It’s been a busy week with a few long posts, so today a short post.
Also, Random Walk is embarking on a short vacation with the fam, but regular programming will resume Tuesday next week.
For today:
foundation models, getting paid (and retention smiles)
xAI getting paid?
“AI Native” companies going gangbusters
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Some charts about AI revenue
Just some random charts about AI-related revenue
Foundation models getting paid
For the biggest horses in the race, the early returns to revenue are impressive.
Retention for the brand name tools is good to great:
70% retention for ChatGPT and 75% retention for Anthropic.
Both curves “smile” in that they get better over time. Even Midjourney, the image maker, has seen some moderate improvement lately.
ChatGPT Pro sales continue to take a larger share of the overall ChatGPT pie, albeit slowly:
GPTPro revenue is just under 6% of total.
Earnest estimates that only 0.7% of paying OpenAI customer subscribe to Pro, so I guess that means there’s a lot of runway? Also, this is consumer data, so it doesn’t capture what businesses are doing (but consumer is apparently ~75% of OpenAI revenue, or was as of recently).
In all events, OpenAI seems to have taken a bigger slice of the overall pie, recently:
~62.5% of consumer AI spending is going to OpenAI (an increase from the Fall).
Truthfully, this data doesn’t tell you all that much, in the bigger scheme of things, but those retention curves are pretty swell.
xAI getting paid
I have no idea how Sacra presumes to know this, but xAI appears to be growing pretty nicely also:
Revenue went from $5M to $100M, so that’s not bad.
Idk if this includes regular twitter premium subs? Or how exactly it relates to Starlink revenue, but there’s a method in there somewhere, I’m sure.
xAI is still a rounding error next to OpenAI:
OpenAI went from $200M to $5B in two years.
I guess that’s pretty good, too, although again, I’m not sure where the $5B number comes from…I suppose just extrapolating growth from the last official count of $3.7B?
Again, grain of salt on this revenue data, but y’know, pretty pictures, at a minimum.
AI “native” apps getting paid
And finally, from Sapphire Ventures, a list of AI-Native companies with $25MM revenue (or more)
That’s 28 “AI-Native” companies doing $25MM or more.
In Sapphire’s words:
By our count, 30+ startups reached $25M in ARR versus 19 at the start of the year. A cursory glance at the chart below demonstrates the breadth of GenAI’s impact as we see companies building foundation models, code assistance, data management, marketing, sales, legal, knowledge management, search and customer support solutions . . .
We think that a year from now, this current view will look quaint. Specifically, we believe there will be at least 50 AI-native startups generating $50M in ARR while still growing north of 50%, including several more that cross the $100M threshold.
Why Sapphire refers to “30+ startups,” (while listing 28),1 or why it includes Anduril, a defense-tech company with a substantial hardware component, as an “AI Native” company, is a little mysterious, but the broader point stands.
Other links
Healthcare stocks are down. Opportunities abound. Infinite spending, where no one makes any money.
Anduril doubles revenue. Venture-backed defense company hits $1B in revenue, planning a $100M tender (valuing the company at $14B). Cool.
Startup funding to Creator Economy rebounds. Funding rose 51%, outpacing startups as a whole.
“accidents waiting to happen” in private credit. KBRA estimates that defaults will rise from 1.9% to 3%. Could be.
US deaths expected to outpace births, within the decade. Because population estimates are always revised downwards.
The ‘Cassandra of passive investing.’ Good read on Michael Green, the guy who sees passive investing as hoisted by its own petard.
a good year for Wall St. isn’t the same as a good year for banking. Big banks are doing well, but it’s all fees and trading, and not lending. Banks outta the banking business is an old Random Walk theme (although query whether the un-inversion changes things).
CBRE buys the rest of Industrious. A bet on coworking.
Previously, on Random Walk
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It’s also possible that I can’t count, but I did count it twice, and came up with 28 both times.