← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20Product: How to Design and Build Products in a World of Agents | Why AI Will Kill Many SaaS Products | What Products Will Thrive and Die in a World of 100M Developers with Matt Biilmann, Co-Founder and CEO @ Netlify
00:49:04
Matt Biilmann is the Co-Founder and CEO @ Netlify. Under his leadership, Netlify has become one of the fastest-growing platforms for modern web development. Matt recently introduced agent experience (AX), a new way of thinking about how software...
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- [00:00]
Matt Billman
I think we'll see the next hundred million software developers emerge around tools that are identic. But I still think it will be a profession to use those tools to do stuff, to build stuff for other people. If I look at Google's products like I now have all these Genesis buttons all over and I never use them, they just haven't managed to productize it in a way that feels super compelling.
- [00:24]
Harry Stabbings
This is 20 product with me, Harry Stabbings Now. Today we focus on a core new focus for product teams. How to craft an amazing agent experience. Now we've had an amazing developer experience for years, but as we move into a world of AI crafting, a beautiful and seamless agent experience will be the difference between winners and losers. Joining me for this discussion is Matt Billman, co founder and CEO at Netlify, where under his leadership Netlify has become one of the fastest growing platforms for modern web development. He's also coined the term agent experience. But before we dive into the show today, are you struggling to beat model benchmarks or implement Genai in your product? If so, you need Turing. Turing is an AGI infrastructure company backed by incredible investors like Foundation Capital and Westbridge Capital and they do two things. One, they help leading companies in AI labs like Salesforce, Anthropic and Meta enhance their LLMs with advanced reasoning, coding, multilinguality, multimodality and more. Two, they combine human and artificial intelligence expertise to deploy cutting edge AI systems for awesome companies like Rivian and Reddit. Right now Turing offers a free 5 minute self assessment to help you pinpoint your place in the Gen AI journey. Get tailored next steps to optimize your model strategy and then finally learn how Turing can refine and implement your models for better performance. Take the guesswork out of Gen AI. Visit turing.com 20vc to start your free assessment today and talking about scaling seamlessly, let me tell you about WorkOS. So WorkOS is the modern identity platform for B2B SaaS helping startups move upmarket with ease. Selling to enterprises means really complex security requirements like saml, single sign on like scim provisioning, audit logs. Honestly a ton of stuff that is just a nightmare to do. Features that take months to build and maintain. Well, WorkOS streamlines this with flexible easy to use APIs that make enterprise readiness quick and painless. Its suite of features include Auth Kit, a complete user management solution, free up to a million monthly users with built in MFA RBAC bot protection and user impersonation Enterprise sso. My God, these enterprises love their acronyms supports any identity provider using SAML or oidc, while directory sync enables seamless user provisioning and deprovisioning. Oh, no. For SCIM compliant directories, fine grained authorization powers complex permissioning. And it comes again. The admin portal simplifies SSO and SCIM onboarding for IT teams trusted by companies like Cursor. Cursor use this. If Cursor use this. It's gotta be great. Come on. Perplexity, Vercel, Sierra. I mean, these companies are awesome. And they've raised $95 million in funding from amazing people like 20VC. Try it today@workos.com 20VC now that you've nailed enterprise features, let's talk about creating amazing product experiences. Get your users to do what you want them to do. That's the simple power of Pendo. The only all in one product experience platform. Pendo combines analytics in app guidance, session replay, feedback management and roadmapping, all purpose built to work together. Seamlessly trusted by over 10,000 companies, Pendo is transforming how businesses understand and engage their users. Plus, they're the creators of Mind the Product, the world's largest product management community. It's awesome. See the magic for yourself. Visit Pendo iO20 product podcast to get started today.
- [04:13]
Unknown
You have now arrived at your destination.
- [04:16]
Harry Stabbings
Matt, I'm really excited for this. I really like your writing and I've.
- [04:20]
Matt Billman
Loved your writing for a while.
- [04:21]
Unknown
So thank you so much for joining me.
- [04:23]
Matt Billman
Thanks. It's great being here.
- [04:24]
Harry Stabbings
I would love to stop.
- [04:26]
Unknown
How does building for agents, not humans, change the way that we build?
- [04:31]
Matt Billman
Yeah, so the first thing I would say is that when I think about building for agents, I still start by thinking about building for humans. In essence, you could say that there's two versions of that 10 year future. There's one where the agents just kind of escape that they're just off doing their own things and we are sort of left behind. Right? Like, I hope that's not what happens, but there's another one where agents are tools that all of us use to do stuff with, right? Like, and where agents are fundamentally always doing something because some human is trying to accomplish something through an agent. And now we are in the very early days of building a discipline around agent experience and really starting to think about, like when a user tries to get an agent to do something through your product, what happens?
- [05:18]
Unknown
Can I be direct? I mean this in a nice way. I don't understand. How does building for agents change the way that we build?
