20VC: Databricks at $100BN | Chamath’s SPAC Revival: Peak Mania? | OpenAI Staff Cash Out Billions & Sam Altman Will Spend Trillions | CoreWeave’s $11B Debt Bet & Nubank’s $2.5B Profit Shocker

Summary

Podcast Summary: The Twenty Minute VC (20VC) — Databricks at $100BN | Chamath’s SPAC Revival: Peak Mania? | OpenAI Staff Cash Out Billions & Sam Altman Will Spend Trillions | CoreWeave’s $11B Debt Bet & Nubank’s $2.5B Profit Shocker

Podcast: The Twenty Minute VC (20VC)
Host: Harry Stebbings (with guests Jason Lemkin and Rory O'Driscoll)
Date: August 21, 2025
Episode Theme:
A rapid-fire, high-energy deep dive into the latest “peak era” headlines in venture, focusing on mega-IPO candidates, AI infrastructure’s capital requirements, SPAC mania’s apparent return, secondary liquidity events at OpenAI, and the astonishing scale and profits of Nubank. The candid, often humorous conversation between stalwart investors Jason Lemkin and Rory O’Driscoll—joined by Harry Stebbings from Greece—explores how these stories reflect the venture, public, and private markets’ cycles, and the evolving psychology, risk, and structure of venture capital.

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1. Databricks at $100 Billion: A New Baseline for AI Growth

Timestamps: 02:52 – 08:00

Key Points & Insights:

• Databricks’ Private Valuation:

  • Now considered more valuable than Snowflake, Databricks’ $100B round feels "almost reasonable" in today’s private market, contrasting sharply with past disbelief.
  • Jason Lemkin: “It seems small...I don’t blink an eye at $100 billion in the age of AI, just didn’t even blink an eye.” (03:09)
  • Rory O’Driscoll: “If you’d said five years ago it was going to be $100 billion market cap, private company, you’d be like, no way...Now the correct response is yeah, like whatever.” (03:39)

• Growth Metrics — Justification for Value:

  • Databricks has almost reached $4B in ARR, growing at 50%, accelerating beyond Snowflake’s slower (26%) growth.
  • Valuated at 25x run-rate, but with that growth, seems justified or even “undervalued.”
  • Lemkin: “If they continue to grow, two more years at 50, 60%, you’re golden. The valuation totally makes sense provided that growth rate goes 50, 40, 35, 20, not some precipitous growth rate decline. That’s the bet.” (05:38)

• AI Boom Persistence Is Key:

  • The entire valuation thesis is predicated on a continued AI boom; any sudden “growth plummet” risks major multiple contraction—echoing the fate of 2021 high-fliers.

• Competitive Position:

  • Internal belief (via Databricks’ CRO): tech is “five years ahead” of Snowflake.

Notable Quote:

“It actually makes databricks sound undervalued if you think about it.” — Jason Lemkin (05:26)

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2. IPO Floodgates Opening: Market Scarcity, Future Mega-winners

Timestamps: 08:00 – 12:05

Key Points & Insights:

• Scarcity Value and Public Market Absorption:

  • The public markets starve for real growth stories, as most high flyers remain private.
  • If Databricks, Canva, and others go public, would scarcity premiums dissipate? Perhaps, but the US markets can “digest another trillion” in assets easily.
  • Rory O’Driscoll: “What it really would be is taking a trillion dollars off the private balance sheet and putting a trillion dollars onto the public balance sheet where it could easily digest it.” (09:22)

• Magnitude of Private Outcomes:

  • Multiple outcomes of $50B–$100B, and speculation of a trillion-dollar private company soon—an “unprecedented” phenomenon.
  • Power law in venture amplifies these mega-winner stories as companies (e.g., SpaceX) “cook” in private for longer than ever before.

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3. Fund Sizes, Exits, and VC Return Math

Timestamps: 13:35 – 17:44

Key Points & Insights:

• Mega-Exits Drive Venture Fund Sizes:

  • If Databricks IPOs at $200B, early VC investors like Andreessen could realize $30B from a single deal, wildly outmatching their fund size.
  • Lemkin: “If they make $30 billion on the Databricks IPO, how big was that fund size and how much does that further reinforce the cycle we’re in?” (13:35)
  • VC economics today often trace back lucky (and gutsy) seed bets, held over a decade—“the benefit of VC economics of its day.”

• Winners Beyond Big VCs:

  • Many SPV participants, including "dentists," will make outsized returns as these mega-secondaries and IPOs “spread the winnings widely”—a shift from the old VC/LP winner-take-all model.

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4. Chamath’s Return to SPACs: Real Financial Innovation or “Peak Bubble”?

Timestamps: 18:35 – 25:17

Key Points & Insights:

• SPACs as “Peak Bubble” Barometer:

  • Harry positions Chamath’s new SPAC—with prospectus citing “no crying in the casino”—as an emblem of speculative excess.
  • Rory is cautious: “It does seem to remarkably correlate. The return of Chamath to the SPAC market does appear to correlate with a more recent bubble in 2021...I think it's been validated to be a bad structure.” (19:11)

• Vehicle Misalignment:

  • The SPAC model’s structure means sponsors crystallize gains at deal close, regardless of long-term performance—”a bad structure” ripe for “adverse selection.”
  • “If you pay people to do deals, deals get done regardless of the quality.” — Rory O’Driscoll (20:56)

• Retail Investor Risk:

  • Complex/private equity-style structures being offered to retail is dangerous; complexity and information opacity create an environment ripe for mis-selling.

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5. OpenAI’s Staff Secondaries: Mass Liquidity, Macro Implications

Timestamps: 27:53 – 33:36

Key Points & Insights:

• $6B Secondary for OpenAI Staffers:

  • Massive liquidity events now reach not just founders, but hundreds of employees, making “multi, multi millionaires at scale.”
  • Accepting secondaries is wholly rational in an era where Meta and others offer “life-changing” cash packages to AI talent.
  • Rory: “Given the competitive pressure...if you're OpenAI, you can preach the mission, but at some point you gotta match the dollars.” (28:19)

• New Norm for Late-Stage Staff:

  • Institutionalizing privco secondary markets lets companies “act more like public markets”—e.g., vesting portions of equity monthly with the option for partial liquidity. This is an overdue adaptation to long private tenures (now 15+ years).

• Retention Mechanics Evolving:

  • The old “golden handcuffs” model for encouraging tenure is giving way to refresh grants and ongoing liquidity—a more realistic approach for multi-decade private journeys.

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6. Founder Liquidity & Abrupt Departures

Timestamps: 33:20 – 35:58

Key Points & Insights:

• Rising trend of founders leaving with substantial liquidity after large secondaries (e.g., Hopin, Story)—a cost of the high-velocity, big-money venture ecosystem.
• “There should be double digits in this era...20 founders who walk away with nine figures. It’s a cost of doing deals.” — Jason Lemkin (33:43)
• High risk, high variance: not every company survives or justifies the hype and investment; the loss rate remains high and expected.

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7. Nubank’s $2.5B Profit Shocker: Neo-Banks Go Mainstream

Timestamps: 35:58 – 43:11

Key Points & Insights:

• Nubank’s Scale & Profits:

  • $2.5B net income, 123M customers, now rivaling the largest Latin American banks in market cap.
  • O’Driscoll commentary on moat:
    • “Fully developed bank, that does the full gamut of financial services, can end up with a market cap equivalent to the largest bank on the continent...That’s winning.” (36:20)
  • Contrasts with Chime (US) and Revolut (Europe): Nubank attacked the most vulnerable niches and did full-stack banking, not just deposits or FX.

• Pathway to Greater Valuation:

  • Even at $63B, “actually quite underpriced...could be a 3 to $400 billion company” if international and product expansion match potential. (41:51)

• Entry Strategies: Fintech seeds with profitable, defensible niches (“snacks”) and then expand into “the meal.”

• Product and Organizational Innovation at Scale:

  • Revolut described as running an internal “venture lab,” constantly launching and testing new products, led by highly capable product “mini-CEOs.”
  • Harry: “He’s the best I’ve ever met” — referring to Nick at Revolut (45:58)

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8. Consumer Brands & Outliers Like On: Can Lightning Strike More Than Once?

Timestamps: 47:09 – 49:58

Key Points & Insights:

• Direct-to-consumer category leaders like On (running shoes, $4B sales, 61.5% margins) are “category of one” outliers—not representative of a repeatable, venture-scalable mega-trend.
• Unlike fintech, there’s no broad “megatrend” support for new DTC brands at venture scale, underlining the rarity of these $10B+ consumer outcomes.

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9. CoreWeave’s $11B Debt Bet: AI Infrastructure’s New Risk Paradigms

Timestamps: 49:58 – 56:07

Key Points & Insights:

• Debt Is Necessary:

  • CoreWeave’s $11B in debt is “duh” when capex plans run into tens of billions—mirrors the real estate/infrastructure business but pegged to hyperscaler demand.
  • O'Driscoll: "They’re in the business of borrowing large amounts of money, building data centers, signing long term leases." (50:16)

• Risk Management:

  • The core risk: maturity mismatch between borrowing and customer contracts. If revenue is “take-or-pay” from AAA buyers (Microsoft, OpenAI), matched in duration to debt, risk is manageable. If not, risk of default rises.
  • Lemkin: “It could be a canary in the coal mine. If Core Weaver struggles...that's where we'll see, even if there's just a bump in this, in this cycle.” (53:03)

• The Fragility of the Boom:

  • The whole model and the AI/infra capex surge depend on several years of “infinite” AI demand. If that slows, the house of cards could have a shaky foundation.

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10. AI CapEx Bubble? Sam Altman’s “Trillion-Dollar” Infrastructure Plan

Timestamps: 60:05 – 65:45

Key Points & Insights:

• Skepticism about AI CapEx Extremes:

  • Altman’s “we’ll spend trillions” is seen as metaphor, not literal plan—especially as $365B annual infra spend is already straining even tech giants’ balance sheets.
  • "We’re reaching the limits of what people will want to finance...” — O’Driscoll (63:46)

• Only Justifiable If...

  • The only way such an investment pays off: if global budgets transition from human labor to AI-enabled technology—unleashing “$10T of value” and making “trillion” scale investments logical.

• Optimist Versus Cynic:

  • “Cynics sound smart, optimists die rich.” Rory threads the line, noting optimism generally wins over time, but timing, pace, and market adoption are the real risks now. (62:08)

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11. The AI Agent Gold Rush & Inevitable Consolidation

Timestamps: 67:53 – 72:34

Key Points & Insights:

• Explosion of B2B AI Tools:

  • Lemkin notes operational experience with 10+ AI tools replacing human labor—budgets for AI agents may soon consolidate, as companies find themselves spending $500k–$1M on multiple tools.
  • Lemkin: “Everyone for the last couple years has been cutting the number of SaaS apps in their organizations...We may see a wave of consolidation in AI very soon. It just has to happen faster.”

• Single-Provider Trend:

  • As in SaaS, the dominant player in a vertical or function can quickly expand breadth, making niche point solutions vulnerable.
  • “It’s not enough to be ROI efficient. There’s only so many things you can get your head around as the CFO or the chief of operations...You have to be able to have high ROI on a large quantum of headcount.” (71:48)

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12. Platform Risk, Epic, and the Rise/Peril of Building on “BigCo” APIs

Timestamps: 74:32 – 78:30

Key Points & Insights:

• Platform Risk Has Multiplied:

  • Abridge vs. Epic in healthcare: partnering with the 40%-shareholder 800-lb gorilla (Epic) is risky—Epic is already launching competitive products.
  • But, “There’s only one thing worse than partnering with Epic and getting smacked around...and that’s not partnering with Epic.” (74:41)

• Risk Appetite is Way Up:

  • Lemkin: “We’re ignoring so many risks...In 2019, we’d debate this for weeks. Now it doesn’t even come up.” (76:31)

• Betting Everything on AI Momentum:

  • “The only thing between us and Armageddon is AI adoption. If it slows, then it’s going to get ugly real fast across the board.” — Rory O’Driscoll (77:08)

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13. Kalshi Quickfire Round: Predictions Market Fun

Timestamps: 78:30 – 83:02

Key Points & Insights:

• Will Anthropic Release Claude 5 in 2025?
  • O’Driscoll would take the “yes” odds for probability, but both agree the “headline” version might mislead, as consumer positioning isn’t their priority.
• Will Mistral Be Acquired?
  • Lemkin: “If you’re not at $100M in ARR, and someone offers $20B, you take it. These moments don’t last.”
• Who IPOs First, Deel or Rippling?
  • Lemkin & O’Driscoll agree: Deel (profitable, consistent business, more likely to go public first), while Rippling is “still in investment mode.”

