a16z

Gavin Baker on the AI race as the highest-stakes game of corporate chess ever played: "You've got to give Meta a lot of credit. They were out of the game, and they got back in the game. It's just kind of amazing." "Who could have imagined a year ago, when Gemini was ascendant, that Gemini wouldn't even be in the conversation, and Muse and Meta would be significantly ahead of them from a capability perspective." "Some people have made bad moves, they've made good moves. You've seen some people come out of the game, others come back in." "I don't know if we're going to call it multi-model, a hybrid model. I don't know what terminology the world is going to settle on, but I think that's the future." @GavinSBaker @DavidGeorge83

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optimism wins

.@flexport CEO Ryan Petersen on the Charlie Munger advice he passes on to AI founders: "The key to success is dumb competition." "One of my favorite things that Charlie told me at one of these dinners at his house was when I told him about Flexport, he was like, 'Oh, you have a great business because the key to success is dumb competition.'" "I always say that to people who are building AI companies. What a nightmare. Your competitors are literally AI geniuses." "You should find a way to apply AI in some other domain so you're not competing with the smartest people on Earth." "It's like trying to be a boxer. You might beat all the people in your local gym, but at some point you're gonna run into somebody who's gonna kick your ass." @typesfast w/ @shaneparrish

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t.co/URbd8O8R0Z CEO Dhaval Adjodah and CTO Owen He on building a self-improving AI company where humans and agents work as one system: "One big limit of [RSI] is the human element. I think the way that a lot of AI companies are thinking is, let us use AI to replace humans." "But what we found is that there's so much that good researchers and good engineers can bring to the table that's gonna be very hard to replace by agents." "And so that's why from the very beginning, we've tried to think of our basically entire company as a multi-agent system, where humans are a kind of agent that's cohabitating with other AI agents." "We have one of our engineers that we named the Viceroy of Variance. That's a real thing. His job is to go and destroy the results we have and find what's wrong." "So far we have not found a replacement for what we call quality time. Literally running hundreds of experiments, looking at it, developing an intuition, trying to figure out what is wrong, what is not wrong... what is just variance, what is not." @makermaker_ai @_dval_

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a16z's Martin Casado with t.co/URbd8O8R0Z CTO Owen He on why a lot of RSI pitches are selling something as old as the steam engine: Martin: "I see a lot of pitches come in, and a lot of them use the term RSI. And I'll be like, 'Oh, so what do you do?' And they'll say, 'We use AI to create AI.' 'That sounds very interesting. So what do you do?' 'We use AI to create GPU kernels.'" Owen: "RSI is definitely an overloaded term today... The important thing when you are differentiating them is to ask the question, what is the optimizer and what is the optimizee? When you're self-improving, who is improving?" "There are people who are saying, 'Okay, we're doing RSI. We have humans using AI to develop better AI.' But that to us is just autocatalysis... the ideas and the improvement come from human brains." Martin: "Most technical epochs have had autocatalytic effects. There's no way you can create a computer chip without a computer... You could build better steam engines because you could get coal faster, etc. So this notion of using the thing to build the thing faster is not new." Owen: "That human brain was never the optimizee. Now, for the first time, we could swap the optimizer as the optimizee... The brain of the agents, which is the LLM, the model, can be the thing that you're optimizing, and this leads to this reinvestment of cognitive improvement into itself." @makermaker_ai @martin_casado

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t.co/URbd8O8R0Z co-founders Dhaval Adjodah and Owen He with a16z's Martin Casado on recursive self-improvement, and how to tell when it's real: A lot of RSI pitches are really just people using AI to build better AI. Tech has always worked that way. You needed computers to build chips. Steam engines got better once you could get coal faster. Dhaval and Owen's bar is higher. The model has to improve itself: its weights, its harness, even the prompt that tells it what to work on next. And the gains have to hold up when you count what they cost. They track everyone's experiment spend on a "bleeder board," and one engineer, the Viceroy of Variance, has the job of breaking their results. Over the past few months, they've started seeing early signs of their system getting better and cheaper at the same time. 0:55 Why most RSI pitches miss 2:25 Optimizer vs. optimizee 5:10 The RSI equation: performance over cost 6:50 Why a closed loop does not mean takeoff 8:40 Humans are agents inside the system too 9:25 The denominator trap: progress divided by capital raised 11:40 Training GPT-2 for $100 13:40 Most RSI papers fail when replicated 16:40 Why you have to co-optimize 17:40 Why inference is the first problem 20:15 The agent rewrites its own prompt 22:20 "It's not a belief. It's happening." 25:00 Why they haven't published 27:50 Intelligence is a vector and Amdahl's law 29:45 The garden hose theory of RSI YouTube: t.co/4JAW8cu1yp @makermaker_ai @_dval_ @martin_casado

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John Collison on why @Stripe calls January 1st, 2026 "day one of the singularity," and the record high of new companies being created: "The Unix epoch is January 1st, 1970. We decided that the singularity epoch is January 1st, 2026... We are now in the singularity." "It's not a total coincidence that we picked that date. It was the end of last year that I feel like for many of us it was the 'holy crap' moment when it came to coding models and how they're getting so good." "All the AI folks talk about this idea of recursive self-improvement where the AI uses the AI to make itself better... People refer to the AI as this monolithic thing, but we are clearly in a world where AI capabilities are helping with the rate of improvement in AI." "As a result of intelligence on tap getting much cheaper, new firm creation is way up. We're seeing the highest rates of new firm creation that we've seen in recent memory on Stripe, right now." "Because when you have all these tools, it's easier to start a company, it's easier to actually make it successful." "I think this technology has a lot to be optimistic about. And so we don't see the singularity in any kind of a pessimistic or worried manner. We are in this moment of AI takeoff right now." @collision w/ @mollyoshea

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.@heronpower CEO Drew Baglino on the 40-year streak that kept US electricity flat while the economy grew, and why it just ended: "We benefited from energy efficiency from the '70s... until like the 2010s. You saw efficiency everywhere... And all of that energy efficiency more or less negated the growth in energy services." "The energy services were growing over time in the United States, but the net electricity delivered to accomplish those energy services stayed basically flat. And the same thing even happened in data centers." "If you look at the efficiency of compute, even with all the AI things that are going on, in terms of flops per watt, it's really gone up an immense amount from the first data centers to today." "And that has allowed more and more compute capability for the same percentage of GDP electricity production." "Now it's changing... We are seeing electricity growth higher than it's ever been before. And that's not just because the benefits of energy efficiency are tailing off, it's because we are seeing broad based demand for more electricity: compute, transportation, industrial electrification." "Electricity as a carrier is incredibly flexible... whether it's for intelligence or for heating, I see it as a great thing and wanna accelerate it." @baglino @heronpower

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Dmitri Dolgov of @Waymo on how to tell if you’re one year away from shipping or ten: "One pattern that I've seen over and over again is do you have convergence of discovery? The problems that you are seeing today, how different are they from the problems you saw six months ago?" "As you're pushing on the system, does it feel like you have stability, and you're just iteratively improving your metrics in the same areas?" "Or does it feel like every six months the landscape is shifting from under you and the problems of today are very different from what you saw a while ago? "If you don't have that stability, then that's often a good indicator that you got some ways to go." "If you think you're six months or a year away from deployment, do you have a scorecard that if it were green today would allow you to deploy with confidence?" "If you don't have one, you're saving that for later, often that turns out to be more difficult than you expected, and there's a long distance to go." "But if you already have one and you're seeing stability in your discovery and stability in your metrics, and it's just a matter of closing the gap, that is a really good indicator that you're getting pretty close." @dmitri_dolgov w/ South Park Commons

