← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: The Startup Adding $1M ARR Every Week | Competing Against OpenAI's Codex and Claude Code: Who Wins | Why Gemini is Failing and GPT-5 Is Winning | Do Margins Matter in a World of AI | The Ugly Truth About AI Coding with Zach Lloyd, Warp
01:13:49
Zach Lloyd is the Founder and CEO of Warp, the next-generation developer terminal reinventing how engineers build and collaborate. Warp has raised over $70M from top-tier investors including Sequoia Capital, GV, Dylan Field, and Elad Gil. Before...
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- [00:00]
A
This is 20 VC with me, Harry Stabbings now. I am so excited for the show today. Today was probably one of the most, I don't know how to say it, maybe loose discussions that we've ever had. There was no structure to this one for sure and it was one of the most fun shows by the way I've ever done. Zach the guest was incredible. So time for the guest intro. Zach Lloyd, Founder and CEO of Warp. They are adding a million of net new ARR every single week. They are the next generation developer terminal.
- [00:31]
B
Reinfor reinventing how engineers build and collaborate.
- [00:34]
A
They've raised over $70 million from the likes of Sequoia GV, Dylan Field, Elad.
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B
Gill, and even the legend that is Marc Benioff.
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A
Now before founding Warp, Zach was a principal engineer at Google where he led development of Google Docs. I mean Google Docs. What a hero. As I said, Zach was one of.
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B
The most fun guests I've ever had.
- [00:56]
A
On the show and he really put up with a lot of shit from.
- [00:59]
B
Me in this episode and so I.
- [01:01]
A
Cannot wait to hear your thoughts. Let me know your feedback har@20vc.com but before we dive into the show today. On this show we care about Velocity. Most teams lose it in code review, not in writing code. Now Code Rabbit fixes that the second a PR opens, it leaves clear line by line comments, calls out what the change might touch and offers one click fixes. You can teach your organizational standards using your own custom instructions such as cursor or claude rules and enforce them on every PR. Code Rabbit has reviewed more than 13 million PRs and installed on 2 million repositories used by over 100,000 OSS projects. If you want to cut code review time and bugs in half, try a free month at Coderabbit AI with the code 20VC. And while Coderabbit keeps your code clean, Tesi makes sure AI handles the rest. Hiring shouldn't take months. Tezzy's AI agents work 247 to keep your recruiting pipeline full, instantly reviewing inbound applic, sourcing top talent, rediscovering those hidden gems in your ats, detecting fakes and pre qualifying candidates before your team even starts interviewing. What makes Tassie so different? Well, it's all in one AI agents across the workflow from open to offer a built in ATS plus a 750 million candidate database. That means added recruiting capacity when you don't have enough hours in the day. And that's why companies like Mutiny, Pocus and Aurum and even Public Companies like Real already trust Tezzy with features in VentureBeat, TechCrunch, Fortune and Axios. You have to check them out. Tezzy AI 20 VC for 10% off your first year and start making hires in days after Tezzy Streamlines your operations. Warp.dev helps your team ship faster. AI coding is everywhere but most of it. Honestly, it's pretty chaotic. Code that is almost right, but you don't really understand. Well, that's why Warp exists. With Warp, the old lines terminal and IDE disappear. It's a seamless environment for coding with agents where you can prompt plan review and ship production ready code, edit files in app review diffs as you go and deploy straight to production without switching tools. Warp tops the benchmarks. Literally number one on terminal bench, top five on software engineering bench, verified and is trusted by over 600,000 developers and used by 56% of the Fortune 500 engineering teams, making it one of the fastest growing AI companies with revenue growing 30x this year. With Warp, you don't just get speed, you get code you can trust. The average developer saves five hours a week with Warp, that's almost half a day. Try Warp for free@warp.dev 20VC. And to get pro for only $5 for your first month, use the code 20VC. That's 20VC.
- [04:10]
B
You have now arrived at your destination. Zach, Dude, I'm excited for this. It's been a long time coming, so thank you so much for joining me today.
- [04:18]
C
Yeah, I'm psyched to be here, dude.
- [04:20]
A
I would love to start Google Sheets.
- [04:22]
B
You LED engineering that rewrote it from the ground up is what I was told in my extensive referencing, which as a venture investor is almost fuck all because we don't due diligence these days. But sorry, I'm just going for it today. It's going to be a great show.
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C
Do it.
- [04:38]
B
So product and design lessons from rewriting.
- [04:41]
C
Google Sheets first thing from rewriting Google Sheets is I would say don't, don't rewrite things. We rewrote Google Sheets because it's at crazy scale. And so you know, if you have something that has 100 million plus users, which is what it had at the time, I think it's now like a billion users. It really matters that the thing is awesome and so it's worth the effort of like 30 to 40 engineers for a couple years to like get it right. Right. But I would say for the audience for this show, which assumes more founders, like rewriting is like a horrible idea. It's like pausing Time.
- [05:16]
B
If you don't rewrite, you don't just do sticky tapes. With technical debt though, I'd say rewrite and rewrite early. Like make a decision, make it fast and go.
- [05:26]
C
So for the startup people out there, I think try to pick the right thing to start is like a little bit better advice. So one lesson I did take for this is for warp. For instance, we built it the hard way to start. Meaning like, you know, I could kind of see around the corner like if we built it on sort of web tech or whatever, we're going to run into a bunch of performance problems, which is a lot of what we were trying to fix with the the sheets. Rewrite, like good engineering matters, but I think it's highly dependent on like where you're at in the stage of building a thing. And so yeah, rewrite. If you have like crazy product market fit in, you know, 100 million plus users, it needs to be perfect. If you're really early, I think rewrite is a little scary.
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A
But if you rewrite with a shit.
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B
Ton of users, surely you're just gonna have a massive time lag for a load of people waiting. Like rewriting when no one gives a shit. I'm sorry, you're the builder and I'm. Yeah, but it just doesn't make sense to me like why rewriting, pausing growth, like pausing progress with millions waiting versus when no one gives a shit.
- [06:23]
C
I guess if you literally have no one, fine. But my take is like in startup land speeds everything and the anti pattern that I'm looking out for is okay. I was a Google engineer building for tons of scale and then go to a found a company and like it's very easy to get like anchored on sort of the beauty of the engineering and trying to get the engineering perfect. And if you don't have a product that anyone cares about, I think like that's a crazy place to be spending your time at the beginning of a company. It should all be around like can I build something that people want to use? And there's a engineering mindset mistake I think that people will make where it's like, well they don't want to use it because the performance isn't like 30% better. That's not a good place to spend.
- [07:07]
B
Time internally at Google. I walked with one of the biggest execs in the world the other day and they said that Sundar is a terrible leader, but we said we'd be spicy today, so fuck it. But he has brilliant managers beneath him and they are very decentralized in their decision making and so it actually works very well. Would you agree with that? And when you assess the state of talent within Google, having been there for several years, would you agree with that?
- [07:36]
C
I think Google's a risk. Like I would never have said that five, ten years ago. I find myself using ChatGPT more and more and so I think they have big innovators dilemma problem. This isn't directly answering your talent question, but I think it's more of like incentives where it seems like they're really slow on AI is like my take.
- [07:55]
B
You're not impressed by Gemini?
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C
I'm definitely not impressed by how Gemini is like integrated into their consumer products. I think Gemini as a model is good. It's in like, like the three models that we care about at warp are Gemini, GPT5 and Claude. So it's, it's like there, I don't know. They had a lead, they wrote the paper on Transformers. It's not an awesome outcome from my standpoint. And then from like a talent perspective, there's still a ton of very, very smart people at Google. It just seems like a super risk averse place to me right now. Like the people I know who I respect a lot, to be clear, are by and large staying at Google because they're super well compensated and it's like a very, very cushy thing. But it tends to keep around the sort of people who want to take fewer risks. So I don't know, I'm not loving what I'm seeing from the outside, but I had an awesome experience working there back when I was an engineer.
- [08:50]
B
Sell all of my position in Google. Sell it. I'm a big buyer of Google.
