← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Andrej Karpathy Joins Anthropic & Anthropic Raises $30BN at $900BN Price | SpaceX Files S1: How Does it Trade | Cerebras Smashes Day 1: What it Means for IPOs | Why Mass Layoffs Are More Worrying Than Anyone Sees
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- [00:00]
Rory O'Driscoll
As it's becoming painfully clear now, no one in America other than us here in California likes the AI trend. We have people who are brilliant scientists who politically are utter morons. And the people who are utter morons at AI, but brilliant at politics are going to have us for lunch. At least when Meta was busy destroying the world, they were smart enough to pretend it was all about bringing friends together and not destroying democracy.
- [00:23]
Jason Lemkin
We're going to have to reflate and hire thousands and thousands of people per tech leader to avoid social unrest. We see no signs that there's a short term crash coming.
- [00:33]
Harry Stebbings
This is 20 VC with me, Harry Stebbings.
- [00:35]
Podcast Host
It's my favorite show of the week. Rory o', Driscoll, Jason Lemkin analyzing the
- [00:39]
Harry Stebbings
biggest news in tech.
- [00:41]
Podcast Host
Starting off, Andre Karpathy joins Anthropic and anthropic eye a $900 billion valuation for their latest fundraise. Then we dig into the public markets. Datadog up 31%. Figma up 12%. What happens from here? Next we have Cerebras IPO smart smashes expectations and breaks the $300 mark. And then finally, SpaceX set June 12th for the largest IPO in history, $1.75 trillion market cap, raising $75 billion. But before we dive into the show today, let me tell you about Omni. It's an AI analytics platform and it solves a problem every scaling company hits. Your team needs insights, not just data lookups. The stuff that really matters. And it's critical to get it right. Like CAC payback periods and net dollar retention. For AI age on your company data, they need your business context, your definitions, your logic, your permissions. And that's what Omni's governed context graph provides. Your data team defines it once. Then anyone, your ops lead, your cfo, your PM can ask a question in English and get an answer in seconds. Perplexity, Mercury and DBT run on Omni and 20 VC listeners get a free three week trial. Three week, very specific. Not a month, but three weeks. Go to Omni CO20VC. That's Omni CO2.0VC. After Omni helps you find the right customers, checkout helps you close them. Over the past 15 years, Guillen Pozaz has led checkout.com through what he calls the velocity years, a period of hyper growth with relentless product building. The lesson? High growth is a gift, but it demands ruthless focus. As his mother put it, play the game you're good at. For checkout.com that game is digital payments. Obsessing over Data chasing basis points and compounding learnings over time. And that discipline is paying off. 2025 checkout.com processed over 300 billion in total volume, up 64% year over year and return to full year EBITDA profitability. They now support over 1,000 enterprise merchants globally, including 63 that process more than a billion annually with brands like ebay, Vinted Amex, asos and Temu. Guillaume's message though, it's pretty clear they've earned the right to win anywhere. Now they're investing in innovation across marketplaces, issuing financial experiences and ajantic commerce. If you want payments built for, what's next? Talk to the team at checkout.com that's checkout.com while checkout powers the moment money changes hands, invisible powers the people behind the work. Why don't we hear more real AI success stories from big companies? The models are insanely good, but implementation's the problem. It's really, really hard. There's data all over the place. There's legacy tech and manual workarounds. It's a Ferrari engine in a shopping cart. Meet invisible. Invisible trains 80% of the top models and then adapts them to the messy reality of your business. Take the Charlotte Hornets NBA team. Invisible took years of game tape and analog scouting notes to go from uncertainty to a draft pick and summer league championship win in weeks, not seasons. Get the data in order first and suddenly AI can do almost anything for you in the enterprise. If you want AI that hits the P and L, go to InvisibleTech. AI20VC.
- [03:59]
Rory O'Driscoll
You have now arrived at your destination.
- [04:02]
Harry Stebbings
Boys, it is so good to be back. So we're going to kick off with our this week in anthropic. We have two. We have anthropic in talks for 30 billion dollars at above a 900 billion
- [04:11]
Podcast Host
dollar price, nearly tripling from 380 in February.
- [04:15]
Harry Stebbings
Greenotes, Sequoia, Altimeter, Dragonair.
- [04:18]
Podcast Host
And then yesterday we had Andre Karpathy
- [04:21]
Harry Stebbings
announcing that he was joining Anthropic. Over to you.
- [04:25]
Podcast Host
How did we read this news?
- [04:27]
Rory O'Driscoll
Well, I divide up the two. I mean the financing. Yes. They can pick their price, they can pick their investors, they can tell the amount and they can tell Evan to jump. And Evan will say how high? Sir, it's all happening. They're going to raise 30 billion. We discussed. Obviously the question is, you know how those folks pencil out the return.
- [04:42]
Jason Lemkin
And so Rory, I don't mean to be old school here, but I'm feeling old school. Do you think AR multiples still matter? I mean, if anthropic is, if 900 billion is 18 times June revenue, it still feels like a better deal than any of the ones I did last year.
- [04:57]
Rory O'Driscoll
Yeah, I mean there's no doubt that statement is correct. Agreed. No, I mean just to put it really simply for listeners is that, you know, you're writing checks in the private market for companies of $10 million in revenue, you be paying 20, 30, 40, 50 times ARR. Maybe it's 3, 5 Xing, but it's five years away from an IPO. And here's for the last three rounds really from the 150 billion round at Anthropic all the way on, they've been so post IPO that you can assume there can be an ipo. So there's no it doesn't make an IPO risk, there's no it will go away risk. Typically when those risks don't exist anymore, the only risk you're taking is valuation risk. And the truth is every time the multiple on this has been significantly lower than the multiple on your median series A or B or series C for a higher growth rate. So it's been the best trade out there.
- [05:45]
Jason Lemkin
The meta question is, listen, at some point everything's dcf, right? At some point it has to be. I get, I guess I'm not even sure I believe that anymore, but certainly that's Public Markets Act 201. Everything is ultimately the discounted present value of your future cash flows. But every growth. I haven't been a part of any of these anthropic rounds, unfortunately. But every growth I've been a part of, it's still AR multiples. At the end of the day, no one's really doing discounts for lower gross margins like we did until say 2021 or 2022. I guess the meta question is, is this the a fair metric for anthropic? It's its margins are improving, right? And so if 18x really is fair. Geez Louise. I think, I think everyone desperate to get in is right because it's the best deal going if an ARR multiple is still fair.
- [06:30]
Rory O'Driscoll
If you ask you, I'm sorry, it took me a while, the coffee's got, you know, first by the way, we're doing this early at 8, at 8 o' clock this morning. So I've been up since 5, but the coffee's only kicking in. If ARR multiples are the right metric, then you should buy the one that's at 18x ARR growing 10x year on year. That's Already so freaking large it will clearly invisibly go public. If ARR multiples are the proxy for value, then this is the best value in the venture universe. Which is why I'm going to say very smart capital allocators whose mandate isn't sector specific but kind of range anywhere, stick your money in. People like Green Oaks, people like Altimeter are doing this deal because they're like yesterday I can do a 20 million ARR deal, today I can do a $50 billion ARR deal. And the multiple is better when it's
- [07:14]
Harry Stebbings
so obviously a good deal. As we mentioned there, given the trade for investors. Why would Dario and Anthropic do it at that price if it is so obviously a good deal?
- [07:23]
Rory O'Driscoll
Because you're giving away 30 over 900 which is like, let's see, 3% of your business to de risk it for another year of monstrous burn where you're committing to, I don't know, 5 gigawatts this year. And the mental rule of thumb is the total cost of gigawatt of high end compute is 40 or 50 billion. So now you're not spending 40 or 50 billion, you're persuading hyperscalers to spend on your behalf. But you have to have, I mean this is a big ass balance sheet war so it's a no brainer to do it. They're going to raise and they're going to raise again and then they're going to raise again.
- [07:54]
Harry Stebbings
Do you think they'll raise again before they go public?
- [07:56]
Rory O'Driscoll
I doubt it. Just depend on the trajectory now because they're saying they're going public in November. When you stop having to raise, that's a disaster. Why are you raising? You're raising for capex and you're raising for growth. Once that hyper growth stops and you don't have a capex need, you also don't have a growth story and that'll be a very different place to be. I mean right now this is the highest ROI on equity dollars. So that's why they're getting it. So they should just keep raising it well in advance of the need because the needs are so great.
- [08:23]
Jason Lemkin
My actually read is that Sam has been pushing the valuation to the absolute max since as long as he could on the thesis he needed infinite capital. Right. He's always been clear on that. Right. So the last open air round was more expensive than almost the contemporaneous anthropic round, even though anthropic appeared to be out accelerating them because Sam just pushed it to the max, which you can if you're a great salesman and have demand of one more dollar than supply. Right. It seemed to me Dario is the opposite. I mean, he actually does own shares in his company. Right. Rather than indirectly through a VC fund, but it's pretty diluted. He's giving away 90% to charity. So he just wants to get a deal done in a week that is fair. He does this deal at 380, it seems fair. And all of a sudden he turns around, Sam's done a deal at twice the price. So he does this at 900. I think when anthropic's worth 2 to 3 billion, he'll do around it like 16 in 48 hours to get it done. He'll just do it. He won't push it to the max like Sam does and create stress. But I actually think these rounds, ironically, the last two intentionally traded at a discount in order to not rip people off and get it done. Low drama in days. I actually think that was the trade off of. And we've all worked with founders like this that enjoy maximizing every penny from the round and others who want a 70% deal and they truly, it's not just in the email. They truly want it done in a week. Right. That's not just a game to get the money. They just like give me a 70% deal in 72 hours.
