← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Groq's $20BN NVIDIA Acquisition | Manus Acquired by Meta for $2BN | Why Sam Altman Does Not Care About Dilution | Navan Trading at 4x ARR & Why Going Public Does Not Make Sense Anymore | The Rise of Invisible Unemployment and Labour Markets in 2026
01:23:47
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- [00:00]
Jason Lemkin
Everyone's coming for Nvidia now. Nvidia's numbers are going to crush this year, but we're going to see all the daggers really coming out in the end.
- [00:07]
Rory O'Driscoll
Words are words and half a billion dollars is life changing, right?
- [00:11]
Jason Lemkin
No, no, no. I just think for venture this is the era of the spike startup.
- [00:15]
Rory O'Driscoll
No one ever said to Winston Churchill, congratulations, you won World War II on budget. They just said, congratulations, you won World War II.
- [00:22]
Jason Lemkin
Honestly, I think the most important thing that's going to happen this year is when we are in AI 24. 7. I do genuinely think you can identify a top 0.1% founder without talking to them. I've done multiple billion dollar exits from Cold inbound.
- [00:38]
Harry Stebbings
This is 20 VC with me. Harry Stemmings. It is back. Jason Lemkin, Rory o'. Driscoll.
- [00:43]
Guest or Panelist (possibly Rory or another VC)
I have missed this over the holidays.
- [00:45]
Harry Stebbings
And my word, what a schedule we have for you today. Grok, acquired for $20 billion by Nvidia. Manus, acquired for $2 billion by Matter. Then we have Navan trading at 4x ARR and what that means for companies considering going public and so much more. But before we dive into the show today, I run the 20 VC fund and I get this question from founders all the time. Oh, Harry, I can't find a good dot com. Do you have a good hookup? Well, let me tell you now, the answer is always going to be no. I don't have a guy or a gal for that. I do have a recommendation though. If you're building a tech startup, get a tech domain. Tech startup, tech domain. It could not be more obvious. As an investor, I appreciate founders who put thought into their branding. When I see tech in your name, it tells me right away that tech is at the core of your build. It'll say that to your customers too. A clean and sharp domain like tech pays off in the long run. You know nothing. Tech1X Tech, Aurora Tech. All of these great tech companies, they all use tech as their domain. These are my two cents. If you're building a tech startup, don't overthink it. Get a tech tech domain. After tech establishes your digital presence, checkout powers the payments experience. Your customers see digital commerce is exploding. But payments are still where revenue leaks. Checkout.com launched in 2012 to fix that. They don't try and be everything to everyone. No, they just do one thing better than anyone. Digital payments, cloud, native sub 500 millisecond latency and 99.999% uptime. Today that bet has paid off. With a 12 billion dollar valuation and 65 merchants each processing over a billion dollars annually. 65 doing over a billion annually is insane. Check out Power's 300 billion dollars in e commerce for brands like Uber, Klarna, eBay, Vinted and more. Now they're building for Ajantic Commerce where AI agents buy on behalf of your customers in real time, partnering with Visa, MasterCard, Google, Microsoft and OpenAI. Now, if you want payments built for, what's next? Talk to the team at checkout. That's checkout.com once checkout gets customers through the paywall. Invisible helps you scale your operations with on demand talent and processes. Why don't we hear more real AI success stories from big companies? The models are insanely good, but implementation's the problem. It's really, really hard. There's data all over the place. There's legacy tech and manual workarounds. It's a Ferrari engine in a shopping cart. Meet invisible. Invisible trains 80% of the top models and then adapts them to the messy reality of your Take the Charlotte Hornets NBA team. Invisible took years of game tape and analogue scouting notes to go from uncertainty to a draft pick and summer league championship win in weeks, not seasons. Get the data in order first and suddenly AI can do almost anything for you in the enterprise. If you want AI that hits the P and L, go to InvisibleTech. AI20VC.
- [03:59]
Rory O'Driscoll
You have now arrived at your destination.
- [04:02]
Harry Stebbings
Guys, it is so good to be back.
- [04:04]
Guest or Panelist (possibly Rory or another VC)
Now. So much happened while we were away. I want to start with one of the most prescient GROK being acquired for 20 billion in cash. It happened just before Christmas Chamath obviously coming out as one of the big winners. Price is 3x more than the last round price. How did we analyze this?
- [04:23]
Jason Lemkin
I just had two thoughts. One is I was thinking a lot about both OpenAI buying up basically all the world's global RAM supply and Greg Brockman this week in the new year talking about how we will all be running 24 hours of inference by the end of the year. Not all of us, but a subset of us of tech workers, of knowledge workers will be running AI 24 hours. I'm already up to a couple hours a day. I'm running AI myself. And so it's a world of inference, I think. And when we started this podcast we, we talked about building models and LLMs and, and all of this. But JFC, if enough of us by the end of the year are running AI, maybe even 48 hours a day, 72 hours a day, multiple agents running 24 hours a day. Inference is all of the growth. And if Grok is even part of the answer, right, part of the existential answer for Nvidia, it's worth it. And everyone's coming for Nvidia now, whether it's amd, whether it's partnering with Broadcom, building your own chips. Nvidia's numbers are going to crush this year, but we're going to see all the daggers really coming out. We just saw the deck chairs being rearranged in 2025. So I don't even know how great GROK is, but if it can possibly address this, it's worth taking out.
- [05:33]
Rory O'Driscoll
I agree. I think a couple of things. One is Jason's comment on inference, I think is key. It's that broadly speaking, in the world of GPUs and TPUs, you know, there's two big picture tasks that every one of these AI companies have to do. You have to train your model once and that's training. And then you have to run your model. Every time I submit a query or a question, you're running a model and that's inference. And the tasks are roughly similar, but they're not quite the same. Nvidia is totally adequate for both. It's awesome for training. Grok had a particular edge for a certain kind of inference where it was very low latency, very deterministic, in other words, where you have to predictably deliver low latency. And what we're seeing now, to Jason's point, is as you live in this always on AI world, it's kind of irritating if you have a lot of latency. So there's a, a certain class of users for whom this was kind of a best in class option. You know, one of my companies, Tavis, actually was a Grok customer precisely because for conversational AI with kind of real time digital presence, you can't have a frozen model. You need to be able to respond in real time. So there was a particular use case within inference for which Grok was best in class. So that's kind of the product comment, but the zoom out comment to Jason saying is this at a high level. Nvidia's got the world's best business and the world's best, world's first or second largest market cap, depending on the day. They make a very complex technical product. They have a small number of customers whom they charge 75% gross margins to and kick off 100 billion a year in cash. The last thing they need is anyone else wandering around the face of Silicon Valley who can make a vaguely comparable product and precisely cause Grok was able to make a vaguely comparable product. I think Nvidia looked at the analysis and said $20 billion is less than 1% of our market cap and less than 20% of our annual free cash flow. That we can buy up a competitor and eliminate that potential margin pressure. There's only five or six people that can exert margin pressure at all on Nvidia. This was potentially one of them. And let's get it off the table. And you know, it's kind of a reminder that startups is a. It's a long game with lots of hard moments and then one great moment. A company started in 2016 17. The founders were part of the Google TPU team, just as the OpenAI and Atropic team were originally some of them part of the Google Transformer team. In this case, they helped build the TPU chip at Google, spun out to do it themselves, funded by social and capital. It was a long walk in the woods. As recently as 2023, they were only doing sub $4 million in revenue. But suddenly the wave of AI hits. AI compute becomes frankly the most valuable intellectual property on the planet. They start to grow reasonably well, but it's still not a layup in terms of growth. You don't get to 20 billion. To be clear on a revenue number. This was, I think a year ago, some $50 million in revenue. As I said, $4 million in 23, 40ish in 24. You get there because it's a strategic asset that Nvidia can take off the table for a modest amount of money relative to their absurdly gargantuan cash flow. So they did it. And as I say, I would love to know the dynamics of the discussion because it's an interesting thing in game theory when you have an asset that's only worth, say 5 billion to you on a standalone basis, but is worth 40 billion to the acquirer on an acquired basis because it protects the $55 trillion market cap. How do you price that asset? There's no finance weenie answer. And I say that because I'm often a finance weenie. I'm trying to look for the right answer. What are the multiples? Blah, blah, blah. None of that applies here. This was a poker game. You can imagine. I don't know what the dialogue was, but you sit there and go, it's worth 5 billion to me. I know it's a terrifying deal, but it's worth 50 billion to you. Let's talk and I think 20 billion, as you say, it made the last round look really smart. It made everyone a ton of money and Nvidia said done and moved on. My guess is in part it was the willingness to do one of these acquihire type deals that made it palatable. Because Nvidia is probably sitting there going, if we announce this as a classic M and A, I got to believe that even in the current deregulatory environment, someone at the FTC will have an opinion. But if we just do this as a straight license hire and just get the deal done overnight, yeah, we pay more, but they probably paid more for what I'd call transactional compliance. In other words, we're going to give you 20 billion, you guys are going to start on Monday and we're going to announce it as another fait accompli. So lots of fun stuff there. Someone had a very busy but very profitable Christmas.
- [09:59]
Jason Lemkin
You know what another thing I thought about on the deal, just for venture, who do you bet on? Do you bet on what I've done? My career, which is the outsider, folks, no one has heard of the young kid from Portugal or Sydney that no one's heard of that figure something out or do you do what grok was, which is you invest on one of the guys that invented the tpu, Jonathan Ross. And the story in the press is Jensen in particular wanted to turbocharge what they're doing. Inference he reached out to Jonathan Ross literally just weeks ago and the deal closed for 20 billion within two weeks. And he told his whole team, I want it done before Christmas and it was done ahead of time. And if you want it done in two weeks with no drama, you are going to pay. In fact, you may pay precisely three times the last round. That's been my experience once as a founder, when you come in hot to buy a company and take it off the table, 3x is a traditional way to remove objections and close a deal instantly. If this company had been founded by someone that was unknown, an outsider, what would this company been worth? 10%. So this was also chamath betting way early, way ahead of all this on an S tier leader and it paying off big, big this time. Right? And this is, I've never made this kind of bet. I can't afford it, I don't have the money. But it does kind of show this bet can pay off. But it's risky, right? Because it's not an AR multiple bet. Not yet.
