20VC: Anthropic Raises $13BN | Why Canva Will Not Direct List | OpenAI Buys Statsig for $1.1BN All Stock | Lovable Raising at $4BN + Vercel at $9BN: Justified or Not | Quarterly Results from SNOW, Mongo, ZOOM and more

Summary

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The Twenty Minute VC (20VC) — Sep 4, 2025, Episode Summary

Overview

This episode of The Twenty Minute VC (20VC), hosted by Harry Stebbings, delivers a high-energy, dynamic roundtable featuring venture luminaries Rory O’Driscoll and Jason Lemkin, with guest Cliff Obrecht (Co-founder at Canva) and insights from Ben Thompson. The group delves into the state of late-stage venture deals and IPOs, dissecting Anthropic’s record $13BN raise, OpenAI's $1.1BN Statsig acquisition, high-velocity up-rounds at Lovable and Vercel, and results from leading public SaaS companies like Snowflake, Zoom, and MongoDB.

The big themes: massive capital flowing into AI, skepticism and excitement around private/public tech valuations, the challenges of compounding growth at scale, and the existential questions around going public versus staying private. The conversation is sharp, honest, and sometimes irreverent, offering front-row insight into what’s driving today’s most consequential tech and investment decisions.

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Key Discussion Points and Insights

1. Anthropic Raises $13BN—Bubble or Bargain?

• Deal Dynamics: Anthropic’s $13BN round at a $183BN valuation sets a new bar for AI funding.

  • Growth perspective: Rory O’Driscoll breaks down the numbers, showing that, if current growth persists, the valuation could make sense (04:07).

    “If you think the growth rate’s there, then it’s not crazy. And I did not go into that math expecting that answer.” — Rory O’Driscoll (05:48)

  • Oversubscription: The round was heavily oversubscribed—AI FOMO and a “corporate imperative” at major growth funds to not miss out (05:58).

• Valuation Parity:

  • Ben Thompson points out that Anthropics’, Canva’s, and Databricks’ forward-looking multiples aren’t irrational—assuming continued “epic” growth (06:43).

    “Literally, if you’re using ARR multiples—especially forward ones—Canva, Databricks, Anthropic seem reasonable, right? As long as the growth can persist.” — Ben Thompson (06:57)

2. Canva’s Capital and IPO Strategy — Why Not Direct List?

• Managing Oversupply: Cliff Obrecht details how secondary rounds provide liquidity for employees, not new primary capital—Canva has been profitable for eight years and sits on $1B+ cash (09:23).

• Valuation Swings: Cliff recalls how Canva’s valuation soared and crashed post-2021, emphasizing that “markets will do what they’re going to do,” but growth and execution win in the long run (10:01).

  “In the end, the thing that bails out our incompetence is your growth rate. That’s the dirty little secret of the positive.” — Rory O’Driscoll (11:48)

• IPO Timing & Direct Listing:

  • While Cliff admires direct listings, data show few immediate post-DL breakouts—Canva is focused on building long-term public investor relationships (45:03).
  • On why not direct list:

    “If you look at all the historic direct listings...none of them have really kind of nailed it over that short term.” — Cliff Obrecht (45:11)

• Why Go Public?: Employee liquidity remains a key driver ("our employees should have liquidity. They’ve created all this value" — 41:51), and public markets now offer better multiples than the private (43:15).

3. AI Product Adoption and Commercialization at Scale

• AI Integration at Canva: Cliff explains that Canva approaches AI as a “workhorse, not a gimmick,” and that success stems from integrating AI to serve mass-market needs, not just early adopters (14:12).

  “AI is just accelerating that massive for us...making it quicker, faster and better for our customers to achieve their goals.” — Cliff Obrecht (14:12)

• Year 2 AI Renewal Worries: Rory posits that renewal rates for AI SaaS tools may be lower than initial hype signals; Cliff concurs, predicting massive “consolidation” in the next 12-24 months as companies focus spend (16:06).

• Canva’s Approach to AI Vendor Spend:

  • Canva already spends close to 10% of revenue on AI compute—Cliff expects that percentage to decrease as models become cheaper and are deployed more selectively (50:41).
  • The company is shifting to a credit-based “hybrid” pricing model to preserve margins as AI usage scales (57:05).

4. Insane Private Company Markups — Lovable, Vercel, and the FOMO Effect

• Hyperspeed Up-Rounds: The team questions the logic of rapid markups—Lovable went from a $1.8BN to $4BN valuation in two months (27:52). Three explanations: real new info, initial underpricing, or FOMO/validation from seeing who invested last (30:43).

• Cliff’s Pragmatic View:

  “If this company is going to be a $20, 40, $50 billion company, who gives a shit whether it’s two or four, right?” — Cliff Obrecht (30:43)

5. Public SaaS Resurgence

• Strong Quarterly Results: Public B2B SaaS companies (Snowflake, MongoDB, Box, Zoom, etc.) are showing signs of “re-acceleration,” often tied to AI tailwinds (36:26, 37:55).
  • MongoDB’s story: Stock jumps 45% after returning to 24% YoY growth—reminding markets that SaaS “death reports were greatly exaggerated” (37:55).
  • Cliff on late-stage private vs public:

    “There’s a lot less scrutiny as a private company, but as a late stage private company... our obligations are pretty much the same as a public company.” — Cliff Obrecht (39:45)

6. The Master Plan, Scale/Mercenaries, Meta/Zuck — Talent & Integration

• Meta's Scale Acquisition: Skepticism arises about integrating acquired talent—Rory notes retention/vision challenges when “mercenaries” are brought in at massive scale (19:44).

  “There’s going to be some fallout. Even if they’re all amazingly talented people...people have egos.” — Rory O’Driscoll (20:37)

• Ben Thompson likens Zuck’s approach to “assembling mercenaries.” Cliff notes Canva’s culture is anti-mercenary, focused on long-term mission and organic growth (24:39).

7. Pricing/Cost Structure and Go-To-Market Shifts for AI-Heavy Products

• AI Usage & Margin Impact:

  • Canva is already spending heavily on AI compute; they expect conversion of some pricing to usage-based as one person can now generate massive output (58:00).

    “We need to rethink our seat based pricing model… it needs to be based on consumption.” — Cliff Obrecht (58:51)

• Quantifying AI Costs:

  • Canva’s new products, launching October, may drive material changes in cost structure as AI use explodes (56:28).

• SEO and Generative AI:

  • SEO's relevance is declining as generative AI and ChatGPT/LLM discovery dominate. Canva pushes hard to optimize for “LLM SEO,” now getting 5% of images via ChatGPT connections (59:56).

8. Broader Macro & AI Infrastructure: Nvidia, CapEx, and the Green Energy Wave

• Nvidia & AI Infra Spend:

  • Jensen Huang (Nvidia CEO) predicts $3-4 trillion in AI infra spend—Rory is skeptical of the ROI at that scale, Ben sees TAM expansion as plausible, and Cliff mentions Canva's billions of AI usages/month as illustration of “100x to come” (48:05, 49:35).

• Energy Consequences: Cliff argues the AI compute boom will accelerate renewables/nuclear adoption—as “every tech revolution is a power revolution” (62:56).

9. VC Regret and the Discipline to Invest at Higher Rounds

• Missing Early, Coming Back Late: Rory says missing early should never prevent a VC from investing later if execution matches projections:

  “When you see the company...do what they say they’ll do, you literally don’t need any more information...The tax you pay for being stupid—pay the tax and just get off the stupid train.” — Rory O’Driscoll (66:24)

• Follow-On Discipline: The best early-stage investors compounded returns by doubling down at every stage, not just holding early positions (67:53).

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Notable Quotes & Moments (with Timestamps)

• On Anthropic’s Raise:

  • “I went in saying, oh, aren’t those guys so silly paying so much?...you look at the numbers, you go, maybe those guys are being quite smart.” — Rory O’Driscoll (05:48)

• On Late-Stage AI FOMO:

  • “If you’re a growth stage investor...it’s hard to imagine a world where you say...the two LLM models we don’t have a piece of.” — Rory O’Driscoll (06:11)
  • “Definitely the latter—the FOMO of missing out, and that’s real.” — Cliff Obrecht on AI markups (26:58)

• Valuation’s Dirty Secret:

  • “In the end, the thing that bails out our incompetence is your growth rate.” — Rory O’Driscoll (11:48)

• The Discipline to Pay Up:

  • “The tax you pay for being stupid—pay the tax and just get off the stupid train.” — Rory O’Driscoll (66:24)

• On AI Product Churn:

  • “We’re all about creating workhorses, not gimmicks, into Canva...AI is just accelerating that.” — Cliff Obrecht (14:12)
  • “There’s going to be consolidation down from year two renewals.” — Cliff Obrecht (16:14)

• On Direct Listing:

  • “If you get the direct listing totally successful, the people buying don’t make any money and people like their pop.” — Rory O’Driscoll (45:39)

• On IPO Timing:

  • “We want to be an IPO-ready company...when we actually go out is another question.” — Cliff Obrecht (40:52)
  • “Our employees should have liquidity...While secondaries are a mechanism for that, it’s pretty janky.” — Cliff Obrecht (41:51)

• On Power and Green Energy:

  • “I actually think [AI] is going to rapidly accelerate our shift to green energy, particularly nuclear.” — Cliff Obrecht (62:56)

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Important Timestamps

• $13BN Anthropic round analysis: 04:07–06:43
• Canva’s capital, IPO, and secondaries: 08:54–11:21, 40:34–43:39
• AI product adoption and churn: 14:12–16:14
• Statsig/OpenAI acquisition: 16:14–18:50
• Meta, Scale, and mercenary talent: 19:44–25:52
• Lovable, Vercel up-round dynamics: 26:26–32:36
• Public SaaS resurgence: 35:47–39:45
• Nvidia/AI capex and macro: 48:05–50:41
• AI infra cost and pricing strategy: 50:41–58:00
• SEO vs. LLM-SEO: 59:35–61:38
• VC regret and stacking into late rounds: 64:46–70:15

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Tone and Takeaways

Expect direct, unsparing, and sometimes tongue-in-cheek debate—a true insiders’ conversation on late-stage venture and the realities of running and investing in hyperscale tech businesses. “Growth covers a multitude of sins” may be the truest lesson—but in these markets, leaders are expected to execute flawlessly, manage cost structures sharply (especially in the AI era), and be transparent with both teams and investors.

