Chamath Palihapitiya

“Its very interesting to note the pace of application features from the foundational model companies. As the cost of the marginal token approaches zero, the value is not in selling tokens. It is very clearly in moving up the stack and owning the application layer. The first victim will not be established SaaS but AI Natives that spend heavily on the labs now - legal, sales, customer service AI Natives tbc. This is…”

“He who shapes power, data centers, chips and models into an economically feasible endpoint, disproportionately shapes AI/SI right now. Why? Power is THE binding constraint in AI/SI. Few really have it. Data centers don’t work without power. This is not about promises of power tomorrow. Or forecasted power in 2028. Power TODAY. Chips can’t operate profitably unless installed in a functional data center. If you can…”

“Power is the binding constraint. This is why prices continue to climb so ferociously.”

“The first thing to change will be terms of service and blocking these agents. Not because the value is low but because the risk is high. Banks will chose self preservation and risk mitigation. Then we will need to find a security and governance architecture that will get external auditors comfortable. These are the practical issues of human risk tolerance in AI diffusion that model capability can’t solve.”

“1% of companies represent 90% of AI spending. Of that 90%, 80% of this spend are from unprofitable VC backed companies. So, roughly, $0.70-75 of every dollar of AI spending right now comes from AI companies spending VC investment dollars. As a result, the revenue quality in AI is currently poor. This happened in previous cycles as well, like cloud when early users of AWS were mostly venture backed startups. The th…”

“I suspect 70-80% of revenues at AI companies are from other AI companies who’ve raised money from the Venture industry. This is not a circular revenue problem but it is a revenue quality problem. We’ve seen this before in the SaaS cycle in the early/mid 2010s.”

“You should expect the silicon chip companies to move up the stack as the application companies move down the stack. In AI, it is increasingly true that everyone competes with everyone. Everyone will soon offer their own LPS, silicon, cloud and applications. The question is what will the constraint be that you can build a long term market and margins around… Is it distribution? Is it a data moat? Is it a physical c…”

“These are some very important observations from Satya. As models and harnesses commoditize, intent, verification and evidence will gate how quickly SI permeates enterprises and businesses. Importantly, you need to implement systems that separate who does the work from those who govern, measure and sign off on it. This is a new kind of 'harness' that will emerge over the next few years. It may become a new system o…”

“Ant will be a blockbuster IPO on every dimension. But the events of the past few weeks will weigh on the price. My bet is that the margin of safety for the IPO buyer is at +/- $1T. At 1T, it gives a good shot at a big return for the IPO buyer. Most every IPO seller is still booking a huge win. Ant gets $200B and can go build the company of their dreams.”