- [11:18]
Guest or Panelist (possibly Rory or another VC)
They're at 175 million in revenue. So that would be Quite a ARR multiple to get to where Jensen wanted.
- [11:24]
Jason Lemkin
Him and his team. He told his team, I want this closed before Christmas and I don't want any effing excuses. And I have no direct reports, so just get it done guys.
- [11:32]
Guest or Panelist (possibly Rory or another VC)
Does this harm or does it help Cerebras? Cerebras, obviously their closest competitor, planning to IPO in the next 12 months. They just raised a large round last year. I think it was a billion, around the 5 billion mark. Does this help in terms of setting a benchmark or hurt in terms of taking a potential acquirer off the table and placing a big competitor in the hands of another big competitor?
- [11:54]
Rory O'Driscoll
It's a super good question. I think emotionally it will help because everyone will feel as you're pricing the IPO that you have some kind of embedded value and you know, and eliminates another competitor. And broadly speaking, at a high level, Cerberus Groq and Nvidia in the same space, are they very different chips? And what Cerberus does has a single wafer chip. I think it's more for really advanced training than kind of high speed inference. But be that as it may, I think at an emotional level, oh, if you're paying up 5 billion, you're suddenly like, oh, this feels good. Other companies have transacted here. So from the banker process of, you know, you use comps to justify value, now you've got the world's best comp and believe me, they'll be using it. I hear you. From a kind of musical chairs perspective, the negative view would be there are a finite number of people who can ludicrously overpay for these kind of assets. And one of them is Nvidia. They just did. Google doesn't need to because they have tpu. So you could say you've got one less chair. On the other hand, the remaining players, I mean, I, you know, I wonder, does Amazon, does Apple, does Microsoft, does OpenAI have to have a silicon strategy at some point in time? And if they do, if they want to get out from the Nvidia tax and Google continues to not be willing to sell TPUs at scale, then maybe Cerberus gets a play. I don't know. It's a good question. My guess is marginally net positive, but kind of it's like the real truth. It's one of those weird things where you ask is it a positive or negative. The truth is there's a big embedded positive, the comp and there's a big embedded negative, the musical chair problem. And how they add up. Who the hell knows? But you must be sitting there thinking, oh, I wish they called me.
- [13:26]
Jason Lemkin
Well, you definitely lost your number one acquirer on the PowerPoint slide. That's clear. And that's always a bummer as a founder or inventor. It always at least sets you back a week. You know, when you. When you fire up the browser and you get an email that. That your acquirer was acquired for mega money by your. The number one potential acquirer, it always best case, it takes you a week to reset from that because at least having it in the back of your mind de Stresses your life. It is a setback, one they could do. They could just deprecate the entire product line and do something brand new. They probably will. So it's hard to predict where it will go right to. And this is a psychology. I know we know this, but I saw this when I was a VP at a Fortune 500 tech company. I saw this when I was at Adobe. It's not just that $20 billion kind of creates a new comp. I mean, that is true, as Rory said. Of course it's true. It really is true that when times are good. This only works when times are good. It does a psychological reset for acquirers. VCs are like, oh, here the 11 companies will buy my portfolio. Company or founders, like acquisitions are, have huge soft costs in organizations. It's not just the money. The massive costs on the team, on time, on distraction, and the amount you have to do to justify a deal of any size that isn't like three times revenue. The amount of work it goes, unless you're Jensen who says gets it done before Christmas. For anyone else, it's massive. So when you can walk into a room and say, we want to acquire service for 25 million. It's twice the size of Grok and we need it now. The whole room just nods. All the objections to that massive check float away in the room. I've seen it time and time again. So it is a gift and it just justifies doing something that maybe only Jensen could do. Until a couple weeks ago, the only.
- [15:09]
Guest or Panelist (possibly Rory or another VC)
Edit I'd have to your statement there, Jason, is billion, not million.
- [15:13]
Jason Lemkin
I'm sorry if I misspoke. Billion.
- [15:15]
Rory O'Driscoll
I think, Jason, that's genuine. That's very insightful. You're exactly right. Six months ago, if you said, I think we should buy Cerebrus OR GUAC For 20 billion, you were at one of these other companies, you know, five people would dump at you and say, idiots. Now you say it and they go, well, the smartest guy on the fricking planet in semiconductors just did one of these things that normalizes it, right? So it's a psychological comp. Yeah, I totally agree. There's a damn unlocking that goes on here where you suddenly realize what you can do if you want to win.
- [15:40]
Guest or Panelist (possibly Rory or another VC)
It is interesting that just funding history wise, there are not a ton of VCs in this. In terms of funding sources, it was very non traditional. I mean, as we said there, it was not an easy pathway to where it is today. And I mean, my words, some of those funding rounds were hard with again, non traditional funders. And so it's not like a big win for Silicon Valley in the way that I think Twitter's talking about it. It is for chamath.
- [16:03]
Rory O'Driscoll
Well, I mean, look, social and capital get all the credit for being early and doing two rounds. And then you write in 21 and 22. There were a couple of, I think D tiger, a bunch of the late stage crossover. But you're right, there was only one classic Silicon Valley firm. And ironically it was happening just that that firm was blowing up and becoming a non traditional Silicon Valley firm, becoming a Chamat private office. So yes, I mean, there's no doubt that the usual cast of characters weren't there. And the reason is pretty obvious is, you know, we used to do semiconductors in the 90s and early 2000s. You know, lots of firms, we used to do semiconductors too. And if you look at the semiconductor exits from 2000, about 3 on, almost none in Ventureland. Right. A very hard way to make money. And of course what happened is in the public markets, semiconductors were hugely profitable in the Philadelphia semiconductor indexes. Compounded up like a crazy person. And then on top of that, you have the AI thing and then you have this chance for this. It's very much a singularity. You have the one off deal that's just the right product. But it was very contrarian thinking in 2016, with no obvious thesis other than, as Jason said, the great guy, he'll figure it out. And then being smart enough to survive long enough for the wave to hit. I don't think this means that there's going to be 20 more semiconductor grade outcomes. To be clear, it's a little like in networking. Arista Networks, everyone did networking in the 90s and early 2000s, then nobody did networking. And then Arista was founded. Bechtel Zine founded the company. It did really well. It's public, it's got a $40 billion market cap company, but there's been no other box company since then. It's like it's a one off. You look at it and you go, oh, someone made 20 billion in a one off, good luck to them. And then you put your head back around to funding relevant AI enterprise, AI software companies. Right. I don't think there's going to be 10 more semis. There might be two. Long before 2016 it was semiconductors just had been really brutal for 10 years. Lots of those companies in 2000, 2010 didn't make it.
- [17:58]
Guest or Panelist (possibly Rory or another VC)
I remember Eric Vishria had to have a chat with Bruce Dunleavy when he was doing the Cerebras deal. And Bruce was telling him the wisdom of investing in semiconductors and all that he had learned from the prior 15 years of the semiconductor winter that you speak of, which I thought was interesting and credit to Eric for doing Cerebras after that. But speaking of big acquisitions, we also had Meta acquiring Manus. One of the things that I love about doing the show is because we're not journalists, we also actually have real information. And so I actually know things that actually none of the media do, which is the price was 2 and a half billion dollars. It was a 25x current ARR. They were at 100 million of ARR doing 125 million run rate including consumption. So for a benchmark it was say a 5x in 8 months, which is pretty amazing. IRR. How do we think about this?
- [18:51]
Rory O'Driscoll
First of all, let's start by all credit to benchmark. If you recollect we talked about this when they first did the deal. It was controversial and I remember even saying myself, you know, I'm not making a moral judgment, I'm making a pragmatic judgment. You're taking on a lot of risk here funding a company that at the time looked like it was a China based company. They did an amazing job of making it a not China based company, cut off the links, based in Singapore. So they created some value by doing that and it's obviously paid off. That's the way ventures meant to work. You take a calculated risk, somewhat of a non consensus risk. And when it works, you can get a very compelling return in a short period of time. So yeah, it's obviously it's a good outcome for them. I mean from Meta's perspective, in the context of the money they're throwing around, it's not crazy, it's not obvious why a kind of B2B or individual knowledge worker work tool, which is what Manus is is an obvious product to roll out to 3 billion users on Facebook, most of whom don't do knowledge work. But I think that what the Manus team showed is they know how to make AI work at the level of the user and the non technical user. And I think that's the asset and the team that they're grabbing here.
- [20:04]
Jason Lemkin
It is exciting. I think the founders decided to sell. I don't think Benchmark was pushing for them. 5x sounds great. The IRR, this is not a 3 times fund returner. So Benchmark would have every incentive. If we're just playing games, if we're just being capital allocators to roll the dice. Let's go for four. Did you. Hey, did you guys see the GROK deal? We're better than grok. So the VCs have no incentive I think to take this deal unless it's out of money, which I don't think was unlikely the case. No matter what the gross margins were. That wasn't going to be the issue. Okay. And I think the founders sitting here moved to Singapore or whatever. It was a lot of existential risk running a very clever orchestration layer on top of other LLMs. That anthropic can do some of this. OpenAI is going to do some of this. They are best of breed. But other people are all doing the same thing. We're all running multiple LLMs, we're all orchestrating multiple agents. I think what happened. And listen, this is just me pattern matching to the size of the deal, the timing to everything they said this is our local maximum relative to risk and reward. There's no capital gains tax in Singapore. If they're Singapore residents is 0% tax. Are they a Chinese company? We've already seen these issues. What are the risks? Who will buy us? Right? Or maybe only so many people want to buy us. IPOs in China are back, but they're weird. Will it be a US ipo? And they're like as founders we're each going to walk away with, you know, we got to go work for, for that scale guy and Meta. But we're going to walk away with hundreds of millions of dollars today for a company probably with extremely low gross margins. You know, and I'm not saying it's not an epic product. It is. But we've picked on some products over this pod, the lovables and replits that I suspect have much better gross margins than Madness does.
- [21:45]
Rory O'Driscoll
Okay.
- [21:45]
Jason Lemkin
Manus is providing a better product running multiple LLMs at the same time. And it's doing it for pretty low price. I mean, it's hard to see it being a high gross margin product. So I could be wrong, but this feels like a local maximum deal where the founders told benchmark guys were selling.
