- 12 hours ago
Taneja drew a sharp line between foundational AI research and applied AI. According to him, 2025 was the year AI “diffusion started,” with enterprises using AI to boost productivity across departments, from coding to customer support and sales.
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00:00Thank you, ladies and gentlemen. Welcome to the India Today AI Summit 2026 that's being held parallelly to the AI
00:09Summit impact that the government of India has done, that's brought together thought leaders and visionaries from across the world.
00:16And I am delighted this morning to start the session with Hemant Taneja, CEO, General Catalyst, a paschim vihar boy,
00:25as he reminded me, now, of course, in the Bay Area, and someone whose company has, as a global venture
00:32capital firm, invested in more than 800 businesses, including crucially in the area of applied AI.
00:39And we're going to focus on applied AI in a moment, but first, welcome, Hemant, back to your roots in
00:44a way.
00:46But I want to start by asking the big questions that's dominated a lot of the conversation globally in Davos
00:53more recently.
00:56Is AI to be still seen as a bubble, or is it the future that's already here? Let's settle this
01:03once and for all.
01:04Well, as I always say, bubbles are very good for us. I think what bubbles do is they mobilize talent
01:10and capital behind important problems, important technological areas.
01:15So I think in a lot of ways, if you think about it with that perspective, we are in the
01:18AI bubble, but in the sense that there's so much investment going into it, there are some areas where it'll
01:24be some money lost, but on the other side of what we're going through now in a few years, you'll
01:28see, we'll build some incredible companies, and we will change the world with it.
01:32The reason I asked you that is because surely there must come a time that beyond the hype, companies like
01:39you all will demand profits, that it's not about only AI foundational models, it's about creating products that will give
01:46profit.
01:46Are we therefore entering this post-hype phase now where people are getting real and saying, look, you're going to
01:53have to show us products where AI will actually deliver hard revenues and profits?
01:58So look, I'll separate the AI investments into two categories. One is there's continued investment into research.
02:04And the whole idea is that the token prediction models, the language models, they will only take us so far
02:11from an intelligence perspective and that you'll need fundamentally new breakthroughs.
02:14So there's a lot of capital going into that particular category, which is hard to assess. When is that going
02:20to become a business?
02:21But the promise of it is why capital keeps going into those projects.
02:24But for most of it, which to me is about the applied AI layer, I really don't think that we're
02:31looking for proof points and that they're not showing up.
02:34I would actually argue 2025 was the year that diffusion started.
02:38And the whole investment case of these hundreds of billions of dollars being invested in the computer infrastructure is all
02:46about will you actually transpose labor spend into productivity, into AI productivity?
02:51And you started to see evidence of that in enterprises in meaningful ways late last year.
02:58So I do think that you're going to start seeing the profit margins come as a result as well, because
03:03now you're doing really high value work with AI.
03:05Give me examples of that, because applied AI itself, the specific areas where you believe that AI will now turn
03:15into a legitimate revenue profit model,
03:20you yourself are investing with existing companies to make them AI ready.
03:26Is that the way for the future?
03:28Or is it about ensuring that you create new products in specific industries?
03:33And if so, which are those specific industries where applied AI will be transformational?
03:39So look, AI is a transformative force.
03:41And the biggest value is about applying it to enterprises.
03:45So the way I think about is the value getting created or not is look at every department and think
03:51about what is AI enabling to transform those departments in a business.
03:56So if you follow the news, you would say over the last few months, you're seeing a lot in the
04:02programming department, in the coding department, with anthropic and the cloud models.
04:06The continued momentum in the advancement of that technology is really stunning.
04:10You're gone from can these models help you write faster to they're actually generating pieces of software for you.
04:19I think that's a pretty profound implication.
04:22So rather than is this a software tool and therefore a software budget for an engineer,
04:26you're actually getting work done that teams of engineers would do in a matter of days and weeks as opposed
04:33to months and years.
04:34That's high value.
04:35So I think that, if you think about what's the margin in that, you could actually charge for those things
04:40a lot more.
04:42There's a version of that going on in customer support and customer success broadly.
04:46There's a version of that going on in sales and marketing.
04:48Every department is going through that kind of a transformation.
04:50But if I were to specifically hone down areas where you believe applied AI will be truly transformative,
04:57to give you examples, healthcare in India is seen as a huge opportunity out there.
05:03Education is seen as a, do you look at those areas or do you look at existing companies and see
05:08how can I transform those companies?
05:10So I think, let me think about the altitude of what you just said.
05:15Step one is to transform the enterprises, right?
05:18If you can make them AI native, then they get unleashed to do all of what you're saying.
05:23If an enterprise becomes AI native, then in its own industry, it can go from being operationally efficient to having
05:30an offering of abundance for their customers.