- [05:25]
Matt Billman
Let me take some examples for stuff we've done that's been successful with agents, right? Like, so one thing that we built specifically to improve our agent experience was building an API flow that would allow an agent to create a site and deploy a site without any users signing up for netlify first and then hand over that site to a user later with a claim flow. And again simply from the realization that when we have a normal developer, the first creation of the site will always be triggered by that developer doing something with netlify, right? Like they'll pick a template and start, or they'll link to a new GitHub repository, or they'll deploy from their command line. But once you have a codegen agent, they might just ask, that agent built me a web app with a Sudoku game, whatever, and now it's shared with people on a URL. So we gave those agents the ability to just deploy to netlify. No sign up from the user, show the user the URL and say like, here's what is built for you. And then later the user can go claim it and say, okay, I actually want a netlify account, or I have a netlify account added here. I'll, I'll want this to stick around, I'll put a custom domain on it, and so on, right? We've seen a lot of companies now start adopting similar flows, right? Like in the authentication space, in the database space and so on, to make their tools available to agents without an explicit user sign up and set up step first and delaying that step to after, right? So that's like one very specific example, but one that's been really impactful.
- [07:01]
Unknown
Does designing for agents in this way reduce the importance of ux, of design, of taste when building?
- [07:09]
Matt Billman
I don't actually think so. And in the end, we are designing for humans. I just don't think anyone can have a great developer experience five years from now if they don't have a great agent experience. So that also means that a lot of the traditional UX disciplines and so on and understanding not just the UI design, but the UX design, right? Like the holistic experience of a user trying to do something with your product, that's still really important, but obviously a lot of the details are going to change. A lot of things we do today are going to require very different interaction flows and very different ways of displaying that UI to people.
- [07:46]
Unknown
If I'm a founder today, how do I tell my product team where they should focus, what they should build, what they should do if I'm setting strategy for them? What the fuck Do I tell them.
- [07:57]
Matt Billman
That you embrace agent experience as a discipline in the same way that you would do it for developer experience or for user experience? I think we'll see that being the approach rather than going from some theory of we need this spec now start understanding in your space what are the agents that humans are actually going to be using with your product. In our space, it's on the one hand, tools like Cursor, Copilot, Windserve. On the other hand, tools like Bold, Lovable, Create, xyz, Refine. Like all of these tools, like one level up, but in other spaces that might be a different set of agents.
- [08:36]
Unknown
When I interview people today, Matt, the common public company short is Salesforce for a number of different reasons. But do agents merely turn Salesforce into a data repository?
- [08:48]
Matt Billman
That's definitely the big threat to Salesforce, right? Like to just be reduced to some kind of system of record. I'm sort of mixed on whether long term that's a really, really bad thing for, for Salesforce or if it could also be a good thing for them, right? Like, if you really start becoming like the main system of record that all of these tools rely on, that that's like, I don't think you should underestimate just how valuable a position that is because all those flows and apps and everything will run on top of it. And sure it might change a lot of what Salesforce look like today and to what they look like in the future, but they definitely feel it very strongly as like the biggest threat to them to be reduced to that system of record and not the actual like workflow platform. And I think that's pretty likely what would happen, right? Like, I think what we're seeing now is definitely the cost of building custom workflows, custom UIs, custom applications is going to dive down dramatically. And typically that will mean that demand for doing that will go up radically and people will start building much more custom applications for everything, right? Like, and then the question is like, where does all that data live that those applications need to interact with and where do the rules that govern that data live to make sure that it's also safe for these agents to do stuff to it? Where does the authentication and permission and auditing layer live?
- [10:10]
Unknown
And I don't think it's as binary as that. I think you can retain Salesforce as your system of record, but then also build applications around it, use other SaaS providers around it. You said before generic, and I'm quoting you here, generic SaaS tools will increasingly be replaced by custom developed Internal apps. I'd love to debate this one with you because if so, I'm going to be out of a job. Why do you think that?
- [10:35]
Matt Billman
I think it's a balance that will really start tipping. Right? Like where today if you're a company and you have a specific business need, hiring a development team to build, deploy, operate an internal application just for you to solve that business need, the math of that very rarely makes sense, right? Like the in the build versus buy equation, the buy equation almost always makes sense. Right? Like, and that balance is going to start really shifting towards like building is going to be much more of a viable option. And that's not.
- [11:07]
Unknown
But that's not a generic SaaS tool. That's a specific tool that a specific company needs for a specific workflow that they have. I agree with you that dev shops that build specialized custom solutions will be replaced by your lovables of the world. But you said generic SaaS tools and we have companies like Klarna who are saying, oh, we're replacing all of our SaaS with AI. They're not, they're absolutely not. And they won't. Why do you think they will?