- [22:02]
Guest or Panelist (possibly Rory or another VC)
So the team had 80% of the company still, they took very little dilution.
- [22:05]
Jason Lemkin
Okay, 80%. And maybe, maybe it's not quite that simple with how the company was founded, but yeah, they took only 20% VC dilution.
- [22:12]
Guest or Panelist (possibly Rory or another VC)
They had term sheets for the same price for a new round.
- [22:16]
Jason Lemkin
So that's the. That was the clearing price, was the same price. Right. We've all been there. I literally had a massive acquisition that got turned down over the holidays. That was exactly at the term sheet price. Right. This happens all the time. And just going to the prior point and they're each going to make half a billion. As founders, I might take that deal. The three of us might split it up. We were not quite billionaires, but the three of us might do it and just become podcasters. It might be enough. We might call it a day, boys.
- [22:41]
Harry Stebbings
If we're on the Manus board.
- [22:42]
Guest or Panelist (possibly Rory or another VC)
It's doing 100 million now. Say it does 3x given growth rates. I wouldn't say that's insanely overly expectant. They're already doing 8x end of year revenues next year.
- [22:54]
Harry Stebbings
It does feel quite cheap.
- [22:55]
Guest or Panelist (possibly Rory or another VC)
I would be fighting with these founders saying, you're being underpriced.
- [23:00]
Jason Lemkin
Well, then give us a billion, Harry, if you think we're underpriced, let's do a secondary at 10 billion. I'll sell 500 million. Rory will save 500 million. Harry, you put the money and put your money where your mouth is, dude. Well, no, because I don't want to.
- [23:12]
Guest or Panelist (possibly Rory or another VC)
Give you that money because I think you'll be less effective with half a billion dollars.
- [23:16]
Rory O'Driscoll
And what you'll discover pretty quickly is trying to persuade a founder to hold on when they don't want it is a very hard thing to do. And arguably you shouldn't even try, right? In fact, not even arguably you shouldn't even try. In the end, 90% of the time, the founder controls the exit decision, and the 10% of the time, they don't. It's usually a mistake for the VCs to try and control it. Right? I mean, what you can. If you have a good relationship with the founder, you should be able to talk to them about how you see the pros and cons of each of the things, help them make an informed decision based on hopefully some wider pattern matching. But they have more specific knowledge, right? I mean, I always tell people, when you get an offer, I always say to the founder, now would be a really good time when we're deciding to take this offer or not to fess up to any nagging worries you've had that you've been smothering down in your CEO gullet here.
- [24:02]
Guest or Panelist (possibly Rory or another VC)
Can I just play devil's advocate with both of you two things here? When you're very young and you get a reasonable amount of money shoved in your face, you jump at it. I remember when I was young, I jumped like a million bucks.
- [24:14]
Harry Stebbings
I would absolutely frickin jump.
- [24:16]
Rory O'Driscoll
I still would. Yeah, go on.
- [24:19]
Guest or Panelist (possibly Rory or another VC)
And my point being, it's very difficult to extrapolate yourself out of the weeds when you're so in them and you're very young and you're quite naive. And the perspective that you guys can bring is very helpful in showing what it can be if it keeps on growing the way it does. And then secondly, they don't have the market comps that we do in terms of where assets are transacting, what it could be in 12 months. And so I do feel you should.
- [24:45]
Rory O'Driscoll
All that's true, Harry, and all that allows you to have a useful dialogue. But in the end, I think Jason's right. In the end, words are words and half a billion dollars is life changing. Right. At some point the entrepreneur can turn to you and say, to Jason's point, I think he nailed this. If you think two and a half billion is the price, okay, don't cash out my 500 billion, give me 50 million, let me take that much off the table. Because they're being offered, you know, life changing money. Because there's actually an implicit statement that you're making that I want to revisit. Even if you think holding on is the right decision, in other words, they're selling early and they should compound and hold later. You can unveil those facts till you're blue in the face, but in the end they're going to make their decision. And they should. You're diversified, they're not.
- [25:27]
Jason Lemkin
I think it's though I do think it's a little like, like little more than that. I think this isn't just money per se. I think going back, it is a local maximum. It's not just the amount of money. And normal people would just take, would have taken it at a billion. If you owned 80%, normal people would have taken it at 800 million. This was risk, reward, the best time, right?
- [25:46]
Rory O'Driscoll
Yeah, I agree. I'm Only going to. I'm going to interrupt you to also agree and contrast it with Harry. Right. Because implicit in Harry's questioning is, quote, they're wrong to sell. And how do you persuade them otherwise? Consider the other possibility. They are entirely fricking right. Jason nailed it. This is where the world is going long term. But it could well be a local maximum where 12 months from now, there's eight or 10 people doing something similar. It's like, remember, it's not quite the same. Autonomous cars. Cruise was entirely right that someone's gonna build a hundred to $200 billion company doing autonomy. They sold for a billion in 2016. Now, Harry, you're right. In theory. They could have stayed for 10 more years, raised 15 more rounds, and become way more and worth 100 million. But I'm willing to work. Kyle does not spend a single second worrying about that. He's like, thank God I sold cause. It was the only fricking exit in autonomous cause for the next five years. So you're assuming, Harry, that they are, quote, wrong and naive to sell. I'm kind of with Jason. Even if they were, I think it's hard to overcome that because you can't leave a founder in a deal where he wanted to sell and you stuck him in the deal, and now he's bitter. And if the thing goes wrong, you have no idea how toxic that will be. But the more important point is Jason's, not mine, which is they may actually be incredibly, astutely selling here.
- [27:04]
Guest or Panelist (possibly Rory or another VC)
To be clear, I completely agree with you in terms of not forcing a founder to remain when they don't want to. That is the worst. But I was more saying provide very clear perspective and direction.
- [27:15]
Jason Lemkin
Yeah, but, you know, interestingly, I think this might be a case study where the local maxima for the founders and the VCs were different at the time. For example, one of the founders I worked with Yesterday, we were DMing. He's like, Wow. I built a whole marketing site on Manus. I Vibe coded it. I'm great. Well, I did that. You could do that at Replit or lovable or base 44. It's like, there's a lot of ways to Vibe code a cool marketing site. So maybe it was right for the founders with competition. But for the VCs, if it returns, what, a third of the fund for a win? For someone that went zero to 125 in a year, that returns a third of a fund. For me, an exit that returns a third of a fund. I know Rory, and I disagree to me, it's not very interesting. Like, do it like, I'm all supportive of you. I would never even. I tell all founders to sell. That's my advice. But a third of the fund, it doesn't even buy me anything good in Miami.
- [28:04]
Guest or Panelist (possibly Rory or another VC)
Rory, he can't do anything in Miami with it. Okay, so just.
- [28:07]
Rory O'Driscoll
Well, I don't want to be in Miami, so that's fine. I mean, but as you know, Jason, I disagree. There are some. I mean, first of all, there was this old bullshit chatter 12 months ago. Oh, poor Benchmark. They go issues. Let me tell you, you put a 4x on the board within six, eight, nine months, you look great.
- [28:24]
Guest or Panelist (possibly Rory or another VC)
That fund is like a 15x fund.
- [28:26]
Rory O'Driscoll
I know that. That's my point. I know it's. I'm well aware of that. That's my point. My point is, you look at the narrative 12 months ago, you look at the narrative today. Right? I agree. That's exactly my point. So you just put points on the board and you move on. It's another win.
- [28:38]
Guest or Panelist (possibly Rory or another VC)
But your misalignment is so real, because for the benchmark, fuck it, it's in a flyer fund. Let's have another flyer. Roll the dice, dude.
- [28:46]
Jason Lemkin
Well, actually, I found. Rory, I don't know your experience, I found in that scenario, the VCs are the kindest. If you have a 15x fund. When I've been in the front of a fund and they're B tier VCs, they're unkind. Okay, Not. Not universally. When you have a great VC and the fund is over 5x. Whatever you want, kiddo. Like, whatever makes you happy.
- [29:05]
Rory O'Driscoll
I think that's. You're exactly right. I mean, it's kind of a wonderful situation for both sides, is that, you know, Benchmark aren't sitting there clutching the nails, going, they've got to make it on this deal. They're like, you know, we've got one of the world's best funds. Just when everyone was calling it bullshit and we've killed it.
- [29:19]
Guest or Panelist (possibly Rory or another VC)
The thing that made me think more broadly about, though, was kind of Mattes Aminat Spree. And then Yann Lecun comes out and has an explosive interview with the ft. I mean, Jesus, this guy did not hold back. And I know Jan, I've interviewed him. He said Alan Wang was naive and young and inexperienced. He said that they pretty much lied about Llama for performance and were selective around the benchmarks that they chose to.
- [29:46]
Rory O'Driscoll
Be clear, by the way, on your prepositions, because who is the they that he's referring to there because some of the llama stuff was pre Alex joining. So he's actually saying that they themselves Facebook. You transition from talking about Yann Lecun's opinion of Alexander Wang as young and naive to Yann Lecun separately confessing, for lack of a better word, that while he was at Facebook some of the Lama benchmarks were incorrect. You're right, it was a quite a. It was a tale of wow, boy, that was talking outta school.
- [30:13]
Harry Stebbings
Yeah.
- [30:14]
Guest or Panelist (possibly Rory or another VC)
How do we feel about it when.
- [30:16]
Harry Stebbings
We think about Zuck's go forward?
- [30:19]
Rory O'Driscoll
Okay, so some pro Zuck comment. I can imagine you have such a senior figure who is an academic who has a very strong belief that long term LLMs are not the only thing you need and as he's one of them has articulated very well is that you're going to need more than that to quote get to AGI. But you're an operator and Zuckerberg is nothing if not an operator. And you're like I don't give a shit about your long term. The other three guys are shipping their equivalent of Lama 4 make the damn product that's comparable with the other guys. Right? You know that frustration. We have a mismatch between the expectations of the employee in the employer. Once it wasn't an academic pursuit, but once it became a for whatever reason, we can talk about why. I don't get those reasons. Once it became a corporate imperative for Meta to be competitive with OpenAI and Anthropic in the LLM space, having a guy running that project whose first line is I don't think this is important, we should do something else just causes managerial disconnect. So the relationship must have been doomed from that moment on.