For founders, investors, and anyone tracking the future of SaaS, AI, and venture capital—this is a must-listen episode.

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Transcript

[Rory O'Driscoll]

Wall street is the madman in the backseat. In the end, the thing that bails out our incompetence is your growth rate.

[Cliff Obrecht]

We've had a billion sitting on our balance sheet for ages and it's about.

[Rory O'Driscoll]

That's a flex, people. I've had a billion lying around for ages. What have you guys been doing this week? It's the Mark Twain. Reports of my debt were greatly exaggerated. Well, it turns out reports of the debt of SaaS and software were greatly exaggerated. No one wants to say it, but if you get the direct listing, totally successful. The people buying don't make any Money.

[Harry Stebbings]

This is 20 VC and it is that time of the week. My favorite episode of the week, Rory o', Driscoll, Jason Lemkin. And joining us, we have Canva co founder Cliff Obrecht. Now today we are discussing anthropic's new round OpenAI by Statsig Nvidia's latest results. As long as the incredible results from the slew of B2B enterprise SaaS companies.

[Jason Lemkin]

That came out last week.

[Harry Stebbings]

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[Ben Thompson]

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[Harry Stebbings]

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[Jason Lemkin]

How dare you.

[Harry Stebbings]

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[Rory O'Driscoll]

Have now arrived at your destination.

[Jason Lemkin]

Guys, I am so excited for this. This, as you know, is my favorite time of the week. And we get to bring in my buddy Cliff from Canva. This is going to be great fun. I just want to dive straight in this week. Rory, as always, I'm diving in with a late edition because you love late editions, but we had to anthropic raises $13 billion. Started with 5, moved to 10, now 13 at 183 post. Wow, it's a lot of money.

[Harry Stebbings]

It's a high price.

[Jason Lemkin]

Rory, going to you first because you prep for this one.

[Rory O'Driscoll]

Well, funny enough, Howie, I did because it was a little bit anticipated and I think to some extent, yeah, it's a high absolute number because 173 billion. 3 billion is a lot of money. But is it a high price? And it's interesting and we talked about this a little last time and relying on reported numbers, if the growth trajectory is really 100 billion, sorry, 100 million two years ago to a billion dollar run rate started this year to somewhere around five. Now maybe eight or nine by year end. Let's just take that as kind of roughly true. Let's say 1 in 9, which typically means the GAAP revenue is roughly the average of the opening and closing ARR. Which means GAAP revenue could be again subject to around four or five billion dollars this year. What are they going to do next Year if they go from 1 to 9, and these are the facts. Up until now, all I've talked about are facts, things we know today. The million dollar question is what does today's traject about the next even year? You throw a rock forward and it falls down, but it moves forward and falls down at the same time. How much does 9x revenue momentum this year persist into next year? Do the math here. Even if they go 9, I was doing it roughly 9 to 30, which is 3x growth down from 10x growth. Then GAAP revenue average of 30 at the close, 9 at the opening, it's around 20 billion. This is 8 times FY26 revenues. The stunning thing with this growth rate, it's if it persists, big underline is you're only buying in at eight to nine times next year's revenues. If the growth lasts now, will it? Is the billion dollar question, but high absolute number? Absolutely. Does it make sense? If you think the growth rate's there, then it's not crazy. And I did not go into that math expecting that answer. I mean, I went in saying, oh, aren't those guys so silly paying so much? And you look at the numbers, you go out, maybe those guys are being quite smart.

[Cliff Obrecht]

This round was also super oversubscribed. It was. I know folks in the industry have been clamoring over this and it was hard to get into. So they could have raised, I think, 10x that 10x that multiple of funds that they put in.

[Rory O'Driscoll]

Totally. Because I was just saying you're exactly right. And looking at the cast of characters who did it, it's like if you're a growth stage investor, you know, you're a big growth fund. It's hard to kind of imagine a world where you say, well, we're growth stage investors, but the two largest market cap companies in growth in the last three to five years, the two LLM models we don't have a piece of. So there's probably some kind of huge corporate imperative at every growth stage firm saying we're either taking a big balls call that this isn't going to work, or we need to get one of those. So yeah, I imagine you're right, Cliff. I'd say there was huge demand as.

[Ben Thompson]

Insane as on its surface anthropic at what, 160 databricks at 100 canva at 42 sounds. There is multiple barely 10x for us.

[Cliff Obrecht]

We sound very cheap.

[Ben Thompson]

That's the point.

[Cliff Obrecht]

It's not very cheap.

[Ben Thompson]

I mean, literally, if you're using AR multiples These are not. Especially if you use forward ones to Rory's point, like if you use next year's CANVA databricks, anthropic seem reasonable, right? As long as the growth can persist. I mean canva. I mean again, I'm a super fan since the old days. I wouldn't have thought it would be this big. But the growth at scale is epic. It's crazy canvas growth that it's not growing 8% today, right? It's growing five to six times that. I don't know if you predicted that in the old days, Cliff, but I mean it like breaks your rules of tam, right? And it's not even anthropic.

[Harry Stebbings]

My question is, we mentioned the oversubscribed.

[Jason Lemkin]

Element there, Cliff, when you literally have a 5x over subscription. I'm sorry if I'm being naive here, but in the same way that Dario did, how do you literally choose which dollars you take?

[Cliff Obrecht]

It's very tough. And then for, for us, we priced our round before figma went out and had all those conversations and relationships. And so the FIGMA IPO kind of throw a cat amongst the pigeons, proving that we will close the year very close, if not at 4 billion, growing close to 40 growth rate and re accelerating growth. So we are compounding growth at scale, which is, which is a good place to be when it comes to investors. We really need to think long term. We have a lot of long term partners and you want to pay a lot of loyalty to people that have supported you along the way. But also we're thinking through what an IPO looks like who are going to be the cornerstones of that ipo. How do we see this not as a point in time deal, but a relationship building exercise through the next 18, 24 month period with these really long holding investors. Investors. And how do we instill trust in them and for them to trust us as a leadership team that can take this through IPO and beyond and make good decisions. So we're not looking to ratchet up the price. We're not looking at kind of playing any silly games. We're really seeing this as like, how do we build these long term relationships that are going to be with us a while.

[Rory O'Driscoll]

Do you have Fidelity?

[Cliff Obrecht]

Yep.

[Jason Lemkin]

It was super interesting. We had Brian Halligan on from HubSpot and he was talking about the central role that Fidelity plays. And I actually wasn't quite as aware as I'm sure Jason and Rory were as how important and strategic that was in terms of aligning them for when.

[Cliff Obrecht]

You are I'm not sure how much I could.

[Rory O'Driscoll]

Yes.

[Cliff Obrecht]

But yeah they're, they're the anchor of the round. They're the largest check in this. This round.

[Jason Lemkin]

I thought you promised that to me though.

[Cliff Obrecht]

Shake some trees. So the problem now so this is all secondary. We've got over $1 billion cash in the bank. We don't need to raise money primary funds. We've been a profitable company for eight years. So when and do this employee secondary and also we have some investors that want to sell and then they see Figma go out a lot of that sell side demand dried up. So we do have even though we're already over subscribed we've got this supply and demand imbalance at the moment. That yeah it's an interesting dynamic to work with. It's a hard problem to have but you don't want to disappoint people.

[Ben Thompson]

How do you coach employees on that? Do you stay out of it. You know especially when you see Figma go out in the multiple. Right. It's tough for employees to process the decision, isn't it?

[Cliff Obrecht]

Yeah, I like to be very transparent and I think Figma are absolutely incredible company. They don't have a massive float. There's dynamics to any float that, that that can make things go higher or lower. What we do, we show them a spread of public companies, we show them their growth rates, we show them how we really think. So if you compare us to some companies we're undervalued. If you compare us to some we're sort of on par and we give them that spectrum. So they're not just taking one single point and referencing all their kind of marks to that. Oh and also just talking through the long game nature of this. I mean we have been through trials and tribulations ourselves. We in 2021 were worth $40 billion which was I think it was a 50x multiple on our revenue at the time. 2022 everything came crashing down. The market came crashing down and that took us down to 26. And so that was, that was a tough pill to swallow when we thought we were riding high and we've slowly just compounded that growth. I mean the company hasn't stopped growing. We're still. Prof. All the foundations were right and that's what I guess what we really focus on and educate the team on the markets will do what they're going to do. But as a company we can compound growth, we can compound margins and increase margins and we can deliver value to our customers first and foremost.

