No Priors: Artificial Intelligence | Technology | Startups
00:01:44 · Sarah Guo, Elad Gil
[00:01:44] S1: You're chasing chasing the next trillion dollar company? [00:01:48] S0: Yeah. It's a it's a really interesting point because basically what we had is over the last five years or so, we had three companies roughly go from close to zero to a trillion dollars in market cap. Right? Anthropic basically didn't exist five years ago. OpenAI was still quite early. I think GPT-three just come out, and SpaceX was trading at 80, a 100, something like that. And so suddenly, we had this massive inflection in terms of valuations of these companies. And I think a lot of people now are assuming that there's a bunch of other trillion dollar companies that will be formed in three to five years. And that's unprecedented in human history. Usually, it takes twenty years. SpaceX actually took since the early 2000s, and Google took since the nineties. These are usually fifteen, twenty year arcs. And then we had this weird five year inflection. And so I feel like a lot of people now are looking at different areas that are very exciting, very promising areas, robotics, materials. And everything in everybody's mind is going to be a trillion dollar company. And maybe some of these will over the next decade, but it's unlikely that we'll see that many more in the next three to five years. I mean, there's one I can think of that could maybe get there, but not multiple. So yeah. [00:02:53] S1: What's the one? [00:02:54] S0: How am I gonna say? [00:02:56] S1: A lot. Where am gonna put my money? [00:02:59] S0: I don't know. It's like throwing darts.
00:02:59 · Elad Gil, Sarah Guo
[00:02:59] S0: I don't know. It's like throwing darts. [00:03:02] S1: Yeah. That's why we have the dartboard here. So you think it's actually just like a very good special point in time vintage versus, you know, the ecosystem always gets bigger?
00:03:12 · Elad Gil
[00:03:12] S0: Well, it's more like a punctuated equilibrium. Right? If you look at theories of evolution, one of them is punctuated equilibrium where you have a Cambridge Explosion and you have consolidation and things are kind of steady state for all. Then you have an explosion. And so that's kind of like the history of technology, right, if you think about it. We had a big social wave, but there isn't a dozen new social companies all the time right now. We had a SaaS wave, then they kind of settled down. So we just had a giant AI wave, and there's still more to come. One could argue that Internet had four or five periods to it. I had the Internet of the nineties, I had social of the early to two thousand ten, 2012 ish kind of era. You had SaaS. You had cloud. You had big security companies. You had crypto as a wave, so you had all these waves happening. And sometimes they had two pieces. Right? Bitcoin had a couple different cycles, and other technologies will have that. AI undoubtedly, there'll be some giant breakthrough in model capability, and we'll see another step in some of these startups again. Right? But we see these moments in time where things go from zero to a lot, and then those things become consolidators. And then the question is what comes after that? And so I think we've now seen at least some of the consolidators emerge. And the question is how many more giant companies are coming in the next handful of years? And that's different from saying what happens over the next twenty years. Of course, there's gonna be tons of interesting stuff over twenty years. Over two years, three years, there's still things that will grow a lot. You know, there's still a lot of $100,000,000,000 companies to be built, but multi trillion dollar companies are kind of hard to get to.
00:04:42 · Sarah Guo, Elad Gil
[00:04:42] S1: I wanna talk to the investors you're talking to because I feel like I run more into a failure of imagination of how much bigger or better something can be than the closest proxy market from a previous era. And, like, I I think, like, being able to rethink market size is just still, like, a key underpriced investor skill right now at any stage. Right? If you think about Sure. Take some of the, like, application companies that, you know, we have in common or that other people have invested in. I think there are a lot of investors who have intellectually recognized this idea of AI companies delivering services value. They don't act like they believe it. They look at everything a little bit more linearly. Right? So think of, if you're looking at Harvey or a Bridge or something, then they think about a per seat or per, yeah, per, like, lawyer or per doctor TAM. And they're not actually, you know, asking the question of, like, what does the company look like if they can charge for outcomes? And actually thinking about, like, what's happening in the the coding domain, which is consumption and value, you know, a 100 x from here. [00:05:48] S0: Coating, I think, is like a much, much bigger market than anyone thought. And, you know, I think both of us were saying that a year or two ago. [00:05:53] S1: But now the evidence is out there. You don't have to be a genius to, like, take that to domains.
00:05:57 · Elad Gil
[00:05:57] S0: The evidence is out there, but it's also what is a trillion dollar market and what is a $100,000,000,000 market? Both of those are big numbers. Right? I actually wrote a blog post in 2010 or something talking about how hard it was to get to 10,000,000,000 in market cap, right, Which is now like a seed round for some of these Neo Labs. Don't get me wrong. I think that the reality is that there's a lot of these things that could be a 100, but I don't think there's that many that could be a trillion. Those are just different orders of magnitude. And so then the question is, what are these things that could actually be a trillion dollar market? Because you just think of the revenue basis that's needed for that. You need a 100,000,000,000 of revenue or 50 to 100,000,000,000 pretty easily. So then the question with good margin. Right? So then the question is, where are the $50 to $100,000,000,000 revenue streams for single companies? That's a different question than is the TAM really, really big. Right? That's huge TAM. Right? That's a very small number of markets in the world. There's a lot of them. There's a dozen plus companies that are there ish. But how many more will there be in the next five years? That's my question. It's not what in the next twenty years. It's what in the next five years we'll be able to get to 50 to 100,000,000,000 of revenue. And that changes how you think about this. Right? There's tons that can get to 5 or 10,000,000,000 of revenue, and there'll be a $100,000,000,000 company.
00:07:14 · Sarah Guo
[00:07:14] S1: I think I'm looking at more both a little further out. And then I'd say, like, I don't know that there are that many markets that are gonna get to 100,000,000,000 of revenue in the next couple years that aren't. Like in France. Right? Tell me what else what else you think in that timeline. Perhaps some supply chain, like energy type technologies.