- [31:20]
Jason Lemkin
No, no. I just think for Venture, this is the era of the spite startup. I mean Anthropic's a spite startup, xai and Twitter's a spite startup. Now we've got met his AI guy who's doing a new spite startup. Like I think if you want to make money in venture, you gotta, you gotta search out spite. This is driving the greatest AI companies of our generation is spite. Maybe poor Madness didn't have enough spite to grow beyond 2 billion.
- [31:44]
Rory O'Driscoll
Spite might provide motivation. It doesn't guarantee outcomes.
- [31:48]
Jason Lemkin
No, but it is, I mean literally OpenAI so many of its competitors are born out of spite, including its number one competitor. It's just the spite is endless here.
- [31:56]
Rory O'Driscoll
First of all, Silicon Valley was founded on spite in the sense of if you look at Shockley, all those guys spun out and Fairchild which was a spite deal and then they left Fairchild because they couldn't get their money and they kind of did intel on a standalone basis. So there's a long tradition in Silicon Valley of people taking the marbles and saying I'm going to do it myself. So I do at one level agree that but I think the earlier comment is it provides motivation. But I wonder does the world need another research lab in AI right now? It'll be interesting to see how that goes.
- [32:26]
Guest or Panelist (possibly Rory or another VC)
I think the interesting thing with the new structure is actually he's chairman and then Alex lebrun who was the CEO of Nabla, who sold two companies previously for several hundred million dollars is actually the CEO. And so I think there is absolutely a commercial head being Alex as CEO.
- [32:40]
Jason Lemkin
Which maybe do you guys believe in these deals where the one you would invest in is the the non full time chairman. And don't get me wrong, this particular deal may work but in my life experience you're just flushing your money down the toilet when a great founder reaches out to you. I've got this one I want to do. And then you dig a little deeper. Well, I'm the non executive chairman, I'm putting some money in and eight, three hours a week of my time actually.
- [33:02]
Rory O'Driscoll
I might argue a different I actually it may well be that's actually the correct configuration if you have a highly talented academic who isn't a commercial driver. In fact actually I my mental model went slightly up when I heard what Harry said. My quote unquote disbelief is I just wonder can the five or six startup research labs is there going to be enough new territory that's not automatically going to be annexed by anthropic or OpenAI or google to justify billion dollar pre is at 5 billion posts times whatever you know risk adjusted return you want to make on that. I think you can extrapolate from the past and say it worked for Anthropic and OpenAI. It will be interesting to see can the world support 10 research labs coming up with different variants of AI all of which have to build either commercial or consumer businesses. I think on aggregate are fairly skeptical. But the truth is almost all of these founders are extraordinarily talented. Not even top 001% of even scientists and engineers. The question is, is the business opportunity there for a whole load more of these things?
- [34:11]
Jason Lemkin
I think there's spite here too. I think there's another type of spite. Rory. I think there's this. It is a big theme now. It's co spite about how they were forced to run companies in 2021. I think there's versions, and I'm a big Sheryl Sandberg fan, but I think Zuck is spiteful. He was forced to run the company in a certain way. I mean, Owen from Intercom, Finn has talked about this a lot, that he's spiteful that he was. The company was forced to be run away and they. They're just effing pissed that they wasted years in a Kumbaya work at home land and they're not wasting time. And Zuck may burn every last penny he has, but some of it's out of spite that they got this far behind. Like it might. These guys just fracked around with pictures on Instagram and trying to get reels going when the world passed us by. And they're pissed. These CEOs. I think a lot of these CEOs are pissed. I think Zuck's pissed.
- [35:02]
Rory O'Driscoll
I think, actually, again, I'm always. There's a real truth in that. I don't love the spite word because it conveys anger, but I get it. It's like that feeling of, oh, there was a period of time you felt as a CEO, you swallowed it up. You didn't push as hard, and now you feel foolish because you didn't push as hard. And now you're like, I'm not going to do that again. To bring it back to the acquisitions, what you're basically saying is Zuckerberg has probably internalized, I'd prefer to fail trying to be me and going for it than to be bland and mediocre. And maybe because I'm willing to run the risk of spending, he said, a couple hundred billion dollars and being wrong. And I'd prefer to do that for my psychic benefit than to be a boring ass bastard who's not relevant in AI, even if it's better for the shareholders. That's really what you're saying, Jason, and I think it's quite insightful. You're right. They're like going, you're only coming through once. I'm not going to be lying there at 80 going, I wish I'd really gone for the AI thing. Zuckerberg said, I'm going to go for it, and if I make some mistakes. And maybe I was wrong about Alexander. Okay, that's fine. Well, buy me another one and keep rolling until such time as the capital runs out. That's how you play the game.
- [36:09]
Guest or Panelist (possibly Rory or another VC)
Well, Larry Ellison's not sitting there at 80 going, I wish I played the AI game.
- [36:12]
Harry Stebbings
That's for Sure.
- [36:14]
Rory O'Driscoll
I don't know.
- [36:14]
Harry Stebbings
He's going.
- [36:15]
Guest or Panelist (possibly Rory or another VC)
Well done for capitalizing.
- [36:17]
Rory O'Driscoll
Yeah, he seems peaceful. Exactly. He played the AI game and he's feeling good.
- [36:20]
Guest or Panelist (possibly Rory or another VC)
I think he's just thinking, you know what if it goes wrong, I'm gonna be dead by the time it does.
- [36:26]
Rory O'Driscoll
And if I'm lucky, I'll own Warner Discovery and I'll own hbo. I mean, you know, in the end, I mean success in America, you got to own a TV studio, movie studio.
- [36:35]
Jason Lemkin
I think he's going to be the healthiest 104 year old that we've ever seen. I think longevity will be the theme of 2027. This will be the year of 24.7ai but I think longevity will be the theme of 2027. I think we will see Larry, if it's not Larry, the next Larry at 95, at 100, looking pretty good. So don't count him out. Harry. I don't. I don't think Larry is fully living his life. Like he's on the 18th hole, definitely the back half, but he's not like he's walking off the golf course.
- [37:05]
Guest or Panelist (possibly Rory or another VC)
Loving this. We're moving to Dr. Jason Lemkin. We mentioned OpenAI and the spite startup that is many of the spin outs. OpenAI announced that they now spend 46% of revenue on stock based compensation. One and a half million dollars per employee, which is 34 times higher than comparable tech companies pre IPO. How did we reflect and think about this news?
- [37:30]
Jason Lemkin
Well, if you're a CEO and you have 0 shares, you don't worry about dilution.
- [37:33]
Rory O'Driscoll
Interesting point.
- [37:34]
Jason Lemkin
You really don't? Then damn the torpedoes because I got no shares. That's why he's pushing this far high. This is like 3 to 4x the comp of Anthropic effectively now maybe they'll make more in the end. And Anthropic doesn't do the secondaries right. They've had a very limited number of secondaries compared to open AI. We talked about this once in the pod years ago. I worked with a CEO that was guaranteed 6% through IPO. He didn't carry a third either. He didn't care about nothing. He didn't care about how many rounds or how much he gave to his CRO because he got re upped. If you ignore the basis and the tax issues, he got re upped constantly to 6%. Why would Sam just wants to build the biggest greatest AI planet on planet Earth. And if he dilutes everyone 99% it doesn't impact him at all.
- [38:13]
Rory O'Driscoll
As a shareholder, I do agree with that. And then. But then on top of that extra positive comment for Sam is that he may also be right in not caring. This may be one where you gotta do what it takes to win and you don't want to come up short. But on budget, one of my quotes I use occasionally is no one ever said to Winston Churchill, congratulations, you won World War II. On budget, they just said, congratulations, you won World War II. No one remembers the budget for World War II. Just winning is the only thing. Remember we talk about the stock based compensation and I'll come back to this point in a second. Those numbers are understated for purely technical reasons that I'll come back to in a second. But he's sitting there going, you know, some of my key people are getting $20 million $50 million offers from Meta and that's really liquid stock. I gotta hold onto my people. So he's doing what it takes to win. And if the market is big enough, then he'll be right. And again, it's this S tier talent, to use your phrase, Jason, where you have to put up with a lot, you have to swallow your spite. You just gotta make it worth their while. So I think it's entirely necessary and rational for your top tier talent. And then to the other point I made, which is that it actually understates the number if in fact the stock based comp accounting is really weird because it all crystallizes at the point when you issue the shares. Let's do RSUs because they're simpler. If your stock is at $10 a share and you give someone one RSU, effectively you amortize $10 over the next four years and you give it to them two years ago. Right now the stock is at 40 bucks a share because the stock's gonna. You still only amortize the initial price. So for companies that are going, the stock based comp actually understates the amount of economics that are being transferred to the employee. That employee is probably making 4 or 5 million dollars. If he's getting 1.3 of SBC, by the way, it's really crappy. On the downside, you saw this after 2021, if you issue shares to people at a high price, the sentence is really odd because it's a high price, it's a high stock based comp, then the share price goes down. The poor employees lily making nothing if it's options because they got options at a high price. But the stock based comp looks enormous in the GAAP P&L. That's why it's partially relevant. Stock based comp is kind of very complex to track. It's partially relevant. But the other thing you got to look at really as a rough rule of thumb, and it's also not perfect, is what percentage of the company are given away every year. For a public company that's not growing quickly, it's 2 or 3%. I wouldn't be surprised if every year some of these companies are literally giving away between 8 and 10% of the company a year. Because as I say, that 1.5 probably understates what's going on here. You're just giving huge grants to people. I could be wrong and it could be starting to kind of taper out now. But as an example, just looking at the publicly available information in the year when Entropic raised money at 4 or 5 billion, then they raised at 14, then they raised at 60. Your rough math would say 4 billion to 60 billion is a 15x. It's just under a 5x on a PER share basis because you're issuing so much capital to raise capital and then you're ratioing so much capital to employees. And that's just. You can figure that out from the publicly filled document. So there's just a lot of dilution going on because these are business that need a lot of capital and they need a lot of great employees. But again, if the prize is worth it, it'll all pay off.
- [41:25]
Jason Lemkin
And even with this comp, they're still leaving in the first year.
- [41:28]
Rory O'Driscoll
They're still leaving. Exactly.
- [41:30]
Jason Lemkin
They still only have like 60 something percent retention in researchers at OpenAI. It's crazy. Even without a client.