- [08:56]
C
Yeah. So here's the bull case on goog have the. They have crazy distribution, they have a crazy brand, they have amazing infrastructure. So it's like I don't think Google's like beyond hope, but like crazy distribution, crazy brand.
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B
Gemini could be integrated much better in time. They have YouTube, they have Waymo, they have 10%.
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C
Waymo is awesome by the way. Have you been in a Waymo? Waymo is crazy. Waymo is very, very cool. But I think Waymo is, is the coolest product I've been in in a long time.
- [09:27]
A
I really like and that could be a mega part of it. They have also 10% of space X. I'm like, there's a lot to like here.
- [09:35]
C
Yeah. But they have like a. I think the culture is super slow and so I don't think a super duper slow culture. They're going against very, very aggressive, fast moving companies. Like, I think OpenAI's execution on chat GPT is really good. But maybe the inertia of just being so big and having such distribution is enough. I don't know.
- [09:54]
B
When you compare Gemini, Claude and GPT, how do they compare for you internally?
- [09:59]
C
Today the two leaders are GPT5 and the Claude models. And so we measure them like first of all, it's like it's not so much gut. It's like we literally, we have a whole bunch of benchmarks. We run sweet bench, we run terminal bench. Claude and GPT5 are the two best Claude, they have like different personalities which is kind of interesting. Like when you're using them for coding, like Claude's a little friendlier. GPT5 is like a little bit more like let me do a whole bunch of thinking. It takes a long time is my biggest issue with it. But then it tends to come back with something that's really good. And at the moment Gemini, which is on 2.5 and I'm sure they're working on Gemini 3 is not as good.
- [10:39]
B
Would you be as direct or blunt as saying that GPT wins consumer and anthropic wins enterprise?
- [10:46]
C
I would say that GPT wins consumer. I don't know who wins enterprise.
- [10:51]
B
Yeah, because they have so much of an emphasis today on Codex that I'm just like, I think they could win enterprise and developers too.
- [10:59]
C
I think developers is open. I'm biased here because the situation that I want actually is competitive dynamic at the model layer for all the coding models. I don't know that anyone has like a super strong moat at the API layer just to be totally.
- [11:13]
B
If you play out the next five years. You said that. I really appreciate you being open about the biased nature of your opinion. Most people, especially people like me, VCs, aren't we just state these views, hoping no one knows that we have massive positions in these companies when we actually think about what that market looks like in five years time from the enterprise developer market. Can you help me understand what you think it will look like? Maybe putting biases aside?
- [11:41]
C
Yeah. So just in the development space, I think the market is going to be, there's going to be two pieces to it. So there's going to be like a set of interactive productivity tools. So think of like things that developers literally are using. You're sitting there, you're telling an agent what to do, you're like, hey, write this code for me, help me understand this production problem. And then there's going to be a set of automation tools that's going to be more like, okay, crash came in. What was the root cause of it? Is there a PR that can fix it? And it's going to do it automatically and you'll have some developer who's reviewing it. Those are going to be the two classes of things. I think over time, the automation is clearly like a better market. The more valuable thing, companies are going to want to like, just pay for stuff that automatically creates software. It's a huge market. It goes into the labor spend a little bit. But I think the productivity piece is also. I don't see it being. I'm just guessing at time frames here. Five years is a long time with these AI models, just to be clear. But in the next few years is what I see happening. So those are the two big. The two big buckets. And I think more and more will go into automation.
- [12:42]
B
When you look at your devs today internally, what are they using? Are they using claw code? Are they using cursor? Are they using cognition?
- [12:50]
C
They use Warp. We're now fully into like the coding agent space, like history of the company. Obviously we started as a, as a terminal, but the terminal form factor is the preferred form factor for doing agentic work at this point. Whether you're using like a terminal app, like cloud code, in Warp, you just literally use the GUI app to do it. And so every single coding task we do starts with a prompt, which is the big shift in productivity that's happening right now. We don't necessarily finish every task with a prompt. There's certain things that are too hard. It doesn't matter which tool you're using. But everything starts with the prompt. Then we try to get all the way to completion, if we can. With prompt.
- [13:29]
B
Do you think prompt is a sustaining input to get desired output? Like, in three years time, will we still, as users be prompting?
- [13:38]
C
That's funny, it sounds kind of stupid. It's like, oh, start with a prompt. The general thing is, are you starting with some expression of human intent? And I'm using prompt for shorthand of that. And it's more than just you're writing some paragraph or something. It's like, what's going to matter more and more is the total context that the model has available to it. And that context is going to come from more and more places. Not just going to come from a person saying to do something. But yeah, I think generally if you're doing something creative and it's not totally deterministic, what needs to be Done. There needs to be some expression to the computer from a builder to do the thing. It's not going to read your mind. So, yeah, I think it's like, even though it sounds kind of stupid, I think that is the thing.
- [14:19]
B
When we look at available budgets, do you think that CEOs, CTOs, CPOs are willing to spend multiples of what they already do on these tools to get developer productivity increased?
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C
If you're comparing it to developer productivity tools, like a million percent? Yes. The budget for like developer productivity tools is not that big. It's like people paying for postman or what? Like, I don't know what you're like your old school developer tool is. It's like a small dollar amount per seat per month and you're using it to increase the productivity of someone who you're paying like $200,000 a year.
- [14:55]
B
One of my friends is Jason Lemkin from sasta and he says that we'll get to a stage where it could be up to like $10,000 per month per developer, maybe.
- [15:05]
C
I mean, again, I think like thinking of it per developer is thinking of it through the productivity lens. Like, you're thinking of it in terms of like, how do I multiply a developer's output? I think at some point you just get into the lens of like, what's this software worth to my business? Which is a lot. Like every company at this point, to a greater, lesser extent is like a software company. It's the biggest lever that they have. And so, so it's going to be orders of magnitude more that companies are willing to pay for these types of tools. Because it's not a productivity tool.
- [15:36]
B
Okay, it's not a productivity tool. But we do look at productivity gains as a measure of effectiveness. We are x more percent productive. We create x percent more code in less time. Whatever, whatever. Are we actually seeing productivity increases in terms of output that are meaningful and measurable, do you think?
- [15:56]
C
In terms of whether we're seeing productivity gains? I think no one knows. Like, there's a bunch of studies that show not really. Like, again, I would be like a little more nuanced. So if you are using Lovable, then yeah, of course. Like, you're going from like, I can't do anything to I've built an app that's like insane. And so the cases where it's like 0 to 1. Yes. I think when you go into the professional development environment, which is like where Warp is focused, there's a bunch of studies that show not really. It's sort of like, the noise that's created by people who are attempting to use a Vibe coding technique on a production code base kind of outweighs or can slow you down. And so I think that's the big problem with it right now. And this is what we see when we talk to companies. It's like they all kind of rush to deploy some sort of agentic coding solution. No one really knows if it's working. And whether it's working or not depends a ton on how you use it. And so you can't just Vibe code with it. I'm not a huge Vibe coding person to begin with. And so there's like a way you have to use it in order to get productivity gains. And then it needs to be figured out how you're going to measure those.
- [17:03]
B
Would you say agentic coding tools have product market fit? I know that sounds utterly ridiculous. When you look at Cognition's $10 billion price and Cursor's $28 billion price and you say, of course they do, you moron. But if you have customers that are genuinely questioning productivity gains and kind of going, do they?
- [17:22]
C
So great question. In like the prosumer market, there's like strong product market fit, but it's not, I would say it's not a great market. Meaning, like, they're very high churn price sensitive customers who are building things that don't have a ton of economic value in the enterprise market. I actually think the thing that has most product market fit is like Autocomplete, which is not the sexiest type of AI. So it's not agentic AI. It's like Cursor's original product or even Copilot. But if you're doing like hand editing of code, it's like, clearly helpful to have the thing show you the gray text and kind of read your mind when you get into like Warp or cloud code or Cursor's agent or. Yeah, even I think cognition's its own beast. Honestly. It's like, it's more of like an automation thing. I think it's like really early in that market and people there's like a lot of like, intuitive signal that it's helpful and there's a ton of willingness to pay. But in terms of like, will companies get measurable impact from it? It's going to happen. It's going to be transformational, and it sometimes is transformational now, but not with every coding test and maybe not in the aggregate.
