20VC: The AI Bubble Will Burst: Half the Neoclouds Will Die | China: Should We Ban Chip Exports & Be Fearful of Chinese Open-Source | Mag7: Who Dies and Who Thrives: Why Meta is Meh and Microsoft is Mega

Jerry Murdock is the Co-Founder of Insight Partners, which manages over $90 billion in assets. Jerry personally backed companies including Twitter, Nest and Docker, while Insight's portfolio includes giants such as Shopify, Wiz and monday.com. Across three decades, Insight has helped produce 55+ IPOs and become one of the most powerful technology investment firms in the world. AGENDA: 00:00 — Is the AI Bubble About to Burst? 11:00 — Will Half of All Neoclouds Disappear Within 36 Months? 13:00 — Can Open Source Models Actually Beat OpenAI and Anthropic? 22:00 — Are We Entering the Golden Age of Cybersecurity Attacks? 32:00 — Have AI Valuations Completely Lost Touch With Reality? 42:00 — Is AI About to Wipe Out an Entire Generation of SaaS & Private Equity? 47:00 — Should We Ban U. S. Chips From Being Exported to China? 48:00 — Should We Be Fearful of Open-Source Chinese Models? 49:00 — Will Continuous Learning Kill Every AI Model We Use Today? 53:00 — Why Microsoft Remains a Mega Buy 56:00 — Which Mag 7 Giant Would You Short — and Is Apple's AI Strategy a Disaster?

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

• 0:00Speaker 00

  If there is a dislocation, no one is better prepared to survive it than hyperscalers. Let's take NeoClouds. NeoClouds right now, there's a whole bunch of them. I think at least half of them go away within 36 months. Fireworks is making a lot more money than Base10. The more you customize the model, the more the token changes its value.

• 0:21Harry Stebbings?

  This is 20VC with me, Harry Stebbings. Now, everyone is calling today, "peak froth, prices are out of control, there's too much money." We don't know what's going to happen with this AI bubble. Well, you know what's really valuable in this time? Wisdom. Jerry Murdock, joining me in the Hot Seas Day, he's the founder of Insight. They manage over $90 billion. Jerry has seen pretty much every technology cycle of the last 25 years. He's invested in some of the biggest companies across those 25 years. And today, we debunk whether we are in a bubble or not, whether China will beat the frontier models, whether we are about to have the greatest cybersecurity threats of our lifetime.

• 1:02Harry Stebbings?

  This and so much more in what really is an incredible, wise, operator-truth-teller, saying it like no one else is willing to today. This was incredible with Jerry. But before we dive into the show today, every great software company eventually runs into money. Uber had to move it, Shopify had to hold it, Airbnb had to settle it. Money movement stopped being a fintech problem, it became a software problem. And increasingly, God, it's an AI problem too. ZeroHash is the infrastructure that makes global instant money movement seamless. One API integration for stablecoins, digital assets, and modern payment rails, so builders can stay builders.

• 1:44Harry Stebbings?

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• 2:29Harry Stebbings?

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• 3:12Harry Stebbings?

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• 3:55Harry Stebbings?

  The agents bring speed and scale, you bring taste, judgment, and control. It's an enterprise-level solution too. Premium hosting, enterprise-grade security, 99.99% uptime SLAs, which is why the world's leading brands like Perplexity and Miro build in Framer. Learn how you can get more out of your site from a Framer specialist or get started by building for free today at framer.com/20vc for 30% off a Framer Pro annual plan. That's framer.com/20vc for 30% off. Framer.com/20vc. Rules and restrictions may apply. You have now arrived at your destination. Do you know what?

• 4:36Harry Stebbings?

  I think I genuinely have the best job in the world, because I get to sit down with people like you. And I'm dumb as rocks, but I get to ask questions that normally I wouldn't be able to ask. And I get to learn from the greatest minds. So thank you so much for joining me for a second time, Jerry.

• 4:52Speaker 00

  I'm happy to be here.

• 4:53Harry Stebbings?

  Now, I want to touch first on something that you said to me before, which was you said if the Iran war continues to fester, then you expect to see a correction. And depending on the depth of the correction, the AI bubble will burst between October 26 and March 27. Can you help me understand your thinking here?

• 5:13Speaker 00

  Sure. If you look at what happened in 2001, the end of the dot-coms, the innovations stopped for a while. And then new innovations came in, the Lampstack, which led to gold out of websites. Google started taking off. 2008, cloud computing, very slow to take off. And this is because these financial disruptions slow things down. The stream of commerce gets disrupted. And right now with AI, debt is a huge part of this. It's so unique compared to previous cycles, so much debt. All the hyperscalers have taken on much more debt than they ever have before. And the challenge becomes, will these guys get disrupted? If the credit markets have a disruption,

• 5:59Speaker 00

  which would be certainly what would happen if we had a problem in the overall capital markets.

• 6:04Harry Stebbings?

  Okay, the concern for you here is that we'll have a credit market disruption caused by the global conflict, which will then impact the ability for these hyperscalers to borrow cheaply?

• 6:14Speaker 00

  Well, that's one potential disruption. I see several that could occur. And I think if it's going to happen, it's going to happen if this Iran war. We can't have it just continue. The reason I say this right now is of complacency. We've got tremendous red lights that have been going on for a year or more on the credit markets. And there's just complacency. It's like, ah, we're fine. And I don't think people are accounting for risk. I mean, if you think about it, those guys that are in the private debt market, the spreads are too narrow between real risk and not so much risk. And they're not really accounting for that. And so I'm concerned about that as one sector. But there's multiple, because this AI revolution is incredibly complex

• 6:59Speaker 00

  with massive amounts of dollars being spent on it globally.

• 7:03Harry Stebbings?

  What are the signs to you that we're seeing a cracking in the credit markets?

• 7:07Speaker 00

  Well, complacency is the first thing you look at. When it happened in 2008, 2010, there was a handful of people, which there's always been documentaries about these guys that made money on shorting the housing market. But everybody else in the world had no idea what was really happening. It was complacency complete, you know? And what you had was, you know, really ugly situation where the people that were supposed to be keeping an eye on things, which were the credit rating agencies, and the credit risk departments of the big banks were asleep at the wheel. And this terrible thing happened. And there was a malaise in forcing this risk. People didn't recognize, because historically,

• 7:50Speaker 00

  there had never been a huge default problem with mortgages. And that was the kind of thinking that was there. And they didn't realize that the underlying problems associated with credit. I see the same thing today in that in the credit markets, there's many opportunities for there to be problems. In the late 90s, you had long-term credit blow up. We just had Leopold blow up because he wasn't accounting for the leverage that he put on his fund. I still see that there's these little warning signs that the complacency is the biggest issue. In Japan, another problem, right? So this is the second time the US has bailed out the yen. And why are they bailing out Japan? That's because Japan holds a trillion dollars in treasuries.

