Podcast Summary: The Twenty Minute VC (20VC)

Episode: 20VC: Thrive & OpenAI Partnership | Eventbrite Acquired for $500M | Databricks $134B Valuation: Cheap or Not? | SaaS as Japan; The TAM Trap
Host: Harry Stebbings
Guests: Jason Lemkin (SaaStr), Rory O’Driscoll (Scale Venture Partners)
Date: December 4, 2025

Main Theme & Purpose

This lively episode, recorded live at SaaStr London, brings together Harry Stebbings, Jason Lemkin, and Rory O’Driscoll for a round-table discussion on the week’s biggest SaaS and venture capital news. The trio delve into the disruptive shifts happening in enterprise software, the ongoing power struggles among AI giants, the new realities of market size (TAM Trap), and existential questions about growth, efficiency, and defensibility in the age of AI. True to form, the conversation steers clear of politics, remains high-energy, and offers unfiltered perspectives shaped by years in the trenches.

Key Topics & Insights

1. OpenAI and Thrive Partnership: Does It Matter?

[05:13 – 07:56]

• OpenAI’s Strategy Realignment: Jason argues the real story isn’t the partnership, but OpenAI’s new laser focus on its core offering:

  "All the other things we've been doing, we ain't doing them now. We're just going to be fixing our core product." – Jason Lemkin [05:32]

• Power Law Dynamics in VC: Rory points out the power law at play – “go as deep with your winners as humanly possible” – with VCs clustering around their biggest bets.

  "It's power law on steroids. It's power law with what you do with your week, it's power law with your deal flow." – Rory O’Driscoll [06:07]

• Loyalty After the Storm: Given Thrive’s support for Sam Altman in crisis, they get an outsized seat at the winner’s table.
• Value Flow: Jason and Rory agree it’s a bigger win for Thrive than OpenAI, which is mostly offering “halo effect” and possible vertical data access.

2. Databricks’ $134B Valuation: Cheap or Not?

[07:56 – 11:54]

• Comparison with Snowflake: Databricks: 4.1B ARR, 55% YoY growth, valued at 32x sales. Snowflake: similar revenue, 28% growth, 20x sales.

  "How much extra in multiple do you pay for how much extra in growth?" – Jason Lemkin [08:23]

• The Power of Re-Acceleration: Both note that true re-acceleration at Databricks scale is vanishingly rare and justifies the multiple, but sustainability is uncertain:

  “If that extra growth lasts for any length of time, extra growth’s worth a shit ton, to use a technical term. That compounding keeps going.” – Rory O’Driscoll [09:00]

• Market Reality: Public comps are limited since few software companies have maintained over 30% growth at scale (Palantir is the lone example).
• Takeaway: Databricks would be the second-best public company if listed today, and the ongoing headroom in the market justifies the hype—for now.

3. The Future: Databricks vs. Snowflake, AI Agents, and Database Dynamics

[12:28 – 18:18]

• Coexistence or Death Match? Don’t expect peace – these companies are set for a decade-long slugfest, with brand differentiation (transactional vs. AI/analytics) crucial.

  "They're going to struggle and fight against each other for the next 10 years, just like SAP and Oracle." – Jason Lemkin [13:01]

• AI Agents Changing the Game: Rapid evolution in data access and “agentic” platforms means CRMs may become commoditized backends for intelligent agents, or build their own agent ecosystems.

  "We're just starting to learn what we can do with our data with agents ... I think we're 1% on this journey." – Rory O’Driscoll [15:41]

• Security Risks: With sensitive data moving between platforms and agents, incumbents may use security as a justification to lock out third-party apps (e.g., Gainsight's and Drift’s bans from Salesforce).

  "We're underestimating security and data residency in general ... it may not matter for your average startup, but I generally am worried." – Rory O’Driscoll [18:18]

4. M&A and the “TAM Trap” – Eventbrite, PagerDuty, SaaS Stagnation

[22:20 – 30:09]

• Eventbrite’s Acquisition: Bought for 1.5x revenue, a stark “new reality” for companies that plateau in growth.

  "When you're public and your stock is floating around nowhere at a lower valuation, you're just very vulnerable ... you’re very forced to take [the deal]." – Jason Lemkin [23:19]

• TAM Trap: The panel discusses how many public SaaS companies are stuck in finite market sizes (the “TAM trap”) with no second act, despite strong teams.

  "The majority of the public SaaS companies, I think, are in a TAM Trap." – Rory O’Driscoll [27:54]

• Why Did the Greats Hit the TAM Wall? Even iconic leaders (Eric Yuan at Zoom, Aaron Levie at Box) struggled to break out of initial market constraints; it’s not stupidity, but saturation.

  "It's not that everyone was idiots and couldn't find the market... we made so many companies that we saturated the markets." – Jason Lemkin [28:04]

• Overpayment Only Works in Massive TAMs: In finite markets, you must price investments more precisely.

5. AI's TAM Expansion – Value, Pricing, and Second Acts

[30:09 – 31:40]

• Can AI Expand Market Limits? Rory outlines two hopes: AI taps labor budgets, and/or unlocks enough value to charge drastically higher prices. Is $500/month for an AI app feasible? Maybe, if it saves $1,000.
• Pricing Faces Commoditization Risk:

  “What happens when there's two or three of these companies and the competition goes from hey, I'm saving you $1,000 of labor... to, there’s three providers and they’ll all do it for a hundred bucks?” – Jason Lemkin [31:40]

• Second Product Syndrome: Companies must now plan for a multi-product strategy before hitting a growth ceiling to avoid the TAM Trap.