- [18:30]
B
Does it make 1x devs or engineers 10x or does it make 10x 100x. Who does it favor? The lower quality or the higher quality?
- [18:40]
C
Favors the higher quality. And this is counterintuitive. It actually causes a lot of problems with people who don't know what they're doing in a professional environment. So if you are a newer engineer or more junior engineer or maybe just like not that sophisticated of an engineer, it's a problem to me because you want to use these tools the most, but they end up producing code that you don't understand or that can't be shipped or they won't get through code review or that contain security bugs. Whereas to successfully use these tools you need to be like more sophisticated, smarter, more experienced. And if you can do that, you can get a crazy productivity gain. But you already kind of need to know what you're doing. So I think it's a little bit counterintuitive. Like I would much rather have senior developers using these tools. There's a little bit of a paradox in that they don't necessarily want to use these tools. Like they feel like they can do the thing themselves. But if you get a senior developer who's really good at wielding these tools, it's very powerful.
- [19:37]
B
Would you say in five years time we will have more or less engineers in dev teams?
- [19:44]
C
I think we're going to have less, I think we're going to have fewer, more senior engineers who are managing the work of a lot of agents.
- [19:52]
B
Do we see the collapsing of roles when we look across the dev spectrum? Now you've got product, you've got Eng, you got design. Do we see the collapsing into these superhuman product builders or do functions remain.
- [20:05]
C
Intact in terms of collapsing of all the roles? If I had to design a role for the uber person who builds with AI, it would be like a product oriented senior engineer. We see a lot of like product managers and designers who will use the tools to make prototypes and that's actually very cool. But to get stuff to production, I think what you want is like someone who, like I said, more sophisticated than the agent. And I think there's a real cap on what a product manager or designer is able to build with this stuff right now. So I guess short answer is I don't really think so. And if there was like a role I would design it would be a product minded engineer.
- [20:43]
B
How do you think about the shittiness of prosumer but then also the challenge of needing to go in top down from enterprise and get adoption, which is much harder.
- [20:53]
C
Yeah, so our motion is plg. So I think I'VE like overstated like how these tools aren't working that well for real devs. They are working well for real devs. In real, you just, you need to learn how to use them right.
- [21:06]
B
What does that mean? Learn how to use them right?
- [21:09]
C
Yeah. So if you're like someone building in a sort of naive way, and I kind of blame vibe coding for this, what you'll do is you'll be like, build me this thing that looks like X. And the build me this thing that looks like X doesn't tell the agent how the thing should work, at least from the engineering side. And so if you do this on a big complicated code base, it fails or it produces something that just wastes a bunch of your time. It might iterate and go in circles for hours and finally get you something that seems to work from a user perspective, but it won't be something that you'll actually want to release. So to make it work in a production setting, it's like you need to tell it how to build it. And that means you need to understand the code. And so it's just, it's very liable to like kind of lazy usage which doesn't work well.
- [22:00]
B
Do you worry about the security of a lot of these builders? When you look at a lovables or a replete, security is often questioned. Is that a fair concern?
- [22:09]
C
I think it's a totally fair concern if you're doing it the same way on like a code base that matters. Yes.
- [22:14]
B
Dude, do your margins matter? I know it seems strange, but like, you know, I'm in a lot of companies and I get top line revenue. You know what? I never fucking get, never get margin.
- [22:24]
C
They don't tell you that's amazing.
- [22:27]
B
How does it matter margin? It's like, Harry, why are you being so negative? I'm like, oh, I'm sorry I'm so anti founder friendly. Does margin matter in this, this cycle?
- [22:39]
C
Do margins matter? I think like yes, definitely. If only because let's say your users cost you money. It just gets super duper expensive the faster you grow. And that's like so you can't.
- [22:51]
B
Are you positive margins?
- [22:53]
C
Not right now, but not like we're, we're working on it. It's, it's really, really costly. I mean, so to talk about like the pricing stuff, here's the fundamental problem with pricing these AI products is like consumers expect like if you're going for the prosumers, let's say for a second, not the enterprise, because enterprise, we're margin positive. But on the Consumer segments, it's like, it's very, very hard. They expect something that looks like SaaS pricing. So they expect like, you know, 20 bucks a month, 50 bucks a month. 50 bucks a month is a lot. You know, more than that starts to get into like they're comparing it to like their gym membership or something. Right. The more they use it, the more it costs you. So the better your product market fit in a sense of like the product is getting better, the like worse your business is from like that perspective. And to some extent I think it's actually fine to subsidize. Like if you're subsidizing users who are going to turn into enterprise leads. But I don't think it's like super smart to subsidize people who are building personal websites where there's no strong economic incentive.
- [23:55]
B
Doesn't it just go in the marketing budget? Like, you know, when you look at the. I completely agree with you. The economics are shit. When you have the massive funnel and you are doing PLG and converting a very small number. But do you not put that in the marketing budget and just subsidize?
- [24:12]
C
Yeah, I think to an extent you do that. At some point though, it's like if you're growing so fast, Warp is not growing really fast writing like, you know, $1 million an hour every week, you're doing a million a week adding of net new ARR. Yeah.
- [24:26]
B
Can you just say that again?
- [24:27]
C
We're now adding a million net new ARR every week or even less. Honestly, recently it's accelerating. People love the thing however it' like, yeah, you can count. You sure do the accounting for it however you want. You know, from our perspective, we want to be growing that in a sustainable way. So I think it's crazy to just be like, no, margins don't matter. At some point you're going to run out of money if you're growing really fast. And though we could probably go raise more money, like for sure. But can I ask you, like, how would. How are you thinking about that as an investor when you're seeing a company like Warp that's growing? We're growing extremely quickly. I think we're still like, I think at outlier growth. How do you think about how sustainable that growth should be?
- [25:09]
B
My honest, again, this is a very. I'm loving this show because it's so natural. But I'm also, I'm candid here. My worry or the risk that I'm underwriting here is you really have to believe that the standalone businesses that will be built outside of the core model providers. And I think Codex and Claw Code are going to be incredibly difficult competition with immense, immense budgets. That would worry me. And so my question to you is not like the, oh, is it like.
- [25:39]
A
Super shitty quality customers?
- [25:41]
B
I think if you're using Warp, you're probably a pretty high quality dev. I'm more worried that you are switchable and I think the switching costs are pretty low. And so I think actually the ability for people to switch to an anthropic or OpenAI is pretty high. I would share the same, by the way, for Cursor even.
- [26:00]
C
I know I'm not supposed to be interviewing you here, but like, do you think that there's some inherent lock in that they have that other companies don't have?
- [26:07]
B
No, no, I don't at all. I just think they have a shitload of cash. I think they will be hoovering up talent and I think they can outspend everyone.
- [26:16]
C
Yeah, I think the competition from the model providers is a big. Is an issue, but it's like, why start a company?
- [26:23]
B
Yeah, well, I get you, I get you and I don't. It's a really shitty VC thing of like, well, Google could just do that. Was always the case. Well, Amazon could just do that, but here they could and they are.
- [26:38]
C
So I guess I'm not going to speak for like the whole coding app industry, but for Warp, it's like a different product. So every other single product out there is either a clone of VS Code, which again is Codex, or Cursor or Windsurf or whatever, they're all the same product or they are terminal apps. And I do think like, even if you believe that it's like really cheap now to clone software. It's really not cheap to clone Warp. We were building this thing for five years and it's a very, very differentiated product experience. I don't think that's enough. Maybe I feel like there's like a VC trope right now around, like, well, product's not a moat. I think that that's like kind of bullshit, especially when everyone else in the market has the same product. So I'll. Speaking for Warp, I actually think we can differentiate on the product quite a bit. If you believe though that it's all just like they're all the same thing and it's like whoever has the most money wins. I guess I see what you're saying, but I don't agree with that when.
- [27:31]
B
You say product is a moat in a way that people don't believe. What you're essentially saying there is that switching costs are high because of product quality.
- [27:38]
C
Product quality with some amount of like. Again, I don't want to like, say, like, lock in it, but there's stickiness in the product. There's stickiness in features where it's.