- [41:36]
Rory O'Driscoll
That is a great point because I'm remembering now when I'm off on a lot of comp committees and one of the questions, when people say we've got to do more on the equity, my first question is what's the retention and what's the success rate on new hires? And if I was the VP of HR and I was on the board and I was given that VP grief about these grants, the VP could turn to me and correctly say, hey, Mr. O', Driscoll, we only got 60% retention. So by definition, if you believe in markets, Mr. O', DriscOll, we're on the pain and we've only got, I don't know, 50% conversion of offers, you know, so you're exactly right. It may be that's the money it takes to get these people in the chair.
- [42:09]
Guest or Panelist (possibly Rory or another VC)
The money it takes is provided in large part now for OpenAI by Massa, SoftBank closes its OpenAI investment.
- [42:16]
Harry Stebbings
It turns out it's already up 2.
- [42:18]
Guest or Panelist (possibly Rory or another VC)
To 3x on paper. Is this Massa's greatest play ever, do we think?
- [42:22]
Rory O'Driscoll
No, his greatest play ever was doing Alibaba and getting 20% of Alibaba, holding it for 20 years and making hundreds of billions of dollars. But I think it's a fun, it's so revealing for people's background. Mazda had negotiated a deal to put In, I think 40 billion into OpenAI, but it had to close by December 30th of this year. And the price at around 300 now looks cheap. But you just gotta love the risk tolerance of someone Massa who is willing to commit 40 billion, he doesn't have until he sells other shit. I mean, it's literally like he did a little inter masa margin loan. You know, I have the right to put 40 billion in OpenAI now I better find the money by selling other stuff. And I'm scurrying right down to the line to find the money the week before Christmas. It's just the level of risk tolerance that that guy has is just amazing. And he got it done. And you're right, Jason, the IRR in a day is amazing. You close the investment on December 29, you put in your 40 billion and next day you should be carrying that thing at 500 because that's what it's worth right now.
- [43:22]
Jason Lemkin
Now you know what might be his best investment? Even though you're right, Rory, I'm sure it can't compare to Alibaba over time. And the entry price was much better and, and everything. He's the only double digit shareholder.
- [43:32]
Rory O'Driscoll
You're exactly right.
- [43:33]
Jason Lemkin
So if Open AI goes to the moon, this may be his best deal ever. Yeah, he had to enter later, right? Yeah, the entry price was high, but he got his double. Like it's not easy to get double double digits at it. This is a pretty hot company. It's hard to get double digits.
- [43:46]
Rory O'Driscoll
It's a great point. I mean, and it gets to the. It's interesting. It's a little like the Nvidia. It's funny because he obviously sold Nvidia at one point in time. But it's that kind of single mindedness. What you admire about him is when he has conviction on a bet. Some of us put in 5% or 10% of our fund, some of us famously at SpaceX, founders put in 20%. Massive would take his fund leverage a 3 to 1 and just go all in. And when he's right. What it means is that you end up being, I mean the sentence says it all. The largest individual shareholder in the most important one or two companies of the last and next decade. That's pretty cool.
- [44:22]
Jason Lemkin
It's thrive on steroids.
- [44:23]
Rory O'Driscoll
It's thrive on steroids. You gotta love it, man.
- [44:26]
Jason Lemkin
And if it is wrong, he might be Ellison. He might check out. If this one goes sideways, he might have to retire and call it a day. Ellison can keep going on for his outcome. It has to work for Maza.
- [44:36]
Rory O'Driscoll
Roll and roll again. I love it.
- [44:38]
Guest or Panelist (possibly Rory or another VC)
Did you guys see the news about the OpenAI hardware? A pen like object which has camera and has a microphone in it. Did you see this and how did you feel?
- [44:48]
Jason Lemkin
I believe in it.
- [44:50]
Rory O'Driscoll
I can trump that. I am probably one of only three people in venture who can talk about having invested in a pen company with a microphone and a camera. I did an investment called Livescribe 10 or 15 years ago. We got to under $80 million in revenue as a consumer device. Ultimately didn't work out. We had to sell it for not a lot. So I have lived the pen computing revolution dream.
- [45:15]
Guest or Panelist (possibly Rory or another VC)
I was not expecting this tangent, Jason. Me and you were not expecting that.
- [45:21]
Jason Lemkin
I'm not surprised, but was not expecting it. Rory's got some stories, man. Rory's got the stories.
- [45:27]
Guest or Panelist (possibly Rory or another VC)
So Rory, Sam Altman is with us. He's the fourth party in this call. What do you know from the pen wisdom that you have?
- [45:35]
Rory O'Driscoll
I do have a film, yeah. I'll tell you what. Quite a lot, actually. You have to get over two or three issues. One is I'm pretty old school. I still write things. Is writing the default choice today for taking notes? Increasingly less so. I liked writing, but how many people are doing that now? So you have this behavioral question, does writing work for you? Then the other question is the business questions of it's a standalone hardware device. In consumer land, everything else got eaten by the iPhone. It's hard to build a standalone consumer. They may have a big edge because they can link it to OpenAI in some way, shape or form. But just getting people to fork out consistently, you know, 50, 100 bucks for a product unless there's clear and tangible value, is hard. And I mean the obvious counter example is some of the devices like Aura and Whoop around fitness and health, where they are standalone hardware devices. But it's traditionally a hard space. I think it's a niche device.
- [46:31]
Guest or Panelist (possibly Rory or another VC)
With the greatest of respect is you frequently denigrate the quality of my questions and for being low Quality, low iq. You, no offense. The lessons that you took from this entire experience were one, do people even write anymore? Okay. And then two, it's really hard to build a consumer business. I'd say there are other light lessons that you learned there.
- [46:55]
Jason Lemkin
Watching Harry's papers sprawled out in the studio where he takes notes by pen every time he's there. He's Mr. Penn himself.
- [47:01]
Rory O'Driscoll
Dr. Stebbings, you're trying to be a fan. You're trying to turn on me, but I'm not going to let you to your snarky comment about how those lessons that I learned were idiot lessons. They were. I mean, when you look back on your failures in Venture, the sad thing is it's usually pretty bloody obvious why they failed. You know, you look at it, you go, there were strengths, and it's the same strengths that are attractive here. If it works, it could be huge. And then the weaknesses are, it didn't work for obvious reasons. Failure rarely has complex, idiosyncratic shit. It just failed because it was a dumb idea and it didn't work, or it was the wrong idea at the wrong time. Maybe now is the right time.
- [47:33]
Jason Lemkin
Pen. For what it's worth, I think this pen's gonna be eventually pretty successful. But I think calling it a pen may be confusing. I don't think this is a writing instrument. Okay. Whether it has ink in it or not, because you've got Johnny. I've working on it. When this deal happened, we kind of made fun of it. At least I did.
- [47:49]
Rory O'Driscoll
It was a.
- [47:49]
Jason Lemkin
It was a heavily produced video in north beach, having coffee with him and Johnny.
- [47:53]
Rory O'Driscoll
I've.
- [47:53]
Jason Lemkin
And it. It seemed like Sam's fancy, like Zuck Steel, but. But Sam isn't fanciful. He's very thoughtful. And I think this was looking ahead to the world where we're all 247 and AI for real. They're making a bet that this, as weird as this pen sounds, that when we go on with our day, we grab our phone and then we grab our pen. Whether it's literally a pen or not, it doesn't matter that. That it's going to happen. And I think today we wouldn't do it today. We wouldn't grab another device. And I know this has happened to many people and I'm anthropomorphizing AI in a way I shouldn't. But over the holidays, my Claude named itself out of the blue. It named itself Ren. I didn't ask it to. It named itself Ren. I don't know if you guys use Claude has something that at the moment ChatGPT doesn't have. Okay, Chat GPD has better memory than Anthropic simply because it's longer. Claude will proactively search every single chat history. You have to come up with long term answers. So in a sense it has almost an infinite memory. It makes mistakes, it has to search it. But I've put so much of my life into Claude. Every 20 VCs in it, every Saster thing is, is in my cloud and it can search all of that history for 14 months and self named itself. And so taking Ren with me all day when Ren is. And I know people are gonna make fun of me when ren is alive 24 7, that's a different world than taking notes on a pen that will be plugged into a USB port and then go into my drive. This is designed for a 24,7 AI world, which seemed like science fiction when we started this pod and will happen this year. We will live in AI 247 this year and it will be creative.
- [49:21]
Rory O'Driscoll
And my big aha on that. Now that you can actually do work on your knowledge work using LLMs. Anyone who doesn't have all their shit accessible to an LLM is just going to be behind. Yes, it's just not a viable state to be. If you look at the jobs that we do. If you want to stay on top of things, which is a lot of what it takes to do this podcast. If you don't have all your information and all your newsfeed coming into some kind of intelligence that stays on top of it and tells you what you need to know, you're just kind of deliberately being disadvantaging yourself versus the other guy. So I totally agree with you, Jason. I totally agree with this ambient AI thing.
- [49:55]
Jason Lemkin
I think it's permanent, not ambient, but keep going.
- [49:58]
Rory O'Driscoll
That's fair. That's fair.
- [49:59]
Jason Lemkin
Ambient was a 2025 Humane Rabbit View of permanent ambient.
- [50:03]
Rory O'Driscoll
I remember, I will say I remember actually the CEO of I think it was Otter told me five years ago and this is what's gonna happen in five years. And I laughed at Sam. And he was totally right. Give him credit. You're gonna want to capture all that information cause it has economic value. I agree. The question is, will I do that on my phone or will I want the extra device? And maybe you're right, because the unique functionality of a writing device has to be about writing. Because if it's just about recording or camera, then I have a recording and a camera and I've already paid for it. And I never let it out of my sight. It's my phone and we all know the data on, you know, human beings would part with their spouse before they'd part with their phone. So the question is, can you get the pen in there?
- [50:39]
Jason Lemkin
I mean, but you know, this is gonna be like, it's gonna be like Blade Runner 2049. What I mean is when your AI names itself, like mine did over the holidays. Ren. When it's running 24 7, when it knows everything that's happened, not just your granola, which does your zooms. It knows what happened in my personal life, it knows my running schedule, it knows what Harry and I talked about in London. When it knows everything. And it's kind our AIs, our clods, our chatgpt. Later in this year they're going to have pseudo sentience. They're already at the edge and we talk about AGI as a, as a technical threshold. But when most people believe their AIs are alive, even if they aren't, when most AIs might even think they're sentient, you will take it with you 24 7. It might be the second version of the pen where the battery life isn't great at first, but we will take our best friend with us everywhere, our pseudo sentient AI. It's going to come with us 24 7.