- [09:43]
Rory O'Driscoll
It's a super point, Jason, because I'm remembering now the details. It's so revealing. Compare the last two rounds. The anthropic round is we're going to raise 30. It's going to be cash. You're going to send me an email confirming you're in and then we'll collect the money. End of conversation. The OpenAI round is, well, Amazon, you're going to give us 50 billion, but 20 people is going to be upfront. The other 30 billion is contingent on us going public. Our AGI and Masasa, you're going to give us 40 billion from SoftBank, but you've got to borrow 30 billion to get that 40 billion. So we're going to give you a little time to pay that money. So we're closing on 110 billion, of which 20 billion is clearing now. 30 billion in six months time, depending on the lending market. It's like, Jesus, give me a break. You're right, Jason. I think philosophically the Anthropic team seems to operate on there. If I want to raise 30 billion, I should probably get a check for 30 billion and call it a day.
- [10:30]
Harry Stebbings
Speaking of getting a check for 30 billion. Jason, I really wanted your thoughts on this one. Benioff was on all in and he said that Salesforce spent 300 million on anthropic tokens this year, almost entirely coding. The question I have for you is when you look at your usage and how you use it today, is that about right? And what you would have thought is that way more, is that way less. And how do you think that will change for a Salesforce over time?
- [10:55]
Jason Lemkin
It's actually not that much per engineer. I think that works out to about 15 to $20,000 per engineer per year.
- [11:02]
Rory O'Driscoll
Yes.
- [11:03]
Jason Lemkin
I think that's just table stakes today. What's this fully burdened cost for a developer at Salesforce? Probably 500k for an engineer for all in all costs with their share of the building and snacks. So 20 grand a year is 4% additional. Cheap man.
- [11:17]
Rory O'Driscoll
Good. First of all, I did the math this one because I actually think this is the most important question and actually I'm going to give you. God, I sound patronizing. I'm going to give you an A, Jason, for math on the fly, which is, I think very hard to do. I couldn't have done it on the fly. I did it this morning and it turns out 300 million is eh. Which is astonishing. First of all. Right, so the numbers are Salesforce spends $5.8 billion a year on engineers. So it's roughly 4% of the spend if you want it per head. They have 20k developers out of their total 83k heads. So it's 15k per head per year, which is 1.2k per head per month, 1,200 per month. We did a survey on 40 portfolio companies and external companies. What are you spending per year per month per developer? And the average was 1.213 K and the median was lower. Right. So obviously you have some token maxing and then wider dispersion. So first of all, you exaggerate. It's in the strike zone of normal. I mean it's only the big number because they obviously have so many developers. So that's the first thing. So your kind of rough estimate math's exactly right. And then the question is, what does all this mean? Where is it going? This is probably the only vendor line item other than maybe rent that comes anywhere close to this amount. So from nothing two years ago, this is the largest single external spend that every software company is making. That's the first big. Aha. Right. Yeah.
- [12:34]
Jason Lemkin
It's both nothing and it explains Anthropic's mediocre It's both at the same time, right?
- [12:39]
Rory O'Driscoll
And then you got to say to yourself because going remember I kind of said it. When it comes to valuation Entropic, is it good or not? When you try and figure out how much money these companies can make, what you figure out is trying to come up with some kind of heuristic relative to R and D spend is the key. In other words, how much of every knowledge worker wage and how much of every coding wage is going to get translated into tokens and we did a rough and tough estimate and we're finding it more is that if you start thinking about a trillion dollars worth of token revenue across Entropic and OpenAI which is the four year projections are saying and they better get it because otherwise that CapEx is going to look pretty sick. If they're going to get a trillion dollars my rough math says it's something roughly like 5 or 7% of every knowledge worker salary and 20% of every engineering salary. If that math is correct that's kind of what it takes to get a trillion. So in other words Salesforce might only be a quarter of the way there. Now one or two things is going to happen. Either they stay at 300 million in which case for some of these kind of token businesses like OpenAI and Tropic will have been overestimated and there'll be a real correction or they keep going, they forex their token spend from here in two years time. Benioff is on saying we spend a billion dollars on tokens and we'll talk about the people consequences for that in a second. But one of those two things has to happen because even on the macro level worldwide software business across everyone is about $1.2 trillion. R&D spend is roughly 20%, $240 billion. The interesting thing is if you get 20% of that you want to get 50 billion. So to justify these anthropic valuation and these OpenAI valuations you really going to have to eat a shit ton of what is otherwise opex you've got to replace 20%. Either those valuations are wrong or Benioff is only a quarter of the way on the journey and he's probably ahead of most the numbers for OpenAI and are so large that you really have to start thinking about what percent of the total wage bill of engineering in the software development market do you get. And if you're not tracking to 20% across most R&D spends then the 3 and 4 year projection for some of these companies will Be a bit lofty
- [14:47]
Jason Lemkin
at a meta level. You have to be a bull, right? Because the trend has just begun. Mark's 300 million is just the start of what he's going to spend. On the other hand, I hate to use myself as an equals one case but. But it's Saster itself. Amelia and I have now we have 21 agents of which three are autonomous. Okay? The direct token cost that we spend, the direct AI altogether for both of us is about two grand a month and that's going to go up. But the bear case. The bear case is the models will get better and they will get more efficient and we will get more efficient. The bear case is 1k for each of us. And listen, this doesn't include third party apps, it doesn't include tokens. We buy inside a Salesforce so it's higher. If you think about it, there is a bear case there that everybody is using. Every knowledge worker has this attached. But the numbers Mark are throwing out is about right for folks not at the bleeding edge of token maxing. This is the bear case. It's not today when SAP and Uber CIOs are said RADA tokens for the year. But I do think we're ahead of most right at our little team. And we're only spending 2k a month in direct token costs. That's a bear case. On the next anthropic round, I think I'll give you another example. We had Saster annuals last week. Rory. Rory was a celebrity. Harry, we could talk about it. He was literally mobbed. You saw the pictures. But our very last speaker, it was kind of him to come because it was the last one. People are tired was Andrew Bielecki who's the co founder and CEO of Klaviyo. Very interesting because he's a true engineer and turned B2B founder. He requires every single employee at Klaviyo if they're anywhere close to product to be committing code. Anyone in product, anyone in design, anyone there. And every single person has to be running AI or agents to do their job. I couldn't believe it was 100% is and they built their own custom framework to require it. He went through it all. It was very cool. And so my point is he knows his stuff, right? And a lot. And we built this aibp market, aibb customers just everyone thinks it toss like 8, $10,000 to run these autonomous humans. I go backstage with Andrew, we're talking about on my phone, he's like how much do you think it Costs to run a VPN marketing because he's done it. He's like maybe $250 for both of them. The answer is 257 just to run the agents. And his point was at the end is this. A lot of this stuff is not as expensive as we think. We do not need to worry about token maxing at Klaviyo. And everything we're doing is agent. We have our own agent. Every single person has to be doing this. We have to manage it and they have a harness that manages the model and gets it. Thoughtful, but he's like, if you do this right, it's not as expensive. And the fact that he guessed it, he was the only person that got it right because he's doing it. The only one that got it that this number right because he's doing it. And so this is the bear case. It's just. We just. We need a half or a third or a quarter as many tokens as we think we do. Outside of the folks running massive workflows. 4814. Right.
- [17:29]
Rory O'Driscoll
At 1% of R& D spend, it's lost in the noise. At 5%, it's real. That's a layoff at 20%. Which let me repeat, is what it takes to get to. For these overall models to work. Right? For these overall TAM analysis to work, that's huge. It's 1/5 of your payroll costs in engineering.
- [17:48]
Harry Stebbings
Every public company CEO wants your advice on agents and AI. Are you more bullish on Klaviyo post seeing the inner workings of Andrew and is he a top 1% public company CEO on AI?
- [18:00]
Jason Lemkin
It's a good. It's a good question, right? The one thing I've been thinking a lot recently when we kind of bounced off the lowest sass apocalypse, right? You think about Atlassian, figma, a few others that have seen at the end of the day, compared to their highs, very, very modest bounces off the hard deck. But growth, but more importantly, growth is re accelerating there. That's the most important. So when you see Figma re accelerate to almost 50% growth, when you see Atlassian seemingly struggling when. When Mike was on the show, re accelerate north of 30 with Atlassian, it's definitely from Rovio, their agent. With Figma, it's a mix, right? But when you see these, when you see Twilio come back from the dead to 20% growth, you have to ask yourself, is there a little more time than we thought? A little more time. The whole world is not in San Francisco. Of all the Buyers of all the users. So it's both a question for Andrew and for Marc Benioff and others. These founder led companies that are iconic with great CEOs. At the end of the day maybe they have enough time, maybe another year if they're just getting going on their gentic journey and, and Salesforce is further along than Klaviyo, I am not sure that means their stock will reaccelerate until it is proven. I think that's what we learned from last quarter Monday. Monday did sort of beat expectations and bounced. HubSpot said Q2 is going to be tougher and it got hit hard. So you got to show me the growth. That's the mantra. But I am somewhat more bullish than 90 days ago that there's just time. Klaviyo is arguably the single most beaten down public company software stock because of the delta from Shopify. Like it's trading at three something times revenue and Shopify is at what, 12 or 14. I got to look it up. So if I were, if we were a long short team I might propose that one on Monday. But you got to show the growth man. And even though he's ahead of the internal agent, he's not. They're not way ahead of the game for the external one. And that's the, that's the bear case. Right. If your competitors are there, why aren't you there today? So yes, I'm optimistic. But my flip side is you've had 18 months and you've had since December, since the Clod fours to destroy your space. Why do you let these, these dumb little startups out hustle you? You've got 2,000 engineers spending $300 million a year. That's the bull case. Like you've had time. But I'm getting more optimistic that if the leaders build the best agents in the space, 2027 could be good for them. I'm getting more optimistic and I was pretty bearish a couple months ago.
- [20:13]
Rory O'Driscoll
I am in the same place and I made some comment about that and you know, positive reinforcement from Datadog and Figma and everyone's like but they'll never get back to 21 prices again. And I commented on that because of course they won't. I said in my comments they'll never get back to 21 prices and I'll never be 21 again.
- [20:29]
Jason Lemkin
Yeah, I like that.