• 8:34Speaker 00

  And if they have to unwind that, if they sell 100 billion worth of treasuries, the market could absorb it. But they sold 300 billion worth of treasures, a third, in order to be able to buy dollars to support the yen? We would have a real problem on our hands immediately, immediate global problem. So I do a lot of backcountry skiing. And you recognize the avalanche conditions when they're worse or they're better. And you recognize things can be just easily tipped over. And so the war in Iran, if it gets really ugly, which it hasn't yet, if things collapse and inflation comes back, these are disruptors, all of multiple different opportunities for disruption, all based on the war.

• 9:16Harry Stebbings?

  When we look at prior credit market cycles, like you mentioned there, was the challenge not the underlying assets were of poor quality? When we look at the hyperscalers today, yes, Facebook is having a bond issuance that's priced higher than expected. But Meta's core business is throwing off hundreds of billions of cash flow. They don't need to borrow, really. They could do it off-balance sheet, it's an optimization game, the assets are good.

• 9:41Speaker 00

  I think you just saw that the free cash flow is the lowest it's ever been in the history of the company, number one. Number two, back in the dot-com bubble, there was a lot of fiber that got laid in the ground. And that fiber was always valuable. But the companies that laid the fiber and stuff, they all went bankrupt. So when you're really heavily dependent on debt and there's a dislocation, the underlying value of the asset declines. It may not decline forever, but it declines pretty sharply in a very short period of time. And that's when you have margin calls. That's the way it goes.

• 10:14Harry Stebbings?

  What should they do from here? They should not take out such levels of debt. Like, how do you expect this?

• 10:20Speaker 00

  Well, I mean, look, people are making decisions on the risk that they see to their business. If there is a dislocation, no one is better prepared to survive it than hyperscalers. I mean, all the hyperscalers have enough ongoing business and they've been very consistent. That's why they're worth what they're worth. The magnificent seven is there because they've been doing this for a long time. And so they know that they could absorb this. And if it happens, it'll be good for them because everybody else gets wiped out. And then assets are become cheaper for them to acquire. And they're in still in good shape. The demand for AI compute is not going to change. That's not going to go away. The issue is the ability to fund it in the short term.

• 11:04Speaker 00

  Let's take NeoClouds. NeoClouds right now, there's a whole bunch of them. I think at least half of them go away within 36 months. And if there's an economic disruption, a lot of them go away right away.

• 11:16Harry Stebbings?

  Can you help me understand that? I can't pass that over. What will separate the NeoClouds that go away and become valueless versus those that retain value and become even more valuable?

• 11:27Speaker 00

  That's a question around which, which head funds are going to go away and which ones aren't. If you looked at Leopold's returns, you think he's never going to go home. And he's probably going to survive this because he still has a good return for the year. But people are going to be a little wary about his risk-taking capabilities. And so it's underlying, it's the people running the company. What's going to separate one NeoCloud from another is who is running it? How are they organizing it? We don't see it, you and I and everybody else. We can't see under the covers how that company is being run. I can tell you, if, look at inference providers, I think fireworks is making a lot more money than base 10. And you look at the efficiency there and you think, oh, well, base 10 is raising money at the same valuation.

• 12:11Speaker 00

  Well, it's not the same business. I bet on fireworks over base 10, 10 times better business, in my opinion, because they're more capital efficient.

• 12:20Harry Stebbings?

  That's purely based on a capital efficiency?

• 12:22Speaker 00

  Capital efficiency and their willingness to make profits on business. I think Cursor was pretty smart in that the base 10 contracts from last year with Cursor, I don't think there was much profit in it for base 10. They just got revenue and they got scale from it, but they didn't get a lot of earnings. And so if you're not making a lot of money and you're putting up a lot of money, you're at risk. You're absolutely at risk.

• 12:46Harry Stebbings?

  You mentioned fireworks there. You had Lynn on the show, amazing founder, where she said that actually specialized intelligence would be the future and that the majority of companies would have their own models, trained on their own data, and that would be very important. Do you think we have a world of millions of specialized models in this way and a couple of frontier providers? How do you see that?

• 13:07Speaker 00

  Well, on two things, in the big overall view, if we say that models are there to provide intelligence and we look at the world and you've got 7 billion people, how many intelligent people do we have in the world? I mean, in some ways, you're going to see that models are going to replicate humans in this sense of being specialized and being able to do a specific task in a specific way. You know, someone who's cutting a gem has a certain intelligence about how to do that work that's pretty specialized. And I think you're going to see intelligence is in early days of these models, it's all going to be about specialization and the ability to customize. What's happening is, is that you can't customize anthropic models or open AI models right now, not the big frontier models.

• 13:52Speaker 00

  You're not allowed to do that. So that's just given an opening, I think, for open source models to be tuned. As I mentioned on our last call, I thought that open source models and ASIC chips were going to kind of be part of a tsunami of their own. And if you're looking at a frontier model with double dollar digit cost per token and you're looking at an open source model that's 10, 11 cents per token, while all tokens aren't created equal, it's still enough of a difference that there's going to be a massive adoption. And by the way, it's not like AI is only demands for enterprise customers or a few consumers. It's a global demand by every business in the world today.

• 14:34Speaker 00

  Even though people haven't quite acted on that demand, it's like websites at first, right? In the nineties, only a certain amount of companies had had websites. But the building out of websites has not slowed down. It's massive. It's just the desire for that and the need for website building continues to this day. It's endless. And I think it's the same thing when we look at intelligence, the demand for it is going to be endless by endless numbers of people. And this is helping creating the opportunity for open source and ASIC chips.

• 15:05Harry Stebbings?

  Totally get you on cost efficiency of open source compared to frontier models. But what everyone says is you're seeing the token traffic go towards open models and you're seeing the dollar traffic, the revenue, go towards frontier models. Is that how you expect it to continue? And will frontier just be paid a lot more for harder problems and open source take the majority of easy?

• 15:27Speaker 00

  That's a great question. I'm going to give an answer, but I want to caveat it this way in that there's opportunity in the answer for short-term disruptions that last from three months to a year where economics appear to have leveled out. As long as the frontier model companies, and I'm convinced they have goals for continuous learning and ultimately lifelong learning in these models. And so as they, if they can execute against those goals over the next decade, the demand for those models will never cease. And so they'll just continue to grow. But because the global demand is so massive, I mean, I'd assume that we're probably in single-digit demand fulfillment today, low single digits.

• 16:12Speaker 00

  And I suspect that open source has a long way to go to fill in the need. And of course it's going to be low cost. And of course, most of the dollars are going to go to the people that can afford to pay for them, right? I mean, Teslas were really expensive at the beginning and only wealthy people could afford a Tesla at the beginning. And now that's changed. I think that's the way it's going to work, that only the wealthiest companies and people can afford these models in the early days. And open source is going to be suffering from a very, a big catch-up game in terms of, in terms of revenue. But they're going to get a lot of money and a lot of thing very, very soon. It's coming.