- [27:46]
B
I'm so sorry, in what way?
- [27:49]
C
So there's stickiness just in like the product experience itself. It's like, okay, I've become accustomed to this thing. There's stickiness a little bit in the fact that, you know, we have a ton of users. We have way, way more users than, than Claude Code, for instance, or codex. We have 700,000 users because we've been doing this for five years. That's not stickiness, but that's like, there's a great funnel.
- [28:10]
B
You have more users than Claude code.
- [28:12]
C
I'm like 98% sure of that. Yeah. So I can tell you part of the reason I believe that is because of where we sit in the stack. I can actually see how many people are using cloud code in War Warp and I can see the trends of all these other products, which is again, an interesting thing about where we are. And it's not super high volume.
- [28:28]
B
What trends are you seeing?
- [28:30]
C
So every time one of these model providers puts out a thing, whether it's cloud code or Codex or Gemini, you see like a temporary spike in their thing, people using it within Warp. And I think the nature of the developer market, which is kind of over, underappreciated, overlooked, whatever, is like, developers just want to try the newest thing always. It's a fragmented market, they want to try the newest thing again. This can work against Warp as well, but all these other things are basically equivalent, like they're all the same product, whereas Warp is not. And you can see the spike, you can see it settle down. I don't think the model providers, based on the data I'm seeing, are winning here. I think, honestly, if I look at the space, the one that comes up the most is Cursor. I think Cursor's execution is really good.
- [29:16]
B
Wanted casa doing well.
- [29:17]
C
I think their fundamental product of Autocomplete is really, really good. They're like a better version of Copilot. And Copilot, it's actually, again, I think it's a testament to what startups can do. Copilot had their product and you might be like, why did Cursor win? Cursor won because their thing was better, it worked better, it provided more accurate suggestions and developers care about that. So that wedge was really good. The switching cost into it was really low. And then Cursor, I think has been really fast with enterprise. I don't think Cursor's like agent product is that awesome. They've done a really good job. Everyone knows Cursor well.
- [29:54]
B
Microsoft just asleep at the wheel there. They had Copilot.
- [29:58]
C
Yeah, but this is like the repeated story with bigger companies who don't have the same pressure to innovate. Yeah, they were asleep at the wheel. They had Copilot. It's not as good. It's literally, it's like a bunch of like, I know the guys at Cursor. There's like some smart people from MIT who are like, like they were actually working on something else and then they just kind of out executed on the autocomplete part, which again, I don't think autocomplete is the future. So I don't feel like I'm like ceding competitive ground here to Cursor. The future is more like developed by prompt but really, really good execution on their part.
- [30:29]
B
Our curse are paying massively for talent. I've spoken to so many people, as.
- [30:35]
C
Far as I know, they are paying massively for talent.
- [30:39]
B
Do you feel the pressure to pay massively for talent?
- [30:43]
C
Yeah, I do. It's like a super competitive space. Like I think we can offer because we're like earlier, like we can offer more equity, they can probably offer more cash. But yeah, it's like a crazy, crazy space that we're in right now. Very competitive. Which again, I think, I think reinforces the like, the importance of senior engineers is not going down. It's never been more competitive for us to hire someone good.
- [31:07]
B
As a vc, part of my core morning activity is tweeting shit that will probably be regretted later in the day, but I tweeted I've been investing for 10 years and I've never seen such frothy environments. 200x revenues, insane packages, insane packages for engineers. Just nuts, dude.
- [31:28]
C
You mean in terms of the VC valuation or what people are getting paid or just the whole thing?
- [31:32]
B
I mean the environment itself is just fucking nuts. Nvidia investing 100 billion billion into OpenAI is fucking nuts for them to then go and spend on Nvidia chips.
- [31:47]
C
I think it's like, do you fundamentally believe that this is transformational technology? If you do, I think, I mean it's crazy, but it's like not crazy. I think it's. I'm a skeptical person by nature, but I am a full believer that AI is going to change every Single business. So there's going to be some big losses, put it that way, but there's also going to be some big winners.
- [32:08]
B
Well, I think bubbles are often associated with bad and I think you can have good bubbles, which is like this is a bubble which will lead to a huge amount of money lost but with a huge amount of technological development made. Do you think it will have the short term impact that people think it will?
- [32:25]
C
I think it's going to depend a bunch on what industry you're in, what the short term impact is. I think for highly competitive unregulated things like if, for startups, for SaaS businesses, I think it's going to change everything. For knowledge workers, if you're not in a regulated industry, I think it's a.
- [32:43]
B
Big deal for SaaS businesses, it changes everything. What do you mean by that?
- [32:48]
C
I think what I mean is like if you're working at there's a few different angles. There's the business angle and there's the worker angle. I think the cost to start a sort of software driven business is going to go way, way, way down. That's one thing I think from a worker perspective, if you are working at a place like I'm going to pick a random company salesforce and there's no real regulatory blocker for the deployment of AI and you're in like a competitive market, AI is going to be deployed really, really rapidly and change what daily work looks like. I think if you're in like the healthcare industry or the government and it's like I'm still filling out paper forms when I go see my doctor right now it's less a question of is the technology transformational than are the incentives there to deploy the technology. And I worry that it's just going to take a long time.
- [33:40]
B
Do you think this is a three year thing or a ten year thing? I'm constantly thinking about no, no. But we often overestimate what we can do in a year and underestimate what we can do in 10 and it takes longer than we actually think.
- [33:52]
C
I think it's more like a 10. I think again the technology is going to run way ahead of the deployment of it. Just because the deployment of it 10 takes a long time, you'll see the deployment go fast. In industries where there's not a lot of barriers. This isn't like the most profound point in the world, but if you go to the DMV you're still going to be dealing with some annoying old school stuff because it's just hard to deploy technology in certain areas.
- [34:13]
B
So you're adding a million a week. At what point do you go, shit, we need to really focus on margin and actually making this a really efficient business.
- [34:23]
C
We're doing it now. Maybe you could tell me as a vc, it's stupid, but, like, you know, we send a big check to Anthropic. We send a big check to OpenAI.
- [34:33]
B
If I pay you a dollar, how much goes to Anthropic?
- [34:37]
C
I don't know if I want to, like, explicitly, like, say that right now, but, like, they get a lot of. Like, let's say they get. They get a dollar. Let's just. Let's just say. Let's say that for a second. And so I don't know if I'm gonna get in trouble with investors or.
- [34:50]
B
Whatever for people compliance is gonna kill me for this episode.
- [34:56]
C
No, but let's not put a. Let's say they get a lot of it. And so what we're doing, again, because it's growing so fast, which I think is good. I think it makes sense to be like, how do we make the usage of these models more efficient? How do we change our pricing so that it's more aligned with customer value? So we make more money as users use warp more, not less money as users use warp more. It's a big focus for us right now. The trick is like, can we do it without harming growth? You know, that's like, where this question of, like, maybe the smarter thing for us to do is to, like, just take it to a certain point, keep growing, raise more capital.
- [35:36]
B
What does that. What does Andrew say?
- [35:38]
C
Andrew says we are in an awesome spot and should, like, get the margins a little bit better and then raise more capital.
- [35:46]
B
Basically, that's such a VC thing.
- [35:49]
A
It's like, hey, keep growth high, but.
- [35:52]
B
Get better margins and then go, basically.
- [35:55]
C
Andrew's not in there being like, well, what? We could change the number of requests we offer on this plan by Y. So he's like, you know, he's like, we're doing awesome. We have a thing people love. Don't fuck that up. First of all. Like, don't fuck that up. Make the product even more compelling. Because I will say, even we're not competing on price. Like, so here. Here's where I would be worried about margins if I were, like, in this space, if we were like, we're reselling Claude for, you know, 75 cents on the dollar or whatever. It's like, what's the point of being in that business? We're not perceived as inexpensive. We're like, like a premium product for people who are doing serious coding and it's still very expensive because we're somewhat inefficient in terms of how we do it. If we were competing on price, I would say like, let's just find a different business. Or you have to, you have got to be really strategic and find the right cohorts that are paying that are like super profitable. And so Andrew's like, just try to make the product as awesome and different as possible. Try to get the enterprise motion going as much as we can because those are better customer segments. Don't mess up the growth. Be sensible with the margin so that we're not just like incinerating VC capital willy nilly but like we're in a very cool spot. I mean that's pretty cool. Your face is so funny right now. You're looking at me like I'm like a crazy.