- [20:30]
Rory O'Driscoll
There's nothing you can do. Every tech cycle has a set of industries that for the once in their life get valued on prospects and futures. It's like being 21. It literally is like being 21 and people will believe everything about you. Five years ago that was SaaS, today it's AI. Once you lose that veneer, you are going to be valued for the rest of your life on some variety of revenue, revenue growth and cash flow. And what that means is it's almost impossible to ever get back to 50 times ARR again. All these companies and everyone goes like it's the Figma thing. It's so annoying for them. I feel so bad for like everyone's over. Your stock's down 80%. Yes. From the idiot price that idiot people price to that. Right. In terms of objective performance, which is how you got to measure these companies. You're right Jason. Somebody's like Figma's re accelerated. Datadog's doing really well and you're going to be in a bound from. I mean the outer edge is probably datadog at 17 or 18 times sales, your good performance, figma 6 to 10 times sales and your crap is 3 times. So you have time to become a good normal company. I mean the big comment is SaaS businesses are amazing but the AI businesses are an order of magnitude or maybe two order of magnitudes larger and are earlier in their growth life cycle. So you're never going to get the attention back on you again. That's the deal for Salzman. But you can still be worth $10 billion as a company. Billion in revenue and growing nicely.
- [21:51]
Harry Stebbings
Just to provide context, Datadog had their first billion dollar revenue quarter 32% up all time high. Arrows 4 billion. This was a great quarter. Ollie and team crushed it. So to the point it's now more realistically priced from its exuberant pricing. Is that the summary?
- [22:10]
Rory O'Driscoll
Yeah, it's the summary exactly. And in that context it's worth trying. I mean the difference between being in the shadow and not getting out and being in the penalty box and then getting out is quite significant. You gotta like where you are. As Jason said, if your team's Atlassian, you gotta like where you are a lot. If you're a datadog or figma, you gotta be pretty depressed about where you are. If you're wix given you know you did the buyback and it hasn't worked.
- [22:34]
Harry Stebbings
So we're gonna discuss wix. I just want to cover FIGMA first. So Jason, you're always rather opinionated on
- [22:39]
Podcast Host
Figma but accelerating for the second straight quarter. NDR 139 two year high.
- [22:46]
Harry Stebbings
This was a, this was a great quarter. Results Fucking sold all of mine at the end of last year.
- [22:52]
Jason Lemkin
Well, you're still ahead. That was the right time to sell the Rory's point. I'll tell you what I got wrong on figma for sure. Like dumb Lemkin. Okay, I got to come up with something assonance with the L, right? A limited Lemkin or something like that. Loser Lemkin. I like limited. Can we go with limited?
- [23:06]
Rory O'Driscoll
Can we be limited?
- [23:09]
Jason Lemkin
I was completely right. That make is the worst Vibe coding product I've used since I've been on this journey. And I'm right that it was not important to the senior management. And I'm right that they left 500 million or more on the table by not building a repliter level competitor. I'm 100% right. And I think it's the tragedy of folks being slow, however limited. Lemkin, I missed the captain obvious point. FIGMA is a building software. So everyone that is in the business there is an AI explosion. But part of the explosion is a software explosion. And you can see it in companies that Harry and I have invested on like work OS and RevenueCap that have exploded because there's a software explosion going on. And even though Figma lost the Vibe coding race so far, it is a beneficiary of the software explosion. One, right. And two, it has internal AI tools like, like Andrew from Clayvo was talking about. So one, it's selling credits to make your product a little better. That almost sounds cynical, right? But what it's really rolling out now is the ability to internally vibe improvements to your FIGMA designs. Like the agent can look at your FIGMA design. It actually officially rolled out I think today. It's been in beta for a while, but it rolled out while we record this. And instead of just designing something, it can say, hey, let's, let's, let's up, let's update the workflow in here. Let's update the journey. This is not like incredibly difficult, but it is difficult at Figma scale. So even if they're not going to help you Vibe products, the fact that they are making the building of software more efficient for their audience, you know, it's like Atlassian not adding massive new customers because of AI, but adding massive more value for their base. So I got, they were a little slow to that. It's in beta today. I mean it's, you know, it's getting to be summer but. But it looks like it's pretty good. And I utterly limited Lemkin missed anyone like Figma should be modestly accelerating today because we're building more crap. If you're in the tooling for software and you're decelerating, you're pro. You've lost product market fit because everyone's just building more crap. Like they're just building more crap. Their new. Their new ability to agentically improve design likely will be a big deal for their customers. They likely can get another 50% or more of revenue out of their base.
- [25:14]
Rory O'Driscoll
The question is to the extent that folks who would have been using figma are now doing mockups for software products using Lovable, which you hear a lot about, you know, which is using it as a way to describe your product rather than doing a figma that's actually a work stream that you would want to own if you're figma, because what you don't want to have is people going around your product flow. So I do think you're right, Jason. I think it's not just the extra 500 million. They probably have an imperative to make sure that their customer doesn't leak out to a design flow that's do your actual design in something like Lovable, where you have a working prototype, not just a Figma design.
- [25:49]
Jason Lemkin
I think so. That one for the moment appeared to be more of a Twitter mania, overstated, limited you. I'm not a the design capabilities in Lovable, which is a little bit ahead of rep, but they're probably pretty limited for anything that's professional grade. Like for a Figma person, they're still pretty pretty early. What, what figma missed is I create this design, it's beautiful, I loop in the product team to approve it and then I click a button which is says push into full production prototype and it just works. It works and you can. And the irony is Replit and Lovable both have that as a native insertion point for a reason. Like if you use these products today, they have up right in the prompt upload a FIGMA design because they know, like this is our number one. ICP wants to take that static design and put it into production. Why, you know, I mean, why Figma doesn't have that natively is a loss of $500 million and going up totally
- [26:39]
Harry Stebbings
is on the flip side of these two Great, great quarters and kind of exciting. Happy news. Wix down 45% since the stock repurchase. Rory, you mentioned it and touched on it. They're now a $2.2 billion market cap base 44. Announced last night actually that they hit 150 million of error, which is that's
- [26:57]
Jason Lemkin
because the core business isn't growing. The pre business is no longer growing, right? Maybe it's not. I think it says the pre business is terminal. That's what the public markets are saying. Right. And they don't think that the AI play is enough to, to rescue it from terminality. Right. 150 from base 44 is very impressive, but it's substitution revenue at a high level, isn't it? Because it hasn't materially grown the, the revenue. It's substitution.
- [27:18]
Harry Stebbings
If you would assume then that it's a terminal business in terms of the core business that's existing, forgetting base 44, surely you would then ascribe the same to a squarespace, which I think, I
- [27:28]
Jason Lemkin
think it's terminal as well. I think WIX in squarespace. One thing people forget this is at. If you look, it's true that not only are they being terminated by two vectors, one is obvious, one is less obvious. The obvious one, but is more true than people think is in many cases it's already better to vibe code your own website because you get what you want and they already have templates and they already have integrations. Not, not for folks that are truly tech fearful. They should still use Squarespace and wix. They're great products but they're so limited and you can build something in a Vibe coded platform so nicely in 10 minutes. Anyone that's not tech phobic should use these products. The other thing that, that we kind of forget is that WIX and Squarespace for the last five years they, they were low end Shopify competitors. That's where their growth was from merchant services, payments, e commerce. And there was a whole world four or five years ago where you had WooCommerce from WordPress, you had Wix, you had Squarespace and you had BigCommerce who all were viable competitors of Shopify. The other thing happened, Shopify destroyed them all. There's no reason to use. This is another category where the low end was destroyed by Shopify who amazingly went up market and down market successfully at the same time. And there's just. It's not worth it. You can't save enough money to not use Shopify for your store. So. So the folks that are trying to save $14 a month have just kind of evaporated for the low end of the market. They don't need these, these sub Shopify and Big Commerce even though it's not low. And it got destroyed too. Right. The most visceral competitor was just dead. It's dead in the water. So they got hit Both ways. It's. It's too, too bad currents hitting them Broadly agree.
- [29:00]
Rory O'Driscoll
I mean I think BigCommerce right in the. Right in the strike zone of Shopify. I don't know the WIX mix between. Think of it as kind of information only sites versus E Comm sites. But you're right, Jason, it really matters. And if it is high on E Comm sites then you have that vector to think about.
- [29:15]
Jason Lemkin
And it was all the growth. It was all the growth.
- [29:16]
Rory O'Driscoll
It was all the growth. Got it?
- [29:17]
Jason Lemkin
It was all the growth.
- [29:18]
Rory O'Driscoll
Interesting. A lot of those businesses have to be customer acquisition. It's super low end SMB, especially for the non E Comm sites. If your core acquisition engine works, you should have been able to. It is still possible that if you can convert most of your customers to the new product, then over a couple of years you can maybe make the math work. Right. If you are a wix, at least they have a new product, they did do the acquisition. It is possible to. You get this weird compounding when the new product is 100 million and it's doubling and the existing product is a couple of billion and it's flat for the first year or so. It's really hard to move the overall aggregate GAAP revenue growth rate. But if you can compound quickly enough on the new product, it does move it up. And that's on the revenue side. I want to separate the stock buyback from that. That's on the revenue side. But separate comment on the stock buyback. That sucks. Because it's like you do the classic investor banker thing of oh, if you buy back the stock at four times, it's cheaper than it's ever been and that'll be good for the stock. And it sounds like it makes sense, but when shit's going wrong, things can go lower than you ever think. And sometimes it pays to keep the money in your back pocket because the stock will go even lower. And I think that's just a strategy that didn't work right now. Right? You took on a bunch of capital, you bought the stock back and you didn't. You know, by definition if the stock is 45% down since that moment, that buyback strategy didn't work. And it's better to have bought it back cheap, then bought it back at even the crazy high prices that some people are doing stock buybacks in the past. But when your business is in trouble, things that are bad can get worse. And the actual ability to have another billion dollars on your balance sheet to maybe make an even Bigger acquisition in my view is worth more than trying to juice the stock for the short term. So I think they look back on that stock buyback and go that wasn't the best move to make. We optimize for the short term value of the stock, not the long term destiny of the business.
- [31:09]
Jason Lemkin
The flip side is Marc Benioff said they did a buyback. What did he borrow, 20 billion or something like that to do it? Not even at the lowest interest rates. But he said I did it to offset slack and tableau. I did it to offset the dilution. I got it back. Right. My theory, what does that mean?