• 16:51Harry Stebbings?

  A token is a token is actually what Gavin Baker said the other day. And Jensen doesn't give a shit whether you put it on a frontier or an open source. He wins at the end of the day. Do you agree with that perspective? And how did you analyze his open source evangelism with his letter?

• 17:09Speaker 00

  I disagree with a token is a token. That may be true at the moment with pretty much frontier models, but I disagree with it because companies like fireworks and others are helping companies to customize. The more you customize the model, the more the token changes its value, right? Because the more you customize what's being produced and some models, they talk a lot more than other models. And so they produce a hell of a lot more tokens, just like your guests, I assume.

• 17:42Harry Stebbings?

  And so essentially you're saying the efficiency gains that can come when you work with a provider like fireworks means that one token goes a lot further than another token in a lot of cases?

• 17:52Speaker 00

  Well, there's two things. So each model is the more it's customized, the more it's going to have a particular, I'll say, style to it. And whether it's a verbose style or a style of brevity, that's going to matter a lot in the overall cost. And I think that what we're going to see is, as enterprises and people with money have more time to understand these, more and more customization is going to occur to do things. I mean, when you talk about agentic systems, it's natural that you think, hey, you're going to use an open source model for coding because they've got that figured out. But for customer service, for onboarding, you can see open source models being really

• 18:35Speaker 00

  ideal because it's a highly specialized task. And I think that highly specialized tasks are going to be something that pays off a lot quicker and a lot cheaper. You can take your, if you only have a million dollars to spend, you could spend that million dollars on customization and getting specific tasks done a lot more efficiently than you can on a frontier model.

• 18:57Harry Stebbings?

  How does this not cannibalize frontier models business? I'm not one to, wants to see the open AI and anthropic challenge. Their thriving is good for all of us. But I don't understand how that doesn't cannibalize their business, making their TAM smaller.

• 19:10Speaker 00

  But don't forget, we're talking about intelligence. You want more of it all the time and you want different flavors of it, right? I mean, humans have emotional intelligence. They have, you know, all different styles of intelligence. We know that learning, some people have more visual intelligence, if you will. And I think that we're going to see the same thing with models. We're going to absolutely see this thing that prohibits the cannibalization of frontier models, at least in the short term. What I've seen with every new wave of technology in my career, the market initially expands. And then the contraction comes when there's a contraction in global markets. And then you see the fallout. And then you start again with more innovation.

• 19:53Speaker 00

  It's this continuous cycle of Cambrian explosion of innovation. Followed by these sort of glacial periods when ecosystems collapse and then they grow back again. And so I think as long as frontier models can continue to innovate because they have the money and they have the ability to do more innovation. There's never been a time yet where the open source model has has trumped a frontier model on innovation yet. They might be better at specialization, but they certainly don't compete yet in being able to do complex tasks.

• 20:26Harry Stebbings?

  When you think about that challenge of frontier versus open, Alex Karp has said the biggest enterprise customers in the world don't want to work with frontier model providers. They're scared that they're going to eat their lunch moving into that business. Is that true? Or is that Alex rather self-servingly then saying, and Palantir will help implement a full infrastructure? That's not that.

• 20:48Speaker 00

  Well, look, Alex has a bunch of customers that that of course are very worried about that. All the CIA and all the intelligence organizations, of course, they're paranoid about that. So he's he's one got a huge customer base that that's exactly the way those people think. But two, look, there's two issues, right? One is the data. And yes, they've been giving their, I mean, Anthropic's been getting all this data and and OpenAI already for years. So in some ways, the cat's out of the bag, right? I mean, if you worry about from a security perspective, I mean, Apple could already rob my bank tomorrow. They have all my passwords. Apple has everything on me, right? If they wanted to. I think Amazon has a lot of data too, maybe not the prize data, but they have a lot of data. Microsoft, Satya Nadella himself came out and said, look, we've got a lot of the data around the communication,

• 21:34Speaker 00

  how communication works inside an organization. So enterprises have already given up a lot of their secret sauce to the ears and they should be cautious. I agree with Alex that enterprises need to be smart about just continuously shoving their data up into Anthropic and OpenAI. They need to practice discernment and they need to think about what they want to keep behind the firewall. And they need to continuously have an iterative conversation about that and be careful. And I think in part, this is what's going to drive the open source opportunity is that, yeah, you know what? We don't want that stuff uploaded into the cloud. We want it behind the firewall.

• 22:17Speaker 00

  So look, two things, one, recognize that enterprises have already given up a lot to third party companies. And B, yeah, they need to be careful going forward.

• 22:26Harry Stebbings?

  They need to be careful going forward and security is front and center more than ever before. We're seeing hacks like we've never seen before. We're seeing OpenAI and hugging face. Anthropic came out saying, hey, Mayor Culpa, our models actually hacked three companies. And it's almost like a brag now to have like a, you know what I mean? Our model hacked companies. Thanks. How do you think about the golden age of cyber that is to come?

• 22:50Speaker 00

  Well, there's no question that there's a heck of a lot of complacency around security overall. Even people that think they're getting the job done, they're complacent. They haven't really thought through. I mean, I don't know how many developers are running their models in YOLO mode, but probably a lot. And they're thinking, oh, I'll put the model in a container. I'll put the tools in a container. I'm okay. Well, containers aren't safe. You need sandboxes. This is why the big container company Docker said, hey, themselves said, containers aren't safe. You better put in a sandbox. And that's why they've had a huge success with Docker sandboxes. That's why E2B is successful with cloud sandboxes. People don't realize how important it is to really step up the game on security. Everybody, in my opinion, is underestimating it.

• 23:35Harry Stebbings?

  When you think about investing today personally, do you want to do a lot more in security? What can I take from that? I'm a venture investor. You know this. Dude, you know, I'm here to ruthlessly make money, Jerry. You know me. What should I take from that?

• 23:48Speaker 00

  Well, look, if you look at fireworks, it's a tea. I'm lucky I invest in fireworks versus Base10 or CoreWeave or any of the other inference providers. Why? Because that team was the geniuses that understood PyTorch in particular. I mean, so you've got this sort of team of people that have a different take and have a different set of aspirations in what they're doing. They're going to move up the stack. They're going to move up and do a lot more fine tuning and refinement and customization for people. And they're going to be the best ones at it. That's why they're going to succeed. I think you're going to see the same thing in security. And the most important thing that is underestimated is the need for sandboxes.

• 24:29Speaker 00

  The truth is there's going to be thousands of different forms of sandboxes. And you're going to need a company that understands how models look at tools and what that behavior is and be able to take that behavior and optimize for it. Because, you know, these agents, we forget sometimes are probabilistic. It's not like a developer says, okay, I'm going to go build this little app over here and I'm going to pick two different libraries. I'm going to see which one does best and I'm going to generate my app. No, an agent could say, I'm going to open up 100 different sandboxes with 100 different libraries and then determine which is the best app and where's all these different tools. That knowledge is in a handful of companies today.

