recap/history/1775603102882-yLmM3M7d9v8.json

{"id":"1775603102882-yLmM3M7d9v8","videoId":"yLmM3M7d9v8","url":"https://www.youtube.com/watch?v=yLmM3M7d9v8","title":"Why You Need a $1B Fund To Do Series A | SpaceX at $2TRN & Data Centers in Space | Groq's $20BN Deal","type":"youtube","topicCount":9,"segmentCount":241,"createdAt":"2026-04-07T23:05:02.883Z","uploadDate":"20260326","chunks":[{"title":"Introduction & Episode Agenda","summary":"The hosts banter about market overreactions and outline the week's agenda, including Anthropic's enterprise gains, Jeff Bezos's mega-fund, SpaceX's valuation, and Groq's acquisition.","entries":[{"text":"Jason: On the Stitch Figma thing, on the one hand, massive market overreaction to a proof of concept, give me an f-ing break. On the other hand...","offset":0,"duration":8},{"text":"Harry: On the agenda this week, Anthropic: are they eating OpenAI's lunch when it comes to enterprise? Jeff Bezos seeks $100 billion for his latest project. SpaceX at $2 trillion after TerraFab. The debrief on Groq's $20 billion deal to Nvidia, and much, much more.","offset":8,"duration":15},{"text":"Rory: If you're a software product and you don't think AI is going to disrupt not just how you build, but what you build, then you actually probably want to actively short it.","offset":23,"duration":8},{"text":"Jason: I think every VC is stressed right now. Let's be honest, who the hell is going to buy them if they don't IPO? I just worry there's some ratio of potential acquirers divided by unicorns, and I think we're at the lowest ratio of our careers. I just don't believe the hyperscalers are going to buy these companies. Basically, it's win or die. Ready to go?","offset":31,"duration":29}],"startTime":0},{"title":"Anthropic Overtakes OpenAI in Enterprise","summary":"Following Ramp's data showing Anthropic capturing 73% of new enterprise AI spend, the hosts discuss OpenAI's defensive response. They debate whether OpenAI's shifting strategies are causing them to lose their enterprise foothold.","entries":[{"text":"Harry: Guys, it is so good to be back. We had, we had a lot of shit go down this week. Um, I think there's a couple of places we could start. To the arbiter of economic justice and revelations, which is Ramp, who revealed recently with, I think they're about 0.5% to 1% of US GDP transactions or whatever it is that Ramp uses as a statement to validate themselves.","offset":60,"duration":25},{"text":"Harry: Ramp data suggested that Anthropic now captures 73% of all spending among companies buying AI tools. 10 weeks ago, it was 50-50 with OpenAI. Early December, it was 60-40 in OpenAI's favor. Are we seeing Anthropic run away with the enterprise lunch, so to speak?","offset":85,"duration":18},{"text":"Rory: Just to start with the facts, they actually said 73% of new spending, right? And what they said, and the same graph shows OpenAI is still actually ahead of Anthropic in terms of total spend, but the marginal buyer in the last 6, 8, 10 weeks has massively shifted, which is obviously the most leading indicator.","offset":103,"duration":21},{"text":"Rory: You know, people in the market today for new AI went 70% Anthropic. So, just in the interest of being precise. Yes, the claim from Ramp, I thought the OpenAI response of, it's not, you know, the snarky comment about extrapolating from a lemonade stand was just a bad look, right?","offset":124,"duration":18},{"text":"Rory: First of all, it kind of doesn't really understand statistics. I would argue Ramp is probably a pretty accurate statistical reflection of especially digital company spend in the US. I think they have got a pretty diversified customer base and they probably have decent data and they've got good data scientists.","offset":142,"duration":23},{"text":"Rory: So it was, so OpenAI trying to be snark, I think was a mistake. I think the real, I think it does represent the facts, which is in the last three months, there's been a shift in the zeitgeist, and I do believe that the marginal user, the marginal person opting for AI today or even people switching today, the switchers are moving towards Claude and they're moving away from OpenAI. That doesn't mean it's the end of the world, but sometimes the first thing you've got to do in dealing with a problem is to face the hard facts in the face. And I think the data was good and the conclusion is real.","offset":165,"duration":30},{"text":"Jason: If Anthropic now is maybe a $20 billion run rate, the revenue does tie to these to conclusions too. Certainly isn't inconsistent with it, right? The only thing I might say, I don't want to spend all our time... I think it's possible they're both right, like OpenAI and Ramp are both right. And what I mean is in some ways this felt to me like the Cursor debate.","offset":195,"duration":19},{"text":"Jason: Because if we walk into our portfolio companies, barely anyone's using Cursor today in my own portfolio, and people said it on Twitter too, like Cursor's dead, no one's using it, they've all moved to Claude. And I would say in that ecosystem, it's true. And maybe if a lot of Ramp's data is still biased toward tech, they might see this same trend.","offset":214,"duration":18},{"text":"Jason: I mean, Claude has, if you just look at why everything's accelerated since December, it is Opus 3.5 and after. It is crystal clear. As soon as Opus came out, it was another step function that was under-discussed, everyone's PRs exploded, everything got better. But for the normal world, they live in ChatGPT.","offset":232,"duration":17},{"text":"Jason: So I don't want to say for sure that the Cursor experience isn't happening here. So in my point is they both could be right. They both could be right. But it's certainly everything, what I don't like is how OpenAI is acting wounded, to Rory's point. I don't like it.","offset":249,"duration":17},{"text":"Jason: When we started this pod, OpenAI seemed invincible no matter what Anthropic did. It seemed utterly... and everything you can just smell this aura, this air of desperation. Oh, we're going to keep head count flat to manage costs, to we're doubling head count. To we're going really deep on agentic commerce, to we're basically canceling it and Walmart says it doesn't work.","offset":266,"duration":19},{"text":"Jason: It feels very inconsistent and what I thought about this, the one thing that I love about Anthropic is it's very consistent about its ICP and goals. It has been very consistent. We know what it stands for, we know what it's trying to do. Yeah, it launches new features, I mean, it's got its new like open, its next version of open Claude launched yesterday as we record this, but you know what's coming with Claude and Anthropic. OpenAI I'm getting whiplash from everything.","offset":285,"duration":25},{"text":"Jason: And the Debbie Downer-ism, it's not... going to last week we talked about the air of invincibility at GTC and Nvidia. It doesn't smell like that at OpenAI today, does it? It's just like a downer to be around and I don't want to try their products because of it, honestly. I actually don't want to try their new products and I literally last night I'm DMing with our chief AI officer, we're trying the new Claude app that just launched. But it ain't gonna hap... we don't want to hang out with Debbie Downers.","offset":310,"duration":29},{"text":"Harry: If we just kind of put that into strategic takeaways, in terms of their pivot, now Sora is getting folded into ChatGPT rather than being a standalone app. Hardware ambitions are being deprioritized and they're really kind of trying to consolidate efforts, stop having such a diverse product set.","offset":339,"duration":19},{"text":"Harry: And then they're also to your point on head count, they now plan to nearly double head count to 8,000 by the end of the year, having said before that they were actually going to keep it flat. Is there a question?","offset":358,"duration":13},{"text":"Jason: No, I just want people to understand the context rather than... you know what it feels like to me in all seriousness, it feels like the... it felt like when we started this podcast quite a while ago, but but not a year ago, I don't think, that OpenAI was an exception to the rule.","offset":371,"duration":15},{"text":"Jason: You could have massive founder turnover, you could have massive management team turnover, you could have an unusual... like the amount of drama with kicking Sam Altman out and then bringing him back and a dysfunctional board and like it seemed to be the exception that made the rule that if you had so much momentum in a consumer... like you could overcome it.","offset":386,"duration":19},{"text":"Jason: Now I feel like the downside is rearing its mind of inconsistency. This inconsistency is damaging the company today in spades. We can see the downstream impacts of that massive turmoil.","offset":405,"duration":11},{"text":"Chamath: Yeah, and I'm going to come in here and try and say something positive, but start by pointing out if we do go back to those first 10 podcasts, they announced the hardware deal with Jony Ive. If you recollect, I was like this will never ship.","offset":416,"duration":15},{"text":"Chamath: I said at the time, and I actually said right when he was on a high that I don't envy Sam because the press only has two stories: we love you, we hate you. And once they've written we love you, there's only one story left. So they're just moving through the to-do list: we've done the we love you Sam, now we hate you Sam, right?","offset":431,"duration":16},{"text":"Chamath: And he has brought on it, you know, you spend a year talking to the prince of fill-in-the-blank, the president of France, instead of staying at home and shipping product, eventually things get defocused, right? But things are never as good or as bad as they seem. That's just one of my rules. It was never as good as people thought a year ago.","offset":447,"duration":17},{"text":"Chamath: They still have, to your point Jason, they still own the consumer business, right? And you know, there's, and so job one is figuring out how to monetize that and make that a big asset business. You know, it's hard to believe that the business, the advertising effort seems to be struggling now, but that's job one to figure out.","offset":464,"duration":15},{"text":"Chamath: And then you're right, job two is to figure out enterprise and in particular coding. I mean, they're doing finally the right stuff, you know, perhaps a year, a year and a half later, but it's still clear to me that if you just take a big deep breath and you were running that organization, focus on the two or three things, get a little more sensible on your financial trajectory, you still have a comfortable chance to be the winner. In other words, to exit two, three years from now as the largest market cap standalone foundation model player, right? You blow it for another year and you won't.","offset":479,"duration":30}],"startTime":60},{"title":"Model Lock-in & Token Economics","summary":"Jason and Rory analyze why developers are locking into Claude's models rather than switching for cheaper alternatives. They explain how the hassle of QAing outputs creates stickiness, making token costs less relevant for high-value applications.","entries":[{"text":"Jason: You know what's interesting is, there's sort of two things going on here that I see in the data, right? If you look at OpenRouter's data, it has exploded since the start of the year. So what that is saying is folks are aggressively switching between models for cost and output, especially cost. Like that's saying there are a large set of customers who are optimizing when to use Glimmy and when to use Haiku and when to use Mini, and and that that model has exploded, right? And we can see it in a lot of our more mature customers, I mean companies that are trying to optimize their spend.","offset":509,"duration":33},{"text":"Jason: On the other hand, so much of us have said listen, I mean, Claude Sonnet and Opus since 3.5 and 3.6 are so good, I want to stick there. It's so... like if you're not deep into coding or vibe coding, you don't see how much better it is in the last 90 days. And I have no desire to screw around when something gets their hooks it... it's so good.","offset":542,"duration":21},{"text":"Jason: And so I want to build all my scaffolding, I want to build my apps, I want to build my AI agents about something that isn't just good, but now is epically good. And so you'd really... there are a lot of even with the OpenRouter data, like I think what I mean is there's this there's these two things happening.","offset":563,"duration":14},{"text":"Jason: On the one hand, the soft costs are very low to pick a different model. But on the other hand, there are high soft costs for managing the outputs and QAing it and qualifying it to make it great. And I don't want to do anything except Sonnet and Opus now. I don't want to spend any time on it. It's not worth... it's not worth the soft cost. And I think that's where the panic is. They can smell that they're losing that even as cost sensitive customers will rotate through the cheapest possible thing.","offset":577,"duration":25},{"text":"Rory: I think true. And I think it speaks to the, you know, you have these discussions, you know, do you want to be first to market or do you want to be second and you know more and you don't, you know, pioneers get arrows in the back and all those clichés. But I think the real truth is if you are first to a market with the right product, you do you you grab that early mind share and market share and then it's theirs to lose.","offset":602,"duration":18},{"text":"Rory: And just contrast the two markets, because it's pretty clear the two potential mega markets here are the consumer market where OpenAI grabbed the mind share with ChatGPT and despite they haven't monetized it yet, no one's really taken that away from them at scale.","offset":620,"duration":15},{"text":"Rory: And then the other mega market is not just enterprise, but within enterprise coding. And you're right, Jason, the scary thing is today it's maybe 6, 12 months ago was up for grabs, today kind of your description's right. It's half up for grabs, people are starting to lock in.","offset":635,"duration":13},{"text":"Rory: And you know, if OpenAI allows Claude to become the default for another year and the perceived best for another year, I don't think you get to show up after a whole bunch of people have made enterprise decisions and say oh now we finally got our shit together, we're good too now I promise, please pick me, right?","offset":648,"duration":18},{"text":"Rory: There is a moment, there is a tide in the affairs of men as Shakespeare says, right? This has been the last six months of coding lock-in, right? Just the recognition that coding is the mother lode app within the enterprise spend. And you're right, if you let Claude run away with that for another six or 12 months, you've probably sacrificed value that you'll never get back.","offset":666,"duration":24},{"text":"Jason: You know let me just give you one small example, like because these because they're the models are so much better since December. So since then, we've built we have built an AI VP of marketing and an AI VP of customer success for real, and they're really, really good.","offset":690,"duration":13},{"text":"Jason: But here is the meta point: our AI VP of marketing defines every day, every single marketing activity, it wakes up in the morning and gives us Slack updates, it runs our weekly team meetings. Our AI VP of success, we have like 200 sponsors for SaaStr and all the humans would quit because it was too much work. It does it 24/7 and the sponsors love it, okay?","offset":703,"duration":18},{"text":"Jason: Now here this so these are great. It runs on Sonnet 3.6 sorry 3.7 and and maybe a little bit of Opus. There is no way we're going to switch the model. This is dialed in, it works. Now we're going to have to deal with QA when it goes to 3.8 and 4.01. There's a little bit of QA and it does change. But my God there's no these apps which we rely on every day, there's no way we're going to switch them to Codex because it took us weeks to dial it in and you have to train it and you have to do it and then now that they're great.","offset":721,"duration":27},{"text":"Jason: Once there's a certain level, I'm not saying that other folks won't, but that is a lock-in since the latest models that I think deserve a code red. We will not invest the time after we've dialed because they're so good, the models today. So that's a risk. I would have a code red on this.","offset":748,"duration":22},{"text":"Chamath: Agreed. And because and again just donning my economics of industry hat, you're exactly. You're an individual enterprise, right? Maybe if you were a SaaS vendor of these products to a thousand enterprises, you might have a big enough engineering team where it'd be worth your while six, 12 months from now to evaluate new models.","offset":770,"duration":20},{"text":"Chamath: But you're right, you've built a business that works for you, right? And it's you're right, unless they're extorting you on token costs, it ain't broke, so you ain't going to want to fix it six months from now. I agree.","offset":790,"duration":10},{"text":"Chamath: And that's why, just like on the consumer side, every time you lock in muscle memory, I mean, I'm using Claude all the time now in Coherence but I will admit when I'm doing my random research for this sort of thing, I still go to ChatGPT. I'm used to it, I got a lot of stuff in there. Every time you lock in behaviors like that and let them settle in for 6, 12 months, you're just, yeah, you're losing lifetime value that's nontrivial.","offset":800,"duration":22},{"text":"Jason: There are applications, if we just stick to B2B and AI for a while, there are applications that are very sensitive to token costs, okay? Um, we've all, you know, even things like support are super sensitive, right? Because they're using so many tokens.","offset":822,"duration":16},{"text":"Jason: But I got to tell you there are so many applications like the ones I described that were not that sensitive to token costs. If you use $200, $400, $2,000, $10,000 of tokens per month for these it just doesn't matter. And so there's the OpenRouter world where costs are super sensitive, but there are plenty of applications that will deliver epic value on these LLMs where it's not worth...","offset":838,"duration":20},{"text":"Jason: You want to reduce my token cost from $2,000 a month to $1,500? I'm not... leave me alone. Leave your Glimmys and all these leave I don't care, like I got 99 problems this isn't on one of them, right? And there are going to be more of those apps than we think.","offset":858,"duration":14},{"text":"Rory: You're exactly right. One of the things I've been thinking about for our for our software apps investments is just having this mental model of, you know, what's the what's the token spend as a percentage of revenue?","offset":872,"duration":9},{"text":"Rory: And you're exactly right Jason, there's a ton of really interesting apps that you know for 5, 7, 8% of revenue on tokens are building huge value, which my sense at least is very different than the coding apps where you might be at 40 or 50%.","offset":881,"duration":13},{"text":"Rory: And if you're at 5% of revenue and you're growing really quickly, you got a lot of better things to be doing with your life than over-optimizing the models. And I think, you know, and if you get around to it you might use some open source. Yeah, exactly.","offset":894,"duration":14},{"text":"Rory: Maybe even more, maybe even 20%. But I think that metric I've actually meant to do this work and if someone has done it out there in internet land I'd love to see it, just looking at a couple of hundred AI apps and just literally looking at the AI token spend as a percentage of revenue across them all. I'd love to know what the pattern is, because I totally see very different percentages depending on the token intensity.","offset":908,"duration":23}],"startTime":509},{"title":"SpaceX TerraFab & $2 Trillion Valuation","summary":"Elon Musk's plans to build a massive chip fab for Tesla and SpaceX prompt a debate over SpaceX's rumored $2 trillion valuation. The group weighs the credibility of Musk's timeline against his history of achieving massive step-function engineering goals.","entries":[{"text":"Harry: SpaceX, TerraFab, potentially $2 trillion. We're reaching new highs. We started off at a trillion two, a trillion five, now TerraFab and the $2 trillion number is being mentioned. Rory why don't we start with some context from you, you're the best at providing succinct...","offset":931,"duration":19},{"text":"Rory: I'm... okay. I mean, the big picture context is context is that Elon made an announcement that they're going to build a fab, effectively build the equivalent I think almost 70% of the volume of all of TSMC, right? In the US near the Gigafactory because across the chip need for Tesla and the perceived and the potential chip need, I'm picking my words carefully, for SpaceX to the extent that they build data centers in space, he doesn't think TSMC will be able to make enough chips to support his needs, and therefore continuing a pattern of vertical integration which they've had for an extended period of time, they're going to build a fab.","offset":950,"duration":44},{"text":"Rory: Right, not just any fab, but the most advanced modern fab on the planet for probably CapEx costs of $25 billion. Right, that's the announcement. So I can't and and it's not clear the ownership by the way, but it's i think the usage, the idea I saw some number like 20% it's kind of some kind of joint Tesla-SpaceX venture, 20% of the volume in the end will go to Tesla, 80% will go to SpaceX and data centers.","offset":994,"duration":28},{"text":"Rory: So that's the story. That's the second piece of context is Harry you said SpaceX now being talked about at $2 trillion. Let's be clear what you're saying about that is because i'm going to push back strong. PolyMarket said the probability of SpaceX being worth $2 trillion on the IPO went up to 50-60%, right? From a lower number, right?","offset":1022,"duration":21},{"text":"Rory: And that's what Harry's attributing information signal to. I would point out that Tesla stock didn't move. So if this really is even if it's 80% SpaceX, 20% Tesla in the market nobody blinked, right? Where actual money's significant money's changing hands. So I am significantly more skeptical that six months from now people are going to attribute another $400 billion of value to a statement that I'm going to build a fab.","offset":1043,"duration":26},{"text":"Jason: Unless they unless they saw your math the 80/20 and really thought of all the value going to SpaceX, right?","offset":1069,"duration":5},{"text":"Rory: Even if all by I mean, yeah, yes, okay. Yes. So again, it's back to the same eternal Elon discussion, at every point in time with every one of his companies, you have things he's already done that you can value on a revenue multiple, things that have been announced or are in process and they're various stages of doneness and in that case you have to assign a probability of getting it done.","offset":1074,"duration":21},{"text":"Rory: And if the probability is 100%, then announcing a fab means you're worth the fab. If the probability is 1%, then announcing a fab means you're worth 1% of the fab, right? And everybody gets to pick their percentage in that continuum, right?","offset":1095,"duration":14},{"text":"Rory: Right now, I mean TSMC itself is just over a trillion in market cap. It's like basically saying if it really popped up by $400 billion of value, it's like basically saying TSMC has spent 30 years building the most modern fabs out there, you've announced that you're going to do the same, you do have customers for those chips in the main, so I'm going to give you a 50% probability of getting it done. It's a pretty high Elon-attributed probability number.","offset":1109,"duration":23},{"text":"Harry: But do you think that's unfair? I wouldn't bet against it. I mean, it's very... I always struggle to describe this. He is the person who's achieved more than anything else entrepreneurially in the world today, period full stop, on hard engineering problems far beyond any piece of software, right?","offset":1132,"duration":18},{"text":"Harry: So that is is it rational to say that if anyone can do it he can? Yes, because he's done it two or three times with cars, with rockets. Not irrational from that perspective. You still have to say is his record on timing of being right about when things happen and when they come a little more spotty, right?","offset":1150,"duration":23},{"text":"Harry: I mean I actually just went into ChatGPT and said make me a chronological list of every prediction from Elon about full self-driving, and then i did another one, make me a chronological prediction of every prediction from Elon about when Starship will be flying and we'll be able to reach, you know, Mars. It's a long line of it's going to happen three years from now in the case of FSD.","offset":1173,"duration":20},{"text":"Harry: So i think with the caveat that we're dealing with the most accomplished entrepreneur probably of at least the last 30 years, maybe one of the top two or three ever, you still have to say his record of predicting timeliness in terms of these things takes a lot longer than you think up front. And you've got to figure out as an investor how you factor that into the valuation. And everyone's entitled... the beautiful thing about markets is everybody gets to play their own way. Right?","offset":1193,"duration":30},{"text":"Jason: I'll tell you what was interesting to me, I watched yesterday on YouTube, they had a Jay Leno where he was the first one to test the new Tesla Semi, okay? And the team from Tesla came over, Franz the head designer and the head PM for Tesla Semi, and they were talking about it and they were talking about energy, and the designer said: Yeah, we strongly believe across all of Tesla the future is fusion.","offset":1223,"duration":22},{"text":"Jason: It is fusion to power our trucks. It's just we believe the fusion's from the sun. There's no point in doing it on earth, and we will soon power all of our semis through fusion. And this isn't this is a thoughtful lead designer saying this vision that has been there and they believe it.","offset":1245,"duration":17},{"text":"Jason: I think it's a great story that can happen, that we're going to build more power than I guess exists in the world today, and 80% of it's going to space. 