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

Agenda: 00:00 – Databricks hits $100B: Bubble or just the beginning? 03:15 – Is Databricks actually undervalued at 25x revenue? 07:40 – Are we on the verge of the biggest IPO wave ever? 11:30 – Can Andreessen’s Databricks bet return $30B+? 18:10 – Who really gets rich when mega-unicorns IPO? 19:30 – Is the return of Chamath’s SPACs the ultimate bubble signal? 28:00 – Should OpenAI staff be cashing out billions in secondaries? 33:30 – Founder raises $130M… then walks away. Is this the new normal? 36:30 – Nubank’s $2.5B profit: The best FinTech in the world? 48:00 – On Running at $15B: Can consumer brands still be VC-backed rockets? 52:00 – CoreWeave takes on $11B in debt: smart bet or ticking time bomb? 1:11:00 – Will AI spend really hit trillions—or is it all hype?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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

• 0:07Harry Stebbings?

  That's why we have Jason. Welcome back to 20 VC with me, Harry Stebbings, brought to you from Greece. Now, this episode is a cracker with Jason Lankin, Rory O'Driscoll. We discuss CoreWeave, NewBank, Databricks hitting $100 billion and much more. This is my favourite show to do, but I want to make it better. So let me know what we can do to improve these shows. Harry at 20vc.com. And then next week, we've got the one and only OG of SaaS, Mark Benioff, joining us for a very special episode. So stay tuned for that one. But before we dive into the show today, let's talk about agents, specifically Piper, the AI SDR agent brought to you by Qualified. The Agentic Marketing Era has arrived. And if you're a B2B marketing leader looking to scale a pipeline generation,

• 0:51Harry Stebbings?

  Piper, the AI SDR agent, wow, it is here to help. Piper is the number one AI SDR agent on the market, according to G2. And hundreds of companies like Box, Asana and Brex have hired Piper to autonomously grow inbound pipeline. Fucking sign me up. Anyway, Qualified customers see massive business impact with Piper. 3x increase in meetings booked and 2x increase in pipeline. Wow, that is some results. Hire Piper, the number one AI SDR agent, and grow your pipeline today. Learn more at qualified.com/20vc. That's qualified.com/20vc with the 20 VC spelt out in letters for goodness sake. And while Piper builds your pipeline, HubSpot gives your business the AI tools to scale faster.

• 1:36Harry Stebbings?

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• 2:17Harry Stebbings?

  Over 238,000 businesses already use HubSpot. So join them. Visit hubspot.com/ai. You have now arrived at your destination. Guys, it's the holiday edition. I am dialing in from Greece. You guys are dialing in from the office, but we still get to do this. My mother is sitting outside and she's like, are you recording the Rory and Jason show? I'm like, this is the one show of mine you listen to these days. She's like, it's my favorite.

• 2:43Speaker 00

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

• 2:45Harry Stebbings?

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

• 2:49Speaker 00

  Needs doing, Harry, needs doing.

• 2:52Harry Stebbings?

  Listen, I want to start with Databricks. Now at $100 billion, worth more than Snowflake, I wanted to start with how we thought about news of it hitting $100 billion. And we can touch on that first before we move on to what it means in terms of founder-like companies and them inherently being better or more valuable.

• 3:09Speaker 02

  Well, I'll tell you, it's funny. When I saw it in the journal, it shows the times we live in. It seems small.

• 3:17Speaker 02

  I mean, Snowflake's worth 60 something billion. So the private worlds and the public worlds are like two different worlds.

• 3:25Speaker 02

  If I'd seen this a year ago, you know, I would have fallen out of my chair. This is just for fun. Then we can talk about its relative, whether it's a good, Rory will help us figure out if it's actually a bargain. It's funny how I don't blink an eye for 100 billion in the day, age of AI. Just didn't even blink an eye.

• 3:40Speaker 00

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

• 4:17Speaker 02

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

• 4:23Speaker 00

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

• 5:06Speaker 02

  Yeah, they've argued, actually, looking at it, I think they've crossed over. Uh, Snowflake did had a billion dollar quarter, so that's four billion, growing twenty six percent. Databricks just said they're crossing four billion, growing fifty. Fifty and twenty six are pretty, they're pretty different. It actually makes Databricks sound undervalued, if you think about it.

• 5:26Harry Stebbings?

  This is what I was just gonna go and say, which is like, it actually feels undervalued at twenty five X revenue. Given the growth rate, given the fact it's found a lead, given the macro trend where it sits, it really feels actually very reasonably priced.

• 5:38Speaker 00

  I just love it, just another cheap stock at twenty five X run rate. It's all about growth persistence. I mean, because the interesting thing is every one of these bets is some version of, if you're paying twenty five X run rate for anything. You know, the only thing you know for sure is that when things level out in growth rate, they get valued like normal companies. So implicit in that is some statement about how, how long this company can continue to grow at that kind of rate. So two more years at fifty, sixty percent, you're golden, you've earned your way into the company, into the valuation. If that growth ever kind of plummets down, then you're, you know, you're high and dry like many of the twenty one deals. So the valuation totally makes sense, provided that growth rate goes fifty, forty, thirty five, twenty, you know, not some precipitous growth rate decline. That's the bet.

• 6:23Speaker 00

  So a- and again, it resolves itself again to the, if the AI boom continues for two or three more years, it will be trading at that point eight or nine times run rate and all will be fine. That's the bet in a sentence.

• 6:35Harry Stebbings?

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

• 6:53Speaker 02

  You know, I'll tell you a couple of things. The one, so the one thing I thought it was is cheap. The other thing I was thinking is, you know, Sam Altman said this week that, one, they're going to spend trillions in infrastructure, but also that a lot of folks are going to lose a lot of money in AI, that there is a bubble. He said two things that aren't completely incongruous. But the other thing I thought when I looked at Databricks is like, obviously, it feels very bubbly right now. It feels like the best of times, but it might get better. And not just because OpenAI is going to continue to grow, but because let's look at comps. Okay, Databricks hasn't IPO'd yet. Databricks compared to Snowflake, growing twice as fast at four billion. Figma and crazy IPO we just had, right? One of the reasons Harry's in Greece. But Canva might be even better. Canva might be even better. And maybe Stripe is accelerated. I don't know if Stripe's going to be better

• 7:36Speaker 02

  than Adyen, but let's imagine it's accelerating because of crypto and AI and mobile. We might get the next wave of IPOs that are even better, very quickly. And the amount of froth that that could create in the ecosystem, the amount of just returns to LPs could create a bubble on top of a bubble, because times might just get much better in the next 12 months.

• 8:00Harry Stebbings?

  That's an interesting question to be had here, which is, given what we've seen with Figma, Call, Weave and Circle, if you had the likes of Canva and Databricks go out, the public reception would be even more inflated.

• 8:11Speaker 00

  Maybe. You could also argue that a little bit of what's happening now is scarcity value. There's very few high growth companies in the public markets, because all that growth has been annexed by the private markets as a bizarre outcome of, you know, ill-informed regulation. So all the wealth creation is taking place on the private and the private side. If all those companies were to go public, as you say, if the canvas of this world, if the Databricks were to go out, it's not clear to me that they'd get that three X pop. Instead, you might what have is, okay, they'd probably trade at the very high. Quite deserved values, but I think the scarcity premium would go out of it. For example, I can't remember, it's been two weeks now, Canva equivalent where Figma priced at fifteen X forward? Yeah, sure.

• 8:56Speaker 00

  A Canva equivalent and a Databricks equivalent then popping three X, probably not. Because at some point, yeah, they would all be just wonderful public companies trading at appropriate growth adjusted multiples. But what it really would be is taking a trillion dollars off the private balance sheet and putting a trillion dollars onto the public balance sheet where it could easily digest it. Because your US stock markets are forty, fifty billion, so another trillion, five, forty, fifty trillion. It can digest another trillion. So you are, you could shove off onto the public markets. An amount of equity that at no, yeah, appropriate multiples would, as you say, Jason, lead to a huge amount of LP capital return. And be totally digestible by the public markets, probably without the forty super premiums.

• 9:40Speaker 00

  Just it would be the return of high growth companies to public markets.

