Revisiting 2025 Predictions
Grading myself, and what others predicted would be the next big thing this year.
Welcome to issue #61 of next big thing.
A year ago, I wrote What I’m preparing for in 2025. Today I’ll grade those 7 predictions, as well as assess others’ submissions for what The next big thing in 2025 will be…
AI-Native Applications
What we’ve seen over the past year is a number of companies fitting a certain profile — a small team, building an AI-native product that is growing quickly in users and revenue, often serving both consumers and enterprises, and doing so very capital efficiently. For example, one of Footwork’s portfolio companies is about to surpass $10 million in annual recurring revenue, having launched two years ago, with a team of less than 20 people today, and with more capital on the balance sheet than they’ve raised in total venture funding (i.e. they have been profitable over the lifetime of building the business). A few years ago, this would have been truly extraordinary, but today there are dozens of companies that are writing a similar story. And by the end of 2025, I think there’ll be hundreds of companies like this, because it is uniquely possible in this era of AI. Software is faster and cheaper to build, and products can spread by word-of-mouth very quickly. ChatGPT is of course the canonical example here (though not in capital efficiency given OpenAI’s level of burn), having reached more than 300 million weekly active users since launching just over two years ago. A truly mind-boggling growth rate.
Grade: A. In our world of tech startups, this felt like the key theme of 2025. There are so many AI application companies that have grown quickly and efficiently to tens of millions of dollars in ARR — we’ve almost become numb to how incredible these stories are!
AI Workers
Related to the above, some of the applications that will grow the fastest this year will be AI workers — coders, salespeople, customer support agents, debt collection agents, clones, and more, that are AI team members instead of human ones. Though the “agent” term has become widespread, I really love this framing from Elicit co-founder Jungwon Byun: “The next big thing in 2025 will be AI moving from assistants to collaborators.” I think of the compelling and productive AI workers more as collaborators than as agents, and suspect that this framing will resonate with end users and software buyers as the year goes on.
Grade: B. While AI became more agentic in 2025, the promise of AI workers completing end-to-end tasks fell short of reality. It feels obvious that this is coming, perhaps as the key theme of 2026.
Non-AGI Breakthrough
While all eyes are on AGI, which we will clearly make progress towards in 2025, if not “achieve” by many definitions, I believe we’ll see a breakthrough in another area of technology, such as biology, robotics, energy/climate, healthcare, that will blow us away and be a ChatGPT-in-2022-like moment in 2025. It is likely to be related to all the advancements in AI but I think it will be distinct and open up a new set of “platform” opportunities for early-stage startups in the way that LLMs have.
Grade: B. While there wasn’t an obvious “ChatGPT moment” in 2025, there were several breakthroughs - for example, Claude’s models that made code generation, vibe coding, and application building things that AI is extremely capable of - that I think we’ll look back on as fundamental. And the progress made in other areas such as robotics and scientific research, while yet to bear a groundbreaking moment, felt very meaningful.
Crypto <> AI
The intersection of crypto and AI has felt like a fertile ground for compelling new products for a while, and I hope we see some awesome user experiences uniquely enabled by this intersection in 2025. I am no expert here, but when I think about the adoption of stablecoins over the past few years, crypto-native products like Bridge, Farcaster and Sling growing in usage, the magic of many AI-native user experiences, the usability issues with many crypto-native experiences, the data trust issues with many AI-native products… it just feels like there is much that can marry the best of each area while eliminating the worst of each. As with small teams building fast-growing, capital efficient, AI-native application companies, per the first theme in this post, I’d love to meet anyone building something that users are loving at this intersection of AI and crypto.
Grade: B. Interestingly, it feels like 2025 was very significant for crypto applications, but just not those that intersect directly with AI! It was stablecoins and prediction markets that both experienced serious inflections in market pull this year.
Hardware! (not Apple)
Over this past year, I got into our Model Y in San Francisco, reversed out of our garage, turned on full-self-driving, and did dozens of drives where the only times I took over from FSD were upon reaching our destination to park (a few lane changes too, but with FSD still engaged). It is remarkable how far Tesla and Waymo (which I also took dozens of times in SF last year) have come, and autonomous driving will have an exciting year of expansion to more cities in 2025. In consumer hardware, I can’t believe I’m typing these words (and this is not investment advice!), but I am long Meta, short Apple. I became a very active (weekly, often daily) user of Meta Ray-Bans last year, which are especially great to use with young kids (hands are often full!). I’m excited for Orion. And I’m really bummed about the latest iPhones, (the lack of) Apple Intelligence thus far, and Vision Pro.
Grade: C. I don’t think we got a revolutionary piece of new hardware in 2025. OpenAI did buy Jony Ive’s io and it will be exciting to see what they launch together in late 2026 or 2027. But given my two straight years of optimism and failed hardware predictions, I’m not holding my breath for what unfolds here.
