From Stablecoin Utility to Proactive Agents
Shreyas Garg breaks down the search for retention, "magical" experiences, and real-world value.
Shreyas Garg (IVP)
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The Uncovered Crew recently sat down with Shreyas Garg, an investor at the tenured venture firm IVP, to discuss the rapidly evolving landscapes of consumer AI and the enduring utility of specific crypto applications.
In the landscape of venture capital, few firms possess the historical perspective of IVP. Founded in 1980, IVP has been doing venture investing since the Atari and Walkman were the best tech you could buy. This enduring presence gives the firm a unique perspective, having guided market leaders through countless cycles and storms.
IVP maintains a high bar for its next set of crypto investments. Each year, the firm invests in just a dozen breakout founders ready to scale from millions to hundreds of millions in revenue and expand from one market to many. With a remarkable track record—130+ IPOs out of 400 investments, including giants like Netflix, Twitter, Snap, Discord, and Coinbase—IVP helps ambitious founders defy limits, command industries and cement their place at the top.
This commitment continues with the launch of their 18th fund in 2024 (yes, you read that correctly). “We’re launching IVP’s 18th fund at an intense— and promising — time for the industry,” the firm noted regarding the $1.6B raise.
“We are experiencing a sweeping technological shift with AI at a time when capital markets are resetting. From our experience, these periods create massive opportunities for companies with product-market fit, organic momentum, and the right team.” [IVP]
Our goal with Thesis Uncovered is not to capture every possible area our guests would invest in. Instead, our goal is to capture in-the-moment thinking and conversation, like what you would hear around the water cooler or at the hipster coffee shop down the street. Shreyas offered deep insights into two rapidly evolving sectors, emphasizing the need for genuine utility and sustainable business models in both arenas.
TL;DR: Theses and Key Quotes
Utility Over Speculation in Crypto
IVP maintains a high bar for crypto investments, focusing strictly on utility rather than speculation, with stablecoins emerging as the most compelling use case for store of value and movement of money.
“The bar we wanted to hold ourselves to was to make an investment that was tied to a utility related to crypto. We thought stablecoins were one of the most interesting ways people were using crypto, which we thought was a very clear utility.”
The Imperative of Invisible Tech
For mass adoption, the underlying crypto infrastructure must be obfuscated. The value proposition should focus on the benefit (cheaper, faster money movement), not the technology.
“I think the key to getting adoption is honestly just making this less and less obvious that it’s crypto-related. I as the end user shouldn’t really need to understand and think about crypto to get utility out of them.”
The AI Monetization Shift
AI applications, with costs closely tied to LLM usage, are shifting monetization models from flat subscriptions to usage-based pricing, better aligning cost with value.
“In a world of AI where your costs are more correlated to the value the user gets. These apps are now charging more on a usage basis, and therefore the value someone gets is [...] more proportional to value (they) pay.”
Retention is King in Consumer AI
Despite the top-line traction many AI companies are seeing, long-term success hinges on demonstrable, retentive consumer behavior.
“...looking for retentive businesses, I think, matters even more, uh, nowadays, just given that I think a lot of great companies are getting a lot of like top line traction...”
The Proactive Paradigm Shift
The next major UX shift in AI will be moving from reactive models (asking ChatGPT a question) to proactive agents that anticipate needs and automate workflows autonomously.
“I think right now, AI is very reactive versus proactive. And I’m very excited for proactive AI.”
“It’s not like me asking for something or knowing I want something. It’s like, Hey, like, and I can predict what I want and what I need and just deliver it to me.”
How Shreyas Thinks: The Pragmatic Search for Utility
Shreyas approaches emerging technologies with a blend of excitement and grounded pragmatism. His thinking is characterized by a relentless focus on utility. While many investors get caught up in the hype or the technical novelty of a sector—be it Web3 or generative AI—Shreyas consistently drills down to the core question: what real-world problem does this solve, and is the solution demonstrably better than the status quo?
This utility-first approach is evident in his view on crypto. Since IVP had a lot of success with Coinbase, Shreyas is less excited about additional crypto investments related purely to speculation on token prices. He emphasizes discipline and focus, candidly stating, “We have not found a thesis in Web3 outside of stablecoins that we’re very, very excited about.”
Furthermore, Shreyas values what he calls “magical consumer experiences”—that feeling when you use a product and realize, “this is special.” It’s a qualitative metric he describes as “you know it when you see it.”
But he quickly pivots from magic to the underlying business fundamentals necessary to sustain it. In the AI space, he is wary of rapid growth fueled by novelty rather than genuine retention. He recognizes that the benchmarks for success in venture are extremely high; the initial traction is not the finish line.
“A great venture outcome in consumer is probably close to a billion of run rate revenue,” he noted. “So even if you’re like, get really fast, a hundred million of ARR... you still gotta go from a hundred to a billion.” This long-term view forces a rigorous examination of retention dynamics and monetization models early on.
Guest Background and Notable Investments
Born in India and raised in Northern Virginia, Shreyas was exposed to technology early, starting to code at 14. His interest always spanned both technology and business, leading him to study computer science at Princeton. A chance opportunity to shadow a VC during his freshman year solidified his career path. “I just kind of fell in love with what he did for a living,” Shreyas recalled.
He took a strategic route into venture, starting in investment banking at Morgan Stanley before joining IVP about four years ago. After two years in the San Francisco office, he helped launch IVP’s London office, spending 18 months building it out before relocating back to San Francisco.
His notable work includes investments in companies like Traceable AI, an API security firm. He also highlighted Cradle, a company that “builds a protein model for pharma companies that better optimize drug development,” using AI to iterate through protein sequences and speed up the drug development process—a concrete example of applying AI to a core, high-value workflow in an established industry.