80% of these chips that come out of this are going to space to power a fusion. You could you could mock that or say it's going to take nine more years than we thought, but it does if it does create a pretty powerful vision for the IPO and beyond and beyond.","offset":1262,"duration":27},{"text":"Jason: I mean, that's pretty now you see it all coming together for SpaceX for real for the first time, well rather than we've got internet satellites and spaceships. Like it sort of made sense, but when we're harnessing the entire sun because it's pretty doable because we've built a lot of it already... starting to sound cheap at $2 trillion. Who else can harness the sun?","offset":1289,"duration":23},{"text":"Rory: Just to push back a little on one word, I you know because i i i think it does all make directional sense, but i'm just going to call you on the word mock, because i didn't mock. I was very clear and i didn't say you some some some, right?","offset":1312,"duration":12},{"text":"Rory: I think you've just got to say look, someone can be 10x more accomplished than you, right? As an entrepreneur and a human being, but when you're investing money you're still entitled to say what probability do i say ascribe to that 10x more accomplished person being able to do the next thing?","offset":1324,"duration":16},{"text":"Rory: And therefore you have to look at this and say for how long will this be supported by a future statement and when will it be worth something on 20 times free cash flow?","offset":1340,"duration":12},{"text":"Jason: But you know why it's interesting, if you really believe in DCF and free cash flow for real in the public markets, and I still get confused, if Starlink really has 53% profit margins and is wildly profitable, the fact that this extends the Starlink vision two orders of five orders of magnitude, it's actually a reason to say hey, if I believe in this at all my my DCF has gone up. How much I don't know.","offset":1352,"duration":24},{"text":"Jason: It's gone up because this is a ma... Starlink is so profitable at scale, like jaw-droppingly profitable, right?","offset":1376,"duration":8},{"text":"Rory: Two comments. First of all, big picture, you are correct. The reason Elon can do it and no one else can is he can articulate these big step-function stories, where as one investor in one of many of his companies pointed out to me, it's a great point he made of this: they're not like software companies that incrementally grow every year, they're kind of step-function technical challenges that you accomplish maybe every five or seven years and then you harvest on that while you're building the next step-function challenge, and then that gives the next lift.","offset":1384,"duration":30},{"text":"Rory: And i mean I think Starship's a great example of that, you had the hey i launch rockets and all i do is get government contracts, and then you're like no i launch rockets and now i have a cellular service for remote for remote cellular, and now the next turn of the crank is maybe if i can get Starship working you can have cellular for everywhere and data centers in space.","offset":1414,"duration":21},{"text":"Rory: So you are right, these are big chunky visions, each of which if realized gives you an extra pick a number $100 billion, $200 billion, $300 billion of net present value of thing. But you just got so i agree i no one else can tell the story and no one else is credible to tell those stories. You've still got to go back to what's the probability of happening when does it happen and what's your cost of capital between now and there.","offset":1435,"duration":23},{"text":"Jason: Yeah, and I I would just argue if you're being if you're the classic optimistic analyst, Wall Street analyst, you can probably justify the $2 trillion Harry's $2 trillion valuation by saying the odds that this occurs are 80%, but but we're ascribing only a 30% chance it happens on time, there's an 80% chance and within five years it achieves similar profit margins to Starlink, and you roll it all back and you can justify $2 billion over 1.x trillion, right? I think you could do it on a spreadsheet.","offset":1458,"duration":27},{"text":"Rory: And that bet will be available to you, and have at it.","offset":1485,"duration":4}],"startTime":931},{"title":"Bezos' $100B Fund & Billionaire Migration","summary":"The hosts unpack Jeff Bezos's attempt to raise a $100 billion fund to inject AI into legacy manufacturing. The conversation shifts to the broader trend of billionaires relocating to Miami to escape vilification and high taxes in traditional tech hubs.","entries":[{"text":"Harry: In the in the in the week of bold $100 billion bets and why the fuck are we doing seed-stage SaaS investing, Jason? Jeff Bezos seeks $100 billion to buy and AI-transform manufacturing. Wall Street Journal broke this one, Jeff Bezos raising $100 billion: manufacturing transformation fund, and acquire companies across semiconductors, space, defense, inject AI into their operations and make them much more efficient. Um, he's apparently been touring Singapore and the Middle East to charm some sovereign wealth funds to give him the money. How did we think about this? Again, it was another week of I feel irrelevant at early-stage VCs.","offset":1489,"duration":38},{"text":"Jason: I think it's a great classic Indian Creek Island investment. So you're sitting in Miami in your couple hundred million dollar home, you've got Jassy and team running the hard business, you don't have to do that that much. Luckily they're doing the hard work and this now I get to think big. I get to think big at Carbone or on the yacht and i don't want to go small anymore and i've already done it, you know, i've already built Amazon.","offset":1527,"duration":24},{"text":"Jason: So you know what i want to do? I'm going to remake some industries. I you know i was with my friends at Pura Vida getting our smoothies and we're all going to remake industries and this is the Indian Creek Island bet. And I get it, right? You don't want to screw around anymore on on at billionaire's bunker, you just don't want to.","offset":1551,"duration":21},{"text":"Harry: Do you think he'll be able to raise the $100 billion?","offset":1572,"duration":4},{"text":"Jason: He could just sell stock if he wants $100 billion he can get it himself, so I'm sure he'll get some significant slug of capital. I mean it's hard i mean i don't know $100 billion i yeah it's so out of my pay grade but...","offset":1576,"duration":12},{"text":"Jason: The only problem is SoftBank seems to be tapped out, they're hitting their debt limits, they just announced this week, right? That they're flashing above their covenants. Um, but I don't think he would announce it if there wasn't a re... that he didn't believe he could do it, right? So you got to announce a decent probability.","offset":1588,"duration":17},{"text":"Rory: I want to come back to what you said Jason. I thought that was actually very insightful, the Indian Creek comment, right? In you do see this of, you know, i did it the hard way, i'm now 50, i'm 60, i'm not 22 anymore, i've got more money and less time so i'd like to insert myself further along in the value creation process to make it happen quickly is the logic.","offset":1605,"duration":22},{"text":"Rory: Because i was reflecting back, AI is this cool new technology that could transform all loads of industries. Just like 20, 30 years ago, the internet was this cool new technology that could transform a whole load of different industries, right?","offset":1627,"duration":14},{"text":"Rory: And if you think you had really and when Jeff Bezos was starting out, there was three different plays you could make. You could say: Hey, internet's going to transform retail and let's focus on retail, I should build software and sell it to retailers so they can kind of move onto the internet. Build Shopify, right?","offset":1641,"duration":18},{"text":"Rory: The second thing you could do is say: Hey, the internet is going to transform retail, I should buy Walmart because I'll kick ass and I'll make them become an internet company and I'll do it that way. Or the third you can do is to say i'm going to do the hard thing for the most amount of money, i'm going to transform retail myself by building a full-stack retailer, i'm going to call it Amazon and i'm just going to kill everyone, right?","offset":1659,"duration":22},{"text":"Rory: And only the and the last one was it turns out the $2 trillion opportunity, right? From zero, so your IRR is from effectively no money in, you make a couple of trillion bucks from a value creation perspective. Shopify, roughly a couple hundred billion dollars, a great because that's the best e-commerce technology provider.","offset":1681,"duration":19},{"text":"Rory: And you know, to be fair to Walmart, if you'd had half a trillion dollars lying around at the time you could have scored a double because it's finally adopted the internet and you know you make a 2x on on a lot of money and you make half a trillion bucks. Because now Walmart's got a market cap plus or minus of a trillion dollars and they're very much a winner in the internet age.","offset":1700,"duration":20},{"text":"Rory: And I was just thinking those are the three games that you play. And back when you're 25 and you have incredible drive, you don't have half a half a trillion dollars lying around, you do Amazon. But you're exactly right, if you're in Indian Creek and you're like oh i don't have 25 years of you know working out of a desk, i'm like a 2x on a 100... you know, taking $100 billion and buying a bunch companies and you know injecting AI into them like i could have injected internet into Walmart, maybe that's the play.","offset":1720,"duration":33},{"text":"Rory: It's inherently less disruptive and more financial engineering than doing either of the Shopify play or the Amazon play. So yeah i agree, i like the framing of the... it's what you do when you have too much money to want to do it the hard way.","offset":1753,"duration":18},{"text":"Jason: If you talk to billionaires today that aren't pulling their hairs out because they're running public SaaS companies, okay? It... the vibe is similar, they want to do something huge in AI right now. They don't necessarily want to run it themselves, they don't want to be CEO again, right? But they're very motivated to do one of these plays. So we're going to see a bunch of these plays, it's what everybody wants to do. It's logical, it's logical from from a billionaire... it's logical.","offset":1771,"duration":24},{"text":"Harry: Yeah, I i love seeing Sergey Brin rock up to a random hackathon in Miami. I'm not sure if you guys saw this? Yeah! But in Miami he came out at the end and you know was a judge or whatever standing on ceremony of a very grassroots hackathon in, you know, a random part of Miami.","offset":1795,"duration":18},{"text":"Jason: Maybe the only only place left in the country hospitable to billionaires, so we'll watch we're going to watch it accelerate.","offset":1813,"duration":6},{"text":"Harry: Oh my god the oppressed species of billionaires.","offset":1819,"duration":2},{"text":"Jason: No no, I do think you know when i think about this the New York QSBS and other stuff, not not we don't have to do it. What i do think when you saw Sergey there, right? And he did he didn't even move to the billionaire bunker he moved to a different different part of Miami Beach, but um um...","offset":1821,"duration":16},{"text":"Jason: I I do think what we're missing is I i think that it is the only place maybe become the only place in the US over the next couple years that is welcoming billionaires. Texas does but Austin even doesn't. Austin does not Austin has mixed views.","offset":1837,"duration":15},{"text":"Jason: But say what you will and I know it's hor... i mean you know Florida welcomes i mean look i mean it's terrible the OnlyFans guy I mean very very controversial subject matter, but where did he live? Pompano Beach, Florida, okay? Florida said you be a billionaire here, okay?","offset":1852,"duration":17},{"text":"Jason: And so we are seeing we're underestimating it's not just taxes, with Sergey it is you may only feel comfortable if you're Bezos or Sergey in Miami soon. Why would you feel comfortable in California or Washington or New York? Seriously why would you feel comfortable? Maybe Utah. I would feel you just don't want to be attacked constantly. No human being wants to feel that way. You want to go where people will just let you be yourself and raise $100 billion or do whatever, like leave me alone, let me let me live. And that's what I think people are missing with the Golden Goose. They're making billionaires uncomfortable, and it's not just the money. It's being uncom... that Sergey, he's he's gone. He ain't coming back except for staff meetings and hackathons in in Mountain View. He's gone.","offset":1869,"duration":44},{"text":"Jason: I'll tell you yesterday I'm here in Utah and i saw Ryan Smith yesterday, i love him right? Founder of Qualtrics, okay? People love Ryan here, and he took his money and bought the Jazz as well as Hockey Team, and he had a rough first year with the Jazz because he traded some top players, but I i they love him here. They love Ryan here, and i don't think in the Bay Area anyone by people are vilified. The billionaires are vilified. Why would you stay?","offset":1913,"duration":30},{"text":"Jason: And so it's only going to accelerate, so it's here's the thing, it's hard to predict the outcome, right? I really don't think adding QSBS to New York is going to lead to the exodus that the people wanted to do. We can talk about why, but they did it in California and it that alone didn't work. But when you are uncomfortable living somewhere, you leave. And it is Ryan Smith is beloved here in Provo where I am today, and Sam Altman is vilified and Dario gets a pass maybe because he gave away 80% but um it's who wants to live there? Who the hell wants to live where you're vilified? Who the hell wants to live there?","offset":1943,"duration":35},{"text":"Rory: Cut put Sam some slack, he apparently has no OpenAI to give away so it's...","offset":1978,"duration":4},{"text":"Jason: Howard Marks left. I mean he's old but he did leave. Um, it's you want to be where you're comfortable.","offset":1982,"duration":5}],"startTime":1489},{"title":"Groq's $20B Nvidia Deal & Antitrust Avoidance","summary":"Nvidia's $20 billion acquisition of Groq sparks a discussion on massive M&A valuation multiples for early-revenue startups. The hosts highlight the highly tax-inefficient structure of the deal, designed specifically to bypass government antitrust delays.","entries":[{"text":"Harry: Speaking of like the world hating billionaires, Groq announced essentially the debrief on the $20 billion deal to Nvidia. Less than $100 million in ARR being acquired. Jonathan the founder is going to make about $950 million after what will be a double taxation. Showing it's quite a costly thing taxes in terms of the IP and team aqua-hires that we've seen.","offset":1987,"duration":26},{"text":"Harry: How did we think and then Chamath also reportedly made $950 million to which he responded on Twitter he made much much more. How did we think about the analysis of this breakdown?","offset":2013,"duration":10},{"text":"Rory: I think there's three different things you said we talk about and i think you should break them apart. You know, one is um how often do you see this kind of sub-$100 million ARR revenue businesses going for this kind of value?","offset":2023,"duration":16},{"text":"Rory: Then the second thing is what was the structure and why does it result in double taxation? And then maybe the third thing is why does poor Chamath need to tell us he's rich all the time? It's okay, we believe you're rich. You know, you may have made you may have made other people poor but we stipulate that you are rich and even you are smart, you did a great deal here. You know, let it go poor guy, therapy will help.","offset":2039,"duration":20},{"text":"Rory: But let's go back to the first one, right? Um how you know, how often because the first question you asked in the notes which you always ignore when it comes to the show is when do you see this kind of transaction price as if revenue doesn't matter?","offset":2059,"duration":12},{"text":"Rory: That was the question, right? When does someone pay $20 billion for $100 million in revenue? And I was thinking about that, it's easy. The answer is when the value to the acquirer is so high and they have the market cap to do it.","offset":2071,"duration":15},{"text":"Rory: And Nvidia with a $5 trillion market cap can pay $20 billion for something that's valuable. And there is another good example i thought of at scale, because it happens a lot at small scale. There are loads of tech M&A where you know some shit little company's doing less than a million in revenue and someone buys it for $100 million, which you know is a 100, 200x revenue multiple, but we don't make a noise about it because it's just so small.","offset":2086,"duration":26},{"text":"Rory: And the reason they're doing that is because they can run it through their channel and they can convert that million in revenue into 20, 30, 40 million very quickly, or it has strategic value to them, right? The number of times it happens at $20 billion is low, but WhatsApp is the other great example of that. Um, Facebook paid $16 billion for WhatsApp and it didn't have a dime of revenue, right? And it was a great deal and it's still a great deal. So it does happen, but there's only a few number of buyers who can afford to do that.","offset":2112,"duration":29},{"text":"Jason: The Groq one, you know they just announced at GDC last week that it's going into production. So that's different, okay? The I don't I and i'll tell you what i find interesting in general for venture, so look they had $100 million in revenue, they proved the concept, they proved it sort of works and Jensen said within a year we can get this into production.","offset":2141,"duration":18},{"text":"Jason: Um, that's worth billions, right? And so it illustrates how weird M&A is so weird. Um this deal probably was a multiple of the last round. The the last round was at $6.9 billion. The there are this is less common these days, but classically rounds would be 2 to 3x the last of a growth round, okay? That that has collapsed for some reason recently.","offset":2159,"duration":21},{"text":"Jason: But my my first startup was acquired for exactly 3x our round, literally our acquirer downloaded our certificate of incorporation, found our per-share price and showed up unsolicited with an offer 3x, okay? That's what i think hap- happened here.","offset":2180,"duration":14},{"text":"Jason: What is so weird though is that it's a reminder that so much of M&A one way or another is focused on revenue multiples, either directly or potentially, and then they're just abandoned after the deal. They're just: You're worth the you're worth 10.2x ARR and then we fire the sales and marketing team after the deal closes and roll it up into our core product. It's uh it's an odd thing, uh necessary but odd, right? There's so many weird ways they are valued.","offset":2194,"duration":28},{"text":"Rory: Agreed and yeah and it's a weird thing because there's often a huge gap between what you're worth standalone might be $2 or $3 billion, what you're worth to your acquirer might be $20 billion, and it's a question of how does that $17 billion of value get allocated?","offset":2222,"duration":16},{"text":"Rory: And obviously sometimes the buyer is trying to grind you down to one dollar more than your standalone value, and then sometimes like in this case they're like: Hey we will pay you a fair amount of what it's worth to us, which is way more than you're worth on a standalone basis.","offset":2238,"duration":15},{"text":"Rory: But kind of segueing to the next thing, in return for that you're going to use this structure which is wildly tax inefficient, but it's the only way for us to get this thing done quickly and without government review. Which is the next thing to say here, which is the point the other point you're trying to make is that you know the CEO, i mean no one's going to cry for someone who made $950 million and they're not even a billionaire so no one'll hate them so that's great. I mean it's actually a win-win, good another $50 million and Jason the pitchforks would be out.","offset":2253,"duration":31},{"text":"Rory: But these transactions are very capital in at tax inefficient because what happens is the company sells the assets to Nvidia, books a gain because the assets were in the books at a sub-billion and now they're getting sold for $20 billion, so you have to pay tax at the company level on that, and then you dividend or redeem the money out and individual investors have to pay tax on the gain.","offset":2284,"duration":21},{"text":"Rory: So it's fairly inefficient, so you're probably wasting plus or minus $4 or $5 billion bucks on a $20 billion transaction because of double taxation.","offset":2305,"duration":8},{"text":"Jason: And it's probably to the founder, Jonathan, it's it's roughly 60% effective tax rate. And and you can't hold Nvidia stock. You're cashed out. Like there's a lot of in there's so many