The battleground for AI startups is constantly shrinking like the map in Fortnite. Foundation models like Anthropic's Claude are aggressively absorbing features, turning what was a standalone product into a native capability overnight. This creates extreme existential risk for application-layer companies.
As a survival strategy, expect to see multiple mid-scale B2B startups ($50M+ ARR) consolidated into single entities at very low valuations (1-2x revenue). This "Frankenstein" approach is seen as the best remaining option to create a larger, more viable company from a collection of underperformers.
With so much flux from AI, betting on undervalued "bargains" is a losing game. The smarter play is to be a momentum investor, buying stocks that are already winning. Their success creates a flywheel of talent and opportunity that is more predictive of future success than traditional valuation metrics.
The threat to companies like DoorDash isn't a new AI delivery service. It's an AI agent that optimizes consumer choice between DoorDash, Uber Eats, and direct ordering. The brand that "owns the agent" wins by commoditizing the underlying service providers, even if their operations remain superior.
Building effective agents requires intensive, custom work for each client—data cleansing, training, and deployment by skilled engineers. Large incumbents lack the agility and cost structure to provide this bespoke service, creating an opening for focused startups who can afford the human capital.
In a sector ripe for AI disruption, Figma is thriving by not just adding features, but expanding its scope from design to a full design-to-code workflow. This, combined with strong leadership and aggressive AI integration, provides a model for how incumbents can successfully defend their position.
Stocks like CrowdStrike, trading at high multiples, are vulnerable. Even a remote threat from an AI company like Anthropic can trigger a massive sell-off because their valuation assumes zero future competition or disruption. This is a reminder of the fragility of being 'priced for perfection'.
AI isn't just a feature; it's a fundamental UI/UX shift. B2B software that isn't conversational or agent-driven now feels "terrible" and dated. This shift is causing a potential "terminal decline" for incumbents who can't adapt, as value accrues to the new agentic layer.
Unlike public companies, highly leveraged SaaS firms bought by PE face a brutal reckoning. With no growth to pay down debt, they must slash headcount and R&D. This leads to a long, nasty grind of declining quality and market relevance, even if customer inertia keeps them alive for years.
Shopify's ability to grow to $12 billion in revenue while keeping headcount flat for three years is a leading indicator of a major shift in tech. Companies can now achieve massive scale without massive hiring, signaling a fundamental change in the relationship between revenue growth and employment.
By shuttering his own multi-hundred million dollar fund to join Benchmark, Jack Altman demonstrated that the brand, network, and partnership of a top-tier firm are now more valuable than the "dream" of being a solo GP. This signals a consolidation of power towards established venture platforms.
As companies use AI to do more with fewer people, productivity gains boost profits but don't create jobs at the same rate. This "ghost GDP" concentrates wealth among a few and risks a long-term decline in broad-based consumer spending, as the generated value isn't dispersed to human workers.