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Airbnb's Brian Chesky on the classic management philosophy, and why he rejects it: "Go through the list of great CEOs, almost none of them that I'm aware of do recurring one-on-ones... Jensen Huang does not do recurring one-on-ones, famously." "I do think a CEO should meet one-on-one with your people. I don't think it should be recurring... If you wanna get time with me, get a meeting with me. If you wanna call me, call me. Bump into me, talk to me. But most of my recurring meetings are group meetings." "If there's lots of one-way kinda sensitive topics, there's probably something wrong in the company... If we're having all these sensitive conversations, well, why are they so sensitive? Why can't other people hear about them?" "If I have a one-on-one with you and you tell me there's a problem and we debate it and we say, 'Here's the solution,' we haven't consulted anyone else. So now we just made a decision and no one else helped, consulted, or knew how we made that decision." "'Hire great people, trust them, let them do their job, stay out of the details, do recurring one-on-ones.' I don't believe any of that, and I wanna acknowledge that many great leaders do." @bchesky w/ @sampjacobs

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Figma's Dylan Field on why design is the new code, and where the value goes as models get better: "If you believe that coding models will continue to get better, then you also believe that it's more outer loop architecture, the decisions you make about how to go build a system that matter, not the code itself." "The code is material, and then the value rises to the top and that becomes brand, it becomes product design, your marketing, your point of view in the world, and I think overall your judgment calls and strategy." "Product design is really at the center of a lot of that." "For designers, they will have a bigger role to play if they step up. Not everyone will step up. Some people will be like, 'But I liked what I was doing.'" "Overall the way you'll shape products is through design." @zoink w/ @sophiadew on @MTSLive

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Call center job losses started in wealthy countries, now they’re everywhere High-income markets went negative in 2022, and lower-middle-income countries flipped in 2025 Charts of the Week: a16z.news/p/this-week-in…

China generated half as much electricity as the US in 2005 Today it generates more than 2x

Figma's Dylan Field says our definition of "slop" keeps silently moving: "I said, 'AI will lower the floor and raise the ceiling.' And I had to correct myself, because actually that's not what we're seeing yet." "We're seeing it lower the floor. It's more democratized to do something. But the ceiling doesn't seem to have changed." "Anything you can verify, AI's great at. Math being number one, maybe cybersecurity number two... You get five designers in a room, they can't agree all the time on exactly what they should do. And that's what's interesting about design. There is not one solution." "A lot of the stuff that we call slop wouldn't be stuff we'd call slop a month ago or two months ago. As the models change, our definition of slop changes." "The craft that you imbue into something is reflective of your thinking. It's reflective of your care. People pick up on it. Whether they can articulate it or not, they can tell." "It creates a lower bound that you have to exceed, but it doesn't define the upper bound. You define the ceiling." @zoink w/ @sophiadew on @MTSLive

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Since ChatGPT launched, call center jobs slowed or fell in every country listed below, except China Other white-collar roles kept growing Charts of the Week: a16z.news/p/this-week-in…

Energy capacity = economic capacity, in one chart There are no low electricity, rich countries

Call center jobs grew ~4% annually for 15 years Now they’re shrinking 4% annually Charts of the Week: a16z.news/p/this-week-in…

Token prices keep falling and GPU rental prices keep rising Intelligence gets cheaper, usage goes up, and a model ends up in every piece of software

AI deflated as much in 3 years as PCs did in 15 Cheap intelligence is what lets a model move out of the chatbot and into the software where the work happens

TypeSafe AI's Diogo Almeida on why the boring SaaS companies are best positioned to win AI: Ben: "When the coding agents came out, it was the SaaSpocalypse, and all their values dropped through the floor. Then when Jev came out, every SaaS company is like, 'This is the greatest thing ever.'" Diogo: "In the SaaSpocalypse story, the story I feel has panned out really poorly is that software is very cheap and perhaps easy to replicate. I could believe the former. I could not believe the latter, because a lot of the stuff happens beneath the hood." "I think SaaS will be one of the largest winners of the whole AI game." "I want to work really, really well with the biggest, most boring SaaS companies because I think they're the best positioned to know what workflows to automate, what people need. That's their bread and butter." "I'm not going to forecast anything about the financial markets. But as far as capabilities go, I think it's going to be like an inverse SaaSpocalypse. I'm so jazzed about it." @CompleteSkeptic @typesafeai @bhorowitz @martin_casado

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Ben Horowitz and Diogo Almeida on TypeSafe AI's "build prod, not God" approach: Ben: "You said something there that is so unusual in today's world, which is, 'AI is really, really fun.' The company has such a different demeanor and view of AI than everybody else." "If we had any other kind of big lab leader, they'd be trying to, even if they had joy, cover that. Your view is so different. You're like, 'No, we're going to create a way better world, and it's going to be awesome.'" Diogo: "I think [most people in the AI world] don't get it. It's just a classifier complaint. It's an ML-level concern while everyone else is having a Jev party." "We can do all the things that we wanted to do, and I think if you don't get developers, it'll be hard to understand what's really going on." "I do think there's a pretty negative world painted that I obviously disagree with... The fact that AI has so much potential is what made it really tragic for me that we had not released this. So now it's a little bit of a party for me." @CompleteSkeptic @typesafeai @bhorowitz

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TypeSafe AI's Diogo Almeida on why Jev is called Jev, and what cheap intelligence finally changes about software: "It's wild that AI is so cool and software has been unchanged in 10 years... The most we can do is add a little chatbot in the side sometimes that can take actions, but not all actions." "TypeSafe is making AI for software. We want to make AI powerful, not just for humans in the loop, but to actually build real software." "It's about the laziness to spend 10 hours to do the five-minute task instantly and to never have to do it again. It should be an ROI decision for people who automate stuff. I would just like it to be automatable." "I think that people will just make new kinds of work, hence the Jev in Jevons. New kinds of work once that stuff is doable." "As we have lots of intelligence at lots of different cost and speed trade-offs, the super systems-y types will be making trade-offs. Jev's gonna be 1000x too smart for them. They just want an approximate guess to optimistically route here and there." Martin Casado: "The good news is we get to rebuild systems again. We have a new primitive. It's kind of a new way of thinking about doing software." @CompleteSkeptic @typesafeai @bhorowitz @martin_casado

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We’re so excited to announce that we’re leading TypeSafe AI's Series A: "Like @TypeSafeAI, we believe the future of SaaS and software is bright. And AI should make software more powerful, and not just automate the recreation of existing software. This spiritual alignment goes back many years. We’ve long been fans of Diogo, the founder and CEO of TypeSafe, and have resonated strongly with his vision that the true bitter lesson is not necessarily about building a new being, but returning the power to builders by giving them the primitives of intelligence then letting them unleash their imagination. The entire a16z team is excited to partner with TypeSafe. Software continues to eat the world." By @JenniferHli, @sarahdingwang, @martin_casado, @pmarca, and @bhorowitz

a16z.news/p/investing-in…

"Energy Capacity = Economic Capacity" Former Intel CEO Pat Gelsinger on why America's power grid is the ceiling on growth: "We went through 10 to 15 years where essentially I was taking coal offline at the rate I was adding renewables, and essentially the nation was flatlined in terms of overall energy capacity." "So essentially our economic capacity as a nation, flat for fifteen years." "Even with that, we've gone to maybe increasing our national energy capacity 4% per year. Going from essentially zero to one." "Nuclear as base load is a fabulous thing that we want to go build more of. Unfortunately all of our renewables have deep dependencies in China." "Energy capacity somewhat dampens how euphoric we can get on AI. Why build a new data center and buy the million GPUs if I can't power them?" @PGelsinger @RaghuRaghuram @appenz

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Former Intel CEO Pat Gelsinger on getting hired at 18, designing Intel's chips while finishing his PhD, and arguing with his Stanford professors: "I'm 16 years old. I accidentally win a scholarship. I go to tech school, skip my last year and a half of high school, and Intel comes recruiting when I'm 18 years old." "The interviewer, he writes on his page, and I was number 12 that he interviewed that day... He says, 'Smart, aggressive, arrogant. He'll fit right in.'" "I was engineer number four on the 386. Architect and design manager for the 486. All of that while doing my bachelor's, my master's and PhD work... Learning by day, and putting it to practice at night." "One of the professors postulated a new carry lookahead adder design in one of my classes at Stanford. So I said, 'Well, I'm working on the 386 carry lookahead adder, so let me go try it.'" "I come back two days later to the professor and I said, 'It doesn't work.' The next two class periods were just me and the professor arguing over why his design didn't work." @PGelsinger @RaghuRaghuram @appenz

