recap/history/1775477439435-HMTrd9Hn3e8.json

{"id":"1775477439435-HMTrd9Hn3e8","videoId":"HMTrd9Hn3e8","url":"https://www.youtube.com/watch?v=HMTrd9Hn3e8","title":"OpenAI Kills Sora & Hits $100M ARR on Ads | Oura Going Public & Whoop Raises at $10BN","type":"youtube","topicCount":16,"segmentCount":235,"createdAt":"2026-04-06T12:10:39.435Z","uploadDate":"20260402","chunks":[{"title":"Introduction & Anthropic's Record February","summary":"The host kicks off the episode and highlights Anthropic's unbelievable $6 billion revenue month in February.","entries":[{"text":"Host: So, we start with Anthropic’s monster week. We may be at the stage where we throw the humans under the bus, not the AI anymore, which I think at some level is pretty terrifying. We move to OpenAI killing Sora. I think shooting in the head is even more significant. A big part of the whole strategic direction of the company was flawed. Agreed. You’re saying the economists, the accountants have wandered into the room and they said, \"We have a scarce resource here, let’s optimize it, let’s devote this compute to the people who can pay the most for it.\" And then we finish on the man with the biggest balls in tech, Masa. You haven’t lived until you’ve seen an 85% decline in an index. This is one where it’s just back-asswards. I don’t believe there’s right or wrong in money, there’s just money. I just don’t think raising at 5 or 8 billion when you’re at 80 million or 100 million of suspect ARR is the most exciting accomplishment in the world. But let me be direct: get the fuck over it. You should conform your company around your customers and your model, not your VCs. Being mean to a billionaire is actually a feature. Ready to go?","offset":0,"duration":65},{"text":"Host: Boys, welcome back. It is this week in Anthropic, otherwise known as the SaaSstoberfest, which has been renamed. Uh, I want to start with, you guessed it, Anthropic. Unbelievable 28-day month of February where they did 6 billion in revenue, which was more than Databricks has done in their entire lifetime.","offset":65,"duration":25}],"startTime":0},{"title":"Anthropic's Claude Mythos Leak & Autonomous Agents","summary":"The hosts discuss the inadvertent leak of Anthropic's Claude Mythos model. They reflect on the irony of a security model leaking and predict that such leaks will become commonplace in the era of autonomous AI agents.","entries":[{"text":"Host: Do you know what I think was the most interesting news out of Anthropic this week? It was actually the—the accidental leak of Claude Mythos, essentially 3,000 unpublished assets leaked. Uh, it’s a 10 trillion parameter model, apparently, that is this next-level step change in capabilities that they’re not releasing because of how powerful it is. This is by far the most interesting to me. Jason, how did you think about this news?","offset":90,"duration":29},{"text":"Jason: Well, look, obviously it’s embarrassing, right? To—to Anthropic to—to leak it. Uh, I actually just think we’re going to see more and more of this accelerate. Uh, the faster we vibe code, the faster we ship, the more corners we cut in general on application-level security. It happens. I mean, so many folks are accidentally uploading code to insecure GitHubs, to—to databases, to Supabases that are by default open.","offset":119,"duration":34},{"text":"Jason: So this is—this is accelerating. Uh, our data which is just open on the internet. And—and you could say, \"God, it shouldn’t happen at the Anthropic level,\" and I’m sure someone will get—will get scolded, right? I’m sure it will. But overall, this is accelerating, and it’s going to accelerate even more as we let our AI agents make decisions. Our agents are going to decide where to put code, they’re going to decide what level of security to use, and this is going to become happenstance.","offset":153,"duration":27},{"text":"Jason: And, you know, it’s funny, I mean, uh, people are like, \"Oh, how could Anthropic have a new, uh, security agent and have this happen at the same time?\" I think they—they—I think it makes perfect sense. The Anthropic AI security agents, which are basically used in Replit, are very, very good, and it also makes sense as we rush, we’re going to leak source code, data, PII, right? It was—I don’t know whether it’s happened, it was reported today all of Mercure’s data leaked. It’s being held hostage, all of it, every single interview, every single piece of PII, every single piece of humans.","offset":180,"duration":43},{"text":"Jason: And so, uh, you know, we used to mock these. I think it’s going to start happening daily and weekly in the agentic era, and it doesn’t excuse it, but—but it’s—uh—it’s a reality. Agents—agents are goal-seeking and agents are going to make—not only are they going to make the same mistake as humans, they’re going to work a thousand times faster. So even if they make the mistakes 10% as often, Rory, help me with the math, if they do a thousand times more productive, they’re still going to make a hundred times more mistakes. So we’re going to see it everywhere.","offset":223,"duration":34},{"text":"Rory: Again, just for perspective, because there’s two things going on here: Anthropic—some data leak from Anthropic about their new model Mythos, which of itself is meant to be amazingly powerful in dealing with cybersecurity, and there was a whole consequence that we’ll talk about in a second in terms of how that impacted cybersecurity stocks. But as Jason pointed out, the level of irony here is acute because it was an inadvertent leak. So you had the situation where a model that’s meant to be amazing for cybersecurity actually leaks via cybersecurity leak. So that kind—so we’re toggling between the two.","offset":257,"duration":39},{"text":"Rory: On the cybersecurity leak, it was noteworthy that Anthropic, quote-unquote, \"blamed human error,\" right? We may be at the stage where we throw the humans under the bus, not the AI anymore, which I think at some level is pretty terrifying. But—and you know exactly what happened. You see this, I mean, uh, down in the weeds. You often see this where, you know, you’re about to do a big announcement, you have your content management system, you stage all the assets, you know, be it the Fed press release. In the UK, it happened on the budget, if you remember, Harry. The budget—you have the press release ready to hit play the minute the budget is ended and someone inadvertently forgets and puts it on the public site in advance. It’s the same thing here. So it probably was a human error. There was a whole bunch of content ready for, I don’t know, pick a date though, March the—May 15th announcement of Mythos, they forget to secure it correctly and out it goes.","offset":296,"duration":58},{"text":"Rory: So—so that’s the first thing, right? So that’s kind of—that’s the embarrassing part of it. And then the interesting part of it, and you really do have to do this without sniggering, despite the fact that it all leaked, you also have to separately talk about the fact there’s some big claims on Mythos, right? At—at Anthropic were making via, again, via this leaked memo. Reminder, no one else has seen it, uh, the—the actual model—um—at least not publicly available, obviously some people have seen it, but not publicly available. And even I was trying to get copies of the leaked memo. There’s just a few screenshots at this stage; it’s hard to track it down, at least quickly anyway.","offset":354,"duration":42},{"text":"Rory: But the statement is: it’s way more powerful. Second thing is it’s going to be way more expensive for them to serve, and therefore it’s going to be way more expensive for customers to buy. And then the third thing is a particular focus on cybersecurity. It’s meant to be, quote-unquote, \"extremely good\" at detecting cyber issues, and the result of that, and—the result of that was an eight, four or five percent decline in the average cybersecurity stock last Friday when this leak happened.","offset":396,"duration":34},{"text":"Jason: Yeah, just two, maybe two other things on the leak, just for—this tradeoff, um, you know, I’m dating myself, but when I was at Adobe and we were acquired, we were an early customer of GitHub. Um, and so we were putting source code in the cloud, and that was banned at Adobe at the time. It was banned because their source code was their crown jewel. It was pretty easy to—to make a crappy PDF reader or a crappy image generator, but to do what Photoshop or Adobe Acrobat did, all the exceptions, all the corner—the thousand—tens of thousands of corner cases was the crown jewel, right? Of the company.","offset":430,"duration":43},{"text":"Jason: And so everything—we got the first exemption to be able to use source code in the cloud, and pros and cons. But when—when they use this on-premise source code management tool, it took a month to do a release. A month. A month, okay? Now we’re doing 60 releases a day, right? Or even Anthropic, fastest-growing enterprise company of all time, is still doing massive releases every month or two and dropping features every day, right? So we went to something that took 30 days at a tech leader to something that takes hours. There’s trade—there’s tradeoffs there, and I’ll—I’ll take them.","offset":473,"duration":45},{"text":"Jason: But we’re going to see it explode. In terms of, like, the stuff that was published today, going back a few threads on show number 50 to Rory, one of the things that I thought was pretty cool in Kairos was two things: um, always-on background assistant that works constantly. Our AI is working with us 24/7. And agents that can sleep, wake, and self-resume without any prompt. The autonomous agents, which I’ve been talking about how this is going to consume orders of magnitude more tokens and change our lives, I’m—I’m excited to see more coming.","offset":518,"duration":46},{"text":"Jason: And, you know, Open Claude was just this—this brief thing that woke us up to what Anthropic appears to be all-in on. Truly autonomous agents running 24/7, hopefully more safely, hopefully not leaking all of our source code. But it’s coming soon, right? Not these—you know, this whole idea that we’ve been doing—since when we started this podcast, you went onto ChatGPT or Claude—no one had heard of Claude when we started this, I was the quirky guy using Claude—and you’d talk to it and go back the next day. The next release is going to be on all the time, all the time, debating Harry’s latest investment. Was it big enough? Is he too concentrated in the fund? Where should he go? What was Rory thinking on that deal, right?","offset":564,"duration":40},{"text":"Host: Why was Rory abusing Harry by email again for the second time in a day?","offset":604,"duration":5},{"text":"Jason: Again, we laugh, but this is the future. I—I’m excited to see it coming sooner when our agents are 24/7. Like, they’re literally around us and we give up all of our personal freedoms and autonomy as part of it.","offset":609,"duration":15}],"startTime":90},{"title":"OpenAI's Strategic Shift: Killing Sora & Embracing Ads","summary":"The discussion contrasts Anthropic's momentum with OpenAI's decision to kill its Sora model. The hosts analyze OpenAI's pivot away from costly consumer experiments toward establishing a viable ad-supported business model.","entries":[{"text":"Host: I hear you on the embarrassment of it being leaked and, you know, the human error element. But while Anthropic has Mythos, which is supposedly as powerful as it is, you’re juxtaposing that with OpenAI fucking around with killing Sora, kind of ads not really working and people being unhappy with it, and it seeming like this massive chasm of the progression of force that is Dario and Anthropic continuing faster and harder than ever with a faltering, confused, and dazed OpenAI wandering around the product desert trying to find some water.","offset":624,"duration":42},{"text":"Rory: You’re just being mean. I mean, again, as I said last week—and I’m sorry to repeat myself—","offset":666,"duration":7},{"text":"Host: Is that not fair?","offset":673,"duration":2},{"text":"Rory: Yeah, but—again, narrative is overdone on both sides, right? So—I think some parts of it are true. Obviously, you throw in a bunch of different things. The decision to shoot Sora in the head, right? Almost certainly a good decision. Look, it’s obviously embarrassing to say something is going to be amazing less than four or five months ago and then shoot it in the head. But if it’s a mistake, give them credit for at least saying it’s a mistake, move on, right?","offset":675,"duration":28},{"text":"Rory: And yeah, that relationship with Disney—again, I think I’m going to give you—it wasn’t me, I was sneering at it in real time when it happened, I think someone else on this podcast said it’s really significant, just saying, right? It’s Crotchety—","offset":703,"duration":16},{"text":"Jason: I do, I—I think it’s massively significant. I think shooting in the head is even more significant. Um, I think saying that the entire—a big part of the whole strategic direction of the company was flawed. Agreed. The whole that we are going all-in on consumer, the—from what I read, Sora made single-digit millions of revenue, right? And was consuming a million a week, which actually sounds way too low, right? It must—it must have consumed billions and made single-digit millions. It makes no sense as a product, either in the short term or the long term.","offset":719,"duration":39},{"text":"Jason: But if you want to own the whole consumer experience with AI, you’ve—they decided we have to own image and video, and Anthropic never even attempted to do it, right? So it’s a massive retreat. It doesn’t mean it’s the right—it’s probably the right decision, to your point, in fact almost certainly is. But man, that’s a—\"Our strategy was wrong.\" Like, this is a huge own goal. \"Our strategy was wrong.\"","offset":758,"duration":25},{"text":"Rory: Agreed. But I—and I agree with that, but I still think—as I say, I still think Harry’s over—kind of overegging it a little bit because, look, you made a comment about ads that I think is—uh—hypothetically—um—effectively implying that the ad strategy hasn’t worked. That’s a bit of a bigger leap. I mean, Sora hasn’t worked, they’ve killed it. I think I’m with Jason, I think that’s smart because I think one of the things you’re seeing right now is in a world of scarce compute—and astonishingly, despite all the investments that we’ve seen in terms of actual available compute for people to sell AI on, we’re in a scarcity mode. You don’t devote compute to things that are highly compute-intensive and low revenue-intensive. I mean, it—and Sora was almost the definition of that. Video generation is extraordinarily compute-intensive, relatively speaking, and the revenue is almost minuscule.","offset":783,"duration":71},{"text":"Rory: Conversely, you know, CoGen, while it is compute-intensive, is orders of magnitude less compute-intensive and there’s real dollars attached to it. So you’re literally—what’s happening right now, I actually think at a higher level, it’s actually very healthy. You’re seeing the economists, the accountants have wandered into the room and they said, \"We have a scarce resource here, let’s optimize it, let’s devote this compute to the people who can pay the most for it.\" So that’s the Sora comment.","offset":854,"duration":56},{"text":"Rory: On the ads comment, Harry, yeah, it’s early days for, you know, ChatGPT ads. But again, I cite that quote that Brian Kimball did that was really good. Of course they’re going to run damn ads because there’s no other way to build a mass consumer business, and they’ve no choice, right? Because, you know, their consumer conversion rates run roughly 5%. It gets them to a—I think a roughly 10, 15 billion dollar consumer business, right? Out of their 500 million uniques or whatever it is.","offset":910,"duration":36},{"text":"Rory: So one of two things has to happen in the consumer business—again, I’m going to leave the enterprise business out. On a consumer business, either A, they take that conversion rate to a number we’ve never seen before from a typical consumer business—I think that’s unlikely, I don’t think most consumers are going to pay 20 bucks a month for this—or option B is you make an ad business work. They’ve got no choice but to make it work. And by working, I don’t mean a hundred million dollars. People are kind of ragging on the hundred million—it’s in the noise, it’s scale. Big picture here: Facebook and Google each do 200 billion, plus or minus, a year in digital ads. If these guys aren’t doing 20 billion within a couple years, they’re not even in the game. And to get to the market cap of—I mean, remember, Facebook has a 1.7 whatever it is trillion market cap doing 200 billion. Alphabet/Google has a 3 trillion market cap doing 260 billion plus thing. If they’re going to grow into their market cap on the consumer side, 20 billion’s not enough. They have to do 50 billion, 70 billion of ads. So unlike Sora, this is not going to be a \"try the ads and then fold.\" This is a—there’s only two existential bets for this company: one of them is ads to make the consumer business work, and then the other is \"Oh my god, we should have done coding all along. Let’s get a competitive coding and enterprise model out there and compete with Anthropic on that side.\"","offset":946,"duration":89},{"text":"Rory: So those are the only two things they’re doing and they’re the only two things they should be doing. It’s straightforward. I mean, I actually see this as good news. Like, at least they’ve—like, we’ve gone from the \"let’s wander around the woods feeling cool building shit\" to \"there’s only two things to do, let’s get them done.\" I—it’s net—it’s a positive. Better late than never.","offset":1035,"duration":20}],"startTime":624},{"title":"The WSJ Report on OpenAI's Internal Drama","summary":"The hosts react to a Wall Street Journal article detailing the leadership turnover and intense interpersonal drama at OpenAI. They discuss the massive toll this infighting takes on CEO Sam Altman's time and execution.","entries":[{"text":"Jason: Man, did you—did they had the Wall Street Journal this week? They had—they had a story of why Dario left—OpenAI. Did you see that story?","offset":1055,"duration":9},{"text":"Rory: Oh, that was juicy. Yeah.","offset":1064,"duration":2},{"text":"Jason: Yes, I did. I mean, the amount of tension at OpenAI. The fact that Greg Brockman attempted—recruited them and no one would work for him. He and—and his sister would not work for Greg Brockman, would not talk to him, they would not allow him to be part of the LLM or G-T-P groups. Then Sam had to constantly tell each of them that they were in charge, right? Told Dario he was the boss, then told Ilya and Greg they could fire him at any time if they wanted to fire Sam, right? Then begging—then Dario to come back, then Dario saying he would stay only if he directly reported to the board and nobody else. I mean, the level—and then—and then finally firing Sam and then bringing him back and then Sora and de-Sora and we’re not doing coding. It’s just—I mean, I’m exhausted.","offset":1066,"duration":55},{"text":"Jason: I—maybe I’m wrong. I have to think at least someone like me would feel much more comfortable in Anthropic where it appears there’s a much more consistent process and leadership, right? Same founders, same things, same goals. It just—I have to think a company organized like that is just going to ex—out-execute someone with that level of drama. I—I almost can’t take it.","offset":1121,"duration":26},{"text":"Host: You’re going to kill me for this, Rory. Is the best thing for OpenAI not to buy Sierra, incorporate that as its customer support product, and have Bret Taylor come in as the day-to-day CEO and Sam can be fundraiser, Sam can be master of—","offset":1147,"duration":17},{"text":"Rory: I’m not in the boardroom, so—you know, I hear—look, at the end of the day—at the end of the day, I think you’re right, Harry, and I would favor that as a board member, but I’m not going to say that publicly because I don’t want Sam to break my balls. I am too unimportant for Sam to even give a shit about, right? So I don’t worry about that at all.","offset":1164,"duration":36},{"text":"Rory: So let me say this delicately. That amount of board-level and senior-team-level turnover over an extended period of time is probably the highest warning signal that you could have as a board member about how your CEO’s doing, right? And if it was anything other than a founder—let’s put it this way, if it was anything other than a founder-led company and this level of drama was going on, you’d probably be having—you’d probably sit down with the CEO and asking how’s it going, at least, and what are you thinking of doing about this? I don’t think you turn on people just when things go to shit, but you probably want to cut down the drama from here, build a team, and try and call a shot and play it for more than 24—you know, for more than six months at a time.","offset":1200,"duration":49},{"text":"Jason: Well, when you’ve—when you’ve worked at or observed startups where the CEO is spending so much of their time load balancing talent that can’t work together versus when you’ve worked at one or with one where the talent’s rowing in the same direction—to say that it’s night and day would be an understatement, right? It’s like the—the back side of Pluto and the front side of Mercury. And it’s just—and I think Sam—we could criticize him, actually when I read the—everything I’ve seen and then when I read the Wall Street Journal article, it’s like, \"My God, this guy has to spend so much time load balancing the drama of these extremely brilliant personalities that just, oh my god, that can consume number—most of your time as CEO. Most of your time load balancing.