• 25:12Speaker 00

  And if you look at E2B and you look at Docker, they're probably the two best at understanding all that stuff. So you start there because if you don't get the sandbox right, forget everything else.

• 25:23Harry Stebbings?

  I have to ask you, you mentioned fireworks multiple times. Lin has margins in the 35% range, she said on the show publicly. Many companies within the AI application layer in particular have very depressed margins, lower than that 20%. Should we just all get used to a lower margin generation of companies? And that is AI sadly, or should we think differently about margin in this generation?

• 25:46Speaker 00

  Early in a cycle with new technology, it's always a real estate game, right? When they wanted to populate Oklahoma with settlers, they just had this giant date, had all these people out there, pulled down the flag, everyone ran and just put their stake in the ground and said, this is mine. And it didn't matter if it belonged to Native Americans or not, they just did it. And I think in the same way, you've got people doing the exact same thing. They're picking low margins or zero margins in some cases, just to get the customers, to get the relationship, to get the real estate. And so it's a strategy. If you've got capital, you're going to own the real estate. And then you're going to go back later and get the bargains built into the business.

• 26:28Harry Stebbings?

  So you don't worry about that. You're like, it's a land grab. It's more important to put your flag in the ground and we can expand margin later.

• 26:35Speaker 00

  Well, it's just a strategy. I would not invest in people that build a culture around that idea of low margin. Now, that's why I probably lost out on investing in Amazon because I just didn't, you know, I didn't buy into Bezos's idea that your margin is my opportunity. And groceries and books and things, yeah, he's right. And in compute, he was absolutely right. And he and he scaled it in a different way, but most people aren't thinking like Jeff Bezos in that regard. I believe that you need to build a culture that works. And if you don't want to give all your company away to venture capitalists, you might think about monetizing and generating margin, effective margin. And you can be clever about it. If I talk about the sandbox example,

• 27:17Speaker 00

  the newest thing is, you know, most sandbox people make money on compute. Frankly, that's a dumb idea, in my opinion. You want to have a model that says, bring your own compute and we'll make money because we we understand how to run sandboxes better. We know how to network them better. We know how to provide traces better. We know how to do all these things that are going to give you visibility into what you're doing. Again, innovation is what should be on your, on the front of your mind and that innovation better drive margin. So even if you don't have it right this minute, if you're not thinking about it, I won't invest in you.

• 27:48Harry Stebbings?

  You said like, hey, we need to rebuild the entire stack. When you think about that and the rebuilding of the entire stack, if you start with chips, we see more and more people coming in at the chips layer, whether it's etched or fractal in the UK. How do you see that?

• 28:05Speaker 00

  I'd said it last February. Look, ASICs chips are really ideal if you're thinking about model customization. If you're saying, look, we're at a new phase in in this AI build out, or what we really want to do is do a lot of model specialization. You don't need a GPU for that. Too expensive. You could absolutely take an ASIC chip. And so I think the number of people designing chips or ASIC chips is because they recognize that trend and they want to take advantage of it.

• 28:35Harry Stebbings?

  Do you need to own the chip layer as a model company stage, you think? When you see DeepSeat building their own chips, you see Anthropic now building their own jalapeno from OpenAI.

• 28:46Speaker 00

  I'm not sure jalapeno was the best name. It bothers me.

• 28:51Speaker 00

  You know, and I love Mexican food. I love spicy food, but I I just not sure about that one.

• 28:56Harry Stebbings?

  The next iteration is called Padron Papa.

• 28:59Speaker 00

  Look, actually, owning the chip is going the wrong way long term. Short term, it makes sense for larger companies because they want to optimize chipsets for models. And that's what they're thinking about. But when I was at the Santa Fe Institute, I'm on the board there. We had a meeting with a bunch of chief scientists from all the major AI companies. And what we came back with out of that meeting, two points was, one, we don't know how to measure AGI, even if it shows up. But the second point that's useful to this conversation is that we should focus on the complexity between the model and the agent, and therefore the human being, to the degree that they're in the loop. That's where the opportunity is.

• 29:42Speaker 00

  And sure enough, that's where the most compelling place I would focus on in investing is that level, which is from the loops to customization, multiple things, security, all of that stuff from the model out is where I think it's far more interesting. Going back to the chips, eh, short term, I can see why people do it. Long term, I think it's unnecessary.

• 30:06Harry Stebbings?

  I'm an investor in Lagora, and they obviously fight intensely with Harvey. When you look at the two of them, you think, God, what a competitive landscape. What have been your lessons over the last few years, decade, two decades, when you have two very well-funded competitors like this?

• 30:23Speaker 00

  Fund the guy who is the small startup right now, watching them to battle it out. Particularly in the legal market, the chances of being early and taking, when you're in that competitive situation, you're going to take risks and you might regret. The first one of those guys that has a security leak and security problem, and it will happen, is going to wreck their market opportunity. And you think, oh, well, the other one's going to win. Well, probably not because they're probably both be vulnerable because they're looking at each other and they're watching what each other is doing. So for me, I look at that situation like, I want to go for the next innovative young company who's maybe not trying to do all things for all lawyers and be more highly specialized,

• 31:08Speaker 00

  like Get Dynasty is in the trust world, do something very specific. And by the way, this has been Peter Thiel's advice, is start with a niche, dominate the niche, and then grow it out. And so when you're trying to take a whole ocean, like the legal system, I just wonder if it's kind of contrary to Peter Thiel's advice.

• 31:28Harry Stebbings?

  Do you worry that we just throw price out of the window? It seems like we've never been less price sensitive. This is crazier than 2021, Jerry. I'm investing every single day on the ground. I consistently have founders say, oh, you know, we're raising a hundred. And I'm like, oh, well, how much are you raising? And they're like, we're raising a hundred. I'm like, that's the friends and family round? And like, when I said to a founder the other day, we write $25 million checks. And they were like, okay, good. So you're small and collaborative. Have we just lost price sensitivity? And is that okay, given all outcomes can be trillion dollar companies?

• 32:03Speaker 00

  It's evidence that we're still in the hype cycle, right? Or in the hype cycle because expectations are beyond everyone's imagination. And so if you're saying, I'm going to be a trillion dollar company, my opening round's a hundred million or something, or even a billion, whatever the valuation is, are, you just recognize and you have to look in your head and look at the people that are going to take that money. And you're going to recognize that, has that number been well thought out? Or are they just doing it because the market's doing it? And I would argue that it looks like Anthropic and OpenAI, those crazy mega rounds, you know, at a hundred billion, 150 billion, might actually have been cheap. I mean, I think Gavin Baker probably believes that and others believe that. And so for a few companies, yeah.