05:32So if you can actually create AI native hospital that has not only nurses that are taking care of patients
05:41in person,
05:41but also agents that are on the phone that effectively cost, you know, deflationary way, essentially to zero over time,
05:48you would have a free nurse that takes care of everybody, right?
05:50So the transformation is only going to happen when you take your enterprise and transform and then start to imagine
05:56how your offerings should be fundamentally different.
05:59And I sort of use the framework around abundance to take care of your customers and constituents.
06:04The reason I also asked you is because India's experience has been we produce a large, strong class of engineers,
06:12a large pool of engineers,
06:14but we are producing fewer AI product companies.
06:17And let's be honest, I mean, the Chinese and the Americans have been way ahead when it comes to innovation
06:22at the moment and enterprise.
06:23So what are we missing here?
06:26Are we missing capital, risk appetite or product thinking?
06:31If we are to also join this engine of applied AI, what does India need to do?
06:38I'm very optimistic on India.
06:41I would say India is behind when it comes to development of infrastructure and models.
06:46I think that's going to be a hard place to go compete and try to be a leader.
06:50But the way we think about our investment landscape, we say there's infrastructure and models, but then there is the
06:55application of AI.
06:56And every single company that is doing really well in the U.S. at the applied AI layer, you know
07:02what they have as a core skill set?
07:04They know how to engage with customers in what's now called forward deployed engineering capabilities.
07:10India's IT industry has matured actually into that.
07:13The workforces that you have here are actually pretty good at it.
07:17They just need to be applied towards going to these customers with the AI tool set now versus your typical
07:23digital transformation tool set and go solve their problems with AI and create these next generation companies.
07:29I do think that's going to get unlocked and create some global companies that start right here with that kind
07:37of a mindset.
07:37No, so do we piggyback in a way on what the Americans have done or what the Chinese have done
07:43and become the sort of back, you know, famously 25 years ago, we became the outsourcing capital over time.
07:52Is that the model that we take or do we encourage Indians to innovate and compete in the product space?
07:58Look, I think the definition of products is actually changing in terms of what it means in AI.
08:04You have such fast-moving technologies that it's hard to understand what the capabilities of the models themselves are.
08:10So what do you really build on top?
08:12And so the products that get built are almost sort of thought about in the context of the problems you're
08:17solving for your customers versus you have a minimum of the product that you're going to go sell over and
08:21over again.
08:21So when you sort of grapple with that and understand these are the capabilities of AI, it doesn't need to
08:29be a discrete product, it needs to understand the problems and solve them structurally, the whole innovation landscape changes and
08:35the talent base here is actually well positioned to go do that and create these next generation companies for different
08:41industries that are using the AI tool set.
08:43But when you as a global venture capital firm look at Indian companies, what are the kind of elements that
08:51you're looking at when you decide, I am going to invest in this specific company?
08:55When you're looking at applied AI from your perspective, what kind of – are you looking at companies which will
09:01essentially scale up in the shortest possible time?
09:04And if you can give me an example.
09:05I think a couple of things.
09:06One is when it comes to India in particular, because AI is deflationary, how to bring capabilities in healthcare, in
09:15education to the masses is actually going to be a really interesting opportunity.
09:20If you can solve it for a billion people with all the complexities that lie here in India, you are
09:26going to be well positioned to solve those problems globally.
09:28So I think that's a place where, just like India did with UPI and Azhar, the innovations that leapfrogged the
09:36world, I think you're going to see some innovations that come out that way.
09:39The second thing is, you know, can you unleash the technology talent here, give them access to these tools, make
09:46the use of AI pervasive, and then go build globally, much like India has started during the SaaS world?
09:52I just think the paradigms change.
09:54You know, SaaS is not where you're going to create the most valuable companies, because AI can do that work
09:58for you.
09:59Well, then let's use AI and go solve problems for customers with that new technology platform versus the older metaphors.
10:05Okay, let me for a moment just show you, since India today had an AI anchor that we introduced on
10:12air a few years ago, started with weather.
10:16There's a question that AI Rajdeep has for you, and I want you to look at that question and answer
10:21it for me.
10:22Take a look.
10:24Thank you, Rajdeep.
10:25When I see you, it seems I'm looking at the mirror, but first my question to Mr. Taneja is, advocates
10:30of AI claim that AI will lead to second industrial revolution.
10:35Do you agree?
10:37Thank you, Rajdeep.
10:39I do.
10:41Look, I think the key important thing with AI, as we look at building the new businesses, as we work
10:48with entrepreneurs everywhere in the world, is you have to think from first principles.
10:53The way you build products is different.
10:55The way you want to build your own companies is different.
10:58The way you engage with customers is different.
