Fundraising, AI Advancements, and the Quest for Product Market Fit with Vasco Pedro
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With over 20 years of experience in the tech industry, Vasco Pedro, the CEO and co-founder of Unbabel, is passionate about leveraging the power of AI to transform the way we communicate and do business. Through Unbabel, which he founded in 2013, Pedro helps bridge the gap between languages and cultures by making translation services more accessible and efficient than ever before. Today, Unbabel helps companies scale across markets.
In the following Crew Capital interview with Dylan Reider and Sonia Damian, Pedro draws from his experience and shares his advice for founders on topics ranging from the importance of product-market fit, fundraising, and investor relations to language infrastructure and the future of Artificial Intelligence (AI) and Machine Learning (ML).
A startup is a vision of a future world – fit the product to that future
A startup represents a founder’s vision of the future, and success lies in developing a product that fits that vision. If the vision is right, Pedro says, and the product is right, and the impact is big enough, the startup will be successful. When raising funding, the founder is in effect telling that story. Being compelling in delivering the pitch, running fundraising as a refinable process, and focusing on investors who genuinely share the vision are important aspects that can assure fundraising efforts’ success.
“Founders have to work on their presentation and pitch, be compelling, and find the right storytelling techniques. It has to capture the essence of their story,” says Pedro.
Although product-market fit is well-known in the world of entrepreneurship, it is crucial to reiterate its importance. When you have it, Pedro says, other problems become relatively smaller. But when you do not have product-market fit, then small problems look insurmountable. The size of that future market determines more about a startup’s success than one might think.
“There is a famous saying that a good team can be successful even with a bad product, but when there is a good team in a bad market, usually the market wins. According to Pedro, there’s a level of purity and wisdom in making something people want or need. In many ways, this is the ultimate test for whether the company has found a fit between the product and the market. “If a startup is doing something that only a few people really want and even if they execute amazingly, they still are not going to create a huge business.”
Using language effectively is a crucial infrastructure layer to drive a company’s growth
A third of the world does not speak English, even as a second language, yet companies surprisingly underinvest in localisation. As a result, the global majority suffers from inferior access to content and services. The problem is growing more acute as the world moves into a stream-based reality as Pedro calls it, with companies producing ever more content, whether it be marketing or customer services. “It has become easy to ship products anywhere but a very small percentage of companies operate in multiple languages.”
The headache is not just a one-time translation, which is hard enough. “I’ve never heard someone say they translated their website and it was super easy!” But it is an ongoing and continuous process. “Companies need to revise their websites in ten languages every time there is an update. It’s not about one engineer sending one piece of text to a free translator. All operations of a company need to function seamlessly in a bunch of different languages and that becomes super-complex.”
Companies are not thinking about language infrastructure, but it’s one of the reasons they are not scaling as much as they could, he argues. Pedro describes ‘LangOps’ as the linguistic equivalent of DevOps in software. “When we had the shift from on-premise servers to cloud computing, we needed a similar way to think about infrastructure that was code-based and scalable. With language it is similar. We used to have translation and localisation that was project-based and non-scalable. With LangOps, there is a scalable, AI-driven way of thinking about language.” Enabling this is a core part of Unbabel’s mission as a company.
Embrace AI’s potential, let history serve as a guide where applicable
With the emergence of ChatGPT and new large language models like GPT-4, discussions and predictions about the effects of AI on society have been reignited. These range from concerns about widespread job loss to the possibility of a world with unlimited resources at no cost.
Pedro, looking to history as his guide, is an optimist. “We don’t know what new jobs will be created. But we’ve never seen an increase in GDP that didn’t lead to an increase in quality of life”.
However, the current enthusiasm for the prospect of achieving Artificial General Intelligence (AGI), a theoretical concept for a machine intelligence as capable as human intelligence, is misguided. “We are attributing a lot of human qualities to a machine like ChatGPT, which appears close to human intelligence, but it is not. We should have realistic expectations about the development of AI, as there have been multiple hype cycles that have led to AI ‘winters’ in the past.”
Look for investors who are equals and partners
When engaging investors, Pedro cites an analogy from investor Paul Graham, advising founders not to see themselves as performers trying to impress a monarch (i.e., investors) in the hopes of receiving a reward (i.e., funding). Instead, founders should focus on building a great company and creating value for their customers.
“It needs to be a relationship of equals, both providing value.” Equally, he stresses that: “Founders cannot rely on investors to build their company for them. They are there for capital, advice, and connections, but founders are the ones who do the work.”
Be thoughtful in choosing investors
Business angel investors can provide valuable benefits for startups. Angels who have a deep understanding of a startup’s industry can offer support and expertise. Their unique perspective can align with the vision and lead to valuable connections and networking opportunities. Additionally, angel investors who have previously founded their businesses can bring a wealth of experience and knowledge to the table.
Strategic investors, such as corporate venture capital arms, can be valuable partners for startups. They can help build credibility with potential customers and offer access to resources and expertise. According to Vasco, by carefully selecting strategic investors, startups can benefit from their strengths while maintaining independence and control.
“In an ideal scenario, investors can help entrepreneurs achieve their growth targets, facilitate introductions in their network, and provide the right advice.”
Vasco says founders shouldn’t feel intimidated when talking to investors. They should accept the reality that most investors are not going to be the right fit.
“If you’re an entrepreneur and you have multiple investors telling you the same thing, then you can draw some conclusions. But just because one investor gives some advice, or rejects the opportunity to invest, founders can not let themselves be too affected by it. Running a financing process should be about understanding the vast pool of potential investors at your reach.”
