← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Cursor Acquired for $60BN by xAI | Anthropic Hits $1TRN in Secondary Markets | Did Anthropic Just Kill Figma, Adobe and Canva | Rippling Hits $1BN in ARR | Salesforce Goes Headless: Smart or Stupid | Cerebras IPO 2.0
01:40:59
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- [00:00]
Jason Lemkin
I'm not sure they're buying them for 60 billion.
- [00:02]
Rory O'Driscoll
If your stock is valued at 100 times revenues, you can buy things that are trading at 10 or 15 times revenue all fucking day long.
- [00:09]
Jason Lemkin
I think there'll be $100 billion deal in the next 12 months.
- [00:13]
Rory O'Driscoll
I think this will stand as the high watermark of private M and A for a decade.
- [00:18]
Harry Stebbings
This is 20 VC with me, Harry Stebbings. It's my favorite show of the week. Rory o' Driscoll and Jason Lemkin analyzing the biggest news in tech now. This week on the agenda, we. My God. Breaking news. Cursor acquired by Xai or SpaceX, otherwise known for 60 billion dollars with a 10 billion dollar break clause. Tim Cook announces he's stepping down from Apple after an epic run. Anthropic turns down 800 billion dollar funding offers and crosses the trillion dollar mark on secondary markets. And then Anthropic launches Claude Design as if it wasn't eating everyone else's lunch. Now it's going after Figma, Adobe Canva. This is an epic always. We did not fall short of banging news to cover. 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 agents to act 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. 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 CO20VC. After Omni helps you find the right customers, checkout helps you close them. Over the past 15 years, Guillaume Pozaz has led checkout.com through what he calls 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 returned to full year EBITDA profitability. They now support over 1,000 enterprise merchants globally, including 60 process more than a billion annually with brands like ebay, Vinted Amex, asos and T Moon. 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 agentic 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 analogue scouting notes to go from uncertainty to a draf 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.
- [03:50]
Rory O'Driscoll
You have now arrived at your destination.
- [03:53]
Harry Stebbings
Boys, we recorded yesterday and last night some very big news happened. I messaged this morning saying I think we should actually do a little segment this morning and discuss this, because it is so not. And so last night it was announced that Cursor was. Rory, you're gonna correct me whatever I say, so I'm just gonna do it and you can correct me. Cursor is being acquired by Xai SpaceX. In other words, for $60 billion with a break clause of $10 billion by
- [04:22]
Rory O'Driscoll
the end of the year.
- [04:23]
Harry Stebbings
Rory, please correct me on.
- [04:25]
Rory O'Driscoll
It's too rounding, Erica. We shouldn't overthink. I mean, basically what it is, is they have an option to acquire Cursor, and if they don't, they pay $10 billion for the work. But it amounts to the same thing.
- [04:34]
Jason Lemkin
Listen, it' of all this is an epic deal, right? If it happens. 60 billion in about three years from seed funding. I mean, we thought Wiz was big guys. I mean, we. When we started the show, we were talking about windsurfer. That was two and a half billion. Now it's 60. I mean, these are numbers that we have not seen in 3 billion from founding. Now, having said that, we haven't read whatever the deal is, right? I'm not sure they're buying them for 60 billion. There's a lot of stuff going on between these companies. Senior engineers have already quit and gone to xi. It appears that Cursor may be at least notionally, the largest customer for Grok for coding. Okay, they have. Their market share has fallen and they've already committed to using a lot of the million GPUs that SpaceX, whatever we're calling it, is in Colossus. So there's a lot of stuff going on here and what this call an option is and how much it's tied to Cursor having enough of a state of the art model that they're worth buying because an ID isn't enough. There's a lot up in the air and it's probably why the deal is structured like this. Beyond the fact that SpaceX is going public, which adds to the complexity, there just. There are a lot of moving pieces here. So I wouldn't be surprised if it doesn't close because I think there are a big milestone that needs to be hit. The Cursor needs to make progress. And maybe I'm wrong.
- [05:53]
Rory O'Driscoll
Wow. Such a lot to unpack. But I'm in no particular. I want to cover all this. But first of all, you're right. The first sentence is this is the biggest private acquisition ever in venture. It used to be Wiz at 32. Before that it used to be WhatsApp at 16. I mean, individual private check before going public. Now it's a $60 billion outcome in three years if this deal closes in three months. This is the biggest ever privately held venture acquisition. Period, full stop, end of story. An amazing result. So you're right. Jason, before you get into the noise, that's the venture takeaway.
- [06:27]
Jason Lemkin
Jesus.
- [06:28]
Rory O'Driscoll
I know. And wow. And we'll come back to who it
- [06:31]
Jason Lemkin
didn't even take 20 years like most of our funds take. This was three and a half.
- [06:35]
Rory O'Driscoll
Big picture here, guys. It actually makes sense. I mean, I was actually thinking last night of doing like a little cute tweet before I got your note. Harry. It's like, you know, you got these guys called Kirso walking down the street saying, hey, good news, we got an exploding business, couple of billion dollars in ARR. But bad news, we have shitty gross margins because we need our own model and we need compute. And Elon goes, hmm, hold that thought. This is a guy walking around with a whole bunch of compute, a reasonably good model and literally no revenue. It's like a marriage made in heaven, you guys. I mean, because let's get real here. It's one of those deals that makes sense for both sides, which is why I think it'll close, which is different than saying it makes full financial sense. I'll come back to that. But if you think about it from SpaceX's perspective, all the narrative has been SpaceX is amazing, Starlink is amazing. WTF with this X AI? Why did they stick in Twitter and X AI? I know Elon loves AI, but it makes my head hurt because the truth Is they'd spent 20 billion-plus or minus on the most amazing data center, the Colossus Data center, with literally hundreds of thousands of GPUs, but they're not doing a very good job of selling them. So they have relative little business, which, you know, all other things are the bad place to be now, you know, capacity is scarce, so I'm sure they could have found kind of, you know, white label work selling to, you know, one of the hyperscalers. But instead they found this company that's in the mother load, the mother of all AI markets, which is coding, that has customers, has revenue, but has shitty gross margins because it doesn't have yet a full standalone model and massively needs compute. So they put this on top of their thing and the vertically integrated thing just looks a lot more attractive. You literally have a company that's spending that, making 3 billion in revenue and spending 3 billion on gross margin and you have another company that's burning 18 billion. You put them together and the 3 billion gets cancelled and at least they have some revenue. It's still not enough to cover the X AI nut unless they can grow this thing, but at least looks like a business now. And I think what's really clever from SpaceX's perspective is they couldn't do it before the IPO because you can't close that deal, it delays everything. It's actually a very clever structure. So they're basically going to be able to say to the public, you know, you love Starlink and you love our space business and you didn't like this other thing, but we got a plan to fix it. Once we close for 2 trillion, we'll exercise our option, we'll buy this thing and suddenly we'll be a $4 or $5 billion revenue AI frontier lab, which my Claude code equivalent is called Cursor and I actually have the rest of the stack and there I told you I'd make a good business out of this.
- [09:04]
Harry Stebbings
Which is an important note just for people to understand that this is not a transaction closing today. This is in 6 months post going public. And it's a very strategic way for them to do it because they can't do it now just before going public.
- [09:16]
Rory O'Driscoll
And that's why I think of it as an option. And you're right, Jason. There's been some commentary that said maybe this option is in part Elon doing a try before you buy. Let's see if the model works on our stuff and vice versa. And if it doesn't, we'll just pay you 10 and walk away. I don't know. I'm not going to guess, and there's probably some of that, but fundamentally it's costing you nothing today because you're not writing the check today. And what Elon's basically saying is, if my IPO happens, and it probably should, and I want to buy this thing, I will because I can. And if it doesn't, I'm promising $10 million that I don't plan to have to give unless God forbid, the IPO doesn't happen. So kind of mentally says, I haven't fixed this story today, but I have a plan to fix it. You can see the plan to fix it, so stop bugging me in the roadshow about X AI. Let's talk about rockets in space.
- [10:01]
Jason Lemkin
I think, listen, Elon walked away from the Twitter acquisition, so he'll walk away from a bad deal. Don't get me wrong. If things change. But you don't. You don't promote it the way SpaceX did all over X. If you're not basically saying this deal is going to close, right? This isn't a change otherwise. If it's just vendor financing with an option to buy, you bury it. You bury it because it's roundtrip revenue. So someone will use. Someone will use our colossus for a. For. For. For model training, right? You'd hide it if it was just a vendor deal, right?
- [10:30]
Rory O'Driscoll
Even though I don't think the whole. I'm going to say something weird, even though I don't think the whole business effort here makes sense, right? Trying to enter this market, you know, trying to be the third or fourth foundation model player, you know, as X AI SpaceX. I don't think it makes any sense. But once you've decided to do that, this deal makes sense at the margin because you've incurred all the negative parts of being a subscale hyperscaler with 20 billion in burn and now at least you have a business. So I'm with you, Jason. I think they're pushing this because they're like, oh, this makes sense and actually solves a problem for us and obviously solves a problem for cursor, makes the P and L of their business look very different and therefore it's a win both sides. And it closes.
- [11:11]
Harry Stebbings
If I push you, who is getting a better deal that expected to finish the year at 6 billion. So this is only 10x end of year revenue.
- [11:19]
Jason Lemkin
Seriously? We just talked on this pod before about Figma 20 billion and about Grok to. You just said grok to Nvidia for 20 billion. And getting to be not have to be a public company CEO was the second best gift to sales off selling for 2 billion. This is a gift. They don't have to do the hard work. They've only been doing this for three years.
- [11:39]
Rory O'Driscoll
Totally.
- [11:40]
Jason Lemkin
They've only been doing this for three years. I was watching some images of like, what's Michael's last name? The CEO.
- [11:44]
Rory O'Driscoll
True.
- [11:45]
Jason Lemkin
Okay. I was watching something on Twitter with him and Gary Tan a year ago. Okay. Gary Tan's got a big job, right? Gary Tan looks like he's aged eight years since the video. Michael looks the same. This is the time to sell because you don't listen. This is maybe this a little meta, but what I've learned as a founder is you don't get it doesn't hit you until around year four to five. This is just the way humans are. Okay? And he's young. But look at founders you've invested or met with around year four to five. The weights there, okay? You can see it in the bags under their eyes, whether they're 21 or 61. And you got to double down at 4 to 5 years old. You got to sit around and say, do I want to sign up for another tour of duty? These guys don't even have to do a second tour of duty. This is pretty good deal, Harry. If you're 10 or 15 years in, you know what to do. Three years in you go, you got to go home.
- [12:31]
Rory O'Driscoll
There's no guy.
- [12:32]
Jason Lemkin
You got to go home after three years for 60 billion. Three years. Three years after 60 billion.
- [12:39]
Rory O'Driscoll
Can I help you on this? You asked which of the two is getting a great deal, and the answer is they're both getting a great deal.
- [12:45]
Harry Stebbings
You've got to give one name.
- [12:46]
Rory O'Driscoll
I'll tell you who's losing. There's two reasons they're getting a great deal. Everyone's getting a great deal. The first is it actually industrially makes sense. The two things go together well. So there's some business logic whether or not the SpaceX Elon team can manage these kind of researchers over time. You know, that's TBD given how the X stuff has unfolded so far. But it makes industrial sense for these two companies to come together. Why are they both getting a great deal? And so you're missing the point because there's a third player in the game here that you're not mentioning the future. SpaceX public shareholders are valuing a $20 million revenue company at $2 trillion which is 100 times revenues. If your stock is valued at 100 times revenues, you can buy things that are trading at 10 or 15 times revenue all fucking day long. As long as SpaceX is worth 2 trillion, then if Elon wants to scratch an itch to clean up a subsidiary of SpaceX that isn't quite working out and he can chuck 6 billion on the table. For context there it's 3% of SpaceX alleged market cap in return for 15 to maybe 20% of their total revenues.
- [13:53]
Jason Lemkin
It's not even material.
- [13:54]
Rory O'Driscoll
Yeah, when you have a high priced stock you can buy any pretty things that you want and what happens?
- [13:59]
Jason Lemkin
You should.