• 9:43Speaker 02

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

• 10:14Speaker 00

  Yes, again, as I say, and it would trade like a wonderful forty percent growth. Look, the absolute number would be bigger, the multiple would be growth adjusted. As I say, my comment is merely the speculative side of it that took it from the IPO valuation. It probably would not be there as, as more stocks come out. The aha here at the high end of the private market, there's a significant absolute sum locked up in private markets that at some point is going to seek a public market where a number that we work fifty billion, which is unprecedented. A few will be up to a hundred billion and maybe one will be worth a trillion dollars in the private markets. I mean, it's only two thousand and eighteen that Apple touched a trillion dollars in the public markets.

• 10:53Speaker 00

  And seven years later, there arguably, I'm not sure I buy it, it might be one or two private companies that touch a trillion in the private markets. That's just bizarre.

• 11:03Harry Stebbings?

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

• 11:29Speaker 00

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

• 11:39Speaker 02

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

• 12:06Harry Stebbings?

  Tranmere Rovers. Yeah.

• 12:08Speaker 00

  I got it. A reference that's wasted on your audience, but yes, yeah, I don't think they're just niche play. I think they're the bread. I mean, look, the truth is they're the bread and butter of what will make most venture firms money. So I'm not going to denigrate them with niche or Tranmere Rovers appellations. But you are right, Jason, in a power law world, the longer you let things cook in the private markets, the bigger one or two of the outcomes will be. And things have been cooking in the private markets for, I mean, I think SpaceX is almost 20 years old. They've been cooking a long time. So it totally makes sense that there's going to be five, seven, north of $100 billion outcomes. It's just the math. I'm super happy with Soqyo as a company in our portfolio for detection, growing at scale, many hundreds of millions of dollars, profitable, accelerating growth rate. We're in a wonderful basis.

• 12:54Speaker 00

  He said smartly happily, you know, about 123. So feeling very good there. And to the point, and I want to go back to, in the context of what Jason says, it's a niche play. It's not doing $4 billion. In the context of a midsize fund with a good ownership position, a company like that, with a trajectory like that, I feel great. And, you know, there's going to be 10 or 15 companies that are 10 billion plus, 50 billion plus outcomes. But the real point, the venture leaders will only work for a few funds if they're the only outcomes. For the venture business to work for us all, you're going to have to see more of these $5 billion market cap outcomes. As you say, the hinge helps the owners of this world start to take place, and I think it will.

• 13:35Speaker 02

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

• 14:10Speaker 00

  30 billion is a lot. No, I'm not, again.

• 14:16Speaker 00

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

• 14:25Speaker 02

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

• 14:47Speaker 00

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

• 14:50Speaker 02

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

• 14:51Speaker 00

  Yeah, you didn't because we're trying to talk to, we're in a conflicting investment. But.

• 14:56Speaker 02

  That was the D in 2017, a decade ago. They let it a decade ago, better part of a decade ago.

• 15:01Speaker 00

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

• 15:16Harry Stebbings?

  I go back to a statement that you say, which I love, which is like Josh Kushner, phenomenal investor, goes to the best house on every block, AI, OpenAI, data, Databricks, Stripe, fintech, and buys the best asset.

• 15:29Speaker 00

  Yeah, buy the quality asset, hold it. I mean, look, the only risk is, I mean, all these, and I'm not saying this to be a Debbie Danner, but just to point it out, the interesting comment is, in the public markets, when things start going south, because there's liquidity, everybody can have a stop loss of 10% and get out, and then someone else can come in, think it's going to turn, and you know, yeah, yeah, you can hold it all the way down, but you can also get out along the way, which is interesting in the private markets, you don't have that option. If you're wrong at 100 billion, if you're wrong on price by 50, 60%, you'll own it the whole way down. So the only risk you're running is a one big, large ass pricing risk. I don't think you'll have preference to save you, but so far that risk has worked. And it gets back to my comment on growth persistence. If they

• 16:10Speaker 00

  continue to grow for two or three more years, and you have a run rate business at, say, 10, 12 billion in ARR or GAAP revenue, then you're kind of money good on normalized multiples, which is how I think about it. Can you get from where you are, which is crazy multiple, in three or four years to being money good on normal multiples for normal growth rates? And provided you can visibly see that growth rate, you're good. And if you're doing four, and you're 40% growth, what you're basically saying is, this infrastructure investment AI keeps going for two or three more years, and then I have 10 billion of locked in contracts with JP Morgan, B of A, OpenAI, everyone, and even if the world slows down from there, I'm good. That's the bet.

• 16:52Speaker 02

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

• 17:15Speaker 00

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

• 17:44Harry Stebbings?

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

• 18:12Speaker 02

  Yes. Yeah, buy a house now in the Bay Area. That's my main recommended. Buy a house now. They're all going, they're all going up.

• 18:19Harry Stebbings?

  This week in real estate with Jason Lemkin.

• 18:22Speaker 02

  All I know over these cycles is you buy a house before the next massive IPO wave.

• 18:29Speaker 02

  Why is everyone paying cash?

• 18:31Harry Stebbings?

  Speaking of which, guys, I want to, I want to usher this along. And Rory, you're going to freaking kill me because it was a bit of a late addition. But peak bubble time, some might suggest, when you see the return of the SPAC, and Chamath announced his new SPAC today, and in the prospectus, it says, if they do lose their entire capital, they will embody the adage from President Trump, that there can be no crying in the casino. I respectfully thought this was peak bubble. I would love to hear your thoughts on, is it peak bubble? And am I being too moralistic?

• 19:11Speaker 00

  You won't know it's peaked till it goes down the other side. You know, I mean, because it's interesting you say that. And as yet, I'm listening to two of you in your euphoria five minutes ago saying, oh, my God, this is just the hors d'oeuvres and the, you know, the entree is coming later in terms of the public markets. If that's the case, then it's not peak bubble. He'll be selling into strength like he did in 2021. So that's the first comment. I don't know if it's peak bubble or not. If I did, I wouldn't be wasting my time talking to you. I'd be trading the QQQ and making money. So what can you say? You can say a couple of things. One, it does seem to remarkably correlate. The return of Chamath to the SPAC market does appear to correlate with the most recent bubble in 2021, where it worked in the bubble and didn't work after. So there's definitely correlation there.

• 19:55Speaker 00

  I'm low to impute causation. And, you know, the serious comment is, because, you know, way more serious people, yeah, I remember Bill Gurley talking a little bit about SPACs. It's not a crazy alternative on its face to the problems around IPO and mispricing. But I believe when you parse through it, it's a bad structure. And I think it's been validated to be a bad structure in 2021. Relatively few of them worked. Though, to give credit, once, I think SoFi did work. I think it priced at 10, it's now 23 bucks. Most did not, because you have all sorts of weird adverse selection, right? So especially in bubble times, it's a pretty iniquitous and expensive vehicle for public, to raise capital in public markets. So I'm just not a wild fan of SPACs.

• 20:39Speaker 00

  I think you get adverse selection in terms of who decides to do the deal. And the other thing is, the incentives aren't aligned, because the person doing the SPAC effectively crystallizes their entire gain once the deal gets consummated. Obviously, if the outcome is great, that's wonderful, they make even more money. But provided they have an outcome, they make some money. So the structure is all wrong. You effectively get paid as the promoter the day you get a deal done. And, you know, one thing you learn in any investment management business is if you pay people to do deals, deals get done regardless of the quality. So I just think it's an imperfect vehicle for fundraising. And therefore, rather than personalizing it on one person, be he ever so great or not,

• 21:21Speaker 00

  I just think it's a bad structure and the fact that it's back is indicative. The fact that the structure is back is indicative of a bubbly time. That was me being nice. Jason, is it below your line?

• 21:33Speaker 02

  Honestly, I don't, for what it's worth, listen, I only know Chamath from a distance back as a founder, watching him back in the day and then as an initial VC investor at Social Capital. I don't, I do have a ton of respect for all of them, but I've honestly never listened to it. But I, you know, I know, I know David and Jason a little bit. I don't get why he cares. This seems like a lot of energy for someone reasonably rich to be, going to Rory's point, to be doing weird shit like SPACs. It's not a criticism, I just, maybe he'll make 50 million bucks off this, help me do the math, right, as the sponsor in this, but why? Why, why not do something more meaningful with the world rather than do something like a SPAC, which is at the edge of grift, like no crying in the casino. I appreciate the disclosure, but this seems to me something better for someone on the way up,

• 22:17Speaker 02

  trying to get their first 100 million. This might seem like a good strategy, but I don't get why the billionaires are maybe approaching, I don't know, you know, it's none of my business how rich he is. It doesn't seem, the juice doesn't seem worth the squeeze here. The drama, it doesn't seem worth it.

