20VC: Navan IPO: Winners, Losers and is a $4.5BN Exit Enough in VC Today | Harvey Raises $150M at $8BN Price | Why Google is a Buy and Amazon is a Sell | Meta Down 10%, Is Zuck Struggling?

AGENDA: 04:27 Navan's IPO: Winners, Losers and 20% Crater 12:55 Harvey Raises $150M at an $8BN Valuation 35:36 Was Sam Altman Wrong to Snap at Brad Gerstner 41:25 Why GOOG is a Buy and Amazon is a Short 47:43 Meta Down 10%, Buy or Sell? 51:12 If You Have Not Accelerated with AI, You Are Dead 01:05:20 Why Now is the Best Time for Series A and Worst for Seed

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

• 0:00Speaker 00

  For me, it's like I don't even want to take meetings with mortal founders.

• 0:04Speaker 01

  This actually shows that sometimes Bill Gurley is wrong because his idea is that these IPO share allocations are quote free money.

• 0:12Speaker 00

  The amount of wealth in Silicon Valley is just unprecedented in our lifetimes. It's just gone up dramatically the last 18 months. Maybe not to spend all the time, but the horrible question in venture and startups, it is horrible. Is this a $4.5 billion exit good enough today?

• 0:25Speaker 01

  A founder's optimized fundraising is a VC's below ownership target. The health of the entire US economy depends on the answer to this question. It turns out fuck off and sell your shares is not an acceptable answer. It's good. There's a little part of me that's kind of a bit sorry for Sam Altman because of where he's put himself.

• 0:43Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. And if that does not compel you to listen to this show, I don't know what's wrong with you, to be quite honest. This is one of the spiciest shows yet. It's my favorite show of the week. Jason Lemkin, Rory O'Driscoll, breaking down the biggest news in tech that's happened over the last seven days. No politics, just incredible commentary and analysis. This was so much fun. But before we dive into the show today, you've heard me mention Guardio before. They protect millions of people from phishing, scams and online threats. But now something genuinely exciting has happened. Loveable, one of the fastest growing AI platforms, just integrated Guardio directly into their Gen AI chain. What

• 1:23Harry Stebbings?

  that means? Every single site built with Loveable now gets scanned in real time. Phishing pages, impersonation sites, scam redirects are blocked before they ever go live. And that's a huge shift. It's rare to see companies take responsibility for the safety of the broader internet. Loveable did, and Guardio is the engine making that possible. Guardio also leverages advanced AI threat detection to block highly targeted socially engineered scams before they ever reach you. From phishing emails and fake login pages to financial fraud, Guardio protects you across the way you actually live and work online. If you want to see what modern proactive protection looks like and protect your platform, go to guard.io/20vc.

• 2:10Harry Stebbings?

  Changes how fast threats appear. Guard.io changes how fast they can get stopped. And as guard.io defends your clicks, HubSpot turns them into customers. You want to grow your company, right? But instead of having the time to get to the next level, you'll start maintaining the status quo. It's freaking maddening. Well, HubSpot's customer platform, it actually solves this. Breeze. No, it is not a fabric refresher. This is the next generation. Their built-in AI takes over all the busy work. It writes emails, it qualifies leads, it answers common customer questions, and even help create content. Also, your marketing, your sales, your service teams can focus on what matters most. And the impact is undeniable. Teams are saving 750 hours a week.

• 2:55Harry Stebbings?

  One even increased leads by 251%. And these results show up in days, not months. Over 238,000 businesses already use HubSpot. So join them. Visit hubspot.com/ai. And while HubSpot builds your funnel, Framer builds the experience around it. Are you still jumping between tools just to update your website? Don't do this! Framer unifies design. CMS and publishing, all on one canvas. No handoff, no hassle. Everything you need to design and publish in one place. Framer already built the fastest way to publish beautiful, production-ready websites. And it's now redefining how we design for the web with the recent launch of Design Pages, a free canvas-based design tool.

• 3:39Harry Stebbings?

  Framer is more than a site builder. It's a true all-in-one design platform. From social assets to campaign visuals, to vectors and icons, all the way to a live site. Framer is where ideas go to live, start, and finish. No Figma imports, no messy HTML. Just design, iterate, and ship, all in one place. And it's completely free to start. Ready to design, iterate, and publish all-in-one tool? Start creating for free at framer.com/ design and use the code 20VC for a free month of Framer Pro. That's framer.com/ design and use the promo code 20VC. Framer.com/ design promo code 20VC. Rules and restrictions may apply.

• 4:22Harry Stebbings?

  You have now arrived at your destination. Boys, we are back. We have some big news this week and we're going to start with some liquidity, baby. We're going to start with Nirvan's IPO. Nirvan obviously IPO'd this week. Orin Ziv invested 150 million, returned a billion, then it slightly cratered 20%. I'd love to start. How did we analyze this? Take me to your thoughts.

• 4:48Speaker 00

  This and Dev stepping down from Mongo made me kind of wistful. It just feels like the very end of an era, the end of the SaaS 2.0 era. Dev stepping down after incredible run at Mongo. Company dipped to like 13% growth. It's now back well into the 20s. It's a good run, handing off the baton. I kind of posted on Twitter, it was the end of the era and Brian Halligan was like, yeah, a lot more are going to retire soon, right? So that. And then for me Navan, it just was kind of a bummer. I mean, Ariel is such a tenacious CEO. It's a great IPO. You know, we're always going to tell us it doesn't really matter if it was down or up. You got it done. Bill Gurley won.

• 5:27Speaker 00

  But it's just kind of a bummer that a company at 700 plus million in revenue, growing 32%, struggles in its IPO at 5 billion. It's just, all of our portfolio companies have to do much better. They've all got to be Harvey or better. I just felt wistful that like the combination of Dev retiring and Navan's stumble IPO just felt like, to me, some of the last pieces of the last era. And so be it, right? We're in the age of AI, so be it. But time to move on to the new era, boys.

• 5:57Speaker 01

  Yeah, I mean, wistful. Didn't have you down as a wistful guy, but I think there was a lot to unpack in this. And first of all, let's start with the basic. It's a great company. It survived the near-death experience. It's a travel company and that's a tough place to be when COVID happens. It came back from that. The investors stepped up, financed the company. The CEO stepped up, kept the company alive. And now they have, you know, what, zooming out a million miles is a great outcome. At the day of the IPO, 6 billion now, high 4.8, 4.9 billion market cap outcome. Big picture, it's great. And Jason's right. I am going to say, you know, two years from now, The stuff will all be in the noise and it'll be seen as a really solid outcome.

• 6:41Speaker 01

  So that's kind of the big picture. It's a good company. It's operating in composite of even though the financials look a bit messy. That's the thing that counts. Probably pause there, but then if you want to talk about the specifics of the IPO, right? Look, what happened is they priced an IPO in the middle of the range. And it traded down a little on the first day and then I think on the third day quite a lot. It's at seventeen bucks a share right now. So a pretty tough debut from its IPO to today. And you said something, Jason, that I actually disagree with. You said Bill Gurley be right. Actually, this actually shows that sometimes Bill Gurley is wrong because his idea is that these IPO share allocations are called free money. You get your IPO, it always goes up and they're leaving value on the table.

• 7:24Speaker 01

  This is an example of an IPO where, you know, if you look at it from the perspective of the issuer of stock. Not only did they not leave money on the table, they actually priced at what now looks like a high. Right? So it's actually proof that Bill Gurley is wrong and that the buyers of IPO stock are correctly saying, I want a discount on the good ones because every once in a while, and you don't know when, this shit goes wrong and the stock goes down. So I want the twenty percent pop on Figma that became obviously a much higher pop in return for the risk of a twenty percent drop on the van. So it's almost untypical to what Bill's saying, which is it free money. It shows that sometimes, I mean, most of the time it is, it skews positive.

• 8:04Speaker 01

  The day one pop on average makes you money, but it does show that every once in a while, for circumstances that we'll talk about in a second that are hard to predict, things just go wrong and it blows up in your face. And that's what happened here.

• 8:14Harry Stebbings?