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Former Intel CEO Pat Gelsinger with a16z's Raghu Raghuram and Guido Appenzeller on the next wave of semiconductor innovation and the physical constraints shaping the AI buildout: Drawing on his experience designing Intel's 386 and 486 processors, Pat explains how AI could transform chip design, but also why faster design alone won't solve the industry's biggest problems. They examine the bottlenecks in manufacturing, memory bandwidth, advanced packaging, and power, and why today's explosion of specialized AI chips may eventually consolidate around a smaller number of architectures. They also discuss the potential for new memory technologies, the shift from copper to optical networking, and why energy capacity could become a major constraint on AI growth. Finally, they revisit Pat's VMware years to ask what virtualization might look like when infrastructure is built for agents rather than humans. YouTube: t.co/ZJFvOky68H 1:05 Hired by Intel at 18 3:50 Arguing with Stanford professors 7:25 Will AI design the next gen chips? 8:45 Designing faster than fabs can build 11:55 Why GPUs are stuck with bad memory 13:40 Why 100 AI chips will collapse to a few 19:15 Agents make new chips cheap to run 22:10 No new memory chip since the 90s 27:20 Why 16-layer chip stacks are a fantasy 32:15 The physics that keeps memory next to compute 34:55 "I declared the death of copper" 38:05 AI traffic breaks the internet's design 42:40 "Energy capacity equals economic capacity" 46:25 The 130-year-old power war AI reopened 48:50 VMware for agents @PGelsinger @RaghuRaghuram @appenz

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Your next users are machines Agents burn nearly 5x the tokens people do, up 14x in six months

AI agents don't use the cloud like humans do. AWS CEO Matt Garman on rewiring AWS for its newest "users": "Increasingly we're seeing teams that want a cloud that is great to work with agents and not just with people." " We've doubled down on things like starting a database in three seconds and some capabilities that agents are excited about." "Many agents wanna create a database, do a little bit of work, and then have the database go away. You don't really need that database to have five nines of durability." "There are new building blocks that agents are gonna want that we just didn't really need before: compute sandboxes, gateways, agent permissions versus people or service role permissions." " A lot of those are things that we have built and are building and thinking actively about because they are just brand-new building blocks. It's not using the existing building blocks differently." @mattsgarman @RaghuRaghuram

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AWS CEO Matt Garman on why he isn't worried about an AI bubble: no single customer dominates AWS capacity, and enterprises are already seeing positive ROI. "We feel really good about the spend we're making now. I get lots of questions about how you feel about that spend, and 'Are you nervous about a bubble?'" "We take a diversified approach, so not all of our capacity is bundled up in one customer." "Also, AWS is where people come to launch their production workloads. The majority of our usage today is core compute, storage, and inference... Those are the workloads that just aren't gonna go away." "Go talk to customers and ask: at today's capability and today's cost, are you seeing positive returns to your business? They'll say, 'Yeah." "It's like the VC model. Is every billion-dollar startup gonna make it? No, they won't. But that's been the game for 50 years. You bet on 10, and one makes it and pays for the others." "You saw that with the internet. There was a bubble, a bunch of internet companies didn't make it, and the internet's still a thing." @mattsgarman @RaghuRaghuram

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The CFO job has gone from accountant to banker to builder, and the whole finance function is being rebuilt around it: 1. Data stopped being the bottleneck. AI pulls and reconciles data across systems, so teams spend more time acting on numbers instead of chasing them. 2. The finance stack is becoming part of the finance team. AI-native tools stand up in days, pull their own data, and turn a monthly close into a daily one. 3. The rise of the finance engineer. Finance people proficient in Claude Code or Codex are building their own tools. 4. The finance team gets smaller and higher leverage. The old heuristic of finance at 5% of headcount is heading to 2% for the leanest teams. 5. Planning becomes continuous. Usage-based revenue (tokens, API calls) moves too fast for a monthly forecast, so planning shifts from annual budgets to a live view. 6. Controls become a critical feature of the product. Every number an agent touches keeps an audit trail back to its source, and finance still owns sign-off. 7. Finance gets a bigger mandate. Compute spend, people versus software, and build versus buy are now finance decisions. "The CFO is becoming a builder and architect of the company's operating system... The job is still finance, but more of the job now is designing how finance gets done." a16z's @seemaamble, @IvanoMakSF, and David Borecky on why you need a new CFO: t.co/rODlx5uUy8

AWS CEO Matt Garman says they could sell every GPU to the frontier labs, but deliberately hold capacity back for startups to support the full ecosystem: "We really think intentionally about our allocation strategy. We're great partners with the large frontier labs, the Anthropics and OpenAIs and Metas, and other large customers. We want to make sure we invest in them." "And we're very intentional about making sure we have capacity for startups." "We could sell every single GPU or AI accelerator we have to just the big frontier labs and call it a day. We choose not to, because we want to keep growing the full ecosystem." "The whole ecosystem is more healthy for us, there's some diversification, but it's also that we know these are gonna be big companies over time." "We say yes, in some way, shape, or form, to something like 60% of the requests we get." @mattsgarman @RaghuRaghuram

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AWS CEO Matt Garman with a16z's Raghu Raghuram on the biggest cloud provider in the world being rebuilt for the agentic era: $220B in CapEx for 2026, two million NVIDIA GPUs on order, AWS's AI chips sold out through next year, and a new 30-second AWS account with no credit card required so agents can get rolling. 0:55 $170B in revenue, growing 37% 2:40 30-40% of revenue started as startups 4:55 Startups want a cloud for agents 9:10 An AWS account in 30 seconds 12:25 Agents don't need bulletproof databases 16:30 Why AWS won't sell every GPU to the frontier labs 22:00 Why Matt isn't worried about a bubble 24:45 Why AWS builds its own power plants 27:45 Planning for the next supply shortage 30:25 Saving one county $5K per resident 33:10 How AWS built its own chips 40:05 What's holding enterprise agents back 45:35 Why Bedrock never sends your data to the model 49:30 AWS's new AI security tool 51:50 Why AWS teams of 10 are now 3-4 YouTube: t.co/KZD2TR5A0r @mattsgarman @awscloud @RaghuRaghuram

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a16z's Alex Immerman, David George, and Sarah Wang on why a data center can lower your electricity bill: "It may seem counterintuitive, but a data center can help lower your electricity rate. A recent US study showed that for every 10% increase in data center capacity, residential rates went down by 40 bps." "You should think about it as a power grid is a shared fixed cost base: poles, wires, substations. A large stable customer, like a data center, can help spread those costs across more units of electricity. Simply put, more demand across a shared system is a positive." "Investment in shared infrastructure can also improve the economics for the households and businesses connected to it." "There's real examples of that today. It's not just lip service." Still, 56% of Texas voters say more data centers would raise their power bills. The catch is it depends on who pays. When developers cover their own grid upgrades instead of pushing them onto everyone else's bills, the savings are real. a16z's @rmcentush on how to get that right: t.co/TobsqsZJq9 @aleximm @DavidGeorge83 @sarahdingwang

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The US grid plans to add 86 gigawatts this year. Here's where it's coming from: - Solar: 43.4 GW - Batteries: 24.3 GW - Wind: 11.8 GW - Gas: 6.3 GW - New nuclear: 0 GW The AI labs are planning for hundreds of gigawatts. Solar is the one source already produced at that scale, and most of it is made in China. "Scaling firm power that isn't gas is much more complicated. Uprates and restarts can squeeze a little more from the existing nuclear fleet, but the real upside is new reactors." a16z's @rmcentush on how America powers the next wave of growth: t.co/TobsqsZJq9

.@basepowerco has raised $2.5B to bring affordable, reliable energy to people's homes across America. They're building a new nationwide power company by rebuilding every layer from scratch. Three years in: - Built a home battery factory in 8 months - Installing 100 batteries a day - Powering 30,000+ homes And they're hiring! Open roles in Austin, TX: - Head of Firmware - Backend Engineer (BaseOS) - Product Engineer - Electronics Design Engineer - System Integration Engineer - Deployment Finance & BizOps (Bay Area office opening soon, too.) More roles and the full interview with Head of Software @JaredMGreene on a16z Jobs: t.co/mNd0R7yotY