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Notable, Funny & Memorable Moments

• Harry’s mother is his “biggest critic” and tunes in to hear Jason and Rory “bring him down a peg or two.” (02:37)
• “Buy a house now in the Bay Area. That’s my main recommendation—buy a house now. They’re all going up.” — Lemkin, on secondary windfall effects (18:13)
• “If you went into abridge thinking Epic wasn’t going to do this, you are a baby and your money will be parted from you sooner than you can say gone baby gone.” — O’Driscoll (74:41)
• “The only thing between us and Armageddon is AI adoption...If it slows, it’s going to get ugly real fast across the board.” — O’Driscoll (77:08)
• “Cynics sound smart. Optimists die rich.” — O’Driscoll summing up the venture psyche (62:08)

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Conclusion & Takeaways

• An era-defining moment in venture, where gigantic outcomes (and corresponding risks) are the norm across private and public tech.
• Growth persistence and AI adoption are everything: if trends persist, returns will be legendary; if not, correction could be swift and severe.
• Markets are being shaped as much by psychology and regulatory quirks (scarcity, secondary markets, mega-funds) as they are by real product and adoption data.
• The structure and sociology of venture—from secondaries to platform risks—are being profoundly reshaped.
• Even the best investors admit: so much is now about taming the pace and psychology of the wave, not just picking the single best company.

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This episode captures a deeply informed but lively “state of the venture market” conversation. It’s essential listening for anyone curious about high-stakes tech investing, with priceless quotes and grounded context throughout.

Transcript

[Rory O'Driscoll]

One of the things I'm learning, especially on this podcast, is to not to try and feel the need to have an opinion just to fill the space.

[Harry Stebbings]

That's why we have Jason welcome back.

[Podcast Host (Harry Stebbings)]

To 20VC with me, Harry Stebbings, brought to you from Greece. Now this episode is a cracker with Jason Lamkin, Rory O'.

[Rory O'Driscoll]

Driscoll.

[Podcast Host (Harry Stebbings)]

We discuss Coreweave, Nubank Databricks hitting $100 billion and much more.

[Jason Lemkin]

This is my favorite show to do.

[Podcast Host (Harry Stebbings)]

But I want to make it better. So let me know what we can do to improve these shows. [e-mail] and then next week we've got the one and only OG of SaaS, Mark Benioff joining us for a very special episode. So stay tuned for that one. But before we dive into the show today, let's talk about agents. Specifically Piper, the AISDR agent brought to you by Qualified the agentic marketing era has arrived and if you're a B2B marketing leader looking to scale a pipeline generation Piper the AI SDR agent.

[Jason Lemkin]

Wow.

[Podcast Host (Harry Stebbings)]

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[Harry Stebbings]

Guys, it's the holiday edition. I am dialing in from Greece. You guys are dialing in from the office.

[Rory O'Driscoll]

But we still.

[Podcast Host (Harry Stebbings)]

Still get to do this.

[Harry Stebbings]

My mother is sitting outside and she's.

[Podcast Host (Harry Stebbings)]

Like, are you recording the Rory and Jason show?

[Harry Stebbings]

I'm like, this is the one show of mine you listen to these days.

[Podcast Host (Harry Stebbings)]

She's like, it's my favorite.

[Rory O'Driscoll]

That's because we're mean to you, Harry.

[Harry Stebbings]

I think she actually likes you. She says, you bring me down a peg or two.

[Rory O'Driscoll]

Rory, it needs doing how it needs doing.

[Harry Stebbings]

Listen, I want to start with DataBricks.

[Podcast Host (Harry Stebbings)]

Now at $100 billion, worth more than Snowflake. I wanted to start with how we thought about news of it hitting $100 billion. And we can touch on that first before we move on to what it.

[Harry Stebbings]

Means in terms of found companies and them inherently being better or more valuable.

[Jason Lemkin]

Well, I'll tell you, it's funny. When I saw it in the journal, it shows the times we live in. It seems small. I mean, snowflakes were 60 something billion. So the private worlds and the public worlds are like two different worlds. If I'd seen this a year ago, you know, I would have fallen out of my chair. This is just for fun. Then we can talk about its relative. Whether it's a good Rory will help us figure out if it's actually a bargain. It's funny how I don't blink an eye for 100 billion in the age of AI just didn't even blink an eye.

[Rory O'Driscoll]

You're exactly right. Yes. That is the meta commentary. You're exactly right. It's like, oh, yeah, databricks is. I mean, if you'd said five years ago it was going to be $100 billion market cap, private company, you'd be like, no way. And, you know, you got anthropic at 170, you got SpaceX at 360, you've got OpenAI at 500. The correct response is, yeah, like, whatever. Exactly. So another $100 billion outcome. It's awesome. So, yeah, you're exaggerated. That is the first comment. And then the second thing, to Jason's point again, is you just have to size it on the cup. I will admit I saw the announcement and I didn't have time to dive in and read the numbers. I haven't had the most recent update.

[Jason Lemkin]

But they said they'll hit 3.7 billion. ARR. They've crossed almost 4 billion. They've crossed almost 4 billion.

[Rory O'Driscoll]

And what that means is, versus Snowflake, the growth rate is higher. I'M doing this on the way. So you have that perfectly positioned infrastructure provider to everyone who's messing around in AI, you have the growth. It's a healthy multiple to say the least. But provided the growth's there on a comp basis, it's not entirely crazy. Going back to my what value do you get in the public market versus private market? I've always said if one gets out of whack with the other things go the other way. People gravitate to where the cheapest capital is. This feels roughly right. In other words, this feels like roughly where it would price in the public markets. In a world where what Snowflake's market cap is 60 or 50 or 60. If this is bigger, going faster, okay, it was like, yeah, that's probably what it's worth.

[Jason Lemkin]

Yeah, they've argued actually looking at it, I think they've crossed over. Snowflake did had a billion dollar quarter. So that's 4 billion growing 26%. Databricks just said they're crossing 4 billion growing 50. 50 and 26 are pretty. It actually makes databricks sound undervalued if you think about it.

[Harry Stebbings]

This is what I was just going to go and say, which is like it actually feels undervalued at 25x re. Given the growth rate, given the fact it's found a lead, given the macro trend where it sits, it really feels.

[Podcast Host (Harry Stebbings)]

Actually very reasonably priced.

[Rory O'Driscoll]

I just love it. Just another cheap stock at 25x run rate. It's all about growth persistence. Because the interesting thing is every one of these bets is some version of if you're paying 25x run rate for anything, the only thing you know for sure is that when things level out in growth rate, they get valued like normal companies. So implicit in that is some statement about how long this company can continue to grow at that kind of rate. So two more years at 50, 60%, you're golden. You've earned your way into the company, into the valuation. If that growth ever kind of plummets down, then you're high and dry like many of the 21 deals. So the valuation totally makes sense provided that growth rate goes 50, 40, 35, 20, not some precipitous growth rate decline. That's the bet. So again, it resolves itself again to the if the AI boom continues for two or three more years, it will be trading at that point eight or nine times run rate and all will be fine. That's the bet in a sentence.

[Harry Stebbings]

I actually interviewed ron Gabrisco, that CRO astonishing guy by the way, zero to 4 billion in revenue as head of Zelles and CRO. He said they were five years ahead of Snowflake in the show. I thought it was just an inch. I said like technologically, how far ahead are you? He said five years. I thought it was interesting of him.

[Jason Lemkin]

To state, you know, I'll tell you a couple of things.

[Rory O'Driscoll]

The what?

[Jason Lemkin]

So the one thing I thought it was cheap. The other thing I was thinking is, you know, Sam Altman said this week that one, they're going to spend trillions on infrastructure, but also that a lot of folks are going to lose a lot of money in AI, that there is a bubble. He said two things that aren't completely incongruous. But the other thing I thought when I looked at databricks is like, obviously it feels very bubbly right now. It feels like the best of times, but it might get better. And not just because OpenAI is going to continue to grow, but because let's look at comps. Okay, Databricks has an ipod yet. Databricks compared to Snowflake growing twice as fast at 4 billion figma and crazy IPO we just had, right? One of the reasons Harry's in Greece. But Canva might be even better. Canva might be even better. And maybe Stripe is accelerate. I don't know if Stripe's going to be better than Adyen, but let's imagine it's accelerating because of crypto and AI and mobile. We might get the next wave of IPOs that are even better very quickly. And the amount of froth that that could create in the ecosystem, the amount of returns to LPs could create a bubble on top of a bubble because times might just get much better in the next 12 months.

[Podcast Host (Harry Stebbings)]

There's an interesting question to be had.

[Harry Stebbings]

Here which is given what we've seen with Figma, Core, Weave and Circle, if you had the likes of Canva and Databricks go out, the public reception would be even more inflated.

[Rory O'Driscoll]

Maybe you could also argue that a little bit of what's happening now is scarcity value. There's very few high growth companies in the public markets because all that growth has been annexed by the private markets as a bizarre outcome of ill informed regulation. So all the wealth creation is taking place in the the private side. If all those companies were to go public, as you say, if the canvas of this world, if the database wanted to go out, it's not clear to me that they'd get that 3x pop instead. You might want to have is okay, they'd probably trade at the very high quite deserved values, but I think the scarcity premium would go out of it. For example, I can't remember, it's been two weeks now. Canva equivalent where figma priced at 15x forward. Yeah, sure, a Canva equivalent and a databricks equivalent, then popping 3x. Probably not, because at some point they would all be just wonderful public companies trading at appropriate growth adjusted multiples. But what it really would be is taking a trillion dollars off the private balance sheet and putting a trillion dollars onto the public balance sheet where it could easily digest it because US stock markets are 40, 50 billion. So another trillion. 50 trillion it can digest another trillion. So you could shove off onto the public markets an amount of equity that at appropriate multiples would, as you say Jason, lead to a huge amount of LP capital return and be totally digestible by the public markets. Probably without the 40 super premiums. Just it would be the return of high growth companies in the public market.

[Jason Lemkin]

Databricks growing twice as fast as Snowflake at the same AR, which is stunning. Figma growing 48% at a billion pretty crazy worth 40x ARR today could change. That means it's frothy, right? But if Canva IPOs next year at 4 billion instead of a billion growing 40% and Figma's at 48%. I mean Figma is one for the ages, but that's an even better company, isn't it, Rory? If it's growing 40% at 4 billion, I mean it could be a jaw dropper if multiples and market dynamics are consistent with today.

[Rory O'Driscoll]

Yes, again, and it would trade like a wonderful 40% growth. Look, the absolute number would be bigger. The multiple would be good adjusted. As I say, my comment is merely the speculative side of it that took it from the IPO valuation, that probably would not be there as more stocks come out. The aha here at the high end of the private market. There's a significant absolute sum locked up in private markets that at some point is going to seek a public market where a number of them will be worth 50 billion, which is unprecedented. A few will be worth 100 billion and maybe one will be worth a trillion dollars in the private markets. I mean it's only 2018 that Apple touched a trillion dollars in the public markets and seven years later there arguably I'm not sure I buy it might be one or two private companies that touch a trillion in the private markets. That's just bizarre.