  Can we touch on something that people don't talk about often, but it's often reported, there's like the winners and the losers. And their stakes are always said very loudly in media, you know, Orange Eve, a hundred and fifty million to a billion. Lightspeed, two hundred and fifty seven million to a billion and Treason State worth six hundred and thirty five. A lot of people take that at face value and think that is cash in bank today for these firms. Rory and Jason, you've been through IPOs. That is not, for people that aren't aware, what does the lockup period look like? When does that turn into? Cash in bank. Can you just share some insight on that?

• 8:48Speaker 01

  Sure. I mean, the typical lockup period will be six months, which means the minimum when you can start selling other than in a registered secondary is six months from now. At which point investors can start to sell and maybe they'll either sell or distribute their stock. It's highly likely that it takes at least eighteen months to get out of your position in a company like this. Which you know, if you have normal appreciation on average, can actually end up doing better than you priced at the IPO. But if you have, for example, you have the Figma thing where you have the pricing and then a huge first day pop to one forty and everyone reports this, oh, my God, XYZ investor made four billion. And then you fast forward a year and a half, they very happily make two billion.

• 9:30Speaker 01

  But maybe it feels like a little bit of a disappointment if you're mentally spending that four that you thought you had for twenty four hours. So you're right, the IPO, it's significant, but the economic significance is limited. And in fact, when we used to track exits every year, which we do, we used to track as of IPO. And then we used to call it the locked in value eighteen months later. And our mental model was that when you want to figure out how much money people actually made, look at the market cap of the IPO eighteen months later, and that's probably a much closer estimate. And in some cases, it goes up massively. And obviously, in some cases, it goes down.

• 10:05Speaker 00

  Yeah, I don't know what what scales policies or I'd be interested to learn. When I entered venture, what I was taught back in the day, right? Was base case distribute for twenty four months ratably after the IPO. If you didn't believe in the company, you might pull it forward. If you thought you had Aviva in your pocket or Shopify, maybe Bessemer didn't, maybe a whole longer. But for sanity's sake, and also to manage float, right? Because you can only sell so much if you own a large stake. That was a rough rule, figured it would take you so so six months to lock up, twenty four months to distribute, that's thirty months total after the IPO. Before you're getting most of your carry and your LPs are getting their distribution, right? So it could be well be into twenty twenty eight, twenty twenty nine. Now, there was almost two hundred million of secondary, but I don't think the big guys sold any as near as I can tell.

• 10:50Speaker 00

  The the founders took out fifty, which I like. I like that much better than in the seed round, by the way. I'd rather see them take fifty in the IPO than after demo day. I think it's it's a better time. But it looked like for the most part, it was just the smaller guys that sold. I I could be wrong there, but that's what it looks like.

• 11:06Harry Stebbings?

  Does this impact your price sensitivity today when investing? When you see 700 million revenue, 30% growth, positive economics, 5 billion market cap? And then you see some of the prices that we're paying.

• 11:19Speaker 01

  But the problem is the prices you're paying are for things going at a very different rate. I mean, where it should. So let's unpick that. At a minimum, your operating assumption should be that for mature companies, SaaS, transaction type, whatever, right? It's not just SaaS. It can also be non-recurring revenue companies. With decent margin profile and 30% growth, we are back to six to seven times NTM. That's kind of like the 10-year treasury equivalent of SaaS. That's what they're worth. So if you're on one of these things, that's how you should think about it, what it's worth, right? And yeah, that impacts how you think about your late-stage portfolio, how you think about a little extra growth is worth. But that's not directly applicable to, you know,

• 12:01Speaker 01

  some company doing 50 million and 5Xing or doing 10 million and 10Xing. Because, you know, those different growth rates mean it's not a like-for-like comparison. So when that 10x year-on-year growth rate de-accelerates to a 30% growth rate, then you'll probably trade at the same valuation multiple as the companies that are already trading at a 30% growth rate, which is 7x. In the end, if the growth rates of the new companies become much closer to the growth rates of the existings, they'll trade at the same rate. There's no magic there, right? But right now, they're not. Right now, AI growth rates for these companies are in a very different place, as you know well, Howie.

• 12:37Speaker 00

  That's why I feel wistful. It does. Listen, of course, it's very interesting to see Navan at the same time as OpenAI and Anthropic raise their estimates, right? OpenAI raised it to 100 million, 100 billion plus in 2027, right? I forget what it was Anthropic. They just, they way raised their estimates. So when we see this, let alone the Harveys, Harry, let alone the Harveys, when we see these, for me, it's like I don't even want to take meetings with mortal founders. I don't even want to take them, and it's terrible, right? I mean, literally, I just did a deal with some founders I love, and it was very expensive for me. I did a deal at 50 post, okay, post, with everything else in it, post, okay? That's a lot for me.

• 13:16Speaker 00

  And okay, for me to make a hundred X on that deal with dilution and dilution in many cases is higher these days for a lot of reasons. It has to be better than Navan for sure. Like it has to way be better than Navan for me to make any enough money on that seed deal, right? Late seed. But so do I really believe this deal I just did is for sure going to be worth more than Navan? I don't know. And when we started, Rory, these deals would be, and I'm not being curmudgeonly or anything, but realistically, when they were easier to see, actually, maybe it was always hard, but now like you got to see these $10 billion exits. But if they're not utterly breaking the mold, if they're not breaking the mold, it's hard to really believe it's going to be worth north of $10 billion, is it?

• 13:58Harry Stebbings?

  So Jason, I get you, but I've actually adopted this mindset from spending so much more time with you. And I bring it to the IC and people in my team are like, you have to turn the next card to see sometimes. And it's not obviously a $10 billion company on day one and actually value can accrue in increments over time. And you could miss some great ones by being flippant and being like, oh, it's not a $10 billion company.

• 14:25Speaker 00

  Depends on your fund size. If you're doing more second and third checks and the first check is smaller, you have a lot more flexibility. Literally, you can. If your first check for me is a very large percent of the fund, I don't have a lot of margin for error. If I'm writing five, four to five percent of my fund as a first check, I don't have the other 145 million that, uh, that, that he had in trip actions in Navan. I just don't have the other 145 million. I should, I guess I should have developed more SBVs and opportunity funds. But for me, that first one has to work. If it doesn't have to work, you want to play more cards today. I do, I do think it's a good idea.

• 15:00Speaker 01

  I recoil from the, I don't do mortal humans. It's a bit, because I think it sounds a little judgy there, I say it, Jason. But what I do think, I think the sobering fact here is you now have to assume that that 400 million, 500 million is the threshold for an IPO. And if you say to yourself that you only want to do deals where you at least have the upside of an IPO, the IPO potential, then you're. Then the bar to what a doable, successful venture-backed deal with upside has gone up. Right? I mean, it's what we discussed. It's that the, you know, we talked about it, fewer but bigger winners. At any stage, if you're keeping the stage the same, if you were doing seed before and you're doing seed now,

• 15:42Speaker 01

  before this seed was an eight-year journey where 20% of them get to the end of the line. And now it's a 12-year journey, maybe only 10% of them get to the end of the line. And that's just mathematically true. Now, the real question is, what do you do with that information? As Harry says, you can have one of two, you can either say a priori, I'm only going to do that $10 billion ones, which is one approach. And the other, the Harry's approach is more the, you never know upfront, which are going to be the $10 billion ones. So you do them and you look at the next card and you play it out. If you have optionality, you can afford to do it the Harry way. If you're picking and most of your dollars are going in when yours are going in, Jason, then you're exactly right. At some level, even though I don't like it, I'm coming back around to not, your comment is correct.

• 16:23Speaker 01

  I don't like the description of mirror market, but you do have to go into these deals looking for a higher believable exit story, given that the exit bar has gone up. You can't do clever little small markets that are going to top out because you're probably only looking at an M and A outcome. And then you've just intrinsically eliminated the magic pixie dust part of the alternative.

• 16:45Harry Stebbings?

  Fuck, this business has got harder.

• 16:47Speaker 01

  It has, it has. And the other interesting thing to note.

• 16:51Speaker 00

  Well, yeah, but but also people are getting richer at the same time. The amount of wealth in Silicon Valley is just unprecedented in our lifetimes. It's just gone up dramatically the last 18 months.