• 22:30Speaker 00

  Cause I think you're right, but when the, my mental model is the amount you raise, 20% of that, so you get 50, but you have to gamble five upfront on fees. So that's it, it's a 10x, the day you get a deal done, it's 50 million bucks. And then you hope to hell it goes up, not down. You probably get out, if it goes down, you probably get 25, but that's it. You're right, it seems like a lot of pain and drama. And also on the disclosure, and again, I'm going to get moralistic, is that at first level, it's cute, because I do like the fact that there's humanity creeping into these disclosures versus, you know, I remember back when there was no founder letter and there was nothing except bland legal speak. So I love the comment, I'm crying in the casino, but it's not a casino. I mean, it may feel like a casino to some of the marginal players, but the point of Wall Street

• 23:15Speaker 00

  is to funnel, and even these, is to funnel money from the savers of ordinary people, managed by people like Fidelity, into profitable, long-term investments. That's why we have the whole damn thing, Wall Street, all of us getting highly paid to allocate capital. It's not a fricking casino, which is a zero-sum game where only the house wins. It's about allocating about $2 trillion worth of savings into, every year into great new investments in companies like Figma. It's not a casino. So it's a cute statement, but I personally would never let anyone manage my money who thought it was a fucking casino, excuse my language, who thought it was a casino. It's not a casino.

• 23:52Speaker 02

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

• 24:05Speaker 00

  I understand what you're saying, which is, is that the more unsophisticated the investor and the more complex the instrument, the more likely it is that the investor will lose and the promoter will win. It's one of those life rules. Even IPOs, there's complex things and you kind of go, whenever it's complex, your rule of thumb should be whenever a bank was explaining something complex, you're losing money. So I don't think it's as bad as, quote, the casino, because I think on aggregate, I mean, stepping back, the casino comment is this, in the casino, the median expected return is negative because the house takes a take and the median is a loss. The long-term returns in PE aren't, are good. The long-term returns in venture are good. So in theory, allowing individual investors to access those

• 24:47Speaker 00

  returns might have meant some individual investors would have got the Databricks exposure that Andreessen got. So it's not a bad idea. But to your point, Jason, the problem is often that more complex the instruments are, the more likely it is to go wrong, the more likely it is to be, to be adverse selection, the more likely it is that the good parts of the PE and venture value chain don't get allocated to the retail investor. So I don't think it's casino level. I do think it requires a fair amount of disclosure and monitoring.

• 25:17Speaker 02

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

• 26:01Speaker 00

  And again, Harry, you're right, I am annoyed at you because I haven't thought about this at all, so I'm working on the fly here. But I think it gets to an interesting philosophical question. There's two approaches. There's the, if I disclose everything, it's buyer beware, which in this case, this is an example of that, and SPACs are an example of that, because it is true to say, every single thing you needed to know to stop yourself getting screwed over was available in the prospectus. And so there's one school of thought that says, on your head be it, you made your own decisions. And there's another school of thought that's a little more nanny protective, and says, it's just not realistic for individuals to all do that level of analysis on something, managing their money, where they spend, you know, 3%, 5% of their time, and therefore, individuals, quote, need to be protected

• 26:45Speaker 00

  or regulated. And I think, you know, what we're seeing right now is probably by virtue of the overregulation, I think, last, you know, no one could get, there's a feeling now that we're going to wrench the needle back the other way to perhaps a lot less protections. I think it's a happy medium. It's a hard thing to decide, because in protecting those individual investors from the grift, as you put it, Jason, of a fund that has an arbitrary markup that's not there, you also, quote, protected them from being able to invest in that Databricks round that, you know, 500 pre, that's now 100x. Rather than doing what I think we do a lot of, which is this black or white thing, it's pretty tricky. It's a tricky regulatory balance to say, how do you allow people a fair amount

• 27:26Speaker 00

  of freedom to pursue what they want to do, treat them like adults, assume the disclosure is there, while at the same time avoiding those horrible stories of, you know, little old granny, gave her money to XYZ Wire Co., and they just lost all her savings, and now she's penniless on the street. It's tricky.

• 27:44Harry Stebbings?

  I am going to take it back to regular programming, Rory, because I don't want to piss you off too much. My mother can't be too thrilled to see me getting a beating. I want to go, actually, we said there kind of about the extended period of privacy division for companies, SPACs being a different mechanism, getting liquidity. There's a $6 billion secondary for staff at OpenAI, and a lot of them are going to make great money at scale. What do we think of staff secondaries at this level of scale, which is in the multiple hundreds, if not low thousands now, or low thousand, getting this level of secondary? First start there.

• 28:19Speaker 00

  Good for them. It speaks to willing buyer, willing seller, a couple of things, and informed buyer. Given the competitive pressure that Meta has exerted on AI salaries by being willing to offer people cash positions allegedly, and I have 10 to 100 million dollars. If you're sitting there in OpenAI, yeah, you can talk about the mission till you're blue in the face, but it's going to help a lot if you can also take off 10 million bucks. So you're going home. One thing I've learned about large amounts of money, as I see this in acquisitions, is one of my rules is this. What people say they'll do when faced with a large amount of money is meaningless and bears no relevance either way to what they'll actually do. Predicting who wants to sell their company based on what they say in the abstract is a waste of time.

• 29:03Speaker 00

  So taking these offers, when you get the 10 million, 100 million dollar offer from Meta, it rocks you back, I'd say. And you know, you go home, you talk to your spouse, do we want to do this? This changes the rest of our life. And that's real competition. So if you're OpenAI, you know, you can preach the mission, but at some point you got to match the dollars. I mean, you know, if you think about it, $6 billion, it's only 600 million dollar engineers. It's only 610 million dollar engineers. I mean, stunningly, to Zachary's comment, it ain't that much, which is hilarious, but wow.

• 29:35Harry Stebbings?

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

• 29:41Speaker 02

  Well, you know what, there's the competition issue, which is critical. Rory's, I, I just think stepping back for a minute, it is nice that as companies get bigger, stay public, private a little longer, if literally this is institutionalized. I mean, we talked about tender offers and all that. I think more if, if they actually act more like the public markets where every month you vest and you got to stay to your cliff and all that stuff works, but it's pseudo-public, right? And so you make it 13 months, you sell a 40th of your stock or 60th or whatever it is. That is, it sounds audacious, but if you step back for a minute, that would be a nice outcome, where it just works that way as a late-stage company. Forget about tender offers, it was just almost automatic every month you could sell your vested shares.

• 30:23Speaker 00

  Agreed. I mean, to use a silly example, but we just started earlier. In two thousand, as I say, Apple was eight hundred billion market cap going into eighteen. So let's go back to about two thousand and fourteen. It had a five hundred billion dollar market cap. You didn't have an objection to those people selling in the public markets. The only difference between this five hundred billion dollar market cap and that five hundred billion dollar market cap is, for stupid absurd reasons, it's still private. So I'm totally with Jason. If we collectively want to recreate the entire mechanism of the public market at massively more expense, massively more transactional cost, then more power to us. And part of that is being able to sell.

• 31:00Harry Stebbings?

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

• 31:09Speaker 00

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

• 31:46Speaker 02

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

• 32:33Speaker 02

  This is kind of the opposite and I don't know if it's bad, but it is different as a way to lock employees down with illiquid equity.

• 32:39Speaker 00

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

• 33:20Harry Stebbings?

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

• 33:27Speaker 00

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

• 33:36Harry Stebbings?

