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Why Data is More Valuable than Code by @ttunguz
In “Data Rules Everything Around Me,” Matt Slotnick wrote about the difference between SaaS & AI apps. A typical SaaS app has a workflow layer, a middleware/connectivity layer, & a data layer/database. So does an AI app. AI makes writing frontends trivial, so in the three-layer cake of workflow software the data matters much more. The big differences between an AI & the SaaS app lie within the ganache of the middle layer.
The Multimodal Lake House : Partnering with Lance by @ttunguz
Remember when you took a family photo & Ghibli-styled it? Or that vibe coding session, when you pasted a screenshot of the browser so the AI can help you debug some Javascript? Today, we expect AI to be able to hear, see, & read. This is why multimodal is the future of AI. Multimodal data means using text, images, video, sound, even three-dimensional shapes with AI. These are magical user experiences.
Fighting for Context by @ttunguz
Systems of record are recognizing they cannot “take their survival for granted.” One strategy is to acquire : the rationale Salesforce gives for the Informatica acquisition. Another strategy is more defensive - hampering access to the data within the systems of record (SOR). Unlike the previous software era where SORs built platforms on top of themselves to develop broader ecosystems (in Salesforce’s case Veeva & Vlocity), the AI shift does seem to be more defensive.
DuckLake - Subsecond Latency on a Petabyte by @ttunguz
DuckLake is one of the most exciting technologies in data. While data lakes are powerful, the formats that manage them have become notoriously difficult to work with. “I think one of the things in DuckLake that we managed to do is to cut, I want to say like 15 technologies out of this stack.” How does it achieve this? Instead of building a custom catalog server, DuckLake uses a simple, elegant idea: a standard database to manage metadata.
The Data Decacorn Derby by @ttunguz
Databricks seems to be closing the gap on Snowflake faster than expected. Last week Databricks shared some important updates on their business which allows us to compare the progress of the two companies. Quarterly revenue between the two company shows nearly identical slope, two parallel lines. Snowflake recently exceeded $1b in quarterly revenue mark while Databricks just touched $750m and is targeting $925m for the next quarter. Snowflake’s revenue growth rate has been on a long glide path to nearly asymptoting at 25% year over year.
The Coming Wave of Acquihires by @ttunguz
The Seed Surge of 2021 will lead to a raft of acquihires. In 2021 the total number of US software & AI seeds jumped from 2900 to 4300 - a 49% jump. Seeds fell to about 3000 creating a seed tabletop. Series As moved in lockstep both on the way up and the way down - creating a squeeze. These data form part of a longer term trend of a greater number of seeds but a relatively fixed number of Series As.
Partnering with Maze Security by @ttunguz
Doctors and security research have more in common than you might think. Doctors defend human bodies against an ever-shifting landscape of viruses & infections. Security researchers do the same thing, but at massive scale—protecting thousands of servers instead of a single patient. The doctors’ responsibility are to defend a human body from an ever-shifting landscape of potential viruses and infections. Each human body is slightly different. The research around human health evolves all of the time as well as the research around potential infections.
Patterns Across 5 Years of YC Investing by @ttunguz
Where venture capital flows, innovation follows. And for more than a decade, few faucets have been watched more closely than Y Combinator. An analysis of their investment patterns since 2020 doesn’t just reveal the accelerator’s strategy—it provides a map to the entire startup ecosystem’s next chapter. With Demo Day approaching this week & inspired by Jamesin Seidel’s YC Series A analysis, I wondered how YC investment patterns have changed since 2020.
The IPO Door is Swinging Open by @ttunguz
Who could have predicted that crypto and data center real estate would be the categories swinging the IPO market doors open? In late 2024, I predicted a thaw in the IPO market. We’re now seeing that forecast come to life with CoreWeave and Circle’s IPOs. Neither company is pure-play software, but their strong performances signal renewed investor appetite for the ragged edge of technology. CoreWeave went public in March 2025, raising $1.
Stuck in the Middle of AI Workflows by @ttunguz
Whenever I hear about a new startup, I pull out my research playbook. First, I understand the pitch, then find backgrounds of the team, & tally the total raised.1 Over the weekend, I decided to migrate this workflow to use AI tools, & the process taught me something important about how we’re actually integrating AI into our work. Tools are small programs that expand AI capabilities. ChatGPT might call a web search tool to read a blog post I’d like to summarized.