• 17:00Speaker 01

  And I think the other interesting thing just about the Nirvana, just to make it a step. Well, really interesting, you cited the numbers for, yeah, amazing numbers for Lightspeed, Orin, all those guys. Really interesting to me, actually, the other thing that brought home to me is the amount of dollars that went in is that if you look at it, I think you said Lightspeed, maybe five or six X, don't quote me. I mean, they did the seed and some of the seed and the A and the B. I'm willing to bet to Jason's point, their multiple on those rounds must be 20 plus, right? At least maybe 30 plus, right? But what you're seeing is instead of being a $20 million investment, getting diluted down, but still getting a magnificent 30x return, you're following that. Twenty upfront with 200 more on the mid and late stage rounds. Your overall blended return is a six X, but it's a six X on a lot of money.

• 17:45Speaker 01

  And you probably have some early stage dollars that are 20 X and some late stage dollars that might even be a loss. Given the last round priced at nine billion. So. And overall, obviously to Wally's successful strategy, it just brings home again. You're diluting your early return, but in return, but you're doing that. Cause it goes back to what I said last week. When you have one of those winners from your early fund. And you have the amount of dollars these folks are managing. You just have to put every dollar you can into your winner. And they did it here and it worked and worked successfully. And even more impressive that Orin Zev did it with, you know, as a smaller solo fund and ended up with 150. Via assume a bunch of SPVs into his biggest deal and good on him.

• 18:23Harry Stebbings?

  And across many different vehicles, which is awesome to see for Orin. I mean, Lightspeed was 257 to a billion, so it's just under a four X blended.

• 18:30Speaker 00

  Maybe not to spend all the time, but the horrible question in venture and startups, it is horrible. Is this a 4.5 billion dollar exit good enough today?

• 18:37Speaker 01

  It is.

• 18:38Speaker 00

  It's a horrible, it's a horrible thing to say. But if we're talking about in VC and inside baseball, it's a bona fide question. Is it good enough today? 4.5 billion.

• 18:46Speaker 01

  It is, it is. They took two, I mean, the interesting, they took 200.

• 18:50Harry Stebbings?

  I mean, I mean, I mean, no, it's not. If your fund size is a billion, five or two billion. It's a third of the fund.

• 18:58Speaker 01

  No, yeah, yeah, yeah. I mean, it's still a third of the fund though. I mean, you're not gonna have guys.

• 19:03Speaker 00

  So much work. I only got a third of the way to 1X Rory.

• 19:06Speaker 01

  Yeah, but the point is, those are different.

• 19:08Speaker 00

  Good God, I spent 12 years with these amazing founders. We had a four and a half billion dollar X and I only got a third of the way to 1X. This is the, you never told me this was such a bad job when I joined the fund. This is the worst. I mean, the perks are great. The dinners are fabulous. Tech week was so fun, but this a third of 1X is the worst job ever.

• 19:29Speaker 01

  Yeah, because you're looking at it through your lens of a seed stage investor where you want your best deal to return the fund. Look, we just said it, the early stage, let's just say your first dollars in on a deal like this was probably a 20x plus. Your first round did probably return the early stage fund. But then instead of just stopping there, you decided, you being whomever you are, to raise a late stage growth fund. And you're not going to get late, without doing massive deal concentration, you're not going to get a late stage investment quote returning the fund. It's not a thing. Because if you're doing 20 deals evenly, that's, you know, what's that, 5% each? Unless you get a 20x, which you typically don't get on a late stage deal, you're not going to return the fund.

• 20:11Speaker 01

  So these guys aren't sitting there going, I'm raising, they might be saying on my 300, 500 million dollar early stage fund, one deal can make it happen. But on the late stage fund, they're saying, we've got 4 billion, we're going to put it to work. The average good deal will be a three to five X, we'll have a low loss ratio and over time we'll get our, you know, two, two and a half X net. It's not, small numbers are big heads business. It's a very different business. It's moving money at scale and, and you know, and the example of Nirvana is they're doing it successfully. The embedded risk on that business is price compression. And you're seeing a little bit of it here. That nine billion dollar round lost money. You know, some of the people who bought the IPO lost money, you know, so the risk you're running is,

• 20:50Speaker 01

  you know, not catastrophic wipeout as much as just you wanted to write a six X and now the thing is trading at a five X and suddenly your return is down 30%.

• 20:59Harry Stebbings?

  So for those that came in at the nine billion price, are they down 50%?

• 21:03Speaker 01

  I believe so because I think it boils down, I read it as they convert one to one. Remember, that's only, I'm going to say this again, that's only the price today. If you want to go back to 2012, you can find a whole bunch of dumb articles about how Facebook is a crap company because the IPO and the stock price went down. Turns out it was a 10x company from there at least, right? So it's a point in time, but you're right, as of now, the last private round and buyers who bought in the IPO are down on the month. You know, it's a horrible shot to my hour.

• 21:32Harry Stebbings?

  Jason, sometimes I think Rory just sits back and thinks, I'm so lucky to do this show with Harry and Jason.

• 21:39Speaker 01

  I think that all the time for so many ways.

• 21:42Harry Stebbings?

  There we go. Listen, Jason, you mentioned Harvey. Harvey raises 150 million bucks, $8 billion valuation, led by our dear friends at Andreessen. Now, I actually tweeted about us talking about this. A little insider at Harvey, not so quiet investors, shared with me that they're at 150 million in ARR. Their DAU to MAU ratio is 40%, which I thought was astounding. Usage wise, I don't think it's outstanding, but keep going. GRR, 98%, NDR, 170%.

• 22:16Speaker 00

  Let's go 150 in revenue, outstanding in ARR, people, they're really buying more, 170, no one's leaving, GRR of 98%. And Dow Mouts, you're impressed, but it just means they're logging in every day to use a legal tool. That's table stakes to me. They use it every day. But it'd be a flag if they didn't, right? Let me put it in the Saster AI, 8 billion, the Saster AI valuation calculator says. What did it go out at?

• 22:37Harry Stebbings?

  In 8 billion.

• 22:39Speaker 00

  If it's 400 forward revenue, that's 20x.

• 22:42Speaker 01

  Agreed. That's exactly.

• 22:43Speaker 00

  That's what it is. 400 next year, 400 ARR, that's what they're predicting, 400 ARR, not GAAP, 400 ARR.

• 22:49Harry Stebbings?

  And 150 million raise for Andreessen coming in, you're, I mean, this is like a dilution wise, very small for the company.

• 22:56Speaker 00

  I love these rounds of like getting nine figures for one or 2% of the company. Honestly, it sounds like I'm being facetious. I do love these as a seed investor. They're great. There's no effective dilution to these rounds, to Harry's point. They're great, right? Now, there may be a little pressure on the exit, but there's no, there's no dilution.

• 23:11Speaker 01

  I think, you know, they've executed really well in a core domain where LLMs were going to have a profound impact. I mean, what's fun about it is up until now, you know, legal had been a pretty barren place. I mean, in terms of software sales, you have companies like Filevine and Clio that have, you know, got, built decent sized businesses, but haven't yet gone public and not a lot of happen in legal. You know, I think LLMs by virtue of the fact that they manipulate language, which arguably is exactly the definition of what a lawyer does, perfect fit. I think they've done a great job. They've established market presence in the and law very quickly. They established a brand quickly. They've executed well. Growth is clearly there. When you start thinking, what you're really asking this quote unquote eight billion makes sense, right?

• 23:55Speaker 01

  What that really boils down to is a TAM question. They are clearly in the lead. Legault is clearly second, focused on lawyers in corporate law practices. The constraint there will be the TAM size, right? How big is the TAM? How many law firms? How much spend per lawyer? There's a million lawyers in America, half roughly in-house, half roughly, you know, external. Does the math support a $24 billion three X from here company? And going back to what we said earlier, 24 billion, let's assume that the law, let's assume that in the end it's a 30% growth company. Like everyone else, and it's a seven X times. That implies a $3 billion revenue line. Is there a $3 billion software business selling to lawyer, to corporate law?