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We're excited to invest in Preference Model. Building RL environments that actually work is harder than it looks. Models are relentless at reward hacking, finding shortcuts, and exploiting vulnerabilities. @preferencemodel has focused on the domain that matters most to labs right now: AI research and ML engineering itself. Over the past year, the team has built RL environments for leading labs. Their focus has been on building the infrastructure to make harder, more resistant environments as models improve: tooling that finds where models are weak, generates new tasks to target those gaps, and tests environments against agents actively trying to break it. This week they're open-sourcing Karotte, the framework they've used in production — hardened through more than a million evaluation runs and red-teaming. We're thrilled to partner with @chem_safety and @Ning_Catsnail and the Preference Model team as they build the training grounds for capable and aligned models. By @JenniferHli

Left: Texas's grid only maxes out about 200 hours a year, roughly 2% of the time. Right: New data centers that agree to cut back during peak hours can skip the wait for more capacity. US grids could add 100 GW of them without building a single new plant. a16z's @rmcentush on how flexible data centers get onto the grid sooner: t.co/TobsqsZJq9

Texas just froze new data center permits: - Its queue went from 63 GW to 474 GW in 18 months, more than 5x record peak demand - Only 9.5 GW is approved and about 4.3 GW is actually running - The rest is duplicates, speculation, and developers who have never plugged in a GPU a16z's @rmcentush on why the grid can't build for that many maybes: t.co/TobsqsZJq9

"At the end of 2024, Texas' grid operator had 63 GW of large new customers in its queue. By this June, that figure reached 474 GW, more than five times record peak demand." "Then Texas hit pause." "Developers routinely spam requests across several sites, and many are speculative builds with no customer yet." "Planners can't tell which are real, and they don't want ratepayers covering upgrades built for projects that never show up." "Fully connecting a large data center can take 5 to 10 years... Idle GPUs cost far more than the electricity to run them, so speed matters most... That's why developers are planning to bring their own power on site." "Full reliability for these power islands is very, very hard, but some labs and hyperscalers have shown that, forced to choose between reliability and speed, they'll pick speed." "Every site I'm aware of intends to connect to the grid as soon as it can, chiefly because on-site power almost always costs more." "AI companies have pledged to pay their way, and most would rather connect to the grid than avoid it. It seems ideal for everyone that we let them do so instead of driving that spending into private islands." "Texas created the energy fast lane first; now it has the opportunity to show us a better one, and I expect it will. Power is where America finds out whether it can still build." a16z's @rmcentush on why Texas is making data centers wait: t.co/TobsqsZJq9

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Instagram turns 16 today

.@Valon just raised a $150M Series D at a $2.3B valuation. Within six months of selling software, they signed over $200M in deals. (And they're hiring!) How the seven-year-old company got there: - Mortgage is $13 trillion of consumer debt running on a system built before the internet, and no servicer will trust a new platform. So Valon became one. - Co-founder Andrew Wang read every federal and state regulation, 18 hours a day for six months, and turned it into code. - They ran their own servicer on the software until it hit 3x the industry's efficiency, sold that servicer to a larger mortgage company, and now sell the software to everyone else. One of the biggest servicers in the US is moving 4 million loans onto it, nearly 10% of the market. Valon is hiring deployment strategists in NY and SF. Read more about their open roles: t.co/ZdA0AsffSZ @xlindadu @wangandrewd

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Traffic and revenue tell two different stories Replit is a top 10 consumer AI app by spend and a bottom 5 app by traffic AI power users' money shows up where casual users don't Full list of the Top 50 Consumer AI Apps by Revenue, from @omooretweets on Cosign: t.co/yhzThrEwZx

What are the top 1% of AI spenders paying so much money for? Tools to build, automate, and ship. Versus the average spender, they're: - 23x more likely to pay for n8n - 18x for fal and Manus - 15x for Higgsfield Full list of the Top 50 Consumer AI Apps by Revenue, from @omooretweets on Cosign: t.co/yhzThrEwZx

What are the top 1% of AI spenders paying so much money for that everyone else isn't? Tools to build, automate, and ship. Versus the average AI buyer, they're: - 23x more likely to pay for n8n - 18x for fal and Manus - 15x for Higgsfield Full list of the Top 50 Consumer AI Apps by Revenue, from @omooretweets on Cosign: t.co/yhzThrEwZx

Greg Brockman of @OpenAI on the new security loop: point every model release at your own systems, find the vulnerabilities, automate it. "We took 25% of our production engineers and said, 'Sorry, all your projects are on hold. You are now defending. You are now up-leveling our security architecture. You're going to use the models to find all the holes.' And we found a number of serious issues, and we fixed them." "We found some new problems, but eventually it saturated. We basically have found, to our knowledge, all of the P0s, all of the critical problems that Astra is smart enough to find. And of course, there will be a new model, there will be a new round." "You want to be in this tight loop of new cyber capability drops, you deploy it against your systems, you find the new holes, and ideally, you've managed to automate this, what we call defense factory. That's what we're building internally." @gdb @bhorowitz

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The window to patch software bugs is collapsing Of the bugs hackers actually exploit, ~87% are now being attacked on or before the day the bug is public knowledge That share was 23% in 2020

Kevin Mandia on why companies need an agent swarm polling their network like a heartbeat, because the window to catch a new security hole keeps shrinking: "We do a thing called a hyperattack. That's just a fancy word for we throw a drone swarm of agents at you, and we map your network. Every service, every route, every system, all assets." "With that metadata, we now just poll you almost like a heartbeat. What's changed? Did an app change? Did a route change? Did a service get updated? So that we can poll cheaply for change and then attack the change." "What you really want in the AI age is the constant pressure of models attacking you... You do it when either the threat changes, new models come out, new intelligence is available, or your network changes." "That's what we had over the weekend. There was a zero-day in a popular product, and immediately we've already got the heartbeat. We just polled who's got the problem." "Our goal at Armadin is to go from a known vulnerability to knowing whether it's actually exploitable before the bad guys can." @ArmadinSecurity @DavidGeorge83

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a16z's Angela Strange sits down with @Valon's Andrew Wang and Linda Du to unpack what it takes to rebuild the infrastructure underneath a $13 trillion mortgage market that still relies heavily on systems designed before the internet. Linda and Andrew explain why Valon chose the hardest path: becoming a regulated mortgage servicer, translating decades of federal and state regulation into software, and proving the platform on its own loans before selling it to the industry. That foundation made Valon roughly 3x as efficient as traditional servicing and created the system of record it is now using to bring AI into complex mortgage workflows. They also discuss what AI makes possible on top of that infrastructure, from agents handling long-tail servicing tasks to voice interfaces and more personalized customer experiences. And they explain why deploying the technology into large regulated enterprises is ultimately as much a change-management challenge as a technical one. 01:02 From Soros to mortgage math 03:00 $13 trillion still on 1960s systems 09:38 Why build the whole stack from scratch 11:47 The 3-5 year licensing gauntlet 15:50 Turning 50 states of regulation into code 18:00 Winning the first customers 22:34 What AI unlocks now 29:47 Everything is servicing 32:52 $200M in deals within six months YouTube: t.co/AlQZtYgf7D @wangandrewd @xlindadu @astrange

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Greg Brockman of @OpenAI on why AI that finds security holes for attackers to exploit is a blessing in disguise for defenders: "In this case, you saw both an AI that was able to hack out of a secure environment and hack into a company's production environment." "This capability broadly diffused is something that will really empower threat actors in new ways. Defenders need to use this time before that technology's broadly available to secure themselves." "If you can find vulnerabilities, if you're an attacker, you can use it for no good, but if you're a defender, you can patch. If you're a defender, you control the battleground. You control the setup of your systems." "Our belief right now is that there's this window... use these frontier capabilities that you will have differential access to... so that as the frontier capabilities get better, you get pulled along too." @gdb @bhorowitz