- [51:30]
Guest or Panelist (possibly Rory or another VC)
Did you see Alex Wang said he was delaying having children because he wanted to wait. Wait until Neuralink is ready.
- [51:37]
Jason Lemkin
No, he was waiting for his earn out to finish. You misunderstood his comment. It's a five year one, Harry. It's five. It's, it was a great deal, but it's a five year out.
- [51:48]
Rory O'Driscoll
Yeah, I, I, yes, we're moving on from this madness. I think one thing, it's mad though.
- [51:52]
Jason Lemkin
I think, Listen, honestly, I think the most important thing that's going to happen this year is when we are in AI 24 7. And I think we as investors as. Listen, if you're building a classic B2B company, you don't have to think about this completely. But I think this is the most important thing for us to think what happens when we're in AI.
- [52:09]
Rory O'Driscoll
Let me be clear. I agree with that. This kind of omnipresent AI, I'm fine with what did you call a sentience as a metaphor. I just don't agree that it's actually correct. But I think as a metaphor it's very. And which is why, Jason, as is often the case with us, I agree with your fundamental premise, which is if you're not thinking about how AI being available to you 247 changes how you work and live your life. You're delusional. I'm just dissociating myself strongly from the Once you drift off into the metaphysical kind of, you know, is it really alive shit, I'm out.
- [52:40]
Jason Lemkin
Oh, for sure. But once you see that the 247 makes sense, then you see all the infrastructure bets, all the data center bets, all the power, actually, it's just obvious, like you need a thousand X what we have today just so all of us can have our Ren running 24 7. We still have to fund it, right? But all of a sudden, Sam's idea of I'll find the way starts to make sense.
- [53:00]
Guest or Panelist (possibly Rory or another VC)
Jason, why are you not changing how you invest then? I, I, I hear you and I agree and it's all completely logical. But if we assume that inference is running 24 hours a day and the large majority of knowledge workers and civilized economies will have 247 inference running, why are you not shifting what you invest in?
- [53:17]
Jason Lemkin
Well, it will. I was literally yelling over DM at one of my founders at 100 million over this yesterday thing, like, you're too slow.
- [53:24]
Guest or Panelist (possibly Rory or another VC)
No, but forget slow. Why, why aren't you investing in data centers? Why aren't you investing in infrastructure?
- [53:29]
Jason Lemkin
Well, it's not. You got to know thyself.
- [53:31]
Rory O'Driscoll
Yeah, I agree.
- [53:33]
Jason Lemkin
If I are part of 20 VC and my job was to go hunt deals, I might. But I've got to work on AI agents. That's where I get, I get, I get so much because of all the sasser stuff. I get so much inbound on AI agents, whether it's GTM or otherwise. I got to pick the best thing I can once a quarter, just do that deal and just try to do a 50x or 100x deal and pat myself on the back. That's the best I can do.
- [53:53]
Rory O'Driscoll
Okay, now I'm giving you a grief again. I thought you were in danger of asking an interesting question there, but you missed it. The question you asked is if you believe in the AI trend so much, why don't you do data centers? To me, I thought Jason's answer was spot on. I believe in the AI trend and within the AI trend. This is what I know. So I do it. I don't know data centers in real estate. I don't do that. I actually thought, as I said, the interesting question could have been how much is how you do your business changing? Because in other words, how much are you leveraging AI within your Business. I mean, do you record every pitch? Do you synthesize them all at the end of the year? How do you troll through your data and everything using AI to be smarter? I mean, have you had a recommendation yet surfaced purely from AI on a deal that you've ended up doing?
- [54:34]
Jason Lemkin
Well, I've done one deal because my AIBC recommended it, which is process 3,000 deals. So that's one. And that's just a start. That was just 2025. We could do much more this year.
- [54:43]
Rory O'Driscoll
Year.
- [54:44]
Jason Lemkin
So I've done one deal. The other thing it will do, which, which this is not even that state of the art. If you put every deal you've done into your GPT, whatever it is, especially if you're like a solo gp, you won't do some deals, it will just stop you and make you think. Because the biggest regret investing are the ones you didn't do, the great ones. My second biggest regret is when I lowered the bar a little bit. Just a little bit. Then you've like lost a decade of your life with one that'll never get there when you lower the bar. So you're just my Claude, my Ren helps me make sure that. And this AI that quantitatively rates every deal helps me not lower the bar. So that's our New Year's resolution for investing. I'm no longer ever going to lower the bar if it means I do one deal every two years. Don't care. Never going to lower the bar again. Not once.
- [55:27]
Rory O'Driscoll
That makes sense. And I think, look, never to lower in the bar again is one of those. Yeah. Things you say every new year like, I'm never going to drink again. But I think what you're saying, that is actually true and interesting and helpful, especially solar gp. It is really helpful to have an AI that says to you when you're looking at a deal, hey, Jason, we agree that the five key criteria are blah, blah, blah and blah. When you look at this deal, on the five criteria, how do you rate them? Look, I see that this. And you write someone pushing just a dialogue with someone saying preventing you from the idiot mistakes. Because I do agree. Exactly. When you look back on the deals that you regret doing, some of them are like, yeah, you made a guess and it was just wrong. That happens. But someone are, oh God. It was obvious at the time. And if I'd had a process of surfacing things and to some extent partners are meant to do that, but AI can do that too.
- [56:11]
Jason Lemkin
I will say one thing, I'll just add one thought on this I do genuinely think you can identify a top 0.1% founder without talking to them. I don't think you can do it without any interactions, but without talk I do. I 100% believe it's possible. Most of my best deals have been from cold inbounds and I have begun that journey by analyzing the inbound, analyzing the intelligence and the quality of the founder, analyzing this. And I've done multiple billion dollar exits from cold inbound. It is not a leap of faith to imagine an AI could do a better job than me. Up to a point with that. Not to get it today into the end zone, but the red zone, right? Hold email. Why can't an AI take a cold email further? Why can't the founder talk with the digital Jason and not even know it's not me or care or even care?
- [56:58]
Rory O'Driscoll
Probably would prefer it.
- [56:59]
Guest or Panelist (possibly Rory or another VC)
I mean Jason, your biggest lost treasure is the emails that you never responded to. Because I've met Rory so many incredible SaaS founders.
- [57:09]
Jason Lemkin
Yeah, why can't I do a better job than me? Easy, easy peasy. Here's my inbox ran. Send me the memo when you're ready to do the deal and I'll sign off on it.
- [57:17]
Guest or Panelist (possibly Rory or another VC)
I do want to move to public markets. Very different tangent but Navan is down to forex ARR. And this is kind of taking a sway away from kind of the M and a craziness and the AI that we've discussed. Navan, real business, very good business down a 4x era. Andreessen buys more. Question is, if Navan's not good enough for a strong ipo, what does that say about the market and what hope do the rest of us have?
- [57:44]
Rory O'Driscoll
I mean I think it was it's kind of as the Lemony Snicket book, A Series of Unfortunate Events. It's not an AI first story, which means it doesn't have automatic love, which means it's got to stand and fall on the fundamentals and facts and circumstances. I think the fundamentals are good. I think this is a 2728% growth company. The GAAP loss is high, but it's non GAAP profitable. And a lot of the Gap stuff is just actually SBC stuff related to the restricted shares. So the fundamentals are this is a 27% growth company trading at 4 times revenue. That's cash flow positive and operating income positive on a non GAAP basis. Actually, after this call I made a mental note to follow Andreessen and buy some perfectly good boring business. It's not going to 10x from here. But it's probably significantly undervalued here. Why? One, they went out at a weird time. Two, they went out with that kind of at the point in time when the SEC was shut. So they had this weird exemption that says you can go public but if you get the shit wrong we can give you grief later. Then their CFO said at the first earnings call that she was stepping down and you know, no nefarious thing, but maybe she was just bought in to do the ipo. But you just add up to a whole bunch of weird stuff and you know, guidance. Overall fine, but you know some questions on the OPEX structure. So you look at it and you go perfectly good company, probably 30, 40% undervalued. Maybe you should buy some. So I don't think it's an indictment of the IPO asset class. I think it's just as I say, circumstances, it will be easier to go public if you've got a mega AI story than if you've got a solid high growth business. But you know, Rubrik and Service Titan and plenty of others have proven those standard companies can get there too.
- [59:23]
Jason Lemkin
I would say here's a narrative and feel free to challenge it. It maybe Navon says the IPO window though really isn't all that open. And what I mean is I think Navon had 700 million in debt and only 200 million in cash. It had to IPO to pay off its debt. Maybe it would have figured out another way, but this was already a down round. It had likely fatigued its investor base. And so I think it IPO because it had to. Not literally, but that's why you IPO in the middle of a SEC shutdown and in a suboptimal time. Look, it got done. They raised the money, they paid down their debt, right? It's a good company, they will fight on to another day. They will fight their way to to decacorn status. But maybe it says the window isn't really that open. Maybe Navon only IPO'd because it was their least best bad option. Maybe if you're not FIGMA or better, it's going to be rough out there. That's what it says to me. If you're not FIGMA or better, it's going to be rough out there. And that all these VCs are saying you can IPO at 100 million and the, the IPO the Vaughn says no to me. It says it's just barely cracked opened.
- [60:19]
Guest or Panelist (possibly Rory or another VC)
Does this don't go to what you said though. Before Jason very well. Which is like. Like one. Unless you're co attached to AI or unless you're replacing labour, you're going to get hit a la duolingo a la Monday. Both, which are not either. I'm just using them as examples. And this is another example of that. It's not co attached and it's not replacing labour.