inefficiencies in this deal. One, you don't even get the IP, right? You don't you don't get the company, you don't get anything, and it's a 60% tax rate to the founders and no ability to roll over the stock.","offset":2313,"duration":26},{"text":"Jason: Uh you know avoiding antitrust is it worth it? Probably for the $950 million, but man this this has got to be the most inefficient thing ever convoluted to avoid antitrust. It's so expensive.","offset":2339,"duration":8},{"text":"Rory: And it is worth pointing out it's just quite terrifying from a government perspective, you now have a process whereby the government makes the rules that enforces the antitrust and the government and basically you've got two choices. It would appear you either lobby extensively at the highest levels of the administration and you get a waiver from the top down per that Wall Street Journal article this week, which was pretty good.","offset":2347,"duration":20},{"text":"Rory: Option B is you um pay double you do it this way and then you pay double taxation and the government wins either way. You know wire me the money and I'll let you off or wire me the money after it closes, but wire me the money either way, you know? It's a really perverse incentive. I mean whoever comes into the antitrust division next time and says i think we should clean up the rules and make it much more transparent is probably going to cost the government $20, $30 billion bucks in terms of you know some combination of kickback and tax avoidance. There you go.","offset":2367,"duration":32},{"text":"Harry: I have to say I do like it. Jonathan was in the desert and the dark for many years and he is a founder who's been a real respectfully cockroach who's gone through the hard times, who's gone through the criticism. He's also just a good dude, I like him a lot. And yeah, he's so it's nice to see good people win.","offset":2399,"duration":18},{"text":"Rory: And you're right, just like Chamath, another good guy who's been through the wilderness and has now got his $950 million so they I'm sure that's the point you're trying to make Harry.","offset":2417,"duration":9}],"startTime":1987},{"title":"Figma's Stock Plunge & Incumbent AI Struggles","summary":"Google's launch of Stitch sends Figma's stock tumbling, prompting a debate on whether the market is overreacting. The hosts critique Figma's AI product, discuss the trap of servicing an installed base, and explain why failing to monetize AI features is a major red flag.","entries":[{"text":"Harry: Much more, he needs money Rory, okay? He could he could. He now can now buy some some Loro Piana. Rory you brilliantly say it to me, you know that's great but what about me? I I own stock in Amazon and I own stock in Figma, okay?","offset":2426,"duration":17},{"text":"Harry: Google launches Stitch, Figma tumbles. Figma tumbles is an understatement. I saw a tweet where it was actually an announcement that someone posted and Sequoia were buying $35 million bucks of Figma stock and i was like fuck if Sequoia and Andre are buying $35 million bucks, i'll put in some of my money, that's a good sign for me. I'm down 22%, 22%.","offset":2443,"duration":26},{"text":"Rory: Yeah, looks like about... yeah it's $21.66 a share. I remember, look when it was at 108 and you asked me what i thought it'd be i said 35 and i was wrong, i was you laughed at me and i because i was so pessimistic and i was wrong it's 21. Wow.","offset":2469,"duration":16},{"text":"Rory: No it's does this have a floor? Of course it has a floor. I mean stop you know like the again it's it has a floor based on its cash flow which is strong, it has a floor versus its growth rate of that cash flow. The third element is the probability of disruption and you know right it's the tricky thing about the equity business in the short term is everybody gets to speculate on that probability of disruption.","offset":2485,"duration":24},{"text":"Rory: So you take the cash flows and then if you love the story you apply uplift, see Elon for details, you take the cash flow and then if you're really scared about the story you apply terror downlift, which is what's going on here.","offset":2509,"duration":12},{"text":"Rory: Now in the end, you say is there floor, in the end if the business is worth it, it will grow and it will generate the cash and they'll get to do what the Palantir guy does which i so love which is every earnings call he basically slams all the haters and says basically fuck you i'm making money and you all were wrong.","offset":2521,"duration":17},{"text":"Rory: Until you're in the short term, the market gets to bitch and moan and have its opinion, but the floor doesn't come because the market changes its mind, maybe it will maybe it won't but that's not in your control. If you're running Figma, the floor comes if you execute, you demonstrate that you've been able to adopt, you know, to an AI-native AI-first world, you generate the growth, you generate the cash flows and eventually it'll turn. But that's why drawdowns are shitty, that's why drawdowns are hard.","offset":2538,"duration":29},{"text":"Jason: Well you know on this on this on the Stitch Figma thing, i mean i've used Stitch of course as you would imagine. Um i don't i think most folks that that chimed in on this never used it. Um i'm confident 98%.","offset":2567,"duration":14},{"text":"Harry: Just for those that don't know, Stitch is what for those that don't know?","offset":2581,"duration":2},{"text":"Jason: It is a new design tool that Google launched, and the bar at Google to launch a new AI tool is pretty low. They try a lot of stuff and they abandon almost all of it because then they focus on a few core products. So you literally cannot take it seriously when Google launches a product because you have no idea whether they will stick to it. They launched a Suna, is it Suna sorry i keep getting this wrong Harry, the the audio one, what's the one?","offset":2583,"duration":23},{"text":"Harry: Suno.","offset":2606,"duration":1},{"text":"Jason: Suno, so Google launched a Suno competitor. It's like cool, but it's not nearly as good, like it doesn't really work. And and will they keep with it for five years? I'll bet you dollars to donuts they don't because it's not core, okay?","offset":2607,"duration":13},{"text":"Jason: I used Stitch, I've used all of Google's design products, I think the odds that they design decide to build a Figma competitor from this for a decade approach zero. So on the one hand, massive market overreaction to a to a proof of concept, give me an f-ing break if i'm Sequoia or whatever.","offset":2620,"duration":18},{"text":"Jason: On the other hand, the markets are saying we are extremely worried about disruption. We are extremely worried about disruption. You better prove to us, Figma, Atlassian, Salesforce, you are ahead of disruption and not behind it.","offset":2638,"duration":16},{"text":"Jason: And the market said: We don't believe it. And i agree with the markets here because Figma Make is one of the worst products i've used in the last six months. But this but Stitch on its own at least it's better than Make, at least it can take context from a website and and not hallucinate.","offset":2654,"duration":16},{"text":"Jason: But the market should be like where show me the money again, where is Figma's $300 million of revenue from disrupting Replit and Lovable like we talked before? And so if you haven't delivered like Palantir or started to deliver like Salesforce, the markets are going to freaking panic that your revenue is not that durable.","offset":2670,"duration":19},{"text":"Jason: This is what i think it all like i didn't get the 2026 panic for a long time, i was slow. Now i get it, the markets are rationally saying we no longer believe this revenue is particularly durable.","offset":2689,"duration":11},{"text":"Jason: Old old SaaS people, PE doesn't believe it, Qualtrics couldn't finish its debt offering this week, Salesforce barely got its debt done and why? They don't... the markets just... it's not that they think that Figma is a bad company, they just don't believe this revenue's going to last a decade anymore. They don't believe it. And so you're going to see more more of these panics for anyone not accelerating. People... they're just going to panic every time it happens.","offset":2700,"duration":24},{"text":"Harry: Jason, we just released the show with the CRO of Figma and I asked him how he's seeing AI implemented into your sales teams and he said, honestly, we don't really have that ability and we haven't done it yet, um, oh and and we're hiring a lot more in sales, by the way. We're not reducing headcount at all. That... we're not seeing that. Uh, and oh by the way, we're not seeing seat pricing change at all. How do you feel when you hear that? Because...","offset":2724,"duration":29},{"text":"Jason: Oh, you're just... you're just serving it up. That one ironically, Harry, ironically, that one does not worry me as much as the product. Okay. I will tell you what I've learned. You you and I... you formerly on the other 20VC, me in Farmland, I've talked... I know a lot of the CROs and CMOs at leading AI companies.","offset":2753,"duration":20},{"text":"Jason: The ones I'm close to are pretty good, but I also see tons of folks I call recycled mediocre. They are folks that bombed out of old B2B companies, they barely did anything there, but because they have the right logo, got hired to a super... they're all over the hot AI companies. So many recycled mediocre. And they're going to hire 250 reps and not train them. And they're going to build infographics.","offset":2773,"duration":23},{"text":"Jason: But the products are so strong and the demand is so strong, it doesn't eff-ing matter. So if the guy if if if Figma make was so great and and their AI product was doing 500 million, you you could you could sell it with folks fresh out of a non-technical junior college. It'd be fine, right? Um, so my point is, even though I talk a lot about AI go-to-market agents and I believe they're great and they work, they don't fix product-market fit. In AI sales, it doesn't fix product-market fit. And we're seeing broken... we're seeing decaying product-market fit. That's why the market panicked on Figma. They're seeing hints, just hints, of decaying product-market fit in the AI era and you should panic.","offset":2796,"duration":38},{"text":"Rory: Yeah. I... Harry, just to pile in on that because I actually have these conversations at my companies all the time. I actually to... I didn't think I... I totally agree with what Jason said. It's like when my companies come and say, \"Hey, you've got this problem, we want to talk about AI,\" and they say what, you know, \"Hey look at us, we're using AI in go-to-market,\" or they say, \"Look at us, we're using AI to build engineering,\" I'm like that's great but nobody gives a rat's ass. That... that's like jacks to open. That's not solving the core problem.","offset":2834,"duration":26},{"text":"Rory: The core prob-... unless you're making like cars where it doesn't matter, it's just back-office efficiency. If you're a software company, the number one question is how does AI change the end product you deliver your customers? That's what's going to determine success or failure. So I... I thought I'm fun-... I had a guest you would have piled on to that guy and kind of bludgeoned him while he was down because I thought Harry served you up a softball for you to say, \"Hey the idiot is not using AI,\" and I'd have argued with you, but I think you nailed it. Look.","offset":2860,"duration":28},{"text":"Rory: You could be using AI well or badly in go-to-market. You can be using AI well or badly in engineering. It will catch up with you over time if you're not using it well. But that's not what's driving, you know, 30, 40 percent price declines. What's driving that is exactly what Jason said is the market looks at this and says there's disruption risk here. I don't know the terminal value here. I... I'm just nervous. So I've got to be paid for that risk.","offset":2888,"duration":30},{"text":"Harry: I got... he didn't take my softball, did he, Rory? That was... normally he's so disciplined. He took it...","offset":2918,"duration":3},{"text":"Jason: But Rory's got the important point. You you've got to have the right AI or your company's going to decline. Listen, would I would listen... I'm sure the Figma guy's great, but honestly, if I interviewed a CRO today and didn't have any AI agents that he here or she had brought in to our last podcast, I would recommend to the CEO \"don't hire her or him,\" okay, for sure. But would I think this was... would I be much more worried than if I talked to a CTO and the the new CTO they wanted to hire didn't really believe in in using agentic coding, then then I would ask for my money back. Can I have all of my investment back and 1x? You can keep your mark-up, just give me my 5 million back.","offset":2921,"duration":38},{"text":"Jason: I'm going to go one level more than that, is that you're right. Not using AI in go-to-market, bad. Not using AI to build product, maybe I want my money back. But if you're a software product and you don't think AI is going to disrupt not just how you build but what you build, then you actually probably want to actively short it. Like for example, they're not doing that, but if Figma or Salesforce or someone were to say, \"I don't think AI is relative is relevant for our customer base and they don't want to use AI in design,\" if someone was to say that today, you'd be like, \"Oh my god, you're just going to be, you know, just left behind.\"","offset":2959,"duration":26},{"text":"Jason: Now... and that's why Figma's insensitivity to how mediocre Make is really worries me. I wouldn't care if if Dylan or the team said, \"Listen, Make isn't good enough but wait give me time. Give me six months, it's going to be great.\" But saying this product that is the worst vibe coding tool I have used... that I have used in the last six months, the fact that there is no public awareness that this is an issue really worries me.","offset":2985,"duration":27},{"text":"Harry: Jason, can you help me understand that? Because Dylan is a is a good CEO. I don't... you know...","offset":3012,"duration":4},{"text":"Jason: Excellent CEO. I think we all have listen... I don't know for sure, okay, um, but I think everyone at scale has a trap, which is their installed base is a trap. It is an opportunity and a trap. It is the greatest thing in the world to sell your agentic product to, to sell Agentforce to, is the 44 billion of ARR that Sell-... it's the greatest opportunity because you don't have to earn that base, right? But it is also 50 years of debt, 50 years of features, 50 years of of offline integrations, non-agentic gaps they want, 50 years of of endless work. And if you're not careful, it will consume 98 percent of your resources is that installed base, right? They need so much attention.","offset":3016,"duration":35},{"text":"Jason: And I do think literally Make is the only vibe coding product that I have used where you say, build me a website for 20VC, use 20vc.com as a template, and it can't go to 20vc.com and pull the context to make the website. Now Replit could do this in June of 2025, Lovable could, but anybody can do it today, right? Uh, so including you know who could do it pretty good was um Stitch. Stitch got the context right of the design projects I get it. And that just shows to me whoever's running it doesn't care about these use cases. They just don't care. It has fallen behind and I real-... my guess is, my guess is there's a small team on this.","offset":3051,"duration":43},{"text":"Jason: You know, they're still growing what, 35 percent? Right? I mean this is this is one of the best out there. But the dema-... here's the trap and we all have portfolio companies like this. The trap of of earning that 35 percent imperil can imperil your agentic growth. It can consume more than 100 percent of all the product and engineering and CS resources you have, right? Even Mike Cannon-Brookes when he was on the show, he alluded to it right and then they did the layoffs. He's like, \"I've got to get these resources because otherwise Jira and Confluence and everyone's going to suck it all up and I have no people.\"","offset":3094,"duration":31},{"text":"Rory: Super interesting.","offset":3125,"duration":2},{"text":"Jason: It's a trap, it's a trap, and think of some of your portfolio companies at scale. North of 100 million, they don't describe it this way, but you know it's a trap, especially when they have a mediocre like VP present at the at the board meeting and the mediocre VP is like, \"I just I want to do it but I don't have the people, I need another 700 people to build that.\" And you're like, \"Ugh, it's a trap.\"","offset":3127,"duration":19},{"text":"Rory: It is so hard to say I'll allocate to the new thing first and allocate the residual to the old thing. And you're right, the instinctive is to say I'll deal with the old thing and then I'll find some people for the new. You're right, it's a mindset. It's an interesting point.","offset":3146,"duration":12},{"text":"Jason: Harry, just to pile in on that, because I actually have this conversation. And you know, I don't want to overstate the Intercom example, um, just because you know it's enough already, okay? But but if you want to use it as a case study, it does illustrate what you have to do here. And and Eoghan was clear, we let our core business go into partial decline. It's very hard for al- almost impossible for a public company though. It's lucky being private because you you've got to have a lot of guts to say we're going to let a 1.something billion dollar design business decline a little bit so we can build our agentic product. It's tough when you're public, right? Um, but it's what you've got to do.","offset":3158,"duration":33},{"text":"Harry: Figma's at 21 today, 12 billion market cap. Would you buy it today?","offset":3191,"duration":7},{"text":"Jason: No. I don't see any evidence of turn- of of of these agentic investments working. I would rather miss miss out on the the bounce, right, off the hard deck, than than invest in something that may fall below it. The reason is there's too much change. My god, there's so much change. It's so fast. Make would have been a great product in August of 2025. It's just not today.","offset":3198,"duration":23},{"text":"Rory: The problem with the bounce, and it's a first world problem, is say you buy at 21, the concerns are overdone, you're back up to 24, 25, 26. So you've made some decent money but you sell it, you get ordinary income, blah blah blah. You actually, net of taxes risk adjusted, is it worth it, right? The only way you buy is, and I'm not saying I have the answer to this, when you buy stocks because you want to hold them for five or ten years, you just do better, especially tax adjusted, than when you buy things because you think there's a short-term bounce, right? I personally think that almost all of this stuff is overdone, right, and there probably will be 5, 10, 20 percent bounces across a number of these companies, but to want to buy it I'd have... I haven't done the work that Jason's done. But he is right, you only should buy things if you think five years from now they'll be a winner in the future. I think it's totally plausible Figma could be, but Jason's right, until you've used the product, until you've seen what they do, I I wouldn't make that decision especially at scale.","offset":3221,"duration":58},{"text":"Jason: Well here's the tough thing is Figma's clear, you just had them on. Harry, are they materially charging for their agentic product? So are they monetizing it?","offset":3279,"duration":8},{"text":"Harry: I have no idea.","offset":3287,"duration":1},{"text":"Jason: No, they're not even really charging. Why do you why look at your portfolio companies. Why the hell would you not charge for your AI product today? Agent- why the hell when when Anthropic's doing 22 billion in the blink of an eye, when people are lining up out the door to buy agentic legal products and healthcare products and OpenEvidence, why would you charge almost nothing for your AI product? Why?","offset":3288,"duration":21},{"text":"Jason: It's not good enough. Literally, I was with a founder this last week who was us- who used Make and got very far with it. If nothing else existed, it would be amazing. If Make if if Make was if this was 14 months ago and they built their own LLM and they could do this on their own, our jaws would drop, right? But it's not. It's not good enough to charge for. If it's not good enough to charge for, it doesn't count. You're not an AI company if you can't charge for it. Very few public companies can effectively monetize AI. And that's why they're all in terminal decline. Almost all of them at the moment are in terminal decline. Will they pull off pull it back? I I'm not going to buy their stocks until they do. I don't see any point.","offset":3309,"duration":42},{"text":"Rory: For the record, that's an excellent test.","offset":3351,"duration":3},{"text":"Jason: Yeah, you can't... they even Figma can't charge for it. It's a bad sign, it's a very very bad sign going into the middle of 2026. It's a terrible sign. Terrible sign.","offset":3354,"duration":11},{"text":"Harry: I'm I'm naive here so forgive me for this. Are Notion charging for it? You've spoken before about Notion's brilliance in the integration of that AI capabilities. Are Notion charging additional for that AI capability or is it just a superior product?","offset":3365,"duration":13},{"text":"Jason: Well first off, if I said I thought it was truly brilliant, like I misspoke. I barely we I use Notion all the time. I think the they're good. I don't think it changes the the game in way other products do. But the simple answer to your question is they have been able, look they're not public, right, but if you combine what they've said with their pricing page and their announcements of acceleration and the fact that they have effectively doubled ARPU from it. Doubling ARPU for for-... here's a way to look at an SMB product today. Is your ARPU 50 percent or higher than it was pre-AI? It's a really simple test. Can you drive ARPU up 50 percent or more? It's very different at Salesforce or ServiceNow. It appears that Notion has done that, in which case they they pass the test, right? But I want to see 50 percent or more ARPU growth due to AI or it's just a feature. It's it's just a feature like an integration. Great, hard work, good job guys, let's have beers but it doesn't count.","offset":3378,"duration":57},{"text":"Rory: Yeah. I mean re-acceleration is the aggregate test, to your point two weeks ago, Jason, right? Something's got to be going b- I mean that's been sticking with me too. Something's got to be going better across the marketing KPIs. It can be charging for your AI product. It can be re-acceleration. It can be ACV but something has got to be working and getting traction, otherwise you are falling behind because the AI-first players are delivering utility to their customers and that's manifesting in them those customers giving them money. So if you if you can't make the same phenomenon happen one way or the other, you're falling behind.","offset":3435,"duration":33},{"text":"Jason: Well obviously the market rejected Microsoft Copilot products as things they didn't want to pay more for, right? That's the example of of stumbling. Notion is Notion with AI is 20 bucks a month, the basic is 10. If if everything ties, and private companies have an incentive to be honest but but polish the numbers a little bit, right, to...","offset":3468,"duration":19},{"text":"Rory: See our prior conversation.","offset":3487,"duration":2},{"text":"Jason: Yeah, but assuming there's at least a substantial amount of truth in what they've said, then it then it's working, right? They are able to charge 20 dollars a month for their agentic product, not because they they splashed an AI label on it, but because it's so much better that it is worth it to talk to your docs, to have to have stuff flow into your database autonomously. It's worth 20 bucks. Um, and I suspect we're going to find this I don't love the pricing. I suspect as the year goes on we're going to see the same thing at Slack because most folks haven't used it, we're on it. The AI version of Slack for certain use cases is so much better. I don't love that they're not just charging another four bucks a month, but we I wouldn't be surprised if it's a dramat- if it's like Notion, like they're able to to do it, right?","offset":3489,"duration":42}],"startTime":2426},{"title":"Broken VC Math & The Exit Drought","summary":"Prompted by Mamoon's new $1B fund, the group explores how inflated round sizes are breaking traditional venture capital mathematics. They express deep concern over a severe lack of M&A acquirers for AI unicorns, warning that startups valued at $9B face a \"win or die\" IPO scenario.","entries":[{"text":"Harry: Speaking of Figma, I I'm going to go a little bit off piste but I think it's worthy. Jason, we were on Twitter about it earlier joking. Um, Mamoon announced raising the new KP funds. A billion dollars for the early, two and a half billion for the growth. Um, growth seems small. I mentioned meeting him for the first time at SaaStr, Jason, if you'll believe 10, 10, 11 years ago, in a side room. Kind enough to give me time. My my takeaway is honestly you can't do early and you're going to kill me, Rory, with less than a billion if you're going to compete to lead As. And my reasoning for that is As now a 30 to 40 million and if you want to lead them you need to be able to write 25 to 30 million dollar checks. I think you need 20 across a firm, so if you need 20, 30 million dollar checks you're at 600 million. I would argue that your fund scale is as small as it could be to lead As today.","offset":3531,"duration":61},{"text":"Rory: I don't entirely disagree in the sense that, you know, it's a 900 million dollar fund and you're exactly right. I mean the math of what you threw out is correct. Series As ten to you you're writing an an average of a 20 million dollar check. Our reserves have...","offset":3592,"duration":15},{"text":"Harry: But I don't even think 20 is enough these days.","offset":3607,"duration":2},{"text":"Rory: I know, I know. Let me just let me just take an average, right, because you know if you if you hustle, if you find some deals where it's a little off the beaten track, I've written... I've written As where we've gotten 20 percent ownership for 12 or 15, right? So it's not all but but let's just go at your average, Harry, because rather than arguing the right? You know, it's 50 percent reserves. We you know over like six or seven funds we've been 50 percent reserves. So you end up with 30 million dollars in the average deal. You know, then the last component is a portfolio concentration versus diversification question. I I think given the higher time to exits you probably tend to be nearer to 30 than 20. So yes, I I think, you know, there's a there's a certain small-s scale required to play meaningfully in the Series A business. Yes.","offset":3609,"duration":42},{"text":"Harry: Rory, can I ask you, you've got 720 of investible, you can't have a reserves of 50-50 and be right?","offset":3651,"duration":6},{"text":"Rory: 720? No, I didn't say 50-50, you didn't pay attention, Harry. 