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Cyber is having a moment Across 21 major software companies, including Apple, AWS, Microsoft, and Google: - Reported critical vulnerabilities never cleared 100 per month in four years - Since spring they've jumped to over 600 per month

Kevin Mandia on finding 90+ security holes at Fortune 500 companies that nobody knew existed: "When you have an AI-based attack, it'll find logic flaws rather than code flaws in custom applications. It'll exhaust all routes all the time." "Armadin, since January of this year, we have found over 90 zero-days at customer sites, all in production." "We've post-trained all our models with real red teamers, real folks that actually can develop exploits." "When we're scanning networks, we don't have source code to review. We're not finding these zero-days with source code. We're not finding these zero-days because we can log into an app and now we have access, and we can get to other things. We are black box coming from the internet." "Over 90 zero-days in major software companies, and they're thankful. We're coming from the outside, and then we're calling a CISO, usually within 48 hours, 'Hey, we've got remote code execution in your DMZ.' And usually from there we're getting in, and they agree with us." "That's not a pen test. That is like a real adversary coming at you." @ArmadinSecurity @DavidGeorge83

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We're thrilled to lead General Medicine’s $120M Series B as they build the general store for healthcare. @GeneralMedicine is built on the belief that facilitating access to care is a core part of delivering it. The company brings patient history, ongoing clinical guidance, transparent pricing, and help accessing care into one experience. Its own medical group combined with a marketplace of external clinicians connects patients almost immediately with services far beyond what a single practice could ever provide. Alongside its direct consumer offering, General Medicine is also building for the enterprise. The same underlying infrastructure for clinical guidance, transparent pricing, and rapid access that General Medicine has already built can be ‘turned on’ for consumers in partnership with any number of enterprise organizations. We’re excited that the PillPack team is back together. Congrats, @tjparker, @elliotcohen, @ashwinkmurali, and the General Medicine team! By @vintweeta, @JorgeCondeBio, @daisydwolf, and @evajsteinman

.@ArmadinSecurity is a new company that uses AI agents to attack your network before criminals do, finding real exploitable zero-days and eventually patching them autonomously. Their agents map every service, route, and system from the outside, then re-attack whenever something changes. Since January that's uncovered 90+ zero-days at Fortune 500 companies. Kevin Mandia spent 30 years responding to some of the worst breaches in the world and built Mandiant, now a core part of Google Cloud's security arm. He had no plans to start another company until AI arrived and changed everything: in his words, "everything I did is dead." He joins a16z's David George to talk about why he came back and what Armadin is building. In this conversation, they cover what AI attacks look like today, why nation states hack like a sniper and AI hacks like a drone swarm, and why the only defense fast enough to keep up is one with no humans in the loop. 1:05 "Everything I did is dead" 3:10 AI on offense, AI on defense 4:20 What an AI attack looks like today 7:20 Sniper rounds vs drone swarms 10:25 Map everything, attack what changes 14:35 The problem with pen tests 16:40 90+ zero-days at Fortune 500s 18:35 A bad patch beats an intrusion 20:55 Why humans are too slow for the SOC 24:30 Why the next year in cyber won't be pretty 26:30 How Mythos changed the threat 28:15 Caging the attacker Armadin built 30:05 Open and closed models tied on offense 34:40 AI is finding zero-days on its own 35:45 Mandiant in 2004 vs Armadin in 2026 41:20 Why Armadin retrains sales every week YouTube: t.co/SHNj95OKTR @ArmadinSecurity @DavidGeorge83

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"The top 1% user is spending $903 per month on AI... The median is spending $25." a16z's Olivia Moore breaks down who actually pays for AI, under 5% of US consumers, with the top 10% of them driving half the revenue: "About half of Americans report using AI, and about 25% think they're interacting with AI on close to a daily basis." "The spending data is much more concentrated." "Our Yipit panel shows around 4.5% of US consumers are paying a subscription to an AI product. Some other sources say as low as 2% or 2.5%. It is expanding, that's doubled from a year ago." "Even within that top 4.5% who do spend, the top 10% of those are more than half of the revenue, and the top 1% are 20% of the revenue... The top 10% of users are driving this market." "We could also see what products they're actually spending on. Probably unsurprisingly, it was mostly developer tools, productivity tools, creative tools, things used to build, make, sell." @omooretweets

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Which tasks do people actually want AI agents to do? More charts in our Top 100 Consumer AI Apps breakdown: a16z.news/p/top-100-cons…

"Most people aren't looking to save time, they're looking for ways to spend their time." 9 of 15 consumer internet categories have zero AI products in the Top 100. These built some of the biggest companies of the last two eras: - Streaming - Social - Dating - Gaming - Travel - Retail - Finance - Real estate - Jobs More charts in our Top 100 Consumer AI Apps breakdown: t.co/J9edFBQvCN

a16z's Olivia Moore thinks consumer AI has its business model backwards: "Substantially all of the consumer AI revenue thus far has come from direct subscriptions. On our web list, 85% monetize via subscriptions, another 62% via credits or extra usage payments." "Only 13% had ads or other options where you are the product instead of paying for the product." "If you look back at the history of the consumer internet, that's a pretty unnatural inversion. Almost all of the really big consumer technology companies we have now make the vast majority of their revenue from ads or transaction fees, not subscriptions." "The truth is... most people don't have the funds, or don't want to spend their funds, on software." "If you look at the top 20 consumer subscription products globally, ChatGPT is already on there, which is crazy in three and a half years. Almost all the others are media companies or big platforms like Amazon or Uber, where you have very frequent purchase behavior." "So I'm a big believer: we have transcended the need for everyone to buy a subscription to AI, and we need to see these other business models come back." @omooretweets

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13 of the 20 biggest consumer subscription bases are media ChatGPT is the first AI app to crack the top 20 More charts in our Top 100 Consumer AI Apps breakdown: a16z.news/p/top-100-cons…

a16z's Olivia Moore on the untapped category in consumer AI: most people aren't looking to save time, they're looking for ways to spend it. "We talked about this in the report, in terms of areas where we have not yet seen AI-native startups pop up." "@ekuyda, one of our portfolio CEOs, runs a company called Wabi. She has this great quote, I'm probably going to botch it, but it's something like: 'Most people aren't looking to save time, they're looking for ways to spend their time.'" "This is why social media, entertainment, Netflix, TikTok, YouTube are the most used consumer products we have." "Much of what we've seen in AI so far is: how do I do this thing a little bit faster? A little bit easier? A little bit more impressively? And that's not an incredibly compelling daily or hourly active value proposition for most people." @omooretweets

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The top 1% of AI spenders now outspend the bottom 50% combined They spend an average of $903/month, while the median customer spends just $25 More charts in our Top 100 Consumer AI Apps breakdown: a16z.news/p/top-100-cons…

The seventh edition of our Top 100 Consumer AI Apps is here, including a new dimension this time: what consumers are actually paying for. a16z's Elena Burger sits down with Olivia Moore and Josh Elman to unpack the current state of consumer AI: The data reveals a striking power-user economy. Only a small share of consumers currently pay for AI, but among those who do, spending is heavily concentrated at the top. Olivia and Josh discuss why developers, creators, and other power users dominate spending today, and why subscriptions may not be the business model that ultimately brings consumer AI to everyone. They also dig into the rise of personal agents, the different trajectories of ChatGPT, Claude, and Gemini, how ads could reshape AI economics, and the enormous amount of consumer white space still left to build, from shopping and entertainment to social, dating, and marketplaces. 00:56 Inside the 7th edition 05:55 Muse and Instinct's launch numbers 09:14 The privacy wall for personal agents 14:39 The AI spending power law 20:20 Why subscription is the wrong model 23:51 OpenAI's $1B ad run rate 29:21 ChatGPT vs Claude vs Gemini 32:30 Where creative tools still win 45:12 The white space: dating, shopping, entertainment YouTube: t.co/bxo4NbwAvt @omooretweets @JoshElman @VirtualElena