[Harry Stebbings]

I go back to this and I've said it so Many times and I've said it in this show so many times. But David from Vencap who said that the biggest mistake we make is that we look at today's fund sizes and today's outcome sizes and think that is what it will be in 10 years time. We should be looking at the outcome sizes of 10 years time and thinking are these fund sizes rightly correlated for those? I always think back to that because if you were to do that, you might actually have a more reasonable, nuanced mindset towards the fund sizes we're seeing today.

[Rory O'Driscoll]

Yes, you do make that point very consistently and at some point and again I think it's true. But you're probably also guilty of over extrapolation. But that's okay.

[Jason Lemkin]

I mean listen, the IPO floodgates are open, right? Even a couple months ago we could have debated it. But if you think about it for a minute, the IPOs we've had this year, they're not the epic ones, are they? The epic ones are still to come. We've had a few fits, we've had the rubrics and the Klaviyos and Figmas, but the mega ones, I think it could just be a force of nature coming. The coreweave has a huge market cap. A Coreweave circle hinge health. These are still niche plays, aren't they?

[Harry Stebbings]

Tranmere Rovers.

[Rory O'Driscoll]

Yeah, yeah, I got it. A reference that's wasted on your audience. But yes, yeah, I don't think they're just niche play. I think they're the bread. And I mean look, the truth is they're the bread and butter of what will make most venture firms money. So I'm not going to denigrate them with niche or Tran Mirova's appellations. But you are right Jason, in a power law, the longer you let things cook in the private markets, the bigger one or two of the outcomes will be. And things have been cooking in the private market for. I mean I think SpaceX is almost 20 years old. They've been cooking a long time. So it totally makes sense that there's going to be 57 north of $100 billion outcomes. It's just the math. I'm super happy with Tokyo as a company in our portfolio. Fraud detection growing at scale many hundreds of millions of dollars profitable, accelerating growth rate. We're in on a wonderful basis. He said, smiling happily. About 123. So feeling very good there and to the point. And I want to go back to in the context of what Jason says, it's A niche play. It's not doing $4 billion in the context of a mid sized fund with a good ownership position. A company like that, with a trajectory like that, I feel great. And there's going to be 10 or 15 companies that are 10 billion plus 50 billion plus outcomes. But. But the real point, the venture business will only work for a few funds if they're the only outcomes. For the venture business to work for us all, you're going to have to see more of these $5 billion market cap outcomes. As you say, the hinge health, the onions of this world start to take place. And I think it will.

[Jason Lemkin]

This math should be easy, but I don't have all the data at my fingertips. If Databricks IPOs next year at 200 billion, which makes sense because that's the implicit goal of this valuation. Andreessen led the seed a How much do they make in what fund and how does that change how we think about fund dynamics? Could they own 15% of Databricks? It's possible, right? I mean it's hard these days, but it's possible. So if they make 30 billion on the Databricks IPO, how big was that fund size and how much does that further reinforce the cycle we're in? It seems like a lot. 30 billion.

[Rory O'Driscoll]

30 billion is a lot again. And if the growth slows and it grows and it has to go public at 80 billion, which would be a heroic win in any man's terms, it'll feel like a real Debbie Downer from where we are now. You're exactly right, Jason.

[Jason Lemkin]

I'm trying to figure out what fund size that would be in talking to just going to Harry's point of the mega rounds and things that make sense today because we're going back in time. Because the beauty of these types of investments like Andreessen leading databricks in 2017 is you get the benefit of VC economics of its day. They probably overpaid in 2017. Right. As an inception investment. And it would probably seem laughable today.

[Rory O'Driscoll]

I think it was even earlier than 2017 because I remember.

[Jason Lemkin]

Oh, you're right, I got it wrong.

[Rory O'Driscoll]

2018 you didn't. Because we're trying to talk to. We were in a conflicting investment.

[Jason Lemkin]

But that was the D in 2017. A decade ago. They let it a decade ago. Better part of a decade ago.

[Rory O'Driscoll]

I won't say 2013, 2014. I could be wrong because Slowflake had just started out. But yeah, I mean look, what it says is shock horror. If you do the best infrastructure deal of your generation and you hold it for a decade and a half and it compounds it. Turns out you make a lot of money.

[Harry Stebbings]

I go back to a statement that you say, which I love, Rory, which is like Josh Kushner, phenomenal investor, goes to the best house On Every Block, AI OpenAI Data Databricks, Stripe FinTech and buys the best asset.

[Rory O'Driscoll]

Yeah, buy the quality asset, hold it. I mean, look, the only risk is, I mean all these, and I'm not saying this to be a Debbie Downer, but just to point it out, the interesting comment is in the public markets when things start going south because there's liquidity, everybody can have a stop loss 10% and get out and then someone else can come in, think it's going to turn. And yeah, you can hold it all the way down, but you can also get out along the way, which is to think in the private markets you don't have that option. If you're wrong at 100 billion, if you're wrong on price by 50, 60%, you'll own it the whole way down. So the only risk you're running is a one big large ass pricing risk. I don't think you'll have preference to save you. But so far that risk has worked. And it gets back to my comment on growth persistence. If they continue to grow for two or three more years and you have a run rate business at say 1012 billion in ARR or GAAP revenue, then you're kind of money good on normalized multiples, which is how I think about it. Can you get from where you are, which is crazy multiple in three or four years, to being money good on normal multiples for normal growth rates and provided you can visibly see that growth rate, you're good. And if you're doing 4 and you're 40% growth, what you're basically saying is this infrastructure investment AI keeps going for two or three more years and then I have 10 billion of locked in contracts with JP Morgan, B of A OpenAI everyone. And even if the world slows down from there, I'm good. That's the bet.

[Jason Lemkin]

Harry, not to do too much time on this, but just thinking through it for a minute, if Andreessen invested, did the A seed slash a in 2013 out of a $650 million fund at the time, trying to line this up through AI, it's probably not perfect, right? But if they did it out of a 60 million, obviously they probably invested in multiple funds, cross funds, right? But boy, they've got some good funds.

[Rory O'Driscoll]

Yes, Again, this is David's point for Becca. You probably, I'm willing to bet they have the guts of a billion dollars in that deal. Could be wrong, but half a billion at least. Because when you have something like that, you follow it the whole way up. You put a lot in. And, you know, the interesting thing is you'll probably have a couple of hundred x multiple on your first investment. You'll have some 20x multiple, you might have some late, say 3x multiple. But if you've turned a billion, billion and a half into $30 billion, you're going to feel good in the morning.

[Harry Stebbings]

The one thing I also think we don't take enough into account is just how many people make money when these go out. And what I mean by that is there are so many LPs who are in SPVs. SPVs on SPVs. There are dentists who are going to make 5x, and I'm saying that positively. And we always pick on the dentist, which is unfair of us. But the multitude of winners when the SPVs are as sprayed as they are in these mega companies will make a people a lot of money in a great way.

[Rory O'Driscoll]

Yes. Yeah.

[Jason Lemkin]

Buy a house now in the Bay Area. That's my main recommended Buy a house now. They're all going. They're all going up this.

[Harry Stebbings]

This week in Real Estate with Jason Lemkin.

[Jason Lemkin]

All I know over these cycles is you buy a house before the next massive IPO wage. Why is everyone paying cash?

[Podcast Host (Harry Stebbings)]

Speaking of which, guys, I want to. I want to usher this along and.

[Harry Stebbings]

Rory, you're going to freaking kill me because it was a bit of a late addition, but peak bubble time, some might suggest, when you see the return of the spac. And Chamath announced his new SPAC today and in the prospectus it says if they do lose their entire capital, they will embody the adage from President Trump that there can be no crying in the casino.

[Podcast Host (Harry Stebbings)]

I respectfully thought this was peak bubble.

[Harry Stebbings]

I would love to hear your thoughts on is it peak bubble? And am I being too moralistic?

[Rory O'Driscoll]

You won't know its peak till it goes down the other side. Because it's interesting you say that. And as yet, I'm listening to two of you and your euphoria five minutes ago saying, oh, my God, this is just the hors d' oeuvres and the entree is coming later in terms of the public markets. If that's the case, then it's not peak bubble. He'll be selling into strength like he did in 2020. 1. So that's the first comment. I don't know if it's peak bubble or not. If I did, I wouldn't be wasting my time talking to you. I'd be trading the QQQ and making money. So what can you say? You can say a couple of things. One, it does seem to remarkably correlate. The return of Chamath to the SPAC market does appear to correlate with a more recent bubble in 2021, where it worked in the bubble and didn't work after. So there's definitely correlation there. I'm load to impute causation and the serious comment is because way more serious people. I remember Bill Gurney talking a little bit about SPACs. It's not a crazy alternative on its face to the problems around IPO and mispricing, but I believe when you parse through it, it's a bad structure and I think it's been validated to be a bad structure in 2021. Relatively few of them work though. To give credit, I think SoFi did work. I think it priced at 10 is now 23 bucks. Most did not because you have all sorts of weird adverse selection, right? So especially in bubble times, it's a pretty iniquitous and expensive vehicle to raise capital in public markets. So I'm just not a wild fan of spacs. I think you get adverse selection in terms of who decides to do the deal. And the other thing is the incentives aren't aligned because the person doing the SPAC effectively crystallizes their entire gain once the deal gets consummated. Obviously, if the outcome is great, that's wonderful, they make even more money. But provided they have an outcome, they make some money. So the structure is all wrong. You effectively get paid as the promoter the day you get a deal done. And one thing you learn in any investment management business is if you pay people to do deals, deals get done regardless of the quality. So I just think it's an imperfect vehicle for fundraising and therefore, rather than personalizing it on one person, be he ever so great or not, I just think it's a bad structure and the fact that it's back is indicative. The fact that the structure is back is indicative of a bubbly time. That was me being nice.

[Harry Stebbings]

Jason, is it below your line?

[Jason Lemkin]

Honestly, I don't. For what it's worth, listen, I only know Chamath from a distance back as a founder, watching him back in the day and then as an initial VC investor at Social Capital. I do have ton of respect for Allan. But I've honestly never listened to it. But I know David and Jason a little bit. I don't get why he cares. This seems like a lot of energy for someone reasonably rich to be going to Rory's point to be doing weird shit like spacs. It's not a criticism. I just. Maybe he'll make 50 million bucks off this. Help me do the math. Right, as the sponsor in this. But why?

[Rory O'Driscoll]

Why?

[Jason Lemkin]

Why not do something more meaningful with the world rather than do something like a spac, which is at the edge of grift. Like no crying in the casino. I appreciate the disclosure, but this seems to me something better for someone on the way up trying to get their first hundred million. This might seem like a good strategy, but I don't get why the billionaires are maybe approaching. I don't know. You know, it's none of my business how rich he is. It doesn't seem. The juice doesn't seem worth the squeeze here, the drama. It doesn't seem worth it because I.

[Rory O'Driscoll]

Think you're right, by the way. My mental model is the amount you raise 20% of that, so you get 50, but you have to gamble 5 upfront on fees. So that's it. It's a 10x the day you get a deal done, it's 50 million bucks. And then you hope to hell it goes up, not down. You probably get out. If it goes down, you probably get 25. But that's it. You're right, it seems like a lot of pain and drama. And also on the disclosure, again, I'm gonna get moralistic. Is that at first level it's cute. Cause I do like the fact that there's humanity creeping into these disclosures versus. You know, I remember back when there was no founder letter and there was nothing except bland legal speak. So I love the comment on crying at the casino, but it's not a casino. I mean, it may feel like a casino to some of the marginal players, but the point of Wall street is to funnel, and even these IP is to funnel money from the savers of ordinary people managed by people like Fidelity, into profitable long term investments. That's why we have the whole damn thing. Wall street, all of us getting highly paid to allocate capital. It's not a fricking casino, which is a zero sum game where only the house wins. It's about allocating about $2 trillion worth of savings every year into great new investment like figma. It's not a casino. So it's a cute statement, but I personally Would never let anyone manage my money. Who thought it was a fucking casino? Excuse my language. Who thought it was a casino? It's not a casino.