Exits! (though 2026 will be better)
IPOs and M&As will be back this year. I thought that last year would be a readiness year for many companies to be able to go public this year. And they will, although I think 2026-27 will be more exciting IPO years than 2025, given the lack of much urgency to go public for leading prospects.
Grade: A. The markets were liquid in 2025 with some massive M&A such as Google buying Wiz for $32B and ServiceNow acquiring Arnis for close to $8B just this week. Global M&A across all sectors was close to $5 trillion, one of the highest years on record (second only to 2021). I stand by my prediction that 2026 will be better, especially with a few long-awaited IPOs that should finally arrive, such as SpaceX.
Government (In)Efficiency
If you spend anytime online, particularly on X, it will be hard to avoid following the efforts of DOGE (the department of government efficiency) this year. I think there’ll be a lot of attention on where they think they’re finding “efficiency” but in reality it will all be more inefficient than the folks working on this want it to be, because of the chaotic way in which they go about trying to enact change. I am optimistic that some of the change will be positive progress, but I suspect there will be more talk than action that actually moves the needle on efficiency (particularly given the % of federal spending on entitlements, defense, and debt, that is near-impossible to touch).
Grade: A. I’m particularly proud of this take, because as the year draws to a close, DOGE is nowhere to be seen, the federal government from the outside-looking-in seems to have been barely changed for it, and all the noise about efficiency that we had at the end of last year seems to (sadly) be dead.
There were many great submissions by 50 of technology’s top thinkers to last year’s The next big thing in 2025 will be… piece. Here are some of the ones that feel particularly on-the-nose as the year draws to a close (look for the ⭐s!).
… AI applications.
The next big thing in 2025 will continue to be the evolution of AI at the application layer. AI applications will continue to advance and be able to create significant value across industries, domains, and modalities
-Chetan Puttagunta, General Partner at Benchmark
The next big thing in 2025 will be verticalized product offerings with AI at their heart that take on boring old industries with enormous TAM. What SaaS was to On-Prem, this new business archetype will be to SaaS!
-Anand Chandrasekaran, Founder & President at Crescendo and Managing Partner at Celesta Capital
The next big thing in 2025 will be in the world of artificial intelligence, where it’s going to be cool to be a GPT wrapper again. Consumers and businesses both need help figuring out how best to use already very powerful language models so we’re going to see a bunch of applications crop up that help people get the most out of these models. Startups will build sales motions, integrations, customer know-how, etc and won’t need some huge technological moat to justify their existence. Of course no one will want to call their company a “wrapper.” Think more “GPT refiner.” These companies will get data particular to their use-case, do some human reinforcement learning, and deliver an easy-to-use product that leads the horse to water instead of an intimidating empty text box.
-Eric Newcomer, Founder/Writer at Newcomer
The themes called out here by Chetan, Anand, and Eric, of AI applications continuing to evolve and grow, including those in verticals, and those leveraging LLMs to create easy-to-use products, were key in 2025.
… software development.
The next big thing in 2025 will be the “YouTube-ification” of software. Building software will become the next frontier of creative expression. Just as video production once seemed daunting, AI coding assistants are turning us all into software developers. Why only do a podcast when building a high quality, monetizable software product will be as simple as making a YouTube video?
-Jeff Morris Jr., Founder & Managing Partner at Chapter One
The next big thing in 2025 will be lots of new products coming from the falling barriers to software engineering. So far, most AI products were imagined by AI engineers and researchers - we’ve yet to fully see the creative output of non-AI builders using this general purpose technology. I think a blockbuster app will top iOS or similar charts that’s built by someone who can’t actually code.
-Nathan Benaich, Founder & General Partner at Air Street Capital
One of the fastest growing areas of applied AI in 2025 was in code generation and software development. Jeff and Nathan nailed this trend, as exhibited by the growth of companies like Lovable, Replit, Anything, and others this year.
… small teams scaling growing companies.
The next big thing in 2025 will be startups of 10 people getting to $10M ARR in less than 18 months with less than $5M raised.
-Garry Tan, President & CEO at Y Combinator
Anecdotally, I’m amazed by the number of small teams that have quickly built a business exceeding $10M in ARR (though “ARR” means something different in different companies — definitely not always “annual recurring revenue,” but some sort of annualized revenue run rate). The Lean AI Company Leaderboard also grew in number of companies, and in the scale of those companies, during 2025, as one proxy for this trend that Garry called out.
… San Francisco.
The next big thing in 2025 will be San Francisco. SF is BACK BABY! Promising local election outcomes, a Mayor who wants to work with the private sector and tech again, IRL matters for communities and startups, abundance YIMBY mindset to kickstart building, YC/Ron Conway never gave up on the city, and so on. Yes, there are challenges - some of which will take several years to fully move on - but 2025 is the year the narrative starts turning. I used to worry it would take a kinetic crisis (eg earthquake) to unite us but a non-kinetic one (post COVID ‘doom loop’) inspired and united enough locals to fight again for the city we love. LFG.