How Monte Carlo's Daily Revenue Model Rewrote Their Strategy by @ttunguz
Pricing changes are hard. Fundamental shifts in go-to-market strategy tied to pricing? Monumentally difficult. We recently dove deep into one such transformation with Barr Moses, CEO of Monte Carlo, during a Theory Ventures Office Hours. Monte Carlo, a data & AI observability pioneer, moved from traditional annual contracts to a daily revenue model. These were the three most important takeaways for me from the conversation: Monte Carlo customers were used to buying usage-based rather than contract-based & the alignment was an important & critical evolution.
What Level of AI? by @ttunguz
Which level do I want to use AI? I find myself asking this question more & more frequently & I think the answer means at work I’ll be using many AIs - not just one or two. AI Level Use Case Description Chat-Based AI Find the best Italian restaurant in the North Beach neighborhood of San Francisco. In-App AI Find a document or generate an overview paragraph within Notion. Browser-Based AI Deep research queries, such as estimating the market size of data center construction.
1000x Increase in AI Demand by @ttunguz
NVIDIA announced earnings yesterday. In addition to continued exceptional growth, the most interesting observations revolve around a shift from simple one-shot AI to reasoning. Reasoning improves accuracy for robots - like telling a person to stop and think about an answer before they reply. Here’s an example where I asked Gemini to create a financial projection for NVIDIA for the next five years. Reasoning is compute-intensive, requires hundreds to thousands more – thousands of times more tokens per task than previous one-shot inference.
A Banner Year for M&A only Five Months In by @ttunguz
With Salesforce announcing its intent to acquire Informatica & Google’s announced acquisition of Wiz, 2025 is the best year in the last six in terms of M&A value.1 These massive acquisitions, totalling more than $32b propel 2025’s year-to-date number to decade highs - exceeding the fast-money pre-Covid days of 2020. But the total number of acquisitions with disclosed deal values (typically a few hundred million or more) is also greater than any year in the decade.
What's in Your Bank's Wallet? by @ttunguz
Only five months in, 2025 has been the year of stablecoins. A Fireblocks survey of banks conducted in May underscores how quickly the market is moving. 90% of respondents are taking action on stablecoins. 49% of them use stablecoin payments already. Only 10% are undecided on adoption. 58% of respondents use it primarily for an international money movement. 86% report infrastructure readiness with wallets and APIs or partnerships. 75% see clear demand from customers.
Theory is Looking for an Investor by @ttunguz
We’re looking for an investor to join our team. We are seeking people who see alpha in ambiguity, who are passionate about crafting theories about the future & making them a reality. The ideal person : enjoys researching themes & debating the future thrives working with founders to navigate the challenges of building companies in hypergrowth brings an accretive network to the firm values intellectual honesty & candor If you’re interested, apply here.
My Prompt, My Reality by @ttunguz
“Now with LLMs, a bunch of the perceived quality depends on your prompt. So you have users that are prompting with different skills or different level of skills. And the outcome of that prompt may be perceived as low quality, but that’s something that is really hard to control.” Loïc Houssier, VP Product at Superhuman, shared this perspective on a recent podcast. AI products differ from classic software in that the experience is in large part determined by the user.
How AI Redefines User Experience by @ttunguz
What if every software spoke English? We asked this question about two years ago but now they do - with AI we can retrofit existing apps to speak English. I don’t want to have to figure out any particular menu to find a setting or understand how a product manager or designer intended me to use the product. I just want to talk to my computer and tell it what to do.
When Will We Pay a Premium for AI Labor? by @ttunguz
AI agents are increasingly outperforming humans in various tasks, yet they typically cost 70% to 80% less. Will they ever be able to charge a premium? Waymo has reduced accidents by 82 to 92 percent in San Francisco. Waymos monitor more sensors, don’t fatigue, and react more quickly than humans. But, Waymo is often 13-33% cheaper than alternatives. Within medicine, recent studies suggest AI can be at least as accurate as human doctors, in the evaluation of rashes from smartphone photos, estimating longevity, and diagnosing medical case histories, scoring 90% accuracy compared to human doctors who averaged in the mid-70s.
Nobody Wants to Read Your Stuff by @ttunguz
Nobody wants to read your stuff. Writing is about the reader - the infinitely busy reader who has a thousand things to do & three goals to accomplish by the end of the quarter. What will attract the reader? What sentence will propel them to the next phrase to the end? In the past, great content marketers have segmented readers into personas, written witty hooks to entice visitors to dwell.