• 32:48Speaker 00

  But how many trillion dollar companies we're going to have? Discernment, again, is necessary here to decide, you know, what really can have the sort of hyperscale type growth associated with it? And which ones are going to be also rounds or a little more of a slower growth opportunity? And we need to, and we need to sort out those a little better.

• 33:07Harry Stebbings?

  Is slower growth venture anymore, Jerry? If we look at fireworks, you know, it's three and a half years to a billion. It'll be four years to 2 billion if they hit end of year targets this year. Four years to 2 billion. Jerry, do you remember when it was Slack, 18 months to 10 million? And we were like, wow, wow, games.

• 33:26Speaker 00

  I think, I think in the case of fireworks, look, they're benefiting because of OpenAI and Anthropic. They are the next level. And now with open source taking off, they're benefiting from that. And so they ride on the shoulders of these model builders. And they're the next layer that needs to get developed. And so they can scale right behind that. But if you're somebody else, like saying the app layer, I'm just not buying that. I'm not buying, I'm not buying it for the legal and I'm not buying it for the app layers yet. But for infrastructure, absolutely.

• 34:02Harry Stebbings?

  But I get killed for this. I say publicly, triple, triple, double, double. Dad, you remember this. Am I glib and my kid, you are a product of a cycle? Or is this just a new expectation level for venture?

• 34:15Speaker 00

  You are glib.

• 34:18Speaker 00

  Sometimes, not all the time, but right now you are, yeah. I would argue that general statements don't apply here. You have to be highly specific. If you look at Anthropic and you look at what they've done, Anthropic and OpenAI, it's never been done in the history of the world. It shows the importance of the time. So we are definitely, if we look through the history of venture, in a completely different era. And the frontier model companies have done something extraordinary in the history of the world. I mean, this is, this is definitely on the level of inventing fire, you know, the electricity, whatever you want to call it. It's truly extraordinary what the frontier model companies have done. They've lit the match to AI.

• 35:01Speaker 00

  And the companies that can follow right on top of them and not get killed by them, but can grow and solve more infrastructure problems and help create an ecosystem around the model companies, those guys can, they deserve those economics. Other categories, no way. Like, for example, NeoClouds, no way. I don't buy it. I think some, one or two of those NeoClouds are going to end up dominating. And a lot of them, at least half of them are going to go away. And they're going to go away with massive amounts of money being burned as part of it.

• 35:33Harry Stebbings?

  Does the model routing layer carry enough value to you to be independent?

• 35:39Speaker 00

  My opinion is OpenRouter has massive amounts of transactions because people are basically lazy, right? It was easy, okay, I need to connect to this model. I'm just going to use OpenRouter. And OpenRouter charges 5% on top of that, which is a crazy amount of money. That's not going to last. You're going to see exchanges. There's a blockchain company called Akinaki that has just launched Dodeca on their mainnet. And this thing is an exchange to go out and buy inference. And as part of that, all the model routing is done for you. And so I think you're going to see multiple opportunities to an open router type product, where people that are hosting the models themselves will provide, you know, through an exchange,

• 36:23Speaker 00

  an easy way to acquire the inference. And the need for an open router type product, and particularly paying the 5% markup for the inference, will matter, right? Because that's what those things do. They're not necessary long term.

• 36:37Harry Stebbings?

  So if you were on the board of OpenRouter and the $10 billion acquisition comes through, what do you say?

• 36:43Speaker 00

  You say, fuck, yeah, this is great, you know? And like a lot of people, you know, you take the money when you can. Credit to OpenRouter, they're there early. Developers didn't see another alternative. They could just go to there, go to the API, and they're willing to pay 5% markup to get their inference. And guess what? Shame on the enterprises for letting them burn all that money. That's a huge amount of money. And so I think that you're going to see a big disruption in that model in the next three, four, five months. Actually, not just Akinaki, but Venice, Venice IO is doing that. And there's two or three other guys that are now in the process of building exchanges that you can go directly, get the inference you need without paying the 5% markup.

• 37:26Harry Stebbings?

  I think you very accurately said about kind of where we are today, the potential dislocation of excitement, dislocation due to external affairs, and then the reblossoming of an ecosystem, so to speak. If you think about that and you advise me as a venture investor, deploying, say, your money today, what would you say to me? Play the game on the field, Bill Gurley style? Be mindful, don't spunk cash into Neo Labs at a billion dollars pre for one person out of OpenAI? What would you say to me?

• 37:57Speaker 00

  Well, Bill's on the board of the Santa Fe Institute with me. I mean, his guidance is pretty smart. He's pretty much on point with a lot of things with venture capital. What I would suggest is you look for impact. You look for people that are gonna be, they're just way different than anyone else. And you look at them and you realize, it's not that they want to build this business, it's that they have to build this business. And if you find that in a person and you recognize that they have the commitment to it, because the commitment to it is all in, there's no other option. Look for that and look for the fact that what they're gonna do has impact if they do it.

• 38:36Harry Stebbings?

  When you review the founders you've worked with, where was that most obviously striking?

• 38:41Speaker 00

  It's rare, right? Because you could say all the founder-driven Mag7 companies would qualify, right? I mean, Elon, Jensen, Zuckerberg, they all qualify for that definition. But you look at these other companies that you say, wow, fireworks looks to be like that. A to B is definitely like that. The founder, Vignan, he's absolutely gonna do it. There's no question in my mind. Avan, this guy came out of Meta as well, his name's Sadi Khan, but Uncle Shu said this is one of the best CEOs he's ever seen. And Vinod was one of the best CEOs building Sun. So when someone says that, you take it seriously.

• 39:16Harry Stebbings?

  Do you think we see a compression in liquidity timelines? We have Cursor scaling to $60 billion sale in four years. Do we see actually venture cycles get shorter in this environment, given companies grow faster?

• 39:30Speaker 00

  I think what Cursor did, because the team is really smart, is they pivoted out of the IDE space, and they pivoted, and in that pivot, they convinced Elon that they could build models. They hadn't proved it yet, but they convinced him that they knew enough to do it. And Elon was pretty desperate to solve his problem with XAI. And so it was a great fit, and they got the $60 billion, so you hit the bid. If Open Rudder gets a $10 billion bid from Stripe, you take it. I think those are not the norm. Those are events that are happening because the board and the management realizes, hey, maybe what we've built isn't a decade company. Maybe this is something that we need to move out of, and we take the win for what we had. And I had a few companies back

• 40:15Speaker 00

  in the day that I wish had done that. Flipboard was one of them, and I wish Flipboard had taken the billion-dollar exit, but they didn't.

• 40:21Harry Stebbings?

  What happened there? They had a billion-dollar asset on the table?