-Hunter Walk, Co-Founder & Partner at Homebrew
As we exit 2025, San Francisco clearly feels like the center of the technology world. The companies at the bleeding edge of AI are here, and the city feels better than it has felt in a long time as a place to live and work. Hunter captured this prediction perfectly as the narrative on SF very much turned this year.
… data centers.
The next big thing in 2025 will be Data Centers. Expect to see increased investments in data centers, cooling technology for data centers, and energy to run data centers. Eg. under-water data centers, diamond-cooling, nuclear renaissance.
-Sriram Krishnan, Co-Founder & General Partner at Kearny Jackson
There was a consistent undercurrent of discussion and work in 2025 on the energy and data center layers, where build out is happening at an unprecedented level, to try to keep up with the demand for AI. Just look at all the OpenAI data center announcements as one proxy. Sriram called this accurately.
… IPOs, M&As, and liquidity.
The next big thing in 2025 will be both the tech M&A and IPO markets booming, as companies take advantage of a more receptive stock market and a more permissive FTC to deliver liquidity and exits to shareholders.
-Gokul Rajaram, Co-Founder & General Partner at Marathon
The next big thing in 2025 will be liquidity. With the new government being far more pro deregulation, we’ll see the IPO market and M&A come roaring back.
-Nikunj Kothari, Venture Partner at Khosla Ventures
The next big thing in 2025 will be the continued maturation of financial products for late stage, seemingly pre-IPO companies. “Will they go public or not?” will continue to be a debate, but firms will offer secondaries, private debt, partial buyouts and more. And with an ironic twist, you’ll start to see names of those firms like General Catalyst or A16Z floated more frequently to IPO themselves.
-Aashay Sanghvi, Partner at Haystack
Consistent with my exits prediction and reflection, 2025 was a strong year for M&A and liquidity as Gokul and Nikunj thought it would be, and there was a lot of late stage private activity in advance of companies going public, as Aashay predicted —see OpenAI’s $60B+ raised, plus their unique deals with hyperscalers, and Databricks’ $4B Series L (!), as examples.
… big tech earnings.
The next big thing in 2025 will be the acceleration of EPS and free cash flow/share at big tech (Google, Amazon, Meta and Microsoft).
If 2024 was a stabilization of revenues as customer confidence came back, 2025 and beyond could result in optimism for both US corporates and consumers. As consumer confidence returns with the prospect of a stable jobs market and increasing wages, consumer spending should be robust. Software spend should accelerate as corporates feel better about their prospects and spend budgets on areas outside of preparing their data estates for AI applications.
This should result in accelerating top lines are the largest mega caps - for example, Google search revenue should accelerate. This thinking is simply not captured in consensus.
My contrarian (and potentially controversial) prediction is that GPU/AI-driven capex will remain high BUT will come in lower than expectations - resulting in accelerating free cash flows at the mega caps. Combined with cost discipline, FCF / Share and EPS will likely accelerate over 2025 (and potentially 2026).
-Ram Parameswaran, Founder at Octahedron Capital
The next big thing in 2025 will be mainstream adoption of agents in large enterprise leading to increased earnings and quarterly beats, resulting in continued stock ATHs among hyperscalers.
-Chad Byers, Co-Founder & General Partner at Susa Ventures
The prediction award of 2025 goes to Ram, who got several of his specific calls right, such as EPS acceleration at most of the big tech companies, and Google’s search revenue accelerating (12% year-over-year growth, beating expectations). Chad also accurately predicted all time highs amongst several of the hyperscalers, and quarterly earnings beats for most of this group.
That’s a wrap on 2025 — what a year. I’d love to hear your reflections on these predictions, and what the key developments were in the last 12 months from your perspective.
Next up: 2026, and a post on what many of tech’s best thinkers believe the next big thing will be next year (send me a note or leave a comment if you have a contribution!), as well as what I’m personally preparing for.
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Hi Nikhil! I think one of the important trends we saw as well in 2025 was not only the rise of AI-Native applications but using these applications to automate service businesses like accounting and law firms. These businesses have traditionally been low-margin and operated with the philosophy of hiring more people to increase revenue. With AI, the topline increases without increasing costs. Eudia that raised $105 million in Series A is a great example. These startups are employing a roll-up strategy by acquiring law firms and optimizing them with AI. Founders require a mix of skills in operations, M&A and embedding AI into workflows.
For 2026, I see two major trends - (1) Domain-Specific LLMs for lawyers (Domain-Specific LLMs for specific practice areas such as M&A, IPR and Labor law etc. Founders will have to go deep into understanding one problem and solve it for the customer. For example, a patent research tool or an M&A assistant) (2) Cybersecurity Solutions for Law - Law Firms are required to comply with GDPR and DPDP solutions as they handle sensitive information. Globally, 60% of law firms reported cyber threats. With law firms digitizing contracts and data they need specialized cybersecurity solutions. I write a newsletter analyzing LegalTech trends and identifying opportunities for building in this space. Would love to have a brief chat with you on where this sector is headed!
Very good one!