Lucas Swisher

Growth Investor at Coatue

Claims

As speaker

Mentioned in

Key positions and views

AI-native companies possess a fundamentally different financial structure than SaaS: lower gross margins due to infrastructure and LLM costs, but potentially higher terminal operating margins from AI-driven efficiencies.

The AI era justifies mega-funds ($5B+) because the potential market caps of winning companies will dwarf those of the SaaS era, making the fund math viable.

The benchmark for a worthwhile investment has shifted from a potential '$10 billion public company' to an 'enduring' one with a $50-$100 billion market cap potential.

Value in the private markets is extremely concentrated, with just 20 companies generating 80% of the enterprise value, necessitating a focus on identifying these massive outliers.

High customer retention is a non-negotiable prerequisite for investing in low-gross-margin AI businesses, as there is no room for error from churn.

Podcast consensus on Swisher

Points of consensus

▶AI-native companies will have a fundamentally different financial profile than SaaS companies, characterized by lower gross margins but potentially higher terminal operating margins due to AI-driven efficiencies.Mar 2026

▶The financial outcomes for the current generation of AI companies are expected to be significantly larger than those of the SaaS era, justifying the viability of large growth funds ($5B+) that were less tenable previously.Mar 2026

▶Value creation in the private technology market is extremely concentrated, with a small number of companies (as few as four) generating the majority (65-80%) of the total enterprise value.Mar 2026

▶The standard for a successful venture investment has increased, with firms like Coatue now looking for companies with the potential to become enduring public entities valued at $50-$100 billion, a significant increase from the previous $10 billion benchmark.Mar 2026

Points of debate

▶Swisher highlights a key tension in AI investing: while AI companies have structurally lower gross margins, he argues their terminal operating margins may be higher, a point of debate as the long-term operational costs of AI remain uncertain.Mar 2026

▶He notes that while the talent pool for AI is highly concentrated in the Bay Area, making it an advantageous location, it is not mandatory, presenting a nuanced view on the geographical necessities for building a top-tier AI startup.Mar 2026

▶Swisher addresses the market debate on SaaS valuations, arguing that the emergence of advanced AI coding models is causing investors to fundamentally question the long-term terminal value of traditional SaaS businesses.Mar 2026

▶He contrasts the difficulty of deploying large, early-stage funds with the necessity of investing in private markets to access high-growth foundational AI companies, highlighting the strategic challenge facing mega-funds.Mar 2026

Key themes

▶The New Financial Paradigm of AI CompaniesMar 2026

Swisher articulates a shift away from traditional SaaS financial models. He posits that AI-native companies are structurally lower gross margin businesses due to cloud and LLM costs, but can achieve higher terminal operating margins through AI-driven efficiencies in OPEX. This new model requires non-negotiable high customer retention to be viable.

Investors must abandon rigid SaaS-era gross margin benchmarks and develop new frameworks that prioritize operating margin potential and customer retention when evaluating AI-native businesses.

▶Mega-Funds and Market Concentration in the AI EraMar 2026

Swisher argues that the AI era makes large ($5B+) growth funds more viable than the SaaS era because the potential market capitalizations are orders of magnitude larger. This is coupled with his observation that private market value is hyper-concentrated, with just 20 companies creating 80% of the value, forcing funds to hunt for these massive outliers.

The venture landscape is bifurcating, where mega-funds are justified but only if they can secure significant ownership in a very small number of generational companies, increasing the stakes for each investment decision.

▶Evolving Investment Thesis and StrategyMar 2026

Swisher details how Coatue's investment criteria have evolved, moving from a '$10 billion public company test' to a new standard of a '$50-$100 billion enduring company'. He also shares lessons from past mistakes, such as overestimating TAM and misjudging Anduril's potential by focusing too narrowly on its P&L, leading to a refined strategy that avoids pre-revenue companies at very high valuations.

Growth-stage investing is becoming more disciplined post-2021, with a greater emphasis on proven execution and a much higher bar for potential market size to justify entry valuations.

▶Company-Specific Analysis and AI MoatsMar 2026

Swisher provides specific bull cases for key AI players. He highlights OpenAI's consumer franchise and enterprise potential, Anthropic's strategic focus on coding models and platform neutrality, and Databricks' successful navigation of multiple tech S-curves. This demonstrates a focus on identifying durable competitive advantages beyond initial technology.

For analysts, understanding a company's strategic positioning—such as Anthropic's multi-cloud/multi-chip approach or Canva's early AI integration—is as critical as evaluating its core technology.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

A decade ago

Swisher notes that at this time, the majority of today's top 20 private tech companies would have already gone public at their current scale, highlighting the trend of companies staying private longer.

Five years ago

Describes Coatue's internal investment benchmark as the '$10 billion public company test,' a standard that has since been significantly raised.

Post-2021 market cycle

States that Coatue refined its investment strategy to avoid investing in pre-revenue companies with no product at very high valuations, a lesson from the previous market peak.

Last six months

Identifies this period as critical, with the emergence of advanced AI coding models from Anthropic and OpenAI causing investors to fundamentally question the long-term terminal value of SaaS companies.

Next three to nine months

Predicts this is the timeframe in which the true impact of AI on the SaaS market will become clearer as corporate earnings reports begin to reflect the technological shift.

Suggested prompts

How does Swisher's framework for AI company margins (lower gross, higher operating) account for the escalating costs of model training and inference over time? &nearr;Given the extreme concentration of value in a few private companies, what are the systemic risks to LPs in mega-funds if one of the top four fails to exit successfully? &nearr;Swisher's miss on Anduril was due to a SaaS-centric P&L focus. What new frameworks or non-financial metrics should investors use to evaluate AI-native companies that don't fit old models? &nearr;If AI companies achieve explosive, non-linear growth as Swisher suggests, how does this change traditional venture capital portfolio construction and the concept of follow-on funding rounds? &nearr;

Key concepts

AI Company Financials 1 ep Venture Capital Fund Strategy 1 ep SaaS vs. AI 1 ep Private Market Investing 1 ep Company Valuation 1 ep Investment Thesis Evolution 1 ep Market Concentration 1 ep Company Analysis (OpenAI, Anthropic) 1 ep Total Addressable Market (TAM) 1 ep

Notable quotes

“we have this test internally, right? Where it used to be five years ago, we called it the $10 billion public company test. Can this be a $10 billion plus public company? That bar has changed in this new world because we are tackling much larger markets than we used to. And so now that test is, can you be just an enduring public company? And that may mean 50 billion of market cap. It may mean 100 billion of market cap.”

Lucas Swisher · Insights from Coatue's Growth Investor Lucas Swisher

“your terminal operating margin may actually be higher in this world than the last world. Your gross margin might be lower, but your operating margin, which is ultimately at the end of the day is really what matters, may end up being higher.”

Lucas Swisher · Insights from Coatue's Growth Investor Lucas Swisher

“We have this chart internally, which just shows at each market cap band, the percentage of companies that 10x. And the counterintuitive thing is as you go up those bands, the percentage increases. So from a $10 to $100 billion valuation, I have a better shot at picking a 10x, not like a better return, a 10x than I did in the prior band.”

Lucas Swisher · Insights from Coatue's Growth Investor Lucas Swisher

“If you look at the private markets today, take the whole private market ecosystem, 20 companies have generated 80% of the enterprise value.”

Lucas Swisher · Insights from Coatue's Growth Investor Lucas Swisher

Report last updated: Apr 21, 2026

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