- [14:00]
Rory O'Driscoll
And you should, you should because it
- [14:02]
Jason Lemkin
may not last, right?
- [14:03]
Rory O'Driscoll
Yeah, exactly.
- [14:03]
Jason Lemkin
This is the opposite. When we did the other version of this pod, we were talking about how so many public software companies, if you're now trading at 10 billion, you can't even spend a billion to buy a couple of kids, Right. I mean for Elon this is immaterial to Space X's market cap to Roy's point. And at the margin, at the margin it helps that he doesn't care if he makes them billionaires. It's a micro learning but there are issues in making targets billionaires. It is, it is issue.
- [14:29]
Rory O'Driscoll
As long as SpaceX is worth that kind of multiple, it's revenue accretive story accretive. And another reason it makes sense to cursor is the number of people who can write a $60 billion check for a roughly break even gross margin. Business can be counted on the fingers of one hand removing at least one or two of them of said fingers of those acquirers. Most of them in most situations would be unable to do so for the doj. This is the only game in town.
- [14:58]
Jason Lemkin
It helps me founder led to to write a check like this.
- [15:00]
Rory O'Driscoll
Yeah, totally. Yes.
- [15:02]
Jason Lemkin
This is a going to Google again. You're like I know we did was at 32 billion. It's crushing it. But we want to buy Cursor for, for, for twice that. I mean, it's a tense board discussion, right?
- [15:11]
Harry Stebbings
If I'm an investor in the business, what does it mean for me? When do I get my cash? What are my LPs getting back?
- [15:18]
Rory O'Driscoll
You're getting a lot of money. I mean, look, you get, you're getting your cash. If this deal closes, I think in six months, which is, you know, back end of this year, assuming the IPO happens in June, you're ecstatic. It means.
- [15:30]
Harry Stebbings
And I'm getting cash or I'm getting SpaceX.
- [15:32]
Rory O'Driscoll
Well, you're almost certainly getting stock. The IPO is 75, Bill. So then the second order questions are, is it registered? If you're getting that stock in the restricted period, is that going to be restricted too? Because the whole, the Dynamics of the SpaceX lockup, given the size of the round, are going to be one of the most interesting parts of the whole transaction. There's talk of, as you say, employees getting out early. There's also, to be fair talk about some shareholders being held in for much longer. Because the combination of a 2 trillion. I mean, it's going to make a difficult problem around float management slightly more complex because a 75 billion raise on a $2 trillion valuation is a teeny tiny float. And going from there to the other 97% of the company being freely tradable in six months just doesn't work. So I'm sure there's going to be a convoluted float management thing and then this stock will probably go into that. So I wouldn't be surprised to discover that as investors in Cursor. Congratulations. You are now investors in SpaceX. You know, you've got that fluctuation risk for six months, plus or minus. But you know, on the other hand, you are getting $60 billion. Shut up.
- [16:39]
Harry Stebbings
And do we know if the 2 billion at 50 billion happened, that round happened last month? We don't.
- [16:45]
Rory O'Driscoll
I don't know.
- [16:47]
Harry Stebbings
And then do we think, well, they're tied together.
- [16:48]
Jason Lemkin
That's what I'll. I don't know all the machinations, but I guarantee they're tied. They're tied in some fash.
- [16:55]
Rory O'Driscoll
Can I start? I think I saw one that said it's not happening because this obviates the need for it. Because if you think about it, they probably had reasonable. I'm just winging it here, but they probably had pretty good cash on the balance sheet. But they knew they had to spend a lot in compute and now one of two things is going to happen in September, October, six months. A, you're going to get 60 billion and you have all the compute you'll ever need from Elon. And B, you're going to get 10 billion in cash, in which case you can buy some compute then. So they can probably do some forward contracts. So if the round hasn't closed, it probably won't close now because there's no point to it. And no one would want that stock because that's basically like buying SpaceX and prefer to just wait for the IPO if I'm in.
- [17:33]
Harry Stebbings
If we get a stock back and we're locked up for 12 to 18 months or whatever that is, how am I feeling as an investor? Am I still ecstatic? Again, if you're in the Figma IPO and you're locked up for 12 to 18 months, that's been brutal.
- [17:44]
Jason Lemkin
But reason is all in on the, on Elon anyway, right?
- [17:47]
Rory O'Driscoll
If you wanted that action, you got more of it. And if you don't want that action, you're going to bite your nails. Look, I mean, you wrote a blank
- [17:53]
Jason Lemkin
check to Elon for that, for the take private of Twitter. Of course you're going to go long on Elon now, right? You're doubling down on the same founder. It's not even, I don't know the cap tables, but for Andreessen, it's almost like merging two portfolio companies at a meta level. Maybe not that somebody ought to be accurate, but intellectually it's like that. Right?
- [18:10]
Rory O'Driscoll
But as yet, how are you? All right, and look, this is where the beauty of being an early at a low basis, if you're in. I mean, I looked at if you're in at the B, which is where the A was unreason and thrive, the B thrive, LED. Basically, the C is roughly a 5x, the B is a 20x. I can't even calculate the A, but it's huge. And then the most recent round is a 2x. If you're into SpaceX at 2 trillion and that's only a 2x, you're scared because there's a lot of volatility in that stock. So that's the thing. You could end up, I mean, I'm going to say something heresy. You could end up breaking even. IPOs do go down apparently at times. I mean, Facebook went down plus or minus, I think, 40% from their IPO price in the first six months before 10xing subsequently, just as a reminder. So you got risk in that deal on the other hand, if you're sitting there at 20 times in the case of the B or 50, 60 times in the case of the A, you're like, oh well, so if my 80x becomes 40x, it's still a 40x, I'm fine. So you can roll that dice.
- [19:08]
Jason Lemkin
It's almost a defensive move. If you're like Andreessen, you've added value to your net asset by combining these on paper, you're shareholders in both. You have an ipo, it has risk. You threw this crazy asset in there. That's very immature, where the debt is exploding, right? Your balance sheet has been blown out. How can I de risk my IPO for a couple percent dilution? Done.
- [19:27]
Rory O'Driscoll
I think you're correct in your analysis though. My comment is the entire sentence implies that Elon consulted with anyone. My sense is Elon solved Elon's problem and everyone else is along for the ride. So they'll get the shareholder consent and the docusign and they'll say thank you very much. So and sign. But you're right, if I owned a lot of SpaceX, oddly enough, to say it succinctly, I'd have been pissed at the X AI merger because I didn't need that dilution. But having done the X AI merger, I'd be like, clever deal with Cursor. Dude, you had this negative thing. Now at least you've got a full on full stack story. Is it the best story ever? No. Would I prefer on a standalone foundation model lab Bet? Would you prefer to own Entropic than X AI plus Cursor plus the Frankenstein of Twitter? Yeah, you would. But at least it's a full stack story. Now this is a clever deal again, enabled by the 100x valuation you have, or at least allegedly have, but at least 50x. I mean, even at the low end. I mean, if you play it out here, even if SpaceX trades shock horror at a trillion, which is a 50x revenue multiple, and even if cursor gets to 6 billion by the year end, so it's a 10x revenue multiple. SpaceX is still buying stuff at 10x with stock that's trading at 50x. That's a great country.
- [20:38]
Jason Lemkin
Those arbitrages are real. You really should do a deal or two in those moments in time because they don't last one way or the other. They don't last. Right?
- [20:45]
Rory O'Driscoll
At the risk of stating the obvious, there is a lot more fucking differentiation in putting rockets in the sky than there is forking an open source ide. And running it on top of Claude code. So I think the boys and the folks at SpaceX have done a much harder task, so they deserve a higher revenue multiple. But nonetheless, it's why you can write the check with such gay abandon.
- [21:07]
Jason Lemkin
And look, if the next deal's at 120 billion, all is good.
- [21:10]
Rory O'Driscoll
I think we just need the next
- [21:12]
Jason Lemkin
exit to be at 120 billion. Right?
- [21:14]
Harry Stebbings
Going to your point earlier though, Rory, of comparing it to Wiz, the other thing that's just amazing is the scale. It's not like a little bit more. It's double Wiz, give or take. I mean literally 32 versus 60.
- [21:24]
Rory O'Driscoll
I was thinking about this this morning for arguably a much less defensible business. And I think the truth is this. It's why venture capital is amazing. It's the aha. Don't play small ball. If you play in the big markets, if you lean into the risk in the part of the cycle where the big guys want to win and want to catch up and want to be relevant in the space, then this kind of exit can happen even if the fundamentals aren't great. And a gross margin Sequoia who might think are the Diane of the whole industry always say we hate negative gross margin businesses. This is a break even gross margin business. But it worked because the overarching comment is AI is the biggest story of the last 5 years and big tech wants to be a player and Cursor is a player in the biggest markets. Don't overthink it. It's like the SAS motto, who dares, wins. Those guys dared and they won. Now the minute the tide goes out, we saw this in 99 too. Once the tide goes out and people are scared of.com or scared of AI, all these high burn, high growth companies can get a real hit. But what you're selling now, what they were selling is a ticket to matter. And X AI wanted the ticket. So to your comment on all the other guys, the factories of this world, there are 10, 20. This is what Jason's point is. There's 10 or 20 other companies that are staring at irrelevance over the next three to five years because they're all part of the old software development life cycle. Maybe they can't pay 60 billion, but they're going to all have to buy themselves or build themselves into relevant. So I think a lot of these can still have decent exits. Aladdin's right, you should be thinking about this. But I'd prefer to be in something like factory leaning in than in Some old school code development tool. It doesn't matter anymore.
- [22:59]
Jason Lemkin
Another way to flip it around on the one I'm sure you should sell. On the other hand, there's six leaders with market caps above 2 trillion, right? And we're adding space X. So there'll be seven, maybe above 2 trillion. They can all afford to pay $100 billion. Yeah, 5% of their market cap plus or split it with some cash to not fall behind. But Jensen stressed about Tanium. He can spend 100 billion, right? He already did a small deal, a $20 billion tuck in. Nvidia, Apple, Metta, Amazon, Alphabet, Microsoft, all can buy a startup for 100 billion. And I remember back in the day at Saster Annual Ryan Smith came at Qualtrics, had just been acquired for 7 billion. And our jaws dropped. Back then, that was a lot for a software company. And I asked Ryan, will this ever happen again? He's like, I don't see why there won't be one for 14 billion next month. He's like, it's just getting good. And he was right. It kept the party, kept going to Rory's point until it ended. I think there'll be $100 billion deal in the next 12 months. Which one it is, I don't know. But you have to, you have to do. There'll be $100 billion deal. This is going to be one of three. That's my prediction. And I may be wrong, and I may be wrong, but there's the under. There's seven folks that can do it. Do 100 billion.
- [24:05]
Rory O'Driscoll
I think this will stand as the high watermark of private M and A for a decade. They all take the other side.
- [24:11]
Jason Lemkin
This clip. It's going to embarrass you, Rory, because
- [24:13]
Rory O'Driscoll
I just think it's anomalous in the sense of it's a combination of the absolute amount and the revenue multiple. The number of people who can write a check for less than 10% of their market cap, that's greater than 60 billion is by definition people above 600 billion. There's only eight or 10 companies above a trillion. So it's a very finite group of people who can do those kind of deals. Everyone but Elon trades at under 10 times revenues. Plus or minus. Yeah, it's pretty much minus. So they're not going to do a 60x. So if you're going to be worked. I might actually contradict myself in a second. Watch this. If you're going to, with the exception of Elon, because he can overpay, because he's trading at 100 times. At least. Plans to be trading at 100 times. I want to spend a little time on that in a second. Everyone else trades sub 10, so you're not going to buy anything greater than 10x, which means to pay 100 billion, you have to buy something worth 10 billion. As I did that, I realized, and at that point, a privately held company has to be doing, let's say, let's round down again, 5 to 10 billion a year to be worth 50 to 100 billion a year to kind of meet the Jason criteria of bigger than this. If JP Morgan wanted to buy Stripe, you actually would be right. So I can imagine a few circumstances. And then you also have the DOJ stuff, which is obviously suspended for a while, but there you go. So you're not impossibly wrong, Jason, but I just think, I think this is such a special circumstances. It's a combination. I mean, it's a combination of a couple things. One is it's a company trading at an amazing price, feeling the imperative to execute a transaction in an amazing space where there's a company willing to transact like that. The other thing I was thinking about is one of the big ahas on this is Elon is so risk on. I would use the expression in poker when you're on tilt, when you're just maybe it's not going well, and your response is to double down and double down. If you look at the whole Twitter x transaction, unlike SpaceX, which has been a worker genius from day one, it's been, I bought Twitter, I didn't want to do it. Shit, now I have to do it. That's 44 billion. Well, if I'm going to do that, then I'm going to want to do the AI thing and I'm going to spend 20 billion on capex. There got no revenue. Let's put them together. Ooh, that's not working. Let's flip them into SpaceX for 250 billion. It feels notional, but whatever, that's not great. So let's buy cursor for another 60 billion. He's basically going to keep doubling down until he wins in AI. Astonishing. It's terrifying if you're a stakeholder, but that's the game he's playing and it's his company.