- [60:39]
Rory O'Driscoll
It's not. Which means it doesn't get a AI premium. Premium. But at the same time it's also not as of now. I mean, you can talk about, are you worried that the AI will do the travel booking and you'll go away over the medium term? I'm going to leave that out. It should be valued on the fundamentals. Stop all the noise. Like just look at the growth rate, look at the free cash flow. Run your model. I don't think you come up with forex revenues again. In the short term, the markets can be very narrative driven. I mean, it's worth pointing out everyone dunks on coreweave. I think coreweave was one of the strongest performing companies last year, simply and solely because it was one of the few ways for the public markets to pay the AI bet over the medium term. Fundamentals on all these things will reassert themselves. To Jason's point, if they really are going to make quote, unquote, they're going to be a DECA coin. If they can double in four years, then they're worth 10 billion. If companies that are worth $4 billion can't go public with 27% golden cash flows, then I'd say this. The public markets can quit bitching about how all the value's been created in the private markets. Then the people who choose to stay private are actually correct. They can look the public markets in the eye and say, you guys just aren't a compelling product. And I do think there are questions about the public market being a compelling product. They have to be because they're in competition with late stage private capital to get access to these great companies. If you have the kind of market where it's a pain in the butt to raise money at 4 or 5 billion dollars of enterprise value, then you don't have a great market.
- [62:03]
Jason Lemkin
You remember all these weeks ago on this pod when Cliff from Canva came on, he said the one advantage to going public is he'd get a better valuation, that it was a reverse arb. Do you think that's true today?
- [62:14]
Rory O'Driscoll
I think at some point it has to be, but it's a great question. In other words, are the Private markets still prepared to give money at higher prices than the public markets.
- [62:23]
Guest or Panelist (possibly Rory or another VC)
Possibly still not being really unwaveringly still no.
- [62:27]
Jason Lemkin
I know Cliff's odd point. When Cliff came On all these IPOs that happened, they were high flying from their initial day, right? Core weave's still a great one, but it is down from its peak. I think Cliff's point was if we went public at Canva now, I'd get a better valuation than I could get from the private market markets. That seemed a brief moment in time.
- [62:43]
Rory O'Driscoll
And that just makes no. It makes no sense on any kind of rational risk return basis that leaving out behavioral aspects, Right. It makes no sense that you get a higher cheaper capital when it's illiquid, higher expense structure associated with that capital, but you're still as a company able to access capital cheaper there than the public markets. It makes no sense long term because the public markets, you have liquidity. As an investor, I should be more willing to pay a higher price if I have the ability to sell than if I don't. All other things being equal. But as yet, Jason, you're right. Is that right? Now that's not the case. And I caveat at the behavioral common. It may well be. One of two things is true. Either this is a massive arbitrage and at some point it's going to switch and the public markets will correctly have a lower cost of capital than A private or B there's this weird behavioral thing which is maybe it's easier to build companies in the private market just because the public markets are so shitty and so annoying and so in your face with activists and quarterly reporting that literally the human beings running these companies perform better in the private market than the public. That's the only long term explanation. Short term, it's an ARB question. Is there a discontinuity in valuation? But the argument stripe seemed to make that in spades. They're basically saying we love running our company private, it's really good, no one bugs us, we do a damn good job, why would I bother?
- [64:06]
Jason Lemkin
Case study number one, Navon. Why? Unless you have to pay off your debt, why IPO like that?
- [64:11]
Rory O'Driscoll
Because I mean I will quote the very funny, but there's a caveat to it. Zendesk. I remember Mikael, the CEO at Zendesk, made a very funny quote about going public when he said eventually you have to move out of your parents basement. It was such a good line about growing up and going public. And in one sense it was very funny. But of course you look back Five years later. And because he was public, they had activists, because they had activists, they had to sell. And once again you can argue maybe being public wasn't as good as it could have been.
- [64:39]
Jason Lemkin
And have you seen what the kids are doing this year? They're staying in the basement.
- [64:42]
Rory O'Driscoll
They are staying in the basement.
- [64:43]
Jason Lemkin
It's a generational change from the Zendesk days. The kids are staying in their basement.
- [64:48]
Guest or Panelist (possibly Rory or another VC)
Then why is Ali from Databricks suggesting that he might not stay in the basement? He didn't rule out a 20, 26.
- [64:55]
Rory O'Driscoll
IPO because maybe when he started going around the second half of the Alphabet and someone said to him, you know, we've got it, we've done an L, we can do an M. But if we start to get into the bottom 13 here, dude, it's getting weird. You know what I believe? I believe in the end it won't be better to be in your parents basement. In the end you will go public. But the question is to di alley comment, is it best to go public at 150 billion or at 5 billion? And it's funny, I was actually just thinking about this because I was mentally thinking about the structure of the venture industry and my big aha, which is captain obvious, as Jason would say when you say it is this. There really are two different late stage businesses. Now it used to be late stage was, I remember Maritech would say beyond 10 million is late stage. And you'd think 10 to 100 million was quote late stage. Now late stage is 10 to 400 million because below that you just can't realistically get public. But then there's this entirely separate asset class I would argue, which is beyond 400 million, which is when you could go public. But you're actively choosing not to. And that's just a different category like stripes and that databricks is in that. I decided to call post IPO scale still private. And if you do the initials on that, if you do the initials on that Harry, it's piss pee. Because they are kind of taking the piss here. It's still private. It's like all these companies who are doing 2 billion, 3 billion in revenue and just could go public and are choosing not to. And it's almost like it's a different asset class from simply not being at the scale to go private, which is maybe 400 million. There's this entire category of choosing not to. And you have to ask yourself as the public markets, why are they choosing not to? If I was running NASDAQ or NYSE why is our product so uncompelling to Ally at databricks that he got all the way to 150 billion in enterprise value before he thought going public was a good idea?
- [66:37]
Guest or Panelist (possibly Rory or another VC)
If you're on the Revolut board, they're doing 9 billion in revenue, 3 1/2 billion in profit in 2025. Would you be saying we should go public?
- [66:45]
Rory O'Driscoll
Not while the cost of capital is cheaper. I mean, you be pragmatic and your cost of capital appears to be still cheaper. I'd possibly be thinking about it, but I'd be empirically rational. And if you're like, that's this, this. I mean, they're not comparable, I mean, to the cost of capital. If you look, Revolut a better business, I think partially for structural reasons, but raising money at 75 billion in Europe. And Chime, an excellent business, in my opinion. Raised money privately at 25 billion. Currently trading in the public markets at 6 billion. If you're the CEO of Revolut, you're like, I like my 75 billion. I like the capital that gives me. I don't know if I want to have that Chime experience. So again, I might say, as Revolut's CEO, I'll wait a while. Thanks.
- [67:25]
Jason Lemkin
Yeah. And maybe, maybe even pay himself a 10 or 15% dividend of the 3.5 billion. Right. If you can take out. I mean, people used to do this. If he could take out 400 million a year himself, just as a dividend. Right. Not a secondary, that's enough for many of us.
- [67:38]
Rory O'Driscoll
You remember the Monopoly card? Bank declares dividend, pay yourself $100 million. He can play the bank dividend card.
- [67:44]
Jason Lemkin
And dividends are never discussed. But when you're producing $3.5 billion, what does he own? 20%. Harry, how much does he own?
- [67:51]
Guest or Panelist (possibly Rory or another VC)
Of revolute, I think 18.
- [67:53]
Jason Lemkin
Yeah, okay, so just. We don't talk about dividends because not that many startups generate three and a half billion of profits a year. Right. If you just say, I'm going to dividend it out, just say just a little bit, maybe a billion or 2 billion, and keep 2, 3, 400 million a year yourself. It's not bad. That's not bad. And you don't have to sell a single share. You don't have to sell one share. Dividends are wonderful, done right as a private company.
- [68:15]
Rory O'Driscoll
That's why, you know, it's the class of companies that have so transcended the startup world that they're now kicking off such cash that literally they're Impervious to the capital markets like Stripe is another example of that. You're just kicking off a couple of billion a year in free cash flow. It's almost like what do you got to offer me, Mr. Public Market? Right. I'm self generating cash. I can just keep doing this thing now. I believe at some point that'll change. But yeah, it's like if you actually have three and a half billion of profit, then yeah, you.
- [68:45]
Jason Lemkin
Most of us have never run a truly profitable business. I mean most human beings have it, most of us in tech have it. I've done it at least a little bit. It's a different world when you generate a ton of cash. Right? It is a different world. It changes your perspective. And it may not be perfect for all VCs, but here also the early stage guys in Revolut have infinite liquidity. They could have all sold their stakes. If the late stage guys are chill and the founders could take out nine figures a year, it could be worse and just execute on your insane maniac dream. To Harry's point.
- [69:13]
Rory O'Driscoll
And again I go back to my comment on and if that founder with his insanely ambitious dreams, not maniac, they will be asking themselves the question which mode of organization, public or private, is going to most help me achieve my dreams? If the answer keeps coming back, being private is the best way to achieve regimes. The public markets have a problem and they need to figure that out.
- [69:32]
Guest or Panelist (possibly Rory or another VC)
When we look at the topics remaining, is there a topic that you most want to touch on before we do.
- [69:36]
Jason Lemkin
Or would you rather can I just answer the databricks one to tie it together? Maybe the answer is M and A. Yeah. At some point, even if you're revolving, if you really want to do deals for real, there are limits to private stock in cash. And if databricks goes public and it's worth two to three times snowflake, it may be able to buy the parts of its journey. And it's already been very successful in acquisitions databricks. It has had a strong M and A strategy today that would be the one thing Ali might get out of it is the ability to spend 10, 20, 30, 40, 50 billion on M A. In a way that's just. It is still harder when you're private.
- [70:08]
Rory O'Driscoll
You're exactly right.
- [70:09]
Jason Lemkin
But Navon can't benefit from that. Navon can't spend 20 billion as it gets. No.
- [70:13]
Rory O'Driscoll
Again, if they execute well for a year, they will be able to. I do believe that they will look back and say that was a wise decision to go Public, the timing. Oh well, life goes on. You can't pick your moment in life, but you'll be successful. You'll generate a couple of quarters again and then you will be public when there's 50, 100 other $400 million, $500 million privately held companies that aren't. And I think they'll look back and it's a good call. Just messy along the way.
- [70:38]
Guest or Panelist (possibly Rory or another VC)
JASON no jobs in 2026. This was Stanford grads saying that they can't find jobs. Was the, I think the title. How do you feel about this in the Labor Markets in 2026?