[Jason Lemkin]

Is stuffing retail investors 401 s with PE a casino issue with PE investments they don't even understand, they have no financials for, don't know what the markups are. Is that at the edge of crying in a casino?

[Rory O'Driscoll]

I understand what you're saying, which is that the more unsophisticated the investor and the more complex the instrument, the more likely it is that the investor will lose and the promoter will win. It's one of those life rules. Even IPOs, there's complex things and you kind of go whenever it's complex. Your rule of thumb should be whenever a bank was explaining something complex, you're losing money. So I don't think it's as bad as, quote the casino, because I think on aggregate, I mean, because stepping back the casino comment is this. In the casino, the median expected return is negative because the house takes a take and the median is a loss. The long term returns in PE are good. The long term returns in venture are good. So in theory, allowing individual investors to access those returns might have meant some individual investors would have got the databricks exposure that Andreessen got. So it's not a bad idea. But to your point, Jason, the problem is often the more complex the instruments are, the more likely it is to go wrong. The more likely it is to be adverse selection, the more likely it is that the good parts of the PE and venture value chain don't get allocated to the retail investor. So I don't think it's casino level. I do think it requires a fair amount of disclosure and monitoring.

[Jason Lemkin]

There was an example on Axe Twitter. I wish I'd saved it. But it was a P firm that had to do public disclosure about a secondary position had bought. So it had bought another position with 50 investments in it and disclosed it and got it at a 20% secondary discount and the next day marked it up. And the disclosures were in like three point font and asterisks and daggers at the end of the disclosure. And the point was a retail investor would think there was. I mean the IR would be insane for the next week, but a retail investor would think they had a 20% gain this year. They bought Scale 7 or Saster 1 at a 20% discount, immediately marked it up to mark to market, and the fund's up 20%. How would a retail investor even understand what the hell was going on there? Or if that's even legitimate.

[Rory O'Driscoll]

And again, Harry, you're right, I am annoyed at you because I haven't thought about this at all. So I'm working on the fly here. But I think it gets to an interesting philosophical question. There's two approaches. There's the if I disclose everything, it's buyer beware, which in this case, this is an example of that. And SPAC's an example of that because it is true to say every single thing you needed to know to stop yourself getting screwed over was available in the prospectus. And so there's one school of thought that says on your head be it, you made your own decisions. And there's another school of thought that's a little more nanny protective and says it's just not realistic for individuals to who all do that level of analysis on something, managing their money where they spend 3, 5% of their time and therefore individuals need to be protected or regulated. And I think what we're seeing right now is probably by virtue of the overregulation I think in last no one could get, there's a feeling now that we're going to wrench the needle back the other way to perhaps a lot less protections. I think it's a happy medium. It's a hard thing to decide because in protecting those individual investors from the grift, as you put it, Jason, of a fund that has an arbitrary markup that's not there, you also quote, protected them from being able to invest in that DataBricks round that 500 pre that's now 100x rather than doing what I think we do a lot of which is this black or white thing. It's pretty tricky. It's a pretty regulatory balance to say how do you allow people a fair amount of freedom to pursue what they want to do, treat them like adults, assume the disclosure is there, while at the same time avoiding those horrible stories of, you know, little old granny giving money to xyz, Y or co and they just lost all her savings and now she's pennuing on the street. It's tricky.

[Harry Stebbings]

I am going to take it back to regular programming, Rory, because I don't want to piss you off too much. My mother can't be too thrilled to see me getting a beating.

[Podcast Host (Harry Stebbings)]

I want to go actually we said.

[Harry Stebbings]

There kind of about the extended period of privatization for companies. SPACs being a different mechanism of getting liquidity. There's a $6 billion secondary for staff.

[Podcast Host (Harry Stebbings)]

At OpenAI and a lot of them.

[Harry Stebbings]

Are going to make great money at scale. What do we think of staff secondaries at this level of scale, which is.

[Podcast Host (Harry Stebbings)]

In the multiple hundreds, if not low.

[Harry Stebbings]

Thousands now or low thousand. Getting this level of secondary first start there.

[Rory O'Driscoll]

Good for them. It speaks to willing buyer, willing seller, a couple of things. And informed buyer. Given the competitive pressure that Meta has exerted on AI salaries by being willing to offer people cash positions, allegedly. And I have 10 to $100 million. If you're sitting there in OpenAI, yeah, you can talk about the mission till you're blue in the face, but it's going to help a lot if you can also take off 10 million bucks. So you're going home. One thing I've learned about large amounts of money as I see this in acquisitions is one of my rules is this what people say they'll do when faced with a large amount of money is meaningless and bears no relevance either way to what they'll actually do. Predicting who wants to sell their company based on what they say in the abstract is a waste of time. So taking these offers, when you get the $10 million or $100 million offer from Meta, it rocks you back, I'd say. And you go home, you talk to your spouse, do we want to do this? This changes the rest of our life. And that's real competition. So if you're OpenAI, you can preach the mission, but at some point you got to match the dollars. I mean, you know, if you think about it, $6 billion, it's only $600 million engineers, it's only $610 million engineers. I mean, stunningly, to Zuckerberg's comment, it ain't that much, which is hilarious, but.

[Harry Stebbings]

Wow, Jason, he's turning into you. This is the full scale transformation of Rory.

[Jason Lemkin]

Well, you know what, there's the competition issue, which is critical. Rory's. I just think stepping back for a minute, it is nice that as companies get bigger, stay public a little private a little longer, if literally this is institutionalized. I mean, we talked about tender offers and all that. I think more if they actually act more like the public markets, where every month you vest and you got to stay to your cliff and all that stuff works. But it's pseudo public, right? And so you make it 13 months, you sell a 48th of your stock or 60th or whatever it is that is. It sounds audacious, but if you step back for a minute, that would be a nice outcome where it just works that way. As a late stage company, forget about tender offers. It was just almost automatic. Every month you could sell your Vested shares.

[Rory O'Driscoll]

Agreed. I mean, to use a silly example, but we decided earlier in 2000, as I say, Apple was 800 billion market cap going into 18. So let's go back to about 2014. It had a $500 billion market cap. You didn't have an objection to those people selling in the public markets? The only difference between this $500 billion market cap and that $500 billion market cap is for stupid, absurd reasons. It's still private. So I'm totally with Jason. If we collectively want to recreate the entire mechanism of the public market at massively more expense, massively more transactional cost than more power to us, and part of that is being able to sell.

[Harry Stebbings]

When suddenly a large portion of your employees are multi, multi millionaires, does that impact the cadence of their work?

[Rory O'Driscoll]

I think money brings out what people really are because it stops you having to do things you don't want to do. So the people who love their work are going to work just as hard or harder because they'll be able to throw money at all the other little problems that take up your daily time. And then other people who maybe have other dreams in their life will go do other things. That's what always happens. Because it's not a binary thing. People ask this question. We see founders get rich and then just keep on trucking, not sell a single share and just compete aggressively the whole way through. And then you see other people go, you know, I never thought I'd have 20 million. I have 20 million. I want to go teach high school. And that's just the way it's going to be.

[Jason Lemkin]

I do think what we're seeing to Harry's point, and I don't say this is bad, it is a cultural change or tech change. I do think, I think the essentially the handcuffs of staying at a startup for a while so that you can see it through a liquidity event, so that. And you would stay longer. If you left, you might not have the money to exercise. If you left, other things might happen. I think at the margin, those things are all weakening, as are implicit tenures for employees. It's all changing, right? But as VCs, you know, historically we've used the pool as kind of a retention weapon. If you stay, you'll make a lot of money. If you leave and you can't afford your exercise price, well, great, I get half of it back. I get all of it back from my pool to give to the folks that stay. Right. And some P firms are extreme there. Like, they have a lot of Lever clauses, you leave, you get nothing. This is kind of the opposite. And I don't know if it's bad, but it is different as a way to lock employees down with illiquid equity.

[Rory O'Driscoll]

I totally agree, Jason. It is. I love that it is different. I love it. And I think the kind of we're all locked in this. If you leave again, it made sense where it was a four or five year sprint in the mid-90s and you would go public at 50 million in revenue. I don't think it's realistic to have that attitude in a world where you can be 12, 15 years. So I think this evolution to allow people to access their capital is just a more realistic. And other things like refresh grants get into the same thing. It's not just a four year sprint anymore. It's a 15 year marathon. And you can't expect people to put 15 years of their life on hold, not be able to do the things you want to do in life. And so you have to have these kind of events. I totally agree with you.

[Harry Stebbings]

Is it a 15 year marathon when Story founder raises 130 million and walks away?

[Rory O'Driscoll]

It's only a marathon if you finished a marathon, Harry. It turns out if you punch out after the first marathon and it's not a marathon anymore. Yeah, it's a failed marathon.

[Harry Stebbings]

How did we think about that? It was a big announcement. $130 million raised and he leaves pretty abruptly.

[Jason Lemkin]

Well, look, it makes sense. In this era we should see 10 or 15 Hoppins, not just one. Harry. It just makes sense. We should see. I mean, there's other hop ins. We can talk about some other ones. That one's just a prominent one. We can think of several folks in the SaaS boom of 2020, 21 that walked away with too much money. But it makes sense. There should be double digits in this era, right? There should be 10, 20 founders who walk away with nine figures. Whether they're weworks or hop ins, there's got to be 20 or more of them. And it's a cost of doing deals over the. I find all hot deals now are done on Saturday.

[Rory O'Driscoll]

Saturdays.

[Jason Lemkin]

This is the new founder vibe. You get an email even if I know them. What's going on? Well, we're, we're taking meetings on Saturday. I work hard. We all three of you do. But like this Saturday, I can't do like. Well, we're, I mean it's. If you're going to close every deal on a Saturday, we're going to lose a few hundred million Here or there.

[Harry Stebbings]

I find that hilarious. I'm with you. On the Saturday deals.

[Jason Lemkin]

There's got to be ten Hoppins, doesn't there? Just mathematically, there has to be.

[Rory O'Driscoll]

And maybe it's a stepping back to just. You should explain because. Because most people might be like me who are like. I haven't spent a second thinking about story. Implicitly, that is. It's a company that raised $135 million. Sounds like the founder took off significant money. And lo and behold, as of today, he's not at the company anymore. Is that the summary?

[Jason Lemkin]

Well, he has a new passion. He wants to start something different. Rory all over again. And he might consent sell the rest to Wind Surf or somebody, but he's moving on to his passion project.

[Rory O'Driscoll]

Yeah, and now you're being a snobby. I actually thought your first response, sort of no, but I thought. Genuine comment. I thought your first response was the correct one, which is, I didn't even know about this. There's going to be tons of these. I didn't even break sweat thinking about it, Harry. Right. It's like I'm shocked to discover that some deals don't work, some founders end up either leaving or getting transitioned out, and some money gets lost. To me, it didn't even rise to the level of the story. I mean, it's fun to snap, but like, literally, it's like Jason Swan, your typical venture loss rate, 30% of your deals don't work out. And that's kind of where we play A's and B's. It's probably 50% plus in seed. So I remember in 2001 and 2, the loss rate spiked to 60. So the fact that loads of companies that have raised $100 million go bust and in tawdry circumstances. Yeah, whatever. Didn't even rise to the level of interesting.

[Harry Stebbings]

Speaking of rising to the level of interesting, then one for me that really did, which I love is Nubank reported earnings on Thursday, blowout quarter. Net income reached two and a half billion, up 42% year on year, 123 million customers.