- [26:34]
Jason Lemkin
Let me just tell you why you're, why you're wrong about the $100 billion deal. Rory. Just, just process wise, okay? And I think your math suggests I might be like, I hadn't even thought about JP Morgan Stripe that literally could happen tomorrow. Like we could open up our X accounts. It would make some sense, right? Here's what happens when times are good, but of stress, which is what's happening with all the leaders, okay? Microsoft, Google. The one thing I have been that I don't think you guys have been. I know, Harry, even I've been a senior VP on the other side at a big tech company during moments of change. And what we talked about all the time is who the hell can we buy to get ahead? And so I will tell you in all of these boardrooms, especially Zuck, you could already imagine in your head they are saying, I want to buy something that is going to actually effing move the needle for us. We'll do some tuck ins, you guys can all have a chip, you can go buy a little thing for 50 million, 500 million, maybe even a billion. But I want something that will move the needle in AI. Now bring me your candidates and they will be debated. But if it is above the line, those deals will get done for 5% or less of your market cap. I guarantee you the discussion because I was there. It happens every week.
- [27:38]
Rory O'Driscoll
Even though I disagree on the number, I 100% agree on the description. That is exactly what happens. You wake up as the leader of this big company, You've got your $2 trillion market cap to defend. There's a technical thing that could make you obsolete if you can spend 5% and de risk that you do it. So I totally agree. And a large part of why venture makes money is every once in a while you find yourself with companies that are kind of in the to do list for corporate America and they just write huge checks. So I do agree with you. I was pushing back on the 100. But do I think it's kind of like the overton window? A 10 or $20 billion acquisition from Zuck tomorrow morning, people wouldn't even blink. They'd be like, yeah, of course he's going to do that. So I do agree. I was just being, as you know me, annoyingly precise, about 100 billion. But I agree with you, every other CEO is looking at going, what do we do now in coding?
- [28:26]
Jason Lemkin
The other crazy thing that happens, I know it sounds crazy, but it is true. On the other side, on the acquirer side, big company, right. Once certain numbers are breached, it doesn't mean you also get 60 billion. It does. Not like you can't walk into the meeting and say I'm better than cursor. But it does psychologically change the break Point for what it because when people go into deal mode in big companies, as long as they can afford it, if they identified the perfect target, like remember it's minor, but remember when. When Benioff was willing to give his next first born to buy LinkedIn, he tried everything he could. Every share, every piece of debt. He couldn't get 30 billion to buy LinkedIn. That's $100 billion deal today.
- [29:03]
Rory O'Driscoll
You're exactly right.
- [29:03]
Jason Lemkin
Benioff would. If Benioff could get 100 billion to buy something to change the face of Salesforce, the LinkedIn of AI, he would do it tonight, I guarantee you. Because he already tried to do it with LinkedIn. He will do 100 billion if he had it. All these guys have 100 billion. So you go in a meeting and I saw it at Adobe as cloud took off, like people's views of price changed in my tenure as a vp, as soon as you see a cursor deal, we don't give a shit. It's. We're not the founders. It's not our money, it's not even our dilution. We don't care. What does it take to buy the next cursor? 68 million. Done. Boys on the corp dev team. Steppings and Lemkin on the corp dev team. Close the damn deal.
- [29:41]
Rory O'Driscoll
When you're fighting for relevance and defending an existing business, as you say, and even if I don't think they get to 100, the fact that someone's done something at 60 means something at 10 or 15 will seem like yeah, that seems like a good idea. Let's get it done. It's expanded the Overton window of doable in ma. Last thing to say is this great outcome for the VCs. Great outcome for, I mean OpenAI. Just as a reminder, everyone, Sam Bankman Fried did the seed. Poor Sam. And the liquidator did his job and sold it for a 1x that it could have been a couple hundredx. OpenAI did the A. I think actually OpenAI did another seed. Andreessen and Thrive did the A, then Thrive, led the B and doubled down the whole way through. I don't know what the returns are on the A, but on the rest of it I think they put in a billion and got 800 million and got roughly a 4x. Great outcome of everyone. It's a great venture story. All credit to the founders. I mean this is pretty good 3 year run. The two best deals at Thrive that are amazing are this one and OpenAI and the aggregate return on OpenAI. I think they're at a 4x but I maybe 5.2x, I can't remember which. And on this excluding the A, I saw the analysis, but it excludes the A, which is bullshit because the A is going to be a 50x on the rest of the money. It's a forex. What it says is there are small numbers of growth funds that can deploy masses of capital, hundreds of millions of dollars and get a high end kind of venture return of a forex, which is a good return, which is A. If you're doing an A or a B, that would be A. Yeah, that's a high end of good outcome. Not yet great. You want a 10x plus on your best stuff. But the fact that you can do it on a billion dollars is what makes this special. It's not that you are going to outperform some little seed like Nio if you only. Again, it's the classic thing, Harry. It's actually why even though you think it's simple to one dimensionally measure venture return, it's actually not. Because if you have only $1 to invest and you can give it to NEO and get a 16x or you can give it to Thrive Growth and get a 5X, you give it to Neo. Right? From that perspective you just rank on pure return. But if you're sitting there with $2 billion to invest, it doesn't matter what you do with Nio and Thrive have proven they can take 2 billion and turn it into 6 billion and you're like give me that net to the limit and like give me that product all day, every day. From a personal network perspective, if you run the math as being the lead GP on Thrive, it turns out to be remarkably good business.
- [31:54]
Jason Lemkin
We'll probably find that these products aren't even the same products. Even more. No, okay, because they were never the same product. But if I can put 5 million, 8, 10 million into an emerging GP and they don't exp into a multi billion dollar fund, it is irrelevant to a large endowment. Unless you've got a little chunk of guys that are just doing emerging managers and they'll put in the work or they'll put in the time or you're a smaller LP and as the numbers get bigger it will just. It just doesn't matter making 10x on your Neo if it's irrelevant to your portfolio. Right?
- [32:24]
Rory O'Driscoll
It's irrelevant. Different products for different folks. But I just got to call it to the last comment on making Thrive is if quote all they'd done was the late stage stuff and gotten that 4 or 5x blended, that would be wildly impressive. But the fact that on top of that they were in the A alongside Andreessen is almost proof. The typical rap on only doing late is you're only doing late. You can't get the early round. It's very impressive to have shown up for the A and doing then stuffing the money in like a foie gras from the B and beyond. I mean that's really, that's the best way to play that growth stage. If you have enough ground game to get in even under the tent for the A, and then you can stuff a billion dollars in from there on in. That's the way you get the best of both worlds. You got some action on the table with a 40x or a 50x is my guess on 10 million, yay you. Maybe 20 million, yay you. And then you got all the action in the world on the table of 800 million at an aggregate of a 4 or 5x. And that feels great. Don't mind you, you will be sweating that SpaceX lockup. You will know the day and the hour when it expires.
- [33:26]
Harry Stebbings
All right boys, onto the next bit of news. Tim Cook announces he's stepping down from Apple after one of the greatest 350 billion to 4 trillion. John Terminus will take over as new CEO. 24 years in Apple for him. He's been in hard by before. How do we read this news boys? Is this what we expected in terms of replacement? How do we feel?
- [33:46]
Jason Lemkin
On the one hand, he's 65, right? It obviously the board has been talking about this for years, right? They found their successor inside. They didn't go through the chaos of Shantu resigning from Adobe when they still don't have a CEO. Right. They did it all the right way. They did it at the perfect age optically. But the big question along with Reed Hastings and Shantanu and others is like folks, turnover every year. And I'm sure Rory's going to say that, but are they all leaving because they don't have an AI strategy? I don't think Netflix has one. I don't think Apple has one. I don't think Adobe has a great one even though they have AI. Like actually I learned this week AI and Illustrator is great. Like AI in Adobe, Illustrator is a 10. But it does hasn't changed the trajectory of the company. Right. So what would you do if you take an Apple from whatever, you know, 12x, its market cap, successfully chaperone the Jobs agenda to Epic heights. And AI is changing the. This show gets stale, like less than a week. We got to do like four of these a week. Like, I just don't know if. If this is normal retirement or deep down, folks are like, jesus, I'm not up for this. Because I think most CEOs I work with are not up for it. Is the truth. Most pre AI CEOs are not. They're not up. You guys know this too from your portfolio. Not all, but most are not actually up for. For the massive amount of what's more than 9, 9, 6, 12, 12, 8. I don't know what it is, but most humans aren't up for it.
- [35:09]
Rory O'Driscoll
I think as a general comment on kind of AI terror, for lack of a better word, and the feeling that you need to be on top of this or get out. I think you're right. I think on the specifics of Cook, I think. I think it's. I think he's been operationally excellent the whole way through. He was operationally excellent taking over the job. He's running Excellency for 15 years and I think he's operationally excellent on exit. And the proof of that is the stock barely budged. The stock is not always right. There's some fun examples of people thinking positive things in the short term and then totally wrong. But the fact is that resigns not unexpectedly in the aggregate, given his 65, but unexpectedly in terms of immediate timing, the stock moves less than 0.5%. Basically that says organized, well managed transition. And I think he was smart. I think you get out on a high. Recent quarter's great, as you say, 3 or 4x the revenue, 3 or 4x in 15 years, 3 or 4x the operating income, it's 12x the market cap. And just as a reminder, because they buy back shares, it's 20x the stock price. As a holder of the stock throughout that entire period. God bless you. Just a great run and handing over internal successor, which as you say, is proof that you had your shit together and you had a couple of options and they went with this option. One of the other guys had pulled back recently. I think getting out in a high is not to be underestimated. At 65, I think it's a home run the whole way through. And so just give credit where credit grew. It's one of the great runs. I mean. Second comment, there is still some pending. Do you have an AI strategy? But honestly, Jason, I mean, I'm going to commit heresy now. If you look at the three companies, you Named Netflix, Apple, Adobe. I would argue that Adobe has to have an AI strategy. It's existential. Apple is somewhere in the middle. Yes, it's pathetic that Siri is not good, but you can continue to build the hardware platform that everyone kind of gets AI on, I think for a long time to come. I don't think they're going to be replaced by the OpenAI mobile phone anytime soon. And Netflix, I think it's the least AI centric problem out there. I mean, they have interesting challenges. Didn't get that big acquisition done. They're a media company. They have media challenges. As Benedict Evans says. So. Well, so it's in the middle in terms of AI terror.
