Keep pulling the thread on Lucas Swisher.
The emergence of advanced AI coding models from companies like Anthropic and OpenAI in the last six months is causing investors to question the long-term terminal value of SaaS companies.
Cotu has updated its internal investment thesis from a "$10 billion public company test" five years ago to a new standard of whether a company can become an enduring public entity with a potential market cap of $50 billion to $100 billion.
Internal data at Cotu shows that the probability of a company achieving a 10x return increases as its valuation band gets higher, making a 10x return more likely for a company valued between $10 billion and $100 billion than for companies in lower valuation bands.
In the entire private market ecosystem, 20 companies have generated 80% of the total enterprise value.
In the entire private market ecosystem, four companies have generated 65% of the total enterprise value.
Large growth funds (e.g., $5B+) are more viable in the AI era than in the SaaS era because AI companies are expected to achieve much larger market capitalizations than top SaaS companies like Salesforce, Workday, and ServiceNow.
AI-native companies are structurally lower gross margin businesses than traditional SaaS companies because they must pay for both cloud infrastructure and LLM usage.
Lucas Swisher predicts that while AI companies will have lower gross margins, their terminal operating margins may ultimately be higher than SaaS companies due to AI-driven efficiencies in OPEX.
Mamoon Hamid's decision to lead Figma's Series A was made when the company had only $500,000 in ARR, based on observing strong usage and retention curves within early customers like Google, Square, and Amazon.
The bull case for OpenAI is based on its strong consumer franchise, a growing enterprise business driven by products like Codex, and significant potential from its collaboration with Jony Ive's design firm.
Anthropic's competitive advantage stems from its strategic focus on coding models as a beachhead into the enterprise and its decision to build its platform to be compatible with every major cloud provider and chip architecture.
The financial outcomes for the current generation of AI technology companies are expected to be significantly larger than those from the previous SaaS generation.