\"","offset":1249,"duration":45},{"text":"Rory: You’re exactly right. It is the drama of—we’re not dealing with a bunch of people just trying to crank out some B2B software and make a paycheck, we’re dealing with people who are angsting about whether this is going to change the world, who have fears about the technology, who have, yeah, desires to be seen as credited for the technology despite their fears about it. This is a—I mean, as is often the case, extraordinary talented people come in an extraordinary high bandwidth—a—demand on attention and care and feeding. It’s probably—it’s been a real slog, I’d say.","offset":1294,"duration":33}],"startTime":1055},{"title":"Masa Son's Leveraged Bet on OpenAI","summary":"SoftBank's Masa Son takes out a $40 billion bridge loan to buy OpenAI stock. The hosts evaluate the extreme leverage and risk involved in this investment strategy.","entries":[{"text":"Host: Okay, the man with the most balls in investing, Masa Son. SoftBank gets $40 billion bridge loan to buy OpenAI stock. How deep can Masa go?","offset":1327,"duration":17},{"text":"Rory: He’ll go as deep as they let him. I mean, that’s the one thing we know: if they give him another 20, he’ll borrow that too, right? I mean, look, this is a—I actually checked the SoftBank—you’ve got SoftBank holdings—I have to be careful, there’s the Telco Group which is mod—reasonably levered at the Japan level, and then SoftBank Group is around 2x levered. One and a half to 2x levered in terms of equity, right? What that means is a 30-40% decline, you know, wipes them out, right? It’s a very aggressive stance, right?","offset":1344,"duration":37},{"text":"Rory: It would be like me taking our $800 million venture—$900 million venture fund, borrowing 1.8 billion, and investing it all, and if, yeah, if it works I make—you know, I really juice my return, but if it goes wrong by 30% I’m done, right? And it’s just—it’s super aggressive. I mean, I suppose his lesson is Masa survived 2002 when I remind everyone the NASDAQ went down 85%. You haven’t lived until you’ve seen an 85% decline in an index, right? And obviously if that happened or anything like it, um, you’d just be way underwater. Right? So it’s a—it’s a fairly high amount of leverage for an investment fund to say the least.","offset":1381,"duration":43},{"text":"Jason: Yeah, I mean, for—for sure it’s dramatic. Having said that, you know, real estate investment funds get the maximum leverage they can by design, right? They—that is how they work. I would imagine if venture had access to more debt, we—we’d all—we’d all load up on it. If we all could—if we all could do the growth rounds in your hottest company and uh maybe we would—and we could get—and we could get all the carry from it with the—and the worst thing is we leave the keys to fund seven on the table, we might—we might load up too. I’m not sure. But certainly, real estate funds load up as much as they can.","offset":1424,"duration":35},{"text":"Rory: But just pushing back again, because real estate funds load up because the cash flows are predictable, right? At the end of the day, I mean, look, in a—","offset":1459,"duration":9},{"text":"Jason: Oh, they—and they can, but they can because the cash flows are predictable, they can load up. Agreed. Right? We don’t—it’s just harder for my little fund to go to Silicon Valley Bank and borrow 200 million against—","offset":1468,"duration":11},{"text":"Rory: In the continuum of risk, I would argue the SoftBank portfolio, not the Telco company at the subsidiary level, but I would argue the SoftBank portfolio is more like Jason’s fund than it is a real estate fund. So I think it’s a high level of risk.","offset":1479,"duration":15},{"text":"Jason: Well, plus what did he lose on WeWork? 12 billion. He—he knows. He knows what it’s like.","offset":1494,"duration":7},{"text":"Rory: The two big assets from memory are uh obviously the OpenAI position and I think the Arm position, which I still think is in um the—the—the—in the holding company. And yeah, but I mean, amazing companies, world-class companies, easily imaginable a blow up with a decline 30%. So, yeah, it’s a hell of a way to live.","offset":1501,"duration":30}],"startTime":1327},{"title":"The Mythos Leak's Impact on Cybersecurity Stocks","summary":"Following the Claude Mythos leak, cybersecurity stocks like CrowdStrike and Palo Alto took a hit. Jason argues the market reaction is backward, as the proliferation of AI agents should usher in a golden age for cybersecurity firms.","entries":[{"text":"Host: Speaking of declining 30% and being in the hole, we—we touched on it earlier, but obviously Mythos leak hammered cyber stocks. CrowdStrike, Palo Alto, Zscaler all down 6%. Okta, Netscaler down 7%, Tenable down 9%. Was this a justified dip, or is this an unjust reaction to Anthropic news?","offset":1531,"duration":24},{"text":"Rory: I was listening carefully to the name because I was listening carefully to the names and there’s different aspects of security, and some of them I can say, \"Yeah, maybe that overlaps,\" and then some where I go, \"That’s just a different thing,\" right? And when you listen to all the names being thrown out, you say that’s just, you know, baby with the bathwater. Because step back: how does—how does Anthropic, you know, make security better? At the code development stage, they can look at code and find security flaws. So there are companies that upfront do something like that and, you know, application security companies, and you could argue that this is a different way of doing that, maybe some of those guys will be impacted, right?","offset":1555,"duration":43},{"text":"Rory: What they’re not doing, for example, is real-time perimeter defense. They’re not in a—in a real-time basis, you know, blocking people like a firewall, right? Nor are they doing what, for example, Okta does, right? Which is single sign-on and authentication. That’s simply not what they do; it’s a different thing. And the fact that both of those kind of stocks sold off says it’s just a kind of knee-jerk reaction rather than anything thought-through.","offset":1598,"duration":29},{"text":"Rory: It will have an impact. If you were doing application security or code review for—security code review, you’re probably going to have to either incorporate how this works in your analysis or you’ll be redundant. Just as the—the coding companies, anyone kind of—just as GitHub had to roll in complete models and figure out how to adopt it, right? So for some of them, this is really going to matter, and then for others it’s like, it’s just a different thing.","offset":1627,"duration":28},{"text":"Rory: Stepping back, I think we’re in the panicky stage, right? I think we’re in the stage of because these companies are doing so well, because they’re private no one sees the numbers, because AI is so sexy and so potentially amazing, we’re at the stage now where everything can—anything can cause a panic.","offset":1655,"duration":18},{"text":"Host: Robinhood was down like 10% because Elon didn’t potentially give them the tender and was going straight through E*Trade. And that alone was like a massive blow for them.","offset":1673,"duration":14},{"text":"Jason: Obviously, there’s a panic in the market and the question is, is the panic justified, right? The panic is that this revenue is not durable, right? That’s the panic. The cybersecurity one’s really interesting. In my—in my experience and opinion, this is one where it’s just back-asswards. Um, because if you’re in the agentic world, this is the golden age of security. The number of security threats and issues is going up orders of magnitude. Claude leaking its source code, it doesn’t matter. The number of—of apps exploding, the number of—like, there’s so many mobile apps that App Store is like—it’s like a month to get your app reviewed versus a week. It is—everything is exploding. These apps are being built by agents. They’re being built in unpredictable ways. Folks aren’t looking at the code. The pace of features being shipped, products being shipped, corners being cut. This is a golden age of taking any mature category and acknowledging, \"Good news for us, there’s more threats.\"","offset":1687,"duration":53},{"text":"Jason: Good—whether—I don’t care whether it’s application level, perimeter, like—the good news is threats are exploding and the whole shtick of cybersecurity—I’m not a real cybersecurity expert, although I’m doing another investment right now for just this reason—the whole shtick in my whole lifetime has been, \"Look, you’ve got to constantly buy new products because new threats keep emerging.\" Like, this has been a golden goose of cybersecurity that has allowed new entrants to come into a conservative category. Someone like Wiz will show up and say, \"Guys, we know how to do this on the web,\" and people are so terrified of new threats they’ll take the meeting, right? This should be the golden age for new and existing investors because the threats are terrifying and you can’t stop the rogue engineers that vibe-coded something that accessed your data. This—this should benefit everybody. Like, everyone should be a rocket ship like everybody built—like everybody monetizing GPUs is a rocket ship. And the fact that the market doesn’t see it shows we’re in a—in my opinion, we’re in a true panic, which is hard to predict a bottom. But I don’t get it. Everyone should be benefiting when you see an explosion in application production and a change in the paradigm. The change in the paradigm’s good for everybody except, you know, Windows Defender from 1996. Like, it probably doesn’t help that product or whatever the hell they have, but anyone—everyone with engineers should benefit.","offset":1740,"duration":86},{"text":"Rory: I broadly agree with Jason. I mean, there might be—there are more than Windows Defender 2006 that might be impacted. As I say, some of the application security code review stuff could be. But big picture Jason’s right. Instead of having people trying to get in through your firewall, we’re everyone is now downloading an agent, giving it full root access to their computer, and telling it have a go, and as Jason just pointed out, work overnight. It’s going to—I mean, no one yet—it’s funny, we—my colleague Errol who does a lot in the security side, we’ve been looking at a lot of these companies. No one yet knows the exact approach that we’re going to have to take to defend against agents running within the organization, but everyone 100% understands that this is a—emerging mega-threat because of the velocity of adoption times the power of the solution.","offset":1826,"duration":52},{"text":"Rory: So I agree with Jason. It mightn’t be the old guard that takes advantage of it, but there’s no—but they tend to be pro—one of the things I admire about the security companies is the CrowdStrikes, the Palo Alto Networks of this world is they know damn fine that when a new threat emerges and a new solution emerges for that threat, when an earlier winner comes out, you better spend your 300 million bucks, your 500 million bucks, and just swoop up the winner and add it to your product, right? So I think there’ll be a ton of fast acquisitions as agent security solutions emerge, you know, and at—and people will be doing, if they’re smart—and I think those two companies are extraordinarily smart—they’ll be doing acquisitions long before it’s, quote, \"certain,\" because you’re going to have CIOs coming and talk to you.","offset":1878,"duration":36},{"text":"Rory: Right? One thing worth mentioning on that is it was interesting—again, I—in some of the leaked information from Anthropic—they are masters at selling fear. One of the things they’re doing is they’re releasing the Mythos model first to CISOs within companies. It’s kind of like, \"Oh, it’s so scary, we’re going to give you this model and give you time to figure out how to use it.\" Of course, part of that time will involve giving a million bucks to Anthropic for—so it’s just great marketing. So they’re actually leaning into that and saying to the CISOs, \"You’re going to have to figure this out. This is the new terrifying weapon we’ve invented. Please give us a million dollars and we’ll let you defend yourself with it also.\" Great marketing. Uh, but it speaks to the perceived—to Jason’s point—it speaks to how correctly afraid every security for—CISO should be given the pace of agentic AI adoption in the enterprise.","offset":1914,"duration":57},{"text":"Host: In the golden age of cyber, I wish I’d bought more.","offset":1971,"duration":4},{"text":"Jason: I mean, it’s just—it’s just how hard is it to get a meeting? Whoever you are, if you have any established brand, \"We—we’ve got a new agentic product, we’re going to help protect you from this.\" You’re going to get a meeting that afternoon.","offset":1975,"duration":9},{"text":"Host: Wish I bought them over Figma, that’s a depressing chart that I’m looking at.","offset":1984,"duration":6},{"text":"Rory: You need to let—you need to let go, Harry. You need to let go.","offset":1990,"duration":4},{"text":"Host: I’m—I’m down 30% in a month, Rory. It’s hard to let go after 30% in a month.","offset":1994,"duration":5},{"text":"Rory: Okay, no crying in the casino. Move on.","offset":1999,"duration":5}],"startTime":1531},{"title":"Questionable AI Revenue Recognition and ARR Metrics","summary":"The hosts break down how Anthropic and OpenAI calculate their annual recurring revenue (ARR) differently. They also note that reselling the same compute tokens artificially inflates revenue across the AI startup ecosystem.","entries":[{"text":"Host: Uh, we—I—I do want to discuss revenue kind of questionability. Uh, we’ve got Anthropic recognizing revenue in a very different way to OpenAI. And then you also have questionability around Emergent Labs, um, and is it okay if ARR is kind of questionable in—sort of how it’s accounted for? Um, how do we think about that? You can choose which one you want to take.","offset":2004,"duration":24},{"text":"Jason: Let me just—can I just—I—maybe Rory can dig into it, but I’ll tell you there’s one startup I invested in that’s over a hundred million ARR. And I get the—I—I—I own just enough to get the investor updates. It’s not—I’m not on the board. And I get three numbers every month. Three revenue numbers. I—I don’t know what the hell they are, over a hundred million, but the smallest one is ARR. Now I invested in Seed, I don’t really care, I’m in the money, I don’t—I don’t have a choice. But I—I can’t understand—this company’s doing great, but I can’t understand for the life of me these three numbers and there’s asterisks and daggers and there’s charts that go everywhere, but they keep going up and to the right, which I think was on this Emergent thing we could talk about next. I think that’s what some of the investors said, \"Who cares?\" But I can’t tell the hell the difference what—what an ARR is in 2027.","offset":2028,"duration":43},{"text":"Host: Well, what—what I always get is like \"pipe,\" which is complete bullshit, then \"contracted,\" and then there’s \"live.\"","offset":2071,"duration":7},{"text":"Rory: So, first of all, stepping back, both—to be fair to both Anthropic and OpenAI, they have a very clear and sensible way they define ARR. What they take is they take the last—the average of the last four weeks to smooth out, times 13, because there are 13 four-week periods in a year. Which is more sensible than monthly because you have these varying months. So they basically—what they’re saying is realized revenue for the last four weeks averaged, you know, the average of the last four weeks—sorry, obviously if it’s the average it’s times 52—but basically it’s actual GAAP revenue. What did we bill for the last four—the average across the last four weeks to take into account holidays? That’s their run rate. Right? So it’s actually pretty—it’s not committed or any of the bullshit kind of higher-level stuff. It’s actual money flowing through the system.","offset":2078,"duration":58},{"text":"Rory: Anthropic is roughly at 19 billion according—based on that kind of trailing four-month—four-week metric, and OpenAI is around 25. But now let’s talk about your thing. There was this kind of whole meme of OpenAI reports net on their partner revenue and Anthropic reports gross. And what they’re saying there is if OpenAI sells through Microsoft and Microsoft takes some money off the top, OpenAI only reports the net amount. If Anthropic sells through AWS and they sell a hundred dollars worth of revenue, they report the gross amount and then they give 20—20 dollars back to Amazon as a cost of sale. So there’s two different methods for what look like the same revenue kind of nix—or same revenue approach.","offset":2136,"duration":44},{"text":"Jason: I thought you were going to extend that. I thought part of where you were going was to Michael Cannon-Brookes’ point on the show was that a lot of this revenue is getting doubled or triple-counted because of how it’s being recognized. And not only does this happen, then Cursor’s selling it again and recognizing the revenue, right? The same—people keep reselling these tokens again and again and recognizing them as their own ARR. Um, how many times do we get to resell these—these poor little tokens?","offset":2180,"duration":30},{"text":"Rory: I think that’s actually a great point, Jason. I hadn’t thought about that, but you’re exactly right. No, it’s like the—everyone’s got amazing revenue growth because it’s the same little token going through different—I can just picture this little token.","offset":2210,"duration":14},{"text":"Jason: I mean, if we all agree to have essentially 0% gross margins, an infinite number of us can keep reselling tokens to each other, can’t we? This is our new 20 VC scale SaaSster demo day. We all resell a million tokens to each other on the first week, so everyone in Batch 001 has a million ARR its first week, because we just resold our tokens to each other. So and it’s completely fair. The VCs don’t mind.","offset":2224,"duration":27},{"text":"Rory: And—and you’re exactly right, and the sentence that you added in passing is the key one: \"until we all have to get profitable.\" All this, you know, can continue. And then at some point, that’s why I said I think you’re starting to see it, someone’s going to have to say, \"Assuming we want to have a net present value and a cash flow, what’s going on here?\" And then—and then all this becomes more clear.","offset":2251,"duration":23}],"startTime":2004},{"title":"Emergent Labs and Deceptive PLG Billing Practices","summary":"A look into Emergent Labs' claim of reaching $100 million ARR in just eight months. The hosts criticize deceptive product-led growth (PLG) billing practices that instantly log free trials as paid recurring revenue.","entries":[{"text":"Rory: I—I didn’t comment on the Emergent Labs fastest to a hundred million. Jason, you—you actually tried it, didn’t you? You thought it was good.","offset":2274,"duration":6},{"text":"Jason: I did. I thought—I mean, listen, it’s hard for me to know the criticism, right? You know, some folks in the press and the India B2B environment tried to make this some sort of scandal, right? Because—and in a sense, fair enough. If you go to Emergent Labs—and Emergent Labs is sort of an Indian competitor Replit and Loveable, which I’ll show you what I learned in a minute, right? And if you go right now to the homepage they say \"0 to 100 million,\" I think in eight months. It’s right there, it’s the biggest banner. So in all fairness, if you’re going to put yourself out there, not—not just as a tweet, but if it’s going to be right there on your website, one would expect 70 to 80 percent accuracy in that number, ideally higher, right?","offset":2280,"duration":43},{"text":"Jason: So if it’s lower than that, I think it’s fair that some daggers came out. But I was curious—um—but I don’t actually know what happened. Is it triple counting to—I—I can tell you one thing that I learned, which I don’t love, which is that what a—and a lot of AI startups do this. So this is not unique to Emergent. They kind of hot—instead of getting you to use the free version, they try to get you to immediately do a free trial, instantly that says it’s zero dollars and twenty dollars a month thereafter. Now so many folks do this. It is not unique to them; it’s probably best practice in most accelerators. But I’m pretty sure that means they recognize twenty—240 dollars in ARR that first month when you’re paying zero. And they trick you because you don’t even—yeah, you do have to click on the Stripe link, but you almost think you’re just using the free product.","offset":2323,"duration":52},{"text":"Jason: So is that—if I do a zero dollar a month product um that’s discounted as a marketing cost and I churn after 30 days, does that count as 240 dollars of ARR? I think for a lot of startups it does. Okay? So—that—that’s a fair criticism. I’m not saying this is what Emergent did, but a lot of startups will instantly recognize that as 240 dollars in ARR, which is how they rocket if you’re self-serve. That’s how you—otherwise you can’t get there that quickly, right? So they clearly did that.","offset":2375,"duration":37},{"text":"Jason: I will say what was interesting is I—I thought the product was pretty good. Much better than Make. Like an order of magnitude better than the disaster of Make. Um, because I—I do a five-part test, a six-part test. The first part is awareness test. So I ask it to redo the SaaSster.ai homepage. Uh, actually of all the platforms it did the best job. It—it beat—it beat—it beat all of them. All of the leaders, because I redid this recently. I redid this and Replit, Loveable, VZero, they’re all good at—they all pass the test, but it actually—it actually was probably the best and it—it passed a bunch of the other tests.","offset":2412,"duration":49},{"text":"Jason: So I’m not going to switch to Emergent Labs, but I would say it’s in the top 10% of vibe-coding apps. That’s pretty good. So that tells me it’s a legit business. Like they did—they did the work and a lot of these they’re just—the truth is if you play with a lot of these even from leaders, like Make’s not the only one that’s crappy, okay? Because they’re basically relying on the fact that Claude code does 90% of the work for you. Right? They’re just putting the simplest wrapper around this and so they did a good job. But is—I really didn’t like the way they do the billing, but we’d probably have to shoot half our portfolio companies that do like PLG AI because I think it’s a sus practice. I just don’t like tricking you with this zero dollar for the first month when you think you’re using a free trial, right? That’s the sus part. I don’t—I don’t love that kind of gray art. Um, but the product’s pretty good.","offset":2461,"duration":71}],"startTime":2274},{"title":"The Optics and Gamification of VC Tranche Rounds","summary":"Harry vents about the misleading nature of venture capital tranche rounds, where blended entry prices are used to artificially inflate headline valuations. The hosts agree that founders and investors are increasingly prioritizing gamified valuation optics over reality.","entries":[{"text":"Host: You know what I didn’t like when it comes to confusing? I was wondering whether to go off on one in this show and then I thought, \"Fuck it, let’s go off on one. It’s been a long day.