- [37:11]
B
It's just shit advice, advice. Don't mess up growth. Improve margins, focus and lean into enterprise.
- [37:19]
C
It's like, wait, why is that? Tell me why that's shitty advice. Like, what would you be advised?
- [37:23]
A
Because it's like, it's like of course.
- [37:26]
B
But there is a world of trade offs which is like I cannot sustain growth, Focus on margins and improve them. Move into enterprise or sustain it and make it super happy. Oh, and continue to focus on beautiful products, product quality all at once. Yeah, sure. Fantastic.
- [37:44]
C
That's like what doing a startup is. It's like I.
- [37:47]
B
No, no doing. Doing a startup is a game of. And this is from, from me. You, you startup founder should listen to me. Vc, who's not going to start tell.
- [37:56]
C
Me how to do it.
- [37:57]
B
Yeah, this is, this is how fucked up the world is today.
- [38:00]
C
Tell me how to do it.
- [38:02]
A
No, but I just think it's a.
- [38:03]
B
Constant game of trade offs and understanding what you're willing to give up for a certain gain. And so it's a case of I'm willing to give up a little bit of growth in return for a focus on margins and that will mean X, Y and Z, I think. Did you say we want it all is idyllic.
- [38:24]
C
So, okay, to give Andrew more credit now. I feel like I'm gonna piss Andrew off in this interview. Andrew's very, very smart. He's an awesome investor.
- [38:31]
B
Brilliant, brilliant. It's way smarter than me by the way.
- [38:34]
C
I think if we had to prioritize we would say don't screw up the revenue growth. But there's nuance and I think it's very easy to go on a podcast and be like revenue growth, whatever. It's like, no. We have to also make some progress on the margins because if you're a smart investor, you're going to want to leak. And the way to think about the margins at least is there's an immediate concern with Burn, which probably we can get more money. I think the bigger long term concern is are you a, a below market reseller of intelligent tokens? That's not a good business to be in. And so we don't want to be in that business. But I don't believe that. And so it's like do what you need to do right now to get the thing to a good enough spot without screwing up growth is kind of the main point.
- [39:17]
B
And can I ask you, end state, what do the margin profiles of these businesses look like? Are these like 15 to 20% margin businesses? End state? Are they like 60, 65?
- [39:27]
C
End state's not obvious because it totally depends what happens in the model market. Somewhere there's going to be margin, right? Like Anthropic has big margin on their API business. Right now what I've heard is 60% margin on Anthropic's API. I've heard 50% on OpenAI. Again I've heard this. I don't know if it's exactly right or not, but if there were no margin anywhere in this stack, I think it's really bad. But there's margin. The question then is like, well who's capturing that? And I think it depends if the model providers are really competitive. Even better would be like some open source model that's good enough. I think the app layer is going to get a lot of value. If you think that it's going to be like one model provider runs away with it, then that's horrible for us. I don't think that's going to happen. I think there's too many smart people who are working on building these models. So our bet is like there's competition. It might look like GCloud AWS Azure level competition or it might look like actually like open source, like database competition and then we're going to have an awesome business.
- [40:26]
B
But I don't know, do you think it's open really? I can see the AWS Asia Google Cloud trio. I can see three or four players going and taking dominant share. I don't think opens it.
- [40:38]
C
I don't think open either if I'm being honest. The reason I don't think open is that it's just so damn expensive to build these things. And so what's the economic incentive? It's not like open source software. People make the analogy like, oh, open. I'll take the word open and apply it to open models. Open source software works because it's a bunch of hobbyist developers who are giving their time to build something really hard. Open models. Somebody's got to spend all the money to make the thing competitive. But here's the flip side. Here's the way it could work. It could get to a point where just for coding, let's say our domain, it's basically solved, meaning, like models that are good enough and you don't need the frontier model. And what actually starts to matter is like, how good are you getting context in from a company? How good is your interface, how good is your automation? Like an orchestration stuff? And that's not crazy to me. Like, it's crazy to me that the frontier model would be open, but it's not crazy to me that there's like a good enough model that is open.
- [41:39]
B
Well, that's the story that your lovables and your applets will say, which is like, you can increase margin over time by having model selection, which will improve obviously your margin by being able to choose older, worse models for more simplistic requests and demands.
- [41:55]
C
Yeah, I mean, it's not how I frame it. I would frame it as like, coding may literally be solved, which is a crazy thing to say, but at the model layer, it might just be the level of intelligent token is good enough that if you feed it a code base and a prompt and a bunch of context, it can make the right coding change. And you don't need this year's model to use a Elvis Costello reference to actually get the good result. So I would look at it more like that. And then, yeah, if there's competition, or you can do model routing. If you're squeezing margins like that, I think it's a more precarious place to be. But I think that the price per intelligence for any fixed level of intelligence is definitely falling.
- [42:36]
B
I love Elvis Costello. Great, Great. I've never had an integration into a.
- [42:41]
C
Show of Elvis Costello.
- [42:42]
B
Like, Elvis Costello is like. I mean, that'll get me weeping. If anyone watches, like, Notting Hill, it's just like, fantastic.
- [42:50]
C
This, this, this is a fun recording. Oh, yeah, yeah. No, trust me, this, I'm a little scared of my level of transparency in this, but whatever.
- [42:58]
B
Oh, don't worry, it's fine. You should see, you should see my team. They're just like, oh no. What did he say? Oh, he said, dude, we mentioned open AI several times as bad game over under on a five year period, over under $3 trillion market cap.
- [43:14]
C
That's a lot of market cap, but I think over.
- [43:17]
A
Wow.
- [43:18]
C
Yeah, Yeah.
- [43:19]
B
I advise some of my mates to sell at 500 billion. And now I'm being like, oh, that was really.
- [43:26]
C
I'm very bullish on open a high. I'm like, for no good reason, like, other than like, I think that they have, have the. I think they have the magic consumer product, the next generation of it and it's worth so much.
- [43:38]
B
It is.
- [43:38]
A
But also if you're an investor, it's.
- [43:40]
B
Not a great business to be invested in. I mean like the early investors in OpenAI have got like $5 billion of enterprise value right now, which is like a 25x for them, which, don't get me wrong, is amazing, but it's actually not like great SaaS businesses will give you 25x. Supabase's early investors will have a 25x.
- [43:59]
C
That's interesting.
- [43:59]
B
And it's because of the dilutive nature of the business being. It's actually not been such a great venture investment. This is the greatest transfer of wealth from VCs to team members and founders.
- [44:11]
C
I'm glad I'm a founder. I mean, I haven't gotten the VC transfer of wealth to me yet. It's not exactly why I'm in it.
- [44:22]
B
But yeah, let's see on the VC side, you've never run a formal fundraising process. I heard.
- [44:28]
C
Yeah, y.
- [44:28]
B
How did you think about the fundraising processes with Warp? Was it always just preempted? How do you reflect on them?
- [44:36]
C
So I have done the formal process thing before. I didn't do it with Warp. I did it with the company before Warp, where when we went out to raise a Series A, we like, you know, flew out to Silicon Valley and pitched like 20 firms in like a week or whatever, kind of took the best term sheet and then like got in bed with investor. And I did not think that process led to an amazing result. And so with Warp, I really tried not to replicate that. Like the way I did it with Warp was as I was developing the idea, I was talking to a few investors I knew who I'd known for a really long time who, just when I was like, I'm ready to do this idea, were like, we love the idea, we want to invest. So not every founder is going to have that opportunity. But if you have that opportunity, I think that that's Way preferable. And then for the subsequent rounds of Warp, which were Dylan Field led the A and Sequoia led the B. That was all preempted. And so those were.
- [45:31]
B
How does Dylan come to lead the A? Like I love Dylan, he's great. Does he just like reach out and be like I love the product, hey let me lead the A.
