AI revenue can fade as quickly as it grows

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 59:03

   but you and Replit recently passed 100 million ARR. Congratulations, a huge milestone. And you guys have been building for a long time, but right now in the Valley, there's so many companies that are getting to both enormous valuations, but also enormous revenue very quickly. So my question for you is, what do you think about this time where it seems like everyone has to get to insane revenue numbers immediately?

2. 59:27

   Is this good? Is that true? and like what is sort of the new kind of era we're in sort of building in an AI era? So one of the reasons, there are a few reasons that happened that made it so that these revenue ramps are really high. One obvious one is the ROI is really clear. When we make an application for someone and then we put a paywall, like they really like the application they wanted, they're much more likely to pay.

3. 59:52

   But also just like credit card penetration across the world has like reached certain heights, internet stability and activity. There's all these confluence of factors that got us to a point where you can grow revenue fast. That being said, like AI revenue can go up as easy as it goes down. You know, we've seen businesses, I think Jasper is now like an enterprise business, but at some point they had like a really amazing consumer business that they lost all of it to chat GPT, right? Like, so if you're not an AI business, if you're a SaaS business and your investor's like, oh, why don't to have ai revenue well i mean the other thing is like you know easy come easy go you know so and we spent like eight nine years building all this infrastructure to get to a point where where the company took off but we're also still very paranoid like google just released another vibe

4. 1:00:41

   coding thing today and they're a co-spartner of ours and obviously they're going to do it but so many companies are interested in in the vibe coding space right now and and so it's very very competitive and so if you can build a business um that is lasting that is grows slower and compounds over time i think i think there's still a lot of value in it now the question is like are there a lot of investors that want to put a lot of capital into that well maybe you don't need a lot of capital uh anymore and so yes a lot of the capital is going to ai but like you can build sass businesses today that are cash flowing that can grow over time what do you think your moat is is it your brand is it your existing consumers like how do you make sure that you're not you know subject to that i i think there are less moats these days than than than before i mean

5. 1:01:29

   one of my favorite books is uh seven powers uh by hamilton hamler and it just talks about there's seven moats right you know network facts economies of scale you know um so on um i i think that that we have a technology lead in that we built all this technology for so many years. We built a hyper-competitive, amazing team that will continue to produce these technology advancements. We launch a new breakthrough version of agent every few months.

6. 1:02:03

   Elon said this a long time ago, the only moat is continued innovation, rapid progress. And I think that's true in AI today. I think at some point when you reach certain scales, there are certain decisions that you can make that really create structural moats. We're not there yet, but I think, you know, I would say the big labs achieved economies of scale, obviously, right? And that's a moat for them now.

7. 1:02:26

   It's very competitive between like the five of them. But I think it is a game that will play over time. So I was just, as CEO, just constantly thinking about what are the degrees of freedom that we have in order to position our business in a way to create lasting advantage.