[Podcast Host (Harry Stebbings)]

It's incredible.

[Harry Stebbings]

I'd love to hear your thoughts on this blowout quarter for Nubank and how you feel.

[Rory O'Driscoll]

I'm not going to do so much the quarter as just stepping back and talking about these fintechs. And maybe it's interesting and obviously as people, I'm sure no, Nubank is a dominant fintech, which is a next generation bank in Brazil, Colombia, Mexico, and it's just interesting to kind of sweep up with revolut a dominant fintech bank, a next generation bank in Europe and maybe even Chime in the us. You pinged me on this and it got me thinking, what do all these have in common? What do all these have different? I think what they all have in common is in the last decade they found the weak, soggy, badly run and profitable parts of the existing banking infrastructure and attacked them voraciously. And if you look at the three companies and the outcomes, new bank is public and worth 6, 60 billion, Revolut Private maybe weren't the same and Chime and the public in the US were 10. The interesting thing is they're all different. They all found a different weak spot because in each of the three continents it's a different dynamic. And in my view it's no surprise that Nubank is the most profitable and perhaps we can talk about Revolut in a second, the most stable because frankly, the incumbent banks were weakest in Latam. They were old, they were stodgy, they weren't serving their consumers. These guys came in over the top and they didn't just build a deposit base like Chime Bid, they've done the full Monte. They do deposits, they do lending. They've basically built a next generation bank. They've cleaned the clock on the average middle class consumer in Brazil versus the old guys and as a result of that they are now, depending on the day, the largest or second largest market cap bank in Latam. So I think what I like about nubank in the context of the other two is that's what winning looks like because banking is inherently geographic. What you can now say truthfully is a fully developed bank that doesn't just do deposits, but does the full gamut of financial services can end up with a market cap equivalent to the largest bank on the continent, although it's probably still 5x smaller in terms of assets. That's winning. And it's take China on the other extreme, $11 billion public outcome, great outcome, great company. But the US banks are pretty well, there wasn't as big a niche there. So where were they able to thrive? Two things. One is with the Durbin amendment they had this arbitrage on deposits and they were able to make money on debit cards and therefore without ever doing lending. This interesting thing is unlike Nuba, they've built a profitable business without ever doing lending, which is the bread and butter of most banks. They've built a perfectly good business on deposit accounts and debit cards. Living off the interchange now it's at $11 billion despite the US being, I don't know, on the day 10x larger GDP country, Chime is only an $11 billion market cap company because they were playing in a less profit rich environment, there just wasn't as much money. I mean JP Morgan might have seeded some of their mid tier customers, but these guys didn't roll over everybody because the banks here just weren't as inefficient as in Latin. And then Revolut, obviously their edge very much in Europe was trans country moving money between different countries initially and now obviously I understand, I've seen the numbers, Harry, don't worry. They're roughly similar size to nubank. Less lending, more fx, more crypto and another wonderful business because I think the European banks frankly weren't as efficient as the US and the opportunity for Revolut slightly different than Nubank but was big. If you look at all three together, you kind of go, wow, big outcomes here.

[Harry Stebbings]

I think when you look at all three together that you do actually go, wow, Nubank is an incredible business. Chime respectfully, just much different scale. 123 million customers for Nubank just really shows the scale difference. I would say that as you said, the FX and the crypto being the core revenue driver for Revolut versus now moving more and more into secured and unsecured loans for nubank being really, really hot and such a defensible growth driver for them, which is so impressive.

[Rory O'Driscoll]

The pun is Nubank is all bank bull. Revolut and Chime exist and I don't mean this on the fringes, the opportunity was new bank is like, no. If the CEO of Bank of America in 1908 Giannini went to Brazil today, he'd be like, I know exactly what these guys are doing. They're banking the middle class top to bottom. It's an incredible story and as I say, interesting. As you size up the Revolut opportunity, I mean it's a very crude metric, simplistic. But the fact that nubank has a larger market cap than our equivalent market cap to the largest market cap bank I think is Univanco in Latam just speaks to the opportunity. When you can make it happen.

[Harry Stebbings]

At 63 billion, do you not still think it's actually quite underpriced given where it could be?

[Rory O'Driscoll]

I mean the answer is on an earnings basis. I can see why you say that in the end the only negative about being all bank is in the end, if you're not careful, you end up trading like all bank traditional banks once they become mediocre mature businesses, they trade on a multiple of book and new bank would be very overvalued on that basis. I do think there's upside there because they're only in three latam countries there's more room to run. So from a revenue and OI perspective, yes you do wonder when do the dynamics of just being a bank start to catch up with them? Do they get regulated? Do they start doing bad loans? Invariably banks at scale do dumb stuff. It's kind of their genetic disposition. Maybe the better answer is this. If they can continue to do what they're doing and avoid doing dumb bank stuff. Yeah, you could see a 2x from here which would be wow. Which would be just a wow outcome.

[Harry Stebbings]

I agree and I think much more actually. I think when you look at Revolut's product expansion versus Nubank's product expansion and how few products Nubank have compared to Revolut and they could have very much the similar and also in terms of revenue potential with each of them, wow. It could actually be a 3 to $400 billion company.

[Rory O'Driscoll]

Company.

[Jason Lemkin]

These are at the edge of consumer investing. It's not my strength but the one thing I think about and why I'm especially impressed with the seed investors. If Nubank has 35 market share of Gen Z in Brazil and Revoluts all across Europe but if almost 20 of everyone in the UK has a Revolut account, you don't want to be number two or number three and you can compare it to Chime but if Chime has less than 5% of US holders having an account it's very different. So. So these are incredible outcomes. Predicting this at seed or pre seed may be beyond my skill set. It's pretty impressive because you want to see this is massive market share in the largest part of the economy on the two by two you want to be number one in the entire plumbing of a nation's financial ecosystem. That's an S tier bet to make its seed, isn't it? You're not just rolling up to the latest plumber software and seeing 18% month over month growth in their AI fueled agents it and saying let's do this one, this one is knocking it out of the park from the pre seed seed stage.

[Rory O'Driscoll]

But I think the smart thing all of them did was obviously have huge aspirations but find a very profitable entry niche. And I think for Revel it was definitely trans country money movement. You just find something that just the banks just do so badly and they're just robbing you blind as an individual Another revenues want to transfer wise user when I'm sending money back to and it's just so much a better product than the banks. It's just you type it in, the money goes revolut. Just what they've done really well is starting off with a niche product that is very gross margin CAC to LTV positive and frankly gets a bit of consumer love because you just hate getting ripped off when you're moving money and then suddenly it's good. And then building what Harry said is you just build year after year for a decade plus just add all the other shit over time. And you wake up one day and you realize, oh my God, God, it's not my account for moving money overseas, it's my account for money. And then it's my account where I do my crypto. If you do it. And then suddenly for that, as you say for that next generation, it becomes a primary bank. It takes a generation, but it's unstoppable.

[Harry Stebbings]

When I had Nick on the show from Revolut, he said, we think about banking like snacks. We want you to with a little snack which is, you know, FX and more. You use it and you see that actually this snack's great and I can have this really routinely. And then suddenly the snack becomes the meal and then the meal becomes the whole meal. And now it's reported that 35% of of users have it as their primary account, which is interesting compared to 50% of new banks, but still really impressive.

[Rory O'Driscoll]

And what's also interesting about this is in a world where banks were tied to physical infrastructure, you couldn't have a bank for a specific demographic type because you had to have a bank for a specific geographic type. If you're the bank for Northern California, you're the bank for Northern California. You deal with old people, you deal with young people on the Internet. Instead of slicing by geography, which is how banks have been for time immemorial, and how US banks are regulated, you could slice based on demographics or based on propensity to buy a certain product and it really just turned the table. And you see, and you also see it in Europe instead of being the. There was a bank for the uk, there was a bank for Germany. They catered to Harry, they catered to his mother, they catered to his grandmother, they catered to the local SMB revenue was just able to carve out. This is the niche people who want to move money from A to B, regardless of what country you're in, within reason, obviously some regulatory issues. So I Mean the bigger heart is the acceptance of Internet which has taken frankly 15 years longer than all the people who funded the neo Banks in 99 and 2000. And I remember being there taught it took 20 years longer than people taught maybe 10 years longer for people to get accepting of it. But once they did you just as you say Jason had this opportunity to to disrupt significantly one of the top three market cap sectors fintech financial circles on the planet. These have been great components final thing.

[Harry Stebbings]

And then we'll move on but it astounded me this Revolut internally has 26 new products that they are kind of baking in their venture lab and they have insane testing metric testing every week with Nick to determine what makes it to main stage and they run them like little venture teams with different funding goals. It is when Nick is truly world class. I have all the founders that I've interviewed and I've interviewed you know Jason, me and you've both interviewed thousands, hundreds and thousands. He's the best I've ever met.

[Jason Lemkin]

This playbook I'm impressed with how many of the S tier founders can run it where they get 20, 30, 40x founders together and have them run be little GMs of their product line. I mean you know we've all had. I mean mean if as founders everyone had one or two of these like they'd find one founder and they trick them into coming and running something for them. But the the ripplings even owner or I'm on the board others where you're seeing double digit numbers of CEOs join to be GM sounds like at Revolut too it's. It's a disruptive way to build a company at scale. It's and it's a superpower to be able to convince them to join. It's a superpower to get to for CEOs to do this. It's not easy.

[Rory O'Driscoll]

Easy. Yeah absolutely. We've seen some of that in the.

[Jason Lemkin]

Portfolio too getting like 10 or 20 of these guys to join.

[Harry Stebbings]

You said about the edges of consumer there. Fintech's been super hot for a while now. We're seeing it now with revolution your new banks of the world and your circles and we can continue Consumer's been shit. Everyone has been shitting on consumer and especially consumer goods and on seems to be the anomaly that just keeps on giving. They have 4 billion of sales up 38% year on year software like margins 61.5% they're worth $15 billion. Is this a shining light in a beacon of darkness? For consumer or is there a pathway for consumer brands in venture?

[Rory O'Driscoll]

I don't know how you get from onto brands and venture. I mean look it's clearly an amazing company. You look at the story founded in 2010, public in 21, just killing it in their high end running shoe marketplace. But I don't know how applicable that is. I don't know is the insight from that that someone should raise a fund doing consumer goods. Not everything in life is noble, predictable or lends itself well to venture type investing. I think some things are categories of one and they're very hard to access and that's the kind of deal where you just go good on them. I'm not sure you build a repeatable venture fund around that.

[Harry Stebbings]

Speaking of categories of 1 then cool wheat is up to 11.2 billion. I know I'm switching but I'm just interested and I'm on schedule Rory. So to be fair it's in the.

[Rory O'Driscoll]

Notes before we go to Corey I actually a better thought there because I lost my I should think a little more about your comment on onset. I think one of the things most venture needs is some kind of megatrend that's pushing these companies along where you can say these things are happening at a wider scale and therefore companies will be formed in this space and you can have some a priori belief that there'll be Even though it was hard to predict the Chime revolute opportunity was knowable. You have digitization, you have the Internet. You could see there was this kind of forming consensus that there would be stuff in fintech. I remember looking at simple which is a predecessor of chime. It didn't work out. Banco Santander bought it but there was like yeah, this thing could happen over the next 10 years and venture can think about it form a little theses and someone will be there ready to intercept the chime of the revolut bold because the trend makes sense. I think something like on it's very hard to predict. There's not a whole set of trends. It's very much category of one. You can say hey running is a trend or high end shoes are a trend but it's just not as scalable. That's perhaps a better explanation of why consumer fintech can be an investable venture trend and high end running shoes are going to probably be a one off anomaly. You can go back to Cor weave now but it's just so much more interesting than then high end. Yeah.

