Overview
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Foundation Models: The LLM market has consolidated around 6-7 core players (OpenAI, Anthropic, Google, Meta, Microsoft, X.AI, Mistral) with Chinese competitors like Deepseek emerging; capital requirements now reach billions making new entrants unlikely
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Code Generation: Revenue ramps hitting $50-500M in 2 years with clear leaders emerging including Cursor, Cognition/Windsurf, GitHub Copilot, and foundation model companies' own coding tools
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Legal Tech: Harvey and CaseText dominate law firm/enterprise markets while EvenUp, Eve, and Supio focus on plaintiff workflows; companies starting to automate entire legal workflows end-to-end
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Healthcare & Customer Service: Medical scribing consolidated around Abridge, Ambience, Athelas, and Microsoft's Nuance; customer service dominated by Decagon and Sierra with incumbents adding AI capabilities
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Emerging Markets: Accounting, compliance, financial tools, sales agents, and security identified as next wave markets likely to crystallize in coming months; AI-driven rollups becoming viable strategy
Takeaways
Elad Gil, the prolific investor who backed Harvey, Perplexity, and Character.AI early, argues that after four years of chaos, AI markets have finally crystallized around clear winners. His timing seems spot-on as we're seeing the shift from experimental AI tools to real businesses with nine-figure revenue ramps.
What fascinates me is his observation about the shift from selling seats to selling "units of cognition" - companies like Decagon aren't just augmenting workers, they're replacing entire workflows. The speed is staggering: some code companies are hitting $500M revenue in just two years.
We are starting to see the shift from selling seats, to selling units of cognition. This is an underdiscussed aspect of AI companies in general.
Gil's most provocative insight might be about AI-driven rollups - rather than selling AI software to companies, just buy the companies and transform them entirely. It's a reminder that the real disruption isn't just better tools, but fundamental restructuring of how work gets done.