- [31:21]
Rory O'Driscoll
What does that mean? I actually challenge that and I hear him saying that and I hear them saying we're doing it to offset stock based compensation. And I want to beat my head off the fucking wall. The only reason you buy stock back is, is because you think it's way cheaper than it should be. The whole, if the stock was trading at a trillion dollars, would you buy it back at a trillion dollars to quote offset slack dilution? I think it's a bogus, bullshit answer for people who are just trying to manage some second order metrics when it just doesn't make sense. I've been on boards where people pitch, bankers pitch to do a buyback to offset stock based comp. And I literally want to bludgeon them to death. Buying stock at high prices is stupid. Buying stock at low prices is clever. End of analysis.
- [32:02]
Jason Lemkin
I think a lot of these deals, and maybe, and even Salesforce, maybe it's really just to hold off shareholder activists because that's their first play. That's their first play. So when you are down in the dumps, that what you got, you know, and you've grow, you've been on boards of this, you've watched it, you want to, to the extent you can, you want to placate the shareholder activists without giving them what they want. And the simplest thing you could do is use all your cash to buy back shares because that's their play. So if you take them out of the game, you've given them what they've asked for and they don't really have a play if they buy you, especially if you're also doing layoffs. So if you're doing layoffs and you're, and you're doing the buybacks, maybe, maybe you keep starboard and friends away because their playbook has already been used up by the management team.
- [32:41]
Rory O'Driscoll
That is actually. And look, if there's nowhere better you can put the money and the stock is cheap, then it pays to buy it back. And I do get the comment that you're always afraid, like of management with big amounts of cash that they'll waste it on a bad acquisition. On the other hand, in these times of change, hyperchange, you probably have two choices. As a SaaS company, you either decide, I am the old thing and the old thing is good enough. I'm going to optimize for 30% operating margins and 10% growth. And I'm an economic machine. It is what it is. And if I have excess capital, I should buy the stock back, give it back, do whatever. Or you say to yourself, I might have to do something more than that. I don't know what it is, but at least for the next 12 months, I'd like the option value of knowing if I want to do what was it? A base 44, whatever it is, acquisition. I have the money. But I agree with you, Jason. Cynical comment. You're right. People do it because it's one of the least disruptive activist moves that you can do. And normally you get brownie points for it. But the odd thing is, if you do a buyback of the stock to appease the beast and then the Stock goes down 40%, they won't remember that they wanted you to do a buyback. They'll just say you're an idiot for doing it. In the end, you're paid to be right. And when you buy and then it goes down 45%, unfortunately, you can't say to yourself, you were right.
- [33:55]
Harry Stebbings
Today they're trading at 1x revenue. In a year's time, will they be higher than they are today or lower than they are today?
- [34:02]
Rory O'Driscoll
I'd say higher just because at 1x revenues for any unless you rev, I would like to look at their churn numbers. I haven't spent enough time. Unless the revenue is absolutely evaporating, you can get from 1x revenues, especially if you had the wit and the intelligence, which they did to buy a kind of replant competitor. So this is the thing. Most mature software companies that aren't growing can easily operate at 20% operating margin. So you're now down to saying you've got your cash and do you think you can last four or five years before you go to zero? I mean, you can calculate the terminal value here. At 1x revenues, you are nearing terminal value for a product that has high gross margins and is relatively sticky. So yes, I think you can create more value. You will regret deeply buying a whole bunch of shares at three times revenues or two and a half times revenues thinking it couldn't get any worse. Fatal next sentence. Maybe now it can't get any worse. And if it's a 0.5x a year from now or the revenues have gone down by 50% then you can call me an idiot then Harry, which I know you're dying to do.
- [34:56]
Harry Stebbings
No, no, it can't get any worse.
- [34:57]
Rory O'Driscoll
I'll go and buy a load of
- [34:58]
Harry Stebbings
wicks and then remind you of it every week.
- [35:00]
Rory O'Driscoll
Remember, can't get worse is not the same thing as it will get a lot better. I mean you know the question a totally separate I think Jason's right about the upside in these stories. Again, it goes back to the same thing. Your range of outcomes has compressed markedly. It's not clear to me if someone said what would you do to get a let's not pick anyways squarespace to make any of these things get to 30% growth and be worth 5x revenues. I'm not sure I have a single idea. I think Jason's right. You're dealing with managing as they used to say about the British Empire. Harry, you're managing decline. It's okay, it's history. You wouldn't understand.
- [35:32]
Jason Lemkin
I do think one of the downbeaten that we think is truly downbeaten public public software companies in the next year will become upbeaten and what I mean is as slow as they've been to react to AI changes right they have the installed base and so someone will get their someone that is still founder led. It won't be anybody that isn't founder led. One of these founder led guys will put his best 50 folks in a room and say listen I don't even need you guys to innovate. I just need you to build a better version of especially prosumer AI app. I just need you to build a better version. Stay out of it and ship it. We're going to sell it the hell out of their base. Arguably that's what Canva is trying to do with 2.0. It's complicated. The startups are moving faster, the models move. But someone's going to pull this off with their best 50 people because they have 300,000 customers. Every time I'm pitching these SDRs and I'm looking at HubSpot with 300,000, I'm like hurry up Breeze because you got 300,000 HubSpot customers just waiting to buy an AI SDR from you. And if HubSpot could actually make this as good as a startup, they're going to sell 150,000 Breeze a strategy just. It just isn't in market today. So I just think there's so many challenges, it's hard to predict, but someone's going to. You're going to turn around and you're going to be like, holy cow, Drew pulled it off. Drew went from 0% growth. He got his last 50, got last 50 soldiers holding back the. The castle. Put him together and holy cow, he built this thing. And. But I don't know that we can predict who it is.
- [36:54]
Harry Stebbings
On the flip side of challenge, we have Nebius growing 684%, accelerating faster than ever. My question is, is it justified? Is this absolutely the sign of just compute starvation and a buy, or is this bluntly further signs of a bubble and concerns that this is over market exuberance?
- [37:15]
Rory O'Driscoll
It's a mini core weave and those have been great businesses because right now everyone's compute starved. And let me make the captain obvious answer. As Jason would say, if compute continues to be starved, then they will continue to be good businesses. If it's not, if compute becomes plentiful, they will be commodity businesses and the guys who are overlevered will go bust. So it's just that simple. Now, I actually think Gavin is a. Gavin Baker who had a very articulate comment is ironically, the slowness of permitting and the inability to bring on data centers at near the speed that people want to bring them on might save us all from ourselves. The disaster scenario is if all the data centers people want to build could be built. And then at the same time, we do the anthropic and OpenAI math that we just discussed, and that trillion dollars of token revenue turns into half a trillion dollars, then you got a trillion dollars of capex and a half a trillion dollars of revenue and you're fucked. But if, on the other hand, the half a trillion dollars of revenue stays, but the just inertia of building data centers means you only get half of them built, then you're saved by the bureaucratic inertia of the great American state and you only bill half a billion dollars. Compute remains relatively scarce, and people like Nevius and Corewef who have that compute do really well. Does Benioff's spend grow faster or slower than data center capacity? That's it in a nutshell, with OpenAI and Entropic in the middle, collecting the money from the first and giving it to the second. That is the bet.
- [38:37]
Jason Lemkin
You know, I was driving back, we had a little Napa retreat break after Sastra A. I Know, this year, and the Tesla took us the long way through the South Bay, which I haven't done in a while, rather than the bridge and I'm passing Marvell Semiconductor, Sandisk, all these folks, all, all these superstars of the 90s, they're on F and fire today. The only thing that isn't on fire today is traditional software. Every other category obstacle connects everything. The old, the South Bay, where Harry's probably never been, like, he probably has never been south of Mountain View or Pal. Certainly he's like, why would you go there? There's like trillions down there, man. Look at the skyscrapers. Okay, And I was thinking, I was thinking, you know, that the only thing that isn't inflating today is old school software. Everything else is on fire. So my point on Nibius is, and Rory made this point, listen, there's an argument to short it. There's an argument that it is just surplus. There's not enough capacity in the market. But how far in the future can you short these things? Sure, you can short SanDisk in memory and you know, we pass Micron on the drive. Like you can make fun of Micron, right? Micron's had more booms and busts than a California prospector from the 19th century. But how you can't shoot short three years into the future effectively. Certainly I don't have the skills to do so. So we could take pot shots at, at, at Nebius and Core, Weave and Friends, but what's the point? We see no signs that there's a short term crash coming. And it's, it's interesting, but anything but, but traditional software, it's just on fire, right? Everything. Cisco. Cisco's back. I should have mentioned Cisco coming up south first or Zanker. I mean, Jesus, every software, every technology company except traditional software is on F and fire again.
- [40:12]
Rory O'Driscoll
Going back to the big simplistic picture here, all these companies are on fire because the hyperscalers and the model companies have decided to spend roughly three quarters to a trillion dollars a year building shit. And 50% of that goes to Nvidia. 10% of that goes to power. 10% of that goes to Network. And you're right, everyone just gets pulled along in the bubble. Everyone, right? One of two things has to happen. Either corporate America has to digest a trillion dollars worth of tokens without any intermediate software layer. And I think it can do some, but I don't think it can do all, or second, software has to start working because only if software starts working does corporate America get to spend that kind of money. And if they do, if Sierra doesn't grow. Let me put it bluntly. If Sierra doesn't grow, then at some point OpenAI and Tropic will stop growing because their customers today are primarily software companies for coding and selling through software companies to corporate America to use tokens for business purpose. So in a weird kind of at some point this all has to level out.
- [41:09]
Jason Lemkin
I just think when we start, when we started this show, I think core weave had just ipoed or was about to IPO and it was easy to mock core weave. It's like, okay, well this is just, this is just round trip revenue to create a little, a little supplemental capacity that we won't need in a year. Right. Fast forward a year. We need every, every, every. Yeah, everything possible. So I do think at some point sandisk and Nebius and Corey all have to crash and Marvell and even Broadcom at some point they have to crash at some level because they always. I think I can grow infinite. Like we all approach the singularity but eventually capacity will catch up. Things will catch up. I just don't know it's going to be near enough to the present that it matters at some level. That it matters. Right.