11:00And so it is a next phase, and it is a next revolution in the context of what AI can
11:08do.
11:08And imagine it actually making a difference in the physical world as well, which is, you know, we don't feel
11:13it as well today, but in the next decade we'll be talking about that as well.
11:16So I think it's pretty profound what's about to come in what this technology enables for us.
11:20Is that also the challenge and the opportunity?
11:22Because it is changing so fast, you can't even predict what will happen a year from now.
11:27And that's why this is a sort of revolution which no one really knows what the future will bring.
11:32It absolutely is.
11:35And the kind of founders that did great in building companies 10 years ago were ones that were very focused
11:41on what is this precise product market fit, where I can come up with a tight, thin product that I
11:47can sell over and over again to customers, to now founders that are highly iterative, that navigate ambiguity, that know
11:54the capabilities of the technologies are changing,
11:56and can actually build through that ambiguity in the technology stacks themselves to solve customers' problems in a way that
12:03they're not going to create rework for customers.
12:05That's where the innovation lies in this next phase of company building.
12:08Which is why I wanted to ask you, Hemant, if today you are looking at, again, if I may use
12:14the Indian example, and you're looking at a specific industry,
12:17do you sort of look curiously at a startup, or do you prefer legacy companies that have already built up
12:24relative scale?
12:25What is more advantages, given the fact that this is so fast-changing, dependent on innovation, dependent at the end
12:32of the day at your ability to scale up in the shortest possible time?
12:36Do you go with a startup that's innovative, or do you look at a big tech company that's already there
12:41in space, already in the space, and has the potential to scale up faster?
12:45Look, I think the startups are innovative, they move fast, they can take advantage of the technologies, but they don't
12:50have the data, they don't have the scale, they don't have the customers, right?
12:52So I think there, it's about, can they start and gain that kind of traction in their markets?
12:58Enterprises have the data, have the customers, have the scale, but they may not have the leadership.
13:03And so I think the way we think about it is that in every category, there's an opportunity for the
13:09right incumbents, for the right leadership,
13:11that have the courage to really adopt AI, to go win more share in their markets, and others will suffer.
13:18So I think there's going to be a dislocation of value in each of these categories,
13:21and we're always looking for what's the leadership that truly wants to get behind AI and spend time with them.
13:26You know, as I said, this AI-led shift, or the applied AI-led shift,
13:32is perhaps changing how venture capital firms like you operate.
13:35In October 2025, general capitalists acquired Summa Health,
13:40an Ohio-based entrepreneurial organization, to transform health sector through AI.
13:45Do you see that, for example, happening in this country with rural health?
13:49There's a huge gap between the quality of health facilities available in urban India
13:55to what's available in rural India.
13:57Will companies actually look at transforming rural health,
14:01because that's a long-term project in many ways, will require much larger investment,
14:06or would you rather prefer, again, existing, urban-centric, profit-driven urban health companies?
14:13So in the U.S., most of these community hospital systems are financially not very strong.
14:21So they don't have the ability to invest in technologies to actually transform themselves.
14:25So one of the reasons we bought a health system there is to actually go in there,
14:29bring in our portfolio companies that are solving different parts of AI stacks for hospitals,
14:34to go demonstrate that.
14:36In India, you actually have the opportunity to leapfrog that rather than going and transforming.
14:40So we're invested in PB Health, and the whole idea is can we actually build the modern set of hospitals
14:46that borrow on the learnings from a lot of the hospital scale-up that happen in the U.S. industry,
14:53avoid some of the traps, take advantage of AI, and fundamentally build a new model of how do you take
14:58care of patients.
14:58I think the Indian opportunity is much more of leapfrogging versus going and transforming,
15:03which is what we're trying to do in the U.S.
15:04Because, again, it comes to size.
15:07India has the huge advantage of size and has areas which remain untapped.
15:12Let me give you another one, and maybe you can tell me whether that's a potential area
15:16that you would look at applied AI, which is agriculture.
15:19You know, this is a country where 50 percent, more than 50 percent of the population is dependent on agriculture.
15:25It only provides 16 percent of the national income, and that has been a huge mismatch.
15:31How do you increase agriculture productivity and make it income-generating?
15:36I'm just wondering whether you see applied AI transforming key areas in India,
15:41which have for the longest time remained, dare I say, areas of darkness or low income.
15:46I do think it will transform agriculture.
15:49Agriculture is the last manufacturing process we leave for the elements, right, if you think about it.
15:54And using AI to optimize yield, optimizing the quality of food, optimizing scalability,
16:00because it's a large population, will be possible someday.
16:03So I think every industry will get transformed.
16:06You know, some of them will be transformed just because the cognitive part of AI is strong enough,
16:11and some of them will need physical capabilities.