50 percent of it... because there's two ways of expressing reserves. It's just simple math, let me help you. Um, one way is expressing it as a percentage of original capital and in other words if I put in 20 do I reserve 10? That's 50 percent of initial capital. And and mathematically that's the same as saying two thirds of the money goes in on the first check and one third goes in in the later check. You're right, I'm not reserving 50 percent of the total amount. Do you understand me? Those are literally just...","offset":3657,"duration":29},{"text":"Harry: I I now I do with that clarification. Thank thank you for clarifying.","offset":3686,"duration":4},{"text":"Rory: I did I used the prepositions correctly the first time as well. But okay, it's good to be clarified. But to be fair to you people do express it both ways and sometimes precision is important. I always think of it as the amount of money you've put in and then the amount of money you have in your back pocket to defend that money if you need to or expand on that position if you want to. So I always think first check.","offset":3690,"duration":18},{"text":"Rory: And what it says is, and this is another insight, unlike for seed where you also have a big fund, for that kind of Series A game, the Series A is not for us, especially for a firm that just has, you know, checks for As and Bs and of this size, it's not an option value on putting a ton of money in later. Most of your value is made on that first check, right? Whereas these folks who have seed or even A funds where their real plan is to put 200 million in at the B or C when it's working, right? To some extent the A is an option value, but just as Jason's for Jason the seed check is the check. For us the A or B, because we're roughly about half and half, is the check. You're not saying oh I'll put in a little now and write more later. That's that's not the way the game can be played.","offset":3708,"duration":46},{"text":"Harry: Rory, are you finding it increasingly uncomfortable with the expansion of Series A rounds because our checks are getting stretched bigger and bigger and it's ruining our math?","offset":3754,"duration":10},{"text":"Rory: I mean it is somewhat uncomfortable but I think you have to find the deals where that's not the case or decide in some cases to reach. I mean and that's I'm going to put both s- both sides of the challenge out there. You know, there may be some deals that are too capital intensive and you decide I don't want to do that because I'm just not getting paid for that risk. But you're right, the average I looked at this math just last week, the average round that we play in has crept up. Right, not just the amount we do but the average round that we play in has crept up over the last year, year and a half. Right, so yes, it's not I would say to the acute level of oh my god, you know, we're perfectly happy with the checks we're writing and the round sizes, but yes, there are times, especially for example, you know, we haven't done any at scale of the kind of the Neo Labs seed checks where you just so outclassed with your 30 or 40 million dollar check, it's barely worth playing.","offset":3764,"duration":53},{"text":"Jason: How big's the Hummingbird fund they just announced?","offset":3817,"duration":3},{"text":"Rory: It's 800.","offset":3820,"duration":1},{"text":"Jason: 800. What was their what what where have they grown their fund size from over time, from doing inception investing?","offset":3821,"duration":6},{"text":"Rory: It's it's 2, 300 of I think initial capital. It's the same fund they always had but adding a growth fund to a rounding error. Right.","offset":3827,"duration":9},{"text":"Jason: Yeah. And then didn't Balderton lead the seed in Revolut?","offset":3836,"duration":3},{"text":"Rory: Yes.","offset":3839,"duration":1},{"text":"Jason: And then who did they just do a billion this week? It's just the the game is it has changed. We were really good at doing Revolut at four, now now billion dollar rounds are a good entry point for us. It's just a lot of change, isn't it?","offset":3840,"duration":15},{"text":"Rory: Yes. There's no anyone look we track it on aggregate, right, versus our 2010 checks you're probably up roughly 2x in terms of the valuation and I think that's significantly lower than the industry as a whole.","offset":3855,"duration":16},{"text":"Jason: Whose point's hard to argue with, which is if you want to own 15 percent of a company or whatever your target number is and deal sizes have inflated, that there's a basic math you have to do, right, with reserves. And that math is in many cases highly stressed in the market today. It's just a f- like it's a fact like, you know, you used to sol- it was very easy to solve your fund size before, right? It was 60 million per partner for seed, maybe 100 for A or B and then it would go up a bit. The math was so simple, all these funds were but that math just is is broken today and it creates interesting I don't find it super interesting but it it is a little bit broken, right? And so if you're Garry Tan you say the 100 billion dollar outcomes make it irrelevant, right?","offset":3871,"duration":38},{"text":"Jason: And I don't know how they work but I was just looking and I was writing an ans- I was writing something up on Wiz and Cyberstarts owned 4 percent at exit, okay? So that that I don't know whether that's dilution or as model back then, but the model still works for a seed fund at 4 percent of 30-some-odd billion, right? Um, but that I think we're going to see more and more of those, right? Dilution in time we'll see more and more seed investments eroded to 3, 4 percent, right? And if they I'm just doing one example, they'll be eroded and and if the exits are uh, you know, north of 10 billion it's okay for a seed fund, right? But the it it's tough.","offset":3909,"duration":47},{"text":"Jason: I don't have the answers. I just think the the old math was easy, right? We need to do 15 to 20 investments per fund, 15 million the average check size and you could roll up into fund sizes that that didn't make you fall out of your chair.","offset":3956,"duration":15},{"text":"Rory: At the risk of being a dick, the math is easy both times because math is independent, you just don't like the answer, right? Multiplying multiplying a pre-money of 50 is no harder than multiplying a pre-money of a billion.","offset":3971,"duration":9},{"text":"Jason: I think the math inherently creates more risk unless the outcomes are massively high.","offset":3980,"duration":4},{"text":"Rory: That's the point.","offset":3984,"duration":1},{"text":"Jason: We are levering up our risk to Harry's point. We're levering up our risk.","offset":3985,"duration":3},{"text":"Rory: I totally agree. I was just being a mild little jerk because I'm think I'm getting grumpy. Exac- it's not that the math is complex, it's just that the consequences are unpleasant and it's what you say. Everyone look we said it over and over again. Everyone's been pushed out on the risk continuum. The whole.","offset":3988,"duration":17},{"text":"Harry: But it does feel like times are changing faster than fund sizes are able to adapt in a way that they haven't done in previous cycles. Like our normalization of billion dollar plus rounds, 100 billion dollar plus raises.","offset":4005,"duration":15},{"text":"Rory: I think that's well put.","offset":4020,"duration":1},{"text":"Harry: So much quicker than fund sizes.","offset":4021,"duration":2},{"text":"Rory: I think that's actually true. The pa- that's actually a good reflection. The pace of change because I've lived through 95 to 99, the run up and the billion dollar funds and I also lived through unwinding watching all those funds being unwound in '02. I remember and then, you know, obviously 2007 that unwinding. This and even 2021, this feels faster than that, right? The action on the table and the need to play at a high. Yes. I think which is why I think every VC is stressed right now. No matter how successful you are, no matter how well your last deal a deal that you did three years ago is doing, everyone wrestling with doing deals now is grumpy, stressed and feeling feeling the pressure.","offset":4023,"duration":35},{"text":"Jason: But I think there's one risk that is under-discussed, okay? All this fund math can lead to concentration risk or ownership risk. Like at least for a smaller fund, I I have to deal with concentration risk or ownership risk. That's the that's the simple trade-off, you can't own that's my math, right?","offset":4058,"duration":14},{"text":"Rory: Agreed.","offset":4072,"duration":1},{"text":"Jason: The one that we are just ignoring because times are so good on paper is who the hell's going to buy these companies if they don't IPO? What the hell are Replit, LangChain, Harvey, Lovable... what how much is Lovable worth in the last round? 8 billion?","offset":4073,"duration":14},{"text":"Harry: 6.5.","offset":4087,"duration":1},{"text":"Jason: Okay, let's be honest, who the hell is going to buy them if they don't IPO? You really think Google's going to buy them for 32 billion? It could don't get me wrong. It could happen. And the and acquisitions are not up, right? Uh, dollars are up. So I just my point that is under-discussed is we are doing these these post-billion dollar deals like like candy. And at least in the in the bubble of '21 there were PE exits, there were many exits out there. We have outstripped any current ability for these companies to have any exit. So you are going all in on the IPO and not without any worry, rhyme or reason and I think so many folks sub-Anthropic are going to get their arses burned because they'll end up in the dead zone. They'll have great companies without great IPOs and zero M&A opportunities. And I'm not saying don't do it, I want my mark-ups on paper, I've got to do it an LP announcement this week. I want my my TVPI and my IRR to look good. But it's also terrible. It's terrible to raise north of a billion. It's terrible because you just out- str- there's just those they're not, you know, Salesforce and and Amaz- I mean Groq is great but a lot of the stuff is not Groq.","offset":4088,"duration":74},{"text":"Rory: Agree with everything you're saying and what's hard about what you're saying is that the strategy that has worked has been precisely the strategy of doing those rounds above a billion and getting the round beyond it. And but you're right, it's all predicated on being able to exit these companies in an IPO. And I will say just to remind you you can imagine a world of IPOs where some of these companies exit. But if the last rounds don't have a block, it's not necessarily going to be above the last rounds. There are some awesome AI applications companies where you kind of go I totally see how that's worth 5 billion dollars in three years based on fundamentals and right now it's valued at 10. And three years from now I could contemplate it going public at 5 billion dollars and you kind of go that last round the 10 is going to have to convert and take 50 cents on the dollars unless it has a meaningful block, in which case they will get more of the company.","offset":4162,"duration":49},{"text":"Jason: Yeah, for sure. I just worry there's some ratio, Rory you can name it, but there's some ratio of potential acquirers real divided by unicorns. And I think we're at the lowest ratio of our careers.","offset":4211,"duration":12},{"text":"Rory: Yeah no absolutely.","offset":4223,"duration":1},{"text":"Jason: The lowest ratio of potential acquirers divided by unicorn unicorn plus up to decacorn that are just not there. We've lost all of PE and Nvidia isn't buying 100 companies, Microsoft is not buying 100 companies.","offset":4224,"duration":13},{"text":"Harry: So what is the subsequent thought then, Jason? Sell aggressively into secondary markets which are more liquid than ever? Like help me understand...","offset":4237,"duration":7},{"text":"Jason: Well probably for early stage investors sure, sell while the that's the Hoppin lesson. I know you love to talk about it, Harry. Maybe that's the lesson. Um...","offset":4244,"duration":7},{"text":"Harry: I don't think it is. Can I just push? I don't actually I'm going to I don't want to use the Hoppin example because then people will because I actually think it I'm going to make it a more interesting discussion. Because when you do Hoppin, people go, \"Well my company's not Hoppin,\" um no pun intended. I think you're saying even for your fucking great company, excuse my language, great company where you know in the end they're not going to be Hoppin, they're not going to a, you know, vanish in a puff of blue smoke, you're still right, which is those last rounds might be a prices you'll never see again. And what should you do as a seed investor? I mean what would you do if a company where you invested at 50, you thought it was worth it could be an M&A at 2 billion at some point in time and suddenly you get a round at 5 billion of new money and there's a secondary opportunity. You're starter for 10, what do you advise?","offset":4251,"duration":45},{"text":"Jason: Yeah. And and listen maybe down maybe just as we're now okay with down IPOs like we're okay with it's just mathematically true, maybe we'll all be chill with down M&As and all these folks raising at 9 and 10 can sell for 1 or 2 in a few years and everyone will be happy. I'm just not so sure that they will and I'm but I'm more worried there's just not going to be a lot a lot of acquisitions. They're very specific. They're very specific to either we're desperately behind on AI or we need to jump forward years. That is a very narrow subset versus uh making sure accounting software at 5 billion is better for accountants. I believe that's a great market, I just don't believe the hyperscalers are going to buy these companies.","offset":4296,"duration":40},{"text":"Rory: No. And the yes because by definition at the app layer, you're not getting the hyperscalers. And the odd thing is, I just realized this for the first time, the odd thing is because of this story of eat the work, the TAM is meant to be larger. That's the whole point of these application-less and I believe it. But Jason to your point what it means is you are definitionally therefore the new company is larger in terms of value than the old company you're replacing, which means the old company can't afford to buy you, right? No chance. If you're Harvey and you're worth 10 billion and West it's not really worth more but if you know the old practice management law software is only worth 2 billion, they're not going to buy you, right? You've got it's basically it's win or die, to your point. I think you're exactly right, Jason, because because these TAMs are bigger in when the TAM becomes bigger the new company has gets marked up and has more has potential to be a bigger outcome. But what it means is once it gets marked to that bigger outcome via late-stage round, it precludes the prior generation buying in. If I was running one of those prior generation companies, right, as if I was the system of record, you what you need to be doing is buying the not marked up, you know, 500 million valuation company and getting something out there. Right but you can't aff-... no matter how hard you try as the old generation legal software company you can't afford Harvey at 10 billion. So doesn't matter what you want they can't you can't afford to buy them and they can't afford to sell to you. I think you're exactly right, Jason. It's kind of structural.","offset":4336,"duration":90},{"text":"Jason: I just wish listen even if IPO markets are barely barely functioning, they're open, but they're barely functioning. If the M&A markets were on fire I'd be good with everything. If we were turning around and these companies were being bought for 10 billion cash each week, I'd be like this is this is awesome man. Um but it it does worry me a little bit that it's so easy to get a 9 billion dollar valuation. It's so much easier to get a 9 billion dollar valuation than a billion dollar exit.","offset":4426,"duration":25},{"text":"Rory: Which should be terrifying if you're the people giving the 9 billion dollar valuation.","offset":4451,"duration":6},{"text":"Jason: I mean you got to play the game on the field but...","offset":4457,"duration":3},{"text":"Rory: Well you actually for the record sometimes you can stick your money in your pocket and not play the game on the field, but that's okay.","offset":4460,"duration":6},{"text":"Harry: But you're playing the game on the field, Rory.","offset":4466,"duration":2},{"text":"Rory: Part of it. And the bits I haven't played have been we you know we haven't done a deals at a billion dollars above. We've you know kept it in that 100 to 3, 400 million dollar pre-money valuation and right now that's been the wrong play. Just to put it out there, right? I mean look I give all credit to for example Spark, the Jasmine there at Spark who broke all the rules and said 4 billion for a pre-revenue company Anthropic. That's paid off, right? I think it'll be interesting for Matt Murphy at Menlo.","offset":4468,"duration":29},{"text":"Harry: Matt Matt has a concept.","offset":4497,"duration":1},{"text":"Rory: Absolutely Matt did it too totally yeah. So my point is some of the late stage bets have paid off. On average I think it's a tough I share the concern. So to your question on playing the game in field, we're playing part of the game on the field but we're a bit scared of certain parts of the valuation curve. I think that will probably across the cycle be the right decision. I'm not sure in the last year or two it's been the right decision, which is always a challenging thing about valuation.","offset":4498,"duration":25},{"text":"Harry: I shouldn't be so honest but I fuck it we'll be it's the end of the day here. My biggest regret with our Series A fund is not being more elastic, disregarding the Series A mandate and just saying I'm going to leverage the brand and the access that I have arrogantly forgive me for that to get into super hot companies like your ElevenLabs, your LangChains, your you name it see Lovables much earlier and being a momentum investor in a hot environment.","offset":4523,"duration":25},{"text":"Rory: I'm going to paraphrase what you said is I have the right to I'm my current plan is to write 20 million dollar checks in Series A investments where I get 10 or 15 10 to 20 percent ownership, right, and I can write 20 of those checks. In retrospect you're saying I should have taken five of those checks, the full 20, not a bitty check but a full ticket, a full ticket or maybe even double down and used a two-ticketer and done Cs, Ds and Es at 1 billion, 2 billion pre and got two mark-ups already, right?","offset":4548,"duration":30},{"text":"Rory: And the interesting question is if your mandate because I wrestle with this a lot so I know it's an interesting question is if your mandate is to do 20 Series As where you get 10 percent to 20 percent ownership and you stick to your knitting and you do your do, right, should you have taken five of those slots and used same check size or maybe even larger check size and done Cs, Ds and Es at 1 billion, 2 billion pre and got two mark-ups already, right? And the truth is in some cases not only will you get mark-ups but you'll get returns commensurate with Series A but at much lower risk. And Anthropic will be the definitive version of that forever. Not actually the round Spark and Menlo did first because that really was risky but kind of the rounds at 14 and 16 billion were risk-adjusted freaking awesome. I wonder will to your point now back to your point I wonder will all of those rounds in those other AI apps companies be as good for precisely the reason you articulated which is that maybe the TAM doesn't support that exit. But right now Harry's right you do you look at the la- yeah Lovable at 6, maybe you could have done it at 1 or 2, you'd have a 3x step up with no hassle, no fear, no early stage. The sweet spot of investing, I mean it's something you said Harry and it was true but tautological, I wish I'd been a mom-... I you said I wish I'd been a momentum player in a rising market. The definition of a momentum strategy is it only works in a rising market, right? But yes, in the market we've been in for the last three years, it's hard to distinguish momentum players from very shrewd players. Both of them have worked out really well. That's the that's the kind of step back from it.","offset":4578,"duration":98},{"text":"Harry: I don't think shrewd players have, actually. That's that's my point. I think shrewd players have appeared disciplined, remained temporally diverse like me and you are, Rory, remained with our high ownership targets and you've had players abscond with AUMs like never before, pay insane prices and get fast mark-ups and in a lot of cases DPI because Zuck buys you at an insane price.","offset":4676,"duration":25},{"text":"Rory: Brutal comment, Harry, then maybe you and I aren't shrewd. Look in the mirror. I you know right?","offset":4701,"duration":5},{"text":"Harry: Very possibly and that's the self-reflective question as I introspect which Mark Andreessen doesn't do clearly.","offset":4706,"duration":8},{"text":"Jason: No, introspection here please.","offset":4714,"duration":2},{"text":"Rory: No. Look look the truth is that is the question everyone wrestles with as you when do you stick with your strategy and when do you break it and what are the and you know what's a good reason to break it. Absolutely, no we all agonize with. And that's why Jason I said the kind of trivial breaking it just to be silly doesn't isn't that interesting, but the sometimes breaking it could be the right strategy and that's the hard one.","offset":4716,"duration":23}],"startTime":3531},{"title":"Episode Outro","summary":"Harry wraps up the episode as the hosts run out of time.","entries":[{"text":"Harry: There we go. Okay, boys it has been a pleasure. Thank you so much as always.","offset":4739,"duration":5},{"text":"Rory: Jesus that was quick. We ran out of time.","offset":4744,"duration":15}],"startTime":4739}],"entries":[{"text":"Jason: On the Stitch Figma thing, on the one hand, massive market overreaction to a proof of concept, give me an f-ing break. On the other hand...","offset":0,"duration":8},{"text":"Harry: On the agenda this week, Anthropic: are they eating OpenAI's lunch when it comes to enterprise? Jeff Bezos seeks $100 billion for his latest project. SpaceX at $2 trillion after TerraFab. The debrief on Groq's $20 billion deal to Nvidia, and much, much more.","offset":8,"duration":15},{"text":"Rory: If you're a software product and you don't think AI is going to disrupt not just how you build, but what you build, then you actually probably want to actively short it.","offset":23,"duration":8},{"text":"Jason: I think every VC is stressed right now. Let's be honest, who the hell is going to buy them if they don't IPO? I just worry there's some ratio of potential acquirers divided by unicorns, and I think we're at the lowest ratio of our careers. I just don't believe the hyperscalers are going to buy these companies. Basically, it's win or die. Ready to go?","offset":31,"duration":29},{"text":"Harry: Guys, it is so good to be back. We had, we had a lot of shit go down this week. Um, I think there's a couple of places we could start. To the arbiter of economic justice and revelations, which is Ramp, who revealed recently with, I think they're about 0.5% to 1% of US GDP transactions or whatever it is that Ramp uses as a statement to validate themselves.","offset":60,"duration":25},{"text":"Harry: Ramp data suggested that Anthropic now captures 73% of all spending among companies buying AI tools. 