The Impact of AI on Education & What It Means for Work by @ttunguz
The blocky charts. The ability to solve a hard test problem. The hidden game of Snake. My graphing calculator was a 7th grade miracle. AI is this generation’s graphing calculator. With about 2 years’ of studies, we can draw some conclusions on its impact. A meta-analysis published in Nature showed a medium to large impact on students. ChatGPT’s Select Impact on Higher-Order Thinking Condition/Scenario Effect Size1 Significance (p-value) Overall Effect 0.
A CEO of AI Applications Marks a New Era of AI Competition by @ttunguz
With models rapidly commoditizing in performance, we are seeing different strategies for keeping users on the same models.1 MidJourney is asking users to personalize their models OpenAI has developed a memory Google is offering free-fine tuning as a way of winning share & locking in demand OpenAI has hired Fidji Simo as CEO of Applications Ultimately, personalization & applications are likely to be the two vectors by which foundational model companies compete.
An Explosive New Distribution Channel by @ttunguz
As traffic to traditional websites plummets due to AI answering user queries directly, there is a new explosive form of distribution. “AI agents are now creating Neon databases at 4x the rate of human developers, driving new requirements for instant provisioning, automatic scaling, & isolated environments.” If I ask an AI agent to create a web application, I want it to select all the components : the front end framework, the database, & the hosting service.
No Asterisk Needed by @ttunguz
Election night struck the regulatory asterisk from web3. But it did more than that. It triggered a broader shift of application investing versus infrastructure. The last few years of crypto & Web3 investing have focused predominantly on infrastructure, the databases (called Layer 1s/L1s & Layer 2s/L2s), security, analytics, & decentralized finance or DeFi (typically lending products). But these categories are slowing. In 2025, gaming, real-world assets (RWA), payments, & applications have all captured 10% more venture dollars compared to pre-election.
100 Trillion Tokens by @ttunguz
“We processed over 100t tokens this quarter, up 5x year over year, including a record 50t tokens last month alone.” If the market harbored any doubt for the insatiable demand for AI, this statement during Microsoft’s quarterly earnings yesterday, quashed it. What could this mean for a run rate? Using some basic assumptions1, this implies : Scenario Model mix (% of total tokens) Monthly run-rate after 20 % discount Annual run rate % of Azure Revenue (assuming $21B Annual) High OpenAI 70 % • Claude 20 % • Other 10 % 382.
Semantic Cultivators : The Critical Future Role to Enable AI by @ttunguz
By 2026, AI agents will consume 10x more enterprise data than humans, but with none of the contextual understanding that prevents catastrophic misinterpretations. In this presentation I shared yesterday, this is the main argument. Historically, our data pipelines have served people. We’ve architected complex pipelines to ingest, filter, and transform information in different systems of record: cloud data warehouses, security information and event management systems (SIEMs), and observability platforms. We then interpreted these outputs and acted upon them.
When Every Employee Becomes an Agent Boss by @ttunguz
If every employee starts managing agents, how does a company change? First, “83% of global leaders say AI will let employees take on more complex, strategic work earlier in their careers.” One executive recently framed this transition of teams evolving to three areas of work : operational, tactical, & strategic. Operational work can be mostly fully automated today. Agents are chomping away at tactical work - better accuracy will improve their share.
A 1600% Improvement in Sales to Lead Conversion by @ttunguz
The ServiceNow team is raising the bar by innovating on our own platform, taking an end-to-end agentic AI-first approach to running our business. We see this in a 16x improvement from lead-to-sale conversion & an over 86% deflection of the soul-crushing work people used to do themselves. ServiceNow reported earnings yesterday alongside Google & many other companies. All the insights out of those reports were interesting, but this was the one that stood out the most to me.
Tokenization as a SaaS Liquidity Option by @ttunguz
When you buy a stock or a bond, do you know which database that transaction is running on? I’m sure the answer is no, but the database will change & that has far-reaching implications. data via Allium Blackrock’s tokenized Treasury fund, BUIDL, has amassed $2b of treasuries so far, with a recent significant surge. This fund is still a bit smaller than BlackRock’s classic Treasury Fund BYTXX at $21b. Tokenized assets, stocks and bonds on blockchains, are at just the beginning.
Rabbits on Firetrucks Redux by @ttunguz
Two years ago I published an image of a rabbit on a fire truck to demonstrate how effective image generation was for blog posts. The conclusion at the time : the images were unusable. In 2025, the opposite is true - with one caveat. Prompt: Coupa & Thoma Bravo logos each in front of a cloud with a plus sign between them. 2023 2025 Two years has brought tremendous professionalism to new image.