- [11:36]
Matt Billman
Again, I think it will be more and more common to start doing that. Right? Like, because if you think of generic SaaS tools, right like they are also solutions to a specific business problem that businesses have, they'll just say, okay, this problem looks very similar across tens of thousands of businesses. So we'll build like the generic version that, that works across all of those businesses, right? Like so they don't each have to build their own and that comes with a set of trade offs. Right? Like you get some benefits from getting a generic tool that encodes some best practices and so on. Right? Like but you typically also have to adapt how you work as a business to the tool you just bought, right? Like you typically sort of have to. With a lot of the SaaS tools that I've bought over time of building up Netlify, it's been like, oh, we are kind of doing things this way now, but this tool kind of says we should do things this way. So we're going to like start adopting to the tool because we can't afford to just build our own stuff. And that's where I mean that more and more things that are right now in the balance where you would buy a generic tool that works for lots of companies for more and more of those problems, it'll start being a viable solution to say let's just build our own like that. Like let's just solve our specific problem instead of leaning into a generic solution for tens of thousands of companies you.
- [12:52]
Unknown
Sold to large enterprises before they move slowly. They're not always hugely educated. Respectfully, I think it is a very small customer segment that will be doing that in the next 15 years.
- [13:05]
Matt Billman
No, I honestly I probably agreed with that like a year ago and then I started seeing like just how fast tools like Bolt and lovable and so on are starting to change things at sort of the other end of like indie startups, everything like that. And now my, my timeline is more like five years and 15 years before it's going to be like really relevant. It'll start by tapping into areas like everywhere where you have no code tools right now. Right. Like retool and stuff like that. Starting to have agents that use code together with people to build there will start just giving lots more flexibility. You'll be able to build much more. Right. Like and as that evolve we'll start seeing that spread into more and more I think like in internal tooling teams that solves like where some budget will gradually start shifting from the SaaS spend budget into that either internal tooling team budget or to kind of like external providers that custom built for you kind of budget.
- [14:04]
Unknown
How do you think about maintenance? The joys of having independent providers is they're maintained, updated continuously by great teams. When you have 200 tools across a large organization, you're not going to do maintenance security updates on all of them. How do you think about that?
- [14:21]
Matt Billman
Yeah, that's something I think a lot about because the interesting thing is that that's kind of like this whole sort of jamstack architecture I proposed back in the beginning of Netlify's journey starts becoming really important for this as well, right? Because if you start going from buying 200 SAS tools to running 200 internal specialized or maybe 400 internal specialized applications, you have to do that on a platform that's zero operations first of all. Right. Like and that means that you start having this new stack where people like you can, can, can make a lot of money by, by investing in the right places is all of the components that go into that kind of like zero operations and serverless stack of building blocks, right? Like you definitely don't want a cogent agent that you're using to solve one of these problems to give you like a massive Kubernetes cluster and be like good luck. You'll want it to deploy to platforms that are zero operations and serverless and with like security built in and so on. You'll want them to use serverless API services, databases that are all sort of managed with their own security team and operations teams and so on. As the, as the Legos it kind of builds on top with and composes together. Because otherwise you're right, right? Like otherwise if it's just fully custom built kubernetes, cluster stuff, all of it, the viability of that whole approach goes away, right? Like the maintenance cost just overtakes everything. And then you could speculate can the agents maintain it. But, but I think, I think that, that then we are definitely in a 15, 20 year horizon before, before they could be relied on for anything like that. But if the agents build on top of a stack where your deployment layer is fully zero operation, serverless and so on where you're using systems for headless content or you're using like Salesforce as your system as records for a bunch of stuff, right? Like you're using managed databases. Whether it becomes like a Supabase or a Neon DB or some of the big cloud providers that wins out in that layer, right? Like but the agent use these building blocks that are in itself maintained by someone, right? Like then you start being able to take on that level of building without exploding in terms of like maintenance costs.
- [16:45]
Unknown
When you look at the different stages we mentioned that lovable and you know, being able to create very easily. Prototyping is now like step one have an idea. Do design tools like Figma die in the next wave of build?
- [16:58]
Matt Billman
They definitely going to have to really think a lot about this full stream of how prototyping again is often going to shift from the design tool into building something. I still think for a certain level again we talked earlier about like does brand matter? Does anything like that matter? Right? Like as long as that still matters, it will also matter having teams I think that work with tooling that operates as the visual level and the interface design level. But if Figma doesn't manage to connect that to the full end to end chain of prototyping and building and so on, then this could be a pretty existential threat to companies like that over time or at least like a threat to their current revenue model. Because there's no doubt that the way people start projects in general are really already starting to shift a lot both from traditional templates and bootstraps and front end frameworks on the one end on the other end from like design prototypes and visual design on the other end, right? Like to, to. To prompting as, as one of the key ways to just start a new project.
- [18:08]
Unknown
Do you think you mentioned prompting that. Do you think chat is the right interface for this next wave of AI? I've had many guests on the show before that say the worst thing with ChatGPT is it made chat and prompting the default interface. Do you agree?