[Rory O'Driscoll]

And you're exactly right. I mean, it's kind of just talking about that because even the little example you gave two things are clear. Look, very smart people with MBAs swore blind you were worth 50x ARR in 21 and 20x ARR and 22. And now you were 10x ARR. So I am.

[Cliff Obrecht]

Funny, funny point. It took discipline to take the 50x because I won't name names, but we had people coming in at higher multiples and even we were like, this is batshit crazy.

[Rory O'Driscoll]

Totally. And it is always. I mean, I did a post years ago, beware the madman in the backseat. Which is Wall street is the madman in the backseat. I mean, finance, we all do. You change your mind so drastically and so quickly. Right. That as you said, all you can say to the team is they're gonna do what they're gon do. They're going to 50x, they're going to 20x, they're going to 10x. What you can do, and it's very impressive, is finance can be wrong, literally by 5x from 50 to 10. And you've been able to recover that valuation by just working hard and growing for five years. In the end, the thing that bails out our incompetence is your growth rate. That's the dirty little secret of the positive. If you get in these companies, which can compound for five or six years, that can cover a multitude of scents.

[Cliff Obrecht]

That's what worries me about some of the AI companies now, because I've seen this time and time again with people trying to copy Canva or be Canva for this or Canva for that. There is an early adopter syndrome that pulls forward a lot of revenue. And I think one thing we've done well with Canva is cross the chasm to the mainstream Middle America people all through Europe, not the Twittersphere or the X sphere, whatever you call it these days, that are always using the latest and greatest products and paying that because they're happy. And, and then, then, then there's consolidation of those early adopter products and a lot of those products struggled across the mainstream because then it comes about, comes to distribution. And distribution at scale is a lot harder to reach those people in middle America than people that are actively tracking what AI is doing, actively on product hunt or whatever, and on X, seeing all that sort of stuff. So crossing from sort of 50 to $100 million to a billion dollars in revenue, that that's a big leap and I'm interested to see how some of the companies can navigate it.

[Rory O'Driscoll]

It's Interesting because yes, there's two separate things embedded in that though. One is just the sheer fact of going from 100 to a billion is a grind. But the second thing, and I thought you were going to go there and I want to ask you about it, is separate comment. Our nagging suspicion is that some of the year 2arr renewal rates for some of these AI products will be pretty low. In other words, that the AI product market fit is getting covered over a little bit by AI enthusiasm early on. And be curious, how are you guys thinking about your AI products? Are they doing great? Are you getting the usage you want? Do you think users are grokking them? Where in the AI adoption curve are you and your users?

[Cliff Obrecht]

Firstly, we're all about creating workhorses, not gimmicks into Canva. So the mission of Canva was to empower the world to design and that's to take anyone's idea and create a great piece of visual content, whether that be a video, a marketing material, a poster, a presentation, et cetera, et cetera. AI is just accelerating that massive for us, making it quicker, faster and better for our customers to achieve their goals. So we already have a user base. AI is accelerating that. And I think what you're seeing now when it comes to companies applying AI into their products, people throw a lot of shit at the wall, right? And hoped, hoped it stick and that was the right thing to do. Like every company on earth or hopefully we're running AI hackathons. What we don't know, what we don't know what, what can we get into the product? Let's test it. And then, then it consolidates down to a small number of things that add true value. And then there's a lot of periphery stuff that is kind of neither here nor, to answer your question, in a different way around sort of AI consolidation and year two renewals, particularly around enterprise customers. If organizations were approaching AI the way Canva was approaching AI, the cost of implementing these tools and a breadth of tools, as long as they meet our security requirements are negligible. Our approach was spray and pray, use all the tools. I'm happy to open up an extra 10, $50 million budget, hoping we can drive employee efficiency and get more done with the same amount of people using all these tools. And I'm not going to be the arbiter of this tools better than that tool. We're running four coding tools at once, right? Cursor seems to be the one that's kind of leading the pack. Same goes with all the LLMs, we give everyone a choice. You can only have two that we limit. You can't have Gemini, open AI and anthropic. You can kind of pick two. So we're, we're like, use what you want as long as it meets our security requirements. Over the course of the next 12 to 24 months, we'll start consolidating down as the clear winner. Winners take charge. And so to answer your question that way, 100% there's going to be consolidation down from year two renewals.

[Jason Lemkin]

Sorry, I do want to retain some semblance of structure because you mentioned clear winners there and we spoke about Anthropic and the large raise.

[Harry Stebbings]

On the flip side, today announced OpenAI.

[Jason Lemkin]

Buys Statsig for $1.1 billion in stock.

[Harry Stebbings]

So it was the same price as.

[Jason Lemkin]

The last round that Iconic led. It's an incredible team with Vijay. Super obvious matchup given Fiji obviously joining OpenAI business is doing 75 million an ARR. My response to the team WhatsApp group, where one of our partners is an angel was that's cheap. And I wanted to know how you guys thought about that. Do you agree with me? A billion won in stock for 75arr company with an amazing team. Guys, how did you feel?

[Rory O'Driscoll]

Let's take the perspective of the person who just did the last round in May of this year. I valued this thing at 1.1 billion. On the other hand, I'm probably the same investor. In fact it was, I think Iconic did the round. They just did anthropic at 170 billion. They might be very happy. Oh my God. I got me some OpenAI now. And effectively within four or five months, you rolled forward into the next OpenAI round and the next OpenAI valuation. Maybe that feels just as good. I'm doing the math in my head. But the revenue multiple mightn't be that much different. So you're kind of like, yeah, I thought I was investing in staffing, now I'm investing in OpenAI. Worse things can happen.

[Ben Thompson]

Maybe the angels don't like it. I think when I saw that the round was apparently exactly the price of the growth round from Iconic. Right. It just makes you wonder if you're, if you're just getting your preference, you don't really care. As a late stage investor, you don't care whether it's 1:1 or 106 or 984 because you're making the exact same amount. The fact that it was exactly the last round showed this was something that everyone wanted to roll into, obviously, the CEO wants. Now, what's the CEO? He's like number three at OpenAI. Right? He's going to run it with. With. Yeah. I mean, and he pushed the CPO aside and now he's running the. That's a big. For me, I'd rather run my own company. I'm. I'm guessing Cliff would too, but. But for 95% of people, this might be a quick upgrade without risk. Right, so he got what he want. Iconic rolls over 100 million into OpenAI. They're not allowed to invest because they led the anthropic round. Right? So this is the only way they can put nine figures into it. Because they're soft band or hard band from the round. Right. Maybe the Angels don't like it because they wanted to play another card, but everyone else, the fact that it's the exact price of the last round, not, not, not 2x, not less. It's. It just. It's just perfectly engineered to check everyone's boxes. Right?

[Rory O'Driscoll]

And the people we didn't name who did the A and the B Sequoia are presumably, as always, happy and successful. So there you go, Cliff.

[Jason Lemkin]

Here's $100 billion of OpenAI stock.

[Cliff Obrecht]

I'm not doing it. But.

[Rory O'Driscoll]

We love OpenAI.

[Cliff Obrecht]

We love them, but it's just not. I mean, we're cutting our own course. We've had acquisition offers.

[Jason Lemkin]

Dude, I will always put you on the spot and ask questions like that. Rory knows that. Well, the tough one, poor old Zuck. Zuck is getting a batter. You know what I love is the transience of Zuck, where it's like, you know, Zuck's a hero, and then Zuck, what a fool for buying Skale. And I mean, the wheels seem to be coming off the Skale acquisition in terms of the talent that's leaving and the satisfaction with the quality of Skale's output. Everyone wanting to use Surge. Edwin, great guy. Liked him a lot, actually. And Macaw portfolio company. Go Macaw, Rory. And they're just very upset with the output of scale not being good enough. Is this the wheels coming off the scale and the Meta train, or is this media overhyping coming back on Zuck? In a way that's just unfair.

[Cliff Obrecht]

I just feel sorry for poor Zuck. Imagine poor Zuck opening the newspaper or his phone every morning, looking at the news. It's gotta be a challenging life being the CEO of Meta.

