The Weekend Leverage
$500 million in revenue, three years after founding
Well, I did it. My daughter is now in daycare full time, which means I had the capacity to publish two pretty extensive pieces, one on computer vision and the other on the Silicon Panopticon. Still suffering from the “I miss my kiddo blues,” but having the time to bring you writing that delights helps a ton.
It could be worse! I could be having a fight on X with the President of the United States.
We’ll get to that. But first, today’s issue is brought to you by Mercury.
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MY RESEARCH
Computer vision is set to be as big as LLMs. The cost of edge computing and digital cameras have fallen over 80% over the last twenty years, and with the rise of AI, it is finally profitable to stick intelligent cameras in places you couldn’t before. Shoot, more than 50% of Americans now have AI security cameras in their homes! This capability will end up being just as important as LLMs are to knowledge work today. Paid subscribers get access to the 5 markets I’m most excited about and am waiting for new startups to build in.
We are entering the Silicon Panopticon. Surprisingly, the best way to forecast the second and third order effects of AI is to read postmodernist French philosophy. Just as social media and smartphones control people’s behavior in public, LLMs will use their superhuman persuasion to curb “unproductive” behavior in users. Turns out, giving AI read-write access for our brains is dangerous. This post is the first in a new series from The Leverage I’m calling “Tech Canon” where I review the books that I think every technologist should read. The goal isn't a summary, but application. How can we apply the big ideas of important books to today’s tech markets? Check it out here.
Why newsletter bundles don’t work. For a media company to be long-term successful in the age of AI, they have to bundle together multiple types of media with distinct product offerings. The NYT has games and cooking. Netflix has mobile games and television and film streaming. In this Substack Live with my friend Elle, we dive into the ugly math around ARPU, conversion rates, and reader growth for writers that make this the harsh reality.
THE BIG STORIES
70,000 fewer employees, $150 billion more in revenue. Walmart has quietly become one of the world leaders in automation over the last five years. Its new warehouse facilities require fewer and fewer human employees, who are being replaced with a combination of conveyor belts, automatic lifts, and robots. There is a TON of energy right now around robotics, such as news this week that Amazon is building new training grounds where robots learn to drop off packages, so you can expect this trend to increase. The fundamental bet is that computer vision models can be paired with LLMs and some kind of foundation model for robotic movement, to finally make mass robotics possible.
The Walmart story is notable because they didn’t do any of that—they just used existing technology and deployed it in new ways. Conveyor belts aren’t exactly cutting-edge science. This isn’t a story of low-cost labor shortages, either. During the same period Walmart was reducing its hiring rates, southern border crossings in the U.S. skyrocketed.
The simplest answer is the right one—Walmart got religion around technology. And where Walmart goes, the U.S. mainstreet follows. Low-skill labor automation is only going to increase over the next few years. Nearly every VC I know is looking at robotics deals with a surprising amount of enthusiasm—one startup or another is going to crack it.
If this happens, we will be looking at a simultaneous disruption of knowledge work and manual labor all within the same 5-10 year timespan. (Whelp.)
Elon’s silver lining of brain chip money. NeuraLink raised $650 million from all the usual suspects in the extended Tesla universe (Founders Fund, Sequoia, Thrive Capital). Despite getting called a “big-time drug addict” by the world’s most powerful man, Musk continues to be one of the most gifted fundraisers the world has ever seen. NeuraLink is my favorite company of his—this video showing how the chips can change a patient's life made me tear up. Every person on the planet should be cheering for this to work.
VISUAL SIGNAL
The fastest growing startup, ever. Anysphere, the maker of the popular AI application Cursor, raised $900 million at a post-money valuation of $9.9 billion. The company announced they had achieved a $500 million revenue run rate (current monthly revenue multiplied by 12) only three years after founding. Remarkable. My research has found that coding is the one place that AI agents are really working, so you can view this company as a result of what happens when an AI application truly achieves product-market fit.
TASTEMAKER
Ballmer balls out: Some CEOs reap, others sow. Ballmer sowed the success of Microsoft by helping it transition from a consumer company into the enterprise giant it is today. However, popular opinion has often been that he was terrible. In this incredibly transparent interview Ballmer defends his record, discusses his regrets about letting go of the “consumer muscle,” and disclosed how he and Bill Gates didn’t speak for a year (!) while they co-ran Microsoft. A must-listen if you care about this history of software or tech company history.
Quality designer interviews: Susan Kare is one of the most important designers in Silicon Valley history. She invented much of the visual language that we all use today while she was at Apple, and every person in tech who claims to have “taste” should know her name. She very rarely does interviews, but this one she recently conducted with Soleio was remarkably good.
Florida Swampfest: The world is so much more diverse and weird than you can possibly imagine. Channel 5, a YouTube channel I love, went to a festival called Swampfest that I can only describe as a combination of brain damage, BMX, fireworks, and an overconsumption of alcohol. Warning: This video is graphic and is not something to watch with kids around. However, it is real! People really do light themselves on fire, do dangerous stunts, and throw flaming cans of gasoline into crowds of people (seriously). Channel 5 does an incredible job of poking fun at the wild/eccentric attendees while also being respectful to the culture of the festival. A very fun watch.
Until next week, my friends. Paid subscribers to The Leverage can look forward to two paywalled essays this week containing my best and most in-depth research. You can upgrade below to get them in your inbox.