- [18:22]
Matt Billman
Yes. I don't think chat is like the be and all of interfaces. It's a very sort of simple transactional flow that, that's easy to work with. And I think chat or conversational interfaces will be a thing, right? Like it's also a thing between humans, right? Like we all use Slack and Messenger and WhatsApp and all of these chat tools for good reasons. It's not like that will go away. But I think there's a whole other set of user experiences and user interactions that we have in sort of the non AI powered world that we haven't really yet figured out how to do in the AI powered world. So one of the things I've been talking a lot about is this path where right now, when we look at all this custom development and all of these apps like bold and lovable and so on, right? Like right now they're generally making it a lot faster to build exactly the same things on the web that we built the last 10 years, right? Like the same kind of applications, the same kind of marketing sites, the same kind of user experiences that we've built through the last 10 years, right? Like, and we're just like driving down the price of building that. But the next frontier for me is sort of figuring out what is it we can build in terms of actual user experiences when we have LLMs and AI available that we couldn't build two to three years ago. Because I think there's a lot of interactive user experiences that we can now build that are definitely not just at a chat prompt saying like, type what you want to see or do or like talk to me, right? Like that could not be done if we didn't have the ability to one, create all kinds of assets, right? Like from 3D modeling to sound and music and visuals and so on automatically. And that couldn't be done at a time when the core constraint of all user interfaces is that like computers are transactional, deterministic machines, right? Like you click a button, the UI does something that you know that button will do every time you type a command, the computer does something predictable, right? Like Genai kind of removed that underlying constraint and we haven't really started building new kind of UIs that takes advantage of that. And I really agree that like chat is chat Is not it there, right? Like chat is part of it but like if I, if I follow a link and I land on a E commerce from like a large brand that's trying to really differentiate themselves and be something different, right? Like I definitely just, I wouldn't want just to have some box saying like you come up with what you want me to do, right? Like type something, right? Like I want, I want those online experiences to guide me and to have some experience for me, right? Like and to take me somewhere and that's never going to happen through chat style prompt.
- [21:12]
Unknown
Why do you not go into a shop and ask for what you want?
- [21:15]
Matt Billman
Yeah, but you also have like you think about how much a fancy brand spend on that shop, right? Like on the display windows and on people that don't ask first, right? Like on everything that's supposed to draw you into the point where you're ready to ask like hey can I have a look at this thing? Right? Like that's a very expensive industry, right? Like to make all of that happen. And I think the more the world goes digital, right, like if you want to build any kind of that kind of brand affinity and like storytelling, you also got to find ways to do that today. Honestly, like most E commerces for example, the last three years have kind of been very stagnating in terms of like development in that field, right. And everything looks pretty similar with some changes, right? But I think when the cost of building an E commerce that looks like any of the current brands today goes down to like just ask Bolt to do it for you or ask Lovable to do it for you and you have that, those brands are going to have to come up with something much more engaging if they want to keep stand out and if they keep wanting to build relations to people as more than just like a one click shopping experience amongst any other.
- [22:25]
Unknown
You've mentioned Bolt and Lovable. And when we think about these gen AI services that are scaling revenues, Matt, like we've never seen revenue scaling before.
- [22:34]
Matt Billman
It's wild.
- [22:35]
Unknown
Are wild. Everyone says these gen AI tools, they're sugar high revenues, you can't rely on them. How do you distinguish between sugar high revenues that lack sustainability and meaningful durable revenues that can be relied upon?
- [22:50]
Matt Billman
When I look at tools like, like bold and Lovable, the category itself has something where it seems obvious that there will be a lot of money spent there just because like when you see some of the examples of what people can do with those tools that they just couldn't do before, it seems obvious that that's worth something when you see how fast someone can build a typical website or typical app or dashboard, right?
- [23:16]
Unknown
Like it's so funny. This is, this is the promise of webflow and Squarespace for years. Anyone can build it. The truth is, Shopify, webflow, Squarespace, me and you both know my mother can't build on them.
- [23:28]
Matt Billman
It's still too tough.
- [23:30]
Unknown
She can use Lovable.
- [23:31]
Matt Billman
Yeah, but even then, I don't know. I've liked this example of this UX designer from Niantic that are building these things on Bolt that just seems, I don't know, it's just mind blowing, right? Like he built this whole 3D object editor like this actual like tool where you can build like 3D objects in the browser with AI based prompting and everything. Like running in the browser and you build that entirely with Bolt just by prompting. And that's so mind blowing. But it's also an example like I'm sure like your mom probably couldn't do that with Bolt, right? Like, because I don't think I could do that. I'm pretty sure I could do that with Bolt, right? Like that takes like real skill having built that skill set to work with these tools. So I'm sure we'll see the same that not everybody is going to use these tools to make their self stuff. In the end, even if you can potentially, as a small restaurant owner or whatever, go to Squarespace today and build yourself the website for your restaurant, you're probably busy enough that what Squarespace will do for you is making sure that the cost of getting some freelancer to build your website is much lower than it would be if you had to get that freelancer to program the whole site from scratch, right? Like, and I think we'll see the same with tools like Bold and Lovable. I think we'll see the next 100 million software developers emerge around tools that are identic. But I still think it will be a profession to use those tools to do stuff, to build stuff for other people. Because there'll still be a skill set involved in knowing what the agent should actually build for someone and what works and how to get there fastest and how to push the limits of these tools. But it will lower the cost of each project built with those tools dramatically from what it would cost today.