- [70:49]
Jason Lemkin
I call it invisible unemployment. And it's all around us and it's going to grow this year. It doesn't show up in the government numbers yet, but it's everywhere. It's shopify saying for the third year in the row they can hit insane growth without adding any headcount. For the third year, it's every single CEO wanting to keep headcount flat and backfill with AI. This is not AI. These are not robots firing us. Okay? Yeah. This is tighter and tighter companies, radically higher ARR per employee and no one wanting to hire entry level people, no one wanting to hire mid pack people. No one wanting to hire work from home people. Folks not able to reskill. Reskill is a delusion. Reskill is something we say to make everybody feel better. Reskilling is like when you get, when they do layoffs and they bring you in the room and they give you a package of jobs. Potentially it's just to make people feel better. No one's ever reskilled anyone, ever. And it's harder in AI. So I call it invisible unemployment. And it may benefit us as VCs, which is a terrible thing to say. It may benefit, it may make our companies more efficient and make us more money and make them move faster and iterate faster. But I am really worried by the end of this year we're going to feel, smell and live in this invisible unemployment. And it's, it's, it's going to be a big deal.
- [72:07]
Guest or Panelist (possibly Rory or another VC)
How do you think that first shows up? Jason?
- [72:10]
Jason Lemkin
Well, it's showing up like literally. Kids can't find jobs in college unless you're the best. If you're the best, this is, it's true of everywhere. But if you're the best, you have infinite job offers right now. If you're top of your class in math at any school, you will be found by anthropic and open AI. You don't have to have An AI apply to a job, they will find you. Okay, it ain't that hard. But for the other 99% of your class, right, that, that sort of. Why do I need you with cloud code? Why do I need any SDRs? We don't need any of them. They'll be. This is the year we will see the end of so many entry level sales jobs. We still need AES, we still need people knocking on doors. We do not need 22 year old kids sending emails. Those jobs will disappear. And so all these entry level jobs are, it is, they are truly disappearing in front of us. And at the same time, what we're seeing, a lot of the folks that the three of us has known, especially Rory and I have known that our senior executives aren't able to reskill. They're not, they can talk the talk on LinkedIn and they are quietly leaving the workforce. We see a lot of, a lot of folks we know are just leaving and this is why it's invisible. They're just quietly hooray, I'm moving on from this role at wherever. And they're not going to be another role for them. There won't be another role for their 2021 toolkit. There's no job for them. The senior execs in the entry level are going to be under massive stress in 2026. Massive stress. And so my I, my advice to them is stay. IBM reported that turnover was almost 2% last year. No one left IBM because they know they got no other job.
- [73:38]
Rory O'Driscoll
Agreed. If you're quitting, there's a lot in Jason's point and there's a lot to unpack there. But one of the things is, I think the unemployment numbers, you always get confused because there's unemployment and then people who are still in study work and then you have, are they actively looking for a job and all that. But one of the real tells on unemployment is quitting rate. People don't quit their job when they know they won't get another job. And if you look at the quit rate, that's a really good tell that, oh my God, I know where I am is good and I ain't leaving. That's the first comment and I think Jason's right there. And it is interesting to look at this in the context of discussion we had about people kind of AI engineers getting paid one and a half million dollars, maybe four million. Really. It's what Jason said is that there's a coterie of people who have the secret skill, the demand for them is infinite. And then there's folks who don't have quite that level of knowledge. And it's not so clearly if that trend doesn't change. And I think it can and it will, but that's not a great societal trend, to state the obvious. Right. And it's this kind of concept of the overproduction of the elites. We may well have put 40% of 18 year olds into college through a world where only 30% of them are going to get jobs and therefore 20% of them have just wasted their dollars on a mediocre degree from a mediocre college in a mediocre subject and they're going to struggle to get work. That's a real problem. And it is different than the. I mean, I love the way Jason distinguished between the last job people. You know, when you punch out of your job, there is no retraining at 55. If this VC thing doesn't work out for me, I'm just going to, you know, take my computer and just go off into the night. Right. I'm not going to retrain as well.
- [75:09]
Jason Lemkin
We'll vibe code together, but keep going.
- [75:10]
Rory O'Driscoll
Yeah, we'll vibe code together, Jason. But so I think that's true and I think, you know, it's tragic because you see folks that 55 to 65 not having a job, not yet eligible for Social Security is a pretty tough time. And I have a lot of compassion for that. On the other hand, if you graduated in computer science from Stanford in 2025 and you didn't take enough AI classes to at least be relevant, what the frick A were you thinking and B, what was Stanford thinking? I mean, I saw a really interesting program where someone was doing where they were taking. They graduated a bunch of computer science things and then they were doing a one year AI kind of booster program to basically take their skill and reskill recent graduates. And I think colleges need to take responsibility for making sure they're getting people out with relevant skills because there clearly is a massive shortage of AI trained engineers. And if for the last four years you've been sitting there in Stanford and they've been giving you CS101 and then teaching you how to build compilers, that's fine. But if you didn't cover AI such that you could be credible in this space, then wtf? I think that. So youth unemployment is a different thing. I think I was less concerned than Jason and I've changed my. I think Jason is right. There is definitely. I don't think mass unemployment is taking place because of AI but I think in a couple of key areas, one of them is customer support. And that's not that visible given the kind of people who do that job. But brutal comment. One of them is kind of high end knowledge work or recent graduates and they are kind of visible. I think Jason is right that even though it's probably 0.2, 0.3% of the total workforce and a small increment to unemployment, I think because those are highly educated, highly articulate 23, 24 year olds, I think you're gonna see to Jason's point, a lot of tension on this issue if it continues. The AI, billionaires, you know, all these talk about a wealth tax. If I was pitching a wealth tax to a bunch of 23 and 24, I'm not saying I support, I'm the exact opposite. But I know how I could get a whole bunch of 23 year olds who just gotta stand for degree and don't have a job. I could get them pretty mad pretty quickly. You say to them, these guys have built a future that doesn't need you. They've left you behind, they don't give a damn. And the only way to save yourself is to take some of the money. That's what you'd say. You'd just be like HUEY LONG In 1934, every single Democratic populist since the dawn of time. You'd be like we need their money, they shafted you. Mondami just did a brilliant version of that in New York. So I do think it's an issue. I do believe one thing very strongly. Unlike 55, you 22 year olds can reskill and you can save yourself and I, you know, we've all been through periods of our life where things didn't work out. So I do think they have to have a little more agent. If at 22 you're saying it's not fair, woe is me, then I think you need to have a lot more agency. So that's what I believe. But I'm not saying that's what they believe. I'm not saying the populism would be right, it just should be anticipated.
- [77:52]
Jason Lemkin
But the problem is of course a 22 year old is the best to reskill, right? The problem that I've seen with my kids in college, but more just importantly at the founders I work with. I think all your founders say the same is, listen, we just. People have not grinded for the outside of Harry and the 996 world. We haven't grinded in a decade, okay? And kids, most of them don't want to grind in the. The thing is these entry level jobs, these AI jobs, not only might you not skill for, they're like more work than the old jobs, they're harder jobs and they're more hours and they're more intellectual and they're more work. And throughout history, just most people have not wanted to work that hard.
- [78:26]
Rory O'Driscoll
I think that's true. But there's also another impact that I've been thinking about, which is is the founders of these companies are themselves around the same age typically, and they're grinders. And one of the things that's really a subtle thing, which is I think of that kind of 20 something good college AI smart as the hive mind. And they know everyone else who is a grinder, they are their compatriots, they're their cohort years. And I think a brutal comment is as a 40 year old manager, can I tell the grinder 22 year old from the non grinder 22 year old? Maybe I can, maybe I can. But the grinder 22 year old at MIT, like take the guy who founded Cursor, he knows the five people in his class who are smart and the 95 who didn't grind and he's only gonna hire the ones who were smart. The scariest judge of young talent is young talent.
- [79:12]
Jason Lemkin
Right.
- [79:12]
Rory O'Driscoll
And I think one of the really interesting things is, I mean you talk to any of your founders who are 25, they're Mark to market on their team and on other people they know because that's, you know, the generation they grew up with. They're finding these new companies now and they're gonna hire the best and they're gonna discard the rest.
- [79:27]
Jason Lemkin
What's happening Also this is what I'm seeing at the companies that I've wrestled at scale. If you're that way, you used to have to give up because you needed a thousand employees to get to ever many revenue. If you can get there with 200 employees, you don't have to give up. You're much later stage than Manus to give up and say, okay, I've got to accommodate lifestyles and any interest outside of work and anything we should as human beings. You don't need 300 people to get to 100 million to 20 million in revenue anymore. You just don't need 300 people. So you don't have to give. So that means no jobs for those people.
- [79:57]
Guest or Panelist (possibly Rory or another VC)
Well, Rory, we bring Jason to bring a positive element.
- [80:02]
Rory O'Driscoll
No, absolutely no. He's. And the scary thing about his negativity is I think he's increasingly correct. I mean I changing my opinion on this one.
- [80:10]
Harry Stebbings
Do you remember on the first shows.
- [80:11]
Guest or Panelist (possibly Rory or another VC)
We did together you argued like it was not.
- [80:14]
Rory O'Driscoll
I still think long term it'll be fine but I think my bigger the short term dislocation. I think Jason is right about the reality of people. The watch this for the lived reality of the undergraduate graduating in 2025. Jason is articulating exactly their lived reality.
- [80:30]
Jason Lemkin
Listen, you may think I'm negative. I'm excited about the products. I just I want to help folks that can get to the next level. That's my goal. I want you to not hide from it and not be grouchy about it because it doesn't help to be grouchy about AI. It's not going to stop the GPUs.
- [80:43]
Rory O'Driscoll
When you Marie Antoinette and Peter Thiel have been dragged out to the guillotine. Just remember that optimism, big guy.
- [80:51]
Harry Stebbings
But before we leave you today, I run the 20 VC fund and I get this question from founders all the time. Oh Harry, I can't find a good dot com. Do you have a good hookup? Well, let me tell you now, the answer is always going to be no. I don't have a guy or a gal for that. I do have a recommendation though. If you're building a tech startup, get a tech domain. Tech startup, tech domain. It could not be more obvious. As an investor, I appreciate founders who put thought into their brand. When I see tech in your name, it tells me right away that tech.
- [81:24]
Rory O'Driscoll
Is at the core of your build.
- [81:26]
Harry Stebbings
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