[Rory O'Driscoll]

Yeah, look, I mean, I don't think it's profitable for me to speculate on how he feels. I don't know and frankly don't much care and it's not my problem. And if he's not feeling great, he can cry into his $200 billion and get over it on his own, right? Take it up with his therapist. The actual most substantive does this new information make you feel better or worse? Just as objectively seeing how the deal's going, is there actual real fact based takeaway right here? There's information. It's not wildly surprising. I mean when the deal was announced you kind of go that feels an odd way to solve this problem. Maybe it'll work, but it'll be messy along the way. And this just feels to me like there's two different shoes dropping here and they both feel like exactly the shoes you expected the first shoe to drop is pulled. People. It's hard to give people $100 million and then give someone else a billion dollars and then give someone else $10 million and then have them all work together. There's going to be some fallout. Even if they're all amazingly talented people who want to work together. People have egos, people who are human. It's just going to be messy. So the fact that some people are leaving, whatever, I don't know. I don't know about the retentive package, but it's just not surprising. And some of it could be directed. Remember we talked only last week back to your comment on were kind of up and down on this that they seem to be organizing the thing in at least a structured fashion. You're in, you're out, you're in, you're out. So there's human fallout. That was predictable. The second thing is just the asset itself, right? The comments about how the meta team aren't as excited about the scale data labeling stuff makes sense to me. I mean from what you read, the requirements of data labeling have evolved a lot from very simplistic this is a dog, this is a cat. To answer much more complex the training data that it takes to pass advanced bio, to pass advanced math. And it's a different thing. And I'm sure that scale aren't dummies, they're trying to do it. But there's other firms and you mentioned too, one of them is your portfolio company because that's what you do, promote the product. There's a bunch of others touring and all that. There's a bunch of folks out there, I'm in none of them. Just to be clear. So no agenda. There's a lot of competition and if you're sitting there as Meta, and your ass is on the line to deliver, then you're not going to say, oh, I'm going to buy from what is now our biggest investment, which is in scale, just because that told me to do it. You're going to buy from the best, so there's probably going to be some of that, oh, we didn't get what we want. Which raises a third. If you remember the structure of this weird deal, they put 14 billion into scale as if it was worth 14 billion. And to your point, Harry, it was a 1x to the last round. And then the VCs promptly took out that 14 billion, leaving scale as an empty shell because all the money's gone. And then there's this remaining asset that we agreed wouldn't last a year, but we had to pretend was like a company. And now scale Meta on its balance sheet has a $14 billion investment in a company that probably isn't worth 14 billion anymore. There ain't any cash and there ain't a great business. At some point, the auditors are going to say, hmm, you've got a $14 billion venture investment there. Do you really think the empty husk of scale, without all the team that's moved over to Meta, all the team that's left is worth 14 billion? We'd like you to write down. And that's going to be the entertainment factor, back end of this year, early next year. It was a quirky deal. It has a bunch of problems. It's just been a step on the journey to fucking up a $14 billion acquisition.

[Jason Lemkin]

Rory, do you have confidence Zuck's master plan will play off, or does this leave you less confident than you were before?

[Rory O'Driscoll]

He has a master plan. He's won already. He's worth $200 billion, and he's got one of the seven most influential companies on the planet. He's won already. All you can say is you've had some big bets that have worked amazingly, like WhatsApp. You've had some small bets that worked brilliantly, like Instagram, best acquisition of the prior decade. And you've had some big bets that have flopped, like Meta, metaverse thing. My gut is this is more like the latter than the former.

[Ben Thompson]

I could be wrong, culturally, I think just the simple fact is he's assembled a pack of mercenaries. He's gone out and hired all the best mercenaries out there. Something forced them to report to each other. A weird structure, power struggles, fiefdoms. But he's put them all together in a matter of weeks. Right. Maybe months. When I was a B2B founder, trying to be driven but touchy feely, I was sort of anti mercenary. If you're not on my journey, I don't want you. Right. This is a long path. Canva's been doing this for I don't know, 20 years, right? Something like that, like. But as time has gone by and more nuanced, sometimes, you know, maybe you need mercenaries and sometimes there's cultures where it's okay and sometimes there's a tool for the job. But I just think this is, we can pick at this and I think the criticism, but it's just, I think Zuck knows this is a bunch of mercenaries. Some of them are going to fall in battle, some of them are going to quit. And he's given 20, 30 billion to a pack of mercenaries. Cliff Canvas seems anti mercenary from the outside. Right. But maybe there are times when you've had to hire a pack of them to go into, go into battle.

[Rory O'Driscoll]

Can I ask a question on that? Sorry, Harry. Because genuinely interested. As we look at kind of big classical SaaS companies, we're trying to figure and trying to figure out their role in the AI world. How much of your RE acceleration would you attribute to the stuff you did in AI versus just getting through 2022 and kind of finding your sea legs again and just executing Covid?

[Cliff Obrecht]

For us, we were growing faster than ever. So you gotta decouple valuation and company growth.

[Rory O'Driscoll]

Decoupling valuation?

[Cliff Obrecht]

Yeah, Covid was a mass discovery event. Everyone was sitting on their ass on their computer all day. It was great for Canva. So what was the question? It was.

[Rory O'Driscoll]

I wasn't clear. But post like 22, 23, you de accelerated, right. And now you leave valuation out of it entirely. Just talk revenue. And now you're obviously re accelerating at huge scale and you're doing what every SaaS company pre the AI companies wants to do and that's the only way they're going to be back to being relevant, being exciting. And obviously every one of us owns lots of them and we're trying to figure this out. So for you, do you think that AI was the reigniter of growth in 24, 25? Do you think it was just execution? How much of it do you attribute to the AI initiatives you guys took in the last year and a half?

[Cliff Obrecht]

I would probably say 20%. I think one thing you need to buck the trend of as you become a larger company is insular thinking and treating your user base like a wet tea towel that you need to wring out 90% of our user acquisition is organic. And so we. We just needed to re. Accelerate all our core flywheels. And I enhanced that. Going really heavy on international, enhanced that.

[Jason Lemkin]

We spoke about paying up for the team. There's companies that are being paid up for. Rory, I'm not shilling, so before you get me for shilling, I'm not shilling.

[Harry Stebbings]

But one of them is Lovable, and.

[Jason Lemkin]

It'S in the FT and it's like, hey, new $4 billion round, by the way, Cliff, notice what I'm about to do here. I'm about to neutralize my argument. Vercell, another company in the similar space, has got a $9 billion round apparently in the works. Question being, do these markups very rapidly, literally within a month or two, really make sense, or is it excess capital supply that is exuberant? Desperately trying to find a home in an AI company?

[Cliff Obrecht]

I'll jump in. Definitely the latter is there's the FOMO of missing out, and that's real. And people throwing cash and realizing that. That we're on a curve here with this AI boom. And I mean, most people are thinking we're not at the top of the curve. It's not going to fall off where we're a lot closer to the top than we probably were maybe a year, 18 months ago. But it still feels like there's money to be made. And, Rory, I heard you the last time saying you're still investing. This gravy chain isn't probably going to end immediately. It will sort of start cooling off at some point. And I think investors are just realizing they need a good chunk of their portfolio in this category. I do worry, as I mentioned before, about some of these companies crossing to. Crossing the chasm to the mainstream and turning that 100 million in revenue to billions in revenue. But companies like Lovable, they're definitely well positioned to do that if they keep executing at the rate they are.

[Ben Thompson]

The multiples can't make any sense because we knew this when we did the round. I mean, Anthropic's revenue has tripled in four months. And no question there was some risk. It wouldn't make the plan. Of course there's some risk, but it wasn't that high. Like, we didn't de risk. We're all investing on forward multiples. And lovable worth 1.8 billion 60 days ago, 4 billion today. I know the era growth has been tremendous, but it's probably exactly as predicted. I mean, listen, if it's. If either of these out accelerated Their plans, it'd be one thing, but I'm probably.

[Jason Lemkin]

This is where I'm going to get in super trouble. But fuck it, it's late at night and I'm in London and fuck it.

[Harry Stebbings]

They'Re out accelerating plans.

[Jason Lemkin]

Plan like they are at 125 to 130 now, give or take and they plan to end the year at 175. They'll be above that, I think at 185 to 200. If you're at 185 to 200 and you end next year, say what? Say they do a 2x to 2 1/2x. Say they're at 450 500. Is it that nuts to be.

[Ben Thompson]

I'm not saying it's nuts, Harry. What I'm. And your data is more valid than mine. What I am saying is most VC should have had that in the model 47 days ago ago. I'm not saying that they didn't achieve the progress, you know, in the public markets. Your Monday you miss by 1% and you get your head cut off. Right? You're down 30, 40%. Even though the range of variations quite, quite tiny. Right. These. We're always valuing future growth. I just. It's not that I'm not saying if lovable really in 30 days blew out the highest plan any VC had, then I'm with you. But I don't believe Anthropic did. I believe Anthropic said at a crazy number, as did OpenAI. These numbers blew our minds when they put them out there and they hit them or exceeded them. The VCs couldn't put that in their spreadsheet.

[Rory O'Driscoll]

I'm going to come in because the Monday comment put a pin on that I think actually proves the opposite point. So stepping back because I think this is a really interesting subject. The second round, two months after the first. I've been thinking about it a lot and I go to do big buckets and then go down each. There's only three reasons logic this happens. One is it was priced right two months ago. New information has occurred or something has changed such that the new price is worth more. And that's kind of what we're talking about now. Is that happening? If that's not happening, that's option one. If that's not happening, then the second thing is somebody underpriced the first round and now someone else is figuring that out, you know, like there's been some kind of misprice either the second price, if there's not net new information. Either the second round is too high or the first round's too low. And the third and the most zany one, but I think is a non trivial thing, is there's this validation concept which is, oh my God, Sequoia were willing to do 2 billion, I would never have offered 2 billion or 2.2 billion before, but now I want to get in. And so they're going to offer 4 billion. So you get this kind of the last round provides the validation for the next round. And those are three different things. And I think they're all going on to some extent. Right.

[Cliff Obrecht]

There's another point as well. It's like if this company is going to be a 20, 40, $50 billion company, who gives a shit whether it's two or four, right? So if you can write the thesis that this company is going to compound some level of growth over the next five years, is going to be one of the major players in a new category, then who gives a shit?

