Thomas Laffont: The $4T AI IPO Wave, 2026's Unicorn Economy, and the 10X Paradox

Why do you think I waited to make my world podcast premiere for all in? All the ankle-biders called and I said no. I'm just gonna wait. I'm gonna wait until the besties call. CO2 is one of the most successful hedge funds of the last two decades. $55 billion under management. This is their flagship hedge funds. The reason we decided to kind of get into this business is to find great entrepreneurs and find great companies. And they're looking to raise a whole billion dollars more to invest in AI. We're in an idea business and when you have a truly revolutionary idea, it can get really big. I hope to do something a little bit different. Besties, you've been on for a couple hours. You can take a break now for a few minutes. Sit back. We are gonna show you some slides. And we're gonna walk you through really an update on the unicorn economy. So the markets are back. We can see that the unicorn economy on average since September of 24 is up 70%. I think that's intuitive to a lot of us. But what's even more amazing is that the public market has really made the same move up. So if we look at the share of the unicorn economy of the NASDAQ, which had a significant move up since 2015, it's really kind of plateaued over the past few years. And I think it speaks to the performance of public companies like Palo Alto and others. So AI is dominating fundraising. What's kind of interesting in this slide is you can see the share continues to increase. So multiple years in a row now that AI is increasing its wallet share of fundraising. But the composition of that funding has changed. If you look at the unicorn factory, which really peaked in the Zerpar of 2021, we've now really normalized at a much lower level pre-COVID. So mathematically, if you put both together, you can see that the funding per unicorn has increased 5x since 2021. So we have fewer unicorns that are each raising more. Now I'm going to spend a minute on this slide because this slide is really about the health of our ecosystem. So the way to interpret this is if you look at the green line, which is the Preserve Era Unicorn cohort of which there's about 73. You can see that 20 corridors after becoming a unicorn, 80% of them had either raised a new round or exited, which is, I would say, pretty healthy. Now if we look at the 2021 cohort, which is the red line, two things stand out. First, that 20 quarters in, you can see less than 20% less had either exited or raised. But look at the number, 479 versus 73 in the prior cohort. Now here comes this new cohort, what we'll call our 2024 cohort of AI companies, and the key question is what will happen in the future? Which of these cohorts will they resemble the most? So we talked about how AI is concentrating the funding base of unicorns, but what we also see is that the top 10 is capturing a significant share of funding. So it's not just AI companies, it's a small number of AI companies, which probably makes sense since we know that in Thropic and OpenAI are raising massive rounds. And so what I like to think is we kind of have a new index. If we really thought about what the index of the future is, what for now I'll be able to call the magnificent aim, but that number is going to shrink as these companies go public. The first thing that jumps to my mind is, wow, what an incredible group of companies. And look at the diversity, space, stripe, and Thropic, Databricks, Revolut, ByteDance, and a row, we have Internet, we have AI, we have Fintech, we have SpaceTech. I'd feel pretty comfortable owning this index if I could for the next decade plus. And obviously the performance of this index has been incredible, it represents almost $4 trillion of value, and has really crushed the traditional kind of Mac 7. Almost every single one of these names has outperformed that index. We'll go to the next slide. Now another positive sign is that if we look at the exits, the exits are falling. So one of the things that we've talked a lot about with the best deals over the years is we know the unicorn economy is great at consuming cash, but how much cash is it really returning? We need to have a balance between the amount of cash consumed to the amount of cash returned. That's how an ecosystem stays in balance. And if we look, 2026 is actually on a pretty good trend. Not quite where 2021 was, but pretty good. And we still have half a year to go. But that does include three companies that we know will be coming public pretty shortly, SpaceTech obviously in the next few weeks. And we know Anthropic just today, the headlines hit that they've submitted confidentially for their S1. And if you add up the totality of just those three companies, you can see that it's basically going to be more than the 10 years kind of combined. Which ultimately means if you remember and you were there when I presented the first all-in-sum in 2024, we knew our ecosystem was out of balance. We were consuming way more cash than we were returning. Which is just a fundamental imbalance. And you can see that now, even pre-the liquidity events that I just mentioned, our ecosystem is significantly more balanced. And that will continue to improve. Part of it is that the growth rates of open eye and anthropic are unlike anything that we've ever seen. So if you look at this chart, just remember this chart starts in January of 2025. That was only a year and a half ago. Just a few months in, these companies past workday, a pretty incredible HR company. Then it was service now. It was Adobe by the end of the year. Sales forced on the way just in January. Now even bigger than Google Cloud, and Azure. So what can that look like in the future? Well, this is just based on kind of some assumptions and some forecasts, but