\" I’m pissed off by these tranche rounds. I see them all the freaking time. The amount of Sequoia rounds where it’s like, \"Oh, you know, X raises money from Sequoia at five billion.\" Trust me, Sequoia got in at one, but they just club it together and then announce the sum and then the latest valuation. And it’s just very misleading. The tier ones get in early, a tier two, tier three instantly marks it up same day.","offset":2532,"duration":35},{"text":"Jason: Same as crypto, isn’t it? For years. What’s the difference? We’ll give the Andreessen crypto fund the, you know, essentially 80% off the token. What’s the difference? You’re paying for the—paying for the signal.","offset":2567,"duration":11},{"text":"Rory: I think if you break it down, first of all, just so everyone’s on the same page, because interestingly neither Claude nor GPT was on the same page and didn’t know what a tranche round was, and they gave the old conventional venture tranche round based on performance milestones, you know, BS from back in the day when we actually ran businesses, right? So they didn’t have a clue about this.","offset":2578,"duration":26},{"text":"Rory: So let’s be clear on the practice here. The practice here is when a company, a hot company raises a round where there are effectively two different prices per share—a first—let’s call it a first close and a second close, even if they are at or near contemporaneous—where the first one might be at 250 pre and the second one is at a billion pre and, you know, the highlight and the headline is they raised at a billion pre. There’s two imp—impacts of this.","offset":2604,"duration":33},{"text":"Rory: First of all, let’s do the simple one where there’s just a single participant in the round. That’s where, you know, if I’m the new investor, I want to pay 600. The company wants a headline of a billion. And to win the deal someone says, \"Okay, let me put some money in at 250, some money in at a billion.\" I can do math because I’m paid to do math because I’m an investor, so I know my overall basis is a billion—sorry, obviously if it’s the average it’s 600 million. So I’m getting what I want, and the company’s getting what it wants, which is a headline number of a billion, right? It’s silly, but that’s all that’s happening in that case. That’s the single participant tranche deal, right? And it’s just—and for some if a company wants a headline that’s what they get, right?","offset":2637,"duration":57},{"text":"Rory: Generally those things come back to bite you because by definition if you’re the company, just as the investor can do math presumably you can do math. If you accept that combined deal you’re implicitly saying, \"I know I’m only worth 600 but I’d like the optics of a billion.\" You better be damn sure that your next round you’re at one and a half billion, otherwise you’ll have the optics of a down round, and if you’re an optics believer that’s probably worse than the uptick, right?","offset":2694,"duration":32},{"text":"Rory: So that’s kind of the single participant version. The much more annoying version that Harry clearly was getting on his high horse about is when you have the same structure but access to those rounds where the—the lead investor maybe does all of the 250 pre-round and only half of the billion round, and then some new investors just get to do the billion round. So literally at the same time, the lead investor is investing at 600 billion—I mean, million—and the follower investor, less marquee investor, is investing in the same asset at a billion. And there—I don’t believe there’s right or wrong in money, there’s just money, right?","offset":2726,"duration":45},{"text":"Rory: That’s where at the minimum you have to look yourself in the mirror as the other investor and say, \"Wow, that’s the price of being cool.\" Right? \"That’s the price of access. I’m paying 50% more because I just can’t access that deal.\" Right? And that feels like pretty invidious thing to—I mean, again, going back to the comment, the—you’ve got to remember if you think about—and again, try to avoid morality and saying, \"Oh, it felt shitty,\" because it really—it would feel like a loser if you did that. But let’s play it out. In this situation where the—the lead investor, let’s say it’s Sequoia because everything good and strong should be Sequoia, they’re admitting it’s only worth 600 on average and they’re just doing this fakey transaction. The company is admitting it’s only worth 600 on average because they’re taking the money at a blended cost of 600. So what you’re saying doing it at a billion is you’re either saying, \"Either I have a lower cost of capital and I’m willing to take a lower return than everyone else,\" or the only positive spin you can come up with is the company thinks it’s worth 600, Sequoia thinks it’s worth 600, but I am smart enough, even though I don’t have access, I am smart enough and clever enough to know that it’s really worth a billion and I should do it at a billion even though I can’t get to 600. And I’m willing to put up with the upfront tax and foolishness look because I think 6-12 months from now it’ll be obvious that I bought it at a great price and maybe I’ll look like a genius.","offset":2771,"duration":99},{"text":"Jason: Yeah, but we’ve—but we’ve entered an era though, the—one—I think the meta thing—maybe this wasn’t exactly what you were queuing up, Harry, but it is tough. We’ve entered an era where so many founders are obsessed about headline prices. Obsessed. They’re obsessed coming out of Demo Day, they’re obsessed—they’re obsessed. Once they cross a billion, which I think should be a moment to take a pause because of an M&A options, they’re obsessed about driving to 11 billion and 9 billion and one-upping their competition. And the numbers have become a joke to many founders, right? They just don’t—maybe joke’s the wrong term. They don’t think through the—any of the ramifications of the valuation they’re hiring, they don’t care.","offset":2870,"duration":48},{"text":"Jason: And I’m not even saying that’s bad. I mean, I think burning the bridges is a good way to have a big outcome, but it’s become utterly gamified on many levels, right? It’s just become gamified. And so this—11-teen tranches and around is just part of gamifying it, right? It’s been true of YC since I started investing. There—there was always a cheaper price before Demo Day if you’re reasonably hot, a higher price at Demo Day, and then a 20% or 30% after Demo Day. So that version has just become institutionalized and so be it if it’s what the founders want. If they want to gamify it, so be it, right? I just don’t think raising at 5 or 8 billion when you’re at 80 million or 100 million of suspect ARR is the most exciting accomplishment in the world. Like, I’m not going to—like, I’m—I’m going to send a few thumbs emojis on the email, but that’s about it.","offset":2918,"duration":55},{"text":"Host: That’s about it. They’re all—they’re all fake anyway, they’re all just bets, right? These are not public companies. It goes back to your point on Emergent Labs and the graph of the eight months to 100 million and the gamification of, like, the race to 100 million. I’m not choosing Emergent Labs, but listen, I think they built a good product. I think—I’m sure they’ve been overly lambasted because whether it’s 100 or 80 or 60, I don’t care, it’s pretty damn good, right? Whatever it is. But if you’re going to—if you’re going to do that, you deserve the daggers to come out when it’s not 100%, right?","offset":2973,"duration":38}],"startTime":2532},{"title":"Wearables Valuations and the Risk of Hardware Faddishness","summary":"Sparked by Whoop's $10 billion valuation and Oura's potential IPO, the group discusses the health data wearables market. They debate whether consumer hardware revenue is too faddish and susceptible to disruption compared to software.","entries":[{"text":"Host: One that I thought was fantastic, exciting, I would like to see a potential IPO or to IPO shortly. I thought this was fascinating. This has been an incredible journey, actually, from, you know, Scandinavia, these founders building this business. It’s had a couple of CEO changes. Uh, the business is actually in incredible shape. Both—actually, and Whoop announced today that they raised, I think it was 500 million at 10 billion. Fitness and health data—do you know what, actually, Rory? Jason’s annoyingly right again. I don’t know if you remember his predictions, but he predicted, if I’m not wrong, that 2027 would be the year for, like, human healthcare data and longevity.","offset":3011,"duration":41},{"text":"Jason: Yes, and it looks like it might even be 2026. And yeah, no—and the great thing about both stories is very defensible—I mean, you know, Jony Ive's side—very defensible from an—this is not an AI envy story, this is—I mean, they use AI in what they do, but these are fundamentally standalone products with a clear consumer value proposition and they’re, you know, they’re not going to be Claude-coded on Friday. I totally see it and they clearly have had critical mass in terms of revenues. I think it’s awesome.","offset":3052,"duration":35},{"text":"Jason: I think the question—listen, the interesting thing for for these products, obviously it’s exploded, is they are—they are recurring rev—you know, going back to the topic of ARR, these are recurring revenue products, right? Um, for the most part, right? Um, fairly expensive subscriptions, um, and they’re exciting until like Peloton when they aren’t, right? Now there—there’s not a $2,000 cost here, um, but—um—and I’m not being critical. I—I think that they’re exciting. But there’s also a faddishness-ism. People can switch. So the RR, the ARR, the pirate R, um, what multiples do these companies deserve? What it is, I—I’m not smart enough to know, but the—but the acceleration is a force of nature, right? I’d love to be a Seed investor, don’t get me wrong.","offset":3087,"duration":49},{"text":"Rory: Do you think there’s a faddishness in the same way? I think we—","offset":3136,"duration":2},{"text":"Jason: I think you can switch from vend—Harry, you’re into fitness. I—I’m not so much, but I run 360 days a year, five miles a day for 10 years. So if there’s a better treadmill, a better device, a better thing, I would switch. And whatever you’re—you’re fairly fit, Harry, like if you—if you were Oura and you love it, but Whoop is—is better and you care, you’re going to switch. So it’s not ServiceNow ARR, right? You—you’re loyal, you’re loyal, but—but there’s just some disruption risk. Like, look at Peloton. When Peloton blew up, but actually as the world changed, even though people love Peloton, right? Super high NPS, they—remember the Peloton addicts of 2020 on Zoom? They—they loved it, but when the world changed they just—","offset":3138,"duration":10}],"startTime":3011},{"title":"Epic Games Layoffs and Tech Overstaffing","summary":"Prompted by Epic Games laying off 25% of its workforce, the hosts recall Mark Andreessen's assertion that tech companies were vastly over-hired during 2021. Harry and Rory jokingly spar over their own daily workloads.","entries":[{"text":"Harry: But he helps me put together some of the schedules too. And he was like, \"Whoa, I had no idea about this.\" He was like, \"Whoa, Epic Games laid off 25%.\" I didn't even hear about that.","offset":3148,"duration":13},{"text":"Jason: Yeah, and then—and then I had—had Mark Andreessen on your last pod sort of laughing about how we all over-hired in 2021.","offset":3161,"duration":7},{"text":"Harry: Well, Mark Andreessen was—was very clear. He thought that we were all using AI as an excuse and that we were all over-staffed by 50 or at least 75%.","offset":3168,"duration":10},{"text":"Rory: Uh, by the way, Harry, just logically it's—it would be 75 or at least 50% overstaffed by 50 or at least 75. This doesn't make any logical sense, but keep going. Just picking up on the errors here.","offset":3178,"duration":13},{"text":"Harry: Rory.","offset":3191,"duration":1},{"text":"Jason: He's pissed now. He's pissed.","offset":3192,"duration":2},{"text":"Harry: I would love to see you do a day of my life. I would love to—","offset":3194,"duration":3},{"text":"Rory: Give me a fucking break.","offset":3197,"duration":1},{"text":"Harry: Uh, actually fair.","offset":3198,"duration":1},{"text":"Rory: I now feel guilty.","offset":3199,"duration":1},{"text":"Harry: You've been cranking.","offset":3200,"duration":1},{"text":"Rory: I now feel guilty.","offset":3201,"duration":1},{"text":"Harry: I will give you two hours sleep for six hours a day running two companies at once.","offset":3202,"duration":4},{"text":"Rory: Okay. Now I'm feeling guilty. Move on.","offset":3206,"duration":2},{"text":"Harry: Don't worry. But—but point being, like... point completely under the radar.","offset":3208,"duration":8},{"text":"Rory: They didn't try and do an AI bullshit story. They basically said, you know, active—daily active use of their Fortnite game and their games is down, so your revenue's down, so you take your expenses down.","offset":3216,"duration":13},{"text":"Rory: It was—struck me as a no-bullshit layoff announcement. It's like, you know, \"We sell less stuff, we have less people.\" It sucks. You know, and again, I really do try never to be cavalier about people losing their jobs because every one of those has to put food on the table, they're not earning the kind of money we're earning and now they've got to go out and find another job in a shitty job market. It sucks.","offset":3229,"duration":19},{"text":"Rory: But the lesson is—and that's why I respected them—it's like, we're selling less, so we gotta do what we gotta do to keep the company profitable. But I agree with you, this kind of pretend it's ARR but then next year we hate ARR, it's just a total waste of time for entrepreneurs. Things are what they are and you do best in business if you actually say what they are and just live and die by that. Most consumer products have high volatility associated with them. You better have a damn good R&D function and continue to build great products.","offset":3248,"duration":52},{"text":"Jason: Well, DJI might disagree with you. I mean, there was a whole step function in the industry that they got—they got left behind, right?","offset":3300,"duration":6},{"text":"Rory: Yeah. Would you prefer $2 billion in consumer hardware revenue or $2 billion worth of five-year contracts, um, like Palantir? Yeah, I'll take the contracts with the 90% gross margin and the five-year lock-in, please. Your starter for 10.","offset":3306,"duration":14}],"startTime":3148},{"title":"Durable Software ARR vs. Consumer Hardware","summary":"The conversation shifts to whether the market still values durable software ARR over volatile consumer hardware revenue. They compare the predictable lock-in of B2B contracts with the vulnerability of hardware products like Allbirds shoes and wearables.","entries":[{"text":"Jason: I think maybe the more interesting question, Rory, that you brought up, um, because so much has changed—this is our 50th show, so much has changed, right? When we started this show, uh, public—durable public company revenue despite slowdown in the top line was the gold standard, right? It was the best revenue out there.","offset":3320,"duration":20},{"text":"Jason: Fast forward to today, do we—Oura going public—do we give a crap what type of R it is because the durable software stuff is trading lower than the S&P 500? Maybe I'd rather have Ring revenue and um, with a somewhat suspect, uh, customer lifetime value because the software value is so low. Maybe I don't care where my R comes from, right?","offset":3340,"duration":20},{"text":"Jason: It used to matter. It used to matter, right? We were so—we'd be in board meetings where you would torture companies so that they would have more ARR and that they would have less variable revenue. I mean, that—that seems like archaic today.","offset":3360,"duration":12},{"text":"Rory: Yeah, and—and I remember doing that and I remember telling people not to do that because I'm a big believer as you can't make—you should sell your product the way the customer wants to buy it, not your VCs.","offset":3372,"duration":9},{"text":"Rory: Because I agree with you, this kind of pretend it's ARR but then next year we hate ARR, it's just a total waste of time for entrepreneurs. Things are what they are and you do best in business if you actually say what they are and just live and die by that.","offset":3381,"duration":11},{"text":"Rory: Most consumer products have high volatility associated with them. You better have a damn good R&D function and continue to build great products.","offset":3392,"duration":7},{"text":"Jason: We looked today—this week they also talked about how I think Allbirds was—was it acquired for less than 30 million?","offset":3399,"duration":6},{"text":"Harry: It was—it—yeah, I was literally about to bring this up, Jason. It was acquired by Ames for $39 million.","offset":3405,"duration":6},{"text":"Jason: So my question is, if a company like Oura goes public and you see weakness in a quarter, should you dump this thing instantly, like Allbirds, um, versus forgive a little bit of weakness in a Salesforce or ServiceNow?","offset":3411,"duration":15},{"text":"Rory: Again, I'm going to avoid any specifics—genuine comment here, right? Because it's not appropriate. But I would say something. Unlike you guys, I've run a textile manufacturing company 30 years ago.","offset":3426,"duration":10},{"text":"Rory: The technology required to make an Allbirds or a shoe is not the same as the technology required to make a modern electronic device that sits on the human finger and measures blood.","offset":3436,"duration":11},{"text":"Rory: Either of these kind of consumer electronic products—they're not a monopoly in the same way Nvidia is, but they're pretty—it's a pretty rare number of companies that can do that. Now, go down—for—put it this way, Jason: I'll name a wearable, you'll name a wearable, and then I'll name a sneaker and you'll name a sneaker.","offset":3447,"duration":17},{"text":"Rory: We'll be done with wearables long before we're done with sneakers because there's a lot of different sneaker companies. And yeah, it turns out sneakers are easier to make than wearables, which are easier to make than Nvidia GPU chips.","offset":3464,"duration":12}],"startTime":3320},{"title":"Labor Market Impacts of Epic Games Layoffs","summary":"Returning to the Epic Games layoffs, the hosts explore the broader macroeconomic consequences for the entertainment labor market. They note that AI and content creator platforms are structurally shrinking Hollywood and traditional gaming employment.","entries":[{"text":"Harry: Speaking of like \"do we care, what do we actually care about,\" there were two that I—I don't know if you guys know this, but I have wonderful partners and one of my partners is much more intelligent than me, which Rory, you're going to make some form of gag about.","offset":3476,"duration":13},{"text":"Harry: But he helps me put together some of the schedules too. And he was like, \"Whoa, I had no idea about this.\" He was like, \"Whoa, Epic Games laid off 25%.\" I didn't even hear about that.","offset":3489,"duration":12},{"text":"Jason: Yeah, and then—and then I had—had Mark Andreessen on your last pod sort of laughing about how we all over-hired in 2021.","offset":3501,"duration":8},{"text":"Harry: Well, Mark Andreessen was—was very clear. He thought that we were all using AI as an excuse and that we were all over-staffed by 50 or at least 75%.","offset":3509,"duration":10},{"text":"Rory: Uh, by the way, Harry, just logically it's—it would be 75 or at least 50% overstaffed by 50 or at least 75. This doesn't make any logical sense, but keep going. Just picking up on the errors here.","offset":3519,"duration":13},{"text":"Harry: Rory.","offset":3532,"duration":1},{"text":"Jason: He's pissed now. He's pissed.","offset":3533,"duration":2},{"text":"Harry: I would love to see you do a day of my life. I would love to—","offset":3535,"duration":3},{"text":"Rory: Give me a fucking break.","offset":3538,"duration":1},{"text":"Harry: Uh, actually fair.","offset":3539,"duration":1},{"text":"Rory: I now feel guilty.","offset":3540,"duration":1},{"text":"Harry: You've been cranking.","offset":3541,"duration":1},{"text":"Rory: I now feel guilty.","offset":3542,"duration":1},{"text":"Harry: I will give you two hours sleep for six hours a day running two companies at once.","offset":3543,"duration":4},{"text":"Rory: Okay. Now I'm feeling guilty. Move on.","offset":3547,"duration":2},{"text":"Harry: Don't worry. But—but point being, like... point completely under the radar.","offset":3549,"duration":8},{"text":"Rory: They didn't try and do an AI bullshit story. They basically said, you know, active—daily active use of their Fortnite game and their games is down, so your revenue's down, so you take your expenses down.","offset":3557,"duration":12},{"text":"Rory: It was—struck me as a no-bullshit layoff announcement. It's like, you know, \"We sell less stuff, we have less people.