Generational platform shifts don’t just spark new applications, they ignite entirely new economies:
- Public Cloud unleashed the SaaS economy
- The iPhone ushered in the app economy
- Social media enabled the creator economy
Recent AI innovations mark a similar tectonic shift, and we are now entering the era of the agent economy. While we’ve written in the past about predicting the hype of agents, the infrastructure required to deploy agents, and how the looming agentic web will revolutionize the way people browse, we are now turning to perhaps the most exciting part of the agent economy—the agentic AI applications themselves.
We’re excited to invest in AI agents for a few reasons, namely:
- AI agents reinvent SaaS - incumbent SaaS typically pairs a point-and-click UX, siloed data moat, and seat-based model. AI Agents run counter to all of this DNA.
- AI agents eat into labor - labor budgets are 35x larger than software budgets. AI Agents can tap into both budgets.
- AI agents turn service into software - markets plagued by low-margin human services can improve efficiency with AI Agents.
For these reasons, we expect most AI and copilots to soon push into the world of autopilots, or agents. We see this happening and compelling opportunities for AI agents across end markets:
- Horizontal (AI across industries) - ie. Legal AI sold horizontally to in-house teams at enterprises (Norm)
- Vertical (AI specific to one industry) - ie. Legal AI sold specifically to law firms (DeepJudge)
- Consumer (AI as a full-stack service for the public) - ie. Legal AI sold as a consumer-facing service (DoNotPay)
Here’s a look at the agent economy’s SaaS and labor reinvention opportunity:
Examples of early winners
To power this generational platform shift, tech giants are estimated to spend more than $1T in capex in the coming years. That price tag suggests (and requires) an impending application ecosystem. There are some early signs of winners, but positively for investors and founders there’s also a lot of runway to go:
- Customer Service: companies like Sierra are taking a fresh approach, and will give Zendesk a hard time
- Sales: companies like 11x are augmenting SDRs with better lead-gen
- Marketing: companies like Jasper rocketed off copywriting use cases, and now must expand into broader Marketing AI platforms
- Recruiting: companies like Mercor are finding unique ways to apply AI to talent assessment
- Healthcare: medical scribes like Abridge are performing well in highly regulated industries
- Legal: Harvey is taking the legal industry by storm and changing the way we think about billable hours
- Contact Center: Crescendo’s approach as an AI-first outsourced contact center is paying off
- General Purpose: companies like Brevian are giving companies the tools to configure secure agents for a wider variety of tasks
We are just entering the agent economy. More winners in these categories (and others) will emerge, and AI Agents will begin to impact every industry and nearly every role.
When the SaaS economy took off, we enjoyed well over a decade of new application winners. After the iPhone was released, it took over three years for mobile-first unicorns like Uber, Snapchat, and Rovio to emerge. The creator economy did not enter the public lexicon until eight years after Facebook acquired Instagram. The exact timing for decacorn AI apps is hard to predict, but with early signs of traction, robust foundational investments, and the speed of innovation cycles, we know killer apps are already being built today.
If you’re building for this agentic future, please reach out.
Thank you to Eric Flaningam for his help with research for this piece.