- [37:23]
Jason Lemkin
Well, look for what it's worth on Netflix, Blockbuster. Blockbuster peaked in 2004 with 994 stores. Six years later, was bankrupt. I think what's happening when it happened with Netflix, and I'll tie this together to a macro theme that Harry brought up on Twitter and others. I think all that has to happen is for these leaders to be maimed or for there to be stealth churn. I'll give you an example. I've paid for Netflix. I'm embarrassed to say how many years I've paid for Netflix. Right? I think since, since it came on flash drives or CD ROMs, I've been, I mean I've been, I, you know, I've been paying for infinity. Is price has gone up, but it's not worth my life to churn, right? But I watch so much YouTube and on YouTube it's becoming more and more AI generated content. I've stealth turned off Netflix. I'm still paying. I may pay for another year. But as more and more folks stealth churn off Canva because they're using AI tools as we stealth churn. You know, Amelia was looking now that we've moved to cloud, she hasn't used OpenAI in four months. So we're paying for OpenAI because it's 100 bucks a month. But she's stealth churn. So my caution is, and I think this is why so many leaders at risk is stealth churn is everywhere. If you're like and not to ramble. But I used to think as a B2B guy mouse and wows and daos were the dumbest metric. I'd get an investor update with with hooray, our wows are up. And I'd be like, I know Mamoon used to cheer that at Slack, but. But that's a sign of a struggling startup. Like I want show me the revenue, right? Show me the money now. I want to see the mouse and wows. I want to see your usage of your Illustrator of Figma, make of Netflix of Canva. I want to see those going up faster than revenue. This, I think, is the ultimate B2B test or anything. Is your mouse wows and daos growing faster than revenue? If so, things are probably working for you in the AI age. If they're. If they're declining, just like net new customer count, right? If it's declining, you're hiding. And I think Netflix just bought Ben Affleck startup for like 300 million bucks, right? Or something like that. Harry. Like, they're not. They're well aware folks are watching AI generated Star wars content on YouTube and not watching Netflix. So I don't know. I would step down too. I just might.
- [39:26]
Harry Stebbings
Speaking of, amelia hasn't used OpenAI in four months. So deeply entrenched in her workflows with Claude, anthropic turns down $800 billion funding offers. I just came back from LP literally 10 minutes ago. I said, what's your biggest challenge? They manage the money for some of the largest families in Europe. And they said, all of our families just want one thing, Anthropic. And the challenge we have is they don't want anything else, but they all want Anthropic. And that's the only thing they want. Every dollar wants its home in Anthropic right now, and it's caused secondary market prices to surge to a trillion dollars for Ant. The implications are. Well, the suggestions are there is a clear market belief that they have won the enterprise race and they've surpassed OpenAI now with 850 with their latest. How do we read that? How do we reflect on that?
- [40:13]
Jason Lemkin
The fun thing in all of this, and I put fun in air quotes, is it's so fluid. So Sam just said Codex Usage is up 50% in one month. As we're taping this, OpenAI is going to launch autonomous agents. OpenClaw on steroids 24. Seven. Okay. Three, I've run my. I've done an experiment over the last week. I've run my own workflows through both APIs. I don't care. So our ability to predict what we thought two weeks ago when there was turmoil, executive turmoil, everyone was using the Anthropic API. It's just better. Claude. When we started the show, I was the only guy that used Claude. You guys probably thought Claude was ridiculous. Like, why is this weird guy. It's less than 1% of the market now everyone's using Claude. Right. I don't know what 90 days is going to bring, but everything could change in our developing environments in a week. And OpenAI could win in agents and autonomous agents. We're just starting. Agents are just getting autonomous. All these goofballs on X with their. With their Mac minis and Mac macros, and 11 of them stacked in their closet. Look, what have they shipped? Nothing, okay? It's performative art. But autonomous agents are what we all are going to live with. We've built some and they could win. I mean, literally, they're shipping it today. It could be the best thing in autonomous agents. CLAUDE has a few now, too. I mean, Anthropic. But that war has just started. It's just started, so I can't honestly predict 30 days out. So does this. Does a trillion feel like anthropic? Did that feel like a good deal on our last show? Yes. Am I sure it will three shows from now? I don't know. Maybe they'll invert.
- [41:37]
Rory O'Driscoll
And if Jason is correct. Look, I believe both of you are correct. You're correct in the sense of, you know, AI is the biggest story out there. And Anthropic has in the last six, nine months being credited as the new winner in that space. So by definition, you're going to have huge FOMO for that stock. You're accurately representing the facts. Whether or not that will prove to have an overall holding period return from here that outpaces The S&P 500, adjusted for the risk is something entirely different.
- [42:04]
Jason Lemkin
It's hard to do in venture.
- [42:05]
Rory O'Driscoll
The trajectory from here is actually pretty straightforward, which is when you've got this level of white heat, you go public. Because up until now, as I think I. I said in a tweet recently, there's just been no way. We've had an entire life cycle of a technology explosion with very little access to it in the public markets. Right. And it's hard to imagine going through the entire cycle of a boom and bust without letting the retail investors lose their money as part of the show. So that's clearly the part that's coming up. So my assumption is Antwerpic will go public and it will be a fabulously successful ipo, which is different than saying at a trillion dollars, you'll feel really great about holding it six months later. It can be an amazing. It can be an amazing company. It cannot be worth a trillion dollars, and it can trade at a trillion dollars for a period of time. All those things can be true.
- [42:49]
Harry Stebbings
What price does it go out at? Rory, if you were to make a guess?
- [42:52]
Rory O'Driscoll
Your job as an investor is to tell you what something's going to be worth four years from now, right? Your job as a banker is to tell you what it's worth today. And those are different skills. One is about projecting the future, the other is about valuing the now. I'm not going to try and project the future on this now. My guess is I'll come with a lower number. But ULP is right about the present today. If it went public today, you would be fighting them off at a stick, at a trillion dollars, you would have a fabulous, successful ipo. And because those guys are wildly smart, really nice profile of the CFO recently. And because the other thing that's happened is the big counter attack on behalf of OpenAI has been compute is the ball game. These guys don't have enough compute. My guess is the anthropic guys are saying, hey, we got the better software. How do we get as much compute as possible? It takes money. This is America. Jensen will take a audit, provided we give them cash and therefore go public. So my assumption is these guys are going to go public, as we said, October Q4 time period, if they can, as soon as it's humanly possible. Which is of course why they're not taking the 800 billion valuation. I mean, why even pause for breath? I mean, especially if it gives any kind of rights, which actually, at this point, I doubt it does. They are, I assume, heads down, preparing to go public. Because as long as this mood lasts, you will probably raise money in the public markets for that stock at a price you mightn't see three years from now. With three years of execution.
- [44:13]
Jason Lemkin
They should go after the ipo. What are they going to do? Are they going to do massive secondaries? Are they going to do pipes? Are they going to do weird debt hybrid equity preferred deals? Because this isn't the last chance. They're going to need epic amounts of capital. Right? And so maybe it's minor, but we're talking about an IPO like it's an event, which of course it is, but the ultimate. I think the meta question is where is it easier to raise ongoing capital, like perpetual capital? Is it really easier public than private for these guys? Not traditionally, the answer is, of course, but for these guys, is it yes.
- [44:46]
Rory O'Driscoll
I think I'm going to say, again, being opinionated on this one, yes, I think it will be. Even though so far it hasn't been. I mean, so far the most stunning Fact so far is the biggest IPO in history is talking about raising $75 billion on the biggest private round in history, raised $122 billion. What that says is the biggest private round is bigger than the biggest ipo. That is bizarre. And we've kind of grown accustomed to it to the point where we don't even focus on that fact. But it is, of course absurd. Given that logic, you would say, oh, stay private, you can raise more. But I absolutely don't buy that, as you know, I've said. I mean, yes, Antropic could get one more round done, but the truth is the big liquid markets are public. I think they go public. You raise a big slug of equity out of the gate, you raise more, you obviously expand the capital base over time, and then you have access to a whole bunch of other things. You have access to convertible preferreds. You probably can do more compelling debt structures. You become a viable player for more people to lend against. So if your business model is as they think, perhaps insanely, but whatever, I need to raise 200 billion, $300 billion. And at some point you have to go public. Why don't you go public when the FOMO is at its peak, when your relative kind of desirability is at a peak? I can, like. It would be hard for me to imagine a better moment to go public if you're anthropic than like this minute.
- [46:04]
Jason Lemkin
But I'll give you this, a counter argument that I might be wrong on that admittedly I might be wrong on, which is figma and the need for capital. So if anthropic does not need any more capital, go public tomorrow, to your point, right? Or Q4, when you're ready, go public. Go public at a trillion. A trade up like Figma did to 2 trillion and write it out. But Figma's down 87% from its trough. Imagine, for some reason something like this happens. Anthropic, it still grows. I mean, what's. Figma is still growing at top 5% rates, right? But the market has fallen out of love with figma. What happens if anthropic IPOs at the perfect time for a company that does not need capital, but the markets fall out of love with it, they get worried. Like the construction costs go up. Those, those space centers we're arguing over don't work as well? Rory was right about the space centers, and it falls 87%. Like just what happens to. To capital raising?
- [46:52]
Rory O'Driscoll
Yeah, okay, respectfully, no. If everything that you articulated happens, then the person who's public wins and the people who are still private are existentially screwed. The Figma soundbite, which I hate of the 83% decline is more accurately represented as follows. Figma priced at 35 with sensible people. Idiots drove it up to north of 100 bucks a share, then the same idiot sold it down. And so that's one factor. But then second factor at the same time, Figma was at the tail end of a 20 year cloud software boom when the Zeitgeist switched to the AI boom and the world fell out of love. So that took it from 35 down to where it is now, which is 20. That explains figma. If there is a world where the AI zeitgeist goes out, I think we're at the start. Well, maybe not the start, but we're not going to hit a stage in the next year or two where people are saying, oh my God, the story's dead, we've moved on to the next thing. You're closer to the start than the finish of the Zeitgeist. I think there could be a hit to the stock and I'll come back to that in a second. But I don't think it's the same as Figma where literally it's like, I mean what's happening at Figma is everyone's saying your operational results are amazing, but we're in love with someone else so we're just not even going to talk to you. If Entropic were to go up and if the stock were to go down, it would be because, oh my God, it's overvalued and this revolution is going to take 20 years, not five. So maybe overpriced and in that case you'll sit there and I've been in much smaller scale on this. When you go that's really bad, our stock is down. On the other hand, we've got 50 billion in cash and our head to head competitors still losing money in private. We win. So no, there's no argument for overstaying your welcome in the private markets at this point. None.
- [48:29]
Harry Stebbings
Jason, you brought up Figma and you brought them into the conversation tying that to what we were talking about. Anthropic launches. Claude Design, for those that don't know, it's kind of their competitor product to Figma very bluntly, obviously Figma as a result were hit and price was hit significantly, as was Adobe's. Jason, you actually did a like for like and you've tried claw design extensively. I'd love to hear your thoughts. What were Your reflections. Does it compete with Figma in a very meaningful way? And how do you leave feeling?
- [48:57]
Jason Lemkin
I leave with a lot of anxiety over Figma and others, but not for the reason. The yahoos on Twitter said two things about Claude design if you haven't used it. One, it is definitely better than the design tools that were in Claude the day before. You've always been able to design a website that looks exactly like every other website built with cloud artifacts and purple gradients and the same. They all look the same. Okay, half of demo day looks like it was built and Claude artifact at most. Okay, you can smell them in 60 seconds. But design was always there. It just wasn't what a lot of designers would call design. But you could always design a website. Now, Anthropic did something which is important. We'll see where it goes. They didn't just improve it, they built an application. Claude, design is an application. There are only so many anthropic and OpenAI applications. There are skills, there are workflows, there are prompts, there are little things you can do. They went to the trouble to build a design application that works whether it's 50% better or 200% better than the day before. You can design better websites, better properties in Claude than you could before. Does that mean you can build what you can build in Figma, let alone Illustrator? No. So a lot of the yahoos are like, the other thing Yahoo said on Twitter is, of course this isn't a threat to perfect design to taste, because we're all about taste now in AI taste. We have no threats because of taste. And the combination of taste and moats means we're unassailable. So will your typical, you know, hoping to afford tickets to Coachella designer that takes two weeks to respond to a ticket to develop an asset. Are they going to switch? Maybe not, right? They're not going to switch from these things. But it means normal people can design stuff and get into production much faster. So I think it is an existential threat. It will maim and nibble at Figma more and more and more. Because like, if the three of us wanted to build an app together and we, we don't want to wait for a designer to turn it around in 30 days and give us a Figma file or a still. What the hell do I even do with the Figma file? I can stick it in repl it now I can just do it myself. So we will bypass designers more and more. That's the risk. Not that, but I do not believe Anthropic will ever build a direct Figma or Illustrator or Adobe competitor. They don't have to to maim them. So yeah, is it a design tool? Maybe it's designed to production like the. Like some folks call it. Who cares if it maims you, it may, it maims you. Right? And I think people are missing the point. The meta question is that no, I saw no one talk about. It is an application. It comes up as a full application. It has sharing, it has users, it has hierarchy, it can save assets. I do not believe there are many other applications that Anthropic or OpenAI built. And this, if you look at what the public markets are, they're scared about a lot of things. But we make fun of Vibe coding. Oh, we're going to vibe code our Salesforce. But what if they start building a tier applications, not just prompt prompts, not just outputs. Like it is something to reflect on. And I'll just start to ramble. But I'll give you one last story to compare. So the oldest piece of software we use is Marketo, okay? Terrible email marketing service. About two weeks ago, it started to violate the canned spam act we started. I started to see things on tweets. Jason, how come I can't unsubscribe your goddamn Saster newsletter? And they ping me again? I don't know. And. And then you, you get more of them, right? So that's when a bug's been introduced into the system to weeks ago. We flagged it for Adobe and Marketo. They said it was unfixable can spam violation. Okay, this was a week ago. Then they said they would only help us if we got on the phone with their engineering yesterday. We did. They did nothing but blame Salesforce and said they could not commit to a fix. So my point is this is what old software looks like, okay? And if Anthropic and Open Air are going to build applications, sell them all as a bucket, like keep the gems. Don't get me wrong, but they're coming for old software. They're coming for old software. This is an application. This is not a prompt. But nor is it going to maim Figma next quarter. Like there's just. But those. Those both can be true. Those both can be true. That we won't see it in Figma's numbers next quarter and that over four, six, eight quarters it will maim its growth. We won't want to use grandpa's software anymore.