\" It sucks. You know, and again, I really do try never to be cavalier about people losing their jobs because every one of those has to put food on the table, they're not earning the kind of money we're earning and now they've got to go out and find another job in a shitty job market. It sucks.","offset":3569,"duration":15},{"text":"Rory: But the lesson is—and that's why I respected them—it's like, we're selling less, so we gotta do what we gotta do to keep the company profitable.","offset":3584,"duration":8},{"text":"Harry: Guys, we keep talking about these layoffs and these big numbers. I mean, it was over a thousand people laid off in this layoff. A thousand. And the numbers are relatively meaningless and we've had so many of these conversations.","offset":3592,"duration":14},{"text":"Harry: What happens to the labor markets?","offset":3606,"duration":2},{"text":"Jason: Well, one thing on—on the Epic thing, if you—and the Wall Street Journal did a good article on this one too this week on the permanent decline of Hollywood employment. It's permanently in decline. It's not—there—it is on—it is in decline because fewer movies and TV shows are being made, TikToks and YouTubes are doing it, and it's in permanent decline because every other country provides larger subsidies, right?","offset":3608,"duration":24},{"text":"Jason: And so there's this permanent decline in Hollywood labor. I think entertainment is—is sort of a—shows us the future. Epic Games is entertainment too, right? And uh, they will absorb as much AI and technologies as they can to address the—to adapt, and it's just early. It's just early. They've had to adapt to YouTube, they've had to adapt to social gaming.","offset":3632,"duration":22},{"text":"Jason: And I think we talk about these, uh, thousand people at Last year or whatever, but I think Epic Games is just—it's—I think it's a more interesting view of the future than Block. We talk about folks might vibe-code a B2B app, but content's already being massively disrupted.","offset":3654,"duration":14},{"text":"Rory: And some part of that is as you pointed out to me when I got it wrong a few episodes back, AI related in terms of recommendation engines. But I think a lot of it is just, you know, a very competitive attention economy. You're right. Fortnite was the—was the game everyone talked about now it's not. It's the nature of the gaming industry. So yes. What—what does that mean?","offset":3668,"duration":19},{"text":"Jason: It's the Fortnite circle coming for everybody at the end.","offset":3687,"duration":4},{"text":"Rory: Oh, yeah, yeah. The little circle.","offset":3691,"duration":2},{"text":"Jason: For everybody, even Fortnite. The Fortnite circle has come to Fortnite itself. It is surrounded itself. Poor Epic Games is in the middle of its—of its endgame of Fortnite.","offset":3693,"duration":10},{"text":"Rory: It's just hidden content creators shooting it out at the very end. It's coming for all the—the Fortnite circle's coming for all of us.","offset":3703,"duration":8}],"startTime":3476},{"title":"Geopolitical Risk: Mannus Founders Trapped in China","summary":"Meta's acquisition of the AI startup Mannus hits a snag when the Chinese government reportedly detains the founders. The hosts reflect on the severe geopolitical risks of \"Singapore washing\" and investing in Chinese-founded companies.","entries":[{"text":"Harry: The other one that—relatively was—I think maybe a little bit overlooked is reports of Mannus founders—Mannus obviously for context being bought by Meta recently. Um, Mannus founders trapped or kept in China.","offset":3711,"duration":14},{"text":"Harry: So just again, give people context and then put out one question mark there. Mannus was a company originally based in China, had some Chinese investors, then redomiciled to Singapore, Benchmark invested, effectively refounded as a US-Singapore company, Meta acquired it.","offset":3725,"duration":19},{"text":"Harry: I want to say—and I use the word past tense \"acquired\" because my understanding is the transaction's closed and the money's moved, though interestingly, not a ChatGPT nor Anthropic were clear on that, but my understanding is that's what happened.","offset":3744,"duration":13},{"text":"Harry: But then now the latest thing is two of the—the Chinese government has—takes a dim view of this because they don't want Chinese talent leaching overseas and going to the US and effectively not being Chinese anymore and they—they—they feel it as a brain drain.","offset":3757,"duration":17},{"text":"Harry: So they did something that was, you know, pretty coercive in the sense of two of the key founders of Mannus, I think, were either in China or summoned to China and they're no longer able to leave.","offset":3774,"duration":13},{"text":"Harry: So that's—those are the facts. And of course you care. I mean, I think that—well, starting from the scratch. I mean, that sucks.","offset":3787,"duration":7},{"text":"Rory: I wish them the best because that's not a pleasant place to be. I mean, I think you've had the Jack Ma thing of, you know, at Alibaba, of effectively going as it were under the radar for a few years when you kind of incurred the displeasure of the administration. You also have people who've had significantly worse consequences than that. So let's start with the basic: you wish them all the best, right?","offset":3794,"duration":22},{"text":"Jason: I don't think another deal like this would happen, do you? I think this whole Singapore washing thing is over. It's over.","offset":3816,"duration":6},{"text":"Rory: I totally agree. That's where I was going to go with that long preamble. I'll tell you who didn't notice: maybe no one in America spent any time thinking about it, but every Chinese founder who was thinking about doing this is going, \"Hmm. Hmm. I don't know how I feel about this. I don't know if I can do this deal. I do know if I do this deal, I am never going home again.\"","offset":3822,"duration":17},{"text":"Rory: I'm with you, Jason. I think all these other China washing deals, they're put on pause or they're put on reevaluation. It's—next thing it's going to sound harsh. It's a fairly coercive regime. If your family's not out of the country, do you have exposure there? Right?","offset":3839,"duration":15},{"text":"Rory: I think it puts—it just shows, I mean, authoritarian governments can take pretty dramatic steps to impact their citizenry if they want to. And I agree, Jason, it makes it really hard to imagine doing another one of these deals without being worried about this consequence. And hopefully they'll kind of go \"naughty you,\" pay a 50%—like, you know, California makes it hard to leave too, but if you pay them 13%, they'll let you go to Nevada, right? Yeah, hopefully it turns out to be something like that and please God it's not something more, you know, coercive. But I agree, Jason, wouldn't do another one.","offset":3854,"duration":33},{"text":"Jason: You know, in venture you take risk, right? It's part of the job. So we've all had deals where there's some rule, some corner that was cut and we talked ourselves into it's okay, right?","offset":3887,"duration":11},{"text":"Jason: This is—companies—something weird about this company but—and we convince ourselves as—as—talking to some mediocre lawyer or asking an LLM today that it's okay. So like this Singapore washing must work, right? They've moved to Singapore, it's got to work.","offset":3898,"duration":15},{"text":"Jason: And you convince yourself, you talk to a few people and you take the risk and it—it—it appears to have bounced the right way for Benchmark and friends, right? It appears they've gotten their money. But you don't do the next one, right?","offset":3913,"duration":11},{"text":"Jason: And there's 242 millionaires in Singapore, the majority of the inflow is Chinese. You don't do the next deal. I mean—and that—maybe other capital does the deal and that's fine, right? Capital is fungible, but you just—in venture you just don't—you just can't do the next one like this. It's too risky.","offset":3924,"duration":13},{"text":"Harry: What do you do if you're Meta? Part of the asset you're acquiring is the team.","offset":3937,"duration":4},{"text":"Jason: 2 billion's not a lot for Meta and they have the product.","offset":3941,"duration":3},{"text":"Rory: Yeah, what are you going to do, Harry? What would you recommend? Getting angry at the Chinese? That'll work well, right? I mean, I think it'll be, you know, a yet another acquisition that looked clever, but in retrospect wasn't anything.","offset":3944,"duration":15},{"text":"Jason: Well, listen, for Meta, I'll just say one thing. I—I only have a tiny bit of information, but I—it appears to me Mannus is running mostly smoothly as an application and a company. Now, I don't know if the founders are working out of, you know—I certainly feel strongly when you lose your founders you lose your heart and soul of your company, but in the short term, I—I don't think it's a big deal for Meta outside of the founders because it's running smoothly, right? That—that's my—in the short term. The—the—it's not down, the team's functioning, they're running. And um, but it's crazy.","offset":3959,"duration":30},{"text":"Rory: And at the risk of being Pollyanna but also wanting to assume the best of people, I would hope that the Meta management team and board, to the extent they do have any influence, can help these guys come to an amicable end and if it requires a tax settlement or whatever, you know, just—you don't want to leave—you don't want to leave people you just acquired in limbo.","offset":3989,"duration":19},{"text":"Rory: At some zoom out level, when you listen to the rhetoric in both capitals, you just have to realize that trying to tread between those two—these two countries is pretty hard right now.","offset":4008,"duration":10},{"text":"Rory: Right, you know, yeah, we have China Hawks in the US government, they obviously have a whole ton of US Hawks or whatever the equivalent is. There's a real perception of competition. Yeah, we don't let them buy the Nvidia chips, etc., etc. You're playing with fire in that thing and sometimes it bites you.","offset":4018,"duration":17},{"text":"Jason: I just think overall, it's natural in given the outcomes in AI and given the growth, that I think it's tied to taking the highest levels of risk we've also taken because the payoffs seem to be there. And when this deal happened, folks kind of thought this was aggressive, Benchmark's never done a deal like this, why are they doing a deal like this? It's not even very cheap, right?","offset":4035,"duration":18},{"text":"Jason: It seems a little crazy. And they're like, \"Well, we've never seen anything grow like this and the team's incredibly talented,\" right? So they took a little bit of risk and um, and they made their—made their profit. We're all taking more and more risk. Folks that, you know, now it's a week of revenue at a Demo Day. I did a million dollars my first week. It's amazing. What about the second one? I don't know.","offset":4053,"duration":18},{"text":"Jason: Like, uh—but as long as it all works out in the aggregate. And I think this is why nobody cares to Harry's point. I cared about Mannus, I added it to the list. I don't think anybody cares. We're all focused on getting a million dollars our first week.","offset":4071,"duration":13},{"text":"Rory: Just good realization that the worst thing that can happen is not just, \"Oh, you lose your money.\" There are worse outcomes than that.","offset":4084,"duration":10}],"startTime":3711},{"title":"Capital Flight and California's Wealth Taxes","summary":"Steve Jurvetson relocates from California to a tax-friendly Nevada residence ahead of major liquidity events. The group debates how aggressive state wealth taxes ultimately drive ultra-high-net-worth individuals away, resulting in lost tax revenue.","entries":[{"text":"Harry: I mean, speaking about cooling their shot on making billions of dollars, Steve Jurvetson... he's tied his career to Elon very smartly, so that's not in any negative way in terms of the investments that he has plowed, trebled, doubled, quadrupled, everything in between.","offset":4094,"duration":16},{"text":"Harry: Uh, leaves California, buys most expensive home in Incline Village. And—and these were Jason's words—will anyone with liquidity be left in California? What if California is structurally bankrupt?","offset":4110,"duration":14},{"text":"Jason: Well, I mean, yeah, it's not a great sign when they keep leaving, is it? It's not a—it's not a positive.","offset":4124,"duration":7},{"text":"Harry: But Rory's staying, Jason.","offset":4131,"duration":1},{"text":"Rory: I mean, look, all—first of all, you're exactly right. All credit to Steve and all power to him. Known him intermittently for 30 years. He made a brilliant call to align with SpaceX, being on the board of Tesla and SpaceX.","offset":4132,"duration":15},{"text":"Rory: Tesla for a while and then came off obviously for those back in the day, but SpaceX too. Yeah, he's—he's put his money in a compounding machine and now he's clearly hit the DPI moment.","offset":4147,"duration":9},{"text":"Rory: Right, but yeah, going back to the thing. Yes, capital—I mean, the truth is this: that's why we said last week, high—ultra high net worth people have a high degree of mobility and unfortunately, if you put the hammer up too high, they can leave and choose to go across the border to Incline Village and save 13% on, um, any realized gains, plus as we've pointed out, 5% on all gains if this wealth tax passes.","offset":4156,"duration":26},{"text":"Rory: You know, at the margin, why wouldn't you? You know, it's not like you need to be in California to be a Tesla board member or a SpaceX board member given they're down in Texas. So yeah, actions have consequences.","offset":4182,"duration":13},{"text":"Jason: Well, it's interesting also this week, um, Washington state did pass their 9.9% state income tax for millionaires. And the governor said—the—the reason the governor said it's signed because there were a lot of folks who said, \"Don't do it,\" right? It's already Howard Schultz left.","offset":4195,"duration":14},{"text":"Jason: He said today, he said, \"Well, they just deserve to pay more.\" And that may well be true. It may well be true. Like, I don't want to debate that. This is not political, right? I'm—I'm more concerned about the tipping point when uh, we kill golden geese.","offset":4209,"duration":16},{"text":"Jason: You know, there's been—Washington and California and to a lesser extent New York have been the gold—golden geese. It's, uh, you know, Washington said they're going to lose money, they're not going to make money on this. It—it appears that most folks that are neutral or right have said California will lose money on the billionaire tax, everyone's left.","offset":4225,"duration":16},{"text":"Jason: And the tax itself assumed massive amounts from Larry Ellison who's been gone a half decade, right? So no one's going—it's just I do—I do worry they're all—they're all—they're all leaving.","offset":4241,"duration":11},{"text":"Jason: Everyone that doesn't work at OpenAI and Anthropic. Uh, you know, on this show we've done it 50 and I said in the beginning of this that you leave after the series B and I—now I see that used again and again by these folks who are on the right on it. They say all the founders leave after the series B, but it may happen by show 100.","offset":4252,"duration":17},{"text":"Rory: And one of the arguments I'd make is, because you know, the truth is this: articulating the argument to the—to, you know, the activist on the other side as being, \"You're being mean to the billionaires,\" is of genuine no interest. In being mean to a billionaire is actually a feature, right?","offset":4269,"duration":18},{"text":"Rory: But I think the real articulation is this: if you—you actually are losing revenue that won't be available to California and the marginal dollar in California probably goes into home—you know, payment for homelessness, payment for young—kids, payment for foster homes, payment for marginal social welfare services that are easy to defund when times are tough, right?","offset":4287,"duration":18},{"text":"Rory: And by choosing to obtusely tax without any attention to ability to collect that money, you've actually reduced the revenue that's available to you, right? And that's the argument you have to make to the—to someone on the other side of the table: You have literally chosen something.","offset":4305,"duration":13},{"text":"Rory: Instead of getting, you know, 250 million—I don't know, pick a number, 50 million from the Larry and Serges and the Jurvetsons of this world, you went for 200 million and now you're going to get zero.","offset":4318,"duration":11},{"text":"Rory: And what that means in real terms is somewhere down the line, long after all these changes have been made, somewhere in Sacramento, someone will zero out a line item on the budget and let me give you a clue: it won't be payments to the teachers, it won't be payments to the firemen, it'll be marginal services to marginal people that your crass stupidity and desire to make a political point has ended up costing them money. And that's the only argument that moves the needle because it—because it's true. And you're right, Jason, you're saying is that it will have a net negative return. How do—now do you feel good?","offset":4329,"duration":35},{"text":"Harry: Rory, if you were Steve, would you have left?","offset":4364,"duration":3},{"text":"Rory: I think from my perspective, I'm just so glad to be in California. It's so wonderful. I moved around a lot early in my life. I have my friends here, I have my life here. At the margin, the whole point of having money is to be able to do what you want, and for three or four or five or even 13% of your income, do you really want to leave?","offset":4367,"duration":16},{"text":"Rory: Now, I will say this, that's why you can tax income relatively highly because it comes all the time and you can't control timing and therefore you have to uproot your whole life for the rest of your life to avoid it, and I don't think it's worth it. So I wouldn't move to avoid income tax.","offset":4383,"duration":16},{"text":"Rory: Conversely, if you have this pending capital event where literally in one year you're going to sell quote all your SpaceX stock and realize a $2 billion gain and you're going to pay an extra 13% of that in California, it's $260 million. Maybe you turn to your wife and say, \"Honey, for the next two years, why don't we live in Incline Village 165 days? I'll pay for the plane, we'll go back every week, you won't lose contact with anyone and we will save $260 million.\"","offset":4399,"duration":23},{"text":"Rory: And you go, \"Hmm. That's real coin.\" So and that's the point about, you know, that's not the life I lead, that's not the situation I'm in, but that's the argument you make. It's like, it's not crazy.","offset":4422,"duration":12},{"text":"Harry: That's real coin, baby.","offset":4434,"duration":2},{"text":"Jason: That's real coin.","offset":4436,"duration":1}],"startTime":4094},{"title":"The Myth of VC Value Add","summary":"A humorous exchange between VC Ron Conway and Cloudflare CEO Matthew Prince sparks a discussion on venture capital value add. The hosts concede that while VCs love to feel helpful, founders rarely remember their minor contributions in the grand scheme of building a company.","entries":[{"text":"Harry: Is—is there any story that I haven't hit on, guys, that we should hit on?","offset":4437,"duration":3},{"text":"Jason: I just have to bring up the Ron Conway Matthew Prince one because it was so—I highlighted that one on Twitter. It was just the funniest thing in the world.","offset":4440,"duration":10},{"text":"Harry: And uh, you know—","offset":4450,"duration":1},{"text":"Harry: Just for context, do you want to provide some context?","offset":4451,"duration":2},{"text":"Jason: Yeah, I don't know Ron Conway, but he's certainly viewed as one of the Silicon Valley gems, right? Seed investor in so many leaders. Always out there as an advocate everywhere, um, probably could have retired years ago, right? Very founder-centric.","offset":4453,"duration":14},{"text":"Jason: And he wrote that he had helped Cloudflare navigate some very significant issues earlier in the day. I think on Jack Altman's podcast, yeah, on Uncapped. And they asked Matthew Prince, CEO of Cloudflare, the question, he said, \"Well, maybe, I don't remember any of that.\"","offset":4467,"duration":14},{"text":"Jason: And it's just—it's not—and he wasn't mean. Matthew can be fairly, uh, sharp as—as Harry knows these days. It wasn't meant mean, the tweet was not mean. He literally just memory couldn't remember getting any help from this beloved VC.","offset":4481,"duration":14},{"text":"Jason: And I think it just said so much to me about VCs adding value, but also VCs thinking they add value. VCs possibly adding a modest amount of value but founders not really thinking that modest value was consistent with the bravado of the VC.","offset":4495,"duration":14},{"text":"Jason: It just—it just—it just crystallized the whole value add idea to be in a single tweet. It wasn't mean, it's just, \"I don't remember any of—I don't remember Ron helping, but maybe he did.\"","offset":4509,"duration":10},{"text":"Rory: Yeah, I—you're right, Jason. I—I did laugh at that. And I think it does—I think actually my big takeaway to your point is both to some extent are right is that, you know, as a—we all want to have agency, we all want to feel we help and, you know, want to be good people and you look and you go, \"Hey, I spent some of my time helping this CEO. I feel I helped.\"","offset":4519,"duration":18},{"text":"Rory: But from the company's perspective, they're founding a company, they're doing a million things. On one or two things on a 10-year journey you helped, you remember that vividly. They're like, \"Dude, it just fades into the background of, you know, a hundred things,\" and you know better than me, Jason, they have to do every day, right?","offset":4537,"duration":16},{"text":"Rory: And the truth is this. I—one of the proofs of this is—interest the way to check it—is I often read business biographies and business stories of great companies, venture-backed companies, and how they were formed and what happened.","offset":4553,"duration":18},{"text":"Rory: And you know what I notice in them? Every single one of them: very few little mention of the VCs. If you just read them, you—you eyeball them, see says, \"Oh, there's a biography they—\" Yeah, and they crop in and come out a couple times, right?","offset":4571,"duration":13},{"text":"Rory: And I think that's right because realistically in the journey of what's going on, the only significant things we do—and I said this before in the podcast—we put in the money and we put in more money when they need it. We decide to hire or not hire or fire the CEO, we agree the broad strategic direction, and anything after that is at best an assist, right?","offset":4584,"duration":20},{"text":"Rory: And if you read the biographies of businesses, what you generally see is the only time the VCs come in is on some version of those, right? And it's, you know, five pages of the journey early on interspersed over 200 pages in the first five chapters, and by the time they get to the IPO, don't even rise to the level of a thing, right?","offset":4604,"duration":15},{"text":"Rory: I was reading the, you know, the OpenAI biography, the—a bunch of them recently. And that's just the way it is. Microsoft biography, same thing, right? You know, so don't—I mean, and you—the VC can feel those five minutes of impact were amazing and they feel really good about them and you feel warm and fuzzy but, you know, the only thing founders really remember for better or ill is, \"Oh my God, our backs were to the wall and no one would put in money and they put in money.