[Rory O'Driscoll]

You're right, Cliff, but logically I'm just going to be that painful person. If that's correct, then the people who did the first round underpaid and the company, let's just say if a company says just be logical. If the company says companies did exactly what it said or do and they raised money at 2 billion two months ago and can raise money at 6 billion now, they should have raised money at 5.5 billion two months ago. They underpriced the first round, by the way. It's why it's quite like that whole IPO weirdness discussion. Oh my God. You priced your IPO at 38 bucks and the stock opened at 76. You left money on the table. It's actually the private version of the same thing. Right.

[Cliff Obrecht]

I think it's the Harry effect. I haven't listened to a Harry podcast for years and drummed he can talk up the loud. I think you've added 2 billion of market cap to this company since single handedly you should usually get more shares.

[Rory O'Driscoll]

But let's go back to the first one because I think the first one's interesting because it's actually a fact based common. Is there net new information, are they worth more? Because you'd like to think the whole world lives in the first area and if it doesn't, because then you're into weirder shit. The second thing is mispricing and then the third thing is just kind of psychological dog hierarchy, high school hierarchy phenomenon of I can invest if a dozen. So go back to the First Jason, your point. You said the Monday thing about you miss by 2% and the stock goes down by 30. But my comment is that's actually proof why you can in fact see these step ups if you're underwriting 30% in the next two months and you get 35 by the same logic that if you miss by 5, you go down by 30%. If you achieve out achieve by 5, you can justify a higher price. And I think anthropic, I mean the.

[Ben Thompson]

Beta is off the charts, right? Yeah, agreed.

[Rory O'Driscoll]

And anthropic. Some of the anthropic thing could go down as that first example is the performance this year. I think they and I'm willing to bet it gets a cliff point. I'm willing to bet no matter how hard you tried, no one had they went from 100 to a billion last year. They're going to re accelerate in Q1 or Q2 of this year. And it's obviously with the curse of Claude code, et cetera. So there is new data, I would argue that's an example of where you have a 3x step up from the early round I think with lightspeed earlier this year to today. And at least some of that is justified based on new information, which is they have re accelerated at a scale that probably no one imagined they could do it at. So sometimes that follow on round two or three months later might be based on new information. I don't think it's majority of them, but some of them.

[Ben Thompson]

I'll tell you one just on this point, what to me shows the inefficiencies in this or the shoot from the hippitness, which is that lovable closes Harry's favorite company closes at 1.8 billion in July 17th 17-17-2225. Thirteen days later, the exact same company called Replit, that's the one I use. Same company closes at 3 billion. Basically the same ARR. Basically the same company. Yeah. I can tell you my views of security and rogue AI agents but come on, I mean most people can't tell the difference and in the revenue is basically the same 100ish. Right ones were 3 billion because it's marked up by Andreessen. One's 2 billion because Excel wants the deal. I don't think either of those deals were perfectly efficient.

[Jason Lemkin]

Is this fundamentally bad for companies? Rory, if these companies are getting hundreds of millions of dollars foie gras down their throats a month or 45 days after they've just taken a couple of hundred million dollars more, do you believe that Is fundamentally bad for the company.

[Ben Thompson]

Did it change your values, Cliff, having an extra billion on the balance sheet? Or did it not really change the company?

[Cliff Obrecht]

I mean, we've had a billion sitting on our balance sheet for ages, and it's about.

[Rory O'Driscoll]

That's a flex, people, that just. I've had a billion lying around for ages. What are you guys been doing this week? Okay, flip. Okay, flex away. Cliff, big guy. Okay, you want to sound all wise, owlish and say don't take too much capital, but the truth is, it's a rocky journey. There's probably some bumps ahead. Most founders will be happier with a bigger balance sheet. The really great ones are the guys who can take the capital and then have the discipline not to use it foolishly. Sometime in the next two years, in many of these markets, there will be a shakeout. And if you've pissed it all away in performance marketing, shame on you. But if you have that capital ready to move decisively, you might find a good opportunity for it.

[Cliff Obrecht]

It all comes down to confidence in your ability to execute and capture TAM and market share. With Canva, we took a very different approach. We were so bullish on where we were going. We wanted to minimize dilution, so we raised as little as possible at every stage to get us. This is a high risk maneuver, and I don't recommend this to founders anymore. I say be a bit over capitalized, but we would run it kind of to the bones in order to take as little money as possible. We'd go for the high valuation possible just to back ourselves to hit that next level and get as minimal dilution as possible, which worked out well for us, but was a riskier than probably is recommended maneuver.

[Jason Lemkin]

Guys, I want to cross the chasm, so to speak, and move from the world of privates to the world of Publix. This will be a fun one because we had quite a big week in Publix. Crushed for B2B. Jason baby.

[Rory O'Driscoll]

B2B.

[Jason Lemkin]

Publix is back. Snowflake Mongo box elastic octa zoom. I mean, zoom beat. I mean, that's like Madonna coming back from the dead. I mean, that is like. Sorry, Rory. Don't worry, I said it, not you. Jason, is this just like the return of the good old days for sass baby? How did you analyze uniform? Great results from everyone.

[Ben Thompson]

I mean, I don't know if it was. It was quite uniform. But it is interesting that some folks, I mean, let's. Let's spitball it as half of the public B2B leaders are finally getting an AI tailwind, right? Or they finally are getting one and not everybody. You know, we love Salesforce. We had Mark on. They haven't seen it yet. They have the demand. It hasn't hit yet. But box zoom, Mongo should be crushing it because every time I spit up a new vibe app, I need like two or three databases, right? I mean that's just one corner of the world, but Mongo should be crushing it it. And so it's exciting to see it's not even. I mean the Atlassians from down under, the Dropboxes aren't. All the asanas aren't seeing it yet. Like Cliff said, you just got to be smart. You're not. We're not building our own LLMs. If you have a billion dollar installed base, you have a distribution channel to Cliff's point, right? It's kind of sinful. If you haven't re accelerated by the end of 2025, you kind of failed as a founder because yeah, you may miss some of the cool kids, right? They may not. They may be using but. But you have a billion plus of distribution. You have no excuse months. So thank God we're seeing it, right? Because it would be almost catastrophic if none of the leaders were getting an AI tailwind boost. And it's good, but. But it's not a dead cat bounce. But we're not outside of Mongo and Snowflake, we're seeing modest, modest RE acceleration. But it's great to see them have it. Otherwise we have to give up on all the public eyes and bet on the canvas and databricks and the anthropics and give up on the last generation.

[Rory O'Driscoll]

Taking Mongo because that was the one that jumped 40, 45% of the stock price. And it's back to the point Jason made earlier, which is the year on year GAAP growth rate is back up to 24%. I think it's higher Q on Q. So I think they guided a little more forward aggressively. But they were at that rate two years ago. It's not like they're 10xing or something like that. I think what happened here is everyone got into the oh my God, SAC is dead. Everyone's sad none of these guys are going to make it. And even small. And this is back to the Monday comment because these markets are trying to get. It's not just about fundamentals, but it's about how you perform relative to expectations. If your expectations are low and you just do moderately well, you can have a 45% jump in the stock Price in a week, it's back to. And if you look at the absolute stock price, if you look at the revenue multiple, it's just back to where it was two years ago. It's a great core company. It's the Mark Twain. Reports of my debt were greatly exaggerated. Well, it turns out reports of the debt of SaaS and software were greatly exaggerated. Exaggerated. If you are a good CEO and Dev is an extraordinarily good CEO. Just like the Cliff story there. Because he didn't. I mean, I noticed, Cliff, he didn't say, oh, it was all just AI. We got our shit together, we did a whole bunch of things, we raised our expectations, we said, hey, we're the leader in a big market, let's make stuff happen. And if at that point you're valued at 7 tons and then you beat plan even by a little bit, you get that kind of bounce. That's what happened here.

[Jason Lemkin]

Cliff, when you see this Monday getting hit for being a couple of percentage points off again, I would never ask on timing or anything quite that ludicrous, but you go like, yeah, that's an arena I want to be in. Or do you sit and watch Cheeky Pint with the Collisons and go, that's the fucking arena I want to be in. Sitting, drinking a non alcoholic beer with the founder of Cognition, doing a handstand with Vlad, enjoying the wonderful splendor of the private market.

[Cliff Obrecht]

I still love my beers alcoholic. Haven't followed that trend, but I love it. I think it comes. I mean, yeah, yeah, there's a lot of. There's a lot less scrutiny as a private company, but as a late stage private company with the likes of all the big cats that are playing in public markets already invested in us and continuing to do so, our reporting obligations and our expectations to beat and raise are pretty much the same. So it does get me thinking, like, what is the real difference? And then I think to your point that you've made on previous podcasts, the public markets are valuing companies a lot higher. So when the public markets were valuing companies lower than the private markets, you were kind of like, well, whatever, whenever. But now, now at a lot higher marks. It's sort of, it is appealing. It is becoming more appealing.

[Jason Lemkin]

In the show we actually mentioned you, you probably heard it, sorry, where we were like, you know, figma goes out. Jason's. But like, Figma goes out, sees the pop. If I were you, I'd be going back to the team going like, let's Forrest Gump this one. Like we should go out now. Let's run for it.

[Cliff Obrecht]

I mean, we're gearing up to be ready to ipo. We, we want to be an IPO ready company. We. Recently you mentioned Zoom. We brought in Kelly who led their ipo and she's been fantastic addition to the team. She was their cfo. So our goal is to be ready when we actually go out is another question. But yeah, we're, we're gearing up to be an IPO ready company.