10 weeks ago, it was 50-50 with OpenAI. Early December, it was 60-40 in OpenAI's favor. Are we seeing Anthropic run away with the enterprise lunch, so to speak?","offset":85,"duration":18},{"text":"Rory: Just to start with the facts, they actually said 73% of new spending, right? And what they said, and the same graph shows OpenAI is still actually ahead of Anthropic in terms of total spend, but the marginal buyer in the last 6, 8, 10 weeks has massively shifted, which is obviously the most leading indicator.","offset":103,"duration":21},{"text":"Rory: You know, people in the market today for new AI went 70% Anthropic. So, just in the interest of being precise. Yes, the claim from Ramp, I thought the OpenAI response of, it's not, you know, the snarky comment about extrapolating from a lemonade stand was just a bad look, right?","offset":124,"duration":18},{"text":"Rory: First of all, it kind of doesn't really understand statistics. I would argue Ramp is probably a pretty accurate statistical reflection of especially digital company spend in the US. I think they have got a pretty diversified customer base and they probably have decent data and they've got good data scientists.","offset":142,"duration":23},{"text":"Rory: So it was, so OpenAI trying to be snark, I think was a mistake. I think the real, I think it does represent the facts, which is in the last three months, there's been a shift in the zeitgeist, and I do believe that the marginal user, the marginal person opting for AI today or even people switching today, the switchers are moving towards Claude and they're moving away from OpenAI. That doesn't mean it's the end of the world, but sometimes the first thing you've got to do in dealing with a problem is to face the hard facts in the face. And I think the data was good and the conclusion is real.","offset":165,"duration":30},{"text":"Jason: If Anthropic now is maybe a $20 billion run rate, the revenue does tie to these to conclusions too. Certainly isn't inconsistent with it, right? The only thing I might say, I don't want to spend all our time... I think it's possible they're both right, like OpenAI and Ramp are both right. And what I mean is in some ways this felt to me like the Cursor debate.","offset":195,"duration":19},{"text":"Jason: Because if we walk into our portfolio companies, barely anyone's using Cursor today in my own portfolio, and people said it on Twitter too, like Cursor's dead, no one's using it, they've all moved to Claude. And I would say in that ecosystem, it's true. And maybe if a lot of Ramp's data is still biased toward tech, they might see this same trend.","offset":214,"duration":18},{"text":"Jason: I mean, Claude has, if you just look at why everything's accelerated since December, it is Opus 3.5 and after. It is crystal clear. As soon as Opus came out, it was another step function that was under-discussed, everyone's PRs exploded, everything got better. But for the normal world, they live in ChatGPT.","offset":232,"duration":17},{"text":"Jason: So I don't want to say for sure that the Cursor experience isn't happening here. So in my point is they both could be right. They both could be right. But it's certainly everything, what I don't like is how OpenAI is acting wounded, to Rory's point. I don't like it.","offset":249,"duration":17},{"text":"Jason: When we started this pod, OpenAI seemed invincible no matter what Anthropic did. It seemed utterly... and everything you can just smell this aura, this air of desperation. Oh, we're going to keep head count flat to manage costs, to we're doubling head count. To we're going really deep on agentic commerce, to we're basically canceling it and Walmart says it doesn't work.","offset":266,"duration":19},{"text":"Jason: It feels very inconsistent and what I thought about this, the one thing that I love about Anthropic is it's very consistent about its ICP and goals. It has been very consistent. We know what it stands for, we know what it's trying to do. Yeah, it launches new features, I mean, it's got its new like open, its next version of open Claude launched yesterday as we record this, but you know what's coming with Claude and Anthropic. OpenAI I'm getting whiplash from everything.","offset":285,"duration":25},{"text":"Jason: And the Debbie Downer-ism, it's not... going to last week we talked about the air of invincibility at GTC and Nvidia. It doesn't smell like that at OpenAI today, does it? It's just like a downer to be around and I don't want to try their products because of it, honestly. I actually don't want to try their new products and I literally last night I'm DMing with our chief AI officer, we're trying the new Claude app that just launched. But it ain't gonna hap... we don't want to hang out with Debbie Downers.","offset":310,"duration":29},{"text":"Harry: If we just kind of put that into strategic takeaways, in terms of their pivot, now Sora is getting folded into ChatGPT rather than being a standalone app. Hardware ambitions are being deprioritized and they're really kind of trying to consolidate efforts, stop having such a diverse product set.","offset":339,"duration":19},{"text":"Harry: And then they're also to your point on head count, they now plan to nearly double head count to 8,000 by the end of the year, having said before that they were actually going to keep it flat. Is there a question?","offset":358,"duration":13},{"text":"Jason: No, I just want people to understand the context rather than... you know what it feels like to me in all seriousness, it feels like the... it felt like when we started this podcast quite a while ago, but but not a year ago, I don't think, that OpenAI was an exception to the rule.","offset":371,"duration":15},{"text":"Jason: You could have massive founder turnover, you could have massive management team turnover, you could have an unusual... like the amount of drama with kicking Sam Altman out and then bringing him back and a dysfunctional board and like it seemed to be the exception that made the rule that if you had so much momentum in a consumer... like you could overcome it.","offset":386,"duration":19},{"text":"Jason: Now I feel like the downside is rearing its mind of inconsistency. This inconsistency is damaging the company today in spades. We can see the downstream impacts of that massive turmoil.","offset":405,"duration":11},{"text":"Chamath: Yeah, and I'm going to come in here and try and say something positive, but start by pointing out if we do go back to those first 10 podcasts, they announced the hardware deal with Jony Ive. If you recollect, I was like this will never ship.","offset":416,"duration":15},{"text":"Chamath: I said at the time, and I actually said right when he was on a high that I don't envy Sam because the press only has two stories: we love you, we hate you. And once they've written we love you, there's only one story left. So they're just moving through the to-do list: we've done the we love you Sam, now we hate you Sam, right?","offset":431,"duration":16},{"text":"Chamath: And he has brought on it, you know, you spend a year talking to the prince of fill-in-the-blank, the president of France, instead of staying at home and shipping product, eventually things get defocused, right? But things are never as good or as bad as they seem. That's just one of my rules. It was never as good as people thought a year ago.","offset":447,"duration":17},{"text":"Chamath: They still have, to your point Jason, they still own the consumer business, right? And you know, there's, and so job one is figuring out how to monetize that and make that a big asset business. You know, it's hard to believe that the business, the advertising effort seems to be struggling now, but that's job one to figure out.","offset":464,"duration":15},{"text":"Chamath: And then you're right, job two is to figure out enterprise and in particular coding. I mean, they're doing finally the right stuff, you know, perhaps a year, a year and a half later, but it's still clear to me that if you just take a big deep breath and you were running that organization, focus on the two or three things, get a little more sensible on your financial trajectory, you still have a comfortable chance to be the winner. In other words, to exit two, three years from now as the largest market cap standalone foundation model player, right? You blow it for another year and you won't.","offset":479,"duration":30},{"text":"Jason: You know what's interesting is, there's sort of two things going on here that I see in the data, right? If you look at OpenRouter's data, it has exploded since the start of the year. So what that is saying is folks are aggressively switching between models for cost and output, especially cost. Like that's saying there are a large set of customers who are optimizing when to use Glimmy and when to use Haiku and when to use Mini, and and that that model has exploded, right? And we can see it in a lot of our more mature customers, I mean companies that are trying to optimize their spend.","offset":509,"duration":33},{"text":"Jason: On the other hand, so much of us have said listen, I mean, Claude Sonnet and Opus since 3.5 and 3.6 are so good, I want to stick there. It's so... like if you're not deep into coding or vibe coding, you don't see how much better it is in the last 90 days. And I have no desire to screw around when something gets their hooks it... it's so good.","offset":542,"duration":21},{"text":"Jason: And so I want to build all my scaffolding, I want to build my apps, I want to build my AI agents about something that isn't just good, but now is epically good. And so you'd really... there are a lot of even with the OpenRouter data, like I think what I mean is there's this there's these two things happening.","offset":563,"duration":14},{"text":"Jason: On the one hand, the soft costs are very low to pick a different model. But on the other hand, there are high soft costs for managing the outputs and QAing it and qualifying it to make it great. And I don't want to do anything except Sonnet and Opus now. I don't want to spend any time on it. It's not worth... it's not worth the soft cost. And I think that's where the panic is. They can smell that they're losing that even as cost sensitive customers will rotate through the cheapest possible thing.","offset":577,"duration":25},{"text":"Rory: I think true. And I think it speaks to the, you know, you have these discussions, you know, do you want to be first to market or do you want to be second and you know more and you don't, you know, pioneers get arrows in the back and all those clichés. But I think the real truth is if you are first to a market with the right product, you do you you grab that early mind share and market share and then it's theirs to lose.","offset":602,"duration":18},{"text":"Rory: And just contrast the two markets, because it's pretty clear the two potential mega markets here are the consumer market where OpenAI grabbed the mind share with ChatGPT and despite they haven't monetized it yet, no one's really taken that away from them at scale.","offset":620,"duration":15},{"text":"Rory: And then the other mega market is not just enterprise, but within enterprise coding. And you're right, Jason, the scary thing is today it's maybe 6, 12 months ago was up for grabs, today kind of your description's right. It's half up for grabs, people are starting to lock in.","offset":635,"duration":13},{"text":"Rory: And you know, if OpenAI allows Claude to become the default for another year and the perceived best for another year, I don't think you get to show up after a whole bunch of people have made enterprise decisions and say oh now we finally got our shit together, we're good too now I promise, please pick me, right?","offset":648,"duration":18},{"text":"Rory: There is a moment, there is a tide in the affairs of men as Shakespeare says, right? This has been the last six months of coding lock-in, right? Just the recognition that coding is the mother lode app within the enterprise spend. And you're right, if you let Claude run away with that for another six or 12 months, you've probably sacrificed value that you'll never get back.","offset":666,"duration":24},{"text":"Jason: You know let me just give you one small example, like because these because they're the models are so much better since December. So since then, we've built we have built an AI VP of marketing and an AI VP of customer success for real, and they're really, really good.","offset":690,"duration":13},{"text":"Jason: But here is the meta point: our AI VP of marketing defines every day, every single marketing activity, it wakes up in the morning and gives us Slack updates, it runs our weekly team meetings. Our AI VP of success, we have like 200 sponsors for SaaStr and all the humans would quit because it was too much work. It does it 24/7 and the sponsors love it, okay?","offset":703,"duration":18},{"text":"Jason: Now here this so these are great. It runs on Sonnet 3.6 sorry 3.7 and and maybe a little bit of Opus. There is no way we're going to switch the model. This is dialed in, it works. Now we're going to have to deal with QA when it goes to 3.8 and 4.01. There's a little bit of QA and it does change. But my God there's no these apps which we rely on every day, there's no way we're going to switch them to Codex because it took us weeks to dial it in and you have to train it and you have to do it and then now that they're great.","offset":721,"duration":27},{"text":"Jason: Once there's a certain level, I'm not saying that other folks won't, but that is a lock-in since the latest models that I think deserve a code red. We will not invest the time after we've dialed because they're so good, the models today. So that's a risk. I would have a code red on this.","offset":748,"duration":22},{"text":"Chamath: Agreed. And because and again just donning my economics of industry hat, you're exactly. You're an individual enterprise, right? Maybe if you were a SaaS vendor of these products to a thousand enterprises, you might have a big enough engineering team where it'd be worth your while six, 12 months from now to evaluate new models.","offset":770,"duration":20},{"text":"Chamath: But you're right, you've built a business that works for you, right? And it's you're right, unless they're extorting you on token costs, it ain't broke, so you ain't going to want to fix it six months from now. I agree.","offset":790,"duration":10},{"text":"Chamath: And that's why, just like on the consumer side, every time you lock in muscle memory, I mean, I'm using Claude all the time now in Coherence but I will admit when I'm doing my random research for this sort of thing, I still go to ChatGPT. I'm used to it, I got a lot of stuff in there. Every time you lock in behaviors like that and let them settle in for 6, 12 months, you're just, yeah, you're losing lifetime value that's nontrivial.","offset":800,"duration":22},{"text":"Jason: There are applications, if we just stick to B2B and AI for a while, there are applications that are very sensitive to token costs, okay? Um, we've all, you know, even things like support are super sensitive, right? Because they're using so many tokens.","offset":822,"duration":16},{"text":"Jason: But I got to tell you there are so many applications like the ones I described that were not that sensitive to token costs. If you use $200, $400, $2,000, $10,000 of tokens per month for these it just doesn't matter. And so there's the OpenRouter world where costs are super sensitive, but there are plenty of applications that will deliver epic value on these LLMs where it's not worth...","offset":838,"duration":20},{"text":"Jason: You want to reduce my token cost from $2,000 a month to $1,500? I'm not... leave me alone. Leave your Glimmys and all these leave I don't care, like I got 99 problems this isn't on one of them, right? And there are going to be more of those apps than we think.","offset":858,"duration":14},{"text":"Rory: You're exactly right. One of the things I've been thinking about for our for our software apps investments is just having this mental model of, you know, what's the what's the token spend as a percentage of revenue?","offset":872,"duration":9},{"text":"Rory: And you're exactly right Jason, there's a ton of really interesting apps that you know for 5, 7, 8% of revenue on tokens are building huge value, which my sense at least is very different than the coding apps where you might be at 40 or 50%.","offset":881,"duration":13},{"text":"Rory: And if you're at 5% of revenue and you're growing really quickly, you got a lot of better things to be doing with your life than over-optimizing the models. And I think, you know, and if you get around to it you might use some open source. Yeah, exactly.","offset":894,"duration":14},{"text":"Rory: Maybe even more, maybe even 20%. But I think that metric I've actually meant to do this work and if someone has done it out there in internet land I'd love to see it, just looking at a couple of hundred AI apps and just literally looking at the AI token spend as a percentage of revenue across them all. I'd love to know what the pattern is, because I totally see very different percentages depending on the token intensity.","offset":908,"duration":23},{"text":"Harry: SpaceX, TerraFab, potentially $2 trillion. We're reaching new highs. We started off at a trillion two, a trillion five, now TerraFab and the $2 trillion number is being mentioned. Rory why don't we start with some context from you, you're the best at providing succinct...","offset":931,"duration":19},{"text":"Rory: I'm... okay. I mean, the big picture context is context is that Elon made an announcement that they're going to build a fab, effectively build the equivalent I think almost 70% of the volume of all of TSMC, right? In the US near the Gigafactory because across the chip need for Tesla and the perceived and the potential chip need, I'm picking my words carefully, for SpaceX to the extent that they build data centers in space, he doesn't think TSMC will be able to make enough chips to support his needs, and therefore continuing a pattern of vertical integration which they've had for an extended period of time, they're going to build a fab.","offset":950,"duration":44},{"text":"Rory: Right, not just any fab, but the most advanced modern fab on the planet for probably CapEx costs of $25 billion. Right, that's the announcement. So I can't and and it's not clear the ownership by the way, but it's i think the usage, the idea I saw some number like 20% it's kind of some kind of joint Tesla-SpaceX venture, 20% of the volume in the end will go to Tesla, 80% will go to SpaceX and data centers.","offset":994,"duration":28},{"text":"Rory: So that's the story. That's the second piece of context is Harry you said SpaceX now being talked about at $2 trillion. Let's be clear what you're saying about that is because i'm going to push back strong. PolyMarket said the probability of SpaceX being worth $2 trillion on the IPO went up to 50-60%, right? From a lower number, right?","offset":1022,"duration":21},{"text":"Rory: And that's what Harry's attributing information signal to. I would point out that Tesla stock didn't move. So if this really is even if it's 80% SpaceX, 20% Tesla in the market nobody blinked, right? Where actual money's significant money's changing hands. So I am significantly more skeptical that six months from now people are going to attribute another $400 billion of value to a statement that I'm going to build a fab.","offset":1043,"duration":26},{"text":"Jason: Unless they unless they saw your math the 80/20 and really thought of all the value going to SpaceX, right?","offset":1069,"duration":5},{"text":"Rory: Even if all by I mean, yeah, yes, okay. Yes. So again, it's back to the same eternal Elon discussion, at every point in time with every one of his companies, you have things he's already done that you can value on a revenue multiple, things that have been announced or are in process and they're various stages of doneness and in that case you have to assign a probability of getting it done.","offset":1074,"duration":21},{"text":"Rory: And if the probability is 100%, then announcing a fab means you're worth the fab. If the probability is 1%, then announcing a fab means you're worth 1% of the fab, right? And everybody gets to pick their percentage in that continuum, right?","offset":1095,"duration":14},{"text":"Rory: Right now, I mean TSMC itself is just over a trillion in market cap. It's like basically saying if it really popped up by $400 billion of value, it's like basically saying TSMC has spent 30 years building the most modern fabs out there, you've announced that you're going to do the same, you do have customers for those chips in the main, so I'm going to give you a 50% probability of getting it done. It's a pretty high Elon-attributed probability number.","offset":1109,"duration":23},{"text":"Harry: But do you think that's unfair? I wouldn't bet against it. I mean, it's very... I always struggle to describe this. He is the person who's achieved more than anything else entrepreneurially in the world today, period full stop, on hard engineering problems far beyond any piece of software, right?","offset":1132,"duration":18},{"text":"Harry: So that is is it rational to say that if anyone can do it he can? Yes, because he's done it two or three times with cars, with rockets. Not irrational from that perspective. You still have to say is his record on timing of being right about when things happen and when they come a little more spotty, right?","offset":1150,"duration":23},{"text":"Harry: I mean I actually just went into ChatGPT and said make me a chronological list of every prediction from Elon about full self-driving, and then i did another one, make me a chronological prediction of every prediction from Elon about when Starship will be flying and we'll be able to reach, you know, Mars. It's a long line of it's going to happen three years from now in the case of FSD.","offset":1173,"duration":20},{"text":"Harry: So i think with the caveat that we're dealing with the most accomplished entrepreneur probably of at least the last 30 years, maybe one of the top two or three ever, you still have to say his record of predicting timeliness in terms of these things takes a lot longer than you think up front. And you've got to figure out as an investor how you factor that into the valuation. And everyone's entitled... the beautiful thing about markets is everybody gets to play their own way. Right?","offset":1193,"duration":30},{"text":"Jason: I'll tell you what was interesting to me, I watched yesterday on YouTube, they had a Jay Leno where he was the first one to test the new Tesla Semi, okay? And the team from Tesla came over, Franz the head designer and the head PM for Tesla Semi, and they were talking about it and they were talking about energy, and the designer said: Yeah, we strongly believe across all of Tesla the future is fusion.","offset":1223,"duration":22},{"text":"Jason: It is fusion to power our trucks. It's just we believe the fusion's from the sun. There's no point in doing it on earth, and we will soon power all of our semis through fusion. And this isn't this is a thoughtful lead designer saying this vision that has been there and they believe it.","offset":1245,"duration":17},{"text":"Jason: I think it's a great story that can happen, that we're going to build more power than I guess exists in the world today, and 80% of it's going to space. 