\" They remember that.","offset":4619,"duration":29},{"text":"Jason: Some—some—sometimes. In my experience, sometimes, Rory.","offset":4648,"duration":3},{"text":"Rory: Sometimes they even forget that. Well, but to your point, Jason, if they forget—","offset":4651,"duration":3},{"text":"Jason: At least half the time they forget that.","offset":4654,"duration":1},{"text":"Rory: If they forget that, they're definitely going to forget the time you made that phone call to help them connect with XYZ and that helped them do something because that's something that happens a hundred times a day. No, you're right.","offset":4655,"duration":10},{"text":"Jason: Yeah.","offset":4665,"duration":1},{"text":"Rory: We're not the stars in the drama. We're—we're just bit players who get well paid for our part.","offset":4666,"duration":6},{"text":"Harry: Boys, as always, the most humbling 90 minutes of my week.","offset":4672,"duration":3},{"text":"Jason: I'm afraid you'll get more.","offset":4675,"duration":2},{"text":"Rory: You'll be humbled tomorrow.","offset":4677,"duration":2},{"text":"Harry: You'd be surprised.","offset":4679,"duration":2},{"text":"(Audio ends)","offset":4681,"duration":15}],"startTime":4437}],"entries":[{"text":"Host: So, we start with Anthropic’s monster week. We may be at the stage where we throw the humans under the bus, not the AI anymore, which I think at some level is pretty terrifying. We move to OpenAI killing Sora. I think shooting in the head is even more significant. A big part of the whole strategic direction of the company was flawed. Agreed. You’re saying the economists, the accountants have wandered into the room and they said, \"We have a scarce resource here, let’s optimize it, let’s devote this compute to the people who can pay the most for it.\" And then we finish on the man with the biggest balls in tech, Masa. You haven’t lived until you’ve seen an 85% decline in an index. This is one where it’s just back-asswards. I don’t believe there’s right or wrong in money, there’s just money. I just don’t think raising at 5 or 8 billion when you’re at 80 million or 100 million of suspect ARR is the most exciting accomplishment in the world. But let me be direct: get the fuck over it. You should conform your company around your customers and your model, not your VCs. Being mean to a billionaire is actually a feature. Ready to go?","offset":0,"duration":65},{"text":"Host: Boys, welcome back. It is this week in Anthropic, otherwise known as the SaaSstoberfest, which has been renamed. Uh, I want to start with, you guessed it, Anthropic. Unbelievable 28-day month of February where they did 6 billion in revenue, which was more than Databricks has done in their entire lifetime.","offset":65,"duration":25},{"text":"Host: Do you know what I think was the most interesting news out of Anthropic this week? It was actually the—the accidental leak of Claude Mythos, essentially 3,000 unpublished assets leaked. Uh, it’s a 10 trillion parameter model, apparently, that is this next-level step change in capabilities that they’re not releasing because of how powerful it is. This is by far the most interesting to me. Jason, how did you think about this news?","offset":90,"duration":29},{"text":"Jason: Well, look, obviously it’s embarrassing, right? To—to Anthropic to—to leak it. Uh, I actually just think we’re going to see more and more of this accelerate. Uh, the faster we vibe code, the faster we ship, the more corners we cut in general on application-level security. It happens. I mean, so many folks are accidentally uploading code to insecure GitHubs, to—to databases, to Supabases that are by default open.","offset":119,"duration":34},{"text":"Jason: So this is—this is accelerating. Uh, our data which is just open on the internet. And—and you could say, \"God, it shouldn’t happen at the Anthropic level,\" and I’m sure someone will get—will get scolded, right? I’m sure it will. But overall, this is accelerating, and it’s going to accelerate even more as we let our AI agents make decisions. Our agents are going to decide where to put code, they’re going to decide what level of security to use, and this is going to become happenstance.","offset":153,"duration":27},{"text":"Jason: And, you know, it’s funny, I mean, uh, people are like, \"Oh, how could Anthropic have a new, uh, security agent and have this happen at the same time?\" I think they—they—I think it makes perfect sense. The Anthropic AI security agents, which are basically used in Replit, are very, very good, and it also makes sense as we rush, we’re going to leak source code, data, PII, right? It was—I don’t know whether it’s happened, it was reported today all of Mercure’s data leaked. It’s being held hostage, all of it, every single interview, every single piece of PII, every single piece of humans.","offset":180,"duration":43},{"text":"Jason: And so, uh, you know, we used to mock these. I think it’s going to start happening daily and weekly in the agentic era, and it doesn’t excuse it, but—but it’s—uh—it’s a reality. Agents—agents are goal-seeking and agents are going to make—not only are they going to make the same mistake as humans, they’re going to work a thousand times faster. So even if they make the mistakes 10% as often, Rory, help me with the math, if they do a thousand times more productive, they’re still going to make a hundred times more mistakes. So we’re going to see it everywhere.","offset":223,"duration":34},{"text":"Rory: Again, just for perspective, because there’s two things going on here: Anthropic—some data leak from Anthropic about their new model Mythos, which of itself is meant to be amazingly powerful in dealing with cybersecurity, and there was a whole consequence that we’ll talk about in a second in terms of how that impacted cybersecurity stocks. But as Jason pointed out, the level of irony here is acute because it was an inadvertent leak. So you had the situation where a model that’s meant to be amazing for cybersecurity actually leaks via cybersecurity leak. So that kind—so we’re toggling between the two.","offset":257,"duration":39},{"text":"Rory: On the cybersecurity leak, it was noteworthy that Anthropic, quote-unquote, \"blamed human error,\" right? We may be at the stage where we throw the humans under the bus, not the AI anymore, which I think at some level is pretty terrifying. But—and you know exactly what happened. You see this, I mean, uh, down in the weeds. You often see this where, you know, you’re about to do a big announcement, you have your content management system, you stage all the assets, you know, be it the Fed press release. In the UK, it happened on the budget, if you remember, Harry. The budget—you have the press release ready to hit play the minute the budget is ended and someone inadvertently forgets and puts it on the public site in advance. It’s the same thing here. So it probably was a human error. There was a whole bunch of content ready for, I don’t know, pick a date though, March the—May 15th announcement of Mythos, they forget to secure it correctly and out it goes.","offset":296,"duration":58},{"text":"Rory: So—so that’s the first thing, right? So that’s kind of—that’s the embarrassing part of it. And then the interesting part of it, and you really do have to do this without sniggering, despite the fact that it all leaked, you also have to separately talk about the fact there’s some big claims on Mythos, right? At—at Anthropic were making via, again, via this leaked memo. Reminder, no one else has seen it, uh, the—the actual model—um—at least not publicly available, obviously some people have seen it, but not publicly available. And even I was trying to get copies of the leaked memo. There’s just a few screenshots at this stage; it’s hard to track it down, at least quickly anyway.","offset":354,"duration":42},{"text":"Rory: But the statement is: it’s way more powerful. Second thing is it’s going to be way more expensive for them to serve, and therefore it’s going to be way more expensive for customers to buy. And then the third thing is a particular focus on cybersecurity. It’s meant to be, quote-unquote, \"extremely good\" at detecting cyber issues, and the result of that, and—the result of that was an eight, four or five percent decline in the average cybersecurity stock last Friday when this leak happened.","offset":396,"duration":34},{"text":"Jason: Yeah, just two, maybe two other things on the leak, just for—this tradeoff, um, you know, I’m dating myself, but when I was at Adobe and we were acquired, we were an early customer of GitHub. Um, and so we were putting source code in the cloud, and that was banned at Adobe at the time. It was banned because their source code was their crown jewel. It was pretty easy to—to make a crappy PDF reader or a crappy image generator, but to do what Photoshop or Adobe Acrobat did, all the exceptions, all the corner—the thousand—tens of thousands of corner cases was the crown jewel, right? Of the company.","offset":430,"duration":43},{"text":"Jason: And so everything—we got the first exemption to be able to use source code in the cloud, and pros and cons. But when—when they use this on-premise source code management tool, it took a month to do a release. A month. A month, okay? Now we’re doing 60 releases a day, right? Or even Anthropic, fastest-growing enterprise company of all time, is still doing massive releases every month or two and dropping features every day, right? So we went to something that took 30 days at a tech leader to something that takes hours. There’s trade—there’s tradeoffs there, and I’ll—I’ll take them.","offset":473,"duration":45},{"text":"Jason: But we’re going to see it explode. In terms of, like, the stuff that was published today, going back a few threads on show number 50 to Rory, one of the things that I thought was pretty cool in Kairos was two things: um, always-on background assistant that works constantly. Our AI is working with us 24/7. And agents that can sleep, wake, and self-resume without any prompt. The autonomous agents, which I’ve been talking about how this is going to consume orders of magnitude more tokens and change our lives, I’m—I’m excited to see more coming.","offset":518,"duration":46},{"text":"Jason: And, you know, Open Claude was just this—this brief thing that woke us up to what Anthropic appears to be all-in on. Truly autonomous agents running 24/7, hopefully more safely, hopefully not leaking all of our source code. But it’s coming soon, right? Not these—you know, this whole idea that we’ve been doing—since when we started this podcast, you went onto ChatGPT or Claude—no one had heard of Claude when we started this, I was the quirky guy using Claude—and you’d talk to it and go back the next day. The next release is going to be on all the time, all the time, debating Harry’s latest investment. Was it big enough? Is he too concentrated in the fund? Where should he go? What was Rory thinking on that deal, right?","offset":564,"duration":40},{"text":"Host: Why was Rory abusing Harry by email again for the second time in a day?","offset":604,"duration":5},{"text":"Jason: Again, we laugh, but this is the future. I—I’m excited to see it coming sooner when our agents are 24/7. Like, they’re literally around us and we give up all of our personal freedoms and autonomy as part of it.","offset":609,"duration":15},{"text":"Host: I hear you on the embarrassment of it being leaked and, you know, the human error element. But while Anthropic has Mythos, which is supposedly as powerful as it is, you’re juxtaposing that with OpenAI fucking around with killing Sora, kind of ads not really working and people being unhappy with it, and it seeming like this massive chasm of the progression of force that is Dario and Anthropic continuing faster and harder than ever with a faltering, confused, and dazed OpenAI wandering around the product desert trying to find some water.","offset":624,"duration":42},{"text":"Rory: You’re just being mean. I mean, again, as I said last week—and I’m sorry to repeat myself—","offset":666,"duration":7},{"text":"Host: Is that not fair?","offset":673,"duration":2},{"text":"Rory: Yeah, but—again, narrative is overdone on both sides, right? So—I think some parts of it are true. Obviously, you throw in a bunch of different things. The decision to shoot Sora in the head, right? Almost certainly a good decision. Look, it’s obviously embarrassing to say something is going to be amazing less than four or five months ago and then shoot it in the head. But if it’s a mistake, give them credit for at least saying it’s a mistake, move on, right?","offset":675,"duration":28},{"text":"Rory: And yeah, that relationship with Disney—again, I think I’m going to give you—it wasn’t me, I was sneering at it in real time when it happened, I think someone else on this podcast said it’s really significant, just saying, right? It’s Crotchety—","offset":703,"duration":16},{"text":"Jason: I do, I—I think it’s massively significant. I think shooting in the head is even more significant. Um, I think saying that the entire—a big part of the whole strategic direction of the company was flawed. Agreed. The whole that we are going all-in on consumer, the—from what I read, Sora made single-digit millions of revenue, right? And was consuming a million a week, which actually sounds way too low, right? It must—it must have consumed billions and made single-digit millions. It makes no sense as a product, either in the short term or the long term.","offset":719,"duration":39},{"text":"Jason: But if you want to own the whole consumer experience with AI, you’ve—they decided we have to own image and video, and Anthropic never even attempted to do it, right? So it’s a massive retreat. It doesn’t mean it’s the right—it’s probably the right decision, to your point, in fact almost certainly is. But man, that’s a—\"Our strategy was wrong.\" Like, this is a huge own goal. \"Our strategy was wrong.\"","offset":758,"duration":25},{"text":"Rory: Agreed. But I—and I agree with that, but I still think—as I say, I still think Harry’s over—kind of overegging it a little bit because, look, you made a comment about ads that I think is—uh—hypothetically—um—effectively implying that the ad strategy hasn’t worked. That’s a bit of a bigger leap. I mean, Sora hasn’t worked, they’ve killed it. I think I’m with Jason, I think that’s smart because I think one of the things you’re seeing right now is in a world of scarce compute—and astonishingly, despite all the investments that we’ve seen in terms of actual available compute for people to sell AI on, we’re in a scarcity mode. You don’t devote compute to things that are highly compute-intensive and low revenue-intensive. I mean, it—and Sora was almost the definition of that. Video generation is extraordinarily compute-intensive, relatively speaking, and the revenue is almost minuscule.","offset":783,"duration":71},{"text":"Rory: Conversely, you know, CoGen, while it is compute-intensive, is orders of magnitude less compute-intensive and there’s real dollars attached to it. So you’re literally—what’s happening right now, I actually think at a higher level, it’s actually very healthy. You’re seeing the economists, the accountants have wandered into the room and they said, \"We have a scarce resource here, let’s optimize it, let’s devote this compute to the people who can pay the most for it.\" So that’s the Sora comment.","offset":854,"duration":56},{"text":"Rory: On the ads comment, Harry, yeah, it’s early days for, you know, ChatGPT ads. But again, I cite that quote that Brian Kimball did that was really good. Of course they’re going to run damn ads because there’s no other way to build a mass consumer business, and they’ve no choice, right? Because, you know, their consumer conversion rates run roughly 5%. It gets them to a—I think a roughly 10, 15 billion dollar consumer business, right? Out of their 500 million uniques or whatever it is.","offset":910,"duration":36},{"text":"Rory: So one of two things has to happen in the consumer business—again, I’m going to leave the enterprise business out. On a consumer business, either A, they take that conversion rate to a number we’ve never seen before from a typical consumer business—I think that’s unlikely, I don’t think most consumers are going to pay 20 bucks a month for this—or option B is you make an ad business work. They’ve got no choice but to make it work. And by working, I don’t mean a hundred million dollars. People are kind of ragging on the hundred million—it’s in the noise, it’s scale. Big picture here: Facebook and Google each do 200 billion, plus or minus, a year in digital ads. If these guys aren’t doing 20 billion within a couple years, they’re not even in the game. And to get to the market cap of—I mean, remember, Facebook has a 1.7 whatever it is trillion market cap doing 200 billion. Alphabet/Google has a 3 trillion market cap doing 260 billion plus thing. If they’re going to grow into their market cap on the consumer side, 20 billion’s not enough. They have to do 50 billion, 70 billion of ads. So unlike Sora, this is not going to be a \"try the ads and then fold.\" This is a—there’s only two existential bets for this company: one of them is ads to make the consumer business work, and then the other is \"Oh my god, we should have done coding all along. Let’s get a competitive coding and enterprise model out there and compete with Anthropic on that side.\"","offset":946,"duration":89},{"text":"Rory: So those are the only two things they’re doing and they’re the only two things they should be doing. It’s straightforward. I mean, I actually see this as good news. Like, at least they’ve—like, we’ve gone from the \"let’s wander around the woods feeling cool building shit\" to \"there’s only two things to do, let’s get them done.\" I—it’s net—it’s a positive. Better late than never.","offset":1035,"duration":20},{"text":"Jason: Man, did you—did they had the Wall Street Journal this week? They had—they had a story of why Dario left—OpenAI. Did you see that story?","offset":1055,"duration":9},{"text":"Rory: Oh, that was juicy. Yeah.","offset":1064,"duration":2},{"text":"Jason: Yes, I did. I mean, the amount of tension at OpenAI. The fact that Greg Brockman attempted—recruited them and no one would work for him. He and—and his sister would not work for Greg Brockman, would not talk to him, they would not allow him to be part of the LLM or G-T-P groups. Then Sam had to constantly tell each of them that they were in charge, right? Told Dario he was the boss, then told Ilya and Greg they could fire him at any time if they wanted to fire Sam, right? Then begging—then Dario to come back, then Dario saying he would stay only if he directly reported to the board and nobody else. I mean, the level—and then—and then finally firing Sam and then bringing him back and then Sora and de-Sora and we’re not doing coding. It’s just—I mean, I’m exhausted.","offset":1066,"duration":55},{"text":"Jason: I—maybe I’m wrong. I have to think at least someone like me would feel much more comfortable in Anthropic where it appears there’s a much more consistent process and leadership, right? Same founders, same things, same goals. It just—I have to think a company organized like that is just going to ex—out-execute someone with that level of drama. I—I almost can’t take it.","offset":1121,"duration":26},{"text":"Host: You’re going to kill me for this, Rory. Is the best thing for OpenAI not to buy Sierra, incorporate that as its customer support product, and have Bret Taylor come in as the day-to-day CEO and Sam can be fundraiser, Sam can be master of—","offset":1147,"duration":17},{"text":"Rory: I’m not in the boardroom, so—you know, I hear—look, at the end of the day—at the end of the day, I think you’re right, Harry, and I would favor that as a board member, but I’m not going to say that publicly because I don’t want Sam to break my balls. I am too unimportant for Sam to even give a shit about, right? So I don’t worry about that at all.","offset":1164,"duration":36},{"text":"Rory: So let me say this delicately. That amount of board-level and senior-team-level turnover over an extended period of time is probably the highest warning signal that you could have as a board member about how your CEO’s doing, right? And if it was anything other than a founder—let’s put it this way, if it was anything other than a founder-led company and this level of drama was going on, you’d probably be having—you’d probably sit down with the CEO and asking how’s it going, at least, and what are you thinking of doing about this? I don’t think you turn on people just when things go to shit, but you probably want to cut down the drama from here, build a team, and try and call a shot and play it for more than 24—you know, for more than six months at a time.","offset":1200,"duration":49},{"text":"Jason: Well, when you’ve—when you’ve worked at or observed startups where the CEO is spending so much of their time load balancing talent that can’t work together versus when you’ve worked at one or with one where the talent’s rowing in the same direction—to say that it’s night and day would be an understatement, right? It’s like the—the back side of Pluto and the front side of Mercury. And it’s just—and I think Sam—we could criticize him, actually when I read the—everything I’ve seen and then when I read the Wall Street Journal article, it’s like, \"My God, this guy has to spend so much time load balancing the drama of these extremely brilliant personalities that just, oh my god, that can consume number—most of your time as CEO. Most of your time load balancing.