- [25:22]
Unknown
So there are devs using Cursor, there are devs using Lovable and Bolt, and then there are non devs using your lovables and your Bolts. When you look across that stack, how many do you think remain in the Devs using cursor and your alternatives.
- [25:40]
Matt Billman
Because I've been in this space of building tools for web developers like for way too long, I guess, right? Like I've kind of seen the same discussion forever, right? Like, because early on when I was CTO of a company in Spain, we were like mass producing websites for small to medium businesses in Europe and so on, right? Like, and I was a CTO building the whole platform that our freelance designers would use to do that work on and everything, right? Like, and tools like Squarespace, Weebly and so on started coming on and everybody was saying, oh, but like that's going to be the end of all web development. People are just going to use those tools, right? Like that didn't happen, right? Like it just lowered the barrier to entry. It meant that every little corner store could have a website. But it also just pushed up like what, what you needed to show up with if you're somewhat more professional. And then I started this whole gamstack movement around decoupling the actual web front end from, from the back end and starting to build at, at that level, right? Like, and we saw probably in the years since like 2016, 17, 18, we started seeing all these boot camps just like starting to spit out react developers and there was this sentiment that they're not real developers and they don't know the whole stack and so on, right? But it turned out that they were really valuable and that working at that layer of the stack was important. And now we might have an additional like 14 million developers in the world from that layer. But the interesting thing is that the layer below of like Ruby and Rails developers and Java developers and NET developers is probably still at least as large as it was before that the new layer just got added on top. And my prediction is that something pretty similar will happen, right? Like we'll probably add a new, in this case, I think more like 100 million new software developers that mainly operate at this like very agentic stack. And some of them will go a couple of layers just like now, right? Like you'll have some that are more full stack than others that'll go a few layers below that level of the stack will have that happen and then you'll probably have more or less the same amount of developers that are actually like fully understand the layers below and are working on that and are doing work on that. And those are probably the ones that are going to be thinking a lot about the agent experience of what they're building, but they're probably still going to be really really necessary.
- [27:56]
Unknown
I totally get you. When you look forward to that future open versus Closed is a very big question. How do you think about which approach dominates in an agent first world and why?
- [28:07]
Matt Billman
Yeah, I mean I think every time there is a platform change we see this battle between open versus closed. This is another kind of platform change. I think open will win again in part because I think the ones that were best positioned initially to become fully vertical lockdown platforms was really like the large language model makers. And I think there was a moment where it really looked like we would just have very few of those that would be incredibly important and would be able to sort of build a whole stack around them and that was it. And then suddenly model training costs kind of went down and like this open model came around and deepsea came around and so on. Right now it seems a bit the opposite, that there'll be a lot more to do to build agents that can then swap out whatever model is best and combine the models together and so on. And it'll actually be an advantage for like the agent builders to not be tied to a specific model and be able to like just jump around between whichever model is best. And I think once that started happening we are going to have like that that's going to mean a much broader competing ecosystem of agents and that's going to make the benefits of an open model where people can bring their own agent win out over a closed model where everything is like fully verticalized.
- [29:26]
Unknown
I'm not sure because I think the most underestimated is Google because of the endpoints they have with consumers being so broad and having so many consumer touch points. And then they also own the chip layer, they also own their own compute and it's a very strong walled garden if they keep it within all of.
- [29:44]
Harry Stabbings
Their G Suite products.
- [29:46]
Unknown
And so I'm not sure. And then you look at Microsoft and you look at Suite and copilot and everything that they can build within enterprises and the security provisions within enterprises being non trivial to say the least. I'm not so sure. I think closed has so much value. Again, am I wrong?
- [30:04]
Matt Billman
I don't think you're wrong in the sense that today I said like the web really managed to fight back and it's fully relevant today and there are still a lot of closed walled off gardens. Right. Like I think we'll see the same. But I will say that when I just look at where we are right now, if I look at like Google's products, like I now have all these Genesis buttons all over and I never use them. They just haven't managed to productize it in a way that feels super compelling compared to just going.
- [30:31]
Unknown
Is that not just a Google product strategy? So I would say that Facebook is the same like Llama. And the productization around Llama has been bluntly very, very poor at the moment. Integration with WhatsApp.
- [30:43]
Matt Billman
And I think most of the. And that's what I mean. I think most of the tools I use that are identic sits outside of any of those walled gardens, right? Like, and we're starting to see things like, you'll see that there's for example, a Chrome Extension to use ChatGPT within Google Docs instead of Gemini just because people want it, right? Like, because, like, hey, I have, like, I use ChatGPT all the time. It has my history, it knows me now and so on, right? Like, I want bring it there, right? Like, you start seeing those things emerge as like pressures to do stuff with these products with other agents. Because the vertical strategy, at least right now, is producing, I think, more bland and worse result than the myriad of companies just like in building agentic experiences, right? So right now my signal is that the open world will probably create more compelling innovation that people will want to bring into the product they otherwise use. And if they really can't, they might start using other products.
