# How we make money

> In a great market — a market with lots of real potential customers — the market pulls product out of the startup.
>
> - When a great team meets a lousy market, market wins.
> - When a lousy team meets a great market, market wins. 
> - When a great team meets a great market, something special happens. 
>
> — Marc Andreessen

## Our Markets

We focus on markets where these breakthroughs are just beginning:

| Market | 2025 | 2032 | Growth |
|--------|------|------|---------|
| AI Agents | $3.7B | $104B | 44.9% |
| Edge AI Hardware | $27B | $270B | 33.3% |
| Datacenter AI Hardware[^3] | $142B | $837B | 34.3% |
| GPU Cloud | $6B | $74B | >35% |
| Hyperscaler [^5] | $231.2B | $2.1T | 37.8% |
| Generative AI | $40B | $1.3T | 42% |
| Robotics | $90B | $350B | 15.2% |

These markets represent massive potential. Even a small slice—just 0.01%—would mean $213.4M in revenue by 2032. 

But the real opportunity is in creating the value.

### Value Creation vs Value Capture

> "A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it's a platform." — Bill Gates

We build for creating value:
- Create massive value through open source
- Grow the entire industry
- Capture a small percentage of the expanded market

This creates a virtuous cycle:
1. Open source drives adoption
2. Adoption expands the market
3. Market expansion increases our opportunity
4. Small percentage of large market = significant value

## Being Frugal

Success equation: Revenue minus Costs. We're good at the second part.

Constraints breed innovation:
- Resourcefulness over resources
- Creativity through limitations
- Solutions without spending

Menlo started as an open source project, with very little money. This has shaped our DNA:
- Choosing essential tools (e.g. Discord over Slack)
- Growing at $0 CAC without ads 
- Building by creating value, not burning money 

The foundation of our perspective is [Lateral Thinking](/handbook/philosophy/lateral).

## Sources

[^3]: [GlobalNewsWire: AI Server Market](https://www.globenewswire.com/news-release/2025/01/13/3008197/28124/en/AI-Server-Market-Global-Outlook-to-2030-by-Processor-Type-Function-Form-Factor-and-Cooling-Technology.html)
[^5]: [Fortune Business Insights: Hyperscaler Market](https://www.fortunebusinessinsights.com/hyperscale-cloud-market-107832)