\"","offset":1249,"duration":45},{"text":"Rory: You’re exactly right. It is the drama of—we’re not dealing with a bunch of people just trying to crank out some B2B software and make a paycheck, we’re dealing with people who are angsting about whether this is going to change the world, who have fears about the technology, who have, yeah, desires to be seen as credited for the technology despite their fears about it. This is a—I mean, as is often the case, extraordinary talented people come in an extraordinary high bandwidth—a—demand on attention and care and feeding. It’s probably—it’s been a real slog, I’d say.","offset":1294,"duration":33},{"text":"Host: Okay, the man with the most balls in investing, Masa Son. SoftBank gets $40 billion bridge loan to buy OpenAI stock. How deep can Masa go?","offset":1327,"duration":17},{"text":"Rory: He’ll go as deep as they let him. I mean, that’s the one thing we know: if they give him another 20, he’ll borrow that too, right? I mean, look, this is a—I actually checked the SoftBank—you’ve got SoftBank holdings—I have to be careful, there’s the Telco Group which is mod—reasonably levered at the Japan level, and then SoftBank Group is around 2x levered. One and a half to 2x levered in terms of equity, right? What that means is a 30-40% decline, you know, wipes them out, right? It’s a very aggressive stance, right?","offset":1344,"duration":37},{"text":"Rory: It would be like me taking our $800 million venture—$900 million venture fund, borrowing 1.8 billion, and investing it all, and if, yeah, if it works I make—you know, I really juice my return, but if it goes wrong by 30% I’m done, right? And it’s just—it’s super aggressive. I mean, I suppose his lesson is Masa survived 2002 when I remind everyone the NASDAQ went down 85%. You haven’t lived until you’ve seen an 85% decline in an index, right? And obviously if that happened or anything like it, um, you’d just be way underwater. Right? So it’s a—it’s a fairly high amount of leverage for an investment fund to say the least.","offset":1381,"duration":43},{"text":"Jason: Yeah, I mean, for—for sure it’s dramatic. Having said that, you know, real estate investment funds get the maximum leverage they can by design, right? They—that is how they work. I would imagine if venture had access to more debt, we—we’d all—we’d all load up on it. If we all could—if we all could do the growth rounds in your hottest company and uh maybe we would—and we could get—and we could get all the carry from it with the—and the worst thing is we leave the keys to fund seven on the table, we might—we might load up too. I’m not sure. But certainly, real estate funds load up as much as they can.","offset":1424,"duration":35},{"text":"Rory: But just pushing back again, because real estate funds load up because the cash flows are predictable, right? At the end of the day, I mean, look, in a—","offset":1459,"duration":9},{"text":"Jason: Oh, they—and they can, but they can because the cash flows are predictable, they can load up. Agreed. Right? We don’t—it’s just harder for my little fund to go to Silicon Valley Bank and borrow 200 million against—","offset":1468,"duration":11},{"text":"Rory: In the continuum of risk, I would argue the SoftBank portfolio, not the Telco company at the subsidiary level, but I would argue the SoftBank portfolio is more like Jason’s fund than it is a real estate fund. So I think it’s a high level of risk.","offset":1479,"duration":15},{"text":"Jason: Well, plus what did he lose on WeWork? 12 billion. He—he knows. He knows what it’s like.","offset":1494,"duration":7},{"text":"Rory: The two big assets from memory are uh obviously the OpenAI position and I think the Arm position, which I still think is in um the—the—the—in the holding company. And yeah, but I mean, amazing companies, world-class companies, easily imaginable a blow up with a decline 30%. So, yeah, it’s a hell of a way to live.","offset":1501,"duration":30},{"text":"Host: Speaking of declining 30% and being in the hole, we—we touched on it earlier, but obviously Mythos leak hammered cyber stocks. CrowdStrike, Palo Alto, Zscaler all down 6%. Okta, Netscaler down 7%, Tenable down 9%. Was this a justified dip, or is this an unjust reaction to Anthropic news?","offset":1531,"duration":24},{"text":"Rory: I was listening carefully to the name because I was listening carefully to the names and there’s different aspects of security, and some of them I can say, \"Yeah, maybe that overlaps,\" and then some where I go, \"That’s just a different thing,\" right? And when you listen to all the names being thrown out, you say that’s just, you know, baby with the bathwater. Because step back: how does—how does Anthropic, you know, make security better? At the code development stage, they can look at code and find security flaws. So there are companies that upfront do something like that and, you know, application security companies, and you could argue that this is a different way of doing that, maybe some of those guys will be impacted, right?","offset":1555,"duration":43},{"text":"Rory: What they’re not doing, for example, is real-time perimeter defense. They’re not in a—in a real-time basis, you know, blocking people like a firewall, right? Nor are they doing what, for example, Okta does, right? Which is single sign-on and authentication. That’s simply not what they do; it’s a different thing. And the fact that both of those kind of stocks sold off says it’s just a kind of knee-jerk reaction rather than anything thought-through.","offset":1598,"duration":29},{"text":"Rory: It will have an impact. If you were doing application security or code review for—security code review, you’re probably going to have to either incorporate how this works in your analysis or you’ll be redundant. Just as the—the coding companies, anyone kind of—just as GitHub had to roll in complete models and figure out how to adopt it, right? So for some of them, this is really going to matter, and then for others it’s like, it’s just a different thing.","offset":1627,"duration":28},{"text":"Rory: Stepping back, I think we’re in the panicky stage, right? I think we’re in the stage of because these companies are doing so well, because they’re private no one sees the numbers, because AI is so sexy and so potentially amazing, we’re at the stage now where everything can—anything can cause a panic.","offset":1655,"duration":18},{"text":"Host: Robinhood was down like 10% because Elon didn’t potentially give them the tender and was going straight through E*Trade. And that alone was like a massive blow for them.","offset":1673,"duration":14},{"text":"Jason: Obviously, there’s a panic in the market and the question is, is the panic justified, right? The panic is that this revenue is not durable, right? That’s the panic. The cybersecurity one’s really interesting. In my—in my experience and opinion, this is one where it’s just back-asswards. Um, because if you’re in the agentic world, this is the golden age of security. The number of security threats and issues is going up orders of magnitude. Claude leaking its source code, it doesn’t matter. The number of—of apps exploding, the number of—like, there’s so many mobile apps that App Store is like—it’s like a month to get your app reviewed versus a week. It is—everything is exploding. These apps are being built by agents. They’re being built in unpredictable ways. Folks aren’t looking at the code. The pace of features being shipped, products being shipped, corners being cut. This is a golden age of taking any mature category and acknowledging, \"Good news for us, there’s more threats.\"","offset":1687,"duration":53},{"text":"Jason: Good—whether—I don’t care whether it’s application level, perimeter, like—the good news is threats are exploding and the whole shtick of cybersecurity—I’m not a real cybersecurity expert, although I’m doing another investment right now for just this reason—the whole shtick in my whole lifetime has been, \"Look, you’ve got to constantly buy new products because new threats keep emerging.\" Like, this has been a golden goose of cybersecurity that has allowed new entrants to come into a conservative category. Someone like Wiz will show up and say, \"Guys, we know how to do this on the web,\" and people are so terrified of new threats they’ll take the meeting, right? This should be the golden age for new and existing investors because the threats are terrifying and you can’t stop the rogue engineers that vibe-coded something that accessed your data. This—this should benefit everybody. Like, everyone should be a rocket ship like everybody built—like everybody monetizing GPUs is a rocket ship. And the fact that the market doesn’t see it shows we’re in a—in my opinion, we’re in a true panic, which is hard to predict a bottom. But I don’t get it. Everyone should be benefiting when you see an explosion in application production and a change in the paradigm. The change in the paradigm’s good for everybody except, you know, Windows Defender from 1996. Like, it probably doesn’t help that product or whatever the hell they have, but anyone—everyone with engineers should benefit.","offset":1740,"duration":86},{"text":"Rory: I broadly agree with Jason. I mean, there might be—there are more than Windows Defender 2006 that might be impacted. As I say, some of the application security code review stuff could be. But big picture Jason’s right. Instead of having people trying to get in through your firewall, we’re everyone is now downloading an agent, giving it full root access to their computer, and telling it have a go, and as Jason just pointed out, work overnight. It’s going to—I mean, no one yet—it’s funny, we—my colleague Errol who does a lot in the security side, we’ve been looking at a lot of these companies. No one yet knows the exact approach that we’re going to have to take to defend against agents running within the organization, but everyone 100% understands that this is a—emerging mega-threat because of the velocity of adoption times the power of the solution.","offset":1826,"duration":52},{"text":"Rory: So I agree with Jason. It mightn’t be the old guard that takes advantage of it, but there’s no—but they tend to be pro—one of the things I admire about the security companies is the CrowdStrikes, the Palo Alto Networks of this world is they know damn fine that when a new threat emerges and a new solution emerges for that threat, when an earlier winner comes out, you better spend your 300 million bucks, your 500 million bucks, and just swoop up the winner and add it to your product, right? So I think there’ll be a ton of fast acquisitions as agent security solutions emerge, you know, and at—and people will be doing, if they’re smart—and I think those two companies are extraordinarily smart—they’ll be doing acquisitions long before it’s, quote, \"certain,\" because you’re going to have CIOs coming and talk to you.","offset":1878,"duration":36},{"text":"Rory: Right? One thing worth mentioning on that is it was interesting—again, I—in some of the leaked information from Anthropic—they are masters at selling fear. One of the things they’re doing is they’re releasing the Mythos model first to CISOs within companies. It’s kind of like, \"Oh, it’s so scary, we’re going to give you this model and give you time to figure out how to use it.\" Of course, part of that time will involve giving a million bucks to Anthropic for—so it’s just great marketing. So they’re actually leaning into that and saying to the CISOs, \"You’re going to have to figure this out. This is the new terrifying weapon we’ve invented. Please give us a million dollars and we’ll let you defend yourself with it also.\" Great marketing. Uh, but it speaks to the perceived—to Jason’s point—it speaks to how correctly afraid every security for—CISO should be given the pace of agentic AI adoption in the enterprise.","offset":1914,"duration":57},{"text":"Host: In the golden age of cyber, I wish I’d bought more.","offset":1971,"duration":4},{"text":"Jason: I mean, it’s just—it’s just how hard is it to get a meeting? Whoever you are, if you have any established brand, \"We—we’ve got a new agentic product, we’re going to help protect you from this.\" You’re going to get a meeting that afternoon.","offset":1975,"duration":9},{"text":"Host: Wish I bought them over Figma, that’s a depressing chart that I’m looking at.","offset":1984,"duration":6},{"text":"Rory: You need to let—you need to let go, Harry. You need to let go.","offset":1990,"duration":4},{"text":"Host: I’m—I’m down 30% in a month, Rory. It’s hard to let go after 30% in a month.","offset":1994,"duration":5},{"text":"Rory: Okay, no crying in the casino. Move on.","offset":1999,"duration":5},{"text":"Host: Uh, we—I—I do want to discuss revenue kind of questionability. Uh, we’ve got Anthropic recognizing revenue in a very different way to OpenAI. And then you also have questionability around Emergent Labs, um, and is it okay if ARR is kind of questionable in—sort of how it’s accounted for? Um, how do we think about that? You can choose which one you want to take.","offset":2004,"duration":24},{"text":"Jason: Let me just—can I just—I—maybe Rory can dig into it, but I’ll tell you there’s one startup I invested in that’s over a hundred million ARR. And I get the—I—I—I own just enough to get the investor updates. It’s not—I’m not on the board. And I get three numbers every month. Three revenue numbers. I—I don’t know what the hell they are, over a hundred million, but the smallest one is ARR. Now I invested in Seed, I don’t really care, I’m in the money, I don’t—I don’t have a choice. But I—I can’t understand—this company’s doing great, but I can’t understand for the life of me these three numbers and there’s asterisks and daggers and there’s charts that go everywhere, but they keep going up and to the right, which I think was on this Emergent thing we could talk about next. I think that’s what some of the investors said, \"Who cares?\" But I can’t tell the hell the difference what—what an ARR is in 2027.","offset":2028,"duration":43},{"text":"Host: Well, what—what I always get is like \"pipe,\" which is complete bullshit, then \"contracted,\" and then there’s \"live.\"","offset":2071,"duration":7},{"text":"Rory: So, first of all, stepping back, both—to be fair to both Anthropic and OpenAI, they have a very clear and sensible way they define ARR. What they take is they take the last—the average of the last four weeks to smooth out, times 13, because there are 13 four-week periods in a year. Which is more sensible than monthly because you have these varying months. So they basically—what they’re saying is realized revenue for the last four weeks averaged, you know, the average of the last four weeks—sorry, obviously if it’s the average it’s times 52—but basically it’s actual GAAP revenue. What did we bill for the last four—the average across the last four weeks to take into account holidays? That’s their run rate. Right? So it’s actually pretty—it’s not committed or any of the bullshit kind of higher-level stuff. It’s actual money flowing through the system.","offset":2078,"duration":58},{"text":"Rory: Anthropic is roughly at 19 billion according—based on that kind of trailing four-month—four-week metric, and OpenAI is around 25. But now let’s talk about your thing. There was this kind of whole meme of OpenAI reports net on their partner revenue and Anthropic reports gross. And what they’re saying there is if OpenAI sells through Microsoft and Microsoft takes some money off the top, OpenAI only reports the net amount. If Anthropic sells through AWS and they sell a hundred dollars worth of revenue, they report the gross amount and then they give 20—20 dollars back to Amazon as a cost of sale. So there’s two different methods for what look like the same revenue kind of nix—or same revenue approach.","offset":2136,"duration":44},{"text":"Jason: I thought you were going to extend that. I thought part of where you were going was to Michael Cannon-Brookes’ point on the show was that a lot of this revenue is getting doubled or triple-counted because of how it’s being recognized. And not only does this happen, then Cursor’s selling it again and recognizing the revenue, right? The same—people keep reselling these tokens again and again and recognizing them as their own ARR. Um, how many times do we get to resell these—these poor little tokens?","offset":2180,"duration":30},{"text":"Rory: I think that’s actually a great point, Jason. I hadn’t thought about that, but you’re exactly right. No, it’s like the—everyone’s got amazing revenue growth because it’s the same little token going through different—I can just picture this little token.","offset":2210,"duration":14},{"text":"Jason: I mean, if we all agree to have essentially 0% gross margins, an infinite number of us can keep reselling tokens to each other, can’t we? This is our new 20 VC scale SaaSster demo day. We all resell a million tokens to each other on the first week, so everyone in Batch 001 has a million ARR its first week, because we just resold our tokens to each other. So and it’s completely fair. The VCs don’t mind.","offset":2224,"duration":27},{"text":"Rory: And—and you’re exactly right, and the sentence that you added in passing is the key one: \"until we all have to get profitable.\" All this, you know, can continue. And then at some point, that’s why I said I think you’re starting to see it, someone’s going to have to say, \"Assuming we want to have a net present value and a cash flow, what’s going on here?\" And then—and then all this becomes more clear.","offset":2251,"duration":23},{"text":"Rory: I—I didn’t comment on the Emergent Labs fastest to a hundred million. Jason, you—you actually tried it, didn’t you? You thought it was good.","offset":2274,"duration":6},{"text":"Jason: I did. I thought—I mean, listen, it’s hard for me to know the criticism, right? You know, some folks in the press and the India B2B environment tried to make this some sort of scandal, right? Because—and in a sense, fair enough. If you go to Emergent Labs—and Emergent Labs is sort of an Indian competitor Replit and Loveable, which I’ll show you what I learned in a minute, right? And if you go right now to the homepage they say \"0 to 100 million,\" I think in eight months. It’s right there, it’s the biggest banner. So in all fairness, if you’re going to put yourself out there, not—not just as a tweet, but if it’s going to be right there on your website, one would expect 70 to 80 percent accuracy in that number, ideally higher, right?","offset":2280,"duration":43},{"text":"Jason: So if it’s lower than that, I think it’s fair that some daggers came out. But I was curious—um—but I don’t actually know what happened. Is it triple counting to—I—I can tell you one thing that I learned, which I don’t love, which is that what a—and a lot of AI startups do this. So this is not unique to Emergent. They kind of hot—instead of getting you to use the free version, they try to get you to immediately do a free trial, instantly that says it’s zero dollars and twenty dollars a month thereafter. Now so many folks do this. It is not unique to them; it’s probably best practice in most accelerators. But I’m pretty sure that means they recognize twenty—240 dollars in ARR that first month when you’re paying zero. And they trick you because you don’t even—yeah, you do have to click on the Stripe link, but you almost think you’re just using the free product.","offset":2323,"duration":52},{"text":"Jason: So is that—if I do a zero dollar a month product um that’s discounted as a marketing cost and I churn after 30 days, does that count as 240 dollars of ARR? I think for a lot of startups it does. Okay? So—that—that’s a fair criticism. I’m not saying this is what Emergent did, but a lot of startups will instantly recognize that as 240 dollars in ARR, which is how they rocket if you’re self-serve. That’s how you—otherwise you can’t get there that quickly, right? So they clearly did that.","offset":2375,"duration":37},{"text":"Jason: I will say what was interesting is I—I thought the product was pretty good. Much better than Make. Like an order of magnitude better than the disaster of Make. Um, because I—I do a five-part test, a six-part test. The first part is awareness test. So I ask it to redo the SaaSster.ai homepage. Uh, actually of all the platforms it did the best job. It—it beat—it beat—it beat all of them. All of the leaders, because I redid this recently. I redid this and Replit, Loveable, VZero, they’re all good at—they all pass the test, but it actually—it actually was probably the best and it—it passed a bunch of the other tests.","offset":2412,"duration":49},{"text":"Jason: So I’m not going to switch to Emergent Labs, but I would say it’s in the top 10% of vibe-coding apps. That’s pretty good. So that tells me it’s a legit business. Like they did—they did the work and a lot of these they’re just—the truth is if you play with a lot of these even from leaders, like Make’s not the only one that’s crappy, okay? Because they’re basically relying on the fact that Claude code does 90% of the work for you. Right? They’re just putting the simplest wrapper around this and so they did a good job. But is—I really didn’t like the way they do the billing, but we’d probably have to shoot half our portfolio companies that do like PLG AI because I think it’s a sus practice. I just don’t like tricking you with this zero dollar for the first month when you think you’re using a free trial, right? That’s the sus part. I don’t—I don’t love that kind of gray art. Um, but the product’s pretty good.","offset":2461,"duration":71},{"text":"Host: You know what I didn’t like when it comes to confusing? I was wondering whether to go off on one in this show and then I thought, \"Fuck it, let’s go off on one. It’s been a long day.\" I’m pissed off by these tranche rounds. I see them all the freaking time. The amount of Sequoia rounds where it’s like, \"Oh, you know, X raises money from Sequoia at five billion.\" Trust me, Sequoia got in at one, but they just club it together and then announce the sum and then the latest valuation. And it’s just very misleading. The tier ones get in early, a tier two, tier three instantly marks it up same day.","offset":2532,"duration":35},{"text":"Jason: Same as crypto, isn’t it? For years. What’s the difference? We’ll give the Andreessen crypto fund the, you know, essentially 80% off the token. What’s the difference? You’re paying for the—paying for the signal.","offset":2567,"duration":11},{"text":"Rory: I think if you break it down, first of all, just so everyone’s on the same page, because interestingly neither Claude nor GPT was on the same page and didn’t know what a tranche round was, and they gave the old conventional venture tranche round based on performance milestones, you know, BS from back in the day when we actually ran businesses, right? So they didn’t have a clue about this.","offset":2578,"duration":26},{"text":"Rory: So let’s be clear on the practice here. The practice here is when a company, a hot company raises a round where there are effectively two different prices per share—a first—let’s call it a first close and a second close, even if they are at or near contemporaneous—where the first one might be at 250 pre and the second one is at a billion pre and, you know, the highlight and the headline is they raised at a billion pre. There’s two imp—impacts of this.","offset":2604,"duration":33},{"text":"Rory: First of all, let’s do the simple one where there’s just a single participant in the round. That’s where, you know, if I’m the new investor, I want to pay 600. The company wants a headline of a billion. And to win the deal someone says, \"Okay, let me put some money in at 250, some money in at a billion.