• 40:24Speaker 00

  Well, they had an opportunity, yeah. They had two bidders going for them at the time, that was very, very interested in them, at around, I'll say, within 20% of that number. And one of them was Twitter, and the other one was TikTok, the founder ByteDance. And he got advice from someone called The Coach, who was pretty famous at the time, that said, hey, don't sell your company. And The Coach was unfortunately passing away. And the board bought into The Coach's advice, and they stayed with it. And now Flipboard, you don't care about it, right? They missed the opportunity. I think those opportunities happen with a lot of companies. I have a lot of arrows in my back from this situation. So you just have to know when it's a time to go and when it's not a time not to go.

• 41:05Harry Stebbings?

  We mentioned, obviously, Cursor selling to X. It seems like IPO markets are open for the rare few, for Anthropic and OpenAI when they want to, for SpaceX. But I'm concerned that your Airtable of the world at $485 couldn't IPO. You can't IPO with less than a billion dollars in revenue today. Does that concern you?

• 41:27Speaker 00

  Hmm, no. I just think that we're at a moment in time where, you know, if you want a proper IPO, you need to be on track for that. But I would think Cursor, if they had gone out last summer, if they wanted to, they could have gone. I mean, they would have been taken, despite the fact. I think the management team was wise to realize that they weren't quite ready for that and didn't do it. But they could have. Absolutely, they could have. The numbers were crazy. There's always a banker willing to do it. The question is, which bankers, and is it the right thing to do?

• 41:56Harry Stebbings?

  Do you worry that Airtable is the start of a much broader generational cohort that will be sold at a mega discount to last round?

• 42:06Speaker 00

  No. First of all, there's not that many buyers like bending spoons, right? And so there's not that many buyers there. So I don't, I think the companies, if they're at $400 million, if they have the kind of revenue, the question is, are they going to continue having the revenue? If they haven't already integrated AI in a compelling way, I'm not optimistic about their future at all. And if you don't have a really thoughtful AI strategy and a thoughtful AI product, I don't believe that you're gonna have an opportunity to do much of anything with the company in two years.

• 42:40Harry Stebbings?

  Are we not seeing most of the SaaS generation put lipstick on the pig, so to speak? Ah, fuck, let's sprinkle some pixie dust in this. And, oh, now you've got an AI co-pilot, and, oh, there you go.

• 42:51Speaker 00

  Well, you know what? It's a good thing you mention that, because we're in a new era now. We've gone to what I call the cowork era, where it's really more agentic, where I mentioned autonomous agents. And I think to those few companies that have deployed autonomous agents successfully, cowork is becoming the new trend. And as cowork becomes more successful and more stable and more broadly used, I would be really concerned about SaaS companies that don't have some kind of system of record or some kind of AI strategy in place to succeed. Because the cowork era, it begins the threat. So the threat to the SaaS world is just starting right now. But it's

• 43:33Speaker 00

  still early days. So you've got time to pivot. If you're a SaaS company, you've got time to do AI and bolt on AI and figure out some other direction. But if you're not doing that now, good luck.

• 43:44Harry Stebbings?

  Good luck if you're not doing that now. Dude, I look at PE today, and I like the PE model, but I'm looking at your Tom and Bravos of the world. And I'm just like, oof, ow. Like, I really like Orlando, and he was great on the show, and I really, I want him to succeed. But fuck, that's a hard job you've got with your Cooper and your Anaplan's of the world. Do we just have a vintage which sucks, and we just get over it?

• 44:12Speaker 00

  Well, you know, it's amazing. I mean, in 2001, TPG had a terrible fund and ventures, like everybody did. They survived it, because they had a whole lot of telecom investments that just evaporated. Forceman Little had a lot of telecom investments, and that led to the end of the firm. Firm ended, died, no more, Forceman Little. So, look, I suppose these PE firms that have challenging portfolios, they have time to do something about it now. But when and if a financial dislocation comes, that's the problem, because they're all levered up. The problem with the PE business is the leverage on the businesses. And if EBITDA drops, churn increases. And if it happens rapidly through a financial dislocation, and there's a margin call effectively on the debt,

• 44:57Speaker 00

  yeah, it's gonna be tough. It's gonna be really tough.

• 45:00Harry Stebbings?

  Dude, a lot of these assets are like 4% to 6% levered. I mean, it's like, it's high.

• 45:05Speaker 00

  Yeah, it's high. I mean, look, Leopold was only 3.5% levered, and he had to sell a lot of assets. I agree, it doesn't look good. But look, they have enough EBITDA today, and they have PE firms that know there's survival's at stake. And the PE firms have time to come up with some strategies, as long as the market stays up. You know, this is the point I was making, that the global markets are critically important to what's gonna happen into the tech sector. Critically important. And if you have a dislocation, I think it was Tom Lee that called for a 10% decline or drawdown in the S&P this fall. If he's right, if it's any worse than that, I don't know how people handle it when assets deflate and you're levered up. I don't know how you handle that.

• 45:49Harry Stebbings?

  You said that, like, you know, the 10% drawdown. And you said earlier about fire and inventing fire with the frontier models. Sam was like, hey, administration, take 5% of frontier models. Do you think the answer when you create fire is you have to be owned at least partly by the administration?

• 46:06Speaker 00

  Well, first of all, that's never happened in the history of the United States until this current administration. So that's never been necessary. I don't see why it's necessary now.

• 46:16Harry Stebbings?

  If you look at utilities providers in the UK, you have your British Gas and your British Telecoms. I know they're not now, because they were sold and privatized. But, you know, you had your Royal Mail. Like, actually, the majority of utilities were state-owned.

• 46:31Speaker 00

  But look, I mean, you have a history of socialism in European countries. Post-World War II, socialism has existed, and people have always supported that. And I do think there was a need for the governments to get involved, because there wasn't the capital markets available to them like they were in the United States. Obviously, in the United States, there's been public-private collaboration. But Sam's already built the company to this size without needing to give sell 5% to the government. So why does he need to do it now? I mean, it makes sense if, like a Manhattan-style project, if we did that for AI 10 years ago, well, fine, you know, do it, because it's strategically important to the country. But today, given the size of them, I think

• 47:14Speaker 00

  the only reason you do it is for political reasons.

• 47:17Harry Stebbings?

  Talking about strategically important for the country, do you think it's right that we have export controls on chips?

• 47:22Speaker 00

  I think it's important that we think about how we're going to deal with our technology. We need to really have a strategy. I'm not a believer in sort of regulation for regulation's sake. Put it in the context. Give us a strategy. Let's publicize the strategy. Let's debate the strategy. Let's have people responsible for it. We don't need just some regulator to come out and say, let's just do this.

• 47:46Harry Stebbings?

  Do you worry about the dominance of Chinese open source models and the ability for backdoors to be introduced into their models? Or do you think this is grossly overestimated?