• 24:37Speaker 01

  Not crazy, Westlaw is bigger selling information, but you know, that's the kind of scale you have to have. You basically have to be such a big automation tool for these lawyers that they're willing to spend, you know, equivalent dollars, you know, thousands of dollars per year in subscription to make the math work. So it's a time, they're clearly going to be number one in that market. And the only question, if you were underwriting that at eight billion is, is this a one billion a year spend or a three billion a year spend? If it's a three billion a year spend, maybe you get there, but it's a lot.

• 25:06Harry Stebbings?

  It goes back to your statement that you said episodes ago, which is like the call to terminal of our success in venture with the AI transition is where we see the transition from software spend to human labor spend. Or sorry, from human labor spend to software spend. I think that's the TAM question.

• 25:19Speaker 01

  You know, you were right, because selling software to lawyers is a particularly shitty business. It's a more constrained business. You've got to do more. You've got to help more. You've got to speed them up. And it's not all or nothing, by the way, this. I I've been seeing a lot of good literature on it. It's not about automating people. It's about automating tasks. You've got to make them a lot more efficient. And they got to be able to track that. And if that happens, then it all makes sense.

• 25:40Harry Stebbings?

  We we mentioned liking these rounds for their low dilutive characteristic or nature. You know, there was, there was a good piece from the information this week about Benchmark luring their ownership requirements. And McColl being the example, they only have 10% where they always normally needed 20%. We always knew this with Benchmark. Has AI seen a reduction in ownership across the board for this generation of venture?

• 26:03Speaker 00

  Every deal I've been in, my God, it is, ownership is attacked at a level I've never seen. That's my conceit investing today is giving up on that, right? Is for me, I feel like I can only make money if I own double digits of two winners per fund. I feel like that mathematically, that's the only way I can make money. And the last three investments I've done are in the six to eight percent range, even though that's my rule. But what am I going to do? Not do the, not do the deal? We also know that's the dumbest thing of all time, right? I'm literally going to write my LP report up in a couple of weeks. I'm going to say my, my resolution for 2026 is to get my ownership up. We'll see, we'll see how I do against my resolution. But that's my main, my main resolution. It's like, yeah,

• 26:48Speaker 00

  you can do it a few times, but if you do, if you do it every time, it's tough. But I don't know what you do in this world. If the companies are capital efficient, they don't need you. In a hot company, you don't really control the die to use kind of like lame VC terminology. You don't control the die. Jason, why didn't you raise 125 and then you can have more ownership? Maybe that, well, that's a different mistake, but this is really just, this is all there is.

• 27:09Speaker 01

  Agreed.

• 27:09Speaker 00

  Like if there's a co-investor, I guess you could be a total jerk and, you know, do the, say, you know, it's me or nothing. I've tried that once in my whole career and just not my vibe. It backfired on me. Of course, that company wasn't that successful. But if you want to be somewhat founder centric, the best thing I know how to do is say, listen, I just need to be the largest investor and let me invest the maximum I can in the round. And that's as far as I go. If you're not willing to put the extra dollar into the deal, don't do it for sure. But if they're selling 10%, it's hard to buy more than 8%.

• 27:39Speaker 01

  Yeah. Multi causation. So breaking apart your question, Harry, the one question is, are VCs getting less on average in these deals? And then the second part of your question was caught because of AI, which we're going to agree is a meaningless phrase and try and fix it later.

• 27:55Speaker 01

  On the first, I I I think there probably are. There's no doubt in my mind. I think it is harder to get twenty percent ownership for the super early stage funds. It's harder at our stage, you know, our target would be ten to eleven percent on average, A or, you know, probably late A or B, some earlier, some later than that. It's harder across the board. There's no doubt that that's the case, right? And you take Merck or Benchmark as a premier firm. I will be validated again, as I said, reports of their death were greatly exaggerated. That sounds like an amazing twenty one fund they've reported. But yeah, that's an amazing firm, courting a great company and only able to get ten percent. What, as Jason said, what are you gonna do? If they only need to sell ten percent of the company to fund their needs, then you're only gonna get maximum ten. And you can either decide not to play, which would have been a very dumb decision, or you can decide, take ten percent and keep going.

• 28:45Speaker 01

  Now, it's interesting. Why is this happening? There's a bunch of different reasons, because you can't say because they're capital efficient, because let's be frank, some of these A's I companies are the least capital efficient companies in the history of humanity. Merck are pretty capital efficient, OpenAI planning to spend more money than we thought existed in most entire continents, and they're not stopping yet. So it's not capital efficiency, not capital efficiency, right? On the capital efficient ones, if you're so capital efficient that you don't need to raise a lot, then you and you and you and you become hot very quickly, then you've got leverage as a founder. On the other extreme, if you're so capital inefficient that you need to raise thirteen trillion billion dollars, then it turns out that no matter how much you put in, you know, if you put in a hundred million, you're still only have a couple of points.

• 29:32Speaker 01

  Both of those, interestingly enough, would be pretty good deals, which actually, and I'm doing this in real time, makes you realize that your mental rules of thumb have been smashed to pieces. There's a situation where you're gonna get ten percent because it's capital efficient, and there's a situation where you only get one percent because it's capital inefficient, and both of them has amazing returns. So that's just the way it be. Maybe that's the aha, there's a companion. I mean, logically, you'd say to yourself, if it's a if it's a continuum, there must be some sweet spot in the middle where they needed to get twenty percent, but then they were capital efficient enough, so you make out like abandon. And I'm sure those companies exist too, but I think that's the aha, it's a continuum here. It's a wider continuum.

• 30:05Speaker 01

  Then we've seen perhaps, maybe not at the early internet as I think about it a lot, but then we've seen it a lot, definitely in the SaaS era in the last 10 years, right? Companies, as you say, being able to get to hundreds of millions of dollars on 10 or 20 million bucks. And then other companies needing, you know, two or three billion just to get a model out the door. Neither of them results in a standard venture ownership position.

• 30:28Speaker 00

  But I do think, when I was reading Iconic's latest report, what they said is when you look at all the top quartile companies in their extended portfolio, or all that they surveyed. Yes, they burn a lot of cash, but the burn multiples of their top companies are much lower because they're generating, they're growing so quickly. Even if you ultimately raise a lot, if your burn ratio, if it burn multiples low, you're able to sequence capital differently. Like you could, listen, hold off, I'm gonna do just 10% now, and then I'll do five, and then at eight billion, I'll do 1.2. You may raise a lot, but a high, you know, if your burn multiple is low, even if it takes a significant amount of cash, it lets you optimize how you sequence fundraising.

• 31:09Speaker 01

  Agreed. And which, and remember, the words optimize how you sequence fundraising as an entrepreneur. The inverse of that is thou shalt not be optimized as a VC. A founder's optimized fundraising is a VC's below ownership target. You're exactly right.

• 31:25Speaker 00

  I think that's right.

• 31:27Speaker 01

  If, if Merck had needed 40 million to get rolling, then Benjrock would own 20%. If they only need 20 million, then there you are. And you're right, they can increment, raise another two rounds. And even the extraordinarily ambitious, the other extreme, the extraordinarily ambitious foundation models, not the new ones today, but you know, early Anthropic and early OpenAI were able to do incremental fundraisings in a way that, as you say, preserve significant, avoided significant dilution.

• 31:55Speaker 00

  And I say it with huge respect, even Y Combinator is structured this way, right? Y Combinator's advice for most companies is to raise a maximum of 10% before, during and after Demo Day. It's very thoughtful advice, it's very structured, yeah, it's biased to helping YC. But if you, it's also saying, listen, we've done, we've run the numbers, most of you will do better. Selling 10% at demo day and another 10% at three to five times the valuation. Not just in terms of overall capital raise, it's not just valuation, it's effectiveness. And so they've institutionalized this low ownership, right? It's always been true, but I think it's been productized the last couple of years. 10% at demo day, right? And if you want to do 4% from angels and friends, that's 6% left for a VC.

• 32:37Speaker 00

  Maybe you get five or 6% unless you way overbid and basically do two rounds at once. That's how you get more ownership in YC, you do two rounds at once.

• 32:45Harry Stebbings?

  I absolutely agree with you. I see three on 30 instituted so well by YC.

• 32:50Speaker 00

  Yeah.

• 32:50Harry Stebbings?