[Harry Stebbings]

Core weave 11.2 billion in debt. We're also Seeing a load of other players join them or join the model, Nabius being one, which is kind of a weird structure. Mistral is moving more and more close to them. First, how do we feel about the news that Corey's up to $11.2 billion in debt?

[Rory O'Driscoll]

Duh. And I'll tell you what I mean by that. If you just look at their, I love their very succinct whatever's Q2, Q3 investor presentation like here we did a billion this quarter, we're going to do 4 or 5 billion for the year. Duly noted loss of 8,900 million, not that much. And then you look niche. Capex plan for the year 22 billion. Okay. I mean once you decide to spend 22 billion in capex you're going to have 11 billion in debt. The way you think about Coreweave is they're the guys that are doing the pointy end of the bet that Meta OpenAI and Tropic, all these guys are talking about we want to deploy a shit ton of GPUs and a lot of data centers. Corewave are stepping up and saying we will be the financing vehicle to make that happen. I love the Barron's headline Corwe's borrowed 5 billion in debt. It won't be the last time and there's nothing wrong with it. This is a infrastructure heavy business. They are in the business of borrowing. It's a real estate company. They're in the business of very sophisticated, clever risk managing real estate company. They're in the business of borrowing large amounts of money, building data centers, signing long term leases. If you're going to grow revenue from 5 billion to 10 billion you probably have to grow capex from 10 billion to 20. So they want to be doing more of this.

[Harry Stebbings]

Does the debt matter? And what I mean by that is just pause. When I interviewed the founder he was like we borrow when we have long term demand. What's the issue?

[Rory O'Driscoll]

I think obviously if he can match his debt structure with his demands from customers who will do take our pay then it doesn't matter. Risk management is all a matter of the greed. There's no hard or fast and people are trying to do hard or fast. It's just not doable. It's absurd. You can't do this business without debt. What will kill you? And actually I can't remember who did it on Leighton's space but someone did a really nice discussion on this. If you have long term expenses and your customers are short term inference customers then you've done the classic banking thing you've let borrowed short, you can be caught short, right? Your customers can evaporate in a month and you still have a 10 year lease. If these guys really are signing up Microsoft and OpenAI to a seven year contract and they have a seven year debt profile, then provided they match it, they can manage which of the two is going on. I don't know. I don't have visibility. But that's the bet you're taking is that I'm sure they disclose things like what percentage of your long term fixed charges are met by take up payments. Now implicit in that is the company on the other side of the take or play is willing to continue to take it or play it. If times got tough and people didn't want all that capacity. It's been my experience that people fight really hard to avoid paying it. So it's not riskless. But they strike me as they seem to well understand the risk they're doing. Whether they can in fact fully hedge a tbd.

[Jason Lemkin]

My only question or my only. I'm just watching, I'm just learning. They need the step. They're going to take another 10 billion this year. They already said, right. They got to buy the GPUs and they got to. But the hyperscalers are offloading some of this risk to Core Weave and they're guaranteeing it as part of it. There's a slightly cynical view of offloading your risk but guaranteeing it. Put it in air quotes, but I'm really just to learn. I just see it as the canary in the coal mine, right? OpenAI will find the capital it needs. Microsoft will certainly find the capital it needs. But if Core Weave struggles, if it can't service its debt, if it can't raise more debt through this weird, through the hyperscalers guaranteeing it, that's where we'll see. Even if there's just a bump in this, in this cycle that doesn't last, I think we'll see the bump in core weave before we see it in the folks one level up market. You're not going to see it in Microsoft. OpenAI isn't public. Right. You're not going to see it in Google. They're too big. But you could see that canary in the coal mine right in this public one due to exposure.

[Rory O'Driscoll]

That's very true. Or even in the, to Harry's point, even in the wannabe core weaves because core weave at least is public liquidity. But yeah, yes, in a downturn, it's amazing how quickly liquidity evaporates for this kind of product.

[Jason Lemkin]

Yeah. So if they have a really rough quarter, we may see something there that you wouldn't otherwise see right in their end customers. We might see it a quarter or two early and not show up.

[Harry Stebbings]

Why would you see the supply of cash go away in a down market for this type of product given the quality of customers that are guaranteeing revenue being Microsoft.

[Rory O'Driscoll]

Agreed. If they have. If you have a seven year contract with Microsoft, that's a take or pay and you have a seven year debt and it's perfectly amortized and the contract's ironclad, you're right, there's no risk on that contract. Let's just say you're three years in and Microsoft is not using its take or pay, but it's still paying its commitments because it's Microsoft. It's the only AAA credit out there. Better than the government. It pays its deals. So you're fine on that asset. But I'll tell you one thing you won't be doing, you won't be building another one. And that's my point. So it's not like perfectly matched. Business will be fine. But if there's some up and comer who's maybe built another data center a little bit on the con because they thought they'd get some contracts because Microsoft is going to continue on expanding and then suddenly that's not there, that's the guy who'd be struggling. So to be very clear, if they're well matched, then despite the debt, they'll be fine. But the point is it comes right back to the databricks discussion. All this depends on three to five more years of continued AI CapEx expansion. If that's the case, everything works. And if that's not the case, all bets are off.

[Jason Lemkin]

I think a lot of this is disclosed in a way that's most favorable to the company. If they say all their customers are 4 year longer contracts, 98% are take or pay, that sounds great. To the public markets. One, going to Rory's point, there may be asterisks and daggers in those agreements. Right. No matter what it says, they may not be as ironclad as they look. Two, even if they're not, if they pay rather than take, that's a canary in the coal mine. If the quarterly releases OpenAI has determined it's cheaper to pay rather than than to take. That would just be an interesting canary to see that maybe there's a bump, maybe there's a bump in the road. Even pain is a canary rather than Taking.

[Rory O'Driscoll]

And you always feel kind of a bit of a Luddite even raising this risk, or at least I do, because I know now that the trend is so strongly expand compute. People are talking next year bigger than this year in terms of hyperscalers scaling. So I'm not saying it's the most likely outcome, but it is simply true. You have to at least encompass it as a possible outcome outcome. I mean, you have to have two scenarios. One, continued enormous growth and then what would it look like if it didn't? And when that happens, you just don't want to be the marginal player because then everyone will go to the wall, but the marginal player will. You want to be Goldman Sachs, not Lehman Brothers.

[Harry Stebbings]

I was speaking to the CEO of one of these largest players. I can't name them, otherwise they will literally sue my ass. But he was like, harry, you literally just don't understand. The only thing that is limiting me now is like supply of competition. You, I'm so voracious, but you don't understand. I feel like a drug addict. Chasing, chasing, chasing. Nothing is enough. And the scale of my demands are so much more than anyone knows.

[Rory O'Driscoll]

Yes, that would be true today.

[Harry Stebbings]

So if we then were to extrapolate that to a little game, Roy, because I know you love games, is core weave over or under 60 billion market cap next year it's at 43.

[Rory O'Driscoll]

I don't have a meaningful answer to that question.

[Harry Stebbings]

Well, you're a venture capitalist. We don't always have to. That's.

[Rory O'Driscoll]

But actually one of the things I'm learning, especially on this podcast, is to not to try and feel the need to have an opinion just to fill the space.

[Harry Stebbings]

That's why we have Jason.

[Rory O'Driscoll]

I would say the logical answer is there's probably a third or more chance. It doesn't. Yeah, I'm not like absolutely certain, but I can contemplate at least a 1 in 3 chance that sometime in the next 12, maybe 24 months that demand slows down just enough that people penciling stuff out to the sky suddenly realize maybe it will taper down and at that point a lot of these multiples could compress. So I'm not going to say it's going to, because that's the question you asked, but I am going to say the probability of a continued infinite AI demand, the probability of Sam Altman's trillion might be high, but it's not more than 2/3. There's at least a 1/3 chance that we end up in a period of time where demand slows and at that point, some of these stocks probably wouldn't trade at those valuations. That's all.

[Jason Lemkin]

Not that I'm an expert in public market investing, but I would just say, look, obviously Core Weave is riding the right trend. It is inherently tied to Microsoft as its dominant customer and OpenAI who's guaranteed it 12 billion of revenue. So it's got to run. But this thing just went IPO and it peaked June 20th at $183 a share. It's half that today. It's half that today, in two months. So the variability here, the beta, the alpha, it's very confusing because my knee jerk response is sure bet on Core Weave, the trends there. Sam Altman just said he's going to spend a trillion bucks on infrastructure. He's got to send a few of those nickels to Core Weave. But it's already down 50% since its peak. Even though the macro trends are strong, we're all investors in NASDAQ QQQ. Like we're all up massively. If just in our 401ks are our private. We've all, we're all making so much money off AI just being an Nvidia. Microsoft Core Weave doesn't seem to be doing better. If it's down 50% from its peak. Maybe we're fine just all living in our qqq. I mean that's the only. You know, the weird thing about the stock market today is that's all the gains. The long tail is not doing well in the us. It's a weird world. It's not the long tail. And we're so, we're all, this whole economy is being inflated in a good way. We're all living in the bubble. It's not just the VCs. Anyone with exposure to VTI or QQQ is living in an AI bubble, whether they realize or not. We're all benefiting from this one because of the hyperscalers. We all have Microsoft stock, we all have Nvidia stock, we all have Google stock and we even have Meta stock. Even if we don't realize it isn't Nvidia like 15% of QQQ or something like that.

[Rory O'Driscoll]

I think it's, it's Nvidia and Microsoft are 15.8%.

[Jason Lemkin]

15. Yeah. So we're all deep in it and.

[Rory O'Driscoll]

It'S 35, 36% for the top out of five or seven. I can't remember which. Yeah, no, it's astonishing. And what do you do with that? I mean, so the question is, do we need core weave the serious count. What do you do with that information? What you basically said, Jason, is the stock market bet is entirely predicated on the AI bet, which is a stock market. For example, the Sam Altman quote, so clever. We're going to spend trillions. I mean, do you think that's someone who sat down and added up they've raised 50 billion so far, so they've probably spent some amount less than 50 billion. Do you think that trillion is a real number or a metaphor? Let's start with that. No company on the planet has spent a trillion dollars on capex ever. Do you think that's a budget estimate for the next five years or do you think it's just some out of my ass conceptual number?

[Jason Lemkin]

I think everything he says is very thoughtful. I think he needs a trillion, trillion. I think we're all going to live in AI 247 and we're all going to use 10 times the tokens and 10 times the compute we are now in 24 months, like help me do the math. If we're using AI 20 times more a day and 10 times more tokens, if all things were equal, which they're not, how much more do we need to spend on infrastructure to spend 200 times what we're doing today? What's 200 times today? I mean, I know there's not enough capital in the world, but don't gloss.

[Rory O'Driscoll]

Over that minor problem. The odd thing now is we're at the stage where the size of this single trend is now capable, as you correctly point out, of influencing macro trends like global aggregate trends. It now, as you say, it's 37% of the stock market. It's a significant percentage of total domestic CapEx investment. I mean, I went and checked. Corporations invest total $2 trillion of which roughly a trillion is on buildings and ships and roughly a trillion is on capital equipment. So basically we're talking about taking a third to a half of everything we invest and everything in the U.S. as I say, I think these are numbers as metaphor rather than numbers as real doable numbers. The aha here is we're going to spend a lot more than we ever did. It's hard for me to imagine it's a trillion and it's also even harder for me to imagine if it is a trillion that it pencils out. Now Sam Altman is so, so smart and he even worked into the same cabinet and he said all the economists will be wringing their hands and maybe I'm just doing that and wringing my hands. He's very good at anticipating the counter comments and preempting them. He's such a talented guy for that. He did the people are gonna lose money. Cause when people say it's not a bubble, it attracts antagonism and people wanna argue with them. It's very disarming to say we're gonna spend a trillion dollars. Pause. Economists won't like it. It might be a bubble. Oh, but by the way, we're fine. I see all the negatives, but just give me the trip. It's so fricking clever. Wonder he's a fundraising genius. The question is, can you take this trend to the bank? Because literally every discussion we've had, starting with databricks all the way through the COVID is how long can you take the trend to the bank? And I don't want to be the cynic, because I do believe the common adventure that cynics sound smart and optimists die rich. So on aggregate, you should be an optimist, but you just gotta keep your eye open on the downside.