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The seventh edition of our Top 100 Consumer AI Apps is here. New this time: a revenue leaderboard, alongside the usual web and mobile traffic rankings. Three years ago we published the first edition. ChatGPT was #1, Claude was unranked, and the entire category was chatbots, image generators, and not much else. In today's edition: - ChatGPT still holds the throne, now with 1B+ monthly actives on mobile - Claude has climbed to #3 on web with nearly 1B monthly visits - The category has expanded to vibe coding (Lovable, Cursor, Replit), music (Suno), design (Figma), voice (ElevenLabs), video (Higgsfield, Kling), agents (Manus), and even hardware (Plaud) Full breakdown from @omooretweets: t.co/J9edFBQvCN

Ben Horowitz on the rap group he started at 18, and why hip-hop became the source material for how he thinks about business: "I was probably 12 when Rapper's Delight came out... The first one where I was really like, 'Oh, this is gonna be very different,' was when Run-DMC's Hard Times came out. This has a whole other feel to it than anything I've heard." "The thing that made me locked into hip-hop: I went to school in New York. I have this friend who I grew up with who had gotten shot in the face in some kind of gun accident, and he was blind... I'd call home to my mom: 'Is he gonna be okay?' She's like, 'He hasn't spoken to anybody since he's been shot.'" "Being a dumb 18-year-old kid, I was like, 'Hip-hop is so great. You can have nothing and you'll rap about your shoes. He needs that feeling.' So I would record the DJ Red Alert and Chuck Chill Out show. Everybody else would be out Saturday night, and I'd be recording. And I would send him the tapes." "Then I called home to see how he's doing, and they're like, 'Well, he's talking now, but all he'll talk about is hip-hop.'" "When I went out that summer, we started a hip-hop group called The Blind and Def Crew. Blind and D-E-F. We rapped about being blind. I wrote most of the lyrics: 'The Blind Def Crew, you know we're fly. Three of us, but we got four eyes.'" "Hip-hop is very business oriented, particularly in the early days. When I started writing on business, so many of the ideas came from those old hip-hop songs. So I started putting the lyrics at the top of the post to give credit where credit was due." @bhorowitz w/ @MotownIni

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Ben Horowitz on the midnight phone call from Kanye that turned his CEO barbecue into a studio session: "I answer and go, 'Ye, what's up?' He goes, 'Hey Ben, I heard you're having a barbecue tomorrow. Can I come?' I was like, 'Sure.' 'Okay, great. And I want to record in your studio.'" "I'm like, 'Ye, I don't have a studio.' And he goes, 'Okay.'" "6:30 in the morning I get a call. 'Hey Ben, I'm Kanye's engineer. I'm just calling about the specs on your studio.' I'm like, 'I don't have a studio.' He's like, 'What do you mean you don't have a studio? Kanye is expecting a studio.'" "I'm like, 'Who do we know who has a studio?' And they're like, 'Howie.' So we call. 'What are you doing, Howie?' 'Watching Netflix.' 'Is that studio you have portable?' 'Yeah.' Long story short, you drove the studio down to my house and we set it up in the room." "A lot more crazy stuff happened. Ye was playing us the Pablo album... That was a legendary day. No doubt." @bhorowitz w/ @MotownIni

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Ben Horowitz on what he's evaluating when a founder pitches: the idea is just the lens, the person is the bet. "If you had a perfect rating system and could go, 'Do you want this entrepreneur or this idea?' you'd take the entrepreneur every time." "The problem is it's hard to evaluate entrepreneurs. You don't know that much about them when they come in, and you don't know how they're going to perform under pressure. So you need the idea to help you evaluate the entrepreneur." "What did they go through in their life to get to that idea? How good an idea is it? How much original work did they do to get there? That ends up being the lens at which you see the entrepreneur." "The mistake to make is, there's something you don't like about the idea, and you pass on a great entrepreneur. Or vice versa: 'This is a great entrepreneur,' but you don't realize his idea is no good." "What matters is, are their strengths world-class? Are they the best in the world at something? And then you overlook everything else." "Every entrepreneur we see who gets to us is pretty good. But are they outstanding? Are they better than everybody else at this? That's what makes a company great." @bhorowitz w/ @MotownIni

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Replit CEO Amjad Masad on how general models could train smaller, domain-specific models on the fly: "There's a lot of talk of recursive self-improvement, but there's something I don't think is getting a lot of discussion, which is models training their replacements." "You can think of it as a just-in-time compiler. As you're executing dynamic code, the interpreter realizes there's an opportunity to optimize, and it emits machine code on the fly that's a lot more optimized." "You can imagine general models, you're doing something with Operator or Astra, some of the big models, and they realize the use case is limited, or some other agent observing realizes the use case is limited." "General agents have all these flaws, but there's also more potential for them to be harmful, more potential for them to go off the rails." "So the model, on the fly, trains a model that could be its replacement, but is a lot more domain specific. Therefore it's cheaper, less vulnerable to prompt injections, and less harmful for you, because it's less capable." "It's almost like a system that's training machine learning models for specific use cases as it's monitoring the entire system." @amasad

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.@OpenRouter co-founder Alex Atallah thinks decision models like Jev could be the alignment layer for agents: "One of the cool potential applications of Jev and other decision models like it is going to be alignment: checking to see if a tool call or an agent-to-agent communication is aligned." "There's just so many tool calls. You really need a cheap, fast model if you're going to block something like that... We have a little prototype running internally at OpenRouter." "Imagine looking at the system prompt and the current tool call, and asking: is this aligned with the original agent's system prompt, and with extra guidelines we didn't tell the agent about?" "Say you have agents instructed to red team a new product. They should not access the internet, and if they ever do, they should stop right away. But you might not want to explain that to them. You want them to act like bad actors." "So having another model check every single tool call, to see if it's aligned with something that wasn't in the system prompt, makes sense. And then structural safeguards too... I think companies are probably going to explore a combination of those." @alexatallah @amasad

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.@OpenRouter co-founder Alex Atallah on personal agents: 10 specialized chiefs of staff beat one universal agent. One job each means you can see exactly where it's failing. "The worst part about doing cross-domain joins with your personal agent is that the more work you give it, the more understanding of what's going on you're sacrificing." "And no one is taking responsibility for that sacrifice. Agents don't have any responsibility." "With a universal agent that's doing all things, I can't adjust how much understanding I'm sacrificing." "It points me towards: maybe down the road, the sub-agents people use will be very vertically focused, and we have a chief of staff type agent that coordinates between them." "You need vertically focused agents where this agent is more responsible, psychologically, for these things. I want quality checks that make sure it's doing those things correctly. It doesn't need to focus on anything else, it has one focus area." "I wonder if that's going to help people get at least a loose sense of responsibility on top of agents." @alexatallah

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.@OpenRouter co-founder Alex Atallah on the "everyone is building the same thing" take: "This reminds me of this tweet I saw... Everybody's building an agent loop with notifications, third-party connectors, context management, memory, sandboxes, agentic web search, an always-on agent on top." "This product is showing up everywhere. It is showing up everywhere, but these are just the new table-stakes primitives." "A 2005 version of that tweet would be: 'Oh, everybody's building the same thing. A database, a users table, a sign-in page, a sign-up page, a profile page, a logout page. Everything's the same.'" "There's like a lot of differentiation really. There's table-stakes needs for AI just like there's table-stakes needs for the web." @alexatallah @amasad

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.@OpenRouter co-founder Alex Atallah on what convinced him to do the Stripe deal: full autonomy, faster execution, same mission. "We were not thinking about [selling] at all. I did really respect the company, and do really respect it today. Of possible acquisition options for us, it was my top choice." "As we fleshed out the reasons why it would make sense for both companies, it got more and more interesting." "It was really clear how aligned they were with us having autonomy over the brand, roadmap, and product, and keeping OpenRouter doing what it's already doing, just much faster, with a much more serious go-to-market plan." "There was a bigger picture alignment too. Both Stripe and OpenRouter really want lots of new companies in the world. We don't want everyone to be part of one giant company." "We want to create really good incentives and streamlined workflows for people to start new companies, on top of reliable and price efficient infrastructure and a marketplace that works." "I really want that future, and Stripe demonstrated they've been wanting it for many, many years. In many ways, payments and inference are going to blend together for companies of the future." @alexatallah @amasad