\" I can do math because I’m paid to do math because I’m an investor, so I know my overall basis is a billion—sorry, obviously if it’s the average it’s 600 million. So I’m getting what I want, and the company’s getting what it wants, which is a headline number of a billion, right? It’s silly, but that’s all that’s happening in that case. That’s the single participant tranche deal, right? And it’s just—and for some if a company wants a headline that’s what they get, right?","offset":2637,"duration":57},{"text":"Rory: Generally those things come back to bite you because by definition if you’re the company, just as the investor can do math presumably you can do math. If you accept that combined deal you’re implicitly saying, \"I know I’m only worth 600 but I’d like the optics of a billion.\" You better be damn sure that your next round you’re at one and a half billion, otherwise you’ll have the optics of a down round, and if you’re an optics believer that’s probably worse than the uptick, right?","offset":2694,"duration":32},{"text":"Rory: So that’s kind of the single participant version. The much more annoying version that Harry clearly was getting on his high horse about is when you have the same structure but access to those rounds where the—the lead investor maybe does all of the 250 pre-round and only half of the billion round, and then some new investors just get to do the billion round. So literally at the same time, the lead investor is investing at 600 billion—I mean, million—and the follower investor, less marquee investor, is investing in the same asset at a billion. And there—I don’t believe there’s right or wrong in money, there’s just money, right?","offset":2726,"duration":45},{"text":"Rory: That’s where at the minimum you have to look yourself in the mirror as the other investor and say, \"Wow, that’s the price of being cool.\" Right? \"That’s the price of access. I’m paying 50% more because I just can’t access that deal.\" Right? And that feels like pretty invidious thing to—I mean, again, going back to the comment, the—you’ve got to remember if you think about—and again, try to avoid morality and saying, \"Oh, it felt shitty,\" because it really—it would feel like a loser if you did that. But let’s play it out. In this situation where the—the lead investor, let’s say it’s Sequoia because everything good and strong should be Sequoia, they’re admitting it’s only worth 600 on average and they’re just doing this fakey transaction. The company is admitting it’s only worth 600 on average because they’re taking the money at a blended cost of 600. So what you’re saying doing it at a billion is you’re either saying, \"Either I have a lower cost of capital and I’m willing to take a lower return than everyone else,\" or the only positive spin you can come up with is the company thinks it’s worth 600, Sequoia thinks it’s worth 600, but I am smart enough, even though I don’t have access, I am smart enough and clever enough to know that it’s really worth a billion and I should do it at a billion even though I can’t get to 600. And I’m willing to put up with the upfront tax and foolishness look because I think 6-12 months from now it’ll be obvious that I bought it at a great price and maybe I’ll look like a genius.","offset":2771,"duration":99},{"text":"Jason: Yeah, but we’ve—but we’ve entered an era though, the—one—I think the meta thing—maybe this wasn’t exactly what you were queuing up, Harry, but it is tough. We’ve entered an era where so many founders are obsessed about headline prices. Obsessed. They’re obsessed coming out of Demo Day, they’re obsessed—they’re obsessed. Once they cross a billion, which I think should be a moment to take a pause because of an M&A options, they’re obsessed about driving to 11 billion and 9 billion and one-upping their competition. And the numbers have become a joke to many founders, right? They just don’t—maybe joke’s the wrong term. They don’t think through the—any of the ramifications of the valuation they’re hiring, they don’t care.","offset":2870,"duration":48},{"text":"Jason: And I’m not even saying that’s bad. I mean, I think burning the bridges is a good way to have a big outcome, but it’s become utterly gamified on many levels, right? It’s just become gamified. And so this—11-teen tranches and around is just part of gamifying it, right? It’s been true of YC since I started investing. There—there was always a cheaper price before Demo Day if you’re reasonably hot, a higher price at Demo Day, and then a 20% or 30% after Demo Day. So that version has just become institutionalized and so be it if it’s what the founders want. If they want to gamify it, so be it, right? I just don’t think raising at 5 or 8 billion when you’re at 80 million or 100 million of suspect ARR is the most exciting accomplishment in the world. Like, I’m not going to—like, I’m—I’m going to send a few thumbs emojis on the email, but that’s about it.","offset":2918,"duration":55},{"text":"Host: That’s about it. They’re all—they’re all fake anyway, they’re all just bets, right? These are not public companies. It goes back to your point on Emergent Labs and the graph of the eight months to 100 million and the gamification of, like, the race to 100 million. I’m not choosing Emergent Labs, but listen, I think they built a good product. I think—I’m sure they’ve been overly lambasted because whether it’s 100 or 80 or 60, I don’t care, it’s pretty damn good, right? Whatever it is. But if you’re going to—if you’re going to do that, you deserve the daggers to come out when it’s not 100%, right?","offset":2973,"duration":38},{"text":"Host: One that I thought was fantastic, exciting, I would like to see a potential IPO or to IPO shortly. I thought this was fascinating. This has been an incredible journey, actually, from, you know, Scandinavia, these founders building this business. It’s had a couple of CEO changes. Uh, the business is actually in incredible shape. Both—actually, and Whoop announced today that they raised, I think it was 500 million at 10 billion. Fitness and health data—do you know what, actually, Rory? Jason’s annoyingly right again. I don’t know if you remember his predictions, but he predicted, if I’m not wrong, that 2027 would be the year for, like, human healthcare data and longevity.","offset":3011,"duration":41},{"text":"Jason: Yes, and it looks like it might even be 2026. And yeah, no—and the great thing about both stories is very defensible—I mean, you know, Jony Ive's side—very defensible from an—this is not an AI envy story, this is—I mean, they use AI in what they do, but these are fundamentally standalone products with a clear consumer value proposition and they’re, you know, they’re not going to be Claude-coded on Friday. I totally see it and they clearly have had critical mass in terms of revenues. I think it’s awesome.","offset":3052,"duration":35},{"text":"Jason: I think the question—listen, the interesting thing for for these products, obviously it’s exploded, is they are—they are recurring rev—you know, going back to the topic of ARR, these are recurring revenue products, right? Um, for the most part, right? Um, fairly expensive subscriptions, um, and they’re exciting until like Peloton when they aren’t, right? Now there—there’s not a $2,000 cost here, um, but—um—and I’m not being critical. I—I think that they’re exciting. But there’s also a faddishness-ism. People can switch. So the RR, the ARR, the pirate R, um, what multiples do these companies deserve? What it is, I—I’m not smart enough to know, but the—but the acceleration is a force of nature, right? I’d love to be a Seed investor, don’t get me wrong.","offset":3087,"duration":49},{"text":"Rory: Do you think there’s a faddishness in the same way? I think we—","offset":3136,"duration":2},{"text":"Jason: I think you can switch from vend—Harry, you’re into fitness. I—I’m not so much, but I run 360 days a year, five miles a day for 10 years. So if there’s a better treadmill, a better device, a better thing, I would switch. And whatever you’re—you’re fairly fit, Harry, like if you—if you were Oura and you love it, but Whoop is—is better and you care, you’re going to switch. So it’s not ServiceNow ARR, right? You—you’re loyal, you’re loyal, but—but there’s just some disruption risk. Like, look at Peloton. When Peloton blew up, but actually as the world changed, even though people love Peloton, right? Super high NPS, they—remember the Peloton addicts of 2020 on Zoom? They—they loved it, but when the world changed they just—","offset":3138,"duration":10},{"text":"Harry: But he helps me put together some of the schedules too. And he was like, \"Whoa, I had no idea about this.\" He was like, \"Whoa, Epic Games laid off 25%.\" I didn't even hear about that.","offset":3148,"duration":13},{"text":"Jason: Yeah, and then—and then I had—had Mark Andreessen on your last pod sort of laughing about how we all over-hired in 2021.","offset":3161,"duration":7},{"text":"Harry: Well, Mark Andreessen was—was very clear. He thought that we were all using AI as an excuse and that we were all over-staffed by 50 or at least 75%.","offset":3168,"duration":10},{"text":"Rory: Uh, by the way, Harry, just logically it's—it would be 75 or at least 50% overstaffed by 50 or at least 75. This doesn't make any logical sense, but keep going. Just picking up on the errors here.","offset":3178,"duration":13},{"text":"Harry: Rory.","offset":3191,"duration":1},{"text":"Jason: He's pissed now. He's pissed.","offset":3192,"duration":2},{"text":"Harry: I would love to see you do a day of my life. I would love to—","offset":3194,"duration":3},{"text":"Rory: Give me a fucking break.","offset":3197,"duration":1},{"text":"Harry: Uh, actually fair.","offset":3198,"duration":1},{"text":"Rory: I now feel guilty.","offset":3199,"duration":1},{"text":"Harry: You've been cranking.","offset":3200,"duration":1},{"text":"Rory: I now feel guilty.","offset":3201,"duration":1},{"text":"Harry: I will give you two hours sleep for six hours a day running two companies at once.","offset":3202,"duration":4},{"text":"Rory: Okay. Now I'm feeling guilty. Move on.","offset":3206,"duration":2},{"text":"Harry: Don't worry. But—but point being, like... point completely under the radar.","offset":3208,"duration":8},{"text":"Rory: They didn't try and do an AI bullshit story. They basically said, you know, active—daily active use of their Fortnite game and their games is down, so your revenue's down, so you take your expenses down.","offset":3216,"duration":13},{"text":"Rory: It was—struck me as a no-bullshit layoff announcement. It's like, you know, \"We sell less stuff, we have less people.\" It sucks. You know, and again, I really do try never to be cavalier about people losing their jobs because every one of those has to put food on the table, they're not earning the kind of money we're earning and now they've got to go out and find another job in a shitty job market. It sucks.","offset":3229,"duration":19},{"text":"Rory: But the lesson is—and that's why I respected them—it's like, we're selling less, so we gotta do what we gotta do to keep the company profitable. But I agree with you, this kind of pretend it's ARR but then next year we hate ARR, it's just a total waste of time for entrepreneurs. Things are what they are and you do best in business if you actually say what they are and just live and die by that. Most consumer products have high volatility associated with them. You better have a damn good R&D function and continue to build great products.","offset":3248,"duration":52},{"text":"Jason: Well, DJI might disagree with you. I mean, there was a whole step function in the industry that they got—they got left behind, right?","offset":3300,"duration":6},{"text":"Rory: Yeah. Would you prefer $2 billion in consumer hardware revenue or $2 billion worth of five-year contracts, um, like Palantir? Yeah, I'll take the contracts with the 90% gross margin and the five-year lock-in, please. Your starter for 10.","offset":3306,"duration":14},{"text":"Jason: I think maybe the more interesting question, Rory, that you brought up, um, because so much has changed—this is our 50th show, so much has changed, right? When we started this show, uh, public—durable public company revenue despite slowdown in the top line was the gold standard, right? It was the best revenue out there.","offset":3320,"duration":20},{"text":"Jason: Fast forward to today, do we—Oura going public—do we give a crap what type of R it is because the durable software stuff is trading lower than the S&P 500? Maybe I'd rather have Ring revenue and um, with a somewhat suspect, uh, customer lifetime value because the software value is so low. Maybe I don't care where my R comes from, right?","offset":3340,"duration":20},{"text":"Jason: It used to matter. It used to matter, right? We were so—we'd be in board meetings where you would torture companies so that they would have more ARR and that they would have less variable revenue. I mean, that—that seems like archaic today.","offset":3360,"duration":12},{"text":"Rory: Yeah, and—and I remember doing that and I remember telling people not to do that because I'm a big believer as you can't make—you should sell your product the way the customer wants to buy it, not your VCs.","offset":3372,"duration":9},{"text":"Rory: Because I agree with you, this kind of pretend it's ARR but then next year we hate ARR, it's just a total waste of time for entrepreneurs. Things are what they are and you do best in business if you actually say what they are and just live and die by that.","offset":3381,"duration":11},{"text":"Rory: Most consumer products have high volatility associated with them. You better have a damn good R&D function and continue to build great products.","offset":3392,"duration":7},{"text":"Jason: We looked today—this week they also talked about how I think Allbirds was—was it acquired for less than 30 million?","offset":3399,"duration":6},{"text":"Harry: It was—it—yeah, I was literally about to bring this up, Jason. It was acquired by Ames for $39 million.","offset":3405,"duration":6},{"text":"Jason: So my question is, if a company like Oura goes public and you see weakness in a quarter, should you dump this thing instantly, like Allbirds, um, versus forgive a little bit of weakness in a Salesforce or ServiceNow?","offset":3411,"duration":15},{"text":"Rory: Again, I'm going to avoid any specifics—genuine comment here, right? Because it's not appropriate. But I would say something. Unlike you guys, I've run a textile manufacturing company 30 years ago.","offset":3426,"duration":10},{"text":"Rory: The technology required to make an Allbirds or a shoe is not the same as the technology required to make a modern electronic device that sits on the human finger and measures blood.","offset":3436,"duration":11},{"text":"Rory: Either of these kind of consumer electronic products—they're not a monopoly in the same way Nvidia is, but they're pretty—it's a pretty rare number of companies that can do that. Now, go down—for—put it this way, Jason: I'll name a wearable, you'll name a wearable, and then I'll name a sneaker and you'll name a sneaker.","offset":3447,"duration":17},{"text":"Rory: We'll be done with wearables long before we're done with sneakers because there's a lot of different sneaker companies. And yeah, it turns out sneakers are easier to make than wearables, which are easier to make than Nvidia GPU chips.","offset":3464,"duration":12},{"text":"Harry: Speaking of like \"do we care, what do we actually care about,\" there were two that I—I don't know if you guys know this, but I have wonderful partners and one of my partners is much more intelligent than me, which Rory, you're going to make some form of gag about.","offset":3476,"duration":13},{"text":"Harry: But he helps me put together some of the schedules too. And he was like, \"Whoa, I had no idea about this.\" He was like, \"Whoa, Epic Games laid off 25%.\" I didn't even hear about that.","offset":3489,"duration":12},{"text":"Jason: Yeah, and then—and then I had—had Mark Andreessen on your last pod sort of laughing about how we all over-hired in 2021.","offset":3501,"duration":8},{"text":"Harry: Well, Mark Andreessen was—was very clear. He thought that we were all using AI as an excuse and that we were all over-staffed by 50 or at least 75%.","offset":3509,"duration":10},{"text":"Rory: Uh, by the way, Harry, just logically it's—it would be 75 or at least 50% overstaffed by 50 or at least 75. This doesn't make any logical sense, but keep going. Just picking up on the errors here.","offset":3519,"duration":13},{"text":"Harry: Rory.","offset":3532,"duration":1},{"text":"Jason: He's pissed now. He's pissed.","offset":3533,"duration":2},{"text":"Harry: I would love to see you do a day of my life. I would love to—","offset":3535,"duration":3},{"text":"Rory: Give me a fucking break.","offset":3538,"duration":1},{"text":"Harry: Uh, actually fair.","offset":3539,"duration":1},{"text":"Rory: I now feel guilty.","offset":3540,"duration":1},{"text":"Harry: You've been cranking.","offset":3541,"duration":1},{"text":"Rory: I now feel guilty.","offset":3542,"duration":1},{"text":"Harry: I will give you two hours sleep for six hours a day running two companies at once.","offset":3543,"duration":4},{"text":"Rory: Okay. Now I'm feeling guilty. Move on.","offset":3547,"duration":2},{"text":"Harry: Don't worry. But—but point being, like... point completely under the radar.","offset":3549,"duration":8},{"text":"Rory: They didn't try and do an AI bullshit story. They basically said, you know, active—daily active use of their Fortnite game and their games is down, so your revenue's down, so you take your expenses down.","offset":3557,"duration":12},{"text":"Rory: It was—struck me as a no-bullshit layoff announcement. It's like, you know, \"We sell less stuff, we have less people.\" It sucks. You know, and again, I really do try never to be cavalier about people losing their jobs because every one of those has to put food on the table, they're not earning the kind of money we're earning and now they've got to go out and find another job in a shitty job market. It sucks.","offset":3569,"duration":15},{"text":"Rory: But the lesson is—and that's why I respected them—it's like, we're selling less, so we gotta do what we gotta do to keep the company profitable.","offset":3584,"duration":8},{"text":"Harry: Guys, we keep talking about these layoffs and these big numbers. I mean, it was over a thousand people laid off in this layoff. A thousand. And the numbers are relatively meaningless and we've had so many of these conversations.","offset":3592,"duration":14},{"text":"Harry: What happens to the labor markets?","offset":3606,"duration":2},{"text":"Jason: Well, one thing on—on the Epic thing, if you—and the Wall Street Journal did a good article on this one too this week on the permanent decline of Hollywood employment. It's permanently in decline. It's not—there—it is on—it is in decline because fewer movies and TV shows are being made, TikToks and YouTubes are doing it, and it's in permanent decline because every other country provides larger subsidies, right?","offset":3608,"duration":24},{"text":"Jason: And so there's this permanent decline in Hollywood labor. I think entertainment is—is sort of a—shows us the future. Epic Games is entertainment too, right? And uh, they will absorb as much AI and technologies as they can to address the—to adapt, and it's just early. It's just early. They've had to adapt to YouTube, they've had to adapt to social gaming.","offset":3632,"duration":22},{"text":"Jason: And I think we talk about these, uh, thousand people at Last year or whatever, but I think Epic Games is just—it's—I think it's a more interesting view of the future than Block. We talk about folks might vibe-code a B2B app, but content's already being massively disrupted.","offset":3654,"duration":14},{"text":"Rory: And some part of that is as you pointed out to me when I got it wrong a few episodes back, AI related in terms of recommendation engines. But I think a lot of it is just, you know, a very competitive attention economy. You're right. Fortnite was the—was the game everyone talked about now it's not. It's the nature of the gaming industry. So yes. What—what does that mean?","offset":3668,"duration":19},{"text":"Jason: It's the Fortnite circle coming for everybody at the end.","offset":3687,"duration":4},{"text":"Rory: Oh, yeah, yeah. The little circle.","offset":3691,"duration":2},{"text":"Jason: For everybody, even Fortnite. The Fortnite circle has come to Fortnite itself. It is surrounded itself. Poor Epic Games is in the middle of its—of its endgame of Fortnite.","offset":3693,"duration":10},{"text":"Rory: It's just hidden content creators shooting it out at the very end. It's coming for all the—the Fortnite circle's coming for all of us.","offset":3703,"duration":8},{"text":"Harry: The other one that—relatively was—I think maybe a little bit overlooked is reports of Mannus founders—Mannus obviously for context being bought by Meta recently. Um, Mannus founders trapped or kept in China.","offset":3711,"duration":14},{"text":"Harry: So just again, give people context and then put out one question mark there. Mannus was a company originally based in China, had some Chinese investors, then redomiciled to Singapore, Benchmark invested, effectively refounded as a US-Singapore company, Meta acquired it.","offset":3725,"duration":19},{"text":"Harry: I want to say—and I use the word past tense \"acquired\" because my understanding is the transaction's closed and the money's moved, though interestingly, not a ChatGPT nor Anthropic were clear on that, but my understanding is that's what happened.","offset":3744,"duration":13},{"text":"Harry: But then now the latest thing is two of the—the Chinese government has—takes a dim view of this because they don't want Chinese talent leaching overseas and going to the US and effectively not being Chinese anymore and they—they—they feel it as a brain drain.","offset":3757,"duration":17},{"text":"Harry: So they did something that was, you know, pretty coercive in the sense of two of the key founders of Mannus, I think, were either in China or summoned to China and they're no longer able to leave.","offset":3774,"duration":13},{"text":"Harry: So that's—those are the facts. And of course you care. I mean, I think that—well, starting from the scratch. I mean, that sucks.","offset":3787,"duration":7},{"text":"Rory: I wish them the best because that's not a pleasant place to be. I mean, I think you've had the Jack Ma thing of, you know, at Alibaba, of effectively going as it were under the radar for a few years when you kind of incurred the displeasure of the administration. You also have people who've had significantly worse consequences than that. So let's start with the basic: you wish them all the best, right?","offset":3794,"duration":22},{"text":"Jason: I don't think another deal like this would happen, do you? I think this whole Singapore washing thing is over. It's over.","offset":3816,"duration":6},{"text":"Rory: I totally agree. That's where I was going to go with that long preamble. I'll tell you who didn't notice: maybe no one in America spent any time thinking about it, but every Chinese founder who was thinking about doing this is going, \"Hmm. Hmm. I don't know how I feel about this. I don't know if I can do this deal. I do know if I do this deal, I am never going home again.