- [31:42]
Unknown
Do you think we'll see a specialization of LLM? You see Anthropic really excel on developer tooling in particular and code. But then honestly, OpenAI has just wiped the floor with them on consumer touchpoints. Consumer brand.
- [31:56]
Matt Billman
Yeah, I mean, I think, I think you just answered it in a way, right. Like I said, I think we're already starting to see models get a brand as being good at different things, right? Like, and you start building affinity to. Okay, if I'm doing this thing, I'm probably going to go to this type of model. And this company seems to like, really, really serve me there, right? Like, and it thinks again, it's so early that who knows, right? Like, but the sign right now is that yes, we will start seeing large language models sort of have, have different strengths and weaknesses and you will go to some of them for specific use cases. And traffic definitely has really stood out in their ability to solve programming encoding style tasks in a way that I think is like, I'm very bullish on Entropic for that reason because I think that's such a groundbreaking part of what makes LLMs multiply what they can do by a lot, right? Like, the better they are at programming other Computers to do stuff, the further the reach of what they can actually do.
- [32:54]
Unknown
You can invest in anthropic at 60, OpenAI at 300 or grok at 50. Which would you buy and which would you sell and why?
- [33:03]
Matt Billman
I would probably go for Anthropic. It's a really interesting thing from the outside where a lot of their motivations started around these safety concerns and how do we allow the models to not take over the world and so on. And I think after sort of an initial panic, now that seems pretty like, okay, LLMs right now are probably not going to escape and take over the world. I think it turned out that a lot of the mechanisms you needed to build to make sure that the model's output was safe applies also to making sure that the model's output is usable for a practical purpose. And I think that's where Anthropic have really built strength, right? Like in terms of actually being able to guide their models to do things that work in production or to write the right code or to not break the syntax and stuff like that. And I think if they can keep on that, it makes their models work really real world applicable.
- [33:57]
Unknown
So would you sell OpenAI or Grok then?
- [34:00]
Matt Billman
I would probably sell Grok. I still think like it sits a little more in a middle space where as you said, OpenAI on the other thing has just like really captured. I think it is just when you as a consumer think about going and asking an AI for something, it is still just the brand you go to, right? Like it is the first one you think of. And I think that carries very, very real value. And it's very hard to build with the scale of users they have and with like just like the ingrainedness of chatgpt into the language as like what you would call like what a normal person would talk about if they talked about going and talking to an AI, right?
- [34:37]
Unknown
Speaking of like carrying value and going full circle, we spoke a lot about the agent experience. How does value accrue in an agent economy if like an agent builder has to pay you and bolt or lovable on OpenAI, how much margin is left?
- [34:51]
Matt Billman
Every layer will shift spend from somewhere else in a way, right? Like that whole layer of Bolt unlovable and also cursor and Windsurf and all of these toolings, right? Like they will shift budget that would normally go into more hours of developer time to build anything. And there's a lot of that budget that can shift into building more things instead. Right? Tools like ours will shift budget from maintenance Operations DevOps like the actual cost of running a thing after you build it. There's a lot of budget there to shift into paying a platform that works. And then if that's true, you'll kind of still have the same amount of budget available for anyone buying your thing or getting value out of your thing. Right. But the pieces of budget that will move is like the hours you would have to pay developers before to build something.
- [35:45]
Unknown
Do you think we'll see companies be willing to shift labor spend to agent spend? And what I mean by that is that you're seeing like trucker calling, you know, calling up brokers for truckers, Happy trucker or whatever it's called, the Andreessen one. Are we willing to move labor costs to agent spend cost?
- [36:04]
Matt Billman
I think so. I think companies will be willing to do that and I think it will be disruptive in some areas. Like I think the first area we've started to see it in is probably something like call center workers. Where obviously you don't see companies saying we have to keep our call centers as staffed as they are today. Right. Like they do say if we can't shift call center hours on traditional limbs, that's going to be more predictable and more.
- [36:30]
Unknown
And we don't see a per seat pricing on those usage cases. We see a resolution pricing which I think is probably much more reasonable.
- [36:37]
Matt Billman
Precisely. We start seeing real changes in those kind of pricings. Right. And I think that just is a very concrete example of a willingness to shift around labor. And part of what my theory is is that that will mean that a lot of the labor again will shift into building agentic digital workflows, products, applications and so on. Back to my thesis of like another hundred million new developers, at least I.
- [37:02]
Unknown
Think stripe will be massively more valuable in a world that we now enter because I think there will be so many people who are enabled to create stores, entrepreneurial endeavors and will inevitably use the default of Stripe as their payments mechanism. That would never have been entrepreneurs making money on the Internet. And the GDP of the Internet will increase seismically as a result of that.