[Ben Thompson]

Can I ask a question we've talked about on this show a bit? You have a billion in cash. You're profitable or cash flow positive. I don't care which one. Probably both. You're able to do tender offers for your employees and provide liquidity and for whatever, whoever of your early stage investors want out, you can probably flip their shares. Why?

[Cliff Obrecht]

I, I'd love them to sell more shares because it has helped solve my problem right now of not having enough sell side. Yeah.

[Ben Thompson]

So why, why, why at a metal level, why ipo, Right. You have and you. And even M and A probably isn't a reason on its own. Right. Unless you want to buy something for $10 billion, why would you IPO?

[Cliff Obrecht]

Yeah, I mean that's the question we've always asked ourselves. And I think there's three key points. There's availability to capital, which we have access to. I think it's probably liquidity. And there are restrictions, particularly around employee liquidity and what you can do in the US and whatnot around that piece. And so we do believe in, we're 13 years old as a company, our employees should have liquidity. They've created all this value. How can we make it easy for them to access that wealth that's built up? And while secondaries, annual secondaries are a mechanism for that, it's pretty janky. And particularly in some jurisdictions, it's downright impossible. That's probably the biggest one. Yeah. As you also get a bit more publicity. Personally, we don't want to be more in the public eye. We're happy just being in Australia, working away, building great products.

[Rory O'Driscoll]

But yeah, I mean, I'm not going to be too nice to you, Cliff, because after last week, Harry gave me grief for being too nice to our guest, Mr. Benny.

[Cliff Obrecht]

Give it to me. I love it.

[Rory O'Driscoll]

But I'm actually going to be nice this time because I totally agree. And you mentioned the other one in passing and I just want to put it back on the table because you said it. Oh, and by the way, the public markets now are Giving me cheaper capital than the private markets. Because if you're. If all the numbers are as reported, you're getting roughly 10x revenues and the fine folks at Figma are getting between 17 and 30 depending on how available you think the current price is.

[Cliff Obrecht]

I think that's a byproduct of these large crossover funds probably have 80% of their capacity allocated to public and 10 to 20 to private. And so you're chasing a smaller pool of capital. Even though we're in a good position ultimately the volume of capital dictates that multiple and there's such an immense amount of capital being deployed in public markets that just is driving up those values.

[Rory O'Driscoll]

Agreed. In this conversation which we have rolling all the week, I'm a huge. Companies at scale like yours should be public if for no other reason. It is bizarre that we've evolved the system whereby to allow ordinary people to invest in you Instead of paying 50bps to Fidelity we have to pay 2 and 20 now and enrich the middleman like us and God bless it. But it doesn't seem a mission driven company would make that their mission. But call me cynical on that. The whole structure is absurd of these high and it's exactly what you said. Having to get permission from your employer to get liquidity as A secondary after 13 years it's better than no liquidity but it's a little bit surf like and when you're public you can make your own choices. So I'm totally with that answer in terms of companies at scale when they're ready should go public and it feels like the better way to run a business at scale.

[Cliff Obrecht]

Yeah, I mean people deserve liquidity and having our customer base we got 240 million monthly active users. A lot of them want to invest in Canva. And you see Figma had a huge retail demand. We want people that have helped create our success to share in that success and we really want to deliver for them. So it very much works into our world. So yeah, we're not. We're not anti ipo.

[Rory O'Driscoll]

I love it.

[Jason Lemkin]

Are you not the perfect contender for a direct list?

[Ben Thompson]

Good question.

[Cliff Obrecht]

I've looked into this and while I've looked into it in depth, it just.

[Jason Lemkin]

You've got a great consumer brand. You've got 240 million consumers that would love to buy in direct listing all the way baby.

[Cliff Obrecht]

Yeah, it is an option. I'm not sure it's going to be the option for us. We'll look at all options when the time comes. You can still get all Those dynamics you're not really getting much out of. And if you look at all the historic direct listings and how they've gone over time, I believe the data proves that none of them have been greatly successful. A lot of them have been really successful companies over a long period of time. But that period post direct listing, none of them have really kind of nailed it over that short term.

[Rory O'Driscoll]

You are right in one sense. But it's always worth pointing out that the definition of success is weird because you're right, they didn't nail it in the short term. In other words, the stock didn't go up a lot after the direct listing. But a little part of mine wants to say that's the fricking point, right? No one wants to say it, but if you get the direct listing totally successful, the people buying don't make any money and people like their pop.

[Cliff Obrecht]

You've mentioned this in a prior podcast. It is about getting the right long term investment. So you want people that are going to hold your stock if you deliver, being a key point, you need to deliver for 5, 10 years and compound that position. And so yes, from a sort of logic perspective, it makes sense. Supply and demand match that. You definitely don't want a huge, huge pop. And I think you can sort of manage that through how you stagger the lockup periods, et cetera, et cetera. There's ways to manage that. So it isn't everyone locked up for six months and then it drops. And there's better ways to kind of manage that. But yeah, I think you're ultimately optimizing for the large long shareholders that are probably going to hold 50% of your stock for an enduring period of time. And the relationship you build with those investors, incredibly important. And they're, from what I understand, pretty anti direct listing.

[Rory O'Driscoll]

And that answer, that very cogent answer is, Harry, why? Everyone in theory will argue this. And then when you're the guy on point with your life's work on the line, just like Halligan, and you're like, do I wanna be an experimental baby on the biggest day of my life or do I just wanna land this fricking plane? There you go, baby. Well, I think your point on Figma.

[Jason Lemkin]

Was totally right though, Rory, which is that everyone was like, oh, well, here's the test case for why we need to have a direct listing. And you were like, well, had it been a direct listing listing, it would not have listed anywhere near the price that it went. It would have been three to four bucks higher, maybe at 36 to 40. But it would be ridiculous to assume it would have been a 75 starting price. I think it was really well articulated. I was listening to Jensen on an earnings call. This is also great, Cliff, about doing these shows. I actually have to do some work and really listen to earnings calls again. Okay. He said over the next five years, we're going to scale into with Blackwell and with Rubin into effectively a $3 to $4 trillion AI infrastructure opportunity. 3 to 4 trillion. Can that level of capex be supported by enough AI driven revenues, guys?

[Rory O'Driscoll]

Yeah, I mean, look at it. Let's do $4 billion. You want a 20% return on equity, you got to be generating 800 billion of profit a year. That's a lot of profit. When Facebook met all these guys make a couple hundred billion a year. So you've got to believe. And you're going to create another four Microsoft's, another four Facebooks to justify that kind of spend. So it feels deeply lofty to me and not grounded in the macro. On the other hand, it's hard to argue against the guy who built the most valuable company on the planet. So you can give him credit for the specifics. I don't see where the macro works, but whatever. If you want to make that bet, Harry, there are Nvidia puts that I keep my eye on that you're more than welcome to plow into anytime you want. Want.

[Jason Lemkin]

Tell me when you do, Rory. I will.

[Ben Thompson]

Look, I don't know. I mean, Rory's math's hard to argue with.

[Rory O'Driscoll]

All.

[Ben Thompson]

All I do know is, you know, I know it's a small percent of the economy, but when you listen to what Cliff's saying now, when you listen to what Mark Benioff said last week, I mean, basically Mark said we're like 0.1% AI penetrated in the Salesforce space. Right. So Salesforce is coming up on 50 billion. They alone are going to have 200 billion of AI attached to their model. I'm not saying Mark's going to get all of it, but the attach is going to have happen. It's just so. It's so early. It's hard not to see everything easily being 100x bigger than it is today. We just started. We just started. It feels like 100x now. Does 100x get us to that number? I don't know. But I do think that Jensen and Sam Altman have a pretty good sense of it, so I'm not betting against it. We can ask Cliff how much how deeply AI is penetrated there.

[Cliff Obrecht]

Yeah, we have billions of AI usages in our product per month and that's accelerating. Rating clip so it is just beginning. And the amount of calls and inference we're going to rely on is just going to grow exponentially as these products evolve.

[Ben Thompson]

It's easy to see 100x growth.

[Rory O'Driscoll]

Right. Let's try and quantify that.

[Cliff Obrecht]

And they're all going to get it run on device a lot more. So there are optimizations that are coming.

[Rory O'Driscoll]

Thank you. Take on that. Because you'd mentioned the notion comment of spending 10% of the revenue on AI on GPUs and inference and model training. Right.

[Jason Lemkin]

I mean turning back, you said they've gone from a 90% gross margin to an 80% gross margin, which is effectively.

[Rory O'Driscoll]

A way of saying to deliver their AI magic they have to part with roughly 10% of their revenue to the big AI companies, just as maybe they probably did roughly the same to AWS. Turning back to Cliff, do you envisage spending 10% of $4 billion, $400 million on Nvidia chips and or third party models and and GPU acceleration, does that feel wildly too much?

[Cliff Obrecht]

100% yes. 100%. So we do our own foundational model training which requires a huge amount of compute, but then there is a lot of expenses and I think this is where the notions and Mondays and all the other companies of the world are flowing through revenue to the model companies. But those costs are coming down exponentially. You want to have the best model in your customer's hands.

[Rory O'Driscoll]

But do you think 10%? I mean you're spending like. Do you think it could get to 10%?

[Cliff Obrecht]

Yeah, definitely. It already is. Yeah.

[Jason Lemkin]

Wow.