- [45:38]
C
So Dylan was a small angel investor at the Seed and then from the get go he was like just super excited by what we were doing. I think some extent of pattern matching with our thesis was reinvent a horrible tool that developers spent all their day in. So I think that that resonated with him. And then we were doing well but still very early and he came and was like I'd like to lead your A. And I was like okay. And then Andrew wasn't that different. We were still really early.
- [46:10]
B
Can I ask how big was the A?
- [46:13]
C
We raised like, like this was in 2021. It was like a 17 million dollar rank.
- [46:18]
B
Wow.
- [46:18]
C
Things have changed by the way. We're, you know, we started back in like the dinosaur era. We're like a five year old company.
- [46:24]
B
No, I love the individuals, I love the individuals lead 17 million dollar Series A's. It's like go, go Dylan.
- [46:31]
C
Like fucking yeah, Dylan's, Dylan's awesome. Dylan.
- [46:35]
B
Dylan's awesome. And so then, and so Andrew then comes in and goes yo.
- [46:38]
C
Well so Dylan introduced me to Andrew because you know Andrew's on Figma's board and Andrew and I really hit it off and again it wasn't, we didn't need the money at that time. We were, it was just a totally different time in the company. We were like, you know, it was a free product at that point with good user growth but not really like a good business model or not a business like we weren't even monetizing.
- [47:00]
B
You weren't monetizing at the beat.
- [47:02]
C
We were not monetizing at the beat. This is, this was so this was another frothy crazy period, right? So this was like pre AI and I don't know if I speak for Andrew but I think Andrew again was like there's some amount of pattern matching. And then I think he liked me and I think he liked that we were building a really hard app in a big market and so they invested very early.
- [47:24]
B
How much did he invest? How much was around.
- [47:27]
C
That was a $50 million round which I think by the way is going to. He's going to look very smart.
- [47:35]
B
No, no, he's going to look fantastic. But I'm just like what a fantastic investor. Like what a prescient pick because that's not obvious. Respectfully, like $50 million that I didn't want to.
- [47:47]
C
Yeah, we talked about it for a long time. Like again I'm like again I'm probably unusually transparent for founder here but like we were a terminal company which is not a real market, just to be clear. And so it was very much like we're displacing a free product. The thesis of Warp was like hey, there's this tool that every developer uses every single day that kind of sucks. And I still believe this. There's a much better version of this that could exist. It's actually very hard to build. It's going to take a bunch of capital to build to get people to work on it. There's a non obvious business model. The business model that we started with was collaboration which makes sense from my background on Google Docs and Figma. To some extent we got lucky that AI came along because that's like a way it took us from being a really, really nice user interface product to something that's truly transformative for people's work. But the general initial thesis was kind of right in that this product sucks and it's used by everyone and something better should exist. And so I think that was the bet. And then we'll figure out how to build a great business around that. And it's turned out I don't know if AIs can be like, I think verdict is out on app layer companies and AI like you're talking about. But from a like does this thing really help people do their job better standpoint, it's like it proved to be right.
- [49:04]
B
But I mean it's just incredible when you look at that 50 million check with no monetization pre AI and not.
- [49:11]
C
Even a huge user base either. Just to be clear, like when they did that round we were in the thousands of wow. And now we're like I think we'll hit a million active users, active developers this year. And now obviously we're growing our revenue super duper fast. But it was really, really risky. I wonder if Andrew thought if he reflected on it was like what am I doing? But I don't know, I think it's actually going to work.
- [49:35]
B
I think this is where actually more successful investors make better investors because you are able to take risks like that when you're not a very successful investor. You can't do a chat like that. That right?
- [49:47]
C
No, no, I think like, like incredibly risky investment but because he's Andrew Reed.
- [49:53]
B
And he's at Sequoia, but. And like, correct. Yeah, he can do whatever he wanted.
- [49:58]
C
And that's, by the way, like, again, from a founder perspective, getting to work with someone who's super secure and confident is a huge, huge advantage compared to working with someone who is like, you know, like the more junior person who doesn't have the wins. I, like, I feel like investors insecurity will bleed into the relationship.
- [50:19]
B
Oh, so much. Absolutely.
- [50:21]
A
And they, you know what's also hard.
- [50:23]
B
Is when they have a lot of pressure put on them by their partnership and they then bring that pressure to you. I always say you want to work with a partner who's got a lot of wins under their belt. Andrew's a great example. Andrew's Robin Hoods, his cloners, his Vantas. I mean, it goes on and on with Andrew. No one is questioning Andrew inside Sequoia ever.
- [50:41]
C
Right. That's where you want, like, it's not necessarily easy to get and like, but like, if you have someone who's really confident, it's just, it's like he's in a role of like, supporting me, not pressuring me. And I think that.
- [50:55]
B
Does it change your business having Sequoia? And I don't mean that like, oh, I want VCs to just, like, you know, jerk each other off. But like, but like, when you have Sequoia money, does life get easier?
- [51:08]
C
A little. Here's, here's what Sequoia, like, I'm a huge Sequoia fan. Here's what Sequoia has done well for us. So there's like a halo around the brand, right? So, like, from a recruiting perspective, it's good. From a, like, customer conversation perspective, it's sometimes good. I'll give you like a really tangible example. We were getting user reports that were being blocked by CrowdStrike. So CrowdStrike's like this security software, right? Which kind of makes sense. Like, we're at that layer of the stack. Like, we do all this crazy stuff, stuff to make warp work on people's computers. So we're like, oh, we're getting blocked by CrowdStrike. That's like really, really bad. And it's like we're. We saw all of our uses start to go down at certain companies. And so I reached out to Andrew. I was like, can you help me here? And then that day, I was on the phone with the president of CrowdStrike, and he's like, I'm looking into it. I don't think that We've actually done anything. I think this is a configuration issue because we were ended up being blocked at Salesforce of all places. You know that. I don't think you get that if you have like your kind of random VC firm, but the connections there are real. It's freaking cool, right? That's like, that's a cheat code. And I was telling my. I told my wife that and she was like, oh, that is like, pretty cool. So that's an amazing story in my take of like, why Sequoia is awesome.
- [52:28]
B
I absolutely love that. Is there anything you would have done differently about the fundraisers?
- [52:32]
C
Honestly, no. But I think, again, I think I'm like a little lucky here and that like a second time founder, I had like, some access to people I knew. I think we're gonna have to do one of these, like, competitive ones at some point. Well, maybe.
- [52:48]
B
You must be getting inundated now.
- [52:50]
C
I am inundated.
- [52:51]
B
I've not pinged you about any funding.
- [52:54]
C
No. You seem uninterested. But yeah, it's like, I have a.
- [53:02]
B
Very simple perspective to this. If Andrew's keen, I'm keen.
- [53:08]
C
No, we're getting a ton of interest and what, you know, do you like it?
- [53:13]
B
Help me understand because I'm on the other end of this.
- [53:15]
C
Okay.
- [53:16]
A
Do you like it or are you.
- [53:17]
B
Like, oh, fucking another vc? Yeah, yeah. You've got a thesis on the space. Sure you do.
- [53:23]
C
So I think it would be, like, kind of arrogant to be like, oh, I hate this. Like, it's like. No, it's. It's cool. People, you're running a business and people are interested in giving you money. I think that is not the default case for most people in the world. And so, like, for me to be like, oh, I don't. That's so annoying. No, it's great. It's. It's awesome to have the interest from a, like, how to manage it. As a founder, I just basically don't take the calls right now. I'll do them once in a while to just like, gauge like, the market and, like, where we're at. But I have a strong feeling that, like, when we do it, I'm not going to do it based on an inbound email. I'm going to do it based on, like, either existing investors or they're going to introduce me to someone who I like. I'm optimizing for the relationship. Right. And so it's hard to get that from just like a sales pitch over an email.
- [54:13]
B
I thought we bonded so well here. This Was like a. This was like a meet cute. You know, the romantic meet cute. Have you ever seen the Holiday? You ever seen the Holiday?
- [54:22]
C
I haven't seen the Holiday. What's that?