- [37:25]
Matt Billman
I think there's a ton of opportunities in that space. Stripe as you mentioned, right. Like it's one of these, has all of those characteristics I mentioned, right? Like it's zero operations. It can be a building block in, in any custom built system. It's not like it's a little more abstract than any of like the end to end e commerce shops that you buy ready out of the box. It's just a building block for, for all the underlying transactions and it's zero operations, right? Like you really don't have to operate it or secure it if an agent builds some, some of it, right? Like, so all of those sets of tools have huge opportunity for being really valuable as we start custom building more and more solutions, right? Like, and then anything that sits in the space where you have like predictable business processes, that's just still pretty manual. That's just an area where we'll accelerate the level of how much of those can be just programmed that way.
- [38:16]
Unknown
Final one and then we'll do a quick fire. What behaviour or action in the wave of AI that we've seen has been.
- [38:22]
Most what to you?
- [38:24]
Matt Billman
I mean, I think it was probably the panic over AI safety when ChatGPT came around, right? It was like, oh, they're immediately going to kill us all and take control of nuclear missiles and out compete humans and so on, where it was. Wait, when you actually go and look at these LLMs, they are very, very far from any kind of like internal agency outside of like still give me a text that says this and I'll try to predict it, right? Like that was probably like the most surprising to me. That like extreme panic around that for, for, for a moment with like all kinds of attempts of really, really strict regulation way too early.
- [39:04]
Unknown
I'm like, it doesn't even do a Twitter thread. It's not exactly going to do global invasion.
- [39:09]
Matt Billman
Exactly.
- [39:10]
Unknown
I feel safe for the time being. Listen Matt, I want to do a quick fire round, so I say a short statement, you give me your immediate thoughts. What do you believe that most around you disbelieve?
- [39:21]
Matt Billman
One thing is probably the sense that we'll still actually be building UIs and applications and websites and so on, where I think there's a lot of people that think that once we have agents, everything will be disintermediated and the agents will just do stuff with each other and so on. But I believe that as humans, as long as those agents are actually doing things, because humans are trying to do things, humans need these like shared experiences that we can pass around, link to and that we can understand, like, hey, I'm seeing the same as you're seeing and so on, right? Like, so that's probably one thing where sometimes see a lot of people thinking that all of that is going to go completely away. And I don't think so at all.
- [39:58]
Unknown
You can buy and hold one public stock for the next 10 years. Which do you buy and hold?
- [40:03]
Matt Billman
It's a hard one, but I would probably say Microsoft. I think again, if you can only buy one, you probably want it to be a pretty safe one. You want it to be one that benefits from all of the disruption AI is going to bring to the field rather than falls from it. And then I think of all of those, I think right now Satya is the strongest CEO in that space and I think we'll make great decisions.
- [40:28]
Unknown
What happens to WordPress?
- [40:30]
Matt Billman
Yeah, I mean, I think WordPress is in a challenging position where they're kind of like in the end of their innovation cycle and I don't think they're in a great position to respond to all of this disruption. So I think it'll be seen more and more as a bit of legacy software.
- [40:48]
Unknown
What happens in that situation? Might P buy it and eke it out for cash?
- [40:53]
Matt Billman
Potentially? Yeah, it depends. Maybe there's enough community and pressure that it just keeps sticking around for a long time. Right. But I have a hard time seeing, seeing the venture scale acceleration of it ever happening. So either it kind of ossifies or it got to have some kind of PE exit.
- [41:10]
Unknown
What have you changed your mind on over the last 12 months?
- [41:13]
Matt Billman
One big piece has just been the timeline for when companies would start writing real software entirely through agents. Right. Like, I think when for me, the combo of bold and lovable coming out was really the. Like, I thought it was going to be 10, 15 years and now it's more like the next five years are going to be really interesting. Right. Because they pushed the frontier so fast.
- [41:37]
Unknown
What was the hardest fundraise for netlify? Why that one?
- [41:41]
Matt Billman
It was the first one. Our seed round was lots of rejections.
- [41:47]
Unknown
And how many meetings did you have?
- [41:49]
Matt Billman
I don't know, like 100 or something. I don't know, like maybe six. I don't really know. Right. Like, because it was all the angels and individuals that then led to fonts and so on. Right. Like, and then there was all the fonts and like, different meetings with like several meetings with each font and so on. Right. Like, it was a long process.
- [42:10]
Unknown
And how much was your first fundraiser and what was the price?
- [42:13]
Matt Billman
It was just over 2 million. 2.135 million at an $8 million post.
- [42:21]
Unknown
What's the latest price for Netlify?
- [42:23]
Matt Billman
I mean, the last round was a 2 billion valuation. Right. So come a long way. And back then, one of the key questions was actually why the web? Why are you building this whole thing for the web when everything is obviously mobile and social media?
- [42:38]
Unknown
When did you raise it? 2 billion?
- [42:40]
End of 21, was that a really toppy round?
- [42:43]
Matt Billman
Yeah. That time the climate was also very different than it is both now and in 2016. Right.
- [42:49]
Unknown
Like, do you regret raising at such a high price or actually was it a joy because you've got a lot on the balance sheet and you're in a really comfortable position?
