The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 48 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 1 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Tunguz: AI app gross margins will expand as inference costs drop 95%
“And when we were looking like a typical software companies, probably at 75% gross margin. Yeah. AI software application companies are like a zero to 30%, and now their single biggest cost has been reduced by 95% overnight, and they didn't have to do a thing.”
Tunguz predicts AI startup margins and multiples will match classic SaaS
“Before they used to have Challenging gross margins. And now they'll probably look the same as SaaS companies, which means you have pretty significant multiple and valuation expansion.”
Tunguz: Software startups tripling growth without AI are a hard sell
“If you're tripling, doubling without AI, it's a hard sell.”
Tunguz: AI is in a "Groupon era" where GTM outpaces product differentiation
“It's a Groupon era for AI where one company takes off and then there are 15 to 20 others because you're wrapping the API, you have a lot of capability out of the gate, and then long-term product differentiation probably matters less than go-to-market execution…”
Tunguz: Enterprise app counts will flatline while total software spend rises
“And so I think maybe what we see is application count stays flat or maybe even decreases, but the total amount of software spending increases because it's capturing some fraction of that labor spend.”
Tunguz: The 20-year SaaS go-to-market playbook no longer applies
“The playbook that we've built over the last 20 years, basically no longer applies. And we need to re-instrument and re-determine what this new world looks like.”
Tunguz: Series A ticket size valuations increased 42% over two years
“In fact, valuations at Series A ticket sizes have increased 42% in the last two years.”
Tunguz: AI agent startups struggle in mid-market compared to PLG and enterprise
“We see most AI agentic software companies, people who are selling software that replaces labor, they either sell at the bottom, PLG, bottoms up, or they sell at the very top. Mid-market is much harder.”
Tunguz: Founders expect valuations to match 2022 and 2023 levels
“They expect their valuations to be the same as in 2023 and the same as in 2022.”
Tunguz: SaaS survey shows AI has no impact on ARR growth
“AI today has no impact on conversion rate, has no impact on ARR growth, even though people who buy AI perceive it as a meaningful contributor to their overall efficiency gains.”
Tunguz: AI buying barrier shifted from security to ROI
“Six months ago, we were asking them, what is the number one prohibition, the thing that inhibits you from buying AI? Six months ago, the answer was security. Today it's ROI. People are struggling to find exactly the value that AI systems are building.”
Tunguz: Pricing model drives statistically significant performance differences in software
“There's actually a statistically significant difference in the underlying performance of these businesses as a function of their pricing model, irrespective of the layer in the stack.”
Tunguz: 81% of peak venture dollars came from non-traditional VCs
“US venture funding has gone from eight to 300 over 15 years. It's now falling to about a 150 because 81% of the dollars invested in venture capital at the height of the boom came from non-traditional venture capital firms who are all very likely to leave.”
Tunguz: Public company signed $100M infrastructure deal with under 3% utilization
“There's a friend of mine who is part of a cost cutting exercise at a major publicly traded company. They had signed up a three year, a hundred million dollar infrastructure deal with less than three percent utilization.”
Tunguz: Hybrid seat-and-usage pricing yields 3x net dollar retention growth
“If you're using a combination pricing model, in other words, seats plus usage, three X the growth in that dollar retention as somebody who's using any other form of pricing.”
Tunguz: AI will transform vertical SaaS at cloud computing scale
“The big theme about machine learning is, it's going to change the world of SAS because all of a sudden, it's not just, The machine learning innovations will happen in the core categories that we've seen in the past. Those horizontal companies selling to custom…”
Tunguz: AI algorithms are commoditized; startups must build proprietary datasets
“The algorithms themselves are not that innovative. They're not that close source. So you, we're going, the company that's going to really innovate is going to need its own data set to be able to train its own models.”
Tunguz: AI innovation alone fails without a strong go-to-market advantage
“A machine learning innovation, in, in and of itself, is not enough to generate substantial customer demand. It has to be able to change the go-to-market.”
Tunguz: AI technology advantages do not automatically lower customer acquisition costs
“Like, let's say you know, you create the next version of Zendesk that's got a whole bunch of ML. It's not necessarily that that technology, you know, that Intel inside technology is going to all of a sudden reduce your cost of customer acquisition relative to …”
Tunguz: Lead VC check sizes are up 42% in 18 months
“Right, but check sizes are up, the lead check sizes are up, 42% in 18 months.”
Tunguz: 95% cheaper AI models will drive 10x-100x usage increases
“If DeepSeq like models with great reasoning, and 95% cheaper. Not for companies will just like 10 X or a hundred X the use and probably keep the margins the same to get to a much better user experience. As a way of differentiation, right?”
Tunguz: Series B through D VC funding market is starting to recover
“After 2022, the series B through the D market was effectively dead and it's starting to come back.”
Tunguz: Portfolio startup keeping engineering headcount flat using AI IDEs
“We have one company growing really fast. Engineering headcount year over year will be flat. Because they deploy some AI enabled ID and they can write a lot more software.”
Tunguz: AI for sales lead analysis works accurately 80% to 85% of the time
“But if I use ChatGPT or OpenAI or a call recording software to determine what's going on with a lead or customer prospect, state-of-the-art says it'll work somewhere between 80 to 85% of the time.”