- [54:24]
B
Jesus Christ. This is not a fit.
- [54:26]
A
That's.
- [54:26]
B
That's it.
- [54:27]
C
That's it.
- [54:29]
B
I mean, if you haven't. Dude, this is like the greatest rom com ever.
- [54:33]
A
Kate Winslet, Jude Law, Come on, Jack Black.
- [54:37]
C
And basically ask my wife.
- [54:40]
B
She's. She's seen it and she's upset with you for not seeing it. And the meet cute is when a.
- [54:45]
A
Couple meet and it's like, you know.
- [54:47]
B
A man meets a woman in the coffee shop.
- [54:49]
C
I knew we were gonna get along. My. I'm concerned that I've been, like, too open. But I think it's gonna be interesting for people listening. Like, I'm very. I'm very unfiltered. So.
- [54:59]
B
Anyhow, dude, I think the most important thing is, like, a natural conversation. You have Benny off in. In the company? No.
- [55:06]
C
Mark. Ben aff's my cousin, so. Yes. So take that for what it's. For it's worth. But yeah, he's. He's a significant investor.
- [55:13]
B
No way. Benioff's your cousin?
- [55:15]
C
Benioff's my second cousin. Yeah, I was. You know, I have pictures of me and him hanging out as a kid when. When I was a kid and he was at. He was at usc. So I grew up in la and I have very distinct memory, like, he was always like, like precocious as a business person. I have very distinct memories of him picking me up from my house as a kid. And he had this white BMW convertible. My parents being like, that's your cousin Mark. He's gonna be really successful. Or maybe he was already like, like at Oracle being kind of successful. And I remember riding around with him. But, yeah, he's my cousin.
- [55:48]
B
Wow. Do you know this? So I emailed Mark.
- [55:51]
C
I've heard him on your podcast, by the way.
- [55:53]
B
Yeah, so I emailed him 53 times. And then, like, after the 53rd time, he responded and agreed to come on. And since then he's, like, turned into a friend. And he's a wonderful, awesome dude. That is so funny that he's your second cousin. So was he in the first round? Why did he not just fund it all?
- [56:11]
C
Well, he was. He's been in all the funding rounds. I don't know. I wanted, like, I wanted some variety and plus, like, Mark. Mark's awesome, but Mark's not like, sitting down with me and being like, here's here's how to think about like your customer base. Mark's not like closing candidates for me. I just want to be. Be clear. Whereas like, you know, Andrew or even Dylan sometimes will help do that kind of thing. So Mark's awesome.
- [56:34]
B
Andrew and Dylan will close. Will close candidates and customers for you.
- [56:38]
C
Well, candidates, yes, customers not so like I haven't been asking them to do that but like, yeah, if I'm like, we have this incredible engineer who I want to join the team. Can you explain to them why they should join Warp? About a million percent. Do you not do that for your portfolio companies?
- [56:51]
B
Do I? Yes. But do most other VCs?
- [56:54]
C
That's like one of the things that I'm actually wanting. The other VCs I have are like I have Greg from Box Group and Eric from gv and I trust them all to be like pretty cool.
- [57:04]
B
Box and Greg are great. Fuck, they're really good. Yeah, yeah, good there and then. Who from gv?
- [57:11]
C
Eric Norlander. Do you know him?
- [57:13]
B
I don't know him well, but GV is a team I know very well and they're very good. So I'm not surprised he's good.
- [57:19]
C
I mean I worked with him at Google. So it's like there's just very, very long relationships here that I have with these people in terms of trust.
- [57:26]
B
I mean you burned that relationship now. You were like, yeah, wouldn't be long either. I don't care like that.
- [57:31]
C
That's not a thing I'm afraid of saying. Like they, they need to like get their. Like I'm saying it all the like, you know I have a 18 month old son, right? And he's his new favorite thing is to talk to our. We have Google home and like we'll be like, hey, you know, hey Google, what's a. What's like a horse sound like. And it'll be like me. And so he walks around, he's like, go, go, go, whatever. And like the thing is like broken half the time. And I'm like, I don't get it. It's like I know the technology to do this well exists. I get better results from like speaking to Warp. And like it's just such a thing with the company so fucking slow that I can just see myself in the meetings where the various product managers are like, how do we get Gemini into this thing? And then it's like some Gemini Org. It's like some PM is coming in and well like we can't put it in because it's like not translated into 70 languages or what? I can just imagine the conversations there, which is like, why again, why I like starting a company. It's like way faster.
- [58:27]
B
A job pisses me off more than anything. I love Whisper Flow. You know Whisper Flow?
- [58:31]
C
Whisper Flow is integrated in Warp. That's how you talk to Warp. Yes.
- [58:34]
A
Amazing.
- [58:35]
B
Okay, great product on Apple, on the keyboard integration. It is terrible. You have to. And it's not Whisper's fault, to be clear. It's Apple's fault. They don't let it be one of the default keyboards. You have to then go back, enable it in Whisper and then it will work. It's just like Apple, just buy Whisper and just like make my day.
- [58:56]
A
No, it's, it's.
- [58:57]
C
It's crazy. It's a crazy like not, not, not invented here or like whatever. Like, I don't, I don't know what's going on at these huge companies and that.
- [59:04]
B
Which incumbent are you most impressed by? And then we'll do a quick fire.
- [59:09]
C
Oh, God. I'm not like in my space. Not really any of them. Not to be jerk, but it's like they all. Microsoft, I guess, but they like. I think that they kind of screwed up Copilot. I don't really know what Amazon is doing. Like, they put out coding thing which people seem to like. Okay. Google is not great at developer stuff. Just period from my time there. And Apple is always just like super duper slow. So I don't know, I guess Microsoft, if you're putting a gun to my head of who's. I'm just talking about MySpace. Who's doing the best. I don't think any of those companies are doing a great job as I insult all of our potential acquirers. But it's just like, I just don't like. I think that it's like there's a big company thing that's a real problem.
- [59:55]
B
It's like playing hard to get. It's like, you know, it's dating. Don't worry, you're fine. Yeah.
- [59:58]
C
Yeah. Okay, good.
- [59:59]
B
That's fascinating. And then my favorite is that you have like an Atlassian who's like, buy it, buy it, buy it. I mean, Atlassian are buying everything. The M and A team there are having a blast.
- [60:08]
C
They're going shopping again. I don't totally get the strategy I'm not plugged in on, but it's interesting. My theory there is that the founder just loves certain products. Like loves like the browser company's product. And they're like, okay, this is available. I will buy it.
- [60:24]
B
For 610 million. I would love to be on the.
- [60:27]
C
Board of the browser companies.
- [60:29]
B
Like in cash.
- [60:30]
A
Yes, yes.
- [60:32]
C
It's like super, super cool product. But yeah, no, it's. I don't. I'm a small. I'm a small investor in the browser company and I know Josh actually, but it's a. Yeah. Crazy market.
- [60:42]
B
That, that deal was like an Eddie Izzard video. Do you know Eddie Izzard, the comedian?
- [60:46]
C
Yeah, yeah.
- [60:47]
B
And he is called Cake or death. And it's like you get offered cake or death. Cake, please.
- [60:54]
C
That's hilarious.
- [60:55]
B
600 million gallbladder. We had fucking nothing. Josh is amazing and we've got him coming on the show.
- [61:01]
C
Great. Yeah, no, he's incredible.
- [61:04]
B
But like, that must have taken about 3 1/2 milliseconds to jump on, like.
- [61:09]
A
Yes.
- [61:10]
B
Dude, this has been one of my favorite shows all year. I've loved it. My favorite is you also listen to the show and so you're like, you know that they are not normally this fun.
- [61:22]
C
No, I mean, well, I would listen to this episode. I would be like, oh, this guy is interesting.
- [61:27]
B
Oh, yeah. No, no, so am I. Listen, we're going to do a quick fire. So I'm going to say a short statement. You give me your immediate thoughts. Who's your favorite founder building in AI today?