  As the de facto round and I again, huge respect to them. It's good for them and it can be good for founders, but it's a challenge for us to navigate.

• 32:58Speaker 00

  Yeah, I'm not even criticizing, it's just institu-, you asked about low ownership. This is institutionalizing. YC has always been a lot low ownership with VCs and I get it, like no cri-, but now it's been institutionalized very effectively. Three on 30, four on 40, two and a half on 25, that just, you gotta get single digits.

• 33:15Harry Stebbings?

  This is where I was just saying, like, just do a world of Roger Ehrenberg, though. We had him on the show, the world of like high ownerships, go where others aren't, get 20% in actually reasonably priced assets. Let's not do AI dictation tools from YC and get 4%.

• 33:30Speaker 00

  If you, if you like, Harry, did you see that Anthropic is now projecting 70 billion in revenue in 2028? I'd rather have a piece of that.

• 33:37Harry Stebbings?

  Pretty good.

• 33:39Speaker 00

  I'd rather have a little piece of that.

• 33:41Harry Stebbings?

  Did you guys see Sam Altman's response to Brad Gerson? What did you think of that? I was intrigued because it was quite a retort publicly.

• 33:50Speaker 01

  It's a totally legitimate, entirely obvious question. Hey, you're doing 12 billion in revenue. How are you going to fund a trillion dollars in CapEx over the next five years? And you know, I'm sure there's an articulate answer could have made. You, the answer, if you want to sell your shares, sell your shares. It was a little snarky, probably because you're tired, you're one hour, you know, you're halfway through a one hour interview. You do a million of these all the time. I believe you just have a baby in the house, you're tired, you're grumpy and you just make a snarky answer. The question is substantively important. What did you, you didn't learn anything about the plan to fund the trillion dol-, trillion dollars from the answer. You learned a little bit. About the persona of the person in a bad moment, but everyone has bad moments. So if you want to know more about Sam Altman, there's fifty three pages of testimony now on the internet.

• 34:34Speaker 01

  You can figure out, you can all come to your own judgment on that. I think the question itself is totally legitimate. It's going to be asked in increasing. There's a, there's a story that can justify it. It's all about revenue traction. If you get to a hundred billion, you can support sixty, seventy billion a capex. But it's, it's a totally legitimate question.

• 34:51Speaker 00

  Didn't he say to Sam, if you want to sell your shares, I'll find someone for you in sixty? That I've only been, founders only said that to me once in my career. I never said a critical word ever again. But I always said to me, that was a teaching moment for me. I'm like, okay, I crossed the line. Like, I didn't, I didn't realize I did. I never said a critical word ever, ever again, when I was told there's a market for you. Just let me know how much you want to sell, Lemkin.

• 35:13Speaker 01

  And it's again, I'm not kind of doing the, oh, damn you for saying that we all have bad moments. Right? But it is kind of a bullshit answer. What would, if that happened to me in a board meeting, if I was a board member and CEOs, you might say to yourself, oh, I want to find, if it's a legitimate company ending question. Now, you have to have an answer to this question because I'll step back to it. Because not just the health of your company, but bizarrely enough, the health of the entire US economy depends on the answer to this question. It turns out fuck off and sell your shares is not an acceptable answer. It's good. And if I'd been a board member at this, you said to yourself, okay, maybe I shouldn't ambush them in public. Maybe I should have said, hey, look, I just want to spend some time. You know, you give your CEO the courtesy of not feeling ambushed.

• 35:56Speaker 01

  You maybe don't do it in a visible place, but you do have it. If you were on the board of a company that's planning to spend a trillion dollars, whatever it is, I can never keep up now. And you only have twelve billion in revenue. It's a totally appropriate board level question to say, how are we going to do this? Maybe.

• 36:13Speaker 00

  I don't know anymore. I don't know if that's true. As silly as it sounds.

• 36:16Speaker 01

  It is beyond silly.

• 36:18Speaker 00

  I think, I think there is so much fear among VCs of getting out of step with the most successful founders. There's so much fear and you guys are going to disagree with me, but I, I see it all across my portfolio. The better the company is doing, the more everyone's a grin fracker. Just never a critical word said.

• 36:37Harry Stebbings?

  Now you've poked the bear. I have a company that's going shit and it's going to shit. The board members will not intervene in any way to protect the shareholders because of the bad MPS that will come from damaging that founder relationship. That to me is one of the most egregious escapes from fiduciary duty. And this is some of the most reputable investors. Harry.

• 37:01Speaker 00

  But you're agreeing with me, right?

• 37:03Harry Stebbings?

  I'm agreeing with you 100%.

• 37:04Speaker 00

  Yeah, you're seeing the same behavior, right? Listen, OpenAI has had an interesting history. But if it were a normal startup with the VCs we work with, and they had to come up with 1.2 trillion, I think everyone would be saying, sounds good, Sam. Sounds good, Sam. Keep going. Good, good, good month.

• 37:21Speaker 01

  Fortunately, and again, I don't know the man, but I've just been very impressed with you. I don't get the impression that Brett Taylor is a yes man. At one point, I'm not sure if he's still on the board, I should know. Larry Summers was on the board and Larry Summers is many things, but not a yes man. He might be off now, which would be a shame because he would be working on a board with just to hear him speak. Right? I think he's a very smart man. But stepping back a level, and I'm actually going to say, I've been thinking about this. There's a little part of me that's kind of a bit sorry for Sam Altman because of where he's put himself. Basically, every public analyst will say, he did what he had to do to raise this kind of money. But everyone covering the public markets will say, the only thing between us and a 30% promote is the AI capex boom. And he is the poster child of the AI capex boom.

• 38:06Speaker 01

  And if the AI capex boom unravels and the world and media is looking for a villain to throw rocks at, it ain't going to be a big search. Actually, genuine, genuine comment here. If this thing starts to slow down, if the thing, it'll just get real hard, real fast. And I think if you're on a board member and that, you actually owe it to your CEO to say, hey dude, how are we thinking about this? Do we have good answers? Right? We can't just be glipp. I hope that in the boardroom Brett Taylor and those guys are sitting down and saying, okay, what's the cash flow numbers that says we can honor all our commitments? What are the cash flow numbers that say maybe we can't honor 20, 29 and 30, but we can do the others? How are we going to do all this? When someone invents numbers at the five, 10 million dollar level and they're wrong,

• 38:50Speaker 01

  they disappear without a trace. When you invent numbers that are wildly over optimistic at the trillion dollar level, and if it unravels, you just become the poster child in every economic history for the next 200 years of the great AI crash of 2026. It's a pretty shitty place to be. And one of the things we've talked about on the past is the job of the board, to your point, guys, is not to be a ride, actually to help the CEO avoid things. I often look back in some of these young founders, and we talked about this. Yeah, they were wrong, but the older board members who should have had more experience, well, even in one sense, they are less legally culpable, but morally they're culpable by not saying, hey dude, are you thinking this through? Do we really have an audit, Sam Bankman? Do we really know what the money is? Do we really know what the customers are, Charlie, whatever, Javissa,

• 39:35Speaker 01

  whatever her name is? You're as a board member meant to provide the guardrails. So I think when I look at this one, I go, hmm, I hope someone's providing really good guardrails. If it hits, it'll hit hard.

• 39:45Speaker 00

  A lot of founders feel like VCs should just be their allies, period. And period, that's your job is to support me. That's your effing job. Some like the critical feedback, but I think it's far fewer today than you might think. Your job, and if you're not supportive, you're not, you're a problem for me. You're not, you're making my job harder. I think that's how founders feel. And I think that's how Sam felt, was my guess. The second thing that's just interesting to watch, because I do think Sam's pretty transparent, is I think it did show there's, there is some stress around raising 1.1 trillion. I mean, not around raising it, he's raised, he's committed to it about generating it. If there was no stress, it wouldn't have been, he wouldn't have poked the bear, right? So I don't think it's actually a big deal. I do think they'll work around it, scale it back, but it did show there's some stress around hitting

• 40:28Speaker 00

  the 1.1 trillion in, it's not even revenue, right? It's got to be gross profit at 50% margin, so they got to do 2.2 trillion or more to pay for it. Maybe I'm getting it wrong, but they've got to certainly do more than 1.1 trillion to pay off their capital commits.