- [52:46]
Rory O'Driscoll
Honestly, I want to ask a lot of questions because one, that's what we do here. Two, you've used both products and I had just. And I tried to look at some demos today, but I just have a ton of questions. So. So it's like the Emerson quote. If you understand one man well, you understand every man. If you understand one competitive market well, you have a kind of a framework for all these markets. I just want to drill down on this because it's the same question in every market. So a couple of things. One is how do you think it impacts, I mean the Canva design engine is at the heart of what they've done on Claude. How do you think this impacts canva vs figma?
- [53:21]
Jason Lemkin
First of all, kudos to Canva. If you use anthropic, I mean cloud design, it exports to Canva. So you can import from Figma and you can export to Canva, right? Should you choose to. But what's happening is product teams and engineering teams are already okay. If we go back 12 months ago you had design okay. Back in the day when I worked at Adobe there was a design group. We weren't allowed to design anything that was public facing. You'd face a ticket and 60, 90 days later you'd get a PDF of what your website had to be look like. Okay. Then your product team would have to figure out what to do with that PDF, argue with your engineering team and months later you could. That's the way software used to work until not too long ago. Then as everyone started working in cloud code toward the end of last year, product and engine teams just started to work in the code together. Product teams first would vibe stuff and replit and lovable on their own. Right now a bigger and bigger deal is they're committing to the code base. Product teams are able to do this and so these PRD teams are becoming more cohesive and then design still way out over there in their own hipster land. As these combine, everyone's going to want to work directly onto Codex and cloud code. It's not going to be this designer enforces a collaborative hierarchy on Figma like the. Because the designers hold the PRD organization hostage. They hold them hostage before AI. It's the worst.
- [54:39]
Rory O'Driscoll
Yeah, it's worth just pointing out a high level comment here when you're saying implicitly what you're saying here is it's the Figma digital design websites and apps world. The software part of design, not the part of Canva that is printing out real world pictures, posters and you know, the physical design where it's decoupled from software.
- [55:01]
Jason Lemkin
You're right. And design's such a confusing term. Right. It's a bigger threat in the short term to things like Gamma. It already makes slides like Gamma. Okay, it's not a threat to Canva today, but every single thing you do in Cloud Designer that you don't do in Canva or Figma or Gamma is a threat to them, even if it doesn't kill them. Every single thing you do.
- [55:22]
Harry Stebbings
I think the smartest thing Jason always says, Rory, which always sticks with me, is just the element of maiming, which is quite hard to deny. If it takes 20 to 30% away because you're already there and it's easy, that's very meaningful.
- [55:34]
Rory O'Driscoll
It is meaningful. And again, I'm not diminishing that. I always thought one of Google's interesting strategies for a decade and a half was their strategy with G Suite. It was email and effectively a docs and a spreadsheet which just gnawed away at the bottom end of the Microsoft Office suite. And if you fast forward a decade and a half, you get both sides of it, though, basically, they could spend a billion dollars yanking Microsoft's chain on a $40 billion business. It's exactly what Jason says. I'm messing with your head. I'm maiming you. And it's not core to me. So I don't have to win here. You just have to lose. On the other hand, 15 years later, your Office is still a plus or minus $40 billion business, lower growth rate. So there is a range of outcomes from. It gnaws away at the low end, takes away a lot of users, but only 5% of the revenue, too. It bites 30% of the users, 25% of the revenue. And it really impacts. And those are big differences in terms of value creation.
- [56:32]
Jason Lemkin
We'll have a maimed meter in board meetings. How much have we been maimed this quarter? And it'll go from 1% all the way to 50%. And, and, and we have to. And our agents will decide. We don't let the founders decide because they're always at 1% or 5th or they're. They're the overactive one. 50.
- [56:46]
Rory O'Driscoll
This is cue for the Monty Python. It's only a flesh wound sketch.
- [56:50]
Jason Lemkin
It is. It is like that. That's what you're going. It's only a flesh room. I lost my arm and my leg this week to Claude.
- [56:55]
Rory O'Driscoll
There's two things you said that resonate. One is anytime someone can give away something at the margin for free, that takes away some of your loan. There's just an impact to that. Right. Bundling is a bit cheap and they're effectively bundling here. The other thing that I think is more important that you said is, and I hadn't internalized this, but if the design flow is a preamble to a technology build workflow and the technology build part of that workflow is already automated using code code, then you're right. The incentives where you get scary as a standalone company is if the other guys have a better together story. And you're right to the extent that design, product and engineering can all be in the same tool, there's probably a whole bunch of embedded efficiencies there. And from the perspective of the company building that product, it makes sense to because the thing that often happens in these deals is OpenAI did a ton of these. If you look back on the it's just fun to do it now. The GPT store, the GPT plugins, every single time Twitter goes all excited, this is the end of everything. XYZ company is screwed. And it turns out two years later, no one even remembers that. And the thing's been deprecated. But you're right in this case, if you think of design not as a standalone category like Canva, but as the front end window into product and eng. And if you think that software is the mother load and software coding is the mother load of enterprise adoption, then you probably get enough effort behind it to build a credible product. That's what you're saying. I mean, put bluntly, at some point when even anthropic has to start allocating resources at the margin, implicitly you're saying there'll be a big enough team here to build, as you say, all the app features to make it a viable competitor.
- [58:34]
Jason Lemkin
Yeah. And not only does it export to Canva, it exports to cloud code. They're integrated. So if we're moving quickly, we're not going to wait. Listen, I still want my human designer to deliver my amazing homepage of my app, my amazing splash screen, my amazing assets. But we're shipping features every day. Guys, I don't have time to wait anymore. We're going to do it in design. It goes straight into Claude code, which we already run our company on. We already ship on. Right? Right. It's fully integrated. And if the humans have time to redesign it later and make it better, great. No one's saying it's pixel perfect. Don't have time. I don't have time. So the only reason I think they want, they won't entirely abandon it is it's, it's part of the core, it's part of the Claude code core. And it is something you can already do in Claude code or even just Claude, just crappily. So they're improving. The closer it is to the core, the higher the chance they'll, they'll maintain it. And it's not a dalliance. Right? Not only are the decliners stressed, not only are, you know, Dylan and Mike, Kendall, Brick stress stressed, they're stressed at Lovable and Replit and Vercel and Gamma too, because they're, you know, the rated competition is like we've never seen before.
- [59:35]
Harry Stebbings
Right?
- [59:35]
Jason Lemkin
And they're, and they're. And I will say one thing I know from all these founders, I mean, they're brutally aware of it. The older CEOs are hiding from it. Oh, our next agent will catch up. Oh, we'll catch up later in the year. Oh, you haven't seen our next. This is what I hear from pre founders. We'll catch up in the next release. They say so confidently, right? As they go off to complete their triathlon, the AI native CEOs, they're frigging all over this. Okay? In 60 seconds you get a slack back. They actually know what's coming. A month later that all their competitors are launching. They're already all over it. They're already. I hate the 40 chess game, but if you don't play 40 chess, if you're at the core of AI, you're going to lose. So they're all playing this game. It just gets harder every week.
- [60:12]
Harry Stebbings
Excel adds 4 billion leaders fund to follow into hot AI growth rounds. Sequoia 4 days ago raises $7 billion growth fund. Is this just further compounding what we said, which is that is the game today and the leaders see it.
- [60:26]
Rory O'Driscoll
It's definitely the game today. It's definitely the leaders see it. Obviously the question is, is it correct? But yes, do you think it's correct? I mean, directionally, yes. People are saying private, longer outcomes are bigger. So capitalism is doing what capitalism should do. It's raising money to put into these companies. I mean, the thing about growth is this. When growth is sexy and attractive from a fundraising perspective, it tends to be hard to make money at. And the way growth makes money is either overall valuations are down like 2022, or there's some insight that the growth investor has that the wider market hasn't figured out yet. Like ChatGPT really matters and you should buy OpenAI. So both of those conditions were 2 in 22 and 23, which is why those funds are going to be awesome. If you have a situation where capital is plentiful for those rounds and everyone understands AI is amazing, then by definition, you've eroded the two things that gave you access, returns. I'm not saying you still won't make great returns. It won't be as clear or as compelling as it was when it was unpopular.
- [61:25]
Jason Lemkin
The other thing is, there's room for the capital. And what I mean is, if you look back at 20 VC fund, one $10 million fund, right? I'm speaking for history. For Harry, back then, the strategy was to get into hot seed or A rounds where he could write a 50k check, 100k check. There was always room. There was always room. And that, to some extent, it's still today. It's just those hotter checks are at much higher valuations. Fast forward to today. If you're a relationship builder, if you drop by and meet with Dario, if you schmooze with Sam, there, there's room in the round. Like you get cut out. Don't get me wrong, people are getting cut out of these rounds. But if you're Sequoia or Excel, and you're a good schmoozer and a people person, and you show up to poker night and you do all the right things, most of these rounds, you're gonna get an allocation. You may be the fourth name on the press release, but you're gonna get an allocation. And so, in a way, the funds don't eat. Sizes don't even sound that large. If you get 20 or 30 checks, they're not even that big.
- [62:14]
Rory O'Driscoll
And that's totally fair for five or six companies. You're exactly right. Jason, is that when you're raising $122 billion, right, it turns out there's room for everybody. Even when you're raising a miserly $30 billion in the last anthropic run, you're right, there's room for everybody.
- [62:26]
Jason Lemkin
Well, people get cut out. They're desperate to get into anthropic. But if you have the relationship and you really build it over a period of time, when they look at the spreadsheet for the round, they're going to put you above the fold. Because we like Rory. He's great on the 20 pot. He came by the office, he loves us. We're going to. Well, fine, we'll give 20 million to Rory. It's no. Did you disagree, Harry?
- [62:45]
Rory O'Driscoll
No, he doesn't. Because his first sentence, his comment was, if you're going Back to Harry's lp, who's Monster Tropic and nothing else. What I like about Sequoia, they know how to make money, right? They're like, let me get this straight. I have a good relationship with these mega companies. I'm a name that they'll want even at this stage. And I got a bunch of LPs saying the only thing I want is this. And I'm in the middle. Let me think about this. This. I should take their money and give it to these guys and charge my percentage and call it a day. As long as that works. The marquee names who can do that are going to do it.
- [63:14]
Harry Stebbings
Some of the package pricing on these SPVs for anthropic has just been the most egregious face ripping I've ever seen. I mean like 8% up front. Crazy one that I thought was fascinating was rippling crossing a billion growing 78% year on year. Is this the new bar for a great B2B IPO?