you can see that we estimate that only not only is it bigger than Azure, but by the end of the year, could be bigger than AWS and potentially bigger than all of Microsoft by 2028. Now these hyperscalers aren't sitting still. They're seeing the disruption. But actually, they're doing more than seeing it. They're actually funding it. Because if you look at the chat GBT moment that we know happened, look at how much these companies, the largest in the world, have invested in enabling and creating this change, truly unprecedented. So I know SpaceX, a lot of people are going to talk about SpaceX. So I thought I would share a little bit of how we as investors think about SpaceX. So that as you think about whether it's a stock that you want to own or you just want to seem smart at a cocktail party, you can benefit from our knowledge. The first thing that pops out when we look in study SpaceX is that the number one driver correlated to the valuation of SpaceX is cadence of launches. Which intuitively makes sense if your business is the launch business, the more you launch the higher your value should be. So I think we see that in the data. But there's another fundamentally different ratio that I want to point you to, which is what if we took the valuation and we divided it by the number of launches, what would that look like? Well, you can see it was kind of in a fixed range for a while and then it really started to move up. Then we believe that markets are rational and so we started thinking, well, why is it that the market is valuing SpaceX higher on a per-launch basis when it's launching more than when it was just starting out? And my fundamental view and we'll kind of call this our co-to framework is that the reason is that the quality of SpaceX's business model increases the more you launch. So in phase one, which we call pre-constilation, you're just trying your rockets and we know rockets are hard and maybe you have a few government customers and that's a one-time revenue business and it's unpredictable. Then you get into your initial ramp and now you might have one constellation. So why is a constellation important? Well, it's an end market and it's a recurring revenue business. The more satellites you put up, the more subscribers you have, the more revenue, etc. Now you can move from ramp into scale. Now you don't just have one constellation, you have multiple constellations. And ultimately we believe that a wide variety of companies and governments and militaries will want to own their own constellation so they can control their own destiny. So now you move into being a scale business which ultimately becomes a platform. And we know how valuable these platforms are in this technology age. And platform means not only do you have many more customers in your core business but you also have new businesses. It could be space data centers, it could be the optionality of the moon and Mars and other space applications. Now we know when defining feature this era has been how quickly these companies are scaling and if we just look at whether it's the PC or the internet or the mobile and the topic in particular is scaling no other company that we've ever seen. Now this was kind of an interesting analysis and this is one I'm curious to kind of discuss with the besties but we looked at essentially three buckets of companies and we said okay within each bucket what is the likelihood that you will have a 10X which I would view as an investor maybe not a seed investor like J. Cal but for us as growth investors wow a 10X is pretty good they're hard to find. So the data showed us that if you're a unicorn the odds of you one day becoming a decacorn are about 8%. If you're a decacorn so that means you're over 10 billion the odds of you becoming a 100 billion are company not much better 8% to 13%. But how interesting that if you're a cent to corn 100 billion or more the odds and by the way we're putting in public and private companies you now have a 31% chance of having had a 10X. This kind of flies in my opinion in different than maybe we would have expected. And if we look at how quickly these companies are creating value this is a chart that I kind of added at the last minute because the data is so fresh but you can see it typically takes multiple years to go from 500 billion to a trillion a market cap. Well something happened very recently in the public market which is that not only did we have three companies do it in the same year but we had two companies do it in a matter of weeks. So we can talk about what conclusions to take from that. Now even as these companies were scaling incredibly quickly from 500 billion to a trillion we had other companies take a long time to succeed. And this is a company called Sirrebers that just won IPO so I thought it'd be a good candidate I was very proud to be a board member for a long time and led the series B. But if you look at the company's funding history you can see why I put the little construction icon that it took a long time and there was some dark periods multiple years of no new capital of hard grind to develop their technology all of that time leading up to a massive open AI contract which then can tuple the value of the company. But we know Sirrebers has been successful and frankly it's not just Sirrebers, Semi's are on a generational run. I was just talking about this with my friend Gerson earlier this is just since 2024 the All-In Summit. You can see how much the semiconductor industry has outperformed the index. So what will happen in the future? One takeaway from having listened to a lot of speakers this morning is that there seems to be wide agreement that the more an AI system knows about your business or you as a user the more useful it is. You want to know when you go and book a restaurant