With over 20 years of experience in the tech industry, Vasco Pedro, the CEO and co-founder of Unbabel, is passionate about leveraging the power of AI to transform the way we communicate and do business. Through Unbabel, which he founded in 2013, Pedro helps bridge the gap between languages and cultures by making translation services more accessible and efficient than ever before. Today, Unbabel helps companies scale across markets.
In the following Crew Capital interview with Dylan Reider and Sonia Damian, Pedro draws from his experience and shares his advice for founders on topics ranging from the importance of product-market fit, fundraising, and investor relations to language infrastructure and the future of Artificial Intelligence (AI) and Machine Learning (ML).
A startup is a vision of a future world – fit the product to that future
A startup represents a founder’s vision of the future, and success lies in developing a product that fits that vision. If the vision is right, Pedro says, and the product is right, and the impact is big enough, the startup will be successful. When raising funding, the founder is in effect telling that story. Being compelling in delivering the pitch, running fundraising as a refinable process, and focusing on investors who genuinely share the vision are important aspects that can assure fundraising efforts’ success.
“Founders have to work on their presentation and pitch, be compelling, and find the right storytelling techniques. It has to capture the essence of their story,” says Pedro.
Although product-market fit is well-known in the world of entrepreneurship, it is crucial to reiterate its importance. When you have it, Pedro says, other problems become relatively smaller. But when you do not have product-market fit, then small problems look insurmountable. The size of that future market determines more about a startup’s success than one might think.
“There is a famous saying that a good team can be successful even with a bad product, but when there is a good team in a bad market, usually the market wins. According to Pedro, there’s a level of purity and wisdom in making something people want or need. In many ways, this is the ultimate test for whether the company has found a fit between the product and the market. “If a startup is doing something that only a few people really want and even if they execute amazingly, they still are not going to create a huge business.”
Using language effectively is a crucial infrastructure layer to drive a company’s growth
A third of the world does not speak English, even as a second language, yet companies surprisingly underinvest in localisation. As a result, the global majority suffers from inferior access to content and services. The problem is growing more acute as the world moves into a stream-based reality as Pedro calls it, with companies producing ever more content, whether it be marketing or customer services. “It has become easy to ship products anywhere but a very small percentage of companies operate in multiple languages.”
The headache is not just a one-time translation, which is hard enough. “I’ve never heard someone say they translated their website and it was super easy!” But it is an ongoing and continuous process. “Companies need to revise their websites in ten languages every time there is an update. It’s not about one engineer sending one piece of text to a free translator. All operations of a company need to function seamlessly in a bunch of different languages and that becomes super-complex.”
Companies are not thinking about language infrastructure, but it’s one of the reasons they are not scaling as much as they could, he argues. Pedro describes ‘LangOps’ as the linguistic equivalent of DevOps in software. “When we had the shift from on-premise servers to cloud computing, we needed a similar way to think about infrastructure that was code-based and scalable. With language it is similar. We used to have translation and localisation that was project-based and non-scalable. With LangOps, there is a scalable, AI-driven way of thinking about language.” Enabling this is a core part of Unbabel’s mission as a company.
Embrace AI’s potential, let history serve as a guide where applicable
With the emergence of ChatGPT and new large language models like GPT-4, discussions and predictions about the effects of AI on society have been reignited. These range from concerns about widespread job loss to the possibility of a world with unlimited resources at no cost.
Pedro, looking to history as his guide, is an optimist. “We don’t know what new jobs will be created. But we’ve never seen an increase in GDP that didn’t lead to an increase in quality of life”.
However, the current enthusiasm for the prospect of achieving Artificial General Intelligence (AGI), a theoretical concept for a machine intelligence as capable as human intelligence, is misguided. “We are attributing a lot of human qualities to a machine like ChatGPT, which appears close to human intelligence, but it is not. We should have realistic expectations about the development of AI, as there have been multiple hype cycles that have led to AI ‘winters’ in the past.”
Look for investors who are equals and partners
When engaging investors, Pedro cites an analogy from investor Paul Graham, advising founders not to see themselves as performers trying to impress a monarch (i.e., investors) in the hopes of receiving a reward (i.e., funding). Instead, founders should focus on building a great company and creating value for their customers.
“It needs to be a relationship of equals, both providing value.” Equally, he stresses that: “Founders cannot rely on investors to build their company for them. They are there for capital, advice, and connections, but founders are the ones who do the work.”
Be thoughtful in choosing investors
Business angel investors can provide valuable benefits for startups. Angels who have a deep understanding of a startup’s industry can offer support and expertise. Their unique perspective can align with the vision and lead to valuable connections and networking opportunities. Additionally, angel investors who have previously founded their businesses can bring a wealth of experience and knowledge to the table.
Strategic investors, such as corporate venture capital arms, can be valuable partners for startups. They can help build credibility with potential customers and offer access to resources and expertise. According to Vasco, by carefully selecting strategic investors, startups can benefit from their strengths while maintaining independence and control.
“In an ideal scenario, investors can help entrepreneurs achieve their growth targets, facilitate introductions in their network, and provide the right advice.”
Vasco says founders shouldn’t feel intimidated when talking to investors. They should accept the reality that most investors are not going to be the right fit.
“If you’re an entrepreneur and you have multiple investors telling you the same thing, then you can draw some conclusions. But just because one investor gives some advice, or rejects the opportunity to invest, founders can not let themselves be too affected by it. Running a financing process should be about understanding the vast pool of potential investors at your reach.”