- [42:58]
Matt Billman
I will say a mixture of the two. I think everything was priced too high there and it wasn't probably entirely healthy. And the other hand, like, it's also, as a founder, pretty good to take advantage of that and get cash into the business before hard times comes. Right? So I mean, as a founder, you should always raise at the best price you can, right. And capitalize the company as much as you can because you want to be able to weather harder periods.
- [43:24]
Unknown
What's your biggest short in the public markets? You mentioned Salesforce earlier is a common one with a lot of people. If you were taking them aside, who would be yours?
- [43:33]
Matt Billman
I'm so bad at thinking in that sense of betting against things rather than betting on what's going to be really big. If I had to pick one, maybe I just pick something like ExxonMobile, because if they go down, it's probably a good thing.
- [43:46]
Unknown
Final one for you. When you look forward 10 years at the most exciting things that happen, what excites you most in the next 10 years of AI?
- [43:55]
Matt Billman
The capabilities it can give for human creativity and for building like amazing shared experiences, right? Like what it can do for builders seems really amazing, right? Like, I always collect examples of people that are starting to build things like as one person or something like that that are just like, wow, right? Like this illustrator that's making these like TikTok sci fi epos with like AI generated video that's just like, wow, one person can just sit and come up with something like that, right? Like as I mentioned, this UX designer from Niantic that can build like a full 3D editor in the browser just by now.
- [44:34]
Harry Stabbings
If you'd like to watch that episode, you can of course find it on Spotify by searching for 20VC. That's 20VC on Spotify.
- [44:41]
Matt Billman
Prompting, right? Like, and I keep thinking like, if we do things right and we make sure that open platforms keep being really accessible and readily available, we really invest in tooling for people to. To build stuff and own it themselves and be creative. AI just has. Has so many exciting abilities to let humans be more creative and do more interesting things. That's what excites me the most. Right? Like, that's why I built tools for builders in the first place.
- [45:09]
Unknown
Matt, listen, I so appreciate you joining me today. I so appreciate the directness. I apologize for my debating at times. I hope SaaS continues in a meaningful way. But I so appreciate your time today and thank you for joining me.
- [45:23]
Matt Billman
Thank you so much. It's a lot of fun.
- [45:25]
Harry Stabbings
Now if you'd like to see that episode, you can watch it on Spotify by searching for 20VC. That's 20VC on Spotify. Don't forget to leave a rating or a review. It makes such a difference and I really do so appreciate that. But before we leave you today, are you struggling to beat model benchmarks or implement Genai in your product? If so, you need Turing Turing is an AGI infrastructure company backed by incredible investors like Foundation Capital and Westbridge Capital and they do two things. Number one, they help leading companies in AI labs like Salesforce, Anthropic and Meta in high enhance their LLMs with advanced reasoning, coding, multilinguality, multimodality and more. Number two, they combine human and artificial intelligence expertise to deploy cutting edge AI systems for awesome companies like Rivian and Reddit. Right now, Turing offers a free 5 minute self assessment to help you pinpoint your place in the gen AI journey, get tailored next steps to optimize your model strategy and then finally learn how to Turing can refine and implement your models for better performance. Take the guesswork out of Genai. Visit turing.com 20vc to start your free assessment today and talking about scaling seamlessly. Let me tell you about WorkOS. So WorkOS is the modern identity platform for B2B SaaS helping startups move upmarket with ease. Selling to enterprises means honestly really complex security requirements like saml like single sign on, like SCIM provisioning audit logs. Honestly a ton of stuff that is just a nightmare to do. Features that take months to build and maintain. Well WorkOS streamlines this with flexible easy to use APIs that make enterprise readiness quick and painless. Its suite of features include AUTH Kit, a complete user management solution free up to a million monthly users with built in mfa, RBAC bot protection and user impersonation. Enterprise sso? My God these enterprises love their acronyms. Supports any identity provider using SAML or oidc, while directory sync enables seamless user provisioning and deprovisioning. Oh no. For SCIM compliant directories. Fine grained authorization powers complex complex permissioning and it comes again. The Admin portal simplifies SSO and SCIM onboarding for IT teams trusted by companies like Cursor Cursor use this if cursor use this. It's gotta be great. Come on. Perplexity, Vercel, Sierra. I mean these companies are awesome. And they've raised $95 million in funding from amazing people like 20 VC. Try it today@workos.com forward. Now that you've nailed enterprise features, let's talk about creating amazing product experiences. Get your users to do what you want them to do. That's the simple power of Pendo. The only all in one product experience platform. Pendo combines analytics in app guidance, session replay, feedback management and roadmapping, all purpose built to work together. Seamlessly trusted by over 10,000 companies, Pendo is transforming how businesses understand and engage their users. Plus, they're the creators of Mind the Product, the world's largest product management community. It's awesome. See the magic for yourself. Visit Pendo iO20 product podcast to get started today. As always, I so appreciate your support and stay tuned for an incredible episode coming on Monday with Elias Torres, former founder of Drift and now founder of Agency.