Integrations as Competitive Advantage by @ttunguz
Software systems work best when they’re connected to each other. For years, incumbents use deep integrations as a competitive moat. But AI upends this dynamic. A few of our portfolio companies are starting to develop integrations with AI in a matter of hours, completely upending the two or three quarter timeframes of classic enterprise integration development. This enables two important impacts to the sales cycle. First, the integration a customer desires can be built during the sales cycle, demonstrating the startup’s technical agility.
Social AI by @ttunguz
I want to see how you use AI. The biggest challenge to AI adoption is reimagining workflows, AI is best discovered socially. Midjourney’s launch on Discord was brilliant. As a new user, I knew enough to ask for an image of a rabbit on a firetruck. But by watching others, I discovered I could create vector images, recast photos into Ghibli-style art, change aspect ratios, or convert photos to pencil-shaded drawings.
Speed Running a 50 Year Old Software Category by @ttunguz
We don’t often hear the words speed & ERP in the same sentence. But when researching Doss, we heard it again & again. We’ve always believed fast sales cycles create competitive advantage - nowhere is this more true than enterprise software. Imagine purchasing software knowing there’s a 75% chance it won’t deliver value after a 12-month deployment. If selling software is the business of selling promotions, traditional ERP offers a ponderous path to career advancement.
My Bottleneck with AI by @ttunguz
I’ve been watching my behavior evolve as I use AI more. Coding new projects, I started first by describing a big idea : generate a new website that ingests podcasts and transcribes them. But I quickly discovered this approach was like asking someone to build a skyscraper without blueprints—the AI choked on requests too broad & lacking structure. So I broke the project down into smaller blocks. Write a function to download the list of podcasts in the last week from these sites.
Beyond ARR: How Monte Carlo Reinvented Their Business with Daily Revenue by @ttunguz
Pricing is one of the most complex topics in software. Changing pricing is never simple. It is a company-wide evolution that has the potential to completely reshape your entire business & your customer relationships. Few have executed this transition better than Barr Moses, Co-Founder & CEO of Monte Carlo. Join us for a candid conversation with Barr as she shares how Monte Carlo transitioned from ARR to daily revenue as the core operating metric for the business.
The Impact of Tariffs on Series As by @ttunguz
With another tariff induced red-tinged day hammering markets, I wondered: Do private markets follow public ones? The data suggests yes—but with a delay & at a fraction of the magnitude. A 1% increase in Nasdaq’s (QQQ) quarterly return translates to a 0.47% rise in median Series A valuations—but only after a two-quarter delay. The inverse holds true as well: when public markets contract, private valuations follow suit approximately six months later at roughly half the intensity.
What do Tariffs Mean for Startupland? by @ttunguz
The new tariffs have markets down broadly. What do they mean for startups?1 In terms of first order effects, tariffs can impact a startup in two ways : the input costs and consumers’ demand. Most software companies don’t import or source critical components of the software from abroad so the COGS / gross margin structure of the company shouldn’t change unless they rely on significant hardware purchases, for example GPUs or robotics components.
Welcome, Bryan and Philip! by @ttunguz
We’re excited to announce our Head of AI, Bryan Bischof, and our first entrepreneur in residence, Philip Zelitchenko. A practicing professor of data science at Rutgers and a Math PhD, Bryan has spent the past two decades building AI and data science practices across thought-leading startups, including Hex, Weights & Biases, Stitch Fix, Blue Bottle Coffee and many others. Recently, he published his learnings on a year’s worth of learnings building with AI here.
A Founder's Guide: Essential AI Implementation Advice for Startups by @ttunguz
As AI capabilities accelerate, effective implementation becomes the difference between wasted investment and transformational success. After analyzing hundreds of AI deployments across startups, I’ve distilled the key pieces of advice that founders and leaders should keep in mind. 1. AI Strategy Fundamentals Start with the problem: Define specific business challenges before exploring AI solutions—not the other way around. Build or buy decision: Evaluate whether to develop custom models or leverage existing AI platforms based on your competitive advantage.
A Founder's Guide: Essential Sales Implementation Advice for Startups by @ttunguz
As startups scale, effective sales implementation becomes the difference between stagnation and sustainable growth. After analyzing hundreds of sales organizations across startups, I’ve distilled the key pieces of advice that founders and leaders should keep in mind. 1. Sales Strategy Fundamentals Start with the right price: Establish pricing that reflects value rather than just covering costs. Define your ICP: Clearly identify your ideal customer profile before building your sales process. Understand sales velocity: Recognize that sales success depends on both deal size and deal frequency—optimize for predictability.