- [61:37]
C
Do you know Granola? Do you know Chris? Have you heard of that product? So he's a friend of mine. I'm a small investor in that company. The way he thinks about it. I knew him at his last company too. He's building really cool AI native stuff. So I think he's doing a great job. It's like, get rid of the black box in Zoom is a very interesting. It just makes the product experience so much better. So I like it.
- [61:59]
B
Do I hear a funny story about Chris? My partner, Kieran was the first investor that he met for Granola. He said, harry, you've got to meet him Sunday night, go for drinks. And so we went for drinks on a Sunday night and I met him and he was doing something. He wasn't sure, but something with AI and something with notes.
- [62:18]
C
But not that was it.
- [62:19]
B
That was it. No idea beyond that. And I, as an investor in MEM and Rome Research and like six other note taking companies. I was like, kieran, dude, someone needs to set up a GoFundMe page for this guy because that's the only way he's gonna get money. And I told Chris this, by the way, like, this is not me being a dick. Like Chris Is a friend now and I love him. And like, and I told him this and Naji, we were like, no, you didn't invest.
- [62:46]
C
No. Oh, that was a mistake. He's great.
- [62:49]
B
Yeah.
- [62:49]
A
No is a mistake.
- [62:51]
C
Thanks.
- [62:51]
B
Yeah, obviously it's a terrible mistake. Not only did we not invest, we said you should set up a GoFundMe page.
- [62:58]
C
So you just like insulted him. That's awesome. I love it.
- [63:01]
B
Oh no, no, no. He was like, this is hilarious. Like maybe it'll be tough to raise. And I'm like, like, that was a mistake. It goes to actually the importance of relationships. Because had I known him for a while, that would have been the easiest check ever to write. Meeting him for the first time, you're like, notes AI.
- [63:19]
C
I can see if that's the pitch. You're not making it the most compelling pitch. So I could see why maybe you passed. Yeah.
- [63:26]
B
Okay. What do you continue to do but wish that you didn't?
- [63:30]
C
I probably. I've like historically waited a little too long to hire people to like be leaders on the team. So my, my default like for instance I like with someone else on the team basically like ran our growth function at Warp for a few years. And I think there's value to that. Like it's better to like try decent yourself as a founder first before hiring someone for it. But there's also lots of people who know how to do stuff way better than I know how to do it. And so I may probably waited a little too long on that. We hired a great growth person who's like been awesome.
- [64:01]
A
What happens to xai?
- [64:04]
C
I would integrate X. They approach us all the time to put out their coding models. But I need some reason that it's like measurably better because every time we want to add one of these, I hope that they have a competitive thing in my space. I don't really know. I think it's great though. I want more models out there and so I'm pro the existence of X. Although we don't use it in more.
- [64:26]
B
OpenAI at 500 billion or anthropic at 183. Which do you invest in?
- [64:32]
C
I've said it before in this interview. I'll say it again. I'm very, very bullish on OpenAI because I think they have a winning consumer product. Anthropic is maybe the best AI lab like from a research perspective and from their models are incredible. I think it's a big problem not to have the consumer product there. And so I don't know is An API business, gigantic business. So they're gonna have to really win on these like enterprise vertical businesses. And maybe they will. I hope not. Like we're competing with them is a frustrating thing as someone in the coding space and. Or a customer of them. But I, I think OpenAI with ChatGPT is going to be gigantic.
- [65:09]
B
Ratplet versus Lovable versus Bolt. What happens there?
- [65:16]
C
I know you're a lovable investor. I don't have. I. This one I truly don't have a strong, strong take on. I will say from, again, from a selfish perspective, I think it's much better to be in the market for professional developers in the enterprise market for code gen than I do think it's being essentially the no code code market. I don't know which of those products is the best. I don't really use them.
- [65:36]
B
Is your webflow totally dead?
- [65:39]
C
Yeah, I think the argument for webflow, like webflow in particular, I don't. We used to use it, we moved off it. Like they need to leverage the fact that they have this great hand interface for building websites. But like, I don't think you really need that. So I think webflow is really, really in a ton of trouble.
- [66:00]
B
Yeah, well, I mean, Excel are in lovable too. So you got. But you just got a transition of.
- [66:06]
C
I mean, like.
- [66:11]
B
It lovable's killing webflow. Let's be in loveable.
- [66:13]
C
So like the bull case on these is like, oh, well, wow, anyone can build something that's cool. And then I think you naturally have to ask the question of like, okay, cool, what are they building? And I worry that what they're building is like the next gen of WordPress or Squarespace or Webflow. And like the business case for those types of apps is not that awesome to me. And so that's why it's like, I think you want to be. If you're in the coding market, I think it's way cooler to be in the market for building the really hard to build apps that have billions of users then someone's Shopify store. And by the way, I think Shopify could also be big in this space eventually.
- [66:57]
B
What would you do if you weren't scared? An example for me would be, I would be in Silicon Valley. Candidly, we've had a wonderful conversation. Shows like this make me realize how much I love what I do, truly. But I'd be in Silicon Valley, I'd be in the coliseum of investors. I'd be before Andrew Reed in the funnel.
- [67:16]
C
This is going to sound crazy and this is Not a thing I've thought through. But, like, at some point, I would like to have some kind of impact outside of technology, maybe in politics. I think I would. I don't think the world wants me in politics. I think that the way that I think of things is probably not very appealing to most people, but I hate what's going on politically. I'll just say in the U.S. and if I could have like, some bigger positive impact, it's not just like starting a business, I would do it, but I don't. I don't really think most Americans probably want me in politics. But that's like, I would love to have some big positive impact on our country, to be honest.
- [67:54]
B
Respectfully, I think when you compare yourself to the other candidates that welcome you with open arms, like, maybe.
- [68:00]
C
Yeah, maybe at some point.
- [68:02]
B
It's a relatively low bar, I find. Who do you not have on your cap table that you would most like to have?
- [68:08]
C
So we have a cool cap table with a combination of, like, operator, investors. I think having. Having someone like you, I don't know if I say you probably you, like, you're. You're. You seem to have like, the big. Who can think through, like, the. One of the challenges we have is like, breaking through the noise. And so I think someone who has that superpower would be a great person to have. Not. Not my best answer, but.
- [68:32]
B
Oh, I thought it was a phenomenal.
- [68:33]
C
That was my favorite of all the answers. Okay, cool.
- [68:36]
A
Of all the shows, that was the.
- [68:38]
B
One, one final one. What are you most excited for? So, like, when I think about my mother's got multiple cirrhosis, I think that we will have incredible cures to some of the world's most challenging diseases in 10 or 15 years, which. It excites me immensely. What do you find most exciting?
- [68:55]
C
Yeah, it's. It's that type of thing, just to be honest, like, I'm getting older. I think we're at this really interesting spot where we're on the precipice of like, like amazing, crazy technology that truly could help a ton with healthcare or help a ton with people's prosperity or learning or whatever. And on the flip side, I think we're at this very precarious political spot. And I feel like those two things are racing each other. It's super unstable. We're not a spot of equilibrium. My hope is that the technology, the advances in technology can really, really have a big impact. I think if I had to pick one area where. Where I'm most interested, most hopeful as well. Is like in health, like that would truly be transformative for like, you know, me and my family and just like having some sort of real medical progress. But I'm also scared because it's like, it's like a very like unstable situation right now in the world, in my opinion.
- [69:48]
B
Well, thanks for the tone of positivity. Bring up politics to finish the show.
- [69:56]
C
I don't know, I was being very, very honest. It's like it's really incredible technology and it's never been a worse time to deploy it in my opinion. So I hope that the sensible people kind of can get the technology deployed so that it really is helpful to people.
- [70:13]
B
I hope the same. And thank the Lord every day I see Palmer Luckey's colorful shirts that here's our hope for geopolitical stability. But yeah, I agree with you. Thank you. Joseph. You have been a fantastic guest. I had no idea like coming into this. Obviously I spoke to Andrew, but you.
- [70:31]
A
Have been so much fun, insightful, entertaining, honest.
- [70:37]
C
Seriously.
- [70:37]
B
Thank you for being such a great guest.
- [70:39]
C
Thanks for having me. I knew this is going to be really fun and it didn't disappoint. It was awesome. Thanks for having me.
- [70:45]
A
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