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

• 33:43Speaker 02

  Well, look, it makes sense. In this era, we should see 10 or 15 Hoppens, not just one, Harry. It just makes sense. We should see it. I mean, there's other Hoppens. We can talk about some other ones. That one's just a prominent one. We can think of several folks in the SaaS boom of 2020, 21 that walked away with too much money, but it makes sense. There should be double digits in this era, right? There should be 10, 20 founders who walk away with nine figures, whether they're WeWorks or Hoppens, there's gotta be 20 or more of them and it's, it's a cost of doing deals over the, I, I find all hot deals now are done on Saturdays. This is the new founder vibe. You get an email, even if I know them, what's going on? Well, we're, we're taking meetings on Saturday. I work hard. We all three of you do, but like this Saturday I can't do like, well, I mean, it's if you're

• 34:27Speaker 02

  going to close every deal on a Saturday, we're going to lose a few hundred million here or there.

• 34:31Harry Stebbings?

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

• 34:35Speaker 02

  There's got to be 10 hoppins, doesn't there? Just mathematically, there has to be.

• 34:38Speaker 00

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

• 34:58Speaker 02

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

• 35:07Speaker 00

  Yeah, and now you're being a snark. I actually thought your first response.

• 35:10Speaker 02

  Sort of.

• 35:11Speaker 00

  No, but I thought genuine comment. I thought your first response was the correct one, which is, I didn't even know about this. There's going to be tons of these. I didn't even break sweat thinking about it, Harry, right? It's like, I'm shocked to discover that some deals don't work. Some founders end up either leaving or getting transitioned out and some money gets lost. To me, it didn't even rise to the level of a story. I mean, it's fun to snark, but like literally, it's like, Jason's right. You know, your typical venture loss rate, you know, 30% of your deals don't work out and that's on the kind of where we play A's and B's. It's probably 50% plus on seed. So I remember in 2001 and two, the loss rate spiked to 60. So the fact that loads of companies that have raised a hundred million dollars go bust and, you know, in tawdry circumstances, yeah, whatever.

• 35:56Speaker 00

  Didn't even rise to the level of interesting.

• 35:58Harry Stebbings?

  Speaking of rising to the level of interesting, then, one for me that really did, which I love, is New Bank. Reported earnings on Thursday, blowout quarter. Net income reached two and a half billion, up 42% year on year. 123 million customers. It's incredible. I'd love to hear your thoughts on this blowout quarter for New Bank and how you feel.

• 36:20Speaker 00

  I'm not going to do so much the quarters, just stepping back and talking about these fintechs. And maybe, you know, it's interesting and obviously as people are sure know, New Bank is a dominant fintech, which is a next generation bank in Brazil, Colombia, Mexico. And it's just interesting to kind of sweep up with Revolut, a dominant fintech bank, a next generation bank in Europe and maybe even China. In the US, right? You ping me on this, it got me thinking, you know, what do all these have in common? What do all these have different? I think what they all have in common is in the last decade, they found the weak, soggy, badly run and profitable parts of the existing banking infrastructure and attacked them voraciously. And if you look at the three continents and the outcomes, you know, New Bank is public and worth sixty billion.

• 37:05Speaker 00

  Revolut, private, maybe worth the same, and Chime, you know, and the public in the US worth ten. The interesting thing is, they're all different. They all found a different weak spot. Because in each of the three continents, there's a, it's a different dynamic. And in my view, it's no surprise that New Bank is the most profitable, and perhaps, we can talk about Revolut in a second, the most stable. Because frankly, the incumbent banks were weakest in Latam. They were all, they were stodgy. They weren't serving their consumers. They were, these guys came in over the top. And they didn't just build a deposit base like Chime, they've done the whole, the full monte. They do deposits, they do lending. They've basically built a next generation bank. They've cleaned the clock on the average middle-class consumer in Brazil versus the old guys.

• 37:49Speaker 00

  And as a result of that, they are now, depending on the day, the largest or second largest market cap bank in Latam. So I think what I like about New Bank in the context of the other two is, that's what winning looks like. Because banking is inherently geographical. What you can now say truthfully is, a fully developed bank that doesn't just do deposits, but does the full gamut of financial services, can end up with a market cap equivalent to the largest bank on the continent, although it's probably still five X smaller in terms of assets. That's winning. And it's, it takes China, the other extreme. Eleven billion dollar public outcome, great outcome, great company. But the US banks are pretty well run. There wasn't as big a niche there.

• 38:30Speaker 00

  So where were they able to thrive? Two things. One is, with the Durban Amendment, they had this arbitrage on deposits. And they were able to make money on debit cards. And therefore, without ever doing lending, the interesting thing is, unlike New Bank, they've built a profitable business without ever doing lending, which is the bread and butter of most banks. They've built a perfectly good business. On deposit accounts and debit cards, living off the interchange. Now, it's eleven billion, despite the US being, I don't know, the ten X large or GDP country. Chime is only an eleven billion dollar market cap company because they were playing in a less profit-rich environment. There just wasn't as much money. I mean, JP Morgan might have seeded some of their mid-tier

• 39:13Speaker 00

  customers, but these guys didn't roll over everybody because the banks here just weren't as inefficient as in Latam. And then Revolut, obviously their edge very much in Europe was trans-country, moving money between different countries initially. And now, obviously, I understand, yeah, I've seen the numbers, Harry, don't worry, they're roughly similar size to New Bank, less lending, more FX, more crypto, and another wonderful business because I think the European banks frankly weren't as efficient as the US. And the opportunity for Revolut, slightly different than New Bank, but was big. If you look at all three together, you kind of go, wow, big outcomes here.

• 39:50Harry Stebbings?

  I think when you look at all three together, that you do actually go, wow, New Bank is an incredible business. Chime, respectfully, just much different scale, one hundred and twenty-three million customers for New Bank, just really shows the scale difference. I would say that, as you said, the FX and the crypto being the core revenue driver for Revolut versus now moving more and more into the skewed and unskewed loans for New Bank being really, really hard, such a defensible growth driver for them, which is so impressive.

• 40:17Speaker 00

  The point is, New Bank is all bank. Both Revolut and Chime exist, and I don't mean this on the fringes, the opportunity, right, was New Bank is like, no, if the CEO of Bank of America in nineteen oh eight, Gianini, went to Brazil today, he'd be like, I know exactly what these guys are doing, the bank in the middle class, top to bottom. It's an incredible story. And as I say, interesting as you size up the Revolut opportunity, I mean, it's a very crude metric, simplistic, but the fact that New Bank has a larger market cap than our equivalent market cap to the largest market cap bank, I think it's Unibanco in Latam, just speaks to the opportunity when you can make it happen.

• 40:53Harry Stebbings?

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

• 40:59Speaker 00

  I mean, the answer is, on an earnings basis, I can see why you say that. In the end, the only negative about being all bank is in the end, if you're not careful, you end up trading like all bank. Traditional banks, once they become mediocre mature businesses, they trade on a multiple of book, and New Bank would be very overvalued on that basis. I do think there's upside there because they're only in three LatAm countries. There is, there's more room to run. So from a revenue and OI perspective, yes. You do wonder when do the dynamics of just being a bank start to catch up with them? Do they get regulated? Do they start doing bad loans? Do they do, invariably, banks at scale do dumb stuff. It's kind of their genetic disposition.

• 41:41Speaker 00

  Maybe the better answer is this, if they can continue to do what they're doing and avoid doing dumb bank stuff. Yeah, you could see a two X from here, which would be wow, which would be just a wow outcome.

• 41:51Harry Stebbings?

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

• 42:08Speaker 02

  These are at the edge of consumer investing. It's not my strength. But the one thing I think about and why I'm especially impressed with the seed investors. If Nubank has 35% market share of Gen Z in Brazil and Revolut's all across Europe, but if almost 20% of everyone in the UK has a Revolut account, you don't want to be number two or number three. And you can compare it to Chime, but if Chime has less than 5% of US holders having an account, it's very different. So these are incredible outcomes. Predicting this at seed or pre-seed may be beyond my skill set. It's pretty impressive because you want to see, this is massive market share in the largest part of the economy.

• 42:47Speaker 02

  On the two by two, you want to be number one in the entire plumbing of a nation's financial ecosystem. That's an S tier bet to make it seed, isn't it? You're not just rolling up to the latest plumber software and seeing 18% month over month growth in their AI-fueled agent and saying, let's do this one. This one is knocking it out of the park from the pre-seed seed stage.