- [63:33]
Rory O'Driscoll
Let's step back even one level beyond the IPO. I think what this sentence if true and you never know, but I believe it to be exposes the whole SaaS is dead meme is bullshit. Low growth SaaS is bad and high growth SaaS is good. This is a market where we can talk about the reasons why. If you're doing a billion dollars going at 78%, then collapse of the entire discussion about, you know, SaaS is going away. SaaS is bad. What's it worth? What it really points out is the real objection to these public SaaS companies is not, oh my God, you're SaaS. It's that your market is now top stop. Then your growth rate is 10%. If rippling is growing at that rate, that's amazing, it's compelling. And they'll get an excellent ipo.
- [64:13]
Jason Lemkin
And they're accelerating. The crazy thing is they're accelerating. So if they were at less than 511 months ago, which I do know, right, and they're at a billion growing 70 something percent. Do the math with me, Rory. They're accelerating. It's not just 70, which is is enough. They're accelerating, right? And you can say that's great for SaaS. And it is, right? As Parker said to me, not bad for a SaaS company, right? Kudos. And we can talk about what that means. I'm not even sure what it means, but not that many are accelerating like this. So this is not good news for anybody. Not accelerating at scale, Right? Let's not. It's not even 70%. It's accelerating from like under 50 to 70 in a year. I mean, candidate for CEO of the year. Not to disparage deal, but candidate for, for to drive that level of acceleration. I don't even know how to do that unless there's people buying. Unless there's people buying tokens. I don't even know how to do that in today's world.
- [65:02]
Harry Stebbings
I mean, bold candidate for CEO of the year. I mean, yeah, respectfully, he's, he's got a bit of competition, Jason.
- [65:08]
Jason Lemkin
Yeah, but like they've just launched their agent driving that level of acceleration without a massive AI tailwind. Just blowing your phones up, right? You know, bring them on, we'll talk about it. I don't know, I don't know how to do that without AI. Right.
- [65:21]
Rory O'Driscoll
I think it's what they refer to in sporting terms as a win against a run to play against the odds. You're playing the SAS game where everyone's walking around saying the world is dead. Yes, Anthropic is putting up 6,700% growth, but you put 78% growth and acceleration up in a category where most ill informed people were saying you can't do that. Maybe the better clear expression is highest outperformance relative to quote unquote market expectations. I think that's a clear example.
- [65:45]
Jason Lemkin
It's better than figma by the numbers, right? It's better than figma by the numbers by far.
- [65:49]
Rory O'Driscoll
What it just serious comment. What it just says is there's markets where the entire AgentIQ AI vibe coding discussion is rubbish. And one of them is financially related stuff and payroll. I've run a business and you guys both run businesses. You can screw up on a lot of things. You screw up on employee payroll and you pay them at 3 o', clock, they'll be in your office at 3:01. You can't get this wrong. You're not interested in Vibe coding it, you're interested in having it. Right. You've got legal and statutory obligations that carry criminal penalties if you don't pay your taxes. You're like, I want to outsource this to someone wildly competent, have them take the responsibility. And no, I don't want non deterministic processes, you moron. These are entire businesses that might have some impact at the margin in terms of agentic efficiency, but this core business will be there in five, 10 years time. It'll compound because payroll is not everything is. We're actually talking about this a lot internally. What gets eaten by AI? What doesn't get beaten by a what's defensible Payroll is one of the best examples of this is just something you do. You might build a software better using AI, but the core value proposition is something that it's just orthogonal to AI and it has to be done right. So big category, it'll go public. It'll be a great outcome. Good for him.
- [66:59]
Harry Stebbings
I think the same with a lot of the fintech players that we see today. Your ramps or your stripes or air wallets of the world are not fortified.
- [67:06]
Jason Lemkin
You know what though? I know it's not to harp on the MAME episode. The mode is stronger, it is less impacted by AI. But everything I view now in terms of it's how well it works with our agents, how well it's API and workflow works with our agents. For example, after Saster Annual in May, we're going to build our own AI VP of Finance. Okay. And the number one thing we're going to do is automate collections. Okay? So we've been on Brax for six years. You know what the first thing we're going to look at which API works best with our agents. I don't care what ramps Dashboard looks like. I don't care what it's office of the, of the, of the, you know, the GDP and now I don't care. I care how our agents work with its API. And we're going to pick the best one that is just starting. But it is a BFD and it also means that folks that seem to have a huge moat, it may weaken when. And I'm not just, I'm not just being a Yahoo on X. We're going to build an AI VP of finance and he don't care what the UX is. He don't care.
- [68:00]
Rory O'Driscoll
First of all, you're right. You absolutely right. And therefore the payroll and, and kind of AP collectibles that have the best API will win. But I'll tell you something, you're not going to build an entire fintech stack so someone will get those dollars.
- [68:14]
Jason Lemkin
You're right, someone. But it could be a new vendor, it could be a different or it could be a different vendor.
- [68:18]
Rory O'Driscoll
I mean this gets to the silver. There are three or four vendors of AP related stuff. You've got Ramp, you've got Bill, where we're involved, you've got Ramp, Brex, whatever, right? Whichever of those doesn't have an API forward product will lose market share. Whichever one does will gain market share. And if all of them are dumb enough not to do it, Then a new vendor who says I'm an API first product will get your business and all the people like you. So I think you're correct in that. Which is a platform shift, which is what we're dealing with at this level, has implications for everyone in the tech stack. But if you are doing something like what Ram, Brex, Bill, all these people are doing, the core thing you do itself won't be replaced in a way. For example, Figma might be right. My point is there's degrees of change
- [68:59]
Jason Lemkin
here, but the degree of just the comfort that we're protected. You know, Ramp has asked us to switch from Brex for, for, for seven years. I bet we finally switch over the summer and it's only because of the agent. If it wins the bake off, we will switch in one week. We will switch and we will never go back to Brex. Same with Marketo and HubSpot. By the way, like, we're leaving Marketo because of this drama. The crappy API there can spam. We will leave Marketo this summer for whoever has the best API, and it probably won't be HubSpot, which is why
- [69:28]
Rory O'Driscoll
we should pause here. To your point, Salesforce just announced the whole an entire headless API strategy. What are your thoughts?
- [69:35]
Jason Lemkin
Well, while we debate where to move our Marketo data, we're already using headless Salesforce to move all of our Marketo data agentically over to Salesforce. It'll be done in a couple days.
- [69:44]
Rory O'Driscoll
See, that's a great story because give him credit. Give Benioff credit. He's like, if you can't beat him, join him, as they say in private, you know? Right. I mean, remember it's less than a year ago there was talk about we're going to charge you a, you know, we're not going to let you have your data. And now we've gone to getting ahead of the spot out the door. So you're an example of where he's taken share from the adjacent companies like Marketo just because they're doing that. And that's your point?
- [70:05]
Jason Lemkin
Well, starting the only thing I will say, Listen, we're already living the headless vision, right? We don't log into Salesforce, it's our hub. But this is a lot of stuff that's going to run on mulesoft in a couple of months or six months. This is also with love. This is also a classic B2B, you know, anthropic set, drops a design tool and we can use it in an hour. This is something that will be dribbled out in classic B2B fashion over here. It's just like it's different worlds.
- [70:31]
Harry Stebbings
Can we provide some context also for those that haven't heard in terms of just Benioff's move with Headless that he announced? So we set the scene there because I want to ask some questions.
- [70:38]
Rory O'Driscoll
Sure. I mean traditionally the Salesforce app, it really had two parts of value. There is the user interface that every sales rep or everyone in the organization uses to input and output information and effectively record the work they're doing. And then at the back end you have effectively this massive database and workflow that records all the information and allows you to track customers, leads, pipeline, all that relevant stuff. So there's two components of value. And by going offering a headless offering, what he's basically saying is if those people who are doing the work are replaced by agents doing the work, then they don't need my UI anymore. Right. Because the people aren't there anymore. They need a totally different agent based ui. But what I'm going to do as the leader of Salesforce is I'm still going to allow them to access the database side of my product, which means I keep my value even in a world where most of the selling or the customer support is not done by humans typing into the Salesforce ui but is done by agents proactively going against the Salesforce back end. So he's given up trying to drive proceed pricing to preserve long term value because I think he correctly has identified the real long. To Jason's point, he said it as a negative, but it's also a positive. The real long term value that Salesforce has is, is it's taken us 10, 15 years to get all those integrations in place, all that data in place. If you make it easy for Jason's agents to work with Salesforce then he mightn't get around to killing you for the longest time. So that's the big move they made in the last few weeks.
- [72:03]
Jason Lemkin
I think like Claude design though, everyone completely misunderstood what Headless Salesforce is. Salesforce is already headless. Salesforce is. And this is actually pretty crazy really. Mark and Parker to their credit, JFC in 2000 friggin 6 they launched an enterprise API when this was seen as not possible. You could not build allow third parties to integrate into enterprise software is too risky, too problematic. They open this platform up and they have 20 years of it getting better. And I will tell you all the APIs that our agents use, our AI VP of marketing, VP customers. Salesforce is the best. It is the best API out there. It crushes everybody. This includes all the new guys, everybody. But it's because they built this for 20 years and because it's the APIs are so good, the agents can work with it. Like it's not a problem what headless is. And that's what Mark's out there. I mean, the greatest marketer in B2B, right? But it's already done this since agents started. What he's really pitching, which is the bigger threat to these leaders and the bigger opportunity, is an agent fabric is the layer that manages all your agents. If you really look at what this is, it's about sales source says we are going to be the fabric to manage all of your agents. Your 20 agents, your 50 agents, 100 agents. Some of them will be built on Salesforce. A lot of them are going to be built on mulesoft, as crazy it sounds. Their platform, which has been renamed it will be in their data platform. But we will be the layer to provide the context, the guardrail, the management, the security, the everything. And this is the biggest issue for 2027 is agent fabric. People are under discussing this. They're all talking about evals and this crap. This is what really matters in the enterprise is agent fabric. You can't let these crazy agents run amok.
- [73:39]
Harry Stebbings
I'm sorry, I'm just going back. When you say agent fabric, you're saying agent orchestration management.
- [73:44]
Jason Lemkin
It manages everything. All the governance, all the security. It knows. Here's the key part. It knows what every single agent is doing in real time. That's the fabric that is more than orchestration. Okay? It literally knows every data, every operation, everything that's happening through 200 agents running 24, seven in parallel with multiple sub agents in them. Who's going to go to poor Jacob o' Driscoll at CIO of wherever that that if there's any security breach, he loses his job. It's his worst job. He wants a trusted agent fabric to manage these crazy agents his team is deploying. And he. They can't be done on at a chat GBT. They can't be done out of base 44. Jesus, JFC, this is a security nightmare, right? I mean, even this week. And I don't want to get into it. Two leading vibe code platforms arguably had massive security issues this week. I don't want to talk about them. But this is only going to compound. And as Mythos comes out and finds every security breach in nanoseconds, I need an agent fabric I could trust. Not someone that came out of YC and claims they have an orchestration platform. But I don't know if Salesforce can deliver it because it's so effing complicated. But if you're in their ecosystem, if you commit to everything, when most folks hear about Salesforce, they think it's CRM. It's 14 of their revenue. Okay. If you commit to everything, E commerce, marketing, data analytics, Slack, and you run it, your whole business on Salesforce. This is the old SAP push. We will give you the agent fabric so you can accomplish everything you want. This is an agentic platform you can trust. This is the big bet coming and this is all the warm up phase for agents. Enterprises need an agent fabric they can trust.
- [75:16]
Rory O'Driscoll
Agreed. Because you know, you're empowering these software agents to do things, to change things in your systems, to upgrade things, to change, you know, to approve orders, to make commitments. How do you audit what's going on? How do you know? How do you keep control of it?
- [75:31]
Jason Lemkin
That's.
- [75:31]
Rory O'Driscoll
You're exactly right. That's going to be the issue.
