The Altman Put

Are tokens the new economy stimulation tools?

I was at dinner with a PE partner the other week who made a point of telling me how few software companies they had in their portfolio because of their AI-disruption concerns. I’ve heard a version of this from a number of other PE friends too. It would have been an unthinkable statement to make three years ago. The AI super-cycle has a way of making you feel like it’s both the end and the beginning of many industries.

Factoring in Capex, investment and M&A since 2017 (but not including the equity upside from the public stocks), you can get to a number of ~$2 trillion which has been spent on AI. If you squeezed that into a single year, it would be roughly 0.5% of world GDP. Maybe just about enough to call it the ‘Altman Put’ effect?

I occasionally catch myself wondering how the world would feel if this AI wave hadn’t happened. I suspect that without the Mag-7 growth (outside of which the S&P 500 is basically flat over the last three years), we’d be making a lot more comparisons with the 1970s. Although to be clear there would still be plenty of structural change happening around you:

• Attention saturation is resetting media models

• Tariffs are upturning international trade models

• Population demographics are rewriting government spending models

• Drones are reshaping military models

• Climate change is rebooting our definitions of long-term

• Etc.

One of the things I love about changing environments is that it gives you a rare opportunity to evaluate management in sectors which rarely change this much, this quickly. VC is a great example. Normally you need about twenty years to know whether VC partners are any good (my simplistic distinction between investing and investing-to-make-money).

I’ve had a lot of quiet conversations with VC partners to kick around ideas of what their firms need to look like in the future. Change is just beginning here. For example, I’ve been fascinated to see how some firms are reconfiguring more like PE firms. General Catalyst, Thrive Ventures, Asymmetric and Elad Gil are now actively investing into vertical AI roll-ups (think Constellation Software but with AI). Unthinkable a few years ago.

In fact, AI is an interesting case in point where one of the biggest opportunities will be in the least technical (and thus least VC-suited) area: consulting and training. There is a broad sense that some combination of agents, co-pilots and humans will allow businesses to ‘adopt AI’. But I think almost every technology company is radically underestimating just how human companies can be. That’s also a challenge for VC models.

Other things

I would like to speak to some high energy BD/sales pros who have come from the consulting and/or corporate training world for a secret AI project. Please DM me if that’s you or if you’ve had a great experience with someone.

I’m becoming increasingly obsessed with ancient tattoo analysis and feel there might be a Scroll Prize type of opportunity here to unlock some very cool things. I would love to talk to more people about this.

Kate O’Loughlin asks who will write the AI playbook for kids?