State of Startups and AI 2025 - Sarah Guo, Conviction
Aug 2, 2025 · 23:52
Sarah Guo of Conviction argues that AI's value creation is massive and early, with companies like Cursor reaching $100M ARR in 12 months and Harvey exceeding $70M ARR. She predicts that by end of 2026, AI agents will ship code directly to production, voice AI will replace text for most business communication, and inference costs will drop below a cent per million tokens. Reasoning is a new scaling vector unlocking higher-stakes use cases, and agent startups have increased 50% in the last year. Multimodal models from HeyGen and Eleven are already rocketing past $50M ARR. The model market is more competitive than ever, with GPT-4 costs falling from $30 to $2 per million tokens in 18 months and open-source like DeepSeek competing. Guo advises builders to focus on thick wrappers around LLMs, leveraging domain and workflow knowledge, and warns against generic text boxes: 'The prompt is a bug, not a feature.' Execution, not first-mover advantage, is the moat.