[Cliff Obrecht]

But especially in the short term it will be probably less than that over so you got to separate training your own models versus serving AI. So currently yes. I mean if you look at lovable, what are they, what is their pass through in regards to what they're paying anthropic or whoever the model providers are. It will be a lot. It will be way more than 10%. But over time they're betting on distilling these models down, understanding user queries and where need the foremost frontier best model versus where I can deploy the model that's on device or the model that we're self hosting and running. You'll get a lot better. Companies will get a lot better at picking the right model for the right job and only using the expensive models connected through an API to OpenAI or Anthropic or whoever for the most premium queries where you need that answer. But 90% of it will be run on device or be self hosted. And we know that over time we'll use the best models and that. So take image for example. If there's the latest greatest image model that has additional capabilities, it may cost us 4 cents an image, but we know we can get that cost down to 0.02 cents an image and we banking on that over a six month period. So we view some of those upfront costs that are having a big eating a chunk into our margin as more of a marketing cost than a long term enduring cost of goods.

[Rory O'Driscoll]

Got it. And that's a huge difference. I mean the assumption of getting 10% from every software vendor is crucial to the idea that you can expend three times trillion dollars. And if Cliff and all the other cliffs optimize and that 10% becomes 5% which is still a hefty tax to pay from your revenue.

[Ben Thompson]

Yeah, but I don't want to speak for Cliff, but creating a static image, such as it is today, you could break it down in order of magnitude. But when Canva adds everything that Gamma does, I mean Gamma's consuming a lot of tokens to build dynamic presentations for every single person at my little team.

[Cliff Obrecht]

On the fly, they're coding every presentation. Presentation from scratch.

[Ben Thompson]

That's a lot of. And it's not. And it's only pretty good. Imagine when it's great and they redo every presentation three times and run it through multiple models and then they. And then Canva does it. And Canva has a higher bar because you have 240 million users.

[Cliff Obrecht]

Yeah, but we don't need to code it. Right. So that's why we're building our own foundational model to generate a presentation that's like phenomenal. It doesn't need to code every line of a presentation. So there. That's a heavy compute cost to create a presentation they'll be looking at. We don't need to essentially go to Anthropic and write a whole thing, a whole essentially website every time we want to create a presentation. It's a lot. There's a lot easier ways to create presentations at a lot lower cost. So they'll be thinking about that just like we've thought about it.

[Ben Thompson]

But if you were doing the Gamma approach, which you're not, you might not going to Rory's point. Let's compare.

[Cliff Obrecht]

We've got the Gamma, but we've got Canva code, which you can code a presentation, you can code a website. That is a high compute cost. So we've got the equivalent of lovable. It's more for creating widgets and for education purposes, etc. Etc. It's got 20 million active users already. It's going really, really well.

[Ben Thompson]

But you could roll that up like it is cool, like and I use it today. But you could do much more. Like you have it pretty locked down. Like what you can do with it is create assets and overviews. It's great, right? But you could, you could spend a month and this could be lovable prime if you wanted to. Right, but you use 100 times the tokens.

[Cliff Obrecht]

Yeah, totally, totally, yeah. And that is an expensive product to serve our customers. That is the most expensive product to serve our customers.

[Rory O'Driscoll]

I mean the macro, this sounds really arcane, but it's actually going to really kind of drive a huge amount of downstream implications on the whole discussion we're having. And is the ROI there? Right? Because like big picture, the cloud business, pre AI, AWS, Microsoft Azure and Google, plus or minus 150, 200 billion of total revenue. If every software company spends as much on AI inference and AI training and the whole enchilada as they did on cloud computing, that's a $200 billion a year business. Just as I said, rough analysis. There's probably some double counting there. That's pretty damn impressive. And it's still going to be hard. That's the minimum they need. $200 billion top line revenue, $100 billion of profits going back to that. You wouldn't want to spend $4 trillion to make $100 billion of profits for 3 trillion of CapEx to have a return. People like Cliff1 and Benzley are going to have to yield a lot of costs over to the hyperscalers, the model providers. And I don't think a large number of software execs are going to do that at least easily. So it will be interesting to see how that math actually shapes out and if you can in fact command a return on that level. My gut is something over and above what we see now is required. And Jason, you're pushing and you always do. Maybe that is there, maybe it is. Instead of optimizing compute, you throw compute at everything and end users are willing to pay for it. It but it's something more than what we got now.

[Ben Thompson]

I just think we're underest. I mean Cliff made the point. We're underestimating the processes we're run today. We'll figure out how to use on less tokens or our own models or other things. Well, if the world doesn't change. It will come down an order of magnitude a year or possibly faster. But our ability to use orders of magnitude more tokens. Canva could turn this on tomorrow and we could consume massive amounts of tokens. They already have the product. It's already cool.

[Cliff Obrecht]

It's just, it's here we genuinely have to. This is an interesting point. We genuinely have to think about this deeply because we've got 240 million users, we're about to launch in October, a whole slew of new AI products deeply integrating it into every part of the workflow. We need to seriously run the maths hey, if 20% of our users, 50, 80% of our users use this 10 times a month, what are the costs going to be? And they can look pretty, pretty big and eating to your margins very significantly. So we need to be sort of double hatting around.

[Jason Lemkin]

You don't feel comfortable shifting pricing accordingly?

[Cliff Obrecht]

No, no. So we are doing that actually we're moving to a unified credit model around AI. So your premium subscription free gets a certain amount, premium subscription gets you a certain amount. And then if you're a super active user and so that means it can't eat into our margins too much. So you need to maintain that margin and we'll have sort of that scaled usage based pricing beyond the certain point Cliff.

[Jason Lemkin]

When you look at usage within the company itself, Jason said something I think very apt a couple of shows ago. Jason, you can remind me specifically what you said but you said about basically equipping developers with I can't remember the number. Was it $10,000 a month in terms of assistance through coding tools?

[Ben Thompson]

And that's where Farhan at Shopify was pushing it like up to $10,000 a month. If you can prove the ROI, that's the budget.

[Jason Lemkin]

When you think of equipping your engineers at Canva to would you feel comfortable in a future world equipping them with $10,000 a month of coding agents?

[Cliff Obrecht]

We haven't done that down to an individual level because I don't believe we've got over 2,000 engineers. Doing that at scale would be the right approach but from an engineering leadership perspective and we encourage all our engineers to use the best security certified coding tools that can increase their efficiency. And we're not price sensitive around. We know that ultimately the playing field levels out and there'll be competition. But yeah, so we're very open with whatever tools they want to use. But it has. There's always the two or three great ones and it is already consolidating push.

[Rory O'Driscoll]

On that and you probably have guys the 20 buck level a month as a given the 200 buck level because Jason's visualizing a world where you can go 1x order of magnitude beyond that to not the 200 buck a month, but the 2000 bucks a month level and even beyond that.

[Cliff Obrecht]

And yeah, we need to rethink our seat based pricing model because some of the tools, particularly around marketing tools we're creating enable a single marketer, deploy tens of thousands of pieces of content so one person can create so much content, be feeding that into all the social platforms and wherever their marketing visual content ends up and then getting the feedback from how that's performing in the world and feeding it back into the creation loop. So one person can can do inordinate amounts of work and that's using a huge amount of compute and you can't charge 20 bucks a seat for that level of breadth. So. So then it hits a certain you give that functionality for a per seat price but then over that it needs to be based on consumption. So it's a hybrid seat and consumption based model.

[Harry Stebbings]

We saw Monday got hit because a.

[Jason Lemkin]

Lot of their growth relies on SEO. You're seeing SEO really reduces a customer acquisition channel for a lot of companies. I know you've only got 10% which is paid click. But given 10% being paid, are you moving forward with the assumption that SEO is going to be a much smaller part of your customer acquisition funnel moving forwards?

[Cliff Obrecht]

I think SEO is about 15% of the 90% organic to date. So used to be our number one channel, but now our user flywheel, word of mouth and people sharing designs are our biggest. No, I mean we're seeing a lot of some of it. SEO is growing for us, but also we're the number one productivity app on ChatGPT and we're the fifth highest domain that ChatGPT refers to. So out of all the websites, it's like Google Meta blah. We're number five in regards to essentially it's SEO for LLM because we've invested a lot over the years. They're obviously taking a lot of the same signals that Google's taking. And anything we're losing on the SEO front is translating to llc, LM SEO, which is a huge tailwind for us. So to give you an example, a year and a half ago, 0.02% I think it was of the images uploaded to canva were from ChatGPT. That's now over 5%. So the fuel and content being generated in these LLMs are being propagated into Canva for that editing, for how they're using it in designs and for that collaboration, storage, deployment, that whole visual communication workflow that we excel at.

[Rory O'Driscoll]

I know what Harry's fishing for, trying to figure out how his investments are doing. Have you proactively tried to win in terms of how you show up on ChatGPT in the same way you did on SEO, or has it just happened organically just by virtue of being who you are?

[Cliff Obrecht]

I would say 100% we have won. As soon as these LLMs started taking off, we had the conversation. Is our SEO team working on LLM optimization? And there's definitely a team at Canva working, working on that, Cliff.

[Ben Thompson]

Also, what you want thing about SEO being dead is, is stupid. It's, it's, it's dead for, for folks that don't have a brand, don't add value and don't have reach. I mean, I just popped it into Claude and best overall Canva.

[Rory O'Driscoll]

What?