6. Pricing Models in Flux – Is Per-Seat Dead?

[32:33 – 38:30]

• Shift from Seat-Based to Value-Based/Usage Pricing: AI is reducing knowledge worker headcount; ARR per employee is going up everywhere (Hubspot 2.8x more efficient since 2021, Salesforce 2x, Microsoft past “peak employee”).

  “It feels like Japan. Like our population is organically shrinking. SaaS has become like Japan ... only so many seats to go around.” – Rory O’Driscoll [34:39]

• Workday’s Existential Threat: Companies rooted in per-seat pricing are deeply threatened; usage and value-based models favored in the AI era.

7. Growth vs. Efficiency — What Do VCs Want Now?

[38:30 – 40:28]

• High-Growth Startups: Still, nobody in the fastest-growing companies “gives a rat’s ass about the bottom line.”

  “No one really cares about efficiency per se as long as they can get their money into the deal.” – Jason Lemkin [39:09]

• The Burn Multiplier: The best AI companies’ high inference costs are dwarfed by even faster revenue growth, so capital efficiency returns by default.

• Different Playbooks:

  • Mature public companies must optimize for ARR/employee and free cash flow.
  • AI model builders spend on compute, not headcount.
  • AI app startups are so viral they can’t hire fast enough to match growth.

8. The Incumbents Strike Back – Google, Gemini, and Defensibility

[43:25 – 48:17]

• Speed of Cloning: Google can replicate hot startups (e.g., Replit/Lovable) in under a year now—no more 5-year runways.

  "You don't even get a year. The incessant pace of cloning and competition does worry me, man." – Rory O’Driscoll [44:10]

• Where Won’t Models Go?: Some verticals (e.g., wealth management automation) are safer, as big model providers will focus on trillion-dollar core opportunities rather than every niche.

9. Wealth Management as a Case Study: AI Empowering New Markets

[48:17 – 64:31]

• Automating for the Mass-Affluent: Startups like Range aim to take “private banking for the masses” by automating estate, tax, and investment advice via AI, compressing what’s now $30–50K/year of human costs into a “product” for $8–10K.

• Skepticism and Patience: Wealthfront is cited as an example of a 10-year overnight success—compounding is slow, but the economic engine is powerful once in motion.

• Venture Relevance Dilemma: Is it better to play the fast-follow, hype, and up-round-mark world, or build compounding value over decades?

  “We're playing a relevance game ... where media matters more than ever before ... And you're like ah, it's slow compounding coming soon. It's just a tougher game.” – Harry Stebbings [57:33]

• Big Takeaway: In the AI era, massive new markets could emerge—provided products are truly disruptive and efficient.

10. Lightning Round: Supabase vs. Lovable – Where Would You Invest?

[66:04 – 68:17]

• Jason Lemkin: Prefers Lovable for its higher risk/reward as a frontrunner in the vibe coding space (“If it’s a category, you want the front end.”)
• Rory O’Driscoll: Picks Supabase for defensibility; databases are "hard friggin' problems" and offer stickier, more stable returns.

  “I'm just anxious about clonable stuff and I want hard problems are reassuring ... we're past the thin wrapper layer.” – Rory O’Driscoll [67:44]

Notable Quotes & Moments

• On SaaS Saturation:

  “We made so many companies that we saturated the markets ... It’s not that some of the CEOs you cite are idiots, it’s that you have high penetration.” – Jason Lemkin [28:04]

• On Security Backlash:

  “I think security is going to benefit the incumbents ... I generally am worried we're underestimating security and data residency in general.” – Rory O’Driscoll [18:18]

• On AI Threat to Per-Seat Pricing:

  “If the AI is doing the work, it's going to be super hard to have a per seat model because it's irrelevant now.” – Jason Lemkin [36:48]

• On Compounding vs. Hype:

  “When you have high certainty that a big company can be built here, you weight that more highly than everything else.” – Jason Lemkin [58:02]

• On Market Evolution:

  “I think we may have seen peak models-are-going-to-do-everything ... They're going to focus on their core mission.” – Jason Lemkin [46:08]

Timestamps for Critical Segments

• OpenAI/Thrive partnership and shifting priorities: [05:13–07:56]
• Databricks valuation and the power of re-acceleration: [07:56–11:54]
• Databricks vs. Snowflake, agents, data future: [12:28–18:18]
• Security and platform lockouts: [18:18–21:54]
• Eventbrite, PagerDuty, the new M&A reality: [22:20–26:33]
• The "TAM Trap" & SaaS market limits: [27:03–30:09]
• AI’s expansion of TAM and new pricing paradigms: [30:09–31:40]
• Per-seat pricing under threat, efficiency vs. growth: [32:33–40:28]
• Incumbents vs. startups, Google enters vibe coding: [43:25–48:17]
• AI and the wealth management market: [48:17–64:31]
• Lightning round: Supabase vs. Lovable: [66:04–68:17]

Final Thoughts

The episode captures an inflection point in SaaS and venture investing—with explosive growth and hype (AI, Databricks) on one side and a sobering reckoning for slower growers and finite markets on the other. Efficiency, defensibility, second acts, and strategic focus are now central. Underneath it all, the panel’s camaraderie and candid banter keep the insights coming—whether you’re an operator, investor, or future founder.

For More

Visit 20VC.com for extended show notes and resources.