Generative AI’s Act Two

With Generative AI’s budding reasoning capabilities, a new class of agentic applications is starting to emerge.

What shape do these application layer companies take? Interestingly, these companies look different than their cloud predecessors:

• Cloud companies targeted the software profit pool. AI companies target the services profit pool.


• Cloud compa

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But despite these concerns and constraints, we still see room for the AI theme to run, either because AI starts to deliver on its promise, or because bubbles take a long time to burst.

GenAI has a user retention problem. And low user retention means GenAI products are not yet providing enough value to their core users to reduce churn or to gain much time in product when looking at DAUs and MAUs compared to other apps.

This is where and why there will be consolidation in the GenAI space. I expect tons of tools to merge in a few pla... See more

- The generative AI revolution is swiftly giving rise to a myriad of startups, with an increasing need to categorize them by their function in the AI landscape, including foundational model providers, infrastructure enablers, and application developers.

- Generative AI is transforming industries across the globe, not just in Silicon Valley, with imp... See more