The Weekend Leverage
The Gulf States got AI, Notion goes for broke, and Airbnb grabs attention
Hello from Hilton Head Island, where I am taking my daughter into the ocean for the first time. I don’t post pictures of her online, but envision a baby with rolls like the Michelin Man giggling and kicking in the water. Ahhhhh cuteness.
Hold that feeling close. Welcome to the fourth edition of the Weekend Leverage, my weekly newsletter where I beg the world to let me write about topics that have no political implications. Each week, the world gives me a wedgie and says “no.” This week’s newsletter will, of course, involve the deals floating around President Trump’s orbit. But we’ll also talk about my favorite hike. Let’s get into it.
This week is brought to you by Mercury.
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(Mercury is a financial technology company, not a bank. Banking services provided through Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.)
MY RESEARCH
Not all growth is created equal. If three companies have identical growth rates, how can investors determine which one is more valuable? There are the easy things, such as comparative ratios like LTV/CAC, or whether the growth rate fits into a strategy framework. However, there is a secret third category of growth quality I call investigative growth. It requires hard work to find, but can produce outsized value over the long-term. Paid subscribers get access to all three types of investigative growth I consider important.
THE BIG THREE STORIES
There will be chips. The biggest tech stories of the week all had to do with President Trump’s vacay to the Gulf (not of America). During a trip to the Middle East, Trump announced a huge swath of deals to technologically tie the region to the United States: American semiconductor company AMD announced a $10 billion partnership with Humain, Saudi Arabia’s state-backed AI infrastructure company. Everyone’s favorite AI chip company Nvidia is selling that same organization 18,000 of its Blackwell chips, which typically go for $30-40 thousand a pop, netting a cool $540 million on the low-end.
But wait, there’s more! Amazon? $5 billion in AWS datacenters for the region. OpenAI is considering opening a data center in Saudi Arabia. The economic package, which the AI chips were only a portion of, will be worth over $600 billion dollars. Add in the tens of billions being spent by the UAE backed G42, and suddenly the Gulf states arise as a collective third world power to balance out China and the United States. This amount of spending starkly contrasts with the Biden’s administration’s attempt to tightly control chips everywhere. The thinking is likely that it is better to give American chips and LLMs to Gulf states than to allow the Chinese to do it first. However, because this region has so much excess capital, they are rapidly going to become a major world player in AI.
This feels like AI Mardi Gras. If a company is willing to just lift up its shirt and show off its tech, it gets a few billion in revenue beads thrown its way. There are national security implications here, but I’m not a political analyst. For The Leverage’s audience, what matters is that we have unlocked tens of billions of revenue for aggressive AI companies. AI founders and investors should probably get used to flying Emirates. For those who get good at this, there are riches available: Groq, a chip startup, announced a $1.5 billion investment from Saudi Arabia this year.
We are in the bundle phase of enterprise software. Last week, I warned you that software was going to get very competitive, very quickly. This week in “told ya so,” Notion announced a host of new AI software tools that directly target startups, including voice transcription (Granola) and enterprise search (Glean). Notion can pull data from your other apps and transcripts and feed it into your databases and workflows within Notion. This makes Notion the place where a company can accomplish all of its operational work—it’s essentially an ERP for knowledge labor. It is cool enough that I’m considering migrating all of the operations for The Leverage onto Notion.
Four years ago, I wrote a post arguing that Notion would need to pursue integration partnerships to beat back competitive threats from Microsoft and Google. Add in some LLM magic—and presto, they can take market share from the distracted giants. Again, told ya so. In four years, I’ll cite this post when a bunch of founders become billionaires with money from the Gulf states.
Airbnb becomes AirEverything. In a wildly ambitious swing, Brian Chesky announced that his company would expand into services and experiences. First, I applaud their team for being so aggressive. However, I am worried that this move is ill-considered.
Airbnb’s original vision was to take real world assets, stick them in a marketplace, and connect buyers and sellers who would otherwise never meet. Chesky may have learned the wrong lesson—the initial magic was in digitizing assets that had never touched the internet, not the buyer-seller connection. It used to be really hard to find a place to stay with a kitchen and a host with local recs. That’s not the case with travel experiences like walking tours or cooking classes. These experiences are already available online. Companies like Viator have been working for many years to make this model work. In fact, it appears that the operators that are currently on Airbnb are integrated from other services.
Here in Hilton Head, I thought it would be fun to book a dolphin tour to show my daughter. On Airbnb, this service is available and is hosted by “Monika” for $69.
On Viator, I can find the exact same tour, from the exact same company, even with the exact same cover image for $39.99. Why does knowing the company owner’s name cost me an extra $20?
This is not to say that Airbnb will always be more expensive than its alternatives. But it does mean that the supply-side inventory on their experiences marketplace won’t be unique unless Airbnb spins up a sales team dedicated to digitizing mom-and-pop travel experience companies. Now, they could do that—but that isn’t a strategy they currently have the muscle or culture to execute on. If they really wanted this to work, they should’ve aggressively acquired some companies to build up unique inventory and staffing.
VISUAL SIGNAL
Middle America isn’t ready for AI. A recent Gallup poll asked Gen Z Americans in the “heartland” about their use of AI in the workplace.
The most surprising category of unpreparedness was from healthcare workers. Their field is one of the ones that could most benefit from transcription and LLMs as knowledge companions. Also surprising that this many Gen Z folks are unable to use AI—aren’t young people supposed to be good at computers?
TASTEMAKER
Silent hiking videos. When I’m stressed after a long day, I’ll throw on a video of someone hiking a trail I’ve done so I can remember the peace of being outdoors. Harmen Hoek is my recent favorite. Check out his 7-day hike through New Zealand which goes through a route I did about 18 months ago.
I’ve seen this view live and this screenshot still doesn’t do it justice. Spectacular.