- [41:53]
Harry Stebbings
But this was the first. I don't know if you follow Leo Aschenbrenner who the famous.
- [41:57]
Jason Lemkin
Yeah. He doesn't have to worry about 10 years out, does he? He'll just trade in and out of it.
- [42:00]
Harry Stebbings
Yeah. But if you saw his latest releases on his latest filings, he put puts across everything. The guy for the first time added very little and actually showed his first real signs.
- [42:12]
Jason Lemkin
He's smarter than me. He's making the opposite point I'm making that it's this is. This future is coming much sooner than I think it is. The tough one is would you invest in a Corey of or Nebius at the seed level today? That's the tougher event. This is still 20 VC, right. It's as a public investor you can say, hey, SanDisk looks pretty good for the rest of the year. Right. As a startup investor, would you do one of these deals?
- [42:30]
Rory O'Driscoll
I'll answer that. I saw a really excellent one with a superb theme. A very good seed investor. I'm not going to name it and I really consider it long and hard. It was still a seed round. We tend to be a investors. He was really talented team. I didn't do the seed but I always try and give a good answer to people when I turn them down, especially when I think they're a Class teams. Because I say, hey, look, here's my thinking because hopefully they'll remember my thinking if they prove me wrong and they come back for the A. And I will admit when I wrote out my thinking on why I'm not doing this and he responded, I thought he won the argument. So I'm actually sitting here going, rory, was I an idiot? Because he had a compelling at the margin story around capacity that I thought was interesting. So I literally ran. I did. To answer your question, Jason, logically, I chickened out. I didn't want to be that module capacity three years into the deal, three years into the capex boom. But there's a little part of me thinking, rory, that might be a dumb decision. That was a clever story with a clever team. And yeah, you are relying on the capital markets being there for the next three years and being able to access, I mean, the sobering numbers is half a billion to a billion dollars to build the capacity. But maybe it could have worked. So I get the temptation. I literally had that. That was last week.
- [43:41]
Harry Stebbings
Roy, do you always give detailed explanations to founders? I remember Jason once saying to me, actually, about founders will always kind of argue back and actually it's easier to be like, hey, keep it much more vanilla.
- [43:51]
Rory O'Driscoll
Yeah, I think it depends, honestly, because you can't do it to everyone, right? So I think to some extent it depends on how much time you spent with them. Depends on two things, right? How much time you spent with them. If you've taken one meeting and you're a no, just give a clear no. I mean, maybe you're minor feedback. You know, you can't write a long email, right. If you've taken two or three meetings and you felt you almost there. And sometimes I like to do it because I think it's helpful for your own self. Some CEOs don't respond well to detailed feedback and they argue. Some of them are really professional about it. And I like them. I'm like, yeah, I see what you're saying. If I'm right and you're wrong, I'll be back in 12 months and I'll say to you, I told you so and you'll pay three times as much. And I'm like, and I'll be glad to. For any deal you spend a lot of time with, it's actually very helpful to write out your conclusions and keep them internally. I do that because then you can test your thinking and you look back and you look back two years later and oh my God, I turned down that for that Reason I was an idiot or I nearly did that deal and I was totally wrong. On the market, it's a lot of. Remember in a model that only gets trained in eight or ten year increments based on the two deals you do a year, you get a lot of additional feedback from the 20 or 30 deals you nearly did that you just don't want to lose. So I do try and write it out for myself and then sometimes I share it with the team, especially if I think it might be of interest.
- [45:02]
Jason Lemkin
I did say that to Harry years ago. I stand by it. Like if you've had between 0 and 1 meetings with the founder, there is no upside in providing feedback. It's just an endless cycle. Wait, Jason, that's wrong. You misunderstand. Like I just, it's, it's if, if you, if you've gone deep on a deal, you should share the real reasons why it's generally appreciated. If they haven't already closed around, it's helpful to them to see the other side after two to three deals. But it's got to be at least two, meet two. You have to have gone deep enough to actually be able to write that email. It can't be because I, I, I just, I don't see it. Just, just don't like then you just got to be a one line. Right.
- [45:36]
Podcast Host
I think I know, I think I
- [45:37]
Harry Stebbings
know the deal that Rory is talking about, but we shall move on.
- [45:42]
Podcast Host
I want to talk about cerebras, the biggest US tech IPO since Snowflake, priced at 185, which was a big expansion
- [45:50]
Harry Stebbings
from where it started. I believe it was 120 in the or110.120 in the early days which went
- [45:54]
Podcast Host
to 150 and then 185. It popped 68% on day one. It was a fantastic IPO.
- [46:02]
Harry Stebbings
An amazing story.
- [46:03]
Podcast Host
Does this open the window for many more companies of that size and not
- [46:08]
Harry Stebbings
the $2 trillion companies, but does this open the window for many more companies to go out and ipo?
- [46:13]
Jason Lemkin
I think it's good first for Space X. I think it's good for anyone above their level. It just shows anything that is that or better and better in air quotes. The demand is infinite. I'm not sure if this is really going to help folks that are below that level. I doubt it. Even you're looking at Figma and you're like, I mean I don't think anything sub Figma can IPO and have a decent ipo. This is the new grade better than figma. BTF Service arguably is a different category. If you look at the backlog of 24 billion and you're. And you're. And you're Pollyann about it. Right. What's Figment's backlog? I don't think it's 24 billion. Right. So I'm oversimplifying it, but I think it's got to be better than figma. And if you're better than Service, then it's a good time to ipo.
- [46:54]
Rory O'Driscoll
This is very much an N of one bet. It's an extraordinarily complex technological product that they've brought to fruition just at the time when demand for that product has exploded. And unlike when they pulled an IPO two years ago, they were able to line up arguably the marquee customer for that product, OpenAI. So it's a. Semiconductors are hot. They're a semiconductor company. Inference is hot. They're an inference company. OpenAI is hot. They're selling to OpenAI. Right. It's a N of one positioning for a market that's starved of ways to bet on OpenAI and Anthropic. They really only have things like Coreweave and obviously you have Nvidia. This was a chance to play. So, yeah, I'm not surprised. If you remember, last week you asked, is it going to go really well? And we recorded before the ipo and we appeared after the ipo and I was like, of course it's going to go really well. They've already raised the range. They're not idiots. And it went exactly like that. They went to the. They went beyond even the range. They went to the max. They could do without refiling. It was an obvious win or category and worth pointing out how fickle the world is. Two years ago they couldn't get this deal done. I think you're right, Jason. Actually, it is at the margin. It's a positive tell for SpaceX. People are willing into. People are very much risk on for the kind of things that look like they have the kind of upside.
- [48:08]
Harry Stebbings
Roy, would you add it to your public book at 300?
- [48:11]
Rory O'Driscoll
Probably not. I go back to the base rate. The base rate return on IPOs, not from the day of pricing, but from the first day's closing price, which is typically way above it. The base rate return on that is negative 6 months, 12 months, 1 year, 2 years. In other words, across the thousand or so of them, if you buy on the pop, you tend to be in a happy camper. Is it a company at the right price you believe can be a long term enduring company. Absolutely, yes. It's got technological differentiation like no one else. So just blindly buying the day every other retail idiot on the planet is buying is probably not the best way to make money just statistically and base rates matter.
- [48:48]
Harry Stebbings
We said it's good for SpaceX and SpaceX sets June 12th for the largest IPO in history.
- [48:55]
Podcast Host
Suspected 1.75 trillion valuation, $75 billion raise.
- [49:00]
Harry Stebbings
My word. This would be epic.
- [49:03]
Rory O'Driscoll
It will. That's one word for it. And you know again back is that.
- [49:07]
Podcast Host
How does this go?
- [49:08]
Rory O'Driscoll
I don't know. I mean I think it's funny we're recording this the day they're due to file the S1 but I haven't seen it. I checked before I came on. The interesting thing about the S1 is in one sense you really want to read it. In the other weird sense there's actually going to be very little in it that actually matters at the margin. What do I mean by that? Is that the S1 will tell us and I'm really curious to read it because it got through the SEC really quickly. The S1 will tell us everything about SpaceX as it existed in December of this year which was without X AI, without the cursor deal, without the entropic deal. Because if you think about it, the most recent I presume their year end is December so they'll have last year which is SpaceX and Starlink standalone. The league figures are 15, 18 billion in revenue, 2030% growth rate EBITDA positive. Would like to see the Capex before I comment but pretty much a bounded understood company. In February of this year they closed on X AI which bought them a pitiful amount of revenue and a burn as big as Croceus, you know what I mean? Right. So that's going to be prorated into the S1 for maybe one quarter. Right. So that's all you literally have half a quarter's information on something that's kind of taking you from a profitable company to a loss making company. Then the other two big deals, the anthropic deal won't even be in the financials because it's a signed deal. And then the cursor acquisition won't even be in the financials because it's not closed yet. So you're literally going to be reading this S1 going and no forward projections are allowed in an S1. You're going to read this thing that says here's the company we used to own on December 31st of last year. Pretty nice Fucking company. It was too, dude. Right. However, we since got AI pilled and now it's totally different. By the way, we can't tell you much about that. You'll have to talk to our bankers. It's going to be the funniest one ever. In one respect is that revenue 30, 40% of the revenue isn't in the S1. All the loss isn't in the S1 except for half a quarter. Some of the bankers are going to be having to tell the story via the roadshow. So in one sense I'm looking forward to reading the S1. In the other sense, that's the first comment is the storytelling around these acquisitions are not going to be in the S1. And it's just going to be interesting how they get that across. There are other markets and other times where people will look back and go, you must have been mad to buy the stock on that little information. So I think the probabilities it gets done extraordinary well. And the excitement is amazing because the market is in the mood for excitement. We're selling. We're selling the most exciting company at the end the planet. At a time when the market wants excitement. If the market ever wakes up and says it wants cash flow, it's going to be a totally different story. Right now we're, we're into excitement.