- [75:33]
Jason Lemkin
I've got 300 agents doing accounts receivable, I've got 200 updating our documents. I've got all of these interacting. Our autonomous customer success agents are economist, data, data analytics agents. Who's going to manage all this? Orchestration is the nerdy term, but most folks talk about orchestration. It's just a limited dashboard on top of a couple easy APIs to connect with. It's fine for a startup or for a team that has human resources. But how's an ordinary company going to manage these agents? How the hell is an ordinary company without a team of agent deployment experts going to manage these agents? They'll go rogue if you don't manage them.
- [76:08]
Rory O'Driscoll
This analogy may be totally useless. It's only because I've been doing it a long time. But I remember in the late 90s when online commerce took off and people really started getting a meaningful percentage of their revenue from online commerce. You have all these executives who are retailers decor. And what do retail executives do when they want to know what's going on? They go walk the floor. They want to know what's going on in the shop. And even if you're running a 500 person chain like Walmart, Sam Walter used to walk around, touch the merchandise, see what's going on and suddenly the whole thing's going on online and you just don't know. People are clicking. That's all you got. You saw a whole Wave of companies doing analytics around. How do you track your website? Because the big guy just wants to know what's going on. That was the value proposition. We did net genesis, we did amateur. We made a lot of money in that space. And the value proposition at its core was you've moved to this new way of doing business. Senior people want to know what's going on. Frankly, AI is way more powerful than that because at least in that you had very deterministic I'm selling stuff at a certain price for a certain thing. And even then you wanted to know. You went and dumb in this case. You've empowered your agents to make decisions. Now you're the executive in 2026. You're going to know what's going on. Because think about it. Even what's gong Gong is all about listening into calls to understand what people are saying. Once you have AI agents doing all this stuff, you're going to want to know what the AI agents are doing. And I think Jason, you're exactly right. This is going to be the huge thing. How do I think about what my little automated bots are doing in my business?
- [77:32]
Harry Stebbings
My question was are Salesforce best placed to be the agent fabric or is someone else better placed? If that's the whole holy grail, of
- [77:40]
Jason Lemkin
course they're well placed. It's a bad analogy. But just like in the end, Google, Microsoft, et al were well placed for the last generation of AI. If they can get their rears together, the leaders are well placed. Salesforce, Shopify, Datadog Databricks. If they can execute faster than they've executed the last 20 years or 8 years. However they are. Of course CIOs want to buy from Salesforce. Of course they do. But it's, it's much bigger than buying one agent force agent. They want this whole agentic fabric. So. And here's my meta point to folks. It's an opportunity to worry. You have time. It's just not infinite. It's like if you're not building up that whole fabric. Right. That's why I'm a fan of Mark. This may not get there. It is a bigger vision than it looked. It's not just headless like all the Yahoo said. Okay, this is a complicated vision and maybe they won't get there in time, but at least he's driving the right vision and forcing thousands and thousands of people to deliver against it. Right? I'm much more worried about folks that it's more performative. Right? You got to work as harder, harder than Mark to Do it. But I don't mean to be repetitive but the saddest thing is when you have an install base and you're not delivering the agentic solutions they want. This is the tragedy of 2026 and 2027. I have the customers but Lagora or Replay or whoever, pick any application you want. What's the AO one you invested in Harry? What's it called?
- [78:55]
Rory O'Driscoll
Oh, peak.
- [78:57]
Jason Lemkin
Yeah. HubSpot launches their thing and it's a dud. It could. Should have been. It should have been Peak or the other one. Like it's just a tragedy because HubSpot has 280000 customers. It's a tragedy you did not deliver them the best in class. AO Agent is a tragedy. It is not just a test or a miss. And I just. So that's why I think Salesforce is extremely well positioned and we are right to be stressed, like everyone is stressed that they will achieve it on time. We're right to be stressed.
- [79:21]
Harry Stebbings
It's really interesting they've had inbound to be bought by so many people. And Eli Gilsay tweeted a load of predictions and one of his predictions was that a load of these AI companies should actively sell and try to sell. Do you guys agree?
- [79:35]
Jason Lemkin
To whom?
- [79:36]
Harry Stebbings
To HubSpot.
- [79:37]
Rory O'Driscoll
To literally.
- [79:38]
Jason Lemkin
Harry. I was on the phone last week with the CEO of a 20 or $30 billion market cap public company, okay. Doing massive revenue. And he's like I get, I get these. And we're talking about M A a little bit. I brought it up. He didn't bring it up. I'm like, well go buy some of these kids. Right? You have the base. Right? He's like, well everyone wants a billion on 5 million in revenue after their last round. He's like, it's almost a waste of like I have a corp dev team but I haven't seen a single one that I'd want to buy that will sell at a valuation that makes sense. So Google can buy them. But HubSpot. What's HubSpot's valuation? As we record this in the teens of billions, they just can't afford a billion dollar for every YC startup.
- [80:11]
Rory O'Driscoll
They don't have the.
- [80:11]
Jason Lemkin
The money.
- [80:12]
Rory O'Driscoll
Yeah, I would say try harder. Stay close.
- [80:14]
Jason Lemkin
There's going to be plenty, plenty of exits. How many wizards can go? Is Google really going to buy though?
- [80:19]
Rory O'Driscoll
I'm not talking about those kind of. I think to your point, what's that? 12 billion HubSpot so they could afford 50 million.
- [80:26]
Jason Lemkin
Right. To take a risk. Right. Not A billion fact.
- [80:29]
Rory O'Driscoll
And you know, you know I like the space but I, someone told me that is it G2 crowd said there's like 250 AEO geo competitors out there. Maybe you can't afford numbers 1 to 5, but somewhere between 10 and 250 is going to be one that has a good product. So I think Allah is entirely right.
- [80:45]
Jason Lemkin
But isn't a lot saying sell at a billion? I think is implicitly what he's saying.
- [80:49]
Rory O'Driscoll
Yes. And if you can sell now for an easy billion.
- [80:52]
Jason Lemkin
Right. I'm optimized for $100 billion outcomes at my fund. But sell for a billion now while you can. Honestly, that's what I think he's saying. Right. I would agree. His other point was you should have an exit discussion every year with your portfolio companies. Right. I'm going to have one tomorrow. Tomorrow. It's a great tip. He's super smart. I just wonder where the billion at 5 million AR exits are coming from. I want their number. Give me their WhatsApp or their text because I'm going to send them a couple deals before this right after we get off this show.
- [81:18]
Rory O'Driscoll
My point is this in many respects what you're saying, right. When you listen to what Jason says about the public market and the dilemma they're going through, they absolutely should be looking to acquire some of these things to get some of this technology. And maybe what we're really saying is the biggest rate limiting factor is not, not their unwillingness to do it, but the prices at which the venture crowd think we're going to get for them has made it hard to make those transactions. It's been my experience that if that's the case, in the end things true up.
- [81:43]
Jason Lemkin
But you know what's tough? I picked on this HubSpot AO product, okay. And I, and I love HubSpot, right. I picked on it, but I didn't know they bought that company for 30 million like months ago. So everything just gets stale so quickly. I'm sure HubSpot sat around and said listen, we need to be in this place. That makes sense. We need to be an ao. What can we afford? Well, Harry just funded this one. We can't buy that for 30 million. There's the other one in the US we can't afford that. Them what is available we can afford. And I think in five years ago that was a good strategy, right? Because the world moves slowly. Now you buy something that let's, let's assume whatever they bought this company was competitive four months ago. It's Just. It's just not competitive at today's pace. I don't mean to pick on them, but it's. It's why M A is tough, right? Who wants to buy something that's going to get stale? Look at poor tbn. We can't even see it on our feet anymore. Like open. Like it's disappeared since the acquisition, right? Gone. So why even buy any of these things if they instantly become stale? You do these tuck in acquisitions which used to be go back to corp Dev. You had the best strategy. Was the barbell just starting to like investment. Buy something small for 50 to 80 million for product, a couple million in revenue to prove it works and rebuild it over a year. Rebuild it natively on Salesforce or HubSpot or go big. Right, because you get scale. But it's tougher today to find the gems that want to sell with product market fit cheap.
- [82:57]
Rory O'Driscoll
I don't think you're saying it's tougher to find them. I think you're saying it's tougher to manage them and preserve the urgency and the speed.
- [83:03]
Jason Lemkin
I mean even openclaw, that dude's just on the TED circuit now, right? Openclaws may be obsolete in a couple more weeks.
- [83:09]
Harry Stebbings
Listen, the two more for me is Snap and Cerebras.
- [83:13]
Rory O'Driscoll
I think you have to do Cerebras first. I just have a predilection for good over bad.
- [83:17]
Harry Stebbings
Okay, let's do good over bad. Cerebras files for ipo. It's the second time. Some of the concerns that were brought up last time in terms of a dependence on G42S revenue and the revenue concentration they had have been resolved. How do we feel about this? Is this going to go out? Well, they're now at. Where are they? 510 million revenue in 2025, up 76% from 2 1924. They've done a great job.
- [83:40]
Rory O'Driscoll
Absolutely. That's why I wanted to cover it. I think it's a great classic venture deal. Credit to Benchmark Eric, Credit to Steve at Foundation. Credit obviously more than anything to the team. This is a 10 year journey and I think in a way that wasn't true a year ago, they got the elements of success in place. I mean you look at the P and L, it's a little noisier than at first glance. Because you at one point said, harry, it's profitable. It's not. It had some weird reversal of liabilities at the operational level. It's still losing money. But the big aha is effectively they've done exactly what it takes. They've proven the product. And stepping back. This is a semiconductor company, potentially one of the very few startup semiconductor companies in the last decade and a half. The product they make is a big ass wafer scale chip that really good for inference because it's really fast and obviously it's very optimized for AI. And if you read the founder letter, it's been optimized for Asus. They founded in 2016. What they've done really well is this is a very hard step back. This is a very hard market to enter, no matter how good your chip is. Because only a small number of big buyers, obviously the hyperscalers, right, and some of them have their own chip, some of them might want to trust you. These guys have done a couple of things to kind of parlay their way in. They've done some big deals in the Middle east with folks who've been willing to use the product. They started to offer a cloud offering and one of my companies has used it, whereby they are effectively saying our chip is so good and so fast that we'll offer Inference services on a cloud basis. And when you use it you'll be like, oh my God, this is really fast. And as I said, one of my companies has had that experience. It's really fast, low latency, it's a great product and those things allowed it to prove that the shit worked. And in the last three months they signed a deal with OpenAI and a deal with AWS, right? And the OpenAI deal is for the usual $20 billion of commitments. Who the hell knows what that means? But the point is they've gone from niche to mainstream and they've clawed their way into the mix. So I just give them huge credit because that's a long journey, it's a hard journey. And a year ago it was easy to sneer and say, yeah, you got a bunch of investor contracts in the Middle east. It's all bullshit. Now you've got the inference business, you've got the service business, you've got the incipient contracts with two of the largest players in AI. It's a credible play. So I think it gets done and it gets done well and it deserves to get done well. And now I'm on my soapbox. This is just great. It is just great. That venture does this kind of thing. A ten year journey to finance a new chip for a new use case that's complex, technically complex business. And they pull it off. I hope they make a ton of money.
- [86:09]
Harry Stebbings
I Agree. Really like Andrew Feldman too, the CEO. He's a really good dude. Where does this go out at grok sold for 20 billion. Does the benchmarking of Grok enable this to be a $25 billion IPO?
- [86:21]
Rory O'Driscoll
When things are valued on a PE or an earnings basis, you can have an opinion, a meaningful opinion on where they should trade. In this case, it's going to be so much narrative based, it could go well above that. I mean again, we talked about this a while ago. If the Reading player is worth $5 trillion and then the next two leading players after that are kind of, well, you got AMD and then you got in house silicon from Google and Amazon. This is the only other standalone play you can make. Right? I mean do the math here. 1% of Nvidia is 50 billion. If you just think of it as a call option on some percentage of a $5 billion market, you could see a very big outcome here. No, you can squint the other way and go, my God, they're never going to. It's a high beta rate. Again, it's back to what we said. In these kind of huge markets, you're way out there on the risk continuum. But when risk appetite is on and risk appetite is on today, high risk, high return stories go at a premium. And this is a high risk, high return story with a big market. So in today's market, in today's environment, that could price extremely well.