[Jason Lemkin]

Rory, you're so good. I don't mean to interrupt, Harry, but if Amazon, Alphabet, Microsoft and Meta are going to spend 365 billion in infra today. 365 billion today if OpenAI goes on its trajectory. And we talked about consumer. It's the most successful consumer app ever, right? Software app ever. If they're doing 365 this year, can't OpenAI consume a trillion in cash? Capex.

[Rory O'Driscoll]

No.

[Jason Lemkin]

I mean it can't raise it. I mean, other folks have to do the investment, but can't it be the engine of a trillion? If they're 365 today and this 10x's it, 10x's to compute?

[Rory O'Driscoll]

No, because the 365 that's being invested by the four most profitable companies on the planet is already straining their balance sheets. Facebook is stunningly having to start borrowing money. Microsoft CapEx as a percentage of revenue has crept up to 25%. It's all. No.

[Jason Lemkin]

Yeah, it's huge.

[Rory O'Driscoll]

We're reaching the limits of what people will want to finance. I mean, maybe over two decade or two decades, you get to a trillion dollars. But even over a decade, a decade. Investing a trillion dollars is 100 billion a year. 100 billion a year in a world where the most profitable company on the planet. Well, that's actually true. Google's more profitable than Microsoft, but all of them are spending 50 to 80. That implies a nonprofit making company can invest more aggressively than a $4 trillion market cap company that kicks off cash. I don't buy it. So again, I'm not arguing the direction. My point is I think it was trillion as metaphor for lots, not trillion as FY26 capex plan by quarter.

[Jason Lemkin]

Sorry, I just want to get your thoughts. Harry, I don't mean to monopolize the conversation. The math makes sense, right? Maybe it takes a decade to get to the trillion. And Sam did say we need some new financial instrument to finance it, which is telling, right? But if we're going to use AI 10 times more often in a year or two in our lives and we're going to use 10 times more compute, that's still a lot of infrastructure we need, isn't it? For 100x more AI.

[Rory O'Driscoll]

The good news, Jason, there's some coals that you can buy tomorrow morning. Right now, right now will give you the joy of that bet in financial terms, baby, knock yourself out.

[Harry Stebbings]

To me, it all goes back to this very wise statement that you said, Rory, which is the only thing that matters in this next wave is that we are going to see the transaction transition from technology budgets to human labor budgets. And if you see that transition, you've got $10 trillion of value unlocked. And then spending trillions over a long period of time becomes a lot more feasible or rational. And if not, then absolutely not. I would go back to that one. I think it's the most brilliant question and statement.

[Jason Lemkin]

I was skeptical a few months ago of that. I was skeptical. I'm not seeing him. B2B software, I'm not seeing. We're gonna have Mark Benioff, which will be great, right? But I don't think he's going to tell us. Half of Salesforce's growth is going to become replacing humans with agent force today. Right? So if we look at our portfolio companies, we can make up some stories. We're not seeing trillions of human replacements with AI robots today. Not yet. I can see it much more than I could 90 days ago. I mean, we have 10 AI agents at our little team that have replaced five humans and it's going to go up. We only had one person at our standup yesterday because it was all AIs and us. And it's just, I think six months ago is VCs talking their hand, right? In six months this could be what all CIOs want. All CIOs could be like, you got to be AI first, not just the Toby's and the others. They all could be like, I'm not giving you a dollar of budget until you find me an AI solution first. Then we'll talk about humans. This could become mainstream.

[Rory O'Driscoll]

I think it's a pace question. One of the reasons I like doing this is I come on and I change my mind. And Jason, your comments, I thought last week on Shopify were the bomb. The numbers and then your comments on your own organization and how you've been able to automate have really made me pause my thinking. I've become convinced that at the pointy edge the really smart. You're definitely seeing this labor replacement and I agree with Harry. Then if you can contemplate that at scale then you can talk about trillions of dollars. I think it's a pacing issue. What I try and take away from here is what am I paying attention to right now to figure out out my investment strategy. And it really is on all my companies that are selling AI products, B2B products, how well are they doing with forward leaning customers and overall in terms of driving adoption and then driving efficiencies? And they're doing well. And you can see it doesn't happen quickly though you have the high propensity to buy customers like you Jason, and then you have the big dollar customers with a much more, much longer time horizon to ramp in corporate America. So I think the trend is real. But the pace is to me the big question at this stage. And it turns out if you're spending 400 billion a year, pace really matters because the time value of money is going to eat your ass.

[Jason Lemkin]

I'll tell you an interesting thing just for venture that I realize I'm a little slow here. Now that we have 10 real AI productions replacing humans, the pace is slow but also consolidation may happen before the pace accelerates. And what I mean is we added up the nominal list price of the all our 10 tools. $500,000 and going up. So you could imagine that could be $1 million by the end of the year. You know what, you know what folks are going to say maybe we'll just, let's just use the ones we have. We did the math, $500,000 already that we're using and every B2B startup out there raised, you know, with these gigantic growth rates, not the prosumer stuff like lovable and replit, but a lot of the ones we look at, they're all trying to charge 60 to 100k a year. That's like the list price. It's like 60k a year to start plus 40k for onboarding. So that's 100k and then we want to upsell you in year two. It's so exciting and there's so much budget out there because this is the only thing CEOs are putting budget for, right? Is these AI projects. We may see a wave of consolidation like we saw in 2022 in AI even next year or the year after because it's just too many AIs that are six figures and up. It's too many. And for us, 500K a million bucks. I mean Harry, if you're. If your team was spending a million dollars a year at 20 VC on AI agents, would you be cool with a million or would you want to.

[Rory O'Driscoll]

Have a. I want to have a.

[Jason Lemkin]

Meeting and you might say like this Gongification consolidation, you might want to do it. We may see a lot of these folks who are excited about our portfolio get consolidated out sooner than happened in the assass wave. Sooner than it happened.

[Rory O'Driscoll]

I think that's a real insight, Jason, because I'm wrestling with that. You're seeing exactly. Everyone thinks their thing is going to save labor, but you can't all get credit for the same labor. So you might see stories like the rippling story happening with a quite quicker which is we're going to give you five agents and an orchestration layer. We'll make it all happen because if we just do one, it's just not enough. I think that's actually an interesting point which may mean a much quicker consolidation story across these plays.

[Jason Lemkin]

Like in sales. Do I need an AI tool, an SDR tool, a BDR tool, an AICS tool? These are all five folks trying to get 5, 600,000 of you, I think. And we're actually already seeing this. This going to our conversation like we're already seeing this consolidation in E commerce. If we want to chat about where they're becoming one tool already. I think it's a real risk for all these cool ones. We just don't need five of them. Going to Rory's point, we may. Rippling is a good example. We may want everything from one vendor in 12 months and maybe the most AI startups can't keep up. It seems so easy in the beginning, but I don't know if they can keep up with that with that rippling pace.

[Rory O'Driscoll]

And by the way, that also goes back to the myth of the one person billion dollar company. I think economics works really well at competing away excess profits. This trend basically says you think you might be able to get away with that, but this other company is going to have five of these agents and compete against you. And I think it just nobody allows billions of dollars of enterprise value to go unclaimed and uncontested. As I'm thinking now. And genuinely what many of my AI forward B2B companies are wrestling with. This resonates having enough surface area, area of value. Because one of the things we learned actually in robotics, which was very clear there, and maybe it applies here too, is you can have a high automation. You'd see a lot in robotics. Here's this product that can automate this particular problem and can reduce the labor by half, two thirds. It's wildly efficient. It pencils out in terms of ROI. But in a warehouse with 300 people, you're only automating two workstations. It doesn't matter. One of the reasons we have done very well with Locus, one of our companies is picking is actually the number one thing people do in warehouses. So your automation attacks a much larger percentage of the labor. And my learnings have been it's not enough to be ROI efficient. There's only so many things you can get your head around as the CFO or the chief of operations. In a year, you have to be able to not just have a high roi, but have a high ROI on a fairly large quantum of headcount. Does that make sense? Because it took the brain death of doing it.

[Jason Lemkin]

Yeah. I think everyone for the last couple years has been cutting the number of SaaS apps in their organizations. Every. No matter how well they're doing, they get around the table each year. We've got to consolidate. The last 18 months it's gone the other way. They're saying we got to consolidate our SaaS apps. But do the AI stuff. Guys, go pick a few of those. Here's, here's our budget. It's either next year or the year after they start to consolidate them. It's gonna has to happen faster in this trend. It just has to happen faster.

[Rory O'Driscoll]

Faster, exactly right. It's not going to be in 10 years.

[Jason Lemkin]

Now I've got 200 of these AI apps. My team bought 100 SaaS apps and 200 AI agents. It's just too, it's too much. Guys, pick your favorite 50 and we're done. And you got to cut 150. It wouldn't shock me because there's so many paid agents running around now. More than Sasa, it's soon going to be much more than classic B2B apps. Everyone wants an agent for their department, don't they? Or five. They want five or six agents.

[Harry Stebbings]

Does this Increasing trend towards consolidation of budgets and assets that you want to engage with. Does that harm vertical SaaS in a way that we should think about investing in vertical SaaS today?

[Rory O'Driscoll]

I don't think so. By the way, some people often use the word vertical to mean functional. Sales is not a vertical, it's a functional. Vertical means for insurance or for healthcare in those areas. What I think the trend is that once you become the dominant solution, it's actually easy for you to vertically integrate. Like give you an example, Viva in healthcare. In the prior SaaS generation, they started off with a single point product. But once you earn the trust of a vertical where typically there might only be a couple of hundred key customers, if you're selling them A, and you have a really good product team, it's much easier to sell them B, C and D as well, all tailored to their specific market. So I think what you'll see in these verticals, it's good for the dominant player and they'll just be tucking in and adding in other shit, for lack of a better term, is that if you're, you're the king of revenue cycle management in healthcare, you're just gonna add a whole bunch of other insurance claims processing related stuff. Ditto across all, you know, if you're doing and we're seeing a lot, actually it's interesting. Voicebots, for example, obviously voice is now doable. Voice is a wedge in hundreds of different verticals where you can go, you know, because the ROI is really compelling. You used to have all these phone calls, some of them don't get answered. Now you add a person, now you add a voice AI and it deals with all that. It's really compelling to seeing fast growth. But in every case, we believe two years from now this is just a wedge point and you better add way more functionality such that two years from now you're not just handling the call, you're handling the booking, you're handling the refund, you're doing whatever it is the customer wants on that call. So I think it gets back to the same thing. You find these cute little wedges, but then you gotta scurry really fast to add breadth to the product. Product in a world where your competitors are doing the same thing.

[Harry Stebbings]

If you're in a bridge, are you shitting yourself when you see Epic announcing their transcription plans to go against your core product?

[Rory O'Driscoll]

If you went into abridge thinking Epic wasn't going to do this, you are a baby and your money will be parted from you sooner than you can say, gone baby. Gone. Abridge is the most impressive profit extraction machine in the healthcare industry. They partner with. Sorry, not a bridge. Epic. Epic, which just to remind everyone, is extraordinarily privately held company, founded in 1979 by Judy Faulkner, is just astonishingly successful. Has like 40% plus market share in the healthcare records marketplace. In large US hospitals, it's dominant. I think it does 5 or 6 billion. It's a magnificent business, private, widely profitable, incredibly tough to deal with in partnership they partner with. I think it was Abridge to do to have this new scribe product that Abridge has. But I'm sure Abridge went into this eyes wide open going at some point Epic's going to announce their own product and you better have the best product. Are you nervous? You're darn right you are. But there's only one thing worse than partnering with Epic and getting smacked around by them, and that's not partnering with Epic and not even get a chance to get smacked around. Because if you're not with Epic, you don't have access to 40% market share again. Turns out that no one rolls over and dies and gives you 5 billion of market cap. Sorry, that was very bland.

