Redpoint’s Post

📈 AI applications are projected to generate $1.5T in revenue by 2032 - is this real or is this the ultimate bubble? Many markets are still underpenetrated by software, and AI is not only expanding into those areas but also unlocking entirely new ones that have traditionally been human-powered. At Redpoint’s annual meeting, Scott Raney, Alex Bard, Patrick Chase and Jacob Effron shared unfiltered thoughts on some of the most topical questions in AI today, where value will accrue, which industries are best positioned for defensibility at the application layer, and more. Some takeaways: ➡️ Key questions we’re asking when investing in the AI application layer --> How much does quality matter in the industry? What are the industries where 80% accuracy matters vs 100% accuracy? Many AI agents are replacing areas already outsourced with labor, and some customers have already accepted quality tradeoffs when hiring labor. They’ll likely do so again for lower cost AI tools, creating a potential race to the bottom. In regulated industries, quality matters more. --> Once a company has found early product-market fit, how can it evolve into a standalone business — not just a single use case? --> As markets get more crowded, what happens when demand flattens? Will a few dominant winners emerge, or will the market remain fragmented? Many good businesses will be built — but not all will be venture-scale. ➡️ What we’ve learned from AI startups seeing success now There’s limited data on earliest-stage companies, but we’re seeing two common founder types: --> Young, fast-moving builders with first-mover advantage (in just 6–9 months, companies can become synonymous with a category) --> Founder-market fit founders with deeper industry experience and a long-term POV ➡️ Maturity of revenue is outpacing maturity of company We’re seeing early-stage companies hit impressive revenue milestones — but without the operational maturity that usually accompanies that scale. Investors are paying prices that reflect revenue maturity, even though company maturity hasn’t caught up. A $50M SaaS business is very different from a $50M agentic revenue business. Expect to see immature companies reaching meaningful scale fast — but the fundamentals still matter. 👇 Full discussion 👇 YouTube: https://lnkd.in/dj23k93W Spotify: https://bit.ly/3R7NAX1 Apple: https://bit.ly/42M7A71