80% of these chips that come out of this are going to space to power a fusion. You could you could mock that or say it's going to take nine more years than we thought, but it does if it does create a pretty powerful vision for the IPO and beyond and beyond.","offset":1262,"duration":27},{"text":"Jason: I mean, that's pretty now you see it all coming together for SpaceX for real for the first time, well rather than we've got internet satellites and spaceships. Like it sort of made sense, but when we're harnessing the entire sun because it's pretty doable because we've built a lot of it already... starting to sound cheap at $2 trillion. Who else can harness the sun?","offset":1289,"duration":23},{"text":"Rory: Just to push back a little on one word, I you know because i i i think it does all make directional sense, but i'm just going to call you on the word mock, because i didn't mock. I was very clear and i didn't say you some some some, right?","offset":1312,"duration":12},{"text":"Rory: I think you've just got to say look, someone can be 10x more accomplished than you, right? As an entrepreneur and a human being, but when you're investing money you're still entitled to say what probability do i say ascribe to that 10x more accomplished person being able to do the next thing?","offset":1324,"duration":16},{"text":"Rory: And therefore you have to look at this and say for how long will this be supported by a future statement and when will it be worth something on 20 times free cash flow?","offset":1340,"duration":12},{"text":"Jason: But you know why it's interesting, if you really believe in DCF and free cash flow for real in the public markets, and I still get confused, if Starlink really has 53% profit margins and is wildly profitable, the fact that this extends the Starlink vision two orders of five orders of magnitude, it's actually a reason to say hey, if I believe in this at all my my DCF has gone up. How much I don't know.","offset":1352,"duration":24},{"text":"Jason: It's gone up because this is a ma... Starlink is so profitable at scale, like jaw-droppingly profitable, right?","offset":1376,"duration":8},{"text":"Rory: Two comments. First of all, big picture, you are correct. The reason Elon can do it and no one else can is he can articulate these big step-function stories, where as one investor in one of many of his companies pointed out to me, it's a great point he made of this: they're not like software companies that incrementally grow every year, they're kind of step-function technical challenges that you accomplish maybe every five or seven years and then you harvest on that while you're building the next step-function challenge, and then that gives the next lift.","offset":1384,"duration":30},{"text":"Rory: And i mean I think Starship's a great example of that, you had the hey i launch rockets and all i do is get government contracts, and then you're like no i launch rockets and now i have a cellular service for remote for remote cellular, and now the next turn of the crank is maybe if i can get Starship working you can have cellular for everywhere and data centers in space.","offset":1414,"duration":21},{"text":"Rory: So you are right, these are big chunky visions, each of which if realized gives you an extra pick a number $100 billion, $200 billion, $300 billion of net present value of thing. But you just got so i agree i no one else can tell the story and no one else is credible to tell those stories. You've still got to go back to what's the probability of happening when does it happen and what's your cost of capital between now and there.","offset":1435,"duration":23},{"text":"Jason: Yeah, and I I would just argue if you're being if you're the classic optimistic analyst, Wall Street analyst, you can probably justify the $2 trillion Harry's $2 trillion valuation by saying the odds that this occurs are 80%, but but we're ascribing only a 30% chance it happens on time, there's an 80% chance and within five years it achieves similar profit margins to Starlink, and you roll it all back and you can justify $2 billion over 1.x trillion, right? I think you could do it on a spreadsheet.","offset":1458,"duration":27},{"text":"Rory: And that bet will be available to you, and have at it.","offset":1485,"duration":4},{"text":"Harry: In the in the in the week of bold $100 billion bets and why the fuck are we doing seed-stage SaaS investing, Jason? Jeff Bezos seeks $100 billion to buy and AI-transform manufacturing. Wall Street Journal broke this one, Jeff Bezos raising $100 billion: manufacturing transformation fund, and acquire companies across semiconductors, space, defense, inject AI into their operations and make them much more efficient. Um, he's apparently been touring Singapore and the Middle East to charm some sovereign wealth funds to give him the money. How did we think about this? Again, it was another week of I feel irrelevant at early-stage VCs.","offset":1489,"duration":38},{"text":"Jason: I think it's a great classic Indian Creek Island investment. So you're sitting in Miami in your couple hundred million dollar home, you've got Jassy and team running the hard business, you don't have to do that that much. Luckily they're doing the hard work and this now I get to think big. I get to think big at Carbone or on the yacht and i don't want to go small anymore and i've already done it, you know, i've already built Amazon.","offset":1527,"duration":24},{"text":"Jason: So you know what i want to do? I'm going to remake some industries. I you know i was with my friends at Pura Vida getting our smoothies and we're all going to remake industries and this is the Indian Creek Island bet. And I get it, right? You don't want to screw around anymore on on at billionaire's bunker, you just don't want to.","offset":1551,"duration":21},{"text":"Harry: Do you think he'll be able to raise the $100 billion?","offset":1572,"duration":4},{"text":"Jason: He could just sell stock if he wants $100 billion he can get it himself, so I'm sure he'll get some significant slug of capital. I mean it's hard i mean i don't know $100 billion i yeah it's so out of my pay grade but...","offset":1576,"duration":12},{"text":"Jason: The only problem is SoftBank seems to be tapped out, they're hitting their debt limits, they just announced this week, right? That they're flashing above their covenants. Um, but I don't think he would announce it if there wasn't a re... that he didn't believe he could do it, right? So you got to announce a decent probability.","offset":1588,"duration":17},{"text":"Rory: I want to come back to what you said Jason. I thought that was actually very insightful, the Indian Creek comment, right? In you do see this of, you know, i did it the hard way, i'm now 50, i'm 60, i'm not 22 anymore, i've got more money and less time so i'd like to insert myself further along in the value creation process to make it happen quickly is the logic.","offset":1605,"duration":22},{"text":"Rory: Because i was reflecting back, AI is this cool new technology that could transform all loads of industries. Just like 20, 30 years ago, the internet was this cool new technology that could transform a whole load of different industries, right?","offset":1627,"duration":14},{"text":"Rory: And if you think you had really and when Jeff Bezos was starting out, there was three different plays you could make. You could say: Hey, internet's going to transform retail and let's focus on retail, I should build software and sell it to retailers so they can kind of move onto the internet. Build Shopify, right?","offset":1641,"duration":18},{"text":"Rory: The second thing you could do is say: Hey, the internet is going to transform retail, I should buy Walmart because I'll kick ass and I'll make them become an internet company and I'll do it that way. Or the third you can do is to say i'm going to do the hard thing for the most amount of money, i'm going to transform retail myself by building a full-stack retailer, i'm going to call it Amazon and i'm just going to kill everyone, right?","offset":1659,"duration":22},{"text":"Rory: And only the and the last one was it turns out the $2 trillion opportunity, right? From zero, so your IRR is from effectively no money in, you make a couple of trillion bucks from a value creation perspective. Shopify, roughly a couple hundred billion dollars, a great because that's the best e-commerce technology provider.","offset":1681,"duration":19},{"text":"Rory: And you know, to be fair to Walmart, if you'd had half a trillion dollars lying around at the time you could have scored a double because it's finally adopted the internet and you know you make a 2x on on a lot of money and you make half a trillion bucks. Because now Walmart's got a market cap plus or minus of a trillion dollars and they're very much a winner in the internet age.","offset":1700,"duration":20},{"text":"Rory: And I was just thinking those are the three games that you play. And back when you're 25 and you have incredible drive, you don't have half a half a trillion dollars lying around, you do Amazon. But you're exactly right, if you're in Indian Creek and you're like oh i don't have 25 years of you know working out of a desk, i'm like a 2x on a 100... you know, taking $100 billion and buying a bunch companies and you know injecting AI into them like i could have injected internet into Walmart, maybe that's the play.","offset":1720,"duration":33},{"text":"Rory: It's inherently less disruptive and more financial engineering than doing either of the Shopify play or the Amazon play. So yeah i agree, i like the framing of the... it's what you do when you have too much money to want to do it the hard way.","offset":1753,"duration":18},{"text":"Jason: If you talk to billionaires today that aren't pulling their hairs out because they're running public SaaS companies, okay? It... the vibe is similar, they want to do something huge in AI right now. They don't necessarily want to run it themselves, they don't want to be CEO again, right? But they're very motivated to do one of these plays. So we're going to see a bunch of these plays, it's what everybody wants to do. It's logical, it's logical from from a billionaire... it's logical.","offset":1771,"duration":24},{"text":"Harry: Yeah, I i love seeing Sergey Brin rock up to a random hackathon in Miami. I'm not sure if you guys saw this? Yeah! But in Miami he came out at the end and you know was a judge or whatever standing on ceremony of a very grassroots hackathon in, you know, a random part of Miami.","offset":1795,"duration":18},{"text":"Jason: Maybe the only only place left in the country hospitable to billionaires, so we'll watch we're going to watch it accelerate.","offset":1813,"duration":6},{"text":"Harry: Oh my god the oppressed species of billionaires.","offset":1819,"duration":2},{"text":"Jason: No no, I do think you know when i think about this the New York QSBS and other stuff, not not we don't have to do it. What i do think when you saw Sergey there, right? And he did he didn't even move to the billionaire bunker he moved to a different different part of Miami Beach, but um um...","offset":1821,"duration":16},{"text":"Jason: I I do think what we're missing is I i think that it is the only place maybe become the only place in the US over the next couple years that is welcoming billionaires. Texas does but Austin even doesn't. Austin does not Austin has mixed views.","offset":1837,"duration":15},{"text":"Jason: But say what you will and I know it's hor... i mean you know Florida welcomes i mean look i mean it's terrible the OnlyFans guy I mean very very controversial subject matter, but where did he live? Pompano Beach, Florida, okay? Florida said you be a billionaire here, okay?","offset":1852,"duration":17},{"text":"Jason: And so we are seeing we're underestimating it's not just taxes, with Sergey it is you may only feel comfortable if you're Bezos or Sergey in Miami soon. Why would you feel comfortable in California or Washington or New York? Seriously why would you feel comfortable? Maybe Utah. I would feel you just don't want to be attacked constantly. No human being wants to feel that way. You want to go where people will just let you be yourself and raise $100 billion or do whatever, like leave me alone, let me let me live. And that's what I think people are missing with the Golden Goose. They're making billionaires uncomfortable, and it's not just the money. It's being uncom... that Sergey, he's he's gone. He ain't coming back except for staff meetings and hackathons in in Mountain View. He's gone.","offset":1869,"duration":44},{"text":"Jason: I'll tell you yesterday I'm here in Utah and i saw Ryan Smith yesterday, i love him right? Founder of Qualtrics, okay? People love Ryan here, and he took his money and bought the Jazz as well as Hockey Team, and he had a rough first year with the Jazz because he traded some top players, but I i they love him here. They love Ryan here, and i don't think in the Bay Area anyone by people are vilified. The billionaires are vilified. Why would you stay?","offset":1913,"duration":30},{"text":"Jason: And so it's only going to accelerate, so it's here's the thing, it's hard to predict the outcome, right? I really don't think adding QSBS to New York is going to lead to the exodus that the people wanted to do. We can talk about why, but they did it in California and it that alone didn't work. But when you are uncomfortable living somewhere, you leave. And it is Ryan Smith is beloved here in Provo where I am today, and Sam Altman is vilified and Dario gets a pass maybe because he gave away 80% but um it's who wants to live there? Who the hell wants to live where you're vilified? Who the hell wants to live there?","offset":1943,"duration":35},{"text":"Rory: Cut put Sam some slack, he apparently has no OpenAI to give away so it's...","offset":1978,"duration":4},{"text":"Jason: Howard Marks left. I mean he's old but he did leave. Um, it's you want to be where you're comfortable.","offset":1982,"duration":5},{"text":"Harry: Speaking of like the world hating billionaires, Groq announced essentially the debrief on the $20 billion deal to Nvidia. Less than $100 million in ARR being acquired. Jonathan the founder is going to make about $950 million after what will be a double taxation. Showing it's quite a costly thing taxes in terms of the IP and team aqua-hires that we've seen.","offset":1987,"duration":26},{"text":"Harry: How did we think and then Chamath also reportedly made $950 million to which he responded on Twitter he made much much more. How did we think about the analysis of this breakdown?","offset":2013,"duration":10},{"text":"Rory: I think there's three different things you said we talk about and i think you should break them apart. You know, one is um how often do you see this kind of sub-$100 million ARR revenue businesses going for this kind of value?","offset":2023,"duration":16},{"text":"Rory: Then the second thing is what was the structure and why does it result in double taxation? And then maybe the third thing is why does poor Chamath need to tell us he's rich all the time? It's okay, we believe you're rich. You know, you may have made you may have made other people poor but we stipulate that you are rich and even you are smart, you did a great deal here. You know, let it go poor guy, therapy will help.","offset":2039,"duration":20},{"text":"Rory: But let's go back to the first one, right? Um how you know, how often because the first question you asked in the notes which you always ignore when it comes to the show is when do you see this kind of transaction price as if revenue doesn't matter?","offset":2059,"duration":12},{"text":"Rory: That was the question, right? When does someone pay $20 billion for $100 million in revenue? And I was thinking about that, it's easy. The answer is when the value to the acquirer is so high and they have the market cap to do it.","offset":2071,"duration":15},{"text":"Rory: And Nvidia with a $5 trillion market cap can pay $20 billion for something that's valuable. And there is another good example i thought of at scale, because it happens a lot at small scale. There are loads of tech M&A where you know some shit little company's doing less than a million in revenue and someone buys it for $100 million, which you know is a 100, 200x revenue multiple, but we don't make a noise about it because it's just so small.","offset":2086,"duration":26},{"text":"Rory: And the reason they're doing that is because they can run it through their channel and they can convert that million in revenue into 20, 30, 40 million very quickly, or it has strategic value to them, right? The number of times it happens at $20 billion is low, but WhatsApp is the other great example of that. Um, Facebook paid $16 billion for WhatsApp and it didn't have a dime of revenue, right? And it was a great deal and it's still a great deal. So it does happen, but there's only a few number of buyers who can afford to do that.","offset":2112,"duration":29},{"text":"Jason: The Groq one, you know they just announced at GDC last week that it's going into production. So that's different, okay? The I don't I and i'll tell you what i find interesting in general for venture, so look they had $100 million in revenue, they proved the concept, they proved it sort of works and Jensen said within a year we can get this into production.","offset":2141,"duration":18},{"text":"Jason: Um, that's worth billions, right? And so it illustrates how weird M&A is so weird. Um this deal probably was a multiple of the last round. The the last round was at $6.9 billion. The there are this is less common these days, but classically rounds would be 2 to 3x the last of a growth round, okay? That that has collapsed for some reason recently.","offset":2159,"duration":21},{"text":"Jason: But my my first startup was acquired for exactly 3x our round, literally our acquirer downloaded our certificate of incorporation, found our per-share price and showed up unsolicited with an offer 3x, okay? That's what i think hap- happened here.","offset":2180,"duration":14},{"text":"Jason: What is so weird though is that it's a reminder that so much of M&A one way or another is focused on revenue multiples, either directly or potentially, and then they're just abandoned after the deal. They're just: You're worth the you're worth 10.2x ARR and then we fire the sales and marketing team after the deal closes and roll it up into our core product. It's uh it's an odd thing, uh necessary but odd, right? There's so many weird ways they are valued.","offset":2194,"duration":28},{"text":"Rory: Agreed and yeah and it's a weird thing because there's often a huge gap between what you're worth standalone might be $2 or $3 billion, what you're worth to your acquirer might be $20 billion, and it's a question of how does that $17 billion of value get allocated?","offset":2222,"duration":16},{"text":"Rory: And obviously sometimes the buyer is trying to grind you down to one dollar more than your standalone value, and then sometimes like in this case they're like: Hey we will pay you a fair amount of what it's worth to us, which is way more than you're worth on a standalone basis.","offset":2238,"duration":15},{"text":"Rory: But kind of segueing to the next thing, in return for that you're going to use this structure which is wildly tax inefficient, but it's the only way for us to get this thing done quickly and without government review. Which is the next thing to say here, which is the point the other point you're trying to make is that you know the CEO, i mean no one's going to cry for someone who made $950 million and they're not even a billionaire so no one'll hate them so that's great. I mean it's actually a win-win, good another $50 million and Jason the pitchforks would be out.","offset":2253,"duration":31},{"text":"Rory: But these transactions are very capital in at tax inefficient because what happens is the company sells the assets to Nvidia, books a gain because the assets were in the books at a sub-billion and now they're getting sold for $20 billion, so you have to pay tax at the company level on that, and then you dividend or redeem the money out and individual investors have to pay tax on the gain.","offset":2284,"duration":21},{"text":"Rory: So it's fairly inefficient, so you're probably wasting plus or minus $4 or $5 billion bucks on a $20 billion transaction because of double taxation.","offset":2305,"duration":8},{"text":"Jason: And it's probably to the founder, Jonathan, it's it's roughly 60% effective tax rate. And and you can't hold Nvidia stock. You're cashed out. Like there's a lot of in there's so many inefficiencies in this deal. One, you don't even get the IP, right? You don't you don't get the company, you don't get anything, and it's a 60% tax rate to the founders and no ability to roll over the stock.","offset":2313,"duration":26},{"text":"Jason: Uh you know avoiding antitrust is it worth it? Probably for the $950 million, but man this this has got to be the most inefficient thing ever convoluted to avoid antitrust. It's so expensive.","offset":2339,"duration":8},{"text":"Rory: And it is worth pointing out it's just quite terrifying from a government perspective, you now have a process whereby the government makes the rules that enforces the antitrust and the government and basically you've got two choices. It