[Harry Stebbings]

No, no, I loved it.

[Jason Lemkin]

The whole issue in general will run out maybe for these platform risks like you talked about. These are ones we used to shy away from in venture. These are one of the many risks we're ignoring today because the growth is epic. We're ignoring so many risks and platform attaches all over AI B2B. There's so much platform risk and we've given up worrying about it. We've given up worrying about it.

[Rory O'Driscoll]

That's actually a great point, Jason. You're exactly right, because you should be sweating that. I mean, I love that. Platform risk is everywhere and this is just one example of it. It's the whole cursor and traffic discussion we had before.

[Jason Lemkin]

But yeah, we just listen. Gross margins. The top line is so attractive. We're going to Ignore the top 10 traditional venture risks today. That's what everyone's doing. And I'm not saying it's bad. It's just so different to ignore these would be classic. You debate this for weeks. In 2019, we'd be at the partner meeting at scale. Rory, I'm real concerned about Abridged and if Epic, it locks their API access down. Let's pass on this one. Rory, I just don't see. I've never done well on these platform adjusted risks. But I've heard good things about Klaviyo. But Klaviyo and Viva and Salesforce. We gotta pass on this one, Rory. And that conversation doesn't even happen on Mondays, now does it?

[Rory O'Driscoll]

It's stunning to me how good that was, Jason, and how true that was. And you're exactly right. I remember those sentences. And you, I were not having those sentences as much today. And it speaks to something I think we said show ago. We're way out there on the risk curve, every one of us, right now. The only thing between us and Armageddon is AI adoption. If AI adoption keeps happening, this whole wagon train keeps on rolling and we're all going to be fine and we're going to get through to California. If AI adoption slows down, then it's going to get ugly real fast across the board. You're exactly right. Because a bridge's bet is, yeah, Epic has a product, but our product is so good that the doctors will want it, and they do, and they'll want it and they'll love it, and therefore they'll be able to power past the platform risk. And intrinsic to that is this belief that the magic is so good. And it's not a crazy bet that you'll be able to overcome the inertial resistance of bundling. Because I think doctors do have a say in this because we have a play in the smaller medical space and a similar thing. I think doctors give a shit about this because it impacts their time. And the entirely rational bridge bet is if you have a good enough product, maybe medical will say, we'll stick with this. We won't go with the bundled product because our poor doctors are spending hours taking scribe not. But it's all dependent on the magic and the end user adoption being a strong enough lever to just as we, as you pointed out earlier, pull the entire US economy up the hill.

[Harry Stebbings]

Speaking of platform risk, and we mentioned anthropic OpenAI, we're going to do a Kalshi quickfire round. As we know, Kalshi basically bets and there's kind of predictions on them with weighted variables. Will anthropic release Claude 5 this year? Rory, I'm giving you odds 100. If you bet yes gets you $322 back, and if no 100 gets 17 back.

[Rory O'Driscoll]

Where are we now?

[Harry Stebbings]

I would say yes. Given those odds and given the need for speed and given GPT5, I'd say weighted, that's a pretty good bet.

[Rory O'Driscoll]

Yes, yes. By the way, it's interesting because it's always hard to do on this kind of sound bitey podcast because what you're really saying is in a 50, 50 shot, probably not because of the pace of their prior things, but the odds are so good. And the other problem is then people go, well, you said it would happen. It didn't. I agree. Probability adjusted. You do it even though it probably won't happen, but the odds push you that way.

[Jason Lemkin]

There's no chance. I think I say this only because I'm a Claude power user. I mean, I love ChatGPT, but I'm in Claude at least 90 minutes a day, maybe two hours. And I'm vibe coding the other two hours. So I'm either in Claude or I'm in Sonnet or Friends. And my point just is there's two different worlds. The anthropic's revenue is so driven by programming, coding, all that piece. Claude the consumer app does feel a little dated compared to ChatGPT. It memory barely works. Imaging doesn't like. There's parts of it that are dated. But I think the market share is so low, they don't need this big consumer press release like Sam Altman. What they need is Sonnet 4 or 5 to crush the limited advancements that OpenAI's made. Right. And so that's what they need is to win in their core market. And know, I don't, I don't think they need a consumer spike in the ground to do that. They need the next version of Sonnet to be awesome. That's all they need. They've already won that market. Now they need to keep up. Right now they need to keep up.

[Rory O'Driscoll]

Jason's vision is ChatGPT calls itself 5.0, but doesn't be awesome. Claude Sonic calls itself four dot whatever's next four six and is awesome. Got it. You may be correct. It's not a crazy answer. Okay.

[Jason Lemkin]

It doesn't seem like they really care about the consumer app, even though I love it. Like they care, but it doesn't seem like a lot of. I don't. They just added a Twitter account for Claude the consumer one in the last 30 days and it said we don't respond to this account on Twitter. So that suggests to me it's not a priority at the moment if it's brand new and they're not going to respond.

[Harry Stebbings]

Mistral. Will any company acquire mistral this year? Yes. $100 gets you $420. No, $100 gets you 113. So again, pretty shitty odds on no.

[Jason Lemkin]

I think if you're not even at 100 million in ARR, you got to make a play, right? Now, you either got to sell or you got to do the inverse one. Like with Windsurf and Buy, you gotta do something to get scale. So if you're at less than 100 million in revenue and someone wants to buy your team for 20 billion today, I say take it. I say, like spend the weekend thinking about 20 billion for your 100 million in revenue. But I would still take it. Even if you leave the VCs in the sales team behind. Behind, I would still do it. There's moments in time, and these moments are not going to last. These crazy deals, they're not going to last. And you got to take them if you're not crushing it.

[Rory O'Driscoll]

It's very telling that Jason's question is whether they would take it. And my question is whether they would get it. Because I agree with you, if you get it, you should take it. To me, it's hard to imagine getting critical mass. I mean, you could be wrong. Cohere just raised a bunch of money. But it's hard to imagine getting critical mass as a fourth or fifth player. But can they get it? I don't know. I don't have data.

[Harry Stebbings]

If they got it, they would take it.

[Rory O'Driscoll]

Yeah.

[Harry Stebbings]

I think the question is, will they get it? To your point, I would agree with that.

[Jason Lemkin]

Well, there's just going to be some weird deals, right? Scales bought for whatever we call it, 15 or 30 billion, depending how you look at it. Right. With a billion something in revenue that's instantly abandoned but yet is the anchoring points for price. In the last round, there'll be other folks that are sub nine figures in revenue. If that's what Mistral is, then you get a similar, like multiple or something. You got to take that arbitrage. Like none of these things quite make sense. You're abandoning the revenue. Does the revenue count? Is it proof of concept revenue? Like what is revenue even mean for some of these deals? It's confusing what the revenue even means if you're leaving it behind with the sales team. Like, what is it? Just to justify the deal? Because sometimes M and A is about justifying a price. I mean, where we've all been through a lot of deals so many times, the deal is a justification to ex the last round 3x. The last round 10x Revolution Revenue 50x. It's just a justification, isn't it?

[Harry Stebbings]

Final one. Jason, this is, this is for you. But like, be nice. I've told you we have to be nice on this one.

[Jason Lemkin]

I'm nice.

[Harry Stebbings]

Will deal or rippling IPO first? Final one 100 bucks gets you only 121 if it's rippling, 100 bucks gets you 174 if it's deal.

[Jason Lemkin]

Well, I'll just tell you Rory probably has better thoughts. I'd want to know your thoughts, Harry, because you know the folks overall even better than I do. On the one hand, deal says it's profitable. That certainly helps to go public, right? I mean rippling is an investment mode. I mean, Parker's an incredible CEO, but it's hard for me to believe they would IPO in anything less than 24 months because they're doubling down on. On investing, right? The top line over the bottom line. If deal's profitable, you have more flexibility. The quality of that. I don't have the financials. I don't know how much is software revenue versus PO revenue versus others. I've heard different things, right? So the quality of the revenue might be lower, but I only. I'm putting this in air quotes. But at the end of day, the bottom line is the bottom line deals quality of revenue probably isn't going to change that much. Unlike say a Palantir that just before it went public had like 20% margins and then went to 70. Assuming deals consistent, might as well IPO now while they're profitable. But Ripley needs another two years is my guess in the oven to get to that. We're getting to break even this quarter. I don't think Parker is going to be there for 24 months. That's just a guess and it's not a criticism, it's just investment mode.

[Rory O'Driscoll]

I think Jason's assessment of the two companies is correct. One of them has a more transactional oriented business that is more profitable more quickly. The decision to go there, public there or not is a function of internal readiness. Let's be honest, any pending litigation angst. But if you could get liquidity on that one, you probably should. I think in Rippling's case you're right. Heavy investments, very ambitious. There is an argument that says that's precisely why they maybe should go public if they continue to need lots of capital. Again, I'm always a worrywart if you worry that the private markets get weird. Having public capital wouldn't be a bad thing. But you're right, it would be less a fully baked story and more an ambitious, continuing to grow story. So if you believe that the markets stay as they are for the next two years, broadly receptive, then the logical thing is what Jason said, deal to go now and ripping to go when you ready. If it was to change it would be because Rippling decides preemptively. I just like to take one risk out of my life and just have a billion dollars in cash on a tradable stock. You'll see a continued bias here. A bit of a scaredy cat. And when the capital markets are dis 40, there's a little part of me that always wants to de risk anything.

[Harry Stebbings]

Chaps, brought you from Greece. This was a pleasure. My mother is beckoning me otherwise I'm.

[Jason Lemkin]

Going to get some baklava on us. I'll venmo it to you.

[Podcast Host (Harry Stebbings)]

As you know, those shows are my favorite shows to do now next week we have an incredible guest in the form of Mark Benief joining us in the hot seat. It will be a very special one. Let me know how we can make these shows better though. You can email me [e-mail] and I always love to hear your thoughts there. But before we leave you today, let's talk about agents. Specifically Piper, the AISDR agent brought to you by Qualified the agentic marketing agency era has arrived. And if you're a B2B marketing leader looking to scale a pipeline generation Piper, the AI SDR agent.

[Jason Lemkin]

Wow.

[Podcast Host (Harry Stebbings)]

It is here to help. Piper is the number one AI SDR agent on the market according to G2. And hundreds of companies like Box, Asana and Brex have hired Piper to autonomously grow inbound pipeline. Fucking sign me up Anyway, Qualified customers see massive business impact with Piper 3.3x increase in meetings booked and 2x increase in pipeline. Wow, that is some results. Hire Piper, the number one AI SDR agent and grow your pipeline today. Learn [e-mail] 20VC that's qualified.com 20VC with the 20VC spelled out in letters for goodness sake. And while Piper builds your pipeline, HubSpot gives your business the AI tools to scale faster. You want to grow your company company right? But instead of having the time to get to the next level, you're stuck maintaining the status quo. It's freaking maddening. Well, HubSpot's customer platform, it actually solves this breeze. No, it is not a fabric refreshener. This is the next generation that built in AI takes over all the busy work. It writes emails, it qualifies leads, it answers common customer questions and even help create content. Also your marketing, your sales, your service teams can focus on what matters most and the impact is undeniable. Teams are saving 750 hours a week. One even increase leads by 251%. And these results show up in days, not months. Over 238,000 businesses already use HubSpot, so join them visit HubSpot.comai as always, I so appreciate all your support and I cannot wait to bring you a fantastic 20 sales show tomorrow.