• 43:11Speaker 00

  But I think the smart thing all of them did was, you know, obviously have huge aspirations, but find a very profitable entry niche. And I think for Revolut, it was definitely trans-country money movement. You just find something that just, the bank Just do so badly and they're just robbing you blind as an individual. Another revenue is when I'm a TransferWise user, when I'm sending money back to Ireland. It's just so much a better product on the banks. It's just you type it in, the money goes. Revolut just, what they've done really well is starting off with a niche product that is very gross margin, CAC to LTV positive. And frankly, gets a bit of consumer love. Cause you just hate getting ripped off when you're moving money and then suddenly it's good. And then building, I, I, what Harry said is you just build year after year for decade plus.

• 43:56Speaker 00

  Just add all the other shit over time and you wake up one day and realize, oh my God, it's not my account for moving money overseas. It's my account for money. And then it's my account where I do my crypto, if you do it. And then suddenly for that, as you say, for that next generation, it becomes our primary bank. It takes a generation, but it's unstoppable.

• 44:12Harry Stebbings?

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

• 44:37Speaker 00

  And what's also interesting about this is in a world where banks were tied to physical infrastructure. You couldn't have a bank for a specific demographic type, because you had to have a bank for a specific geographic type. Yeah. If you're the bank for Northern California, you're the bank for Northern California, you deal with old people, you deal with young people. On the internet, instead of slicing by geography, which is how banks have been, you know, for time immemorial and how US banks are regulated. You could slice based on demographics or based on propensity to buy a certain product. And it really just turned the table. And you know, you're saying, and you also think in Europe, instead of being the, there was a bank for the UK, there was a bank for Germany, they catered to Harry, they catered to his mother, they catered to his grandmother, they catered to the local SMB.

• 45:21Speaker 00

  Revolut was just able to carve out, this is the niche, people who want to move money from A to B, regardless of what country you're in, uh, within reason, obviously some regulatory issues. So, I mean, the big aha is the acceptance of internet, which has taken frankly fifteen years long with an old. The people who funded the neo banks in ninety nine and two thousand and I remember being there. Tard, it took twenty years longer than people taught, maybe ten years longer for people to get accepting of it. But once they did, you just, as you say, Jason, had this opportunity to disrupt significantly. One of the top three market cap sectors, fintech, uh, financial service on the planet. These have been great compounds.

• 45:58Harry Stebbings?

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

• 46:27Speaker 02

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

• 47:07Speaker 00

  Yeah, absolutely. We've seen some of that in the portfolio too.

• 47:11Speaker 02

  Like getting like ten or twenty of these guys to join.

• 47:14Harry Stebbings?

  You said about the edges of consumer there. I, I, yeah, consumer, fintech's been super hot for a while now. We're seeing it now with Revolut's and your new banks of the world and your circles and we can continue. Consumer's been shit. Everyone has been shitting on consumer and especially consumer goods. And ON seems to be the anomaly that just keeps on giving. They have four billion of sales, up thirty eight percent year on year. A software like margins, sixty one and a half percent, they're worth fifteen billion dollars. Is this a shining light in a beacon of darkness for consumer? Or is there a pathway for consumer brands in venture?

• 47:53Speaker 00

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

• 48:28Harry Stebbings?

  Speaking of categories of one then, Cool Wave is up to 11.2 billion. I know I'm switching, but I'm just interested. And I'm on schedule Rory, so like to be fair, it's in the notes.

• 48:41Speaker 00

  So before we go to Cool Wave, I think a better thought there, because I lost much, I should think a little more about your comment on Onset. I think one of the things most venture needs is some kind of mega trend. That's pushing these companies along where you can say, these things are happening at a wider scale. And therefore companies will be formed in this space and you can have some a priori belief that they'll be big. Even though it was hard to predict, the Chime Revolut opportunity was knowable. You have digitization, you have the internet. You know, you could see there was this kind of forming consensus that there would be stuff in fintech. I remember looking at Simple, which is a predecessor of Chime. It didn't work out, Banco Santo there bought it. But there was like, yeah, this thing could happen over the next 10 years. And venture can think about it, form a little theses.

• 49:25Speaker 00

  And someone will be there ready to intercept the Chime or the Revolut ball because the trend makes sense. I think something like ON, it's very hard to predict. There's not a whole set of trends. It's very much, you know, category of one. You can say, hey, running is a trend or high-end shoes are a trend, but it's just not as scalable. That's perhaps a better explanation of why consumer fintech can be an investable venture trend. And high-end running shoes are gonna probably be a one-off anomaly. You can go back to Cool Wave now, but it's just so much more interesting than high-end, yeah.

• 49:58Harry Stebbings?

  CoreWeave, eleven point two billion in debt. We're also seeing a load of other players join them or join the model. Naby S being one, which is kind of a weird structure. Mr. Al is moving more and more close to them. First, how do we feel about the news that CoreWeave is up to eleven point two billion dollars in debt?

• 50:16Speaker 00

  Duh. And I'll tell you what I mean by that. If you just look at their, I loved their very succinct, whatever it's Q two, Q three investor presentations. Like, here we did a billion in this quarter. We're going to do four or five billion for the year, duly noted, loss of eight, nine hundred million, not that much. And then you look at CapEx planned for the year, twenty two billion. Okay. I mean, you know, once you decide to spend twenty two billion in CapEx, you're going to have eleven billion in debt. The way you think about CoreWeave is they're the guys that are doing the pointy end of the bet. That Meta, OpenAI, Anthropic, all these guys are talking about. We want to deploy a shit ton of GPUs and a lot of data centers. CoreWeave are stepping up and saying, we will be the financing vehicle to make that happen.

• 50:59Speaker 00

  I love the Baron's headline, CoreWeave borrows five billion in debt. It won't be the last time. And there's nothing wrong with it. This is a infrastructure heavy business. They are in the business of borrow, it's a real estate company. They're in the business of very sophisticated, clever, risk managing real estate company. They're in the business of borrowing large amounts of money, building data centers, signing long term leases. If you're going to grow revenue from five billion to ten billion, you probably have to grow CapEx from ten billion to twenty. So they want to be doing more of this.

• 51:31Harry Stebbings?

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

• 51:42Speaker 00

  I think obviously if he can match his debt structure with his demands from customers who will do take or pay, then it doesn't matter. Risk management is all a matter of greed. There's no hard or fast and people are trying to do hard or fast. It's just not kind of doable. It's absurd. You can't do this business without debt. What will kill you? And I actually, I can't remember who did it on Late and Space, but someone did a really nice discussion on this. If you have long term expenses and your customers are, you know, Short term inference customers, then you've done the classic banking thing. You've lent long and borrowed short, you can be caught short, right? Your customers can evaporate in a month and you still have a 10 year lease. If these guys really are signing up Microsoft and OpenAI to a seven year contract,

• 52:24Speaker 00

  then they have a seven year debt profile, then provided they match it, they can manage. Which of the two is going on? I don't know. I don't have visibility. But that's the bet you're taking is that, you know, I'm sure they dispose things like what percentage of your long term fixed charges are met by take up pays? Now, implicit in that is the company at the other side of the take up play is willing to continue to take it or play it. If times got tough and people didn't want all that capacity, it's been my experience that people fight really hard to avoid paying it. So it's not riskless, but they strike me as they seem to well understand the risk they're doing, whether they can in fact fully hedge a T V D.

• 53:03Speaker 02

  My only question or my only, I'm just watching, I'm just learning. They need to step, they're going to take another 10 billion this year, they already said, right? They got to buy the GPUs and they got to, but hyperscalers are offloading some of this risk to CoreWeave. Um, and they're guaranteeing it as part of it. There's a slightly cynical view of offloading your risk, but guaranteeing it, put it in air quotes. But I'm really just to learn, I just see it as the canary in the coal mine, right? OpenAI will find the capital it needs. Microsoft will certainly find the capital it needs. But if CoreWeave struggles, if it can't service its debt, if it can't raise more debt through this weird, uh, through the hyperscalers guaranteeing it. That's where we'll see, even if there's just a bump in this, in this cycle that doesn't last, well, I think we'll see the bump in CoreWeave before we see it in the folks.

• 53:49Speaker 02

  Uh, one level up market, you're not going to see it in Microsoft. OpenAI isn't public, right? You're not going to see it in Google, they're too big, but you could see that canary in coal, in the coal mine, right? In this public, one due to exposure.

