For the past century, Consumer technology has been defined by two critical phases that repeat. The first is a short period of rapid change, catalyzed by a fundamental innovation (e.g. Edison’s carbon filament lightbulb, Ford’s assembly line, Apple’s “I” computer). The second is a period of incremental adaptation and specialization to various applications (e.g., lights for homes and offices, cars for commuting and hauling, smartphones for communication and entertainment). The last century of technology in the US is the story of this dynamic playing out over and over again.
Recent cycles have contracted adoption times through building blocks set by prior cycles. 100 years passed between the very first phone call and the point at which landline adoption reached 90% in 1975. But mobile phones hit the same level of penetration in only 20 years. After the dot-com boom, new technology adoption occurred more rapidly because most of the enabling infrastructure (e.g. web servers, CDNs, payment gateways, fiber optics, etc) had already been established. Today the marginal cost to ship a website or app is essentially zero, making it possible for companies like Meta to reach 1B users in its first 8 years and for TikTok to hit the same goal in only 5 years. Consumer adoption is moving faster than ever because all the building blocks are in place.
It should be clear to anyone watching that the current Consumer supercycle is being defined by artificial intelligence (AI), which is benefiting from prior cycles’ building blocks like no cycle that came before it. OpenAI’s ChatGPT is the fastest growing Consumer technology product of all time, reaching 100M users in only 2 months after its launch. And countless other AI-native companies have seen similarly explosive growth that would not have been possible even 5 years ago. Yet despite this rapid adoption, AI is still relatively early in its penetration of the broader economy. We believe many net-new consumer experiences will be created through prior building blocks combined with the new building block of AI in the coming years. And AI will deliver such a huge surplus of consumer time back through automation that we expect to see a secondary boom in where that time gets reinvested, in classic consumer categories like entertainment, media, gaming, finance and personal health.
Lightspeed’s approach to early-stage Consumer investing must adapt to best pursue the new world that AI is creating for us. While Lightspeed has already deployed $2.2 Billion across 100+ AI native companies since 2012, true platform shifts are rare, and it’s clear we’re entering the Age of AI. In order to more effectively partner with founders building outlier companies in consumer AI, investors must deeply understand both the technical differentiation and vertical context of specific applications of AI.
Fortunately, Lightspeed has a long history of investing behind highly technical founders, and our modular investment architecture allows us to adapt resources across the firm to grok the idiosyncrasies of various vertical industries. We have already seen this cross-firm collaboration result in significant investments in AI+legal (EvenUp), AI+healthcare (Abridge), AI+music (Suno), AI+productivity (Granola), AI+video (Pika), AI+education (Outsmart), AI+gaming (Inworld), AI+publishing (TollBit), and more to come. This strategy is already working for us, and we’ll be doubling-down on it moving forward.
Today we are announcing a realignment of the Consumer investing team at Lightspeed to pursue this AI-native strategy. The goal is to drive tighter integration with the rest of the firm and sharpen our focus on the following areas: media, health, financial services, gaming, and emerging verticals of AI. Bejul Somaia, Michael Mignano, Moritz Baier-Lentz, Faraz Fatemi, and Nikita Bier will continue to drive our work in all early stage consumer applications of AI and will collaborate closely with other sectors, such as our health and fintech teams, to fulfill this goal for the firm.
Our partners Alex Taussig and Nicole Quinn have led our Consumer group for the last 3 years and have each been investing with Lightspeed for nearly a decade. Through their leadership at the firm, they have been responsible for strengthening our reputation in Consumer, as well as hiring and supporting the exceptional team we have today. Both Alex and Nicole will continue to serve as Partners at Lightspeed, but will transition into non-investing, Board Partner roles next year in order to spend more time supporting the set of companies we’ve invested in during the last cycle of Consumer. We are deeply grateful for Alex and Nicole’s near decade of dedication and their individual contributions toward our collective success and are excited to continue to partner with them in their new roles at the firm.
We plan to publish more of our thoughts in the coming months that inform our new strategy and have several new investments that we’ve yet to announce. We couldn’t be more excited for what the future holds for this next generation of Consumer investing at Lightspeed.
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