16:13I think agriculture, especially when you have the right robotic technologies
16:16and you can build the right control systems, you should be able to transform it pretty profoundly.
16:20Okay, there's one question that I'm going to ask all my guests, because it is another concurrent running theme.
16:27Heyman, do you think AI will steal jobs?
16:30I mean, steal may seem to be a rather unusual word to use, on a large scale.
16:35Or do you see it somewhere as a capacity multiplier?
16:39Is AI actually going to increase capacity?
16:42Or somewhere in a country like India, where again we've got a large pool of unskilled labor,
16:47will AI become a replacement for unskilled labor on a large scale?
16:53And that's the fear being expressed by many.
16:56Look, this is the most complicated issue around AI.
16:59The reality is, when you think about the AI technology and adoption, it does impact jobs.
17:05There are a lot of jobs that fundamentally have to change.
17:07Maybe tasks more than jobs, but they are going to change.
17:11But at the same time, if you don't lean into it, the businesses aren't going to be competitive
17:15and that you won't have access to the markets to begin with.
17:20So you have to lean into it.
17:21You have to be intentional.
17:23And we have to try to imagine the world where AI enhances the productivity of the young generation,
17:30the demographic that's coming into the workforce, so they can do a lot more
17:33and make the nation a lot more productive,
17:34as opposed to should we not let AI be so they can have the jobs that frankly are not going
17:40to be around,
17:41in globally competitive businesses 10 years from now.
17:43And presumably the key to that is skilling.
17:45The key to that is skilling.
17:47The key is to leaning into it.
17:48We have to make sure the entire country, and this is a digital native generation growing up,
17:53does lean into AI and uses it to enhance their core capabilities,
17:57so the workforce is that much more productive and enhanced.
18:01I have to ask you this.
18:03I don't know how long you've been at the moment in India.
18:06Have you seen the expo at all so far, the AI expo?
18:09Is there a particular product, a particular innovation that you're seeing coming out of India?
18:16A lot of them are there at the AI expo from road safety to healthcare.
18:21That has struck you and given you a wow feeling.
18:25How important is it to get that wow feeling for a global venture capital firm
18:29which has got a basket of opportunities out there to choose from
18:32before you say, okay, this is the area, I'm going to choose the company.
18:36Does a company need to have that wow factor?
18:38Yeah, it's a great question.
18:40So I haven't gone there yet, and I'm looking forward to going there.
18:44I heard it's going to be quite a show tomorrow.
18:46The thing I am looking for is where are the Indian entrepreneurs leapfrogging
18:51and thinking fundamentally differently about the problems and the industries
18:55as opposed to potentially mimicking a lot of what's going on
18:58because there's a lot of AI innovation and zeitgeist,
19:01but I think India is going to thrive by coming with ideas that are unique to India.
19:06And I think that's what the talent here is capable of,
19:09and that's ultimately what's going to be the pervasive idea.
19:11So I am very keen to look at those types of ideas over the next couple days.
19:15Okay, so in conclusion, if there were three lessons that you want to offer,
19:20you can give me just one or two,
19:22but if there were three lessons or three pieces of advice
19:26that you would like to give young Indian entrepreneurs in the AI space
19:30looking at applied AI, what would those three pieces of advice be, Heman?
19:37I think I would say lean into AI, learn it, internalize it and use it.
19:44It's available.
19:45I think the other thing I would say is use it to solve the problems
19:51that make the lives of Indians better
19:54because I do think if we can solve those problems here,
19:57especially in a growth economy like this,
19:59it's one of the fastest growing economies.
20:00First of all, you'll create interesting businesses,
20:03but I also think you'll create global reach for those ideas as they manifest.
20:06And so that's probably my biggest area of excitement.
20:11We are very keenly following all the innovation here,
20:14and I'm very confident these ideas are going to emerge out of India.
20:18Heman, it's been wonderful to have you here and kick-starting our AI summit.
20:23I wanted to say we had a conversation before we spoke,
20:27and when he told me Pashim Vihar, I said Pashim Vihar is no longer the backwaters.
20:31It's produced arguably India's greatest contemporary cricketer in Virat Kohli.
20:36So there are trendsetters out there in Pashim Vihar who have gone and conquered the world,
20:41and you've done the same in the Bay Area.
20:43But good to have you here and set the stage for what you believe is the future.
20:48It's no longer a bubble as you said it.
20:50That argument is more or less over.
20:52It is here, and we've got to, in a way, live with it,
20:56and more importantly, use it to our advantage.
21:00Hemant, for joining us here, Hemant Taneja, CEO, General Catalyst,
21:04thank you so much for joining me here at the India Today AI Summit.
21:07Thanks.
21:08Thanks for having me.
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