that it knows already your preferences whether it's what time you like to eat or what food you like to have etc. So we think ultimately that in this era the amount of memory per user could can tuple just based on the demand that these AI systems are requiring to provide their services. That helps explain why we've seen some of these moves in these memory companies. And then I want to finish on a point that I think has a lot of controversy which is where is the revenue. If we remember over the past 12 to 24 months there's been a lot of discussion about is there revenue, is there ROI, where is this associated with? So we tried to look and see okay what is the size ultimately of the AI ecosystem. We believe that it's about 140 billion today. It'll be about 300 billion this year and it'll double in 2027. So where is that revenue coming from? Well, if we break it down we can see we kind of estimate three key pillars to this industry. One we know consumer, number of subs, times an R-POO, that gives you your consumer revenue. One that I think a lot of people forget but it's ads. We estimate currently that about a quarter of ads served by Meta and Google are AI enabled. We think that penetration will eventually go to 100%. That's 150 billion. And then obviously we all know about the breakthroughs in enterprise and what clot code and codex are doing inside of those businesses. So if you add all these together you get a good sense of the size of this ecosystem. So this will be kind of my second or last slide. One thing that's different to me about this era versus the prior era is in which I was an investor is that almost every sector of the economy is being transformed at the moment. So we know some of the obvious ones software. But look at telco. I believe that within a few years Starlink will power a device which will actually enable you to make a phone call anywhere in the world. And we think that's a solve problem but every time we get a drop call we get reminded that there's a better technology out there. So back to Nikesh's framework on profit pools. I think the Starlink profit pool is the telco global profit pool of broadband and wireless. We know compute is driving massive changes in semis. We had senators earlier on telling us how data centers have changed the energy equation in Pennsylvania. Just think about the auto business. I'm sure a lot of us followed what happened in Ferrari last week trying to introduce a new technology of electric and autonomous begging the question of what is the future of that franchise in an autonomous and electric world. And I think the response to that car kind of fed into this narrative. And then obviously in consumer we know GLPs are having a profound impact on consumption of food, alcohol, composition of diet and a huge focus kind of on wellness. So if we put all that together what are our takeaways? Well my first takeaways that the new unicorn economy is healthier. And we really have kind of AI to thank for that. The winners are compounding faster than ever which means the cost of not being in a winner are higher than ever. Disruption is impacting every part of the global economy. And by the way we don't even have super intelligence yet. So if I think that it was about two years since my last all in summit I started thinking well gee what could this look like in two years. And we know it's going to be a really interesting time and thankfully we have a great group to help us navigate what the next two years will look like. We're going to give this a title, the power law rules our lives. The power law rules our lives. All the great gains are being consolidated into small numbers of companies. But we're still seeing strength in those. How do you see the private market ecosystem that game on the field evolving because of the state private longer and these extraordinary outcomes. Obviously I operate in the earliest stages. You have people who are doing series a's like craft ventures. You have yourselves dipping down into private but I was talking to Brad Gerson who you discussed earlier. He was like I have to figure out where to put my time. We have early stage and they do obviously public like yourself. And then add to that you have people like entries in Harowitz maybe going for the average in a major way. Indexing venture. What is the playing field going to look like for people who are LPs, angel investors, venture firms. How does this all sort out into a cohesive strategy over the next decade or two because it's clearly the private markets are operating much differently than the playbook 20 years ago. Yeah. So I think the first breakdown I would submit is on the positive side of the ledger the outcomes are big. We're seeing outcomes that we never thought possible in private companies and I think that's good just generally. for our ecosystem. So we have big outcomes. It's really why I wanted to kind of show that space slide. It was somewhat counterintuitive to me on the launch business. Why is it that the company would be valued more as it launched more? So I think at least we have a number of big outcomes. And those outcomes will be public within-- it seems like a 12-month period. So if I think about the ZERP era where the outcomes were smaller and companies were not going public, I think at least in this era, we have big outcomes and a desire of these companies to go public. I think both anthropic and open AI are both publicly saying that they want to be public. So I would say that's good. I'd say the biggest issue is it seems like we're talking about K-shape and power law in every aspect of life. And it seems like that's the case in startups as well. So we've seen, if you looked at my center corn slide, we've really kind of been stuck at this number for a little bit now. So I think, Jake Al, I think