- [51:37]
Harry Stebbings
June 12th, this goes out. It's Elon the pump machine. Does this have the mother of all pops with retail getting behind Elon in a way that we haven't seen before.
- [51:46]
Jason Lemkin
Got to do better than GameStop.
- [51:48]
Rory O'Driscoll
No?
- [51:49]
Jason Lemkin
Yeah. I think there's a reason it's 30% retail. I think some of it is being Robinhood and democratic. Right. He's selling nothing. 30% to retail. I just think the Robin Hooders and the gamestoppers have got to be more excited about rockets than plushie toys at GameStop, to me it's more exciting.
- [52:06]
Rory O'Driscoll
I agree. I think everyone will be wild. Everyone will want to own some of this. Which means retail will buy a lot of this. You're exactly right.
- [52:11]
Jason Lemkin
I'm going to put 2,000 bucks on my iPhone into this thing.
- [52:14]
Rory O'Driscoll
And the reason I said no is because remember GameStop again, I'll go back to numbers. GameStop, I think pops 10, 30, 20x from low to high just based on retail. When you start at 1.7 trillion and the largest market cap company on the planet is five and a half trillion Nvidia, it's going to be hard to 10x from here. Right, that's what I meant. But you're right. The excitement on retail will make this a super interesting story. And then the other thing is, as
- [52:41]
Jason Lemkin
you, you know, literally, Rory, I'm completely ignorant. Obviously, it's going to be a huge float mathematically. Could the Gamestoppers and the Robin Hoods. I'm admitting my ignorance. If they. They could, they could Believe it, go 10x. This is. They're not doing any DCF analysis, they're trading. Is it possible to trade enough shares to create a 10x pop? Is it mathematically possible to influence the float that way? I just. Because sometimes it's a thin float when you're able to manipulate it. Right.
- [53:06]
Rory O'Driscoll
The float isn't that small. It's 75 billion. I think the interesting thing is if it's. It's already healthily priced at 100 times revenues, it will be interesting to see what happens when these things and how you can go. No comment at this point. When institutions take shares in an ipo, they have a price target. And if that price target gets achieved on the first day, you tend to see additional trading the 70%. If BlackRock spends $10 billion on buying in the IPO, as has been rumored, again, I have no clue about the facts. They run an internal analysis and they say, we think we should buy 10 billion because we think over the next 12 months we can make 40% on our money. And if at the end of the first day it's up 40%, it'll be sorely tempting to have another $10 billion come back to market because you'll be looking at your price target and going, I have a price target. I've achieved it. Time to go. And you see that phenomenon when IPO pops the institutions. And I used to think, oh my God, they're disloyal, they'll leave. But in fact, it's just, we bought. We wanted to be a holder, but we had a price target and you've achieved it. So it will be interesting to see that price action if it does in fact do a GameStop y type up price. You could also have the Facebook effect where the IPO was frankly a dismal failure early on. It hung around its price for a day or two and then look it up in 2012 and then it dropped at 1.40 50% below its IPO price. It was a horrible IPO. It's going to be wild. I genuinely hope it succeeds because I think the damper effect of it not succeeding and trading well would be pretty profound.
- [54:34]
Jason Lemkin
I think it'll trade up to 5 trillion I'll take this bet. I think there will be enough sitting in Brickell in Miami, day traders, yahoos that love the brand. Folks hate the brand. That's why he lost the trial in Oakland. I think they hate the brand too. But enough folks love the brand that it can float up 3-5x based on partially influenced the float. There's not enough. There isn't enough demand. This could be limited. Lemkin speaking. But I'm going to take this bet that it's going to trade up 3x in 2026 just based on Gamestoppers driving it up.
- [55:05]
Harry Stebbings
I think it's going to go to 3 trillion.
- [55:07]
Rory O'Driscoll
I don't discount the fact that it goes down. I don't discount the fact. I didn't say it's likely. I'm just pointing out here you're paying 100 times revenues.
- [55:15]
Harry Stebbings
You boomer. You boomer.
- [55:17]
Rory O'Driscoll
I am a boomer.
- [55:19]
Harry Stebbings
Boomer. 5 trillion region. I think it's going to go down.
- [55:23]
Rory O'Driscoll
I didn't say. Hang on. I didn't say it will go down. Harry. You got to be able to live in probably.
- [55:27]
Jason Lemkin
Did I tell you when I got into bitcoin?
- [55:28]
Rory O'Driscoll
Yeah.
- [55:29]
Jason Lemkin
I've made billions on my bitcoin. This is going higher than bitcoin.
- [55:33]
Rory O'Driscoll
Okay, good for you.
- [55:34]
Jason Lemkin
We do realize that space is bigger than bitcoin, right? There's a trillion stars just in our own galaxy and there's a trillion galaxies that is larger than all the bitcoins out there. You have this completely wrong. Tell you when I got into bitcoin. Did I tell you guys when I got into bitcoin?
- [55:48]
Rory O'Driscoll
Okay, okay. I'm just trying to be serious.
- [55:50]
Jason Lemkin
That's an instant pass on a founder in a pitch telling you when they got into bitcoin that that's my flip side of too much feedback after zero. Like if all they tell if in the first 20 seconds they tell you about when they got into bitcoin, tell them to stay in bitcoin.
- [56:02]
Rory O'Driscoll
The reason I made that comment is, and I know it sounds like again, I go back to Facebook, I remember the ipo. It was the defining company of its generation. It was far more attractively priced in here. It was profitable. But they pushed the limit on price and they just hit that point where the initial trades went the other way. There was a little worry about mobile. They hadn't managed a mobile transition and it really traded down over the next six months. When everyone thinks something is guaranteed, that's just when it blows up in your face. Do I think it's the likely outcome? No, it's probably 2/3 positive and of that at least 30% of it is adjacent outcome which is a pops amazingly because of retail. But I'm going to go back to it's. You know, fundamentals is trading at 100 times revenues. They've effectively decided to be a nebbyist, not an antropic by virtue of selling their compute to antropic. So that whole the AI story ain't there. It's Starlink as the growth engine with a core we've attached.
- [56:54]
Harry Stebbings
It's been a while since we had a bet. Rory, this is great. Jason's five, I'm three and you're negative.
- [56:59]
Rory O'Driscoll
No, there's probably some kind of spread betting. I can take on that which is. I'm comfortable below three. I mean I'll totally take that bet.
- [57:07]
Jason Lemkin
The price is right bet.
- [57:09]
Rory O'Driscoll
I mean you basically, guys, you said three, Jason said five. I do not think. Let me add at the end of a month. I do not think this company will be valued at $3 trillion or more.
- [57:18]
Harry Stebbings
Neither do I. No, no. This is a meme and this is a casino. We're seeing the casinoization of public markets. This will go faster. 3 and it'll come fast back down.
- [57:27]
Rory O'Driscoll
I don't do casino betting, but thank you. But Dooley noted that over the.
- [57:31]
Harry Stebbings
Okay, what are you doing in venture and I then if you.
- [57:35]
Jason Lemkin
If you.
- [57:35]
Rory O'Driscoll
Yes, okay, keep rolling, keep rolling.
- [57:38]
Harry Stebbings
Okay, keep rolling.
- [57:39]
Podcast Host
News last night.
- [57:40]
Harry Stebbings
Mic drop moment with Y Combinator and
- [57:43]
Podcast Host
I do think it's actually important.
- [57:44]
Harry Stebbings
Sam Altman just offered $2 million in OpenAI tokens to every YC startup in the current batch in exchange for equity. It reminded me of Yuri Milner and DST doing the exact same with the very early YC batches.
- [57:58]
Podcast Host
What do we think about this?
- [57:59]
Harry Stebbings
And does that impact the valuations that we ultimately get it at? If they can get $2 million in OpenAI tokens from SAM, first of all, it's all smart.
- [58:09]
Rory O'Driscoll
You have let anthropic steal a march on you. More than a march. Many marches on people, on mindshare, on respect. And you got to do all you can to earn it back. And that's just one more thing. Developer hearts and minds. So smart. Second, I'm assuming it's not transferable because if it's transferable, then it's money. Because let's be real, compute is money. I'm sure they've thought of that. So it's not transferable. To your comment on does it impact pricing? Maybe at the margin but if you're compute intensive, it does. But probably if you're compute intensive, you're raising 200 million anyway. I mean if I think of the last YC batch and I said to it, most of them are building software on top of AI, but where agentic spend would be, you know, token intensity would be 10% of revenue. So it's valuable, but it's not going to replace the need for humans. You're still going to need four or five humans to build the code, to build the agent for call centers or whatever. So at the margin it takes a little bit of the edge off, but it's not like any of them can build the next generation whatever with it. It's nice at the margin.
- [59:11]
Jason Lemkin
I think it'll increase the valuations for
- [59:12]
Rory O'Driscoll
sure a little bit. Yeah.
- [59:13]
Jason Lemkin
If nothing else, even if you don't view it as inflationary, they have 2 million of tokens now agree that that's a real investment. Like let's, let's take this seriously. Like we all can use the tokens. So that is 2 million of DE risking that investment. 2 million more that they can use to add value to the deal. There's plenty of YC companies that don't raise 2 million at demo day. Right. So now they've raised another. Now they've radically derisked these investments. It would make sense that typical post might go up to 60. There's some, there's some correlation I'm not smart enough to do. It may even gamestop at higher since they're investing at 100. It's hard to predict, Harry. If you do the deal a month before demo day, it's 20. If you do it the week before, it's 40. If you do it after you're at the OpenAI price, it's 100. But you are welcome to come in at the OpenAI price and it's not even a premium. Okay, we'll do it because we love the pod. We'll let you, Harry and Jason all in at and no premium. Just at the. No, no, no nothing. Just at 100.
- [60:09]
Rory O'Driscoll
You're right, Jason. If you navigate on optics, it probably causes an anchoring effect. You know, I got 2 million at 100. Why would I take another 4 at 50?
