When was the last time venture capital fundamentally changed its definition of a great founder? History suggests these shifts happen only once every generation.
In the 1950s and 1960s, investors backed scientists and engineers who possessed specialist knowledge that few others understood. The founders of companies such as Fairchild Semiconductor, also known as the ‘Traitorous Eight’ became valuable because of their technical expertise, while management capability was considered secondary.
By the 1980s and 1990s, investors reached a different conclusion. Technical founders were often viewed as incapable of scaling businesses, and experienced operators were brought in to lead. Cisco replaced its founders, while Google appointed Eric Schmidt as chief executive.
The next transformation arrived during the rise of Silicon Valley’s modern startup ecosystem. Firms such as Y Combinator, Founders Fund and Andreessen Horowitz backed founder-CEOs, believing that founders themselves possessed unique insight, conviction and vision that professional managers could not replicate.
AI is now forcing another shift, but unlike previous transitions, this is not simply a debate about who should run the company. It is a question of what remains uniquely human.
For the past two decades, investors have largely rewarded intelligence. Analytical ability, strategic thinking, technical expertise and rapid problem-solving became the qualities most associated with exceptional founders.
AI is rapidly commoditising many of these capabilities. Code can be generated instantly. Market analysis can be produced in seconds. Strategic frameworks, financial models, product roadmaps and investor presentations are available to anyone with access to the same tools. Recent research from McKinsey on the economic potential of generative AI suggests the technology could add trillions of dollars in productivity across knowledge-based work, accelerating the democratisation of expertise.
When every founder can produce a compelling deck, write software and analyse a market, intelligence itself becomes abundant, and the traditional competitive advantage begins to disappear.
This challenge sits at the centre of my 3M Model, developed through more than two decades of teaching executives and entrepreneurs across Asia and internationally. The model describes three levels of human capability: Material, Mental and Mind.
The Mental layer consists of rational analysis, logic, calculation and knowledge. It is the layer where most modern education systems operate and where many investors have traditionally evaluated founders. It is also the layer where AI excels.
AI can process information faster than humans, identify patterns at extraordinary scale and generate sophisticated outputs. If a founder’s advantage exists primarily within the Mental layer, they are competing against a system specifically designed to outperform them.
Ancient Chinese philosophy offers a useful perspective.
The Tao Te Ching teaches:
Humans follow the Earth.
Earth follows Heaven.
Heaven follows the Tao.
The Tao follows its own nature.
Today we might add another line: AI follows humans.
AI is fundamentally a human emulator. It learns from human language, human decisions and human knowledge. It can reproduce what we think, but it cannot determine what is worth thinking about. It can optimise existing ideas, but it cannot create meaning.
As AI becomes more and more capable, the most valuable qualities move upward, from the Mental layer to what I describe as the Mind level: intuition, awareness, wisdom, purpose and moral judgement.This distinction is not philosophical abstraction. It carries profound implications for investors.
More than 2,500 years ago, Sun Tzu identified five qualities of effective leadership in The Art of War: intelligence, trustworthiness, humaneness, courage and discipline. Intelligence appears only once, the remaining qualities concern character.Above these qualities sits Dao – alignment of purpose and shared meaning.
Modern venture capital often evaluates founders through educational pedigree, technical capability and intellectual horsepower. Yet history repeatedly shows that these measures alone are insufficient.
Elizabeth Holmes possessed nearly every traditional signal that investors seek. She attended Stanford, projected enormous ambition and attracted some of the world’s most influential backers. Investors evaluated the technology, the market opportunity and the narrative. Few asked a more fundamental question: Can this founder be trusted?
Theranos demonstrated that intelligence without integrity can become extraordinarily dangerous. The subsequent fraud charges and collapse of the company revealed how easily investors can mistake intelligence, ambition and storytelling for character.
AI now exposes the same weakness in many investment frameworks.
If analytical capability becomes widely available, investors must assess qualities that machines cannot replicate, such as:
- Clarity amid complexity
- Moral judgement
- Courage under uncertainty
- The ability to inspire trust
- Long-term purpose
- Deep empathy
- The capacity to attract exceptional people around a shared mission.
These qualities cannot be downloaded, automated or scaled through software, they emerge from character. Marc Andreessen recently argued that venture capital may become one of the last professions because, in a world where anyone can build almost anything, the scarce skill becomes deciding what is worth building and the same principle applies to founders.
The defining founders of the AI era may not be those with the highest intelligence, the strongest technical skills or the most sophisticated algorithms. They may instead be those who possess:
- The discernment to identify what truly matters
- The courage to act before evidence is complete
- The empathy to understand needs before customers can articulate them
- The discipline to pursue meaning rather than short-term outcomes.
Steve Jobs frequently spoke about the importance of intuition. His study of Zen Buddhism helped shape his ability to cut through complexity and focus on what truly mattered. This was not a rejection of intelligence, but an understanding that intelligence alone is insufficient.
AI is not making founders obsolete, it is forcing them to become more fully human. As machines master analysis, prediction and optimisation, investors may discover that the rarest qualities are no longer intellectual at all. They are wisdom, judgement, compassion, creativity and purpose.
The next generation of exceptional founders will not simply think better than the machine. They will understand what the machine can never know: What truly matters.