Tunguz: Software usage is compressing as companies cut major SaaS vendors
“What we've seen in the last six or seven months, most notably with Klarna announced cutting Salesforce and other major software products as a way of reducing costs is in fact the opposite. There's been a real compression in the use of overall software.”
Tunguz: Software burn rate dropped from $5 to $3 per ARR dollar
“During the twenty-twenty era, most companies were burning five dollars for every new dollar of bookings. When the capital markets retrenched and the Fed raised rates, 550 basis points. Companies went from burning five dollars for every dollar, marginal dollar …”
Tunguz: Average SaaS company raised sales quotas 14% year-over-year
“So the average respondents company increased quota, 14% year over year, which is higher than inflation.”
Tunguz: Top-quartile SaaS net dollar retention dropped from 130% to 120%
“Top quartile used to be around a 130%. Now it's about a 120%.”
Tunguz: Founders are more positive than in 2022 despite longer sales cycles
“In terms of what we've noticed, founders are more positive today than in 2022, despite the fact that sales cycles are about 12% longer.”
Tunguz: LLMs replace 3 to 12 months of SQL training for data analysis
“It's really much easier for someone who's maybe not be as sophisticated with SQL to suddenly start asking and answering questions of their data in ways that would have taken them three, six, 12 months to learn beforehand.”
Tunguz: Theory Ventures produced its first investment memo summary using an LLM
“We record the conversation so we don't have to ask them to repeat, and we're starting to save all that information, produce LLMs on top that summarize diligence, and we produced our first investment memo summary from an LLM.”
Tunguz: LLM-generated blog titles deliver 3x to 4x better click-through rates
“And so if I take like a blog post that I've written, and then I ask one of these models to produce like three or four suggested blog post titles, I actually get three to four times Better click-through rates on the titles, because I'm aggregating all that, tha…”
Tunguz: Machine learning simplifies to just four core capabilities
“Machine learning is really simple. All it does is it teaches the machine to find patterns and data, and there are four things that you can teach a machine to do.”
Tunguz: Google's WaveNet generates speech indistinguishable from human voices
“Google has a product called WaveNet. It's a computer that speaks so well that no human can tell it's a computer.”
Tunguz: Microsoft achieved human parity in speech recognition in 2016
“Microsoft released some research in 2016 that a computer can understand human speech as well as another human.”
Tunguz: Google released a zero-shot translation model for unseen languages
“And Google released a machine translation algorithm that will translate from English to any other language even if it's never seen that language before.”
Tunguz: Google, Microsoft, and Amazon will dominate foundational AI APIs
“Google, Microsoft, Amazon, they will be releasing the APIs that lots of companies will be building on, competing with them. You may want to compete with them, but we will likely not invest in that because it's a very challenging go to market strategy.”
Tunguz: Off-the-shelf AI models only hit 80% of required enterprise performance
“You can take a generic NLP or speech learning model and you can get 80% of the way there, but in order to really have a fundamentally new experience, you need to get it 95% of the way there, and you can't do that with just off-the-shelf algorithms. You're goin…”
Tunguz: Machine learning products succeed when they operate invisibly in the background
“That's a great, ah, analogy for how machine learning succeeds. And what I mean by that is, it's not in your face. It's hidden in the background. It's doing the work behind the scenes.”
Tunguz: AI startups must pitch customer value without mentioning machine learning
“Can you pitch your startup without saying machine learning? And what that means is you're not focused on the technology. You're focused on the value proposition. You're focused on why the customer is going to care about it. Why the buyer is going to be promote…”
Tunguz: AI interfaces must set user expectations deliberately low to build trust
“What it really comes down to in order to get people comfortable with UI, particularly interactive UI, is being able to set the expectation of the user appropriately, and then and that means much lower than you think it typically ought to be. And then the secon…”
Tunguz: The first ML SaaS startups will hit $15M ARR by 2018
“I think we're in the world of, like, there are very few SaaS companies that use machine learning at scale, and I think maybe next year we'll be talking about the first handful of them are, that are 10 or fifteen million in ARR, and we're going to be trying to …”
Tunguz: Theory Ventures raised closer to $700M across two funds in 14 months
“A little less than that. Closer to 700, but.”
Tunguz: Customer acquisition payback periods increased 12% on average
“We've seen payback here has increased about 12% on average. This is basically linear. It's in line with the increase in sales cycles.”
Tunguz: Top third of SaaS companies saw 40% lead conversion increase
“And then the 70, the second standard, the first standard deviation now, which is that line on the right is actually a 40% increase. In sales qualified conversion. So that means the top third of all businesses actually saw a 40% increase in lead conversion.”
Tunguz: Microsoft OpenAI customer count tripled in recent quarter
“You look at the total number of customers that are starting to use Microsoft's OpenAI technology has three X, I think, in the last quarter in the reporting.”
Tunguz uses Midjourney for blog posts after being sued for image rights
“I was unfortunately sued for using an image where I didn't have the rights, and so I learned a very important lesson, and so now all, most of the images on the blog post that I write are mid-journey generated because now I can be confident that I'm not going t…”