• 54:01Speaker 00

  That's very true. Or even in the, to Harry's point, even in the wannabe Core Weaves, because Core Weave at least has public liquidity. But yes, in a downturn, it's amazing how quickly liquidity evaporates for this kind of product.

• 54:13Speaker 02

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

• 54:22Harry Stebbings?

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

• 54:34Speaker 00

  If they have agreed, if they have, if you have a seven-year contract with Microsoft that's a take-or-pay, and you have a seven-year debt, and it's perfectly advertised, and the contract's ironclad, you're right, there's no risk of that contract. Let's just say you're three years in, and Microsoft is not using its take-or-pay, but it's still paying its commitments because it's Microsoft, it's the only AAA credit out there, better than the government, it pays its deals. So you're fine on that asset. But I'll tell you one thing you won't be doing, you won't be building another one. And that's my point. So it's not like perfectly matched businesses will be fine. But if there's some up-and-comer who's maybe built another data center, a little bit on the con, because they thought they'd get some contracts, because Microsoft is going to continue on expanding, and then suddenly that's not there, that's the guy who'd be struggling. To be very

• 55:15Speaker 00

  clear, if you're, if they're well matched, then despite the debt, they'll be fine. But the point is, it comes right back to the data bricks discussion. All this depends on three to five more years of continued AI capex expansion. If that's the case, everything works. And if that's not the case, all bets are off.

• 55:33Speaker 02

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

• 56:08Speaker 00

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

• 56:40Harry Stebbings?

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

• 57:04Speaker 00

  Yes, that will be true today.

• 57:06Harry Stebbings?

  So if we then were to extrapolate that to a little game, Rory, because I know you love games. Is Core Weave over or under sixty billion market cap next year? It's at forty three today.

• 57:19Speaker 00

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

• 57:22Harry Stebbings?

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

• 57:25Speaker 00

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

• 57:35Harry Stebbings?

  That's why we have Jason.

• 57:36Speaker 00

  I, I would say the logical answer is there's probably a third, a more chance it doesn't. Yeah, I'm not like absolutely certain, but I can contemplate at least a one in three chance that sometime in the next twelve, maybe twenty four months, that demand slows down just enough that people penciling stuff out to the sky suddenly realize maybe it will taper down. And at that point, a lot of these multiples could compress. So I'm not going to say it's going to, because that's the question you asked. But I am going to say the probability of a continued infinite AI demand, the probability of Sam Altman's trillions might be high, but it's not more than two thirds. There's at least a one third chance that we end up in a period of time where demand slows.

• 58:20Speaker 00

  And at that point, some of these stocks probably wouldn't trade at those valuations. That's all.

• 58:24Speaker 02

  Not that I'm an expert in public market investing, but I would just say, look, obviously Core Weave is riding the right trend. You know, it is inherently tied to, to. Microsoft is its dominant customer and OpenAI who's guaranteed it 12 billion of revenue. So it's got to run, but this thing just went IPO and it peaked June 20th at $183 a share. It's half that today. It's half that today in two months. So the variability here, the beta, the alpha, it's very confusing because my knee jerk response is sure, bet on CoreWeave. The trend's there. Sam Altman just said he's going to spend a trillion bucks on infrastructure. He's got to send a few of those nickels to CoreWeave, but it's already down 50% since its peak, even though the macro trends are strong.

• 59:08Speaker 02

  We're all investors in NASDAQ QQQ. Like we're all up massively. If just in our 401ks or our private, we've all, we're all making so much money off AI, just being in Nvidia, Microsoft. CoreWeave doesn't seem to be doing better if it's down 50% from its peak. Maybe we're fine just all living in our QQQ. I mean, that's the only, you know, the weird thing about the stock market today is that's all the gains. The long tail is not doing well in the US. It's a weird world. It's not the long tail and we're, so we're, this whole economy is being inflated in a good way. We're all living in the bubble. It's not just the VCs. Anyone with exposure to VTI or QQQ is living in an AI bubble, whether they realize it or not. We're all benefiting from this one because of the hyperscalers.

• 59:51Speaker 02

  We all have Microsoft stock. We all have Nvidia stock. We all have Google stock and we even have Meta stock, even if we don't realize it. Isn't Nvidia like 15% of QQQ or something like that?

• 1:00:00Speaker 00

  I think it's Nvidia and Microsoft of 15.8%.

• 1:00:02Speaker 02

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

• 1:00:05Speaker 00

  And it's 35, 36% for the top out of five or seven. I can't remember which. Yeah, no, it's, it's astonishing. And you know, what do you do with that? I mean, so the question is what?

• 1:00:16Speaker 02

  Do we need CoreWeave?

• 1:00:17Speaker 00

  The serious cut, what do you do with that information? And what you basically said, Jason, is the stock market bet is entirely predicated on the AI bet, right? Which is astonishing. For example, the Sam Altman quote, so clever, we're going to spend trillions. I mean, do you think that's someone who sat down and added up? They've raised 50 billion so far, so they've probably spent some amount less than 50 billion. Do you think that trillion is a real number or a metaphor? Let's start with that. No company on the planet has spent a trillion dollars in CapEx ever. Do you think that's a budget estimate for the next five years? Or do you think it's just some out of my ass conceptual number?

• 1:00:51Speaker 02

  I think everything he says is very thoughtful. I think he needs a trillion. I think we're all going to live in AI 24/7 and we're all going to use 10 times the tokens and 10 times the compute we are now in 24 months. Like, help me do the math. If we're using AI 20 times more a day and 10 times more tokens, if all things were equal, which they're not, how much more do we need to spend on infrastructure to spend 200 times what we're doing today? What's 200 times today? I mean, I know there's not enough capital in the world, but-

• 1:01:17Speaker 00

  But don't gloss over that minor problem. The odd thing now is we're at the stage where the size of this single trend is now capable, as you correctly point out, of influencing macro trends, like global aggregate trends. It now, as you say, it's 37% of the stock market. It's a significant percentage of total domestic capex investment. I mean, I went and checked. Corporations invest total $2 trillion, of which roughly a trillion is on buildings and shit, and roughly a trillion is on capital equipment. So basically, we're talking about taking, you know, a third to a half of everything we invest and everything in the US. As I say, I think these are numbers as metaphor rather than numbers as real doable numbers. The aha here is we're

• 1:02:01Speaker 00

  going to spend a lot more than we ever did. It's hard for me to imagine it's a trillion, and it's also even harder for me to imagine if it is a trillion that it pencils out. Now, Salom is so, so smart, and he even worked into the same comment, and he said, "All the economists will be wringing their hands, and maybe I'm just doing that and wringing my hands." He's very good at anticipating the countercomments and preempting them. He's such a talented guy for that. You know, he did that. He did the "people are gonna lose money." So, because when people say it's not a bubble, it attracts antagonism, and people want to argue with them. It's very disarming to say, "We're gonna spend a trillion dollars." Pause. Economists won't like it. It might be a bubble. Oh, but by the way, we're fine. I see all the negatives, but just give it a

• 1:02:43Speaker 00

  tr- it's so frickin' clever. One is a fundraising genius. The question is, can you take this trend to the bank? Because literally, every discussion we've had, starting with Databricks, all the way through the co-op, is, "How long can you take the trend to the bank?" And I don't want to be the cynic, because, you know, I do believe the common adventure that, "Yeah, cynics sound smart, and optimists die rich." So on aggregate, you should be an optimist, but you just gotta keep your eye open on the downside.

• 1:03:10Speaker 02

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

• 1:03:33Speaker 00

  No. I mean, just

• 1:03:36Speaker 02

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

• 1:03:44Speaker 00

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

• 1:04:03Speaker 02

  Yeah, it's huge.

• 1:04:04Speaker 00

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

• 1:04:44Speaker 02

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

• 1:05:08Speaker 00

  The good news, Jason, there's some CoreWeave calls that you can buy tomorrow morning.

• 1:05:13Speaker 02

  Right now.

• 1:05:14Speaker 00

  That right now will give you the joy of that bet in financial terms, baby. Knock yourself out.

• 1:05:20Harry Stebbings?