would appear you either lobby extensively at the highest levels of the administration and you get a waiver from the top down per that Wall Street Journal article this week, which was pretty good.","offset":2347,"duration":20},{"text":"Rory: Option B is you um pay double you do it this way and then you pay double taxation and the government wins either way. You know wire me the money and I'll let you off or wire me the money after it closes, but wire me the money either way, you know? It's a really perverse incentive. I mean whoever comes into the antitrust division next time and says i think we should clean up the rules and make it much more transparent is probably going to cost the government $20, $30 billion bucks in terms of you know some combination of kickback and tax avoidance. There you go.","offset":2367,"duration":32},{"text":"Harry: I have to say I do like it. Jonathan was in the desert and the dark for many years and he is a founder who's been a real respectfully cockroach who's gone through the hard times, who's gone through the criticism. He's also just a good dude, I like him a lot. And yeah, he's so it's nice to see good people win.","offset":2399,"duration":18},{"text":"Rory: And you're right, just like Chamath, another good guy who's been through the wilderness and has now got his $950 million so they I'm sure that's the point you're trying to make Harry.","offset":2417,"duration":9},{"text":"Harry: Much more, he needs money Rory, okay? He could he could. He now can now buy some some Loro Piana. Rory you brilliantly say it to me, you know that's great but what about me? I I own stock in Amazon and I own stock in Figma, okay?","offset":2426,"duration":17},{"text":"Harry: Google launches Stitch, Figma tumbles. Figma tumbles is an understatement. I saw a tweet where it was actually an announcement that someone posted and Sequoia were buying $35 million bucks of Figma stock and i was like fuck if Sequoia and Andre are buying $35 million bucks, i'll put in some of my money, that's a good sign for me. I'm down 22%, 22%.","offset":2443,"duration":26},{"text":"Rory: Yeah, looks like about... yeah it's $21.66 a share. I remember, look when it was at 108 and you asked me what i thought it'd be i said 35 and i was wrong, i was you laughed at me and i because i was so pessimistic and i was wrong it's 21. Wow.","offset":2469,"duration":16},{"text":"Rory: No it's does this have a floor? Of course it has a floor. I mean stop you know like the again it's it has a floor based on its cash flow which is strong, it has a floor versus its growth rate of that cash flow. The third element is the probability of disruption and you know right it's the tricky thing about the equity business in the short term is everybody gets to speculate on that probability of disruption.","offset":2485,"duration":24},{"text":"Rory: So you take the cash flows and then if you love the story you apply uplift, see Elon for details, you take the cash flow and then if you're really scared about the story you apply terror downlift, which is what's going on here.","offset":2509,"duration":12},{"text":"Rory: Now in the end, you say is there floor, in the end if the business is worth it, it will grow and it will generate the cash and they'll get to do what the Palantir guy does which i so love which is every earnings call he basically slams all the haters and says basically fuck you i'm making money and you all were wrong.","offset":2521,"duration":17},{"text":"Rory: Until you're in the short term, the market gets to bitch and moan and have its opinion, but the floor doesn't come because the market changes its mind, maybe it will maybe it won't but that's not in your control. If you're running Figma, the floor comes if you execute, you demonstrate that you've been able to adopt, you know, to an AI-native AI-first world, you generate the growth, you generate the cash flows and eventually it'll turn. But that's why drawdowns are shitty, that's why drawdowns are hard.","offset":2538,"duration":29},{"text":"Jason: Well you know on this on this on the Stitch Figma thing, i mean i've used Stitch of course as you would imagine. Um i don't i think most folks that that chimed in on this never used it. Um i'm confident 98%.","offset":2567,"duration":14},{"text":"Harry: Just for those that don't know, Stitch is what for those that don't know?","offset":2581,"duration":2},{"text":"Jason: It is a new design tool that Google launched, and the bar at Google to launch a new AI tool is pretty low. They try a lot of stuff and they abandon almost all of it because then they focus on a few core products. So you literally cannot take it seriously when Google launches a product because you have no idea whether they will stick to it. They launched a Suna, is it Suna sorry i keep getting this wrong Harry, the the audio one, what's the one?","offset":2583,"duration":23},{"text":"Harry: Suno.","offset":2606,"duration":1},{"text":"Jason: Suno, so Google launched a Suno competitor. It's like cool, but it's not nearly as good, like it doesn't really work. And and will they keep with it for five years? I'll bet you dollars to donuts they don't because it's not core, okay?","offset":2607,"duration":13},{"text":"Jason: I used Stitch, I've used all of Google's design products, I think the odds that they design decide to build a Figma competitor from this for a decade approach zero. So on the one hand, massive market overreaction to a to a proof of concept, give me an f-ing break if i'm Sequoia or whatever.","offset":2620,"duration":18},{"text":"Jason: On the other hand, the markets are saying we are extremely worried about disruption. We are extremely worried about disruption. You better prove to us, Figma, Atlassian, Salesforce, you are ahead of disruption and not behind it.","offset":2638,"duration":16},{"text":"Jason: And the market said: We don't believe it. And i agree with the markets here because Figma Make is one of the worst products i've used in the last six months. But this but Stitch on its own at least it's better than Make, at least it can take context from a website and and not hallucinate.","offset":2654,"duration":16},{"text":"Jason: But the market should be like where show me the money again, where is Figma's $300 million of revenue from disrupting Replit and Lovable like we talked before? And so if you haven't delivered like Palantir or started to deliver like Salesforce, the markets are going to freaking panic that your revenue is not that durable.","offset":2670,"duration":19},{"text":"Jason: This is what i think it all like i didn't get the 2026 panic for a long time, i was slow. Now i get it, the markets are rationally saying we no longer believe this revenue is particularly durable.","offset":2689,"duration":11},{"text":"Jason: Old old SaaS people, PE doesn't believe it, Qualtrics couldn't finish its debt offering this week, Salesforce barely got its debt done and why? They don't... the markets just... it's not that they think that Figma is a bad company, they just don't believe this revenue's going to last a decade anymore. They don't believe it. And so you're going to see more more of these panics for anyone not accelerating. People... they're just going to panic every time it happens.","offset":2700,"duration":24},{"text":"Harry: Jason, we just released the show with the CRO of Figma and I asked him how he's seeing AI implemented into your sales teams and he said, honestly, we don't really have that ability and we haven't done it yet, um, oh and and we're hiring a lot more in sales, by the way. We're not reducing headcount at all. That... we're not seeing that. Uh, and oh by the way, we're not seeing seat pricing change at all. How do you feel when you hear that? Because...","offset":2724,"duration":29},{"text":"Jason: Oh, you're just... you're just serving it up. That one ironically, Harry, ironically, that one does not worry me as much as the product. Okay. I will tell you what I've learned. You you and I... you formerly on the other 20VC, me in Farmland, I've talked... I know a lot of the CROs and CMOs at leading AI companies.","offset":2753,"duration":20},{"text":"Jason: The ones I'm close to are pretty good, but I also see tons of folks I call recycled mediocre. They are folks that bombed out of old B2B companies, they barely did anything there, but because they have the right logo, got hired to a super... they're all over the hot AI companies. So many recycled mediocre. And they're going to hire 250 reps and not train them. And they're going to build infographics.","offset":2773,"duration":23},{"text":"Jason: But the products are so strong and the demand is so strong, it doesn't eff-ing matter. So if the guy if if if Figma make was so great and and their AI product was doing 500 million, you you could you could sell it with folks fresh out of a non-technical junior college. It'd be fine, right? Um, so my point is, even though I talk a lot about AI go-to-market agents and I believe they're great and they work, they don't fix product-market fit. In AI sales, it doesn't fix product-market fit. And we're seeing broken... we're seeing decaying product-market fit. That's why the market panicked on Figma. They're seeing hints, just hints, of decaying product-market fit in the AI era and you should panic.","offset":2796,"duration":38},{"text":"Rory: Yeah. I... Harry, just to pile in on that because I actually have these conversations at my companies all the time. I actually to... I didn't think I... I totally agree with what Jason said. It's like when my companies come and say, \"Hey, you've got this problem, we want to talk about AI,\" and they say what, you know, \"Hey look at us, we're using AI in go-to-market,\" or they say, \"Look at us, we're using AI to build engineering,\" I'm like that's great but nobody gives a rat's ass. That... that's like jacks to open. That's not solving the core problem.","offset":2834,"duration":26},{"text":"Rory: The core prob-... unless you're making like cars where it doesn't matter, it's just back-office efficiency. If you're a software company, the number one question is how does AI change the end product you deliver your customers? That's what's going to determine success or failure. So I... I thought I'm fun-... I had a guest you would have piled on to that guy and kind of bludgeoned him while he was down because I thought Harry served you up a softball for you to say, \"Hey the idiot is not using AI,\" and I'd have argued with you, but I think you nailed it. Look.","offset":2860,"duration":28},{"text":"Rory: You could be using AI well or badly in go-to-market. You can be using AI well or badly in engineering. It will catch up with you over time if you're not using it well. But that's not what's driving, you know, 30, 40 percent price declines. What's driving that is exactly what Jason said is the market looks at this and says there's disruption risk here. I don't know the terminal value here. I... I'm just nervous. So I've got to be paid for that risk.","offset":2888,"duration":30},{"text":"Harry: I got... he didn't take my softball, did he, Rory? That was... normally he's so disciplined. He took it...","offset":2918,"duration":3},{"text":"Jason: But Rory's got the important point. You you've got to have the right AI or your company's going to decline. Listen, would I would listen... I'm sure the Figma guy's great, but honestly, if I interviewed a CRO today and didn't have any AI agents that he here or she had brought in to our last podcast, I would recommend to the CEO \"don't hire her or him,\" okay, for sure. But would I think this was... would I be much more worried than if I talked to a CTO and the the new CTO they wanted to hire didn't really believe in in using agentic coding, then then I would ask for my money back. Can I have all of my investment back and 1x? You can keep your mark-up, just give me my 5 million back.","offset":2921,"duration":38},{"text":"Jason: I'm going to go one level more than that, is that you're right. Not using AI in go-to-market, bad. Not using AI to build product, maybe I want my money back. But if you're a software product and you don't think AI is going to disrupt not just how you build but what you build, then you actually probably want to actively short it. Like for example, they're not doing that, but if Figma or Salesforce or someone were to say, \"I don't think AI is relative is relevant for our customer base and they don't want to use AI in design,\" if someone was to say that today, you'd be like, \"Oh my god, you're just going to be, you know, just left behind.\"","offset":2959,"duration":26},{"text":"Jason: Now... and that's why Figma's insensitivity to how mediocre Make is really worries me. I wouldn't care if if Dylan or the team said, \"Listen, Make isn't good enough but wait give me time. Give me six months, it's going to be great.\" But saying this product that is the worst vibe coding tool I have used... that I have used in the last six months, the fact that there is no public awareness that this is an issue really worries me.","offset":2985,"duration":27},{"text":"Harry: Jason, can you help me understand that? Because Dylan is a is a good CEO. I don't... you know...","offset":3012,"duration":4},{"text":"Jason: Excellent CEO. I think we all have listen... I don't know for sure, okay, um, but I think everyone at scale has a trap, which is their installed base is a trap. It is an opportunity and a trap. It is the greatest thing in the world to sell your agentic product to, to sell Agentforce to, is the 44 billion of ARR that Sell-... it's the greatest opportunity because you don't have to earn that base, right? But it is also 50 years of debt, 50 years of features, 50 years of of offline integrations, non-agentic gaps they want, 50 years of of endless work. And if you're not careful, it will consume 98 percent of your resources is that installed base, right? They need so much attention.","offset":3016,"duration":35},{"text":"Jason: And I do think literally Make is the only vibe coding product that I have used where you say, build me a website for 20VC, use 20vc.com as a template, and it can't go to 20vc.com and pull the context to make the website. Now Replit could do this in June of 2025, Lovable could, but anybody can do it today, right? Uh, so including you know who could do it pretty good was um Stitch. Stitch got the context right of the design projects I get it. And that just shows to me whoever's running it doesn't care about these use cases. They just don't care. It has fallen behind and I real-... my guess is, my guess is there's a small team on this.","offset":3051,"duration":43},{"text":"Jason: You know, they're still growing what, 35 percent? Right? I mean this is this is one of the best out there. But the dema-... here's the trap and we all have portfolio companies like this. The trap of of earning that 35 percent imperil can imperil your agentic growth. It can consume more than 100 percent of all the product and engineering and CS resources you have, right? Even Mike Cannon-Brookes when he was on the show, he alluded to it right and then they did the layoffs. He's like, \"I've got to get these resources because otherwise Jira and Confluence and everyone's going to suck it all up and I have no people.\"","offset":3094,"duration":31},{"text":"Rory: Super interesting.","offset":3125,"duration":2},{"text":"Jason: It's a trap, it's a trap, and think of some of your portfolio companies at scale. North of 100 million, they don't describe it this way, but you know it's a trap, especially when they have a mediocre like VP present at the at the board meeting and the mediocre VP is like, \"I just I want to do it but I don't have the people, I need another 700 people to build that.\" And you're like, \"Ugh, it's a trap.\"","offset":3127,"duration":19},{"text":"Rory: It is so hard to say I'll allocate to the new thing first and allocate the residual to the old thing. And you're right, the instinctive is to say I'll deal with the old thing and then I'll find some people for the new. You're right, it's a mindset. It's an interesting point.","offset":3146,"duration":12},{"text":"Jason: Harry, just to pile in on that, because I actually have this conversation. And you know, I don't want to overstate the Intercom example, um, just because you know it's enough already, okay? But but if you want to use it as a case study, it does illustrate what you have to do here. And and Eoghan was clear, we let our core business go into partial decline. It's very hard for al- almost impossible for a public company though. It's lucky being private because you you've got to have a lot of guts to say we're going to let a 1.something billion dollar design business decline a little bit so we can build our agentic product. It's tough when you're public, right? Um, but it's what you've got to do.","offset":3158,"duration":33},{"text":"Harry: Figma's at 21 today, 12 billion market cap. Would you buy it today?","offset":3191,"duration":7},{"text":"Jason: No. I don't see any evidence of turn- of of of these agentic investments working. I would rather miss miss out on the the bounce, right, off the hard deck, than than invest in something that may fall below it. The reason is there's too much change. My god, there's so much change. It's so fast. Make would have been a great product in August of 2025. It's just not today.","offset":3198,"duration":23},{"text":"Rory: The problem with the bounce, and it's a first world problem, is say you buy at 21, the concerns are overdone, you're back up to 24, 25, 26. So you've made some decent money but you sell it, you get ordinary income, blah blah blah. You actually, net of taxes risk adjusted, is it worth it, right? The only way you buy is, and I'm not saying I have the answer to this, when you buy stocks because you want to hold them for five or ten years, you just do better, especially tax adjusted, than when you buy things because you think there's a short-term bounce, right? I personally think that almost all of this stuff is overdone, right, and there probably will be 5, 10, 20 percent bounces across a number of these companies, but to want to buy it I'd have... I haven't done the work that Jason's done. But he is right, you only should buy things if you think five years from now they'll be a winner in the future. I think it's totally plausible Figma could be, but Jason's right, until you've used the product, until you've seen what they do, I I wouldn't make that decision especially at scale.","offset":3221,"duration":58},{"text":"Jason: Well here's the tough thing is Figma's clear, you just had them on. Harry, are they materially charging for their agentic product? So are they monetizing it?","offset":3279,"duration":8},{"text":"Harry: I have no idea.","offset":3287,"duration":1},{"text":"Jason: No, they're not even really charging. Why do you why look at your portfolio companies. Why the hell would you not charge for your AI product today? Agent- why the hell when when Anthropic's doing 22 billion in the blink of an eye, when people are lining up out the door to buy agentic legal products and healthcare products and OpenEvidence, why would you charge almost nothing for your AI product? Why?","offset":3288,"duration":21},{"text":"Jason: It's not good enough. Literally, I was with a founder this last week who was us- who used Make and got very far with it. If nothing else existed, it would be amazing. If Make if if Make was if this was 14 months ago and they built their own LLM and they could do this on their own, our jaws would drop, right? But it's not. It's not good enough to charge for. If it's not good enough to charge for, it doesn't count. You're not an AI company if you can't charge for it. Very few public companies can effectively monetize AI. And that's why they're all in terminal decline. Almost all of them at the moment are in terminal decline. Will they pull off pull it back? I I'm not going to buy their stocks until they do. I don't see any point.","offset":3309,"duration":42},{"text":"Rory: For the record, that's an excellent test.","offset":3351,"duration":3},{"text":"Jason: Yeah, you can't... they even Figma can't charge for it. It's a bad sign, it's a very very bad sign going into the middle of 2026. It's a terrible sign. Terrible sign.","offset":3354,"duration":11},{"text":"Harry: I'm I'm naive here so forgive me for this. Are Notion charging for it? You've spoken before about Notion's brilliance in the integration of that AI capabilities. Are Notion charging additional for that AI capability or is it just a superior product?","offset":3365,"duration":13},{"text":"Jason: Well first off, if I said I thought it was truly brilliant, like I misspoke. I barely we I use Notion all the time. I think the they're good. I don't think it changes the the game in way other products do. But the simple answer to your question is they have been able, look they're not public, right, but if you combine what they've said with their pricing page and their announcements of acceleration and the fact that they have effectively doubled ARPU from it. Doubling ARPU for for-... here's a way to look at an SMB product today. Is your ARPU 50 percent or higher than it was pre-AI? It's a really simple test. Can you drive ARPU up 50 percent or more? It's very different at Salesforce or ServiceNow. It appears that Notion has done that, in which case they they pass the test, right? But I want to see 50 percent or more ARPU growth due to AI or it's just a feature. It's it's just a feature like an integration. Great, hard work, good job guys, let's have beers but it doesn't count.","offset":3378,"duration":57},{"text":"Rory: Yeah. I mean re-acceleration is the aggregate test, to your point two weeks ago, Jason, right? Something's got to be going b- I mean that's been sticking with me too. Something's got to be going better across the marketing KPIs. It can be charging for your AI product. It can be re-acceleration. It can be ACV but something has got to be working and getting traction, otherwise you are falling behind because the AI-first players are delivering utility to their customers and that's manifesting in them those customers giving them money. So if you if you can't make the same phenomenon happen one way or the other, you're falling behind.","offset":3435,"duration":33},{"text":"Jason: Well obviously the market rejected Microsoft Copilot products as things they didn't want to pay more for, right? That's the example of of stumbling. Notion is Notion with AI is 20 bucks a month, the basic is 10. If if everything ties, and private companies have an incentive to be honest but but polish the numbers a little bit, right, to...","offset":3468,"duration":19},{"text":"Rory: See our prior conversation.","offset":3487,"duration":2},{"text":"Jason: Yeah, but assuming there's at least a substantial amount of truth in what they've said, then it then it's working, right? They are able to charge 20 dollars a month for their agentic product, not because they they splashed an AI label on it, but because it's so much better that it is worth it to talk to your docs, to have to have stuff flow into your database autonomously. It's worth 20 bucks. Um, and I suspect we're going to find this I don't love the pricing. I suspect as the year goes on we're going to see the same thing at Slack because most folks haven't used it, we're on it. The AI version of Slack for certain use cases is so much better. I don't love that they're not just charging another four bucks a month, but we I wouldn't be surprised if it's a dramat- if it's like Notion, like they're able to to do it, right?","offset":3489,"duration":42},{"text":"Harry: Speaking of Figma, I I'm going to go a little bit off piste but I think it's worthy. Jason, we were on Twitter about it earlier joking. Um, Mamoon announced raising the new KP funds. A billion dollars for the early, two and a half billion for the growth. Um, growth seems small. I mentioned meeting him for the first time at SaaStr, Jason, if you'll believe 10, 10, 11 years ago, in a side room. Kind enough to give me time. My my takeaway is honestly you can't do early and you're going to kill me, Rory, with less than a billion if you're going to compete to lead As. And my reasoning for that is As now a 30 to 40 million and if you want to lead them you need to be able to write 25 to 30 million dollar checks. I think you need 20 across a firm, so if you need 20, 30 million dollar checks you're at 600 million. I would argue that your fund scale is as small as it could be to lead As today.","offset":3531,"duration":61},{"text":"Rory: I don't entirely disagree in the sense that, you know, it's a 900 million dollar fund and you're exactly right. I mean the math of what you threw out is correct. Series As ten to you you're writing an an average of a 20 million dollar check. Our reserves have...","offset":3592,"duration":15},{"text":"Harry: But I don't even think 20 is enough these days.","offset":3607,"duration":2},{"text":"Rory: I know, I know. Let me just let me just take an average, right, because you know if you if you hustle, if you find some deals where it's a little off the beaten track, I've written... I've written As where we've gotten 20 percent ownership for 12 or 15, right? So it's not all but but let's just go at your average, Harry, because rather than arguing the right? You know, it's 50 percent reserves. We you know over like six or seven funds we've been 50 percent reserves. So you end up with 30 million dollars in the average deal. You know, then the last component is a portfolio concentration versus diversification question. I I think given the higher time to exits you probably tend to be nearer to 30 than 20. So yes, I I think, you know, there's a there's a certain small-s scale required to play meaningfully in the Series A business. Yes.","offset":3609,"duration":42},{"text":"Harry: Rory, can I ask you, you've got 720 of investible, you can't have a reserves of 50-50 and be right?","offset":3651,"duration":6},{"text":"Rory: 720? No, I didn't say 50-50, you didn't pay attention, Harry. 