- [60:17]
Jason Lemkin
It may shrink the size of the rounds too. Like it may make it even harder on VCs to invest in YC rounds because the Average ownership for VC rounds has already been sliced to like 5 or 6% at YC. This could slice it to 2 or 3. Just because you just don't need as much capital. That might even be the bigger impact potential, Right.
- [60:33]
Rory O'Driscoll
In fact, yeah. Depending on how much of your Remember at scale, if you're successful, any software company can use up 2 million in tokens without blinking. The question is how. Yeah. The interesting question is how much leverage. I'd love to know in the first 12 months of the typical YC company's life how much of their spend is either today is either tokens to serve customers, tokens to build product and our engineering spend that can now be replaced by tokens. It all goes back to that 20% number. Can you replace out of the gate? You're probably not selling so much that you're reselling that you're using those tokens to serve customers. Most of what you're probably doing with those tokens is building your product. So if you can with maybe what
- [61:14]
Jason Lemkin
if you're building a Legora or Replit, you could burn through all those tokens in 12 months.
- [61:18]
Rory O'Driscoll
Yes. Serving customers. But if you are. Can I make a comment? If you are given that token intensity for a Javier Lagoa is probably 20% in terms of revenue, that probably means. So to burn through 2 million you're going to be at 10 million in ARR. If you had 10 million in ARR in today's world, you're going to raise at 500 million anyway.
- [61:35]
Jason Lemkin
But hold on. Would love that. I don't think that's the early stage math. The early stage math might be token spend is marketing spend. So I'm going to give away 20, $30,000 a month of video creation, of audio creation, of my psuno competitor, of my replica competitor. Now I can give away $50,000 a month of tokens my first 12 months. Where it would have been stressful af before this.
- [61:56]
Rory O'Driscoll
You're exactly right. I was mentally putting in two categories which was token spend for engineering and token spend for full price customers. You're exactly right. The minute you sell it. I agree with you. What you'll now do is everyone will have destructive free token programs because you want to try. There'll be a bunch of freemium products. You're exactly right. That's how it manifests.
- [62:13]
Jason Lemkin
And if Sam increases it to like 4 or 8 or 10 as open air grows, then think about how much that could change the game. If as a startup you get 10 million of tokens to build another Ligora or repl it for your for your first year, then you're just be to the wall because you don't have to worry about Anything except shipping the best Opus 5 point. I mean I Opus, sorry, a 5.7 Codex product if you can. Because there's no issue the first year. It's all about Mark, because for so many of the startups we invest in now, tokens are marketing. Their tokens are marketing. Because poor Michael Cannon Brooks, he's built an iconic company but he can't afford to spend the number of tokens a startup can per customer. Two could just be the start. I just think this is already disruptive to 200 startups. And why couldn't it go up?
- [62:59]
Rory O'Driscoll
It can if you have spare capacity. It's also very telling. It says at the margin, if you're tapped out on capacity, that's two times 150 for anthropic, if they really are capacity constrained, that's 150 star, that's 300 million you're giving up every three months. That's 1.2 billion a year. If you say four YC batches, 1.2 billion a year at 18 times valuation is about, you know, it's a 20, 30 billion dollars hit. The valuation, that's real money. But if you on the other hand, you have spare compute, then it sleeves off your vest. So to some extent.
- [63:31]
Jason Lemkin
But if you believe in the, in the open, I mean the YC model, worst case, you're going to hold it at like once cash is less of an issue, you're going to at least be able to hold these investments at 1x. It's not going to cost you anything because if the average, if allegedly the average batch does 3x to 4x but you're paying 100 million, then at least
- [63:48]
Rory O'Driscoll
I don't have to mark it down
- [63:49]
Jason Lemkin
from my balance sheet.
- [63:50]
Rory O'Driscoll
Respectfully, up until then you were more right than me on that. You're wrong because OpenAI's investments will be valued at 1x and no one will give them any credit. But if to make that investment they gave up on revenue from selling to bank of America those tokens.
- [64:04]
Jason Lemkin
Of course, you're right on that. Yeah. It only sort of works if the tokens are surplus or left over or something like that.
- [64:10]
Rory O'Driscoll
Therefore, my conclusion is OpenAI has surplus tokens and Antropic does not.
- [64:14]
Jason Lemkin
I mean, I think that's a good, that's a good, good conclusion. Right, but it's also a thoughtful bet. Right?
- [64:18]
Rory O'Driscoll
It's a smart way to use them. It beats the. Yes, it's a smart way to use them. Okay, what else are we.
- [64:23]
Harry Stebbings
I just want to hear before we do a rage bait but real Jason, Rory is a celebrity at Sasta.
- [64:29]
Jason Lemkin
Oh God, they loved him. Don't give me L O V E D. He was just. He was like 8, 10 rows standing room only deep to hear from this guy. They. They love him.
- [64:39]
Harry Stebbings
Did he get selfies?
- [64:41]
Rory O'Driscoll
Okay.
- [64:43]
Jason Lemkin
He wasn't that into the selfies, but yeah, he was okay.
- [64:46]
Rory O'Driscoll
I hate this. Keep going.
- [64:47]
Harry Stebbings
Oh, yeah, no, it's okay. Do we want to do that?
- [64:50]
Jason Lemkin
In all seriousness, I do think it's a reminder that there. There's a large threat of Rory super fans. Right. They like the thoughtful dives. Got a few skills here. Harry and I are self aware. We're not claiming we're something we're not. Rory has a set of insights and
- [65:03]
Rory O'Driscoll
skills that I'm very self aware that
- [65:06]
Jason Lemkin
I would say to the LPs listening, at least justify a 6x fund. I would say at a minimum.
- [65:10]
Harry Stebbings
Would you agree, Harry?
- [65:12]
Jason Lemkin
At least. At least. At least justify premium carry. At a bare minimum. Right. At least a 199 fund.
- [65:20]
Rory O'Driscoll
I'm cutting this out. We're going to move on to rage bait in a second.
- [65:22]
Jason Lemkin
A real celebrity.
- [65:23]
Rory O'Driscoll
I just want to point out in passing, we did call the OpenAI Musk lawsuit correctly. Not just dismissed, but dismissed on the technicality. Exactly what I said last week. The Jew call?
- [65:35]
Jason Lemkin
Yeah.
- [65:35]
Rory O'Driscoll
They just said my wife used to be a public defender. And one of the real tells was how quickly the jury came back. Like literally two hours. She said they went in, had lunch, picked the foreman said, look, we can decide on the technicality of statute of limitations. We can be done in here half an hour, or we can waste a whole bunch of time arguing facts. Beyond that, what does the vote say? We're done. And I think in this case, the real truth is this. Elon knew that they were talking. I mean, so stepping back for people, the question came. The conversion had already been blessed by Delaware and California. You can't say the conversion is legal. So the case you were making was fraudulent. In other words, that the other two guys were fraudulent when they didn't tell Elon about the planned future conversion and they took his money on a false pretensus. So they were alleging fraud. Right. And that fraud took place in 2016. 17, 18. But there's a statute of limitations on a fraud claim. So if Elon only found out about the conversion to for profit when it happened in 20, 23 or 24, then it's within the statute of limitations limitations and his claim could proceed. But it was obvious to anyone the brain of a pea that given that he was in the. That he was discussing a conversion to for profit back in the day, and therefore it was a ludicrous allocation that he didn't know that's why they took. The reason it went to a juror, went to a jury, and also to a judge versus just being a black and white thing is that it was about knowledge. When did you know? In the case of fraud, it's when did you know you were defrauded? It is when the clock starts for statute of limitations. But it's pretty clear he knew. I think the real truth is anyone sane wouldn't have taken that, wouldn't have been the plaintiff. Elon just didn't care. He didn't do it based on probability of winning. He did it because even if he doesn't win, he can damage the other side. He's really angry and pissed off about what happened. And if he worked $800 billion. So what if I wasted $40 million on a bullshit case? I yanked everyone's chain. I'm happy. So my take on this one is justice was served. Elon got his pound of flesh for the 40 million or whatever he spent on legal fees. He's going to appeal it. It won't get a second past appeal and it'll go away. So I actually think it came out exactly as planned.
- [67:48]
Harry Stebbings
But Jason actually found one of the news stories that came off the back of this, which I didn't actually, which
- [67:53]
Podcast Host
is that Elon spawns dozens of other
- [67:55]
Harry Stebbings
investigations into Sam Altman's finances on the
- [67:58]
Podcast Host
side, creating more problems for Sam.
- [68:01]
Rory O'Driscoll
I think that's true. I think the separate comment is that, okay words I never thought I'd say. I feel empathy for Sam Altman in the sense that he hasn't taken any equity in OpenAI. And he's been asked about that. And he said he's had no economic interest in OpenAI. And we probably all talked at the meeting. He doesn't own any equity. But what's going to happen now is a whole bunch of people, including in a congressional test, are going to say, but you have an ownership interest in Y Combinator that has an ownership interest in OpenAI. You have an ownership in these companies that are selling to OpenAI, and therefore you're nefariously trying to get the money. And in one sense, he may have been factually incorrect to say that. In the other sense, it's obviously bullshit, because if Sam wanted to get 4% of OpenAI, the board would have given him 4% of OpenAI. So whatever he Gets indirectly is minuscule compared to what he could have gotten had he not been so far. And the reason all this is biting him in the ass is this whole, we're doing it for the good of the world, I'm not getting paid. The enjoyable part is all these bullshit good intentions are biting him in the ass. It's kind of unfair, right? Had he been Larry Ellison and saying, I'm doing for the money, it would all have been clear. So yes, Elon is going to get. He's going to continue to make OpenAI's executive team life and misery, which clearly makes Elon happy. And not only that, but other people are going to be able to pile on too, because of the complex nature of OpenAI structure in a world where a much simpler structure wouldn't attract any attention. I mean, if he owned 20%, to be fair to Samoa, he was the founding idea behind OpenAI. He convened that meeting. If he'd taken 10% ownership day one or 10% ownership when the conversion, no one would blink an eye. So it's one of those things, good intentions bite you in the ass.
