Scale & Strategy
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This is Scale & Strategy, the newsletter that catches you up like a blue shell in Mario Cart.
Here’re the quick highlights from the week:
- What bubble? AI valuations keep ripping upward
- Google vs. Microsoft Performance Max: What’s actually the same—and what isn’t
What bubble? AI valuations keep ripping upward
Unconventional AI, a two-month-old startup founded by Databricks’ former head of AI, just pulled in $475 million at a $4.5 billion valuation. The round was led by a16z and Lightspeed, adding yet another jaw-dropper to a market that refuses to cool off.
The company is building more efficient chips, making it the latest entrant in the compute-arms race where investor appetite still looks bottomless. And while the nonstop mega-rounds have triggered plenty of bubble talk, not everyone thinks the sky-high numbers are irrational.
Still, Unconventional’s seed round is on another planet. Carta’s head of insights, Peter Walker, noted that $475 million is 121 times this year’s median seed raise. His advice: if you want to keep your sanity, don’t compare chip companies and AI labs to anything else.
It’s undeniably a good time to be in chips or frontier AI research. NVIDIA keeps blowing past records. Thinking Machines, the lab launched by former OpenAI exec Mira Murati, hit a $12 billion valuation pre-product. And then you’ve got OpenAI and Anthropic, sitting at roughly $500 billion and a rumored $350 billion.
Put all that together with AI’s sometimes circular funding dynamics, and it’s no surprise some see bubble territory. Ray Dalio told CNBC he believes we’re in one, arguing the real value will accrue to companies that cut costs with AI, not to hyperscalers spending billions to build it.
But others say the valuations still pencil out. Morgan Stanley’s Andrew Slimmon argues the only bubble is in the bubble discourse. The dot-com crash happened when demand stopped outpacing supply. With AI, Q3 earnings calls suggest the opposite: companies can’t keep up with demand.
Multi-billion-dollar seed rounds are basically a Rorschach test. You either see world-changing potential or a looming correction. Both interpretations can be true. Dalio himself noted that being in a bubble doesn’t mean you’re anywhere close to the pop. And the simplest explanation for these monster rounds might be the most accurate: there’s a mountain of VC capital right now and not enough places to put it.
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Google vs. Microsoft Performance Max: What’s actually the same—and what isn’t
Performance Max has become the default mode for AI-driven ads across platforms. But Google and Microsoft didn’t build identical machines. Navah Hopkins breaks down where they overlap and where they diverge heading into 2026.
Where they’re the same:
Both platforms have shifted from ad groups to asset groups, and both hand the steering wheel to the algorithm. Budget allocation is no longer your decision. And the minimum requirements haven’t changed: you still need roughly 30 conversions in 30 days to keep the models stable. No way around it.
Where Google pulls ahead:
Google finally rolled out channel-level reporting, which means you can see how spend breaks across Search, Display, and YouTube instead of guessing. It also leans harder into visuals, with AI-generated creative and video tools that keep CPCs lower than search-only mixes. If you care about storytelling and transparency, Google gives you more to work with.
Where Microsoft differentiates:
Microsoft’s killer app is its ecosystem. The integration of LinkedIn targeting signals is a huge advantage for B2B advertisers. Microsoft also supports impression-based remarketing, letting you build audiences off views, not just clicks. And it’s more flexible structurally, allowing up to 300 campaigns per account vs. Google’s 100.
Which one wins?
Depends entirely on the job. Google is stronger on creative and reporting; Microsoft is stronger for B2B and audience data. Just don’t make the rookie mistake of replacing search entirely. PMax should expand your reach, not cannibalize your proven keyword campaigns.
If you’re in B2B, Microsoft’s data advantage is real. If you need creative power and budget clarity, Google’s still the safer bet.
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