50 percent of it... because there's two ways of expressing reserves. It's just simple math, let me help you. Um, one way is expressing it as a percentage of original capital and in other words if I put in 20 do I reserve 10? That's 50 percent of initial capital. And and mathematically that's the same as saying two thirds of the money goes in on the first check and one third goes in in the later check. You're right, I'm not reserving 50 percent of the total amount. Do you understand me? Those are literally just...","offset":3657,"duration":29},{"text":"Harry: I I now I do with that clarification. Thank thank you for clarifying.","offset":3686,"duration":4},{"text":"Rory: I did I used the prepositions correctly the first time as well. But okay, it's good to be clarified. But to be fair to you people do express it both ways and sometimes precision is important. I always think of it as the amount of money you've put in and then the amount of money you have in your back pocket to defend that money if you need to or expand on that position if you want to. So I always think first check.","offset":3690,"duration":18},{"text":"Rory: And what it says is, and this is another insight, unlike for seed where you also have a big fund, for that kind of Series A game, the Series A is not for us, especially for a firm that just has, you know, checks for As and Bs and of this size, it's not an option value on putting a ton of money in later. Most of your value is made on that first check, right? Whereas these folks who have seed or even A funds where their real plan is to put 200 million in at the B or C when it's working, right? To some extent the A is an option value, but just as Jason's for Jason the seed check is the check. For us the A or B, because we're roughly about half and half, is the check. You're not saying oh I'll put in a little now and write more later. That's that's not the way the game can be played.","offset":3708,"duration":46},{"text":"Harry: Rory, are you finding it increasingly uncomfortable with the expansion of Series A rounds because our checks are getting stretched bigger and bigger and it's ruining our math?","offset":3754,"duration":10},{"text":"Rory: I mean it is somewhat uncomfortable but I think you have to find the deals where that's not the case or decide in some cases to reach. I mean and that's I'm going to put both s- both sides of the challenge out there. You know, there may be some deals that are too capital intensive and you decide I don't want to do that because I'm just not getting paid for that risk. But you're right, the average I looked at this math just last week, the average round that we play in has crept up. Right, not just the amount we do but the average round that we play in has crept up over the last year, year and a half. Right, so yes, it's not I would say to the acute level of oh my god, you know, we're perfectly happy with the checks we're writing and the round sizes, but yes, there are times, especially for example, you know, we haven't done any at scale of the kind of the Neo Labs seed checks where you just so outclassed with your 30 or 40 million dollar check, it's barely worth playing.","offset":3764,"duration":53},{"text":"Jason: How big's the Hummingbird fund they just announced?","offset":3817,"duration":3},{"text":"Rory: It's 800.","offset":3820,"duration":1},{"text":"Jason: 800. What was their what what where have they grown their fund size from over time, from doing inception investing?","offset":3821,"duration":6},{"text":"Rory: It's it's 2, 300 of I think initial capital. It's the same fund they always had but adding a growth fund to a rounding error. Right.","offset":3827,"duration":9},{"text":"Jason: Yeah. And then didn't Balderton lead the seed in Revolut?","offset":3836,"duration":3},{"text":"Rory: Yes.","offset":3839,"duration":1},{"text":"Jason: And then who did they just do a billion this week? It's just the the game is it has changed. We were really good at doing Revolut at four, now now billion dollar rounds are a good entry point for us. It's just a lot of change, isn't it?","offset":3840,"duration":15},{"text":"Rory: Yes. There's no anyone look we track it on aggregate, right, versus our 2010 checks you're probably up roughly 2x in terms of the valuation and I think that's significantly lower than the industry as a whole.","offset":3855,"duration":16},{"text":"Jason: Whose point's hard to argue with, which is if you want to own 15 percent of a company or whatever your target number is and deal sizes have inflated, that there's a basic math you have to do, right, with reserves. And that math is in many cases highly stressed in the market today. It's just a f- like it's a fact like, you know, you used to sol- it was very easy to solve your fund size before, right? It was 60 million per partner for seed, maybe 100 for A or B and then it would go up a bit. The math was so simple, all these funds were but that math just is is broken today and it creates interesting I don't find it super interesting but it it is a little bit broken, right? And so if you're Garry Tan you say the 100 billion dollar outcomes make it irrelevant, right?","offset":3871,"duration":38},{"text":"Jason: And I don't know how they work but I was just looking and I was writing an ans- I was writing something up on Wiz and Cyberstarts owned 4 percent at exit, okay? So that that I don't know whether that's dilution or as model back then, but the model still works for a seed fund at 4 percent of 30-some-odd billion, right? Um, but that I think we're going to see more and more of those, right? Dilution in time we'll see more and more seed investments eroded to 3, 4 percent, right? And if they I'm just doing one example, they'll be eroded and and if the exits are uh, you know, north of 10 billion it's okay for a seed fund, right? But the it it's tough.","offset":3909,"duration":47},{"text":"Jason: I don't have the answers. I just think the the old math was easy, right? We need to do 15 to 20 investments per fund, 15 million the average check size and you could roll up into fund sizes that that didn't make you fall out of your chair.","offset":3956,"duration":15},{"text":"Rory: At the risk of being a dick, the math is easy both times because math is independent, you just don't like the answer, right? Multiplying multiplying a pre-money of 50 is no harder than multiplying a pre-money of a billion.","offset":3971,"duration":9},{"text":"Jason: I think the math inherently creates more risk unless the outcomes are massively high.","offset":3980,"duration":4},{"text":"Rory: That's the point.","offset":3984,"duration":1},{"text":"Jason: We are levering up our risk to Harry's point. We're levering up our risk.","offset":3985,"duration":3},{"text":"Rory: I totally agree. I was just being a mild little jerk because I'm think I'm getting grumpy. Exac- it's not that the math is complex, it's just that the consequences are unpleasant and it's what you say. Everyone look we said it over and over again. Everyone's been pushed out on the risk continuum. The whole.","offset":3988,"duration":17},{"text":"Harry: But it does feel like times are changing faster than fund sizes are able to adapt in a way that they haven't done in previous cycles. Like our normalization of billion dollar plus rounds, 100 billion dollar plus raises.","offset":4005,"duration":15},{"text":"Rory: I think that's well put.","offset":4020,"duration":1},{"text":"Harry: So much quicker than fund sizes.","offset":4021,"duration":2},{"text":"Rory: I think that's actually true. The pa- that's actually a good reflection. The pace of change because I've lived through 95 to 99, the run up and the billion dollar funds and I also lived through unwinding watching all those funds being unwound in '02. I remember and then, you know, obviously 2007 that unwinding. This and even 2021, this feels faster than that, right? The action on the table and the need to play at a high. Yes. I think which is why I think every VC is stressed right now. No matter how successful you are, no matter how well your last deal a deal that you did three years ago is doing, everyone wrestling with doing deals now is grumpy, stressed and feeling feeling the pressure.","offset":4023,"duration":35},{"text":"Jason: But I think there's one risk that is under-discussed, okay? All this fund math can lead to concentration risk or ownership risk. Like at least for a smaller fund, I I have to deal with concentration risk or ownership risk. That's the that's the simple trade-off, you can't own that's my math, right?","offset":4058,"duration":14},{"text":"Rory: Agreed.","offset":4072,"duration":1},{"text":"Jason: The one that we are just ignoring because times are so good on paper is who the hell's going to buy these companies if they don't IPO? What the hell are Replit, LangChain, Harvey, Lovable... what how much is Lovable worth in the last round? 8 billion?","offset":4073,"duration":14},{"text":"Harry: 6.5.","offset":4087,"duration":1},{"text":"Jason: Okay, let's be honest, who the hell is going to buy them if they don't IPO? You really think Google's going to buy them for 32 billion? It could don't get me wrong. It could happen. And the and acquisitions are not up, right? Uh, dollars are up. So I just my point that is under-discussed is we are doing these these post-billion dollar deals like like candy. And at least in the in the bubble of '21 there were PE exits, there were many exits out there. We have outstripped any current ability for these companies to have any exit. So you are going all in on the IPO and not without any worry, rhyme or reason and I think so many folks sub-Anthropic are going to get their arses burned because they'll end up in the dead zone. They'll have great companies without great IPOs and zero M&A opportunities. And I'm not saying don't do it, I want my mark-ups on paper, I've got to do it an LP announcement this week. I want my my TVPI and my IRR to look good. But it's also terrible. It's terrible to raise north of a billion. It's terrible because you just out- str- there's just those they're not, you know, Salesforce and and Amaz- I mean Groq is great but a lot of the stuff is not Groq.","offset":4088,"duration":74},{"text":"Rory: Agree with everything you're saying and what's hard about what you're saying is that the strategy that has worked has been precisely the strategy of doing those rounds above a billion and getting the round beyond it. And but you're right, it's all predicated on being able to exit these companies in an IPO. And I will say just to remind you you can imagine a world of IPOs where some of these companies exit. But if the last rounds don't have a block, it's not necessarily going to be above the last rounds. There are some awesome AI applications companies where you kind of go I totally see how that's worth 5 billion dollars in three years based on fundamentals and right now it's valued at 10. And three years from now I could contemplate it going public at 5 billion dollars and you kind of go that last round the 10 is going to have to convert and take 50 cents on the dollars unless it has a meaningful block, in which case they will get more of the company.","offset":4162,"duration":49},{"text":"Jason: Yeah, for sure. I just worry there's some ratio, Rory you can name it, but there's some ratio of potential acquirers real divided by unicorns. And I think we're at the lowest ratio of our careers.","offset":4211,"duration":12},{"text":"Rory: Yeah no absolutely.","offset":4223,"duration":1},{"text":"Jason: The lowest ratio of potential acquirers divided by unicorn unicorn plus up to decacorn that are just not there. We've lost all of PE and Nvidia isn't buying 100 companies, Microsoft is not buying 100 companies.","offset":4224,"duration":13},{"text":"Harry: So what is the subsequent thought then, Jason? Sell aggressively into secondary markets which are more liquid than ever? Like help me understand...","offset":4237,"duration":7},{"text":"Jason: Well probably for early stage investors sure, sell while the that's the Hoppin lesson. I know you love to talk about it, Harry. Maybe that's the lesson. Um...","offset":4244,"duration":7},{"text":"Harry: I don't think it is. Can I just push? I don't actually I'm going to I don't want to use the Hoppin example because then people will because I actually think it I'm going to make it a more interesting discussion. Because when you do Hoppin, people go, \"Well my company's not Hoppin,\" um no pun intended. I think you're saying even for your fucking great company, excuse my language, great company where you know in the end they're not going to be Hoppin, they're not going to a, you know, vanish in a puff of blue smoke, you're still right, which is those last rounds might be a prices you'll never see again. And what should you do as a seed investor? I mean what would you do if a company where you invested at 50, you thought it was worth it could be an M&A at 2 billion at some point in time and suddenly you get a round at 5 billion of new money and there's a secondary opportunity. You're starter for 10, what do you advise?","offset":4251,"duration":45},{"text":"Jason: Yeah. And and listen maybe down maybe just as we're now okay with down IPOs like we're okay with it's just mathematically true, maybe we'll all be chill with down M&As and all these folks raising at 9 and 10 can sell for 1 or 2 in a few years and everyone will be happy. I'm just not so sure that they will and I'm but I'm more worried there's just not going to be a lot a lot of acquisitions. They're very specific. They're very specific to either we're desperately behind on AI or we need to jump forward years. That is a very narrow subset versus uh making sure accounting software at 5 billion is better for accountants. I believe that's a great market, I just don't believe the hyperscalers are going to buy these companies.","offset":4296,"duration":40},{"text":"Rory: No. And the yes because by definition at the app layer, you're not getting the hyperscalers. And the odd thing is, I just realized this for the first time, the odd thing is because of this story of eat the work, the TAM is meant to be larger. That's the whole point of these application-less and I believe it. But Jason to your point what it means is you are definitionally therefore the new company is larger in terms of value than the old company you're replacing, which means the old company can't afford to buy you, right? No chance. If you're Harvey and you're worth 10 billion and West it's not really worth more but if you know the old practice management law software is only worth 2 billion, they're not going to buy you, right? You've got it's basically it's win or die, to your point. I think you're exactly right, Jason, because because these TAMs are bigger in when the TAM becomes bigger the new company has gets marked up and has more has potential to be a bigger outcome. But what it means is once it gets marked to that bigger outcome via late-stage round, it precludes the prior generation buying in. If I was running one of those prior generation companies, right, as if I was the system of record, you what you need to be doing is buying the not marked up, you know, 500 million valuation company and getting something out there. Right but you can't aff-... no matter how hard you try as the old generation legal software company you can't afford Harvey at 10 billion. So doesn't matter what you want they can't you can't afford to buy them and they can't afford to sell to you. I think you're exactly right, Jason. It's kind of structural.","offset":4336,"duration":90},{"text":"Jason: I just wish listen even if IPO markets are barely barely functioning, they're open, but they're barely functioning. If the M&A markets were on fire I'd be good with everything. If we were turning around and these companies were being bought for 10 billion cash each week, I'd be like this is this is awesome man. Um but it it does worry me a little bit that it's so easy to get a 9 billion dollar valuation. It's so much easier to get a 9 billion dollar valuation than a billion dollar exit.","offset":4426,"duration":25},{"text":"Rory: Which should be terrifying if you're the people giving the 9 billion dollar valuation.","offset":4451,"duration":6},{"text":"Jason: I mean you got to play the game on the field but...","offset":4457,"duration":3},{"text":"Rory: Well you actually for the record sometimes you can stick your money in your pocket and not play the game on the field, but that's okay.","offset":4460,"duration":6},{"text":"Harry: But you're playing the game on the field, Rory.","offset":4466,"duration":2},{"text":"Rory: Part of it. And the bits I haven't played have been we you know we haven't done a deals at a billion dollars above. We've you know kept it in that 100 to 3, 400 million dollar pre-money valuation and right now that's been the wrong play. Just to put it out there, right? I mean look I give all credit to for example Spark, the Jasmine there at Spark who broke all the rules and said 4 billion for a pre-revenue company Anthropic. That's paid off, right? I think it'll be interesting for Matt Murphy at Menlo.","offset":4468,"duration":29},{"text":"Harry: Matt Matt has a concept.","offset":4497,"duration":1},{"text":"Rory: Absolutely Matt did it too totally yeah. So my point is some of the late stage bets have paid off. On average I think it's a tough I share the concern. So to your question on playing the game in field, we're playing part of the game on the field but we're a bit scared of certain parts of the valuation curve. I think that will probably across the cycle be the right decision. I'm not sure in the last year or two it's been the right decision, which is always a challenging thing about valuation.","offset":4498,"duration":25},{"text":"Harry: I shouldn't be so honest but I fuck it we'll be it's the end of the day here. My biggest regret with our Series A fund is not being more elastic, disregarding the Series A mandate and just saying I'm going to leverage the brand and the access that I have arrogantly forgive me for that to get into super hot companies like your ElevenLabs, your LangChains, your you name it see Lovables much earlier and being a momentum investor in a hot environment.","offset":4523,"duration":25},{"text":"Rory: I'm going to paraphrase what you said is I have the right to I'm my current plan is to write 20 million dollar checks in Series A investments where I get 10 or 15 10 to 20 percent ownership, right, and I can write 20 of those checks. In retrospect you're saying I should have taken five of those checks, the full 20, not a bitty check but a full ticket, a full ticket or maybe even double down and used a two-ticketer and done Cs, Ds and Es at 1 billion, 2 billion pre and got two mark-ups already, right?","offset":4548,"duration":30},{"text":"Rory: And the interesting question is if your mandate because I wrestle with this a lot so I know it's an interesting question is if your mandate is to do 20 Series As where you get 10 percent to 20 percent ownership and you stick to your knitting and you do your do, right, should you have taken five of those slots and used same check size or maybe even larger check size and done Cs, Ds and Es at 1 billion, 2 billion pre and got two mark-ups already, right? And the truth is in some cases not only will you get mark-ups but you'll get returns commensurate with Series A but at much lower risk. And Anthropic will be the definitive version of that forever. Not actually the round Spark and Menlo did first because that really was risky but kind of the rounds at 14 and 16 billion were risk-adjusted freaking awesome. I wonder will to your point now back to your point I wonder will all of those rounds in those other AI apps companies be as good for precisely the reason you articulated which is that maybe the TAM doesn't support that exit. But right now Harry's right you do you look at the la- yeah Lovable at 6, maybe you could have done it at 1 or 2, you'd have a 3x step up with no hassle, no fear, no early stage. The sweet spot of investing, I mean it's something you said Harry and it was true but tautological, I wish I'd been a mom-... I you said I wish I'd been a momentum player in a rising market. The definition of a momentum strategy is it only works in a rising market, right? But yes, in the market we've been in for the last three years, it's hard to distinguish momentum players from very shrewd players. Both of them have worked out really well. That's the that's the kind of step back from it.","offset":4578,"duration":98},{"text":"Harry: I don't think shrewd players have, actually. That's that's my point. I think shrewd players have appeared disciplined, remained temporally diverse like me and you are, Rory, remained with our high ownership targets and you've had players abscond with AUMs like never before, pay insane prices and get fast mark-ups and in a lot of cases DPI because Zuck buys you at an insane price.","offset":4676,"duration":25},{"text":"Rory: Brutal comment, Harry, then maybe you and I aren't shrewd. Look in the mirror. I you know right?","offset":4701,"duration":5},{"text":"Harry: Very possibly and that's the self-reflective question as I introspect which Mark Andreessen doesn't do clearly.","offset":4706,"duration":8},{"text":"Jason: No, introspection here please.","offset":4714,"duration":2},{"text":"Rory: No. Look look the truth is that is the question everyone wrestles with as you when do you stick with your strategy and when do you break it and what are the and you know what's a good reason to break it. Absolutely, no we all agonize with. And that's why Jason I said the kind of trivial breaking it just to be silly doesn't isn't that interesting, but the sometimes breaking it could be the right strategy and that's the hard one.","offset":4716,"duration":23},{"text":"Harry: There we go. Okay, boys it has been a pleasure. Thank you so much as always.","offset":4739,"duration":5},{"text":"Rory: Jesus that was quick. 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