Foundation model companies are achieving revenue scale at a pace that dwarfs previous technology waves, including cloud and SaaS. This growth is occurring even while AI's penetration into the broader economy remains nascent, suggesting the total addressable market is far larger than currently understood.
The magnitude of AI-native company outcomes is rapidly inflating the definition of a top-tier venture capital exit. The threshold for a top 1% exit has more than tripled in under two years, fundamentally altering fund construction models and return expectations.
A key debate is whether value will accrue to the foundation model providers or the application layer built on top. Currently, being 'in the token path' is seen as critical, but the future depends heavily on the market structure of the model layer and the price of tokens.
The discussion highlights that we are in the very early, 'skeuomorphic' phase of AI adoption, where technology is used to make existing jobs more efficient. The shift to truly 'native' AI applications and proactive, agentic workflows that restructure how companies operate has barely begun.
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