Is T3D2 Dead? Has AI Killed It?

OpenAI hit $12 billion ARR within five years of ChatGPT’s launch ^[1] . Anthropic reached $200 million in revenue in January 2024 ^[2] . Meanwhile, Salesforce took ten years to reach $1 billion ARR ^[3] .

Does this mean the T3D2 framework (triple-triple-triple-double-double ARR to go public), originally outlined by Neeraj Agrawal, which provides a clear path to IPO-scale revenue is dead?

There’s no doubt that AI companies have grown at unprecedented rates. If we understand these fundamental drivers, we can better assess how sustainable this growth is.

1. Management teams & boards are insisting on AI transformation. ROI is still early. This urgency is captured by Larry Page’s recent quote: “I am willing to go bankrupt rather than lose this race.” The same mentality drives aggressive experimentation across multiple vendors & rapid buying decisions, from hyperscalers to mid-market businesses. Will the end of this era lead to churn?

2. AI can automate labor. The overall cost savings can be significantly greater than workflow optimization tools of the previous era. As a result, the contract sizes for many AI products are significantly larger to start. If this continues, the overall bookings model & AE productivity model also need to change. If AI can deliver on the promise, larger contract sizes may be the norm.

3. Incumbents are defensive. The prizes in AI are huge. The initial curiosity around AI & the massive growth rates of some companies has led some incumbents to turn defensive, blocking access to their data. More defensibility might also curtail on-platform growth.

The more sustainable AI’s growth rates & customer retention are, the more challenging T3D2 advice remains because the market’s expectations of growth will change. But for now, it’s too soon to tell whether the sizes of the contracts and durability are long-term characteristics of this market.

For businesses currently on the T3D2 plan, the fundraising market may be a bit more challenging because of the comparison to AI growth rates. Also the expectations around size at IPO have increased.

$100m in trailing revenue growing 50% used to be the target. But now the expectation is closer to $300m growing at 50%. Attaining those numbers requires sustaining high growth rates for longer.