Finally, Data I’ve Been After for a Year

Coatue analyzes the world

In a perfectly rational, functional market, each new data point would allow for a more accurate assessment of risk and reward. In markets bubblier than a 12-pack of La Croix, like the one we are currently in, each additional point of positive data is seen as a decrease of risk and an increase in reward. It’s confirmation bias at its finest. Any anecdote that is positive for one entity means the whole sector is going up and to the right.

The hard part of bubble land is picking which companies will thrive in the long-term. Picking those companies—to invest in or to work at—is key to building generational wealth during a market transition. Only an elite few survive the bubble popping.

Selecting the winner requires a combination of incredible insight, paired with incredible intuition.

Coatue, a public and private market technology investor with about $50 billion in assets under management, recently published a 102-slide deck to help contribute to the insight column. It offers troves of data that I haven’t seen anywhere else.

Today I thought it would be worth distinguishing between the very good data Coatue has determined as signal, and the bubble noise in the deck. The Leverage is the email where you get the most value in the least amount of time. So in that spirit, let’s tell you what it got right (and what it might have gotten wrong).

Crazy growth (inside of fake markets)

What took Instagram, Tiktok, and Facebook seven years, ChatGPT has accomplished in under three: 800 million users. Keep in mind that ChatGPT did this with no built-in network effects, no virality, no social feed, no contact-list hacking. It has, of course, had some marketing. But the majority of this adoption has been driven by good old-fashioned consumer utility. People like it, so they use it.

All images are from the Coatue deck.

Currently, 42% of U.S. businesses have paid subscriptions to AI—this isn’t just kids cheating on homework and Studio Ghibli image generation.

As I’ve written about previously, AI coding is the one use case outside of consumer chatbots where agents are really working. In the last year the market has added $1.3 billion in net-new revenue.

This is a story we’ve discussed before. However, near the end of the deck, I saw a mistake that I think is indicative of what is happening in VC and startups right now.