\"","offset":3822,"duration":17},{"text":"Rory: I'm with you, Jason. I think all these other China washing deals, they're put on pause or they're put on reevaluation. It's—next thing it's going to sound harsh. It's a fairly coercive regime. If your family's not out of the country, do you have exposure there? Right?","offset":3839,"duration":15},{"text":"Rory: I think it puts—it just shows, I mean, authoritarian governments can take pretty dramatic steps to impact their citizenry if they want to. And I agree, Jason, it makes it really hard to imagine doing another one of these deals without being worried about this consequence. And hopefully they'll kind of go \"naughty you,\" pay a 50%—like, you know, California makes it hard to leave too, but if you pay them 13%, they'll let you go to Nevada, right? Yeah, hopefully it turns out to be something like that and please God it's not something more, you know, coercive. But I agree, Jason, wouldn't do another one.","offset":3854,"duration":33},{"text":"Jason: You know, in venture you take risk, right? It's part of the job. So we've all had deals where there's some rule, some corner that was cut and we talked ourselves into it's okay, right?","offset":3887,"duration":11},{"text":"Jason: This is—companies—something weird about this company but—and we convince ourselves as—as—talking to some mediocre lawyer or asking an LLM today that it's okay. So like this Singapore washing must work, right? They've moved to Singapore, it's got to work.","offset":3898,"duration":15},{"text":"Jason: And you convince yourself, you talk to a few people and you take the risk and it—it—it appears to have bounced the right way for Benchmark and friends, right? It appears they've gotten their money. But you don't do the next one, right?","offset":3913,"duration":11},{"text":"Jason: And there's 242 millionaires in Singapore, the majority of the inflow is Chinese. You don't do the next deal. I mean—and that—maybe other capital does the deal and that's fine, right? Capital is fungible, but you just—in venture you just don't—you just can't do the next one like this. It's too risky.","offset":3924,"duration":13},{"text":"Harry: What do you do if you're Meta? Part of the asset you're acquiring is the team.","offset":3937,"duration":4},{"text":"Jason: 2 billion's not a lot for Meta and they have the product.","offset":3941,"duration":3},{"text":"Rory: Yeah, what are you going to do, Harry? What would you recommend? Getting angry at the Chinese? That'll work well, right? I mean, I think it'll be, you know, a yet another acquisition that looked clever, but in retrospect wasn't anything.","offset":3944,"duration":15},{"text":"Jason: Well, listen, for Meta, I'll just say one thing. I—I only have a tiny bit of information, but I—it appears to me Mannus is running mostly smoothly as an application and a company. Now, I don't know if the founders are working out of, you know—I certainly feel strongly when you lose your founders you lose your heart and soul of your company, but in the short term, I—I don't think it's a big deal for Meta outside of the founders because it's running smoothly, right? That—that's my—in the short term. The—the—it's not down, the team's functioning, they're running. And um, but it's crazy.","offset":3959,"duration":30},{"text":"Rory: And at the risk of being Pollyanna but also wanting to assume the best of people, I would hope that the Meta management team and board, to the extent they do have any influence, can help these guys come to an amicable end and if it requires a tax settlement or whatever, you know, just—you don't want to leave—you don't want to leave people you just acquired in limbo.","offset":3989,"duration":19},{"text":"Rory: At some zoom out level, when you listen to the rhetoric in both capitals, you just have to realize that trying to tread between those two—these two countries is pretty hard right now.","offset":4008,"duration":10},{"text":"Rory: Right, you know, yeah, we have China Hawks in the US government, they obviously have a whole ton of US Hawks or whatever the equivalent is. There's a real perception of competition. Yeah, we don't let them buy the Nvidia chips, etc., etc. You're playing with fire in that thing and sometimes it bites you.","offset":4018,"duration":17},{"text":"Jason: I just think overall, it's natural in given the outcomes in AI and given the growth, that I think it's tied to taking the highest levels of risk we've also taken because the payoffs seem to be there. And when this deal happened, folks kind of thought this was aggressive, Benchmark's never done a deal like this, why are they doing a deal like this? It's not even very cheap, right?","offset":4035,"duration":18},{"text":"Jason: It seems a little crazy. And they're like, \"Well, we've never seen anything grow like this and the team's incredibly talented,\" right? So they took a little bit of risk and um, and they made their—made their profit. We're all taking more and more risk. Folks that, you know, now it's a week of revenue at a Demo Day. I did a million dollars my first week. It's amazing. What about the second one? I don't know.","offset":4053,"duration":18},{"text":"Jason: Like, uh—but as long as it all works out in the aggregate. And I think this is why nobody cares to Harry's point. I cared about Mannus, I added it to the list. I don't think anybody cares. We're all focused on getting a million dollars our first week.","offset":4071,"duration":13},{"text":"Rory: Just good realization that the worst thing that can happen is not just, \"Oh, you lose your money.\" There are worse outcomes than that.","offset":4084,"duration":10},{"text":"Harry: I mean, speaking about cooling their shot on making billions of dollars, Steve Jurvetson... he's tied his career to Elon very smartly, so that's not in any negative way in terms of the investments that he has plowed, trebled, doubled, quadrupled, everything in between.","offset":4094,"duration":16},{"text":"Harry: Uh, leaves California, buys most expensive home in Incline Village. And—and these were Jason's words—will anyone with liquidity be left in California? What if California is structurally bankrupt?","offset":4110,"duration":14},{"text":"Jason: Well, I mean, yeah, it's not a great sign when they keep leaving, is it? It's not a—it's not a positive.","offset":4124,"duration":7},{"text":"Harry: But Rory's staying, Jason.","offset":4131,"duration":1},{"text":"Rory: I mean, look, all—first of all, you're exactly right. All credit to Steve and all power to him. Known him intermittently for 30 years. He made a brilliant call to align with SpaceX, being on the board of Tesla and SpaceX.","offset":4132,"duration":15},{"text":"Rory: Tesla for a while and then came off obviously for those back in the day, but SpaceX too. Yeah, he's—he's put his money in a compounding machine and now he's clearly hit the DPI moment.","offset":4147,"duration":9},{"text":"Rory: Right, but yeah, going back to the thing. Yes, capital—I mean, the truth is this: that's why we said last week, high—ultra high net worth people have a high degree of mobility and unfortunately, if you put the hammer up too high, they can leave and choose to go across the border to Incline Village and save 13% on, um, any realized gains, plus as we've pointed out, 5% on all gains if this wealth tax passes.","offset":4156,"duration":26},{"text":"Rory: You know, at the margin, why wouldn't you? You know, it's not like you need to be in California to be a Tesla board member or a SpaceX board member given they're down in Texas. So yeah, actions have consequences.","offset":4182,"duration":13},{"text":"Jason: Well, it's interesting also this week, um, Washington state did pass their 9.9% state income tax for millionaires. And the governor said—the—the reason the governor said it's signed because there were a lot of folks who said, \"Don't do it,\" right? It's already Howard Schultz left.","offset":4195,"duration":14},{"text":"Jason: He said today, he said, \"Well, they just deserve to pay more.\" And that may well be true. It may well be true. Like, I don't want to debate that. This is not political, right? I'm—I'm more concerned about the tipping point when uh, we kill golden geese.","offset":4209,"duration":16},{"text":"Jason: You know, there's been—Washington and California and to a lesser extent New York have been the gold—golden geese. It's, uh, you know, Washington said they're going to lose money, they're not going to make money on this. It—it appears that most folks that are neutral or right have said California will lose money on the billionaire tax, everyone's left.","offset":4225,"duration":16},{"text":"Jason: And the tax itself assumed massive amounts from Larry Ellison who's been gone a half decade, right? So no one's going—it's just I do—I do worry they're all—they're all—they're all leaving.","offset":4241,"duration":11},{"text":"Jason: Everyone that doesn't work at OpenAI and Anthropic. Uh, you know, on this show we've done it 50 and I said in the beginning of this that you leave after the series B and I—now I see that used again and again by these folks who are on the right on it. They say all the founders leave after the series B, but it may happen by show 100.","offset":4252,"duration":17},{"text":"Rory: And one of the arguments I'd make is, because you know, the truth is this: articulating the argument to the—to, you know, the activist on the other side as being, \"You're being mean to the billionaires,\" is of genuine no interest. In being mean to a billionaire is actually a feature, right?","offset":4269,"duration":18},{"text":"Rory: But I think the real articulation is this: if you—you actually are losing revenue that won't be available to California and the marginal dollar in California probably goes into home—you know, payment for homelessness, payment for young—kids, payment for foster homes, payment for marginal social welfare services that are easy to defund when times are tough, right?","offset":4287,"duration":18},{"text":"Rory: And by choosing to obtusely tax without any attention to ability to collect that money, you've actually reduced the revenue that's available to you, right? And that's the argument you have to make to the—to someone on the other side of the table: You have literally chosen something.","offset":4305,"duration":13},{"text":"Rory: Instead of getting, you know, 250 million—I don't know, pick a number, 50 million from the Larry and Serges and the Jurvetsons of this world, you went for 200 million and now you're going to get zero.","offset":4318,"duration":11},{"text":"Rory: And what that means in real terms is somewhere down the line, long after all these changes have been made, somewhere in Sacramento, someone will zero out a line item on the budget and let me give you a clue: it won't be payments to the teachers, it won't be payments to the firemen, it'll be marginal services to marginal people that your crass stupidity and desire to make a political point has ended up costing them money. And that's the only argument that moves the needle because it—because it's true. And you're right, Jason, you're saying is that it will have a net negative return. How do—now do you feel good?","offset":4329,"duration":35},{"text":"Harry: Rory, if you were Steve, would you have left?","offset":4364,"duration":3},{"text":"Rory: I think from my perspective, I'm just so glad to be in California. It's so wonderful. I moved around a lot early in my life. I have my friends here, I have my life here. At the margin, the whole point of having money is to be able to do what you want, and for three or four or five or even 13% of your income, do you really want to leave?","offset":4367,"duration":16},{"text":"Rory: Now, I will say this, that's why you can tax income relatively highly because it comes all the time and you can't control timing and therefore you have to uproot your whole life for the rest of your life to avoid it, and I don't think it's worth it. So I wouldn't move to avoid income tax.","offset":4383,"duration":16},{"text":"Rory: Conversely, if you have this pending capital event where literally in one year you're going to sell quote all your SpaceX stock and realize a $2 billion gain and you're going to pay an extra 13% of that in California, it's $260 million. Maybe you turn to your wife and say, \"Honey, for the next two years, why don't we live in Incline Village 165 days? I'll pay for the plane, we'll go back every week, you won't lose contact with anyone and we will save $260 million.\"","offset":4399,"duration":23},{"text":"Rory: And you go, \"Hmm. That's real coin.\" So and that's the point about, you know, that's not the life I lead, that's not the situation I'm in, but that's the argument you make. It's like, it's not crazy.","offset":4422,"duration":12},{"text":"Harry: That's real coin, baby.","offset":4434,"duration":2},{"text":"Jason: That's real coin.","offset":4436,"duration":1},{"text":"Harry: Is—is there any story that I haven't hit on, guys, that we should hit on?","offset":4437,"duration":3},{"text":"Jason: I just have to bring up the Ron Conway Matthew Prince one because it was so—I highlighted that one on Twitter. It was just the funniest thing in the world.","offset":4440,"duration":10},{"text":"Harry: And uh, you know—","offset":4450,"duration":1},{"text":"Harry: Just for context, do you want to provide some context?","offset":4451,"duration":2},{"text":"Jason: Yeah, I don't know Ron Conway, but he's certainly viewed as one of the Silicon Valley gems, right? Seed investor in so many leaders. Always out there as an advocate everywhere, um, probably could have retired years ago, right? Very founder-centric.","offset":4453,"duration":14},{"text":"Jason: And he wrote that he had helped Cloudflare navigate some very significant issues earlier in the day. I think on Jack Altman's podcast, yeah, on Uncapped. And they asked Matthew Prince, CEO of Cloudflare, the question, he said, \"Well, maybe, I don't remember any of that.\"","offset":4467,"duration":14},{"text":"Jason: And it's just—it's not—and he wasn't mean. Matthew can be fairly, uh, sharp as—as Harry knows these days. It wasn't meant mean, the tweet was not mean. He literally just memory couldn't remember getting any help from this beloved VC.","offset":4481,"duration":14},{"text":"Jason: And I think it just said so much to me about VCs adding value, but also VCs thinking they add value. VCs possibly adding a modest amount of value but founders not really thinking that modest value was consistent with the bravado of the VC.","offset":4495,"duration":14},{"text":"Jason: It just—it just—it just crystallized the whole value add idea to be in a single tweet. It wasn't mean, it's just, \"I don't remember any of—I don't remember Ron helping, but maybe he did.\"","offset":4509,"duration":10},{"text":"Rory: Yeah, I—you're right, Jason. I—I did laugh at that. And I think it does—I think actually my big takeaway to your point is both to some extent are right is that, you know, as a—we all want to have agency, we all want to feel we help and, you know, want to be good people and you look and you go, \"Hey, I spent some of my time helping this CEO. I feel I helped.\"","offset":4519,"duration":18},{"text":"Rory: But from the company's perspective, they're founding a company, they're doing a million things. On one or two things on a 10-year journey you helped, you remember that vividly. They're like, \"Dude, it just fades into the background of, you know, a hundred things,\" and you know better than me, Jason, they have to do every day, right?","offset":4537,"duration":16},{"text":"Rory: And the truth is this. I—one of the proofs of this is—interest the way to check it—is I often read business biographies and business stories of great companies, venture-backed companies, and how they were formed and what happened.","offset":4553,"duration":18},{"text":"Rory: And you know what I notice in them? Every single one of them: very few little mention of the VCs. If you just read them, you—you eyeball them, see says, \"Oh, there's a biography they—\" Yeah, and they crop in and come out a couple times, right?","offset":4571,"duration":13},{"text":"Rory: And I think that's right because realistically in the journey of what's going on, the only significant things we do—and I said this before in the podcast—we put in the money and we put in more money when they need it. We decide to hire or not hire or fire the CEO, we agree the broad strategic direction, and anything after that is at best an assist, right?","offset":4584,"duration":20},{"text":"Rory: And if you read the biographies of businesses, what you generally see is the only time the VCs come in is on some version of those, right? And it's, you know, five pages of the journey early on interspersed over 200 pages in the first five chapters, and by the time they get to the IPO, don't even rise to the level of a thing, right?","offset":4604,"duration":15},{"text":"Rory: I was reading the, you know, the OpenAI biography, the—a bunch of them recently. And that's just the way it is. Microsoft biography, same thing, right? You know, so don't—I mean, and you—the VC can feel those five minutes of impact were amazing and they feel really good about them and you feel warm and fuzzy but, you know, the only thing founders really remember for better or ill is, \"Oh my God, our backs were to the wall and no one would put in money and they put in money.\" They remember that.","offset":4619,"duration":29},{"text":"Jason: Some—some—sometimes. In my experience, sometimes, Rory.","offset":4648,"duration":3},{"text":"Rory: Sometimes they even forget that. Well, but to your point, Jason, if they forget—","offset":4651,"duration":3},{"text":"Jason: At least half the time they forget that.","offset":4654,"duration":1},{"text":"Rory: If they forget that, they're definitely going to forget the time you made that phone call to help them connect with XYZ and that helped them do something because that's something that happens a hundred times a day. No, you're right.","offset":4655,"duration":10},{"text":"Jason: Yeah.","offset":4665,"duration":1},{"text":"Rory: We're not the stars in the drama. We're—we're just bit players who get well paid for our part.","offset":4666,"duration":6},{"text":"Harry: Boys, as always, the most humbling 90 minutes of my week.","offset":4672,"duration":3},{"text":"Jason: I'm afraid you'll get more.","offset":4675,"duration":2},{"text":"Rory: You'll be humbled tomorrow.","offset":4677,"duration":2},{"text":"Harry: You'd be surprised.","offset":4679,"duration":2},{"text":"(Audio ends)","offset":4681,"duration":15}],"logs":[{"elapsed":"0.0","message":"Downloading audio from YouTube...","detail":null},{"elapsed":"0.0","message":"Trying download with browser cookies (ad-free)...","detail":null},{"elapsed":"2.8","message":"⚠ Cookie download failed: WARNING: [youtube] [jsc] Error solving n challenge request using \"deno\" provider: Error running deno process (returncode: 1): \u001b[0m\u001b[1m\u001b[31merror\u001b[0m: Uncaught (in promise) TypeError: Cannot read prope","detail":null},{"elapsed":"2.8","message":"Retrying without cookies...","detail":null},{"elapsed":"35.4","message":"⚠ Downloaded without cookies — audio may contain ads","detail":null},{"elapsed":"35.4","message":"Audio downloaded (42.4 MB) in 35.4s","detail":"File size: 42.4 MB"},{"elapsed":"35.4","message":"Video title: OpenAI Kills Sora & Hits $100M ARR on Ads | Oura Going Public & Whoop Raises at $10BN","detail":null},{"elapsed":"35.4","message":"Audio duration: 1:12:40 (72.7 min)","detail":null},{"elapsed":"35.4","message":"Large audio (72.7 min) — will use chunked transcription with gemini-3-flash-preview","detail":null},{"elapsed":"35.4","message":"Skipping full-file attempt — using chunked transcription for 72.7 min audio","detail":null},{"elapsed":"35.8","message":"Split audio into 2 chunks for transcription","detail":null},{"elapsed":"35.8","message":"Transcribing chunk 1/2 (starts at 0:00)...","detail":null},{"elapsed":"35.8","message":"Uploading audio to Gemini File API...","detail":null},{"elapsed":"39.9","message":"Audio uploaded in 4.1s","detail":"File ref: files/qayd4s5cwjo9"},{"elapsed":"39.9","message":"Audio processed in 0.0s. Transcribing with gemini-3-flash-preview...","detail":null},{"elapsed":"111.8","message":"Chunk 1: 95 segments, last timestamp 52:18","detail":null},{"elapsed":"111.8","message":"Transcribing chunk 2/2 (starts at 45:00)...","detail":null},{"elapsed":"111.8","message":"Uploading audio (offset 45:00) to Gemini File API...","detail":null},{"elapsed":"114.7","message":"Audio uploaded in 2.9s","detail":"File ref: files/zx2q22hqixbw"},{"elapsed":"114.7","message":"Audio processed in 0.0s. Transcribing with gemini-3-flash-preview...","detail":null},{"elapsed":"171.4","message":"Chunk 2: 172 segments, last timestamp 1:18:01","detail":null},{"elapsed":"171.4","message":"Chunked transcription complete: 235 total segments","detail":null},{"elapsed":"171.4","message":"Total cost: 109,552 in / 24,064 out — cost: $0.1270","detail":null},{"elapsed":"171.4","message":"Total transcription time: 136.0s — 235 segments","detail":null},{"elapsed":"171.4","message":"Analyzing topics across 235 segments with gemini-3.1-pro-preview...","detail":null},{"elapsed":"228.2","message":"Topic analysis complete in 56.8s — found 16 topics","detail":null},{"elapsed":"228.2","message":"Analysis tokens: 22,865 in / 1,436 out / 6,374 thinking — cost: $0.1395","detail":null},{"elapsed":"228.2","message":"Pipeline finished in 228.2s — total cost: $0.2664 (164,291 tokens)","detail":null}]}