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

• 1:05:45Speaker 02

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

• 1:06:30Speaker 02

  could be like, I'm not giving you a dollar of budget until you find me an AI solution first. Then we'll talk about humans. This could become mainstream.

• 1:06:38Speaker 00

  I think it's a pace question. One of the reasons I like doing this is I come on and I change my mind. And Jason, your comments, I thought last week on Shopify were the bomb, you know, the numbers. And then your comments in your own organization and how you've been able to own them have really made me pause my thinking. I've become convinced that at the pointy edge, the really smart, you're definitely seeing this labor replacement. And I agree with Harry then, you know, if you can contemplate that at scale, then you can talk about trillions of dollars. I think it's a pacing issue. What I try and take away from here is what am I paying attention to right now to figure out, you know, my investment strategy? And it really is on all my companies that are selling AI products, B2B products.

• 1:07:19Speaker 00

  How well are they doing with forward leaning customers and overall in terms of driving adoption and then driving efficiencies? And they're doing well and you can see it. Happen quickly though. You have the high propensity to buy customers like you, Jason. And then you have the big dollar customers with a much longer time horizon to ramp, you know, in corporate America. So I think the trend is real, but the pace is to me, the big question at this stage. And it turns out if you're spending 400 billion a year, pace really matters because the time value of money is going to eat your ass.

• 1:07:53Speaker 02

  I'll tell you an interesting thing, just for venture that I realize that I'm a little slow here. Now that we have 10 real AI productions replacing humans, the pace is slow, but also consolidation may happen before the pace accelerates. And what I mean is we added up the nominal this price of our 10 tools, $500,000 and going up. So you could imagine that could be a million dollars by the end of the year. You know what? You know what folks are going to say? Maybe we'll just, let's just use the ones we have. We did the math, $500,000 already that we're using and every B2B startup out there raised, you know, with these gigantic growth rates, not the prosumer stuff like lovable and replit, but a lot of the ones we look at, they're all trying to charge 60 to 100K a year. That's like the list price. It's like 60K a year to start plus 40K for onboarding. So that's 100K. And then we want to upsell you in year two.

• 1:08:38Speaker 02

  It's so exciting and there's so much budget out there because this is the only thing CEOs are putting budget for, right? Is these AI projects? We may see a wave of consolidation like we saw in 2022 in AI even next year or the year after, because it's just too many AIs that are six figures and up. It's too many. And for us, 500K, a million bucks. I mean, Harry, if you're, if your team was spending a million dollars a year at 20 VC on AI agents, would you be cool with the million or would you want to have a meeting?

• 1:09:04Harry Stebbings?

  I want to have a meeting.

• 1:09:06Speaker 02

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

• 1:09:18Speaker 00

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

• 1:09:45Speaker 02

  Like in sales, do I need an AI tool, an SDR tool, a BDR tool, an AICS tool? These are all five folks trying to get 500, 600,000 of you. I think, and we're actually already seeing this going to our conversation, like we're already seeing this consolidation in e-commerce. If we want to chat about where they're becoming one tool already. I think it's a real risk for all these cool ones. We just don't need five of them. Going to Roy's point, we may, rippling is a good example. We may want everything from one vendor in 12 months. And maybe the most AI startups can't keep up. It seems so easy in the beginning, but I don't know if they can keep up with that, with that rippling pace.

• 1:10:18Speaker 00

  And by the way, that also goes back to the myth of the one person billion dollar company. I think economics works really well at competing away excess profits. This trend basically says, you think you might be able to get away with that, but this other company is going to have five of these agents and compete against you. And I think it just, nobody allows billions of dollars of enterprise value to go unclaimed and uncontested. And as I'm thinking now, and genuinely what many of my AI forward B2B companies are wrestling with, this resonates. Picking, you know, having enough surface area of value. Cause one of the things we learned actually in robotics, which was very clear there, and maybe it applies here too, is you can have a high automation. You'd see a lot in robotics.

• 1:11:00Speaker 00

  Here's this product that can automate this particular problem and can reduce the labor by half, two thirds. It's wildly efficient. It pencils out in terms of ROI. But in a warehouse with 300 people, you're only automating two workstations. It doesn't matter. One of the reasons we have done very well with Locust, one of our companies is picking is actually the number one thing people do in warehouses. So your automation attacks a much larger percentage of the labor. And my learnings have been it's not enough to be ROI efficient. There's only so many things you can get your head around as the CFO or the chief of operations in a year. You have to be able to not just have a high ROI, but have a high ROI on a fairly large quantum of headcount.

• 1:11:45Speaker 00

  Does that make sense? Cause it's just brain death of doing it.

• 1:11:48Speaker 02

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

• 1:12:11Speaker 00

  It's not you, Dr. White. It's not going in 10 years.

• 1:12:13Speaker 02

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

• 1:12:34Harry Stebbings?

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

• 1:12:48Speaker 00

  I don't think so. By the way, some people often use the word vertical to mean functional. I, like, sales is not a vertical, it's a functional. Vertical means for insurance or for healthcare. In those areas, what I think the trend is that, once you become the dominant solution, it's actually easy for you to vertically integrate. Like, give you an example, Viva in healthcare, in the past SaaS generation, they started out with a single point product, but once you earn the trust of a vertical, where typically there might only be a couple of hundred key customers. If you're selling them A, and you have a really good product team, it's much easier to sell them B, C, and D as well, all tailored to their specific market. So I think what you'll see in these verticals, it's good for the dominant player, and they'll just be tucking in and adding in other shit, for lack of a better term,

• 1:13:33Speaker 00

  is that if you're the king of revenue cycle management in healthcare, you're just going to add a whole bunch of other insurance claims processing related stuff. Ditto across all, you know, if you're doing, and we're seeing a lot, actually, it's interesting. Voicebots, for example, obviously voice is now doable. Voice is a wedge in hundreds of different verticals. Where you can go, you know, because the ROI is really compelling. You used to have all these phone calls, some of them don't get answered. Now you add a person, now you add a voice AI and it deals with all that. It's really compelling to see fast growth. But in every case, we believe two years from now, this is just a wedge point. And you better add way more functionality. Such that two years from now, you're not just handling the call, you're handling the booking.

• 1:14:18Speaker 00

  You're handling the refund, you're doing whatever it is the customer wants on that call. So I think it's, it gets back to the same thing. You find these cute little wedges, but then you got to scurry really fast to add breadth to the product. In a world where your competitors are doing the same thing.

• 1:14:32Harry Stebbings?

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

• 1:14:41Speaker 00

  If you went into a bridge thinking Epic wasn't going to do this. You are a baby and your money will be parted from you sooner than you can say, gone, baby, gone. A bridge is the most impressive profit extraction machine in the healthcare industry. They partner with a, sorry, not a bridge, Epic. It's not Epic, which just to remind everyone is, you know, extraordinarily privately held company. Founded in nineteen seventy nine by Judy Faulkner. It's just astonishingly successful, has like forty percent plus market share in the electric, in the healthcare records marketplace in large US hospitals. It's dominant, I think it's five or six billion. It's a magnificent business, private, wildly profitable, incredibly tough to deal with and partner.

• 1:15:25Speaker 00

  They partner with, I think it was a bridge to do, to have this new scribe product that a bridge has. But I'm sure a bridge went into this eyes wide open going, at some point, you know, Epic's going to announce their own product. And you better have the best product. Are you nervous? You're downright, you are. But there's only one thing worse than partnering with Epic and getting smacked around by them. And that's not partnering with Epic and not even get a chance to get smacked around. Because if you're not with Epic, you don't have access to forty percent market share. Again, turns out that no one rolls over and dies and gives you five billion a market cap. Sorry, that was very bland.

• 1:15:59Speaker 02

  No, no, I know. I loved it. The whole issue in general, we're on a maybe for these platform risks like you talked about. These are ones we used to shy away from in venture. These are one of the many risks we're ignoring today because the growth is epic. We're ignoring so many risks and platform attaches all over AI B2B. There's so much platform risk and we've given up worrying about it. We've given up worrying about it.