the point that you're asking is if we were to see no new center corn right in the next decade, we've basically not really seen any new one in the past couple of years, I think that's going to be a warning sign kind of for us. What does this mean for where capital allocators should be thinking about putting their money? Because what you're showing here, a rational person who's an LP, we just say, wait for whoever gets to $100 billion. And YOLO, every dollar you can in there. Because it's the most sure thing. It's the least brittle. It's the least amount of effort. And it's the quickest return. But as we know, supply demand equals valuation. These valuations are disconnecting from any valuation metric we've ever had. We had it explained to us today by Bill Ackman, I think, quite accurately. You're making venture investments in trillion dollar companies and giving them 50 times revenue, 100 times revenue evaluation. So talk a little bit about where people should rationally as a limited partner, as a private investor, a high net worth individual, ultra high net worth. Which should they be putting their money to work? And do you worry about this? Everybody racing to be in three names. Yeah, look, that obviously was the right strategy for the past five years. The question is about the next five years. Correct. So the one pushback I would have just on the valuation argument is these are not fake companies. No, absolutely not. I think we have to-- I remember the bubble in 2000. I also remember 2021. These are companies generating substantial revenue at scale that are growing faster than anything we've ever seen. So these businesses are real in their performing. And I think it was widely shown that in Thropic, even had a profitable month, I believe, is what was reported. So they're also kind of profitable. But ultimately-- and I think, Tramath, you agree with this-- the public market is the great test-- - Globalizer. - Yes. - Yeah. - The scale. - It will be the great antiseptic. It will not care about my bullshit presentation. Or-- and so I love that. I love that these companies are going to face the scrutiny, both SpaceX, OpenAI, and in Thropic of the market. And ultimately, I'm a big believer in the market. And so I'm very excited to see these companies go public withstand the scrutiny of short sellers, pontificators, debaters, politicians, kind of, et cetera. - Let me ask you two questions on that. The first is very tactical, which is normally we would say that the antiseptic or the disinfectant happens on T equals one day. Now the rules are changing. There's going to be a lot of passive buying. So it's going to move out that date, because you're going to have to wash through a lot of supply demand. So that could maybe-- - Six month plus one. - Six month plus one is when you'd say we can really start to get a sense of what these companies are. OK, so that's a tactical question. The more strategic question, Thomas, is do you think that there's something structurally inefficient or wrong that's allowing these compounders to accelerate at scale? Is that a market efficiency problem? Or do you think that's just a survivor bias? And we shouldn't look too much into that. How do you look at that? - I don't want to read too much into it because the end of those companies is so small. And look at Anthropic. Anthropic pre-clot code was a completely different company than post-clot code. So one event completely dentured the trajectory of almost that entire industry. So it's hard for me to know whether these companies were like the Mule in the foundation series, something that could never be predicted and just came out of nowhere. And it was just a one-time thing. We'll see. I do think that the narrative of, oh, these models are commodities and these companies are going to get-- I think that's been pretty thoroughly disproven now. - How do you, as Cotu, your asset base as well, you've expanded strategy, you're not doing data centers, you're doing many things. How do you keep it all organized when maybe a slide like that would say, hold on a second, maybe we should have just plowed $10 billion into Anthropic? How do you balance that? - The reason I make a deck like this, and in some ways I should thank you guys because when I do something like this for you guys, then it is a tremendous amount of time from myself and our team, and we really want to present you with accurate information. So the past two weeks is pretty much been a full-time job doing this. But for me, it re-enkers my conviction around what to do. I can't go and listen to 1,000 people, and then I get distracted, and I don't know when I'm thinking anymore. So going back to these ground truths of numbers and valuation, bring me back to a point of, OK, conviction. So for me, whenever I try and understand the world, I go back to, OK, what do I understand? I understand models. I understand numbers. Let me go back and peel this out. What I think, hopefully, the deck will show is, look, there is substantial reasons for why, right? If you look at the trillion dollar companies that became trillion dollar companies in a matter of weeks, these are not fake companies. These companies have been around for decades, right? And they traded the lowest multiple of earnings of the S&P 500 of almost any other company. So there is kind of something kind of real up and end up energy there that just got released, correct. And now it's like, well, someone made a point to me on you like this on memory, right? They said, if I want to design a chip like OpenAI, I can go to TSMC. And I know it's hard, but at least I have TSMC to help me. If I want to make memory, well, there is no TSMC. So what should the memory multiples be versus ASIC chips as an example? The wrath of Lena Khan can be seen clearly in this and sacs I