Thesis 1: The Utility-Driven Case for Crypto (Stablecoins)
Despite the volatility and speculative nature that has characterized much of the crypto market, IVP remains interested in the sector, provided investments meet a high bar for utility. For Shreyas, the most compelling area that clears this bar today is stablecoins.
“We thought stablecoins was one of the most interesting ways people were using crypto that we thought was very clear utility,” Shreyas emphasized. He identifies two primary applications where stablecoins offer significant advantages over traditional financial systems.
1. Store of Value in Volatile Economies
The first major use case is providing a stable store of value, typically pegged to the US dollar, for individuals in emerging markets with highly inflationary or volatile local currencies.
“One is just like store of value,” Shreyas explained. “You can kind of see the benefit for people, especially in emerging countries, who have more volatile currencies.” When local currency value changes day to day, “your purchasing power fluctuates a lot. And that can be quite rough.” By allowing people to save in a currency less prone to devaluation, “stablecoins can provide you a way to save money in a more stable fashion. Therefore, your purchasing power remains intact.”
2. Seamless Movement of Money
The second application is disrupting the slow, expensive rails of traditional fiat currency movement.
“Two is just like movement of money,” he said. “Obviously like moving like fiat currency has, you have to go to the banks, it takes days. It’s like not the cleanest process in the world.”
Shreyas shared a personal anecdote from his time in London. “That’s actually how I paid my rent in London while I was living there, because I got paid in US dollars, had to spend in pounds,” he said, utilizing apps to move money seamlessly. “Just moving money around more cheaply and faster will lead to, I think, an interesting company being built on top of the rails.”
The Path to Adoption: Invisible Infrastructure
While the utility is clear, Shreyas believes mass adoption hinges on making the underlying crypto infrastructure invisible to the end user. The technology must be obfuscated by a clear, compelling value proposition.
“I think the key to getting adoption is honestly just making this less and less obvious that it’s crypto-related,” he argued. “I as the end user shouldn’t really need to understand and think about crypto to get utility out of them. I should just be able to say, this is the value prop and the actual rails can be somewhat obfuscated.”
The marketing should not focus on the technology; it should focus on the outcome: “I don’t think [the marketing] needs to be about stablecoins, [it] should be move money cheaper, move money faster, save money in like US dollars and not like your local currency.”
Why This is Important
The focus on stablecoins represents a maturation of the crypto industry, moving beyond speculation toward solving fundamental financial problems. It addresses the very real pain points of currency devaluation and cross-border transaction costs. If executed correctly—with an emphasis on user experience and regulatory compliance (Shreyas noted IVP’s preference for working with regulators)—this thesis points toward massive opportunities for financial inclusion globally, potentially disrupting legacy financial institutions by providing a faster, cheaper, and more accessible alternative.
Thesis 2: The Search for “Magical” Consumer AI
The explosion of generative AI has led to a proliferation of new applications, and Shreyas is highly optimistic about the potential. “I think AI will change a lot of how we just interact with the world as consumers,” he said, looking for “AI native” versions of existing categories and entirely new applications.
He is actively searching for those “magical consumer experiences.” However, magic alone is insufficient. Shreyas applies a rigorous lens to consumer AI, focusing on defensibility, retention, and evolving monetization models.
The Retention Imperative and Monetization Shift
A key challenge in the current AI landscape is distinguishing between genuine product-market fit and novelty-driven growth. “Looking for like retentive businesses, I think matters even more, uh, nowadays,” Shreyas noted, observing that many fast-growing companies may not have the “best like core retention dynamics.”
Furthermore, AI introduces a new cost dynamic. Unlike traditional SaaS where marginal costs are low, AI applications have significant compute costs (LLM charges) directly correlated with usage. This is driving a shift away from flat subscription models.
Shreyas used Spotify as a counterexample: a heavy user and a light user pay the same price despite deriving vastly different value. AI changes this equation.
“In a world of AI where your costs are more correlated to the value the user gets, just like you have to pay the LLM charge. These apps are now charging more on a usage-based model, and therefore the value someone gets is closer to the value [they] pay.”
He is looking for evidence that users are willing to bear these costs, particularly the “whale cost” of heavy usage. “If I get a ton of value out of it, like, am I paying more and more? And like, are those users also sticking around?”
The Next Frontier: Proactive AI
Perhaps one of the most exciting shifts Shreyas anticipates is the move from reactive to proactive AI. Today’s tools require user initiation—you have to go to ChatGPT and ask a question. The future lies in AI that anticipates needs and acts autonomously.
“I think right now, AI is very reactive versus proactive. And I’m very excited for proactive AI,” he said.
He illustrated this with his own workflow at IVP. Currently, he might manually request a research report before a meeting. The proactive version would operate without prompting.
“But there’s no reason why an AI shouldn’t just proactively look through my calendar, go through all my first meetings, and just generate a research report for me, send it to my email a day before every meeting.”
This is the essence of the shift: “It’s not me asking for something or knowing I want something. It can predict what I want and what I need and deliver it to me.” This concept extends to optimizing workflows automatically: “Literally just having an AI watch my workflow data and be like, hey, can automate this, can automate that, and just does it for you. That flavor of company could be quite exciting.”
Why This is Important
The shift toward proactive AI represents a fundamental change in human-computer interaction, moving beyond tools to true agents that reduce cognitive load and automate complex tasks. Furthermore, Shreyas’s emphasis on retention and usage-based monetization addresses the critical need for sustainable business models in the AI era. As the initial hype subsides, the companies that succeed will be those that deliver continuous, measurable value directly aligned with what users are willing to pay.
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