• 1:16:21Speaker 00

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

• 1:16:31Speaker 02

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

• 1:17:08Speaker 00

  It's stunning to me how good that was, Jason, and how true that was. And you're exactly, I remember those sentences and you are, we're not having those sentences as much today. And it speaks to something I said, I think we said shows ago, we're way out there on the risk curve. Every one of us right now. The only thing between us and Armageddon is AI adoption. If AI adoption keeps happening, this whole wagon train keeps on rolling and we're all going to be fine. And we're going to get through to California. If AI adoption slows down, then it's going to get ugly real fast across the board. You're exactly right. You know, because a bridge's bet is, yeah, Epic has a product, but our product is so good that the doctors will want it. And they do, and they want it, they love it. And therefore they'll be able to parlay past the platform risk.

• 1:17:52Speaker 00

  And intrinsic to that is this belief that the magic is so good. And it's not a crazy bet that you'll be able to overcome the inertial resistance of bundling. Because I think doctors do have a say in this because, you know, we have a play in the smaller medical space and a similar thing. I think doctors give a shit about this because it impacts their time. And the entirely rational bridge bet is if you have a good enough product, maybe medical will say we'll stick with this. We won't go with the bundle product because our poor doctors are spending hours taking scrag notes. But it's all dependent on the magic and the end user adoption being a strong enough lever to just, as you pointed out earlier, pull the entire US economy up the hill.

• 1:18:30Harry Stebbings?

  Speaking of platform risk, and we mentioned Anthropic, OpenAI. We're going to do a Kao Shi quickfire round. As we know, Kao Shi makes these bets and there's kind of predictions on them with weighted variables. Will Anthropic release Claude five this year? Rory, I'm giving you odds a hundred. If you bet yes, gets you three twenty two dollars back. And if no, a hundred, he gets seventeen back. Where are we now? I would say yes, given those odds and given the need for speed and given GPT five. I'd say weighted, that's a pretty good bet.

• 1:19:06Speaker 00

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

• 1:19:27Speaker 02

  There's no chance, I think. I say this only because I'm a Claude power user. I mean, I love chat GPT, but I'm in Claude at least ninety minutes a day, maybe two hours. And I'm vibe coding the other two hours. So I'm either in Claude or I'm in Sonnet or Friends. And my point just is there's two different worlds. Anthropic's revenue is so driven by programming, coding, all that piece. Claude, the consumer app, does feel a little dated compared to chat GPT. It memory barely works. Imaging doesn't, like, there's parts of it that are dated. But I think the market share is so low, they don't need this big consumer press release like Sam Altman. What they need is Sonnet four, five to crush the limited advancements that OpenAI has made, right? And so that's what they need is to win in their core market.

• 1:20:10Speaker 02

  And I don't think they need a consumer spike in the ground to do that. They need the next version of Sonnet to be awesome. That's all they need. They've already won that market. Now they need to keep up, right? Now they need to keep up.

• 1:20:23Speaker 00

  Jason's vision is chat GPT calls itself five oh, but doesn't be awesome. Claude Sonnet calls itself four dot whatever's next, four six, and is awesome. Got it. You may not be correct. It's not a crazy answer.

• 1:20:36Speaker 02

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

• 1:20:57Harry Stebbings?

  Mr. Al, will any company acquire Mr. Al this year? Yes, $100 gets you 420. No, $100 gets you 113. So again, pretty shitty odds on no.

• 1:21:11Speaker 02

  I think if you're not even at $100 million in ARR, you gotta make a play right now. You either gotta sell or you gotta do the inverse one like with windsurfing buy. You gotta do something to get scale. So if you're at less than 100 million in revenue and someone wants to buy your team for 20 billion today, I say, take it. I say like spend the weekend thinking about 20 billion for your 100 million in revenue, but I would still take it, even if you leave the VCs and the sales team behind. I would still do it.

• 1:21:37Speaker 02

  There's moments in time and these moments are not going to last. These crazy deals are not going to last and you gotta take them if you're not crushing it.

• 1:21:44Speaker 00

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

• 1:22:07Harry Stebbings?

  If they got it, they would take it. I think the question is, will they get it? To your point.

• 1:22:11Speaker 00

  I would agree with that.

• 1:22:13Speaker 02

  Well, there's just going to be some weird deals, right? Scales bought for whatever we call it 15 or 30 billion, depending how you look at it, right? With a billion something in revenue that's instantly abandoned, but yet is the anchoring points for price in the last round. There'll be other folks that are sub nine figures in revenue. If that's what Mr. Al is, that get a similar like multiple or something. They, you gotta take that arbitrage. Like none of these things quite make sense. You're abandoning the revenue. Does the revenue count? Is it proof of concept revenue? Like what does revenue even mean for some of these deals? It's confusing what the revenue even means. If you're leaving it behind with the sales team.

• 1:22:48Speaker 02

  Like what is it? Is it just to justify the deal? Cause sometimes M and A is about justifying a price. I mean, Rory, we've all been through a lot of deals. So many times the deal is a justification. Two X the last round, three X the last round, 10 X revenue, 50 X. It's just a justification, isn't it?

• 1:23:02Harry Stebbings?

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

• 1:23:09Speaker 02

  I'm nice.

• 1:23:10Harry Stebbings?

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

• 1:23:22Speaker 02

  Well, I'll just tell you, Rory probably has better thoughts. I'd want to know your thoughts, Harry, because you know the folks overall even better than I do. On the one hand, deal says it's profitable. That certainly helps to go public, right? I mean, Rippling is in investment mode. I mean, Parker's an incredible CEO, but it's hard for me to believe they would IPO in anything less than 24 months because they're doubling down on investing, right? The top line over the bottom line. If deal's profitable, you have more flexibility. The quality of that, I don't have the financials. I don't know how much is software revenue versus PO revenue versus others. I've heard different things, right? So the quality of the revenue might be lower, but I only, I'm putting this in air quotes, but at the end of the day, the bottom line is the bottom line. Deal's quality of revenue probably isn't

• 1:24:03Speaker 02

  going to change that much. Unlike say a Palantir that just before it went public had like 20% margins and then went to 70. Assuming deal's consistent, might as well IPO now while they're profitable. But Rippling needs another two years is my guess in the oven to get to that we're getting to break even this quarter. I don't think Parker's going to be there for 24 months. That's just a guess and it's not a criticism. It's just investment mode.

• 1:24:23Speaker 00

  I think Jason's assessment of the two companies is correct. One of them has a more transactional oriented business that is more profitable more quickly. The decision to go there, public there or not, is a function of internal readiness. Let's be honest, any pending litigation angst. But you know, if you could get liquidity on that one, you probably should. I think in Rippling's case, you're right. They're in heavy investment world. It's a very ambitious task. There is an argument that says that's precisely why they maybe should go public. If they continue to need, that's the capital. If there's, again, I'm always a worrywart. If you worry- That the private markets get weird, having public capital wouldn't be a bad thing. But you're right, it would be less a fully baked story and more an ambitious continuing to grow story.

• 1:25:08Speaker 00

  So if you believe that the markets stay as they are for the next two years broadly receptive, then the logical thing is what Jason said, deal to go now and rippling to go when ready. If it was to change, it would be because Rippling decides preemptively, I'd just like to take one risk out of my life and just have a billion dollars in cash on a tradable stock. You'll see a continued bias here, a bit of a scaredy cat. And with the capital markets of this fraughty, there's a little part of me that always wants to do risk anything.

• 1:25:37Harry Stebbings?

  Chaps, brought to you from Greece, this was a pleasure. My, my mother is beckoning me, otherwise I'm gonna get killed.

• 1:25:43Speaker 02

  Have some baklava on us. I'll, I'll, I'll Venmo it to you.

• 1:25:48Harry Stebbings?

  As you know, those shows are my favorite shows to do. Now, next week, we have an incredible guest in the form of Mark Benioff joining us in the hot seat. It will be a very special one. Let me know how we can make these shows better, though. You can email me harry at twenty vc dot com and I always love to hear your thoughts there. But before we leave you today, let's talk about agents, specifically Piper, the AI SDR agent brought to you by Qualified. The agentic marketing era has arrived. And if you're a B two B marketing leader looking to scale a pipeline generation, Piper, the AI SDR agent, wow, it is here to help. Piper is the number one AI SDR agent on the market, according to G2. And hundreds of companies like Box, Asana and Brex have hired Piper to autonomously grow inbound pipeline.

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