want to get your input into how policy and elections matter when it comes to outcomes. - As I saw, I don't know if it was this chart, but the chart where you show the odds of eSategory reaching the next level, the-- - Would you have predicted that at a trustee? - No, it's very counterintuitive. Where my mind went was extrapolating one more, which is what are the odds of the trillion dollar more cap companies get to 10? And the last one was 31%. I mean, seems to me would it be like 50%, 100%, I don't know, it seems, I'm thinking it is it's gonna be greater than or less than 30. It seems to me it's greater than 30% or gonna hit that. - It's probably the filtering mechanism of what's the compounding advantage or the durability of earnings of that company. And for every step, you have a filter that says, do you have a compounding advantage? Do you increase, do you have a stronger durability of earnings? And if so, you're gonna accelerate to the next phase. It's almost like fundamental to business valuation analysis, like then Graham's dial analysis. - To get to that level, let's call the trillion dollar club, you have to have a dominant business. And then the question is just at what point do you hit saturation? And it seems like all of these markets have ended up being so much bigger than anyone would have predicted. - Yeah. - I mean, just-- - Ed Monagall, or government intervention. - Because fundamentally, if you think about the breakup of the Bell system, I mean, who knows where that would have gone. Over time, they could have had a monopoly on the internet, they could have had a monopoly on commerce, they could have had a monopoly on e-commerce. And on and on and on. - But then as a trading strategy, what you'd like to do is have a bot that just starts buying up shares of a company once it hits one trillion. (laughing) And actually, if you had done that, I mean, a lot of the-- - I remember, who is the first company to hit trillion? Was it Apple? - I believe so, yeah. - Yeah, and everyone was like, oh my god, now there's like five or something. - Well, by the way, that's what I would-- - That's what I would study the show. If you bought, I'm sorry to interrupt, but you bought the NASDAQ over a 10-year period, you get like a 3X multiple or something, quite significant. If you just rebalanced every year on the top 10 companies in the NASDAQ. So just by the top 10 companies by market cap, and you outperform over a decade by like 3X. - Yeah, Thomas, why didn't you do that? (laughing) - What is your, maybe just the last question, so we make sure we wrap up about something that I think you were uniquely positioned to tell us, what happens when all this money gets distributed back? Like, what do you think happens to your competitive dynamics? What do you think happens to entrepreneurial dynamics? What happens in Silicon Valley when three or four trillion dollars gets put back to GPs, then to LPs, and then the recycling happens? - Well, the first thing that comes to mind is, I remember when David was so bearish California real estate, we'll see whether this influx of capital time to sell San Francisco. >> The homes are selling out. >> Anybody made by the Mosley O. >> Anybody interested in a 40-vast square foot Mosley O. >> Yes. >> Protester's not included. >> The one thing I'll say on SpaceX, and look, I don't know whether 1.75 is the right price for the IPO, and frankly, I have no clue. What I do know is that the global profit pool of telco and service providers across the world is anywhere between two to 400 billion depending on who you want to address, right? So you do have to think about a company that just in a core business, which by the way, wasn't even in a couple of years ago, is addressing a profit pool of multiple hundreds of billions at dollars with a substantially better product, right? I think all of us, when you think about Star like, works all the time, no radio towers, you know, etc. So I go back to it and I think it's hard to note, because we've never had anything like this before, right? The ultimate question would be if you look a bit in the right-sharing wars and in food delivery wars, at some point that excess capital was used to have a price for. >> Right. >> Could we see a price for between open-eye and anthropic? As a question, right? If these companies have so much capital, is one of them ever going to pull a price lever to try and compete with the other? >> Right. >> So, they should. >> They should. So, we might see things that we can't predict today, right? Our companies might say, "Why I have my 200 billion of cash?" Now, the issue is they're spending so much on infrastructure, right? So it's not obvious. But I do think we're going to see some counterintuitive changes. You guys will discuss them on the show every week and hopefully I'll come back in two years and analyze what went right and what went wrong. >> Honestly, I think what should happen is you should come back here every year and we should get the benefit of it. >> Yeah, let's lock it in. We'll lock it in. >> Or a big benefit every year. >> We've been here for the two weeks of work this time. >> We really appreciate the work. >> We really do appreciate the work in the effort. >> It's tremendous. >> Yeah. >> And it's really great to bring this to the audience. >> It just shows also the power of sometimes slowing down and to meditate on the actual state of reality and it was incredibly grounded. >> Incredibly rich coming from you. >> Incredibly grounded. >> I think it's a compliment or an insult. I'm not convinced. >> I'm not convinced. >> Incredibly rich. >> Thank you. >> To you, Chimath, for that incredible compliment and for you, Thomas, for coming today. >> Thank you guys. >> Thank you guys. >> Thank you. >> Thanks, Ralph. You got a great job on this.