Andreessen Horowitz just released one of the most interesting reports of the year. The AI Application Spending Report.
It looked at over 200,000 startups using Mercury and tracked where their money actually goes. Real spend. Real behaviour.
The short version. AI is no longer an add-on. It is the foundation of how new companies operate.
60% of spend goes to horizontal tools
These are the apps anyone in the company can use. Assistants, creative tools, meeting note takers, and what they call vibe coding platforms like Replit or Cursor.
The real story here is cultural. Teams are blending. The same product that helps marketing write copy helps engineering document APIs. AI is flattening silos.
Vertical AI tools split into two camps
Some amplify humans. Others quietly replace them.
Think of AI copilots for recruiters and support teams on one side. And AI only firms like agentic law firms or automated GTM reps on the other.
For now, the human boosters dominate. But the end to end AI services are learning fast.
The new route to enterprise runs through consumers
Nearly seventy percent of products on the list started as personal tools. One person tries it. A team adopts it. Procurement follows.
Ten years ago you sold to CIOs first. Today you get invited into Slack.
Vibe coding is real
Replit ranks third in spend. That tells you something. Non developers are now building. Not full systems, but working prototypes. This is not no code. It is low friction code powered by AI. The wall between user and builder is falling.
So what should you take from this?
AI is no longer the message. It is the medium. Saying “AI-powered” is like saying “internet connected” in 2005.
Buyers assume it.
They want to know how it helps them do more with less. How it saves time, or headcount, or budget.
If you are selling in this environment
Lead with workflow. Not technology.
Price for mixed users. One product may serve five roles. Expect adoption bottom up. Individuals first. Teams next.
The next generation of winners will not look like AI companies. They will look like normal SaaS tools that just happen to do five jobs better.