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Sunday, October 11, 2026

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@convequity

Convequity on X

$PANW and $DDOG both put something real inside the customer's systems that an AI lab cannot recreate by calling SaaS APIs. Palo Alto's install is still harder to replace with AI. 1. Datadog's agents mostly sit outside the traffic and watch production. A bad agent version rarely takes the business down the way a bad firewall rule can. 2. Palo Alto's firewalls and SASE cloud gateways sit inside the traffic and decide what to allow, deny, decrypt or inspect. A wrong allow or deny hits live traffic and live machines. 3. Many Datadog users start the day in a coding agent and open Datadog when something looks wrong. Many Palo Alto users start in its console and stay there through alerts, triage and response. For them, an outside AI agent is an add-on. Cybersecurity work splits two ways on AI risk. Work done before code ships ("shift-left") or from outside the traffic, such as scanning code, checking cloud settings and sorting collected alerts, gives answers that are easy to check. AI agents are already taking over more of it. Work in live traffic and on live machines ("shift-right") means judging whether an attacker is still inside and whether blocking them is safe. That is more ambiguous and mistakes cost more, so enterprises move slower and demand earned trust. Palo Alto is not risk-free. In our view its exposure is the easily checked detection and vulnerability work inside its platform, which AI agents can take over sooner. The threat is not an AI-native firewall startup.
@ActAccordingly

PAA Research on X

Following the action in $FICO, it seems this post from @pulte has drawn increased investor attention to $STC $FAF $ORI $FNF and their title insurance pricing policies. We have had a short call on $STC and $FAF for some time. There's no doubt there are several technology options that could lower title insurance costs (AI) if not eliminate the need for it altogether (blockchain). You already have many brokers offering bundled solutions for title, mortgage, and advisory. Lots of pressure on these busineses.
@convequity

Convequity on X

Anthropic's biggest near-term threat isn't the S-1 or AI-safety language. It's competition, especially an OpenAI price war. The S-1 is public, and the timing lines up with OpenAI DevDay. My read is that it isn't a coincidence. That's my read, not something either company has said. What surprised me more came out of DevDay: OpenAI is ending its price war. Here's what that means in practice. OpenAI removed the Pro 20x subscription at $200/month and plans to cut usable tokens on that $200 plan by about half. The allowance was also more generous than it looked. Over the past quarter, OpenAI did roughly 2.5 manual usage resets per week. So heavy users didn't only get a big allowance. It got refilled before they hit the wall, over and over, for about three months. That's a price war fought in tokens instead of list prices, and it is expensive to fund. Why it mattered for Anthropic: for heavy users, cheaper tokens beat a better model. Once a model is good enough, what limits you is how much work you can push through it per dollar. A better model you have to ration loses to a good-enough model you can run all day. Anthropic went the other way and raised margin. That's the right posture for an S-1. It's the wrong posture when a competitor is paying for volume. That left Anthropic in a trap going into the IPO: - Match the pricing, and margin thins just when margin is the story you're selling. - Hold the line, and growth slows as heavy users drift to wherever tokens are cheapest. Either way the numbers get worse at the worst possible time. Ending the price war takes that trap off the table for now. Anthropic gets a cleaner tape into the IPO. Why did OpenAI stop after one quarter? I see two reads, and both are mine, not confirmed: 1. The burn. My read is that OpenAI postponed its own IPO because of how much it was burning, and investors pushed it to stop. 2. OpenAI's own later IPO. If it wants to list, its numbers have to look like a business too. One quarter of subsidized tokens is a campaign. A year of it is a problem in your own filing. The second-order point is that in both reads OpenAI stopped because of its own finances. Anthropic didn't win the war. It ended because the side paying for it chose to stop. The playbook still exists and it ran for a full quarter. It can be turned back on. That's the risk that remains. OpenAI restarts it. Or a rival like $SPCX xAI ships a next-gen model and discounts tokens hard to buy share. It's a bit like Uber's cash burn: a well-funded player can keep subsidizing longer than a margin-focused company wants to wait. I don't think that's fully priced in.

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