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Back to Martin Casado on Frontier Model Economics, AI's Slowdown, and the Cursor Deal, with Martin Casado.

What Does Martin Casado Think of Network Effects?

Martin Casado calls the fuss over network effects a personal annoyance and a pedantic habit. Defensibility is not really worth talking about most of the time. In early discussions on models, investors would never invest in a model because it would never accrue value and was not defensible. A model still accrues a lot of value as long as the market is growing and the market is large.

When a market is growing, companies do not want to compete. A lot of new white space gets created, and they try to move into other white space. Talking about defensibility is a second or third order thing. When a market is slowing down or shrinking, it normally consolidates anyway, independent of moats.

Investors spend a lot of time hand-wringing about defensibility when in practice it does not really matter, especially in growing markets they invest in.

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Transcript

Martin Casado on Frontier Model Economics, AI's Slowdown, and the Cursor Deal ·

Invest Like the Best with Patrick O'Shaughnessy

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  1. What Are the Four Venture Investing Mindsets?Martin Casado names four mindsets people bring to venture and private-market tech investing: a traditional finance mindset, productive investors, frontier…
  2. Why Do Traditional Investors Miss Disruptive Technology?Martin Casado says traditional investors miss disruptive technology because they judge revenue quality before anyone knows the pricing model.
  3. How Do Frontier AI Models Keep Pricing Power?Martin Casado says frontier AI models keep pricing power because the market is still large and growing, and buyers want the smartest model.
  4. Why Do Startups Always Buy the Smartest AI Model?Martin Casado says two competing startups never pick a dumber model to get ahead.
  5. Was Early Internet Security Worse Than Now?Martin Casado lived through the early internet on the ground, with formal studies in security, and the era was way worse than the breaches happening now.
  6. What Is the Mythical Man Month?Martin Casado says the mythical man month means you cannot increase the speed of engineering by adding people.
  7. What Was Larry Page Asked About Orbital Compute?Martin Casado heard that someone asked Larry Page how much compute will be orbital.
  8. What Does Martin Casado Believe About Private Market Money?Martin Casado believes money put into private markets grows private markets.
  9. How Did the Cursor Deal Come Together?Martin Casado says the Cursor deal came together off a raise that was already closing, once building models required compute few people have.
  10. Has Software Become a Capital Problem?Martin Casado believes software has become a capital problem, and he treats the shift as industrial-revolution scale.

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