[Ben Thompson]

Best design product to make YouTube thumb. What? Best design product to Make YouTube thumb. Best overall Canva.

[Rory O'Driscoll]

I mean, it's just in fairness, kind of the SEO, I think you have to distinguish between, between people like Canva where they have a product to sell and they're totally happy to sell it via ChatGPT. And then media companies where the only product they have is their content, where If Google or ChatGPT serves up the answer and no one clicks on the website, then they're toast for Canva. This is not existential. You guys are fine. But if you're a mid tier review site, you just get scraped and summarized. Well, thanks for playing, cliff.

[Jason Lemkin]

You've got OpenAI at 500, you've got Anthropic at 183 and you've got Grok at 100. Where do you put your money?

[Cliff Obrecht]

All of them. I'm big fans of all those companies. I'm not going to choose.

[Rory O'Driscoll]

We're still a constitutional company country. You have the right to remain silent.

[Cliff Obrecht]

Yeah, yeah, yeah, yeah. They're all doing great work.

[Jason Lemkin]

Neutral.

[Rory O'Driscoll]

He doesn't fall for your traps, Harry. Not like me who foolishly feels they need to answer these questions and get into trouble. Trouble.

[Cliff Obrecht]

I genuinely believe they're all, they're all companies that are going to be the foundations of our AI future. They're going to feed pretty much every single product. So it's like betting on Amazon and betting on power. You know, it's. And every, every sort of. And that come. And the power question is an interesting one because Every big revolution when it comes to technology shift has largely been power based. And I think one thing that's interesting is the amount of, of Energy that Jensen's $4 trillion investment is going to take is just insane. And I think it's akin to really what Tesla have done with electric cars. And so while I see AI pessimists and environmental pessimists saying oh, so much more energy it's going to be bad for the environment, I actually think it's going to rapidly accelerate our shift to green energy, particularly nuclear, which we're just going to have to solve. And once we've solved it, and it's way more economic viable than burning fossil fuels, it's going to kickstart the entire shift to renewable, renewables or zero emission energy sources, which I think is ultimately going to be huge for the environment. Long like midterm.

[Jason Lemkin]

Before we wrap, there's one interesting topic that we said about before, which is that you said, oh, you should invest in Riverside. And I was like, oh no, I saw it at seed and I missed it. And then I've seen it every round since and I, I didn't want to do it. You said it was an interesting thing about kind of the VC regret pathway and not engaging later on. I had it again today with Revolut when people asked me why I weren't investing in Revolut and I was like, well, it's been embarrassing as an early stage investor to buy Revolut off Goldman Sachs, my bank. That's when you really fucked up as an early stage investor. Rory Jason, I'm intrigued to hear your thoughts on the ones that you've missed and the regret pathway on investing later.

[Rory O'Driscoll]

I think you should do it is the short answer. And for the viewers, this happened before we kind of went live. Cliff was talking about folks who looked at Canva early on, passed and then really struggled later on to pony up and pay obviously much higher prices. I am the exact opposite. Many of my most successful deals I've passed on prior and I've just learned if you pass on something and then you get another data point like a year or two later and they've done what they say they'll do, you literally don't need any more information. It's so much more telling because with a new deal you're starting off and all you're seeing is one data point, the difference in information content between two data points over time, both of which are positive and one data point and where you have no calibration is almost infinite. I can think of two or three deals way back in the day. I didn't get amateur in 2003 and a year later I saw it at twice the price and I bought all I could. Same thing on box passed at the start of 2010, the round didn't even get done. And nine months later I literally woke up and said, what's the dumbest thing I did all year? I didn't do that deal. And I went to down and did it. And I think I'm trying to discipline myself to do it even more. Because when you go back, Let me just repeat it again. When you see the company, when they sell, they'll do A, B and C and you pass. You don't believe they'll do A, B and C. And then they do A, B. And even if they do C prime a little less than C, you have what you need to know. And then Cliff's comment applies is now you're seeing a category leader, you know you can lean into their execution. You really should say to yourself, unless you think there's a tambour problem, unless you use a tam problem, you should say to yourself, I was wrong. How do I kind of change my weighting and lean in here?

[Jason Lemkin]

Does that leaning in apply in an AI world where sustainability of revenue is a question? Because a lot will say, oh, I'm going to do 10 million in a year.

[Rory O'Driscoll]

I think they're two separate issues because you are right about one thing. Sustainability is a lot harder in AI. We're seeing a lot of people drift in and out of product market fit. But that's going to be true in the new deals and as well, the new deal that you see where you have no context from two years ago and it looks golden today. That can drift out of product market fit too. So it's a separate factor. And I do think even in an AI world, taking it one step beyond. I think the really positive side in an AI world would be you finally found it. Whatever reason you passed two years ago. The best of all signs is this. The product has evolved three times because that's what's happening in AI land. And the founder's been able to evolve it. And then you're like, oh my God, this guy has a survivor gene. Run, don't walk. Because I think that's one of the identifying characteristics of the people we see figuring it out, which is the damn thing keeps changing, but they just keep changing faster than the other guy. So again, I think there's always signal because the hardest thing, the thing you can't change in this business is time. You can't compress time, you can't fast forward, you can't rewind. So when you have two data points over time, that's just so fricking power powerful. And I totally get it because I wrestle with this. You get hung up, oh my God, I could have done it for 10 million or 100 million or whatever. Now I got to pay 500 million. And you just got to look yourself in the mirror and say that is the tax you pay for being stupid. Pay the tax and just get off the stupid train.

[Cliff Obrecht]

Does the same apply for follow on rounds as well? Because it's amazing to me when I've seen investors have the inside lane on all the company data and the company is performing like crazy. They got a big chunk very early, call it seed A or B. And the best investors that have done best out of Canva like they were early stage funds, but they realized, holy shit, we're onto something here. So they raised SPVs or additional vehicles to move further up the value chain going later and later stage and compounded their position or at least didn't get diluted over time. They've done the best first. There's a lot of early stage investors, but being like they call themselves being disciplined, oh, we only stuck here. But if you're on a winner, keep betting on that winner is my approach. But it's amazing to see how different investors kind of treat follow on investors investments as well.

[Rory O'Driscoll]

It's a great point. And I think two separate issues. You have the individual the investment is are you making the right investment? In other words, did you really think that the third follow on round was overpriced because you thought the market was smaller? Were you wrong on the investment? So that's one factor and we can talk about that. But then separate from that, you have the institutional thing. Are you set up to do those big rounds? Do you have to raise an spv? Are you able to raise an spv? And I would say, Cliff, one of the things I've internalized is I think especially being scarred by probably three decades doesn't help sometimes. And you're right. In a company like yours, the correct responses pile in at every level and find some way to do it. So there's two separate things. One is do you still think it's a good. And to your point, one of the things we've observed is the round after the round we do. If it gets a quick outside led up round and you have positive data, it always feels Expensive. Going back to, oh my God, there's 2x more. That's the round. You should do every dime because it's roughly in the same strike zone as your sweet spot. It's not like we typically invest plus or minus 100 million pre. The 20 billion round is hard to get your head around. But if you do the round at 100 and then 12 months later they're at three or four, 400 and everything's working, that's a signal that we have constantly underestimated and have constantly corrected and have been validated on or not, or.

[Jason Lemkin]

Actually there's been a price inflection point, but there hasn't been a company inflection. And so you're actually paying up for little company growth. I'd rather pay up for the 800 to a billion where there's real company inflection and the price inflection matches that.

[Rory O'Driscoll]

Well, there's two things. One, if it's price only and you're not. Yes. If you believe your inside information pushes to the negative and you know something, something, then yes. But I give Peter Thiel said it is that the data on and outs are good and maybe not in this market and I haven't processed that yet, but he's very quotable as saying the outside led up round, the follow on on the outside led up round was the strongest positive signal and they consistently underestimated the value of that. And I do believe that to your point, Cliff is the case. I do admit sometimes that if your business is relatively early stage, it is hard to think how do you go at 20 billion billion and what do you do and how much do you put into it. But there's no doubt we've talked about this before, that being willing to massively concentrate on a small number of deals gets you the last absolute dollar of outperformance. You do have to, as you say though, the key thing is to be able to distinguish the canva from the 10 other companies you've had that got a billion pre valuations in 2021 that aren't worth a billion.

[Cliff Obrecht]

True, true, true.

[Rory O'Driscoll]

In the end, you still have to be vaguely good at picking guys.

[Jason Lemkin]

Listen, I can't thank you enough for this. You've been fantastic. Cliff, I so appreciate you joining so early in the morning. It's so great of you to join and I really appreciate it, man.

[Cliff Obrecht]

Thank you so much for having us. I appreciate it. It's a great chat.

[Ben Thompson]

Rock and roll.

[Rory O'Driscoll]

Thank you, Cliff.

[Harry Stebbings]

I think you can just tell how.

[Jason Lemkin]

Much fun we have as A group.

[Harry Stebbings]

I want it to be the best show though for you. So let me know any feedback that you have. Harry0vc.com I want to know what we can do to make it the best show of of the week for you. But before we leave you today, let's talk about agents. Specifically Piper, the AISDR agent brought to you by Qualified. The agentic marketing era has arrived. And if you're a B2B marketing leader looking to scale a pipeline generation, Piper, the AI SDR agent.

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[Harry Stebbings]

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[Harry Stebbings]

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[Jason Lemkin]

How dare you.

[Harry Stebbings]

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