• 47:56Speaker 00

  It's a really good question. The main thing about open source and Chinese models today is, one, all these models are not going to exist in 10 years. There's going to be completely different ones. So if there's backdoors today, they better do what they're going to do now because they're not going to exist in 10 years.

• 48:13Harry Stebbings?

  What do you mean by that? Like Kimi won't be a dominant model in 10 years?

• 48:16Speaker 00

  All the open source models that we're doing right now, we're using, they won't be used. They'll be replaced by something else. First of all, within 10 years, I believe, and I think some people are thinking two or three years, continuous learning models will come into existence. That means that every generation, every model we have today dies, goes away.

• 48:38Harry Stebbings?

  Two things. What is a continuous learning model and why does that mean every generation dies for those that don't?

• 48:43Speaker 00

  Because today, one of the most important goals of the model builders, particularly frontier models, is continuous learning so that it can do more complicated tasks, just like humans. Like, in theory, we're continuous learning, but robots, so physical AI will need to have some ability that maintains its memory so it can continuously do complicated tasks and learn and deal with dynamic events that come into it. And so these models will be fundamentally different than the models that have been trained to date. And so continuous learning models will come in and once they're deployed, there'll be a whole new breed of open source models based on this new capability of continuous learning.

• 49:26Speaker 00

  And then those will evolve into what's called lifelong learning, which is truly more how human intelligence works. But those models, in my humble opinion, will replace every model that exists today.

• 49:38Harry Stebbings?

  Does continuous learning and potential lifelong learning not denigrate the value of frontier models?

• 49:44Speaker 00

  Well, they're going to replace frontier models. I don't think you can bolt on continuous learning into an existing frontier model. I think they're going to try and the early stages will look like that, but I think ultimately it'll call for a new form of architecture and completely new training, right? When you train a model today, it's kind of static, done, it's trained. Then you go out there in the world, right? And so continuous learning models, I think, will be architecturally different.

• 50:10Harry Stebbings?

  Would you have done SSI at 30 billion, Ilya's company, which is supposedly coming out with the first version of their continuous learning model end of August?

• 50:17Speaker 00

  I don't know him and I don't do model deals like that unless I know him or someone I trust knows them. So I can't say.

• 50:24Harry Stebbings?

  You said there about training being kind of a shot and done. I'm an investor in McColl. I think data itself is much harder than people give it credit for in terms of acquisition, cleaning and deployment. How do you feel about data providing companies as a commodity or as a valuable asset?

• 50:42Speaker 00

  Well, data keeps changing. So the thing about data is it's not static. There's a course value to context, right? Data gives you the context and memory, right? And so I do think that if you're an enterprise business, your data, the way you do it, will be different than the way someone else. Take hamburger companies, right? I mean, Shake Shack's data is going to be utilized differently than, say, Burger King will do it or McDonald's. And so I do think that there's going to be highly unique use cases for data that is really important. But you have to have a system where the data continues to evolve and change and the underlying utilization of it can change as the data changes.

• 51:26Harry Stebbings?

  I think I buy Lynn's thesis that you'll have specialized models for companies and part of the training for those models will require additional surplus data. And then you'll see the likes of McColl go from purely selling to frontier models to selling to enterprises and even mid-market who need specialized data that they might not have. And that massively opens the TAM. That's the $200 billion opportunity.

• 51:50Speaker 00

  Right now, models are especially task-driven to large degree. With models and frontier models are doing some levels of creativity, but you really want into deep creativity, like go solve climate change. You're going to need a diversity of intelligence. You think about board levels and you think about management teams. You need diversity of intelligence to be able to solve really difficult problems. And so the market is going to change from, let's just solve tasks and do it a great way. Let's do minimal creativity with writing and visual arts to being, oh, we really need a lot of diversity of intelligence

• 52:31Speaker 00

  to be creative enough to solve the problems that matter and the problems that we're going to get paid for.

• 52:37Harry Stebbings?

  I find everything that we talk about today so exciting. And then I just have one pullback in my mind, which is just a lot of wise people say you always overestimate what you can do in a year and underestimate what you can do in 10. Is that the case here? Am I massively getting ahead of myself when I think about a lot of what we've spoken about? And actually, calm down, kiddo, it takes longer than you think.

• 53:01Speaker 00

  My feeling is, is that continuous learning, it feels like it's two to three years away. Maybe it's 10 years away. We don't know. I mean, we've been thinking we're on the cusp of solving cancer for the past 15 years. And we got, I got a little bump with the new sort of drugs like KEYTRUDA to do, you know, cancer solving problems with the immune system, but we haven't solved cancer yet. We're managing it better, but we thought we'd be over by now and it hasn't happened. So I think I apply the same thinking to continuous learning models. We are getting a little bit of success with sample efficient models. Sample efficient models means when you just get a little bit of data, a small sample,

• 53:43Speaker 00

  and you can extrapolate enough beyond that to come up to be useful and to learn, you know, from that small sample. And so learning from small samples is starting to happen, but when they actually become robust enough to be useful, I don't know. And my feeling is these things take a breakthrough from where we are. And just like with cancer, we need more of a breakthrough. And the complexity that they're trying to solve is huge. So I'm not going to bet against them. But I would say what could send us into the valley of disillusionment is a combination of a global financial event and a failure for the models to continue to grow and evolve.

• 54:23Speaker 00

  And we're going to get to a place that if we don't solve sample efficient models and we don't solve continuous learning, we're going to feel like, hey, our inflated expectations are somehow not being met.

• 54:35Harry Stebbings?

  Jerry, I'd love to do a quick fire with you because I could talk to you all day. Who goes out first? OpenAI or Anthropic?

• 54:41Speaker 00

  It appears like Anthropic.

• 54:43Harry Stebbings?

  Over or under? Nvidia will be a $10 trillion company in five years.

• 54:48Speaker 00

  Over.

• 54:49Harry Stebbings?

  Why is it so mispriced then, right now? It's been flat for the last 12 months despite numbers going through the roof. I don't get it.

• 54:57Speaker 00

  I think it's because the market doesn't go like a rocket ship forever. You're going to have these plateaus. And I think that there are areas of things not really accelerating as fast as you think it is. We don't know because right now there's these circular transactions that are obfuscating real growth in the market because the hyperscalers are sort of trying to get ahead of the game, but we don't know, you know? I mean, demand is going to have a lot to do with people having money in their pocket. And if you have a 10%, 15% dislocation in the markets, people are going to feel poor. And that's going to affect the credit markets. That's going to affect everything. That's going to affect demand. It always does.

• 55:41Harry Stebbings?

  I can't believe I'm about to say this to you, Jerry, but fuck it, we've known each other a while. In the UK, we have a game called Shag, Marry, Kill. Okay? I'm going to apply it to three companies and the application is, Kill is short, Shag is buy quick, but you'll probably flip it. And Marry is you're in it for the long term. You've got Meta, you've got Google and you've got Microsoft.