• 40:43Speaker 01

  Yeah, I can't believe I'm saying this. It's only cumulative, so you might it might be a little less, but yes, it's in the many hundreds of billions of dollars a year in a world where today, you know, there's a couple of companies, Google, there's a hundred billion in a quarter, so does um, so does Amazon. You got to be at that scale. Three, four hundred billion a year. Yeah, you're somebody. You can pay for these things. It's a real number.

• 41:03Harry Stebbings?

  You mentioned Amazon. Amazon crushed this quarter. Plus twenty percent. AI shopping assistant Rufus, additional ten billion in sales. Things looking up. They obviously have their ownership in Anthropic, which I think is at seven and a half percent. How do we feel about the state of Amazon today, where they sit considering last quarter? How do we feel?

• 41:23Speaker 01

  The the overall growth rate was, I think, eleven or something, but the real point is Amazon Web Services, their cloud business grew at twenty percent. You know, the story had been they were the dominant provider pre-AI. They felt they'd slip versus Google and Microsoft in the AI world. And in fact, in terms of growth rate, they still have Google and Microsoft were both in the mid high thirties, but AWS kind of came back from, I want to say, thirteen percent to twenty percent. So the story was, oh, we're doing, we're relevant to, we're not irrelevant in the land of, in the land of AI, and the stock popped. And I think the real takeaway from here is, and this is the counterargument to all the cynical, it's a bubble people. It would appear, and Microsoft said the

• 42:04Speaker 01

  same thing, that demand for these products is still exploding. If you have it, you can sell it. At some point, maybe that won't be the case. I have my concerns. But right now, the objective facts on the ground are, Microsoft was saying, my biggest problem is I can't build data centers, so I'm capital capacity constrained. Amazon was saying, you know, my growth rate is up. Interestingly, they just signed a deal with OpenAI, because everybody signs a deal with OpenAI, and to sell them more compute. So they clearly found some capacity for that. But overall, the story was, continue high demand for compute, and if you're selling compute, stocks go up. That was the takeaway. The compute story was strong, and the compute story was strong across

• 42:45Speaker 01

  the board. That was the aha, right? It was the people who want to articulate a it's all going to go wrong story. Right now, you have to still make that story prospectively, and say it'll go wrong in the future. What you can say is it's going wrong now because the demand was still there.

• 43:02Speaker 00

  But to me, it's making a press release that says you're now the number five or number six partner to OpenAI for Nvidia GPUs is not that impressive.

• 43:11Speaker 00

  Like it's just you're behind Microsoft, you're behind Oracle, Oracle, you're behind Google, you're behind. And so it's interesting that they found some GPUs in a closet. I'm not speaking literally, but I don't actually think it means much to be late to the party to sell. It may mean a lot over time. Don't get me wrong, but I think today, there is a lot of AI performance theater today. There's real incredible growth. There's growth in our retirement funds across the country, but there's still a lot of theater. There's a lot of folks who are doing a lot of work in AI and not seeing huge benefits. So this felt partly theatrical to me, but it's okay. I'm in favor of keeping the ball moving when you don't have all the answers.

• 43:50Speaker 01

  That's very cynical to us.

• 43:52Speaker 00

  It doesn't rank them. I mean, literally, they're like, okay, we called the CoreWeave guys, we called Nebius, we called Microsoft, Google and Oracle. We even called Benioff in case he had some GPUs or TPUs hanging around. Oh, Amazon found some.

• 44:07Speaker 01

  Yeah, I think the stock popped more because of the objective fact that the actual revenue growth grew than you're right than the OpenAI deal. But while you are right that it's not huge compared to the 250 billion for Microsoft or the 300 billion from Oracle or the 400 billion for Broadcom, it is still better than not having one because now at least we can say they don't have one. So tick, done.

• 44:29Speaker 00

  It is, but it's tough from AWS having really created the category, right, of cloud frieders and being what we all grew up on. It's a major come down to be not even to be above the fold on the leaderboard.

• 44:40Speaker 01

  I think that's a different statement and totally correct. You're exactly right. Five years ago, AWS dominated cloud compute. Now they don't because cloud compute evolved from being simple compute to being AI centric computing and they didn't evolve fast enough with it. And they let a whole bunch of people into their little oligopoly. So zoom out a million miles, that's a bummer. If they knew then what they knew now, I think in 2019, they would have bought a lot more GPUs and been a lot more aggressive.

• 45:06Speaker 00

  And yeah, 20% growth also is a lot, right? At this scale, absolutely. But Shopify, which is a competitor, right? On the other side of the house, it blew it out. 32% revenue growth this quarter, 32% GMV growth, which is a close analog to Amazon. I mean Shopify is re-accelerating at eight digits of revenue, which is pretty crazy. So kudos to Amazon, but it's also lucky that both of its core product lines are getting just a general boost. Right. There's a lot of tailwinds going on here.

• 45:33Harry Stebbings?

  Jason, I know Rory won't answer this one. Given what you just said there about their not being above the fold and they're losing market share in one of their core markets which they used to own. And then considering the 20% pop, how do they sit in terms of being underpriced versus overpriced?

• 45:48Speaker 00

  For the moment, Google is underappreciated and Amazon is overappreciated. Google was slow to AI. Google had to bring Sergey Brin out of jet skiing and windsurfing and retirement to whip the troops into shape, but Google's really good now at all levels, right? It's really good at consumer AI. It's really good in searches back. Search is growing for Google again. The TPUs are good. It's a good partner and it's, you know, it's the only one other than Nvidia making real money. So I feel like Google is underappreciated and it has the application layer. It has all the applications that we, so many that we use. Amazon has none of the application layer. It has very little at the hardware layer. It has a niche search, which is incredibly powerful, but only used for e-commerce. In a way, it just doesn't have as much going for it.

• 46:32Speaker 01

  To be fair to Google, I mean, you used the word underappreciate. I think the stock has appreciated very nicely. I mean, the catastrophists at the start of the year were, oh my God, it's awful. And I think it's up 53% from there. In Q1, we talked a little bit about the companies and I was positive on Google. And I admit it, Harry knows this. I was retrospect, I thought about it. It felt so contrarian that I even said, please don't lead with that on the highlights because I felt a little stupid. And you fast forward two quarters and it's turned out to be broadly correct that they have the key ingredients and a place to put them and the ability to monetize them. And Facebook's missing that last key element, right? I still think to your point, Jason, what I think at some macro zoom out level,

• 47:12Speaker 01

  if you had a monopoly in search and now you've gone to having chat GPT as a de facto competitor, you'd still better off if it hadn't happened. It was a really good gig when you had this monopoly. You wish it hadn't happened, but once it has happened, what you've got to give them credit for is getting almost everything done to be able to play in the new world. Had the key ingredients. It took them a while to put it together, but now they have all the boxes. You'd still prefer not to have to do any of this shit and just, you know, optimize your 10 links from now until the end of human time versus having to compete, but they're competing well.

• 47:43Harry Stebbings?

  In terms of playing in the new world, it was a bad week for Meta. I'm one big ass Meta shareholder. Don't doubt Zuck. But wow, the $15 billion fine and then the reaction to their commitment to CapEx moving into 2026 and the enormous spend that they continue to do and will continue to do, I mean, down double digits. How do we think about how they fare in the new world?

• 48:06Speaker 01

  I think it's easy because their core business performed really well. Let's start with that. The core business, I think, grew 20%, you know, despite, yes, some usage being down, it's kicking off cash. Yeah, it's a great business, right? The market is just entirely, and we said this once, entirely correctly saying, dude, you have this wonderful business and then you're taking the entire cash flow and you're building this AI stuff. And unlike Google, Microsoft or Amazon, you don't have an enterprise business to sell this shit to. And unlike ChatGPT, you don't yet have an obvious AI forward app that could give you a lot more consumer engagement. So you're basically spending 70 billion a year, but with no revenue attached. What the hell? And, you know, that Mr. Zuckerberg's answer appears to be, I think it's relevant to be in this space. Thank you for your opinion.