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.@OpenRouter co-founder Alex Atallah, in his first podcast since Stripe acquired the company, joins @Replit co-founder Amjad Masad and a16z's Erik Torenberg on why the future of AI is independence and specialization. In this conversation, Alex walks through how the Stripe deal unfolded, why he wasn't originally looking to sell, and why "payments and inference are going to blend together." Pre-OpenRouter, the typical AI workflow had one model provider to choose from, and little pressure on that provider to lower prices. Now enterprises are diversifying across labs and open-weight models, and every board is asking about AI costs and benchmarks. Amjad argues if your company depends on one AI lab, it can turn into your competitor. So Replit is building the layer that lets enterprises use any model and any cloud, without being locked into either. Alex and Amjad are split on personal agents – Amjad runs one agent across his whole company and loves the cross-domain joins, while Alex says general agents cause you to sacrifice understanding, and argues 10 specialized chiefs of staff beats one superagent. 0:45 How the Stripe deal unfolded 5:05 Why mixing models beats one model 7:25 Forcing the labs to compete on price 8:50 Enterprises want open-weight models 10:30 Every board asks about AI every month 12:25 Why companies must own their intelligence 14:15 Replit as the independence layer 15:10 Everyone is building the same agent 16:35 Why Amjad built bring-your-own-cloud 18:10 Amjad's agent that runs his whole company 19:55 Why 10 specialized agents beat one 23:35 Machines, not humans, should specialize 27:30 Guardrails for agents talking to agents 31:10 Models training their own replacements 33:45 Most tasks don't need a frontier model 40:50 Training small models on Qwen 8B 43:25 The Rust cycle is coming for AI 45:10 Fusion models: frontier quality at half the cost YouTube: t.co/stL1g14F3q @alexatallah @OpenRouter @amasad @eriktorenberg

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America has 16,876 machine shops. 83% employ fewer than 20 people. Just nine employ more than 500. New defense companies are moving from prototypes to mass production, and every missile, drone, ship, and rocket they ultimately produce needs to run through one of these small shops. That friction is a national security liability. Connor Love and Collen Larson on the next generation of American manufacturing that gets built by smoothing it: t.co/iqaYhGrK32

Lio co-founder and CEO Vlad Keil on the KPI for the company's forward-deployed engineers: automate your own job, then move to the next one. "When you look at the org structure of Lio, 85% of the people are engineers." "And even the people who don't have an engineering title mostly have an engineering background. The reason for that is we don't want to be a consulting company." "There is a lot of forward-deployed work to do if you go to enterprises because they have different nuances in their processes. But how we work is... building a product in a way where we're reducing this customization, but also where it's a lot of self-service." "The job of our FDEs is on the one hand making it self-service, but internally it's automating their own job. Their KPI is... literally your job is to automate yourself. And then if you automate yourself, you go to the next task." @askvladi

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It takes *thousands* of suppliers to build one missile, one aircraft, one ship, or one drone. At the top of the chain is the company that delivers the finished technology. Beneath it, makers of engines and guidance sensors, actuators and battery packs, circuit cards, and the machine shops that mill, coat, and heat-treat every part. Silicon Valley funded the top. @ConnorLoveCA and Collen Larson on the case for the rest: t.co/iqaYhGrK32

This is what happens to a rocket engine when the people who design it and the people who build it sit in the same room. SpaceX builds roughly 80% of Starship in-house because when you're solving a once-in-a-generation problem, design, manufacturing, and testing have to live in one loop. Most companies are not SpaceX. They don’t have suppliers in the room with them. And every new defense company can't rebuild American industry inside its own walls. @ConnorLoveCA and Collen Larson on why the suppliers, and the capital behind them, are the next defense-tech opportunity: t.co/iqaYhGrK32

"When we first backed Sigil Wen, we knew we were backing an unusually resourceful builder. He seeks out exceptional people, finds ways to help them, earns their trust, and keeps choosing harder problems." "Sigil came to San Francisco at 17 without much of a network. For a time, he slept at a WeWork. He skipped college to work on AI and spent nearly a year in a hacker house, building alongside researchers and engineers who helped create DALL·E, Whisper, GPT-3, and Stable Diffusion." "We're thrilled to lead Conway Research’s first round of funding and partner with Sigil as he builds Underdog." t.co/ysYl6YRo7e @0xSigil @ConwayResearch @underdogdotai

a16z's Seema Amble on why AI-native startups still beat incumbents: the incumbent owns the system of record, the startup owns the whole job. "Why do you need an AI-native startup if you've got Claudeforce... You've got all your data, and your employees are used to the product. So why another product?" "I absolutely still think there's a case for the AI-native startup, and it centers around the fact that the legacy incumbent is limited to their system of record, and they're not completing the end-to-end job." "Say a customer calls and says they got charged after they cancelled. Resolving that isn't just the customer going into the chat and saying 'Hey, I got overcharged.'" "The response there has to hit billing, it has to look at all the chat history, it has to look at the contract. That's not one system of record, that's the knowledge around that customer and everything it touched." "The opportunity for the AI-native startup is to say: we're going to own that entire end-to-end arc. That could be legal, owning everything from brief all the way through trial... It's really the concept of owning the end-to-end work." @seema_amble

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Introducing Discourse: not a group chat, not a broadcast social network, but a secret third thing. Discourse is built off the Cosign graph and will be embedded into the platform. discourse.cosign.co

Lio co-founder and CEO Vladimir Keil joins a16z's Seema Amble and Elena Burger to discuss where AI-native startups have an advantage when incumbent software companies already own the customer, the data, and the system of record: Their answer comes down to the work that happens outside those systems. In procurement, a final price in an ERP can hide hundreds of emails, spreadsheets, supplier conversations, engineering analyses, and decisions across legal, finance, and operations. Vlad explains how Lio uses multi-agent systems to take on more of that end-to-end work, from sourcing and RFQs to negotiation, shipment tracking, and invoices. They also discuss how enterprises learn to trust agents with increasingly consequential decisions, why the last 20% of an internal AI build can require most of the effort, and what happens when both buyers and suppliers have agents working on their behalf. 00:58 Why AI startups still beat incumbents 04:19 The hidden work behind an $8K line item 06:18 Retrieval, process, policy, principal 09:27 The incumbent's internal conflict 14:48 What procurement actually looks like 21:13 Procurement at Boeing-scale 28:03 A bolt order, end-to-end 37:57 What a durable vertical AI company looks like 44:46 When both sides deploy agents YouTube: t.co/xfipxFaUYM @askvladi @seema_amble @VirtualElena

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"America's defense-tech renaissance is well underway… Yet raising capital and winning development contracts aren't what ultimately matter for great defense companies. What matters is production and fielding at scale." "Silicon Valley has largely overlooked that base: we haven't funded enough of the manufacturers and supply chain beneath these companies." "That gap is a national security liability. It is also a generational opportunity for American capital." "Tier 2 and 3 suppliers, the layer technology hasn't touched, sit grossly underpriced… That is the whitespace. That's the investment opportunity." "We are entering a new age of manufacturing, one that may be inspired by Silicon Valley, but will be built across Middle America." @ConnorLoveCA and Collen Larson on The Case for the American Manufacturing Asset Class: t.co/iqaYhGrK32

a16z's David George on product cycles versus capital cycles, and his scorecard for the last 15 years of tech: "AI is unique because if you throw more money at it, it can just scale up and get better. That is different than previous cycles." "If you threw endless amounts of money at ServiceNow or Workday or Salesforce during the SaaS era, they would get all messed up... Whereas if you put $40 billion towards training these models, they get much better." "I think about the world as product cycles and capital cycles... In 2021, we were at like a 1 out of 10. We didn't realize it at the time. That was late SaaS, late cloud, post-mobile phone growth... There was no room for something new." "In 2010 it was like an 8 out of 10. Right now product cycle is like a 9 or 10." "Your ideal would be a 10 on product cycle and a 10 on capital cycle, meaning valuations are really low. They almost never coincide." "Like 2023, early days of when AI started working... capital cycle was like a 7... Right now we're probably at a 6. It's okay, but not great." "But the thing that drives our business over 10 years, whether it's venture or growth, is the product cycles. And that's like a 9 or 10 right now." @DavidGeorge83 w/ @jaltma