- [87:21]
Jason Lemkin
It'll create an interesting case story with Grok. Who has the better. I mean, I know this is such an annoying investor thing, but who has the better outcome? Risk and time adjusted. Right? Right. Both took huge risks to start their companies. Both started ahead of the curve. Right. Cerebras, I guess even more. Right. Would you rather take 20 billion in whatever, I don't know, combination of cash and stock with weird taxes you got from Nvidia or ride the, the up and down and emotional rollercoaster of running a public company for a decade and trying to get liquidity and see if Morgan Stanley will give you a loan against your stock. We're all on different journeys. I don't know.
- [87:54]
Harry Stebbings
I can tell you I'd rather sell to P like Salesloft did for $2 billion and Peace Out.
- [87:59]
Jason Lemkin
Well that's, that's a different journey altogether. Right?
- [88:03]
Rory O'Driscoll
You guys, you're doing the heights. I mean, yeah, look equally say, you know, I think they're pretty glad they didn't sell Google to Yahoo for you know, billion dollars or whatever it was. When it works, you're Glad.
- [88:13]
Jason Lemkin
What about Figment Adobe? That didn't happen. That one I'd be, I'd be pulling if Dylan's better than I me, but I'd be like farts. Yeah, farts, farts, farts, farts, farts. I don't mean to be political, but man, that was a rough stretch there.
- [88:27]
Rory O'Driscoll
Yeah, but maybe they like what they're doing. I mean, maybe, you know, lots of folks do actually. Maybe they do, but.
- [88:33]
Jason Lemkin
But it's just, it's tough when the team's RSUs are not worth what they were and the options are struggling and people are leaving to go to Anthropic. It's just, it's not a fun and like, no matter how great, it's just not fun to run those companies.
- [88:46]
Rory O'Driscoll
But my point, you're exactly right. When the momentum turns against you, you wish you'd sold. And when Amanda, I mean, yeah, Jensen's glad he didn't sell Nvidia anytime along the way. When it works, you're glad you didn't sell. And when it doesn't work, you wish you had. It's as simple as that.
- [88:59]
Jason Lemkin
It's a derivative of Elon's Gill's point. Which one are you? Right? Be honest. Once a year at the board meeting, be honest, who are we? Are we Nvidia or which one are we? And it's easy on Twitter to think that you're Jensen. We used to think we were Zuck, right? I'm the CEO B. Right? Now we all pull on our leather jackets and think we're Jensen. Right?
- [89:19]
Rory O'Driscoll
If you're going to be Jensen, I hate to tell you, but you've got to be willing to eat a podcaster for breakfast once a week because. Oh my God.
- [89:25]
Harry Stebbings
I was going to bring this up as like, what did you guys say? I'm sure we both, we all watched the dwarf. Ashton, what did you think?
- [89:31]
Rory O'Driscoll
Well, I thought he was excellent. Is his comments on, you know, we don't kind of have this preferential status. We're here to sell chips. If you issue us a po, we'll sell you chips. You know, his relationship with tsmc, all that stuff, I think was super grounded. And you just go, wow, that's a world class executive who shipped gazillions of chips. What you're really talking about is the argument about China. Correct. With Dorkish. And he and Dorkish got into it and it was a little bit.
- [89:56]
Harry Stebbings
Yes. And when he was saying bluntly, when you look at two of the largest frontier model providers, neither of them trained on your chips and he bluntly provided a pretty cagey response at best and that admitted we should have invested in them.
- [90:10]
Rory O'Driscoll
Well, I think there's a lot of things lumped into that. OpenAI definitely trains in part on Nvidia chips. On topic, I'm not as clear on what they train on. I've had mixed comments on that, but whatever. I think his comment on not investing in Tropic was he couldn't do it at the time because he didn't have which makes sense in 2223 you weren't in the business of writing $30 billion venture checks. I thought he was very rational there. He said made a mistake, didn't have the capital at the time. Wish I had to bring him closer to so I didn't think that was bad. I think the problem with the China discussion is there was two priors that neither party agreed and when you have a discussion and they're talking past each other and you don't agree on the ground truth, it's just a waste of time. And two things are one is how big an enemy do you think China is? Is it just a competitive trading partner competitor in the way that Microsoft and Apple compete all the way from there to is it the new Russia and we got to not give them a single thing because we're scared they're going to nuke us? And then the other thing that I think is the Dwarkisch clearly thinks that frontier models are as dangerous as uranium and Janssen clearly thinks that's bullshit. If you don't agree on those two things. If the question is should we make it easy for China to build frontier models by selling them Nvidia chips? Which was the question. If you don't agree on what you think about China and you don't agree on what you think about frontier models, you simply don't have a useful discussion because neither of the nouns in the sentence have been defined find. So once you internalize that you're like, oh, that's two people talking past each other and one of which just doesn't give. And it turns out yeah, and that's why that part wasn't that useful. But it was kind of funny. It reminded you what semiconductor executives were like. When I started investing a lot of business with semiconductors, just hard headed guys who just say no, no and enjoy it. So I enjoyed it at that level. It was a little bit of a culture clash of generations and it was fun. But I thought he did look, you can't argue with the guy.
- [91:55]
Harry Stebbings
No, I Just saw it for the first time ever. It wasn't an easy interview.
- [91:59]
Rory O'Driscoll
No, it wasn't easy. And give Dwarkish credit. He tried to punch, and it's really hard to punch someone who A, talks his book And B, has 30 years
- [92:06]
Harry Stebbings
of knowledge when you were a 25 year old podcaster.
- [92:10]
Rory O'Driscoll
And you know, I think one of the things I like about it's about where you come from dictates how you approach things. We're doing this in a spirit of inquiry because to some extent we're all trying to figure out what we think and talking things through often helps. So I often find I revise my priority based on the discussion. But I'm not here as the CEO of a $5 trillion company. He's here to talk his book. And let's be clear, 30% of his entire market is in China. He wants to sell those guys Nvidia chips. And there's simply no argument on God's green earth that's going to convince him that he shouldn't get that $40 billion of revenue from shipping chips to China. He spent time with the President lobbying to be allowed sell Nvidia chips if he's had to do whatever that takes. And I shudder to think in terms of sucking up to be allowed to sell chips to China. He's not gonna roll over and play dead cause some 25 year old said maybe he shouldn't, he'd do the same to you. Harry beat a straight handoff right in the face. It's like thank you, but no big guy. And did I think he won the argument? No, but he knows how to fold his corner. So it was fun. I listened to it, I worked out and listened and I was like, whoa,
- [93:09]
Harry Stebbings
boys, is there any other topics that we haven't discussed that we should discuss?
- [93:13]
Rory O'Driscoll
We ran out of time to cover Snap, but I just don't care.
- [93:18]
Harry Stebbings
I mean, and for anyone listening, Snap cut a thousand jobs, 16% of the workforce and the stock popped 11%.
- [93:27]
Rory O'Driscoll
They just need to figure out a converging business model. And you know, this, this and they haven't. Amazing company at the start and now it's just drifting around and needs to figure it out.
- [93:36]
Harry Stebbings
Master of stock based compensation.
- [93:38]
Rory O'Driscoll
Yeah, yeah. No, I mean it's going to look, it's going to be an advert for the dangers to some extent of dual class votes. And I used to agonize about this and now I don't. Now my perspective would be, look, you had a chance to buy two social media companies with dual class votes. If you bought Snap and if you bought Facebook, you're 50% down on Snap and you're 10x up on Facebook from the IPO. Shut up. Take the check. Move on. Yeah. Turns out untrammeled power has good outcomes and bad outcomes.
- [94:07]
Harry Stebbings
Dip Mario supermodel, though, so it's not all downside, you know, that's a positive note to end on, Rory.
- [94:13]
Rory O'Driscoll
I hope everyone has happy marriages there.
- [94:16]
Harry Stebbings
That's great.
- [94:17]
Jason Lemkin
Okay, I have one last one if we're out of time, but I want to get Harry's thoughts. So the other thing. Elon had retweeted something that went around many times. 91% of all AI unicorns are now in the Bay Area. Thoughts from London on this.
- [94:30]
Rory O'Driscoll
Nice one.
- [94:31]
Jason Lemkin
Yeah. How many. And I want to know in particular how many are in marylebone. But. But 91% of the bay Area Project Europe. How are you thinking about that for.
- [94:38]
Rory O'Driscoll
From.
- [94:39]
Jason Lemkin
From London, this increasing concentration of AI unicorns in the Bay Area. This is from this week.
- [94:43]
Harry Stebbings
I think some of the best AI minds or the majority of the best AI minds want to be in Silicon Valley. Quite rightly, you're seeing the recentralizing of power back to Silicon Valley. That said, I think you can still build unbelievably great AI companies, as we have done in London with Demis and DeepMind and with, you know, Matti at Elevenlabs. And I think it's easier to be in Europe because with your 91%, you also have 91% of the capital and every other person on the street being a venture capitalist. And so I think you see this gluttony of cash combined with a gluttony of companies which makes detection harder and makes winning harder. And so I agree with that. Sure, the majority of great AI companies are there, but I also think it's harder. And I think for me, being one of the top three brands in Europe, I would rather be here with much less supply side than their fighting against Benchmark and Founders Fund and Andreessen and everyone in between.
- [95:37]
Rory O'Driscoll
Well, I have two comments on that one. Yeah, it's the old Caesar quote. I'd rather be first in a village than second in Rome. That's really what you're saying? Though, of course, I would add he was a killer psychopath and really, you know, not a good man. But the more important point is. Yeah, the evil that would deal is that we can let it. We can go back to Shakespeare, but we won't. I think the real point, what you're saying, it's interesting. It's 91% in the Bay Area. What this says is companies are in the Bay Area to the point where the marginal advantage of being in the Bay Area is less than the marginal advantage of being in Europe and having access to a talent pool. What it says is the equilibrium point for indifference is now roughly at 90%, which is another way of saying yeah to a rounding error. Bay Area wins, but there's still some wins in Europe.
- [96:22]
Harry Stebbings
And I think actually trying to be a startup stay recruiting and maintaining that team in the Bay is next to impossible unless you have an egregious amount
- [96:30]
Jason Lemkin
of money, no doubt. Right. I was just curious as the last point, what you thought of this from the week. Right. I don't have an opinion on this. Certainly you can't argue with the talent question. Right. But there's just a lot of complexity here as everything concentrates. Right. Everything's concentrating in everything.
- [96:46]
Harry Stebbings
And also, Jason, just like the competitive funding landscape, I do not mean this arrogantly, but there is just one tenth of the competitive elements in Europe that there is. I have so much respect for Silicon Valley early decision message is, God, it's fucking competitive.
- [97:01]
Rory O'Driscoll
It is. And again, back to. And the equilibrium will be re established when the costs of being here are equivalent to the advantages. Look, I think really what happened is for a couple of years, and it gets back to entropic and everything like that, is that in that period when they just first cracked the code at OpenAI of what could be done, the closer you were to knowing what was happening, the bigger the advantage you had. And it was intrinsically a local thing. So, I mean, you'll look back and go 10 years after 22, knowledge will be widely dispersed. But there was a period of two or three years where the knowledge was available tribally in hacker houses in San Francisco and wasn't available widely across the rest of the world. And that's why you had this Cambrian Explosion here. It's a point in time, just like the start of the Internet. But yeah, great companies in London.
- [97:48]
Harry Stebbings
And just to be clear, I'm not a. Was it a psychopathic serial killer? Was that.
- [97:52]
Rory O'Driscoll
Yeah, I know you're not, Howie. I know you're not.
- [97:55]
Harry Stebbings
Slightly mediocre moderator, but not a killer, Rory.
- [97:59]
Rory O'Driscoll
I mean, remember Caesar killed a million goals. I mean, let's just keep score gratuitously.
- [98:03]
Jason Lemkin
Just not quite as good as Pol
- [98:04]
Harry Stebbings
Pot, but, you know, up there.
- [98:06]
Rory O'Driscoll
Up there in the baddie category. Yeah. Okay.
- [98:09]
Harry Stebbings
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