Tim Tully

Menlo Ventures @MenloVentures · 5d

This just in: Menlo Ventures’ 2026 The State of Enterprise AI report is live.

In 2026, enterprise AI spend skyrocketed 5.4x from $33B to $177B in a single year.

The full report covers how AI became an economy-scale force this year, and shows where the dollars are going, which markets are working, and which models buyers choose.

More from @timt, @mejoff, @deedydas, and @derekgxiao: mnlo.vc/enterprise-ai-…

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Zain Asgar Verified account @zainasgar · Oct 20

x.com/i/article/2112…

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Inception Verified account @_inception_ai · Oct 19

Mercury 3 is live: the most capable diffusion LLM released to date.

It outperforms GPT-6 Luna and Claude Haiku 5.5 across a range of benchmarks while running at over 1,000 tokens per second.

More than 40x the size of Mercury 1, 3x more intelligent across standard benchmarks, and just as fast, with a 1M-token context window.

Available today on the Inception API, @baseten, and @OpenRouter .

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Alex Kurland Verified account @atkurland · Sep 8

Joining @MenloVentures! Running it back with @mmurph @Jormont1978. Here is why I am so so excited: linkedin.com/pulse/all-menl…. @venkyganesan @shawnvc @amywumartin @deedydas @mejoff @timt @jpsanday @vcrama @Bad2theSloane @CroomBeatty @derekgxiao

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Harry Stebbings Verified account @HarryStebbings · Jul 27

To me, there are four firms that have crushed this wave of AI investing like no one else:

1. Menlo (Anthropic, Lovable, Legora)
2. Spark (Anthropic, Sierra, SSI)
3. Thrive (OpenAI, Cursor, Databricks)
4. Khosla (OpenAI, Factory, Physical Intelligence)

So I sat down with @mmurph GP @MenloVentures to discuss the questions that every other interviewer is too shy to ask:

- Does open-source cannibalise Anthropic’s business?
- Leading Lovable at $13BN? What is the upside case from here?
- Openrouter? Is the routing layer even valuable or a commodity?
- When a partnership makes $3BN in carry? Does it last?

This was such a banger and summarised my thoughts below.

1. Why We Broke All Our Investing Rules to Invest in Anthropic

Menlo bypassed its traditional fund parameters because Anthropic delivered elite benchmarks while spending a fraction of the capital. Dario Amodei’s technical leadership and ability to attract exceptional talent made it clear Anthropic could become the dominant alternative to OpenAI. When a generational wave hits, flexibility beats rigidity.

2. Does Every Model Provider Have to Build Their Own Chips Today?

Soaring infrastructure bills make custom silicon worth exploring for $100 billion giants optimizing specific workloads. But competing with Nvidia is brutal and requires a specialized team. Most providers should use custom in-house technology selectively while paying for superior external options where they make more sense.

3. Why the Open-Source Rise Will Not Deter Anthropic’s Revenue Growth

Open source handles basic workflows well, but it lacks the specialized intelligence to displace elite frontier models. Using Anthropic directly drives stronger retention, platform engagement, and revenue for enterprise applications. The market will mature into a hybrid tapestry where developers route calls across models to optimize cost and performance.

4. Why Anthropic Is Not a Threat to Legora

Foundation models may eat generic wrappers, but application layers survive through deeply defensive workflows. Legora solves a complex, multi-constituent problem spanning corporate lawyers, law firms, and finance directors. Generic frontier models cannot easily replicate these intricate, multi-stakeholder workflows.

5. The Hard Part About Series A Today

The compressed timeline between Seed and Series A lets startups reach $1 million ARR quickly with minimal proof of product-market fit. Many hit the milestone, but it no longer signals durable demand, even as valuations stretch toward $200 million. VCs need a barbell strategy: get in early at seed or wait for proven breakout winners.

6. Why Ownership Matters Less and Being in the Mega Outcomes Is the Only Thing That Matters

Venture is no longer about owning 20% of a $500 million exit. Returns are driven by extreme, compounding outliers. Rigid ownership targets can price you out of generation-defining companies. A tiny stake in a massive winner is better than a large stake in a company that fails to move the needle.

(links below)

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