- [69:39]
Jason Lemkin
Let me add just two final thoughts. We go forever. One, I've said I'm on Team Sam now. More importantly, I'm on Team OpenAI. Open AI, okay? But he did not have no consideration. He set up an entire venture fund where he got all the carry and claimed it was Open AI. If Elon keeps this going, he this will reverberate forever. He did not. The idea that Sam took no consideration from OpenAI is the biggest load of malarkey because he set up a venture fund on the side, probably without telling the board. This is probably why he got fired and kept all the carry. Like. And you know why he did this? Because he didn't think OpenAI would be worth anything as a non profit. So he said, I want to do this. I'm deeply passionate about it, but I also want to monetize it. And how do I do this? Do what I did at yc, set up a fund on the side and keep all the carry. Call it OpenAI Venture Fund and make all the investments and keep all the carry. That way I can at least make 800 million like I did on stripe. That's what happened.
- [70:32]
Rory O'Driscoll
Ironically, if in fact, just as a commenter, if in fact you're correct, it's evidence of a belief that OpenAI is not going to make any money, which ironically would actually have helped his case. He could say, hey, I mean, I think what it really points genuine commentary. What it really points to is complex arrangements, especially complex arrangements bite you in the ass. Because I go back to my comment that once it became a for profit, if you wanted to just be a paid CEO, you could have got your ownership. You didn't need to do all this other stuff. And you're right, Jason. When you do all this other stuff and then you make an enemy of the richest man on the planet who is clearly malevolent and willing to go to the to the mat for this over and over again, you're in trouble. Then add to that on top something we haven't talked about, but I think goes back to where you're wrong on your comment on the jury. Right. They didn't find for OpenAI cuz they found OpenAI more sympathetic than Elon Musk. I think as it's becoming painfully clear now, no one in America other than us here in California likes the AI trend. And I think probably if you asked a jury what they thought of all the people involved, they would say a curse on all your houses. What a nasty, obnoxious, arrogant, entitled bunch of shits. But we did our job and we followed the law. And I hope I never see these buffoons again and only bad things happen to them.
- [71:49]
Jason Lemkin
My guess is probably that was the jury. Yeah, that's probably the jury.
- [71:51]
Rory O'Driscoll
That was the jury. Right. And now can we get our lunch and our daily stipend and are we done? Did you guys see the Eric Schmidt? Yeah, Eric Schmidt got booed. I think that. Again, go back to my comment. Here we have the leaders of this thing spending three years telling us how it might destroy humanity and it's going to put us all out of jobs. And then we're shocked to discover that people don't like us. Oh, and by the way, your electricity is going up in the meantime. But have a nice day. We have people who are brilliant scientists who politically are utter morons. And the people who are utter morons at AI but brilliant at politics are going to have us for lunch. That's the movie. In the next three years, they're going to have Sam for lunch because he's lied to them as far as they're concerned. And they're going to have the AI industry as a whole because we're firing people left, right and center. And the politics are going to be brutal. At least when Meta was busy destroying the world, they were smart enough to pretend it was all about bringing friends together and not destroying democracy. We will regret that lack of transparency.
- [72:45]
Jason Lemkin
Yeah, this is why I'm on Team Sam, I think he's doing the best balance he can here. I think it's mostly a positive image. He's not doing the Dario thing.
- [72:52]
Rory O'Driscoll
Yeah.
- [72:52]
Jason Lemkin
And people still shot at his house
- [72:54]
Rory O'Driscoll
because I don't believe.
- [72:55]
Jason Lemkin
It's not funny. It's not funny. Eric Schmidt got off light.
- [72:58]
Rory O'Driscoll
And it's very telling because actually three years ago I was at. Maybe four years ago I was at my son's graduation the first year after ChatGPT and it was the exact opposite. Someone, one of the speakers made a kind of a semi nice reference to ChatGPT and all the kids clapped in a totally knowing fashion that basically exuded We've all cheated for the last year using this product. We fucking love it. And it was a really sweet one. I'm like, including my son. And I'm like, oh, I get what just happened here. Right? And We've gone in three years from, from graduations, clapping about OpenAI because it was like, oh my God, that got me my final essay done in 24 hours. When I didn't do it to we now. Boo. Eric Schmidt, you might want to think about the trend here and the direction of travel if you're representing AI. And that's why there's been a message shift that DAO hasn't gotten. But most people are now trying to emphasize the positive. But it's going to be hard to do that because as we speak today, Meta are laying off 8,000 people. That's 8,000 lives impacted because he wants to put it all into capex. So I think the politics are going only one way.
- [73:58]
Jason Lemkin
Harry knows the British. What did the CEO of Standard Charter bank says? We're getting rid of 8,000 jobs. But we don't have job losses. We just have job reductions in favor of the machines. This is the greatest graduation speech of all. No job losses at standard charter. 7,7800 reductions. We just have job role reductions in favor of the machines. This is a level of honesty that I think is disingenuous as we get. He's not even seeing them as job losses because they're no longer necessary the machine. They're just in favor of the machines. I mean, this statement should echo through history.
- [74:30]
Harry Stebbings
I don't want, I don't want to end on a negative, but Cisco cuts 4000. LinkedIn cuts 875. Meta cuts 8000.
- [74:39]
Rory O'Driscoll
I will give LinkedIn credit. They specifically said it's not caused by AI, it's realignment. But yes, the trends are tough here.
- [74:45]
Jason Lemkin
Intuit's a big one too old school intuit16000 wow.
- [74:49]
Rory O'Driscoll
The politics here are going to be interesting.
- [74:51]
Jason Lemkin
We will need to create policies in tech to rehire these people. I think we need to reflate first. We're going to get fit. We're going to. We realize reskilling doesn't work. We're out of time, okay? We've got to do. We got to be better than figma. We can't screw anymore so we're going to get fit. We're going to replace our workflows, we're going to have AIs and then we're going to have a social obligation. The Eric Schmidt's can't just go to graduation and say F you. We're going to have to reflate and hire thousands and thousands of people per tech leader to avoid social unrest. We're going to have to do it. I've had this conversation with a number of high flying AI CEOs and at first they think I'm ridiculous and then they think about it and then they're like well maybe, maybe we need to go. We need to have a 2021 I just charter where we just double our headcount and we just. They have nothing to do but play on chat GPT all day.
- [75:36]
Rory O'Driscoll
No, I just want to flag that's only the case if in fact AI is capable of replacing these jobs. There is a scenario, I just want to put it out there whereby people are overestimating what AI can do and maybe it's not 20% of RD headcount, it's 5% and therefore the amount of efficiency that AI creates might be less in which case you have yourself. Are these people being really laid off because they were surplus to voyage all along? Are they being laid off again? We talked about this because you just spent all your money on Capex or your shock. Have you cut too deeply and do you have to do a klarna and wind some of it back? Jason, let me be clear. If the reality is as you articulated then you're correct. If the tech industry really does put, let's say Dario is correct. If we put 20 to 50% of white collar jobs out in the next five years then you're going to have to do something massive on the social thing otherwise they will be forming the guillotine in the square in San Francisco. And I have a long list of people that I would suggest to bring up in the tumbles. I actually don't think that'll happen. I think we're over exaggerating the impact of it. But you are Right. What you can't do is say the half. What you cannot do is what's happening right now laying off a whole bunch of people saying it's AI and then acting surprised when it bites you politically in the ass. I mean, I wonder, genuine comment, going back to something you said. How do you think those 8,000 ex Facebook employees are going to vote on the wealth tax next week?
- [76:56]
Jason Lemkin
They're going to vote. You know, it's worse because first of
- [76:59]
Rory O'Driscoll
all, let me see, we can take 5% of fucking Zuckerberg's money and he might leave the state I'm in.
- [77:04]
Jason Lemkin
I agree. That's why I think we have to have this reinflation of hiring. First of all, one thing. I'm sorry, I know, ten equals one.
- [77:11]
Rory O'Driscoll
He'll just leave.
- [77:13]
Jason Lemkin
He may have left. He may be a citizen of Nevada.
- [77:15]
Rory O'Driscoll
You're right. My point is politics. When you're calm and rational and you can talk, I think it's a horrible idea. You can talk about it very rational, like this. Because if they leave, you lose all the tax. Right. Politics. When you've been laid off by email at 4 this morning because the CEO of your company has decided he'd prefer to buy, to Jason's point, $100 million of machines than $100 million of people, that politics becomes very different. And I don't think you think as much. I think you are pretty pissed off. That's my point.
- [77:43]
Jason Lemkin
I actually think it's worse than that, Rory, because I think these are gonna be by far the layoffs that Harry just rattled off. And the ones for this year, I believe, are gonna be far worse than any layoffs in our lifetimes. And I'll tell you why. And I know this is brutal. No one's going to hire these people. No one wants. It has always been a scarlet letter to be laid off from a tech company, but it is a double scarlet letter today. And these people are going to be angrier.
- [78:07]
Rory O'Driscoll
No, I'm interrupting because late breaking news. I just saw a headline come in that says OpenAI might file as soon as Friday. What this says to me is they have figured out that the money. The last trains are leaving for Money Station. I don't know if it's true or not. I'm literally responding in real time here. But I think when you look at the service market, you say to yourself, go, go, go, go, go. So when Sarah said, we need another 12 months to start the process, what we really meant was, we're going today.
- [78:35]
Jason Lemkin
So, yeah, if it does happen tomorrow, we Might have to do another supplemental podcast like hrsa.
- [78:39]
Rory O'Driscoll
No. Remember, it'll only be a filing. It'll be a closed filing. You'll learn nothing. All you'll learn is what we've just learned, which is that the point to start the process. It's the april period for SpaceX, not the flip. What really counts is the flip. And the flip is happening for we'll see SpaceX tomorrow. We'll know OpenAI filed two months from now. They'll do their flip. But there you go.
- [78:59]
Harry Stebbings
What an ending.
- [79:00]
Podcast Host
Rory Woo.
- [79:01]
Rory O'Driscoll
There you go, man. My God, I got to go to just a little board meeting and try and make a buck.
- [79:05]
Jason Lemkin
Goodbye, good luck.
- [79:06]
Podcast Host
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