• 56:04Speaker 00

  I'm gonna say because of the scale, I'm gonna say long term for all of them.

• 56:09Harry Stebbings?

  No, really?

• 56:11Speaker 00

  Here's why. When Meta's got 2 billion users with all their things, when Google's got 2 billion users with all their things, there's a kind of stability in that because consumers are really slow to accept new changes and things. So because of those two companies having such a substantial consumer business, and Microsoft's consumer business is good too, it's kind of acts like a buffer, a stabilizer that gives them time to catch up. I mean, let's face it, all three of them have failed on the coding agent side, but I don't know if they're gonna fail forever. I think you have to say this mass customer base gives them this incredible time to catch up with problems. And that's why they're gonna be trillions of dollar

• 56:56Speaker 00

  companies for at least a decade. They may not be as important as they are today. That's not the question you ask, but as an economic buyer, would I hold their stock for long term? Yeah, I would.

• 57:08Harry Stebbings?

  Even Microsoft? No model, relatively shitty AI products, you'd still be a buy.

• 57:13Speaker 00

  Yeah, here's why. They control communication for the global enterprises. Microsoft email, as dumb as it is, I mean, Exchange, whatever you wanna call it, that's not going away. That thing is a money machine that cannot change. It cannot just disappear. By the way, you know, what's really interesting, we talk about the speed of AI and stuff, they won't be able to control agent communication, but human communication, that's not going away. And they're gonna be able to monetize that forever. You can't get rid of it. It's not like it's, you know, your cable system at home, we can say, fine, I don't need Infinity anymore, get rid of it. You're not getting rid of Microsoft anytime soon. It's gonna

• 57:54Speaker 00

  be around. Sadly, you know, Facebook is the same. You're not gonna get rid of it anytime soon. And these guys have built these kind of businesses because of the scale that supports their underlying business. And the consumer is, in my humble opinion, the thing that's keeping those companies afloat, more than anything.

• 58:11Harry Stebbings?

  You got a short one of the mag seven, which you would be?

• 58:14Speaker 00

  It would be Meta. And it would be Meta because that's the one that may become boring. It may become like a telephone company. I mean, it'll just be this malaise, like owning an AT&T or something. That's what you kind of think about it.

• 58:30Harry Stebbings?

  So I push back, it's the largest ads business in the world. It's got WhatsApp and it's got Instagram.

• 58:36Speaker 00

  Yeah, WhatsApp, I mean, again, they control human communication on WhatsApp in a very meaningful way. They haven't monetized it yet, but those users, they're gonna find ways to keep the users. You got 2 billion plus, maybe there'll be 3 billion in five years. I don't know, we got half the world using your application. I'm sorry, that's something that's stable. That's a stable thing. Like I say, it might be boring, they'll just generate dividends out to you. So as an economic buyer, you don't necessarily always need growth. You can take big fat dividends and just punch the coupon. At least for the next five years, it's gonna be considered a safe haven. The mag seven is the mag seven because people say, hey, I'll put my money there. I might be underwater for a year or

• 59:18Speaker 00

  two, or less of a return than I had. But long term, those things are gonna be there and they're gonna benefit with every positive cycle in the markets.

• 59:26Harry Stebbings?

  Is Apple's AI strategy unforgivable mistakes? Or is it genius patience waiting to see how a developing ecosystem plays out?

• 59:35Speaker 00

  The answer to that is something that it's gonna be hard to know. We'd have to go sit down with Tim Cook, now that he's retired, maybe he'd tell us, what is the culture around AI at Apple? How are they thinking about it? What are they doing in there? You know, I know they're using Claude Code, huge, massive Claude Code customer, but how are they thinking about it? Do they have anything innovative to say? Have they been intelligent, watchful observers? Or are they just dumb consumers? If they're consuming, sorry, they're in big trouble. They're gonna suffer. But if they're watchful observers and they've got something up their sleeve, then we could be surprised by them.

• 1:00:12Harry Stebbings?

  Which PE firm will navigate the next five years best?

• 1:00:16Speaker 00

  Ooh, that's not fair. That's a tough question. I wouldn't wanna make that bet.

• 1:00:21Harry Stebbings?

  Which will navigate the worst?

• 1:00:23Speaker 00

  Well, I don't know who's worse, but my company, Insight, they have a very small PE portfolio, very, very small. It almost doesn't even matter. So I think, I feel the best about them long term because they've been really intelligent about how they deploy the capital there. But the people that are all in on PE all the time, ooh, I just don't know about that. I think they're highly at risk to any kind of financial dislocation.

• 1:00:50Harry Stebbings?

  Which venture investor do you think has fared most well in the transition to an AI world?

• 1:00:55Speaker 00

  Good question. Well, look, I mean, I think there's five or six firms that have just done phenomenal. The guys like Menlo that did Anthropic, how do you say, early, but early enough, you know, they're gonna, they're gonna do great. Benchmark, while they missed Anthropic and OpenAI, they've done amazing with Factory and a bunch of other great ones that we've talked about. So I think despite the fact that missing the big frontier models, they have a great portfolio. I think Koschla is also phenomenal. I mean, Vennode with Avan and, you know, his companies, they're did amazing. I think Koschla is in that group. I mean, they're just gonna crush it. Koschla, Menlo and Benchmark have all just done amazing.

• 1:01:39Harry Stebbings?

  I have one final one for you, and this is kind of the beauty of what we do, I think, which is seeing the future, hopefully ahead. What seems crazy today that you think will be quite obvious in five years' time?

• 1:01:51Speaker 00

  Ah, that's easy. Blockchain for agent payments. Blockchain is in the valley of disillusion right now. It's like, it's really at a bad spot. I mean, IBM's CEO came out and said Bitcoins at risk of being hacked in three to four years. Tom Lee came out and said Bitcoins at risk to being hacked in two years. Google said that Bitcoins being hacked in two years. And that greed element of blockchain, which is exactly what the Bitcoin thing is all about, in my humble opinion, is about greed, you know, is bringing down the whole blockchain thing. While Solana and Ethereum, they're looking like they have

• 1:02:30Speaker 00

  a long-term potential. And I do think that new things like Venice or Akinaki, or what Robinhood did with Robinhood Chain, great, they got a billion in revenue probably, those innovations, whether you're tokenizing stocks, or you're gonna do payment rails, or you're gonna use blockchain for buying inference, like on Akinaki or Gonka, those things are gonna be real innovations and people are gonna be blown away that blockchain has found true utility, other than some supposed form of utility.

• 1:03:05Harry Stebbings?

  Jerry, I've absolutely loved having you on. I know, seriously, I learned so much from you. I love what I do because of shows like this. So thank you so much for joining me and you've been amazing, dude.

• 1:03:15Speaker 00

  Cheers. Take care.

• 1:03:18Harry Stebbings?

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