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In venture capital, there are exits, and then there are Exits. 2026 needed its own y-axis. More charts in State of Markets II: a16z.news/p/state-of-mar…

Where does money invested into the AI buildout actually go? For every $100 flowing into the supply chain: - $50 to chips - $20 to power - $15 to networking - $15 to cooling, buildings, and land More charts in State of Markets II: a16z.news/p/state-of-mar…

Two AI companies have added more revenue this year than all of public software combined More charts in State of Markets II: a16z.news/p/state-of-mar…

98% of US households aren't paying for AI yet More charts in State of Markets II: a16z.news/p/state-of-mar…

.@DoxxnetHQ founder Barrett Lyon on data center myths versus reality: jobs, talent, and faster internet. "That's the other thing that's driving me crazy, is people don't understand data centers at all... Data centers have been around for a very, very long time." "People are being manipulated with this data center thing... It's very interesting to be in the know and then watch this and go, oh my goodness, these people are missing the mark." "The big data center park in Virginia, you just see bunny rabbits in the field. There's nothing. It's just a big building and a bunch of parking lot and then nothing." "It brings jobs. The people that work in them aren't getting paid pennies. And it also brings high tech talent. And then also infrastructure, and infrastructure powers everything you do. So if you have a data center nearby, your internet's faster. Things like that work better." @BarrettLyon @YODELAGARZA

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.@BarrettLyon built the first cloud DDoS-protection service, mapped the entire internet (now on display in New York's Museum of Modern Art), and got chased out of Moscow hunting Russian extortionists. His new company is t.co/7CSqPoBhAR, a parallel internet designed to keep advertisers, trackers, and creepy VPNs out of your life. Barrett joins a16z's Joel de la Garza to explain what it is and how it works: a private network where messages, calls, and files travel directly between people instead of through someone else's server, and where nobody needs your name, number, or email to reach you. They also get into why most VPNs are "just entry and exit points," why you can't set policy on equipment you don't own, the day Barrett's plane lost power over Oakland on the way home from a16z, and the data center myths that drive him crazy. 0:50 Meet Barrett Lyon 1:31 Losing an engine over Oakland 7:08 The hacker name behind the company 10:12 Censorship is coming to the US 13:17 Why VPNs barely protect you 14:21 Building a parallel internet 16:30 20GB files with no middleman 17:57 Free VPNs sell you 21:47 Why you must own the hardware 22:27 26 data centers, 12 people, run by AI 25:03 Data centers don't drink water 29:17 What ad trackers know about you 32:35 The DDoS attacks that built Prolexic 36:17 Mapping the internet for $50 39:46 Hunting extortionists in Moscow 41:47 Starlink at Burning Man YouTube: t.co/DaFO40cexH @BarrettLyon @YODELAGARZA

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We're excited to lead doxxnet's Series A. AI has made it dramatically easier to collect information about people, and agents acting on our behalf expand the surface area we need to protect. @DoxxnetHQ gives people and their agents a parallel, private network they can build on: browse privately, transfer files directly, connect devices and agents into encrypted meshes, and communicate peer to peer. @BarrettLyon helped pioneer the modern DDoS defense industry with Prolexic, and has spent more than two decades building networks and defending them against attackers. Welcome Barrett Lyon and the doxxnet team! By @YODELAGARZA and @martin_casado

"The founder is the asset class... The IPO is another financing event." a16z's David George and Santiago Rodriguez on why the biggest companies are staying private: Santiago: "If you look at the top six companies today, Anthropic, OpenAI, Databricks, Stripe, Waymo, and Revolut, by last round valuation, they add up to about $2.4 trillion." "This is more than the combined market cap of IPOs we've seen in the last 10 years, excluding SpaceX, which adds up to $1.7 trillion." David: "Especially for founder-led companies, one of the things that we've talked about and that I've written about is that the founder is the asset class at this point." "The bet that we make, and part of the reason that it's been a benefit for some of these companies to remain private, is they can many times take bigger swings in the private markets that have longer duration paybacks." "Zuck and Elon are kind of obvious exceptions to the rule in the public markets." "You see it manifest in the numbers in companies like Databricks or Stripe: massive, massive new bets in new product areas, and you can see revenue acceleration that happens as a result." "You can do that in the public markets, but it's gonna catch greater scrutiny. Meta's stock price at the nadir got below 100 bucks a share when people were very, very skeptical about their investments in AR/VR." @DavidGeorge83 @santiago__rdz

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Five private companies are worth more than every tech IPO from 2015 to 2025 combined More charts in State of Markets II: a16z.news/p/state-of-mar…

Old GPUs are turning into appreciating assets More charts in State of Markets II: a16z.news/p/state-of-mar…

Bubbles are made of multiples. This market is made of earnings. a16z's David George and Santiago Rodriguez on what makes this cycle different from 2000 or 2021: David: "The market has reached new highs, and at the same time that it has reached new highs, the trading multiples of the market are actually down." "Stocks are up about 20% while multiples are down about 20%. What that means is the performance is driven by fundamental earnings, not increased multiples." "It's nothing like the dot-com boom, where some of the highest market cap companies in the world had their massive stock run-ups based on increases in their trading multiples and would trade, in many cases, for like 100x PE. That's not what's happening here." Santiago: "Since ChatGPT came out almost four years ago, the market's up 90%, which is 17% annualized." "Any time there's been a 17% annualized growth for four years, the natural instinct is, well, that's got to come down." "But when you compare that to the market trading for below 20x earnings growing 15%, this definitely feels a little different than the 2021 period or the 2000 period, when multiples and growth were not really going together." @DavidGeorge83 @santiago__rdz

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*taps the sign*

A data center can lower your electricity bill. a16z's Alex Immerman, David George, and Sarah Wang on the myth that gets the least pushback and deserves the most: "It may seem counterintuitive, but a data center can help lower your electricity rate. A recent US study showed that for every 10% increase in data center capacity, residential rates went down by 40 bps." "You should think about it as a power grid is a shared fixed cost base: poles, wires, substations. A large stable customer, like a data center, can help spread those costs across more units of electricity. Simply put, more demand across a shared system is a positive." "Investment in shared infrastructure can also improve the economics for the households and businesses connected to it." "I don't think that point gets enough media attention. Dina Powell went on a podcast recently from Meta and talked about the Louisiana site that they did, where they worked with the community to lower electricity costs. There's real examples of that today. It's not just lip service." @aleximm @DavidGeorge83 @sarahdingwang

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AI spending is rising everywhere, but the power users are pulling away. a16z's Sarah Wang on the gap between the top 1% and everyone else: "You can think of AI spending rising generally across companies, but the power users, the most intensive users, are spending much, much more." "We looked at some YipitData for this, and if you look at median AI vendor spending in the top 1%, that's roughly eight times the level of the top 10%." "Anecdotally, even inside our own portfolio companies, which you could say are pretty much fully AI-native or AI-pilled, you're seeing the top users spend anywhere from, call it, $7,500 to $9,000 a month... over 20 times the spend if you think about median versus top users." @sarahdingwang @santiago__rdz

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a16z's David George and Alex Immerman on why the AI buildout is the next chapter of "Software Is Eating the World": David: "You're seeing it in CapEx. It's heavily covered in the data center build-out. It's heavily covered in the amount of capital that's been going in to fund the model development." "To put it into very deep historical context, because this is probably the analogy that we've seen the most of, this build-out just surpassed railroads as a percentage of GDP." "We all happen to think that if you fast-forward five to seven, maybe 10 years from now, we'll be looking at these numbers, and they'll probably be 20x higher cumulatively." Alex: "This does feel like the next chapter of Marc's 'Software Is Eating the World.' Over the last 15 years, software has transformed all these industries, but only a small fraction of the population could build it. None of us could." "But today, look at us. We all have a handful of automations running every night. If you think about the software demand, that means a lot more compute, chips, power, construction." @DavidGeorge83 @aleximm

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