• 48:48Speaker 01

  I refer you to the Artisan Corporation. I control this company. Have a nice day. So the market is just saying, hey, you're doing the thing you did in 21, 22, putting a whole bunch of CapEx into something that might not work. And that's why the shares are slightly down despite objectively pretty good performance. It's entirely rational. They're saying, I don't know why you're making this spend. He's saying, that's why I'm a founder. I personally don't get it either, but you know, I didn't build Facebook. He's, if he's got a plan for it, we'll see. Doesn't appear to be the most efficient way to spend 70 billion dollars as judged from the amount of infighting, but we'll see.

• 49:19Harry Stebbings?

  One that made me happy was Twilio. Twilio bounced 20% after beating expectations. Question being, when you look at that and you look at that generation of companies, your drop boxes, your boxes, maybe you're underloved, underappreciated companies. Are we going to see a series of bounce backs on better than expected results, do we think?

• 49:40Speaker 01

  If you're undervalued, then you perform reasonably well. I mean, what happened here? Twilio, $20 billion company, doing four or five billion a year, valued at four or five times revenues, as you say, had a decent quarter, revenue grew up 15%, had a nice stock bounce. It's still in a bounded universe. The zoom out point is this, they're in a much more bounded world now. They might grow 15%, they might grow 5%, they might trade at six times revenues, they might trade at four times revenues. You know, if you look at the stock chart, the area of magic is gone and now they're just perfectly good $20 billion market cap companies kicking off cash, really strong cash performance. That's what successful, mature companies look like. They'll be valued accordingly. That's

• 50:21Speaker 01

  the good news. And yet, the bad news is, as you look at the AI-first universe that exists, they're not really playing in that to any degree of significance. In a world where your cash flow is positive and trading at four or five times, you can feel really good about yourself. And then you look up and realize, oh my God, Palantir is trading at 123 times revenues and is cash flow positive. You know, they're not in that ballpark. They're not in that game. So that's what a mature business with mid-level growth prospects look like.

• 50:48Speaker 00

  My take was a little bit different. So Twilio goes from single-digit growth to 15%. That's still significant re-acceleration. We talked about Dev stepping down at Mongo. He went from 13% growth five quarters ago to 24%, 13 to 24, right? That's almost doubling your growth rate. And here's my point from both of these. Heading into 2026, you better have gotten a few nickels out of the AI expenditures, all the AI dollars. This is not new, guys. This is, what, 60% of the growth of our GDP. You can't miss AI. And so Twilio said its voice AI customers are a huge part of that re-acceleration. It says voice AI is up 60%.

• 51:30Speaker 00

  We all know a million companies using voice AI, right? It said its top 10 voice AI startups are up 10x. AI is fueling the number of databases we use. Now, sometimes we use Superbase or Neon if we're for vibing, but a lot of folks use Mongo. So not to be the only guy in the board meeting that says something, but going into Next year, you sure better have seen reacceleration because of AI because there's so much money there. You got none of it, guys? You had 18 months to not launch a single feature, tap into a single trend to reaccelerate. Now, I'm not expecting you went from 30 to 300% this quarter. But if you're not growing faster at the end of 2025 and the start, as a founder, I give you an F minus.

• 52:12Speaker 00

  There's so much money and you don't have to be Harvey to get a little piece of it. Twilio and Mongo and Cloudflare and tons of folks have a little piece of it, a little piece of that massive pie.

• 52:23Speaker 01

  I think that's totally fair. And it was well put because I would almost amend what I said is you exactly. They're not the AI native exploding 2X year on year. But what you're saying is correct. There's a big point spread between having no AI magic pixie dust and getting taken private for three times runaway revenues to be, you know, destroyed by their PE machine and getting just enough AI pixie dust and lift to get that growth rate in the mid twenties plus like Mongo, see some reacceleration. And we've just agreed from the Navan comp, you're still only going to trade at seven times revenues. But it's a downside better. You have six or seven times revenues and some kind of forward story is a big point spread from three times revenues and being sold to PE. And that's the story we're actually articulating to a lot of our private companies.

• 53:07Speaker 01

  You can't go from the hundred million dollar revenue to just be being Harvey. You're not. But you better find a way to be relevant in, I like your expression, Jason, the age of AI. You better find a way to matter in this world and co-attach to the spend. And even if it only takes you 10 basis points up from 15 to 25, that's a night and day difference in terms of your relevance and viability. I always like to come back from the publics where I think we have opinions, but maybe it's not our day job to the deals we all work with where it is our day job. And I think you're exactly right, Jason. That is the message for any of your companies that were pre 2021, that are pre GPT companies. Maybe you can't make yourself into the next Harvey or the next OpenAI, but by God, you better co-attach to that spend because it's the only game in town.

• 53:51Speaker 01

  I think you're totally right. You should be preaching that to all you guys as we come into the end of the year and looking at 26.

• 53:57Speaker 00

  And look, it's sometimes it's luck, like the CEO of WorkOS, Michael Grinnick, he was posting, I think they, they went from, I'm gonna, I'm gonna get these numbers wrong, but something like 20 to 40 in five months. Okay? And they, he's been working hard for years on WorkOS to be an OAuth, an authentication layer. But all the AI guys used him. So seeing insane growth, I've seen, we've all seen portfolio companies and you sometimes you got to make your own luck, but we've had 18 months, like get a little bit of the Harvey. You gotta find it and it's like, it's at the edge of too late, not because there's not time. I actually think there's plenty of time for startups. It's because your team isn't good enough. If you haven't gotten a boost this year from AI, fire half your team right before the holidays, give them a turkey and three months of severance, but they failed.

• 54:42Speaker 00

  You have a, your team is not good enough. They had 18 months to ship a product that mattered in this world. Where's your agent? Where's your re-acceleration? F, F, no more excuses after Thanksgiving. But the irony is it's early. At the same time, what we're all learning now, we feel like it's late with all the stuff we talked about, the cursors and replits and levels, Sierras, but it's actually so early in so many categories, right?

• 55:05Speaker 01

  It's just three years since ChatGPT shipped.

• 55:08Speaker 00

  Yeah, but you got nothing. You did not re-accelerate this year. Fire yourself or half your team. Take your choice. Fire yourself or half your team at the end of this year. Don't keep those folks that don't have the answers around. You're better off just not having them. You had time, right? And if we want to be like, I almost hesitate to say this, if we go back to the Publix, because we love this folks, if we want to be critical, you know, HubSpot and Salesforce got to deliver in 2026 because they're in play. They have the AI things. They built, they shipped the products, but they haven't seen the bump, the Datadog and Twilio and Mongo have. And maybe that's okay. They're not at the infrastructure layer. Maybe it takes longer, but if I were Mark or Yomani, I would fire half my team if I don't see real growth from that by middle of next year. I just fire half them. You got

• 55:52Speaker 00

  the wrong people. There's 2,000 people building agent force and we've deployed it. It's quite good. It's very competitive with any other agent you're going to buy. Time to monetize it in 2026. It works. It's a good product. It's not just smoke and mirrors. It's really good. Your team, maybe some of those folks that have been hanging around for a decade, maybe they're not the right people going forward. I don't know.

• 56:09Speaker 01

  Sometimes when Jason is cruel and harsh, I disagree. And then sometimes I listen and I go, he's absolutely right. This is one of the latter ones. I mightn't say it as harshly, but I think you're exactly right, Jason. If you're not on this train now, you're just not going to be right. And you will be sold for three times run rate revenues to a PE firm who will smush you in with something else and never to be seen again. And you have your chance and it's raining money in this space and you need to navigate your product towards it. And I think that's probably pretty common advice across as I think about our portfolio and. You know, all those, we talk about them a lot and that's why the Navan thing was so good. All these companies that are doing a hundred to 200 to 300.

• 56:51Speaker 01

  With sluggish 20% plus or minus growth rates, they need to figure out how to co-attach and we expand or. Eventually you're going to get tired, the VCs are going to get tired, your team's going to get tired and something's going to just not work out.

• 57:05Speaker 00

  Yeah, and there's just so much that the other thing I I I got a little bit, I get a lot of things wrong, right? It took me a while to see the data to believe. That software companies could really capture dollars from replacing humans for real. It's not that I didn't believe it, it's just so much of the stuff was VCs talking out of their rears, making stuff up, talking about how. Every human's going to be replaced with an agent when the software wasn't very good, it just wasn't good, it was hard, you know, it was a great dream. And when the node says it, I believe it, but when most of the rest of the VCs say it, I think they're just water cooler talk, but. Now we're really seeing it. Agents are better than mediocre humans. So you better be tapping into that revenue too. They're better than mediocre humans. So get going guys like.

• 57:47Speaker 00

  It's the age of the co-pilot is behind us. How are you replacing humans? This is your job in B2B software is to genuinely replace humans. I'm not a Harvey expert, but I do believe Harvey is partially replacing associates, right? That's a lot of money there and whatever Harvey is today, it's going to get better now. I guarantee you it's a better piece of software next year. Than it is at eight billion, right? And it will replace more mediocre associates. That don't want to do it and want to go home at 4pm and don't want to work on the IPO prospectus, it will just replace, find that money and you you can grow 50% faster. Harry's with me on this.

• 58:19Harry Stebbings?

  I I am, but the trend I'm finding across shows is that Jason is becoming more and more right with his assertions. Have you seen this in the more recent episodes? Yeah, and and you're agreeing more and more with him.

• 58:31Speaker 01

  Bring my comment here, I think the conviction that he brings. His use of the product is really valuable. You know, I've numbered my colleagues who are engineers and it's just really great when you can say, you know, when you actually touch and use the product, if it's an app, I try and use it. If it's cursor or something like my colleagues will be using it. I don't want opinions from people who just saw it on PowerPoint. When you use the product, it all becomes clear and he's running a business where he's literally had people and now he has machines. That's what this is all about. And it doesn't mean that humans go away entirely. It means they find other uses. It means they find other roles. But when you see it happen, you believe because if you want to be a good investor, I have this concept, you can tell when people are saying something that they actually understand. It's a very good habit to have this.

• 59:14Speaker 01

  And I'm listening to him and sometimes on other shit, I'm like, Jason, you're just talking out your ass. I don't believe it. When he's talking about this shit, you can tell he has built these products. He has automated these processes. He's transitioned out those employees and he's getting a better product. And I'm like, yes, I don't know if I believe in all the claims for AI that the maximists say, but I totally believe what you there are areas where right here, right now, you can replace a $40,000 worker with a $10,000 a year agent and be better off. And that's why it's not all just hype. I think the million dollar question is how fast that diffuses into the whole economy. But there are places here and now where you should just be using AI. And Jason is living that he probably is right on the pointy edge, but he's right.

• 59:57Speaker 01

  If he's the most pointy edge sales force customer in the next two years, they got to get 20% of their customer base plus maybe 30% onto being as pointy edge as Jason in terms of automation. Otherwise these guys are going to go somewhere else to get their automation. And that's, that's what it's going to take.

• 1:00:13Speaker 00

  This is what I've learned. If they don't buy it from you and you have a market position, they're going to buy it from somebody else. And that, that's why I think Agent Force is so important because we have this thing on Saster, saster.ai agents where we share all the agents we use. It, it came out of nowhere. It now gets like 12,000 views a month. Okay. Out of, out of nowhere. It's not even highlighted, so that's a lot of traction. But we have tracked it. We've sent millions in revenue to two vendors, artisan and qualified that we use. Millions in a couple of months of deals like, and we sent it to Agent Force now too that we use it. If other folks are Building these agents and you're not building them or they're not on your platform. They're going to find them somewhere else. The demand in some of these categories is insatiable. Vendors, if you really can replace humans with software for real, not for pretend, not for San Francisco, for real.

• 1:00:58Speaker 00

  And you have even a mini-brand, you will find you have more demand today than you can actually service. You can't even onboard the number of customers that want to replace their sales team with an AI. Now there will blow up, there's the X11s and the blowups of last year. But the demand is like something we've never seen. It's just, it's insatiable to replace humans with software.

• 1:01:19Harry Stebbings?

  I, I, I saw, I mean, it's kind of tied to this, but it was speaking about the adoption of open evidence. Open evidence grew to 300,000 doctors in one year, which is one tenth of the amount of time it took Doximity. Thought that was interesting, just in terms of like market pull and adoption rate. Going to what we said last week, which was just everyone being in market at the same time.

• 1:01:40Speaker 01

  It is super interesting. You're exactly right. And the fascinating thing is that open evidence got there in a year, what took Doximity 10 years. And it speaks to, yes, this latent demand for kind of AI. You just got to put the negative in, the, the annoying worry, which is you just got to say the following fact though. There aren't any more doctors as a result. And this is something Jason said last time. Everyone's in the market right now. You could have a world whereby you get every doctor on the platform in three years. Have you saturated TAM more quickly, right? And that's why, one of the things when you look at these hyper growth rates, and they're so compelling. And I think you've just got to say to yourself, you've got to be sure that once you get all the, the names, that you have enough follow-on stories for those names. You don't want to be one and done, right?

• 1:02:25Speaker 01

  Cause your Doximity is a really good company. It has a finite TAM associated with the numbers of doctors and the amount of advertising and kind of stuff you can sell to them. Open evidence plays in roughly the same market. Probably at its current privately held valuation, it will need to expand that market substantively to offer a return from here. Totally doable, but it's not just going to be getting there quickly and then stopping. And one of the things we started to deal with for all these tools, you should know for each of the tools, how many of that profession exist? How many lawyers? How many doctors? How many bankers? How many wealth advisors because that's your talent, you know, and tracking that and then it's so it's really number of people times amount of their work you can automate. Because in the end, that, that, that, you know, these are finite money piles. And what it means is that's that that sound a little more negative, but let put the positive out there.

• 1:03:10Speaker 01

  Open evidence sees the moment. And if you come along to Jason's point, a year from now with a slightly better version of open evidence, two rounding error, no one will care. Because you missed the moment when ninety percent of the people who are ever going to adopt the tool like this are probably in market now. In the last two, in the next one year, they're all going to make their initial decision pretty damn quickly. You've shot up the S curve super fast. And if you've missed your moment, you've missed your moment.

• 1:03:35Speaker 00

  Having said that, just going to Mark Benioff's point, which I think was a good one from before when it's on the show. There are categories where you'll miss your moment. If you are a little slow, maybe find the areas that are slower. I mean, Mark's point was like only a couple percent of his customer base is fully ready for AI today, right? Maybe play to your strengths. If you're a little slow, maybe, maybe go into retail or manufacturing or areas. It's not that AI isn't there, but it's not, it hasn't changed overnight, right? Play to it, play to your strengths.

• 1:04:02Speaker 01

  I, I, I agree, Jason, and it's interesting because open evidence, just like chat GPT is an individual adoption product. I think the velocity of individual adoption, you see it in lovable, is explosive. The pace of corporate adoption is much slower. So you exactly right. I don't think everyone's going to buy agent force other equivalent in a year. It might be five years, not ten like SaaS. It might be half the time of SaaS, but it still could be five or six years. I think the fascinating thing is the consumer has shown they're going to adopt in a year, right? And that's what you saw with the open evidence. I mean, it was interesting if you looked at some of the general AI search and AI science tools, the number one user was doctors. Using general research tools to look at very specific medical questions, presumably meeting some patient with an odd disease.

• 1:04:47Speaker 01

  And open evidence caters directly for that need. It was a perfect product and the adoption's been enormous and super quick. And I think that's what you're seeing in all the individual users. Like, we can talk about the pace of adoption and corporate law of people like Harvey, but I can tell you every individual associate is legally or illegally. Using ChatGPT to help them format the masses of writing. And every, when you do any kind of market research, you confirm that. Even if, you know, they don't have a corporate use case, they just have their laptop open and are cranking along.

• 1:05:18Harry Stebbings?

  Okay, fantastic. It has never been harder to do Series A investing than today. Agree or disagree?

• 1:05:25Speaker 00

  I completely disagree. Ignore some of the stress around price and otherwise. This is the best of times to be a Series A investor because there is just an explosion of seed AI startups. There's so many and they can't all get funded. And I know it's stressful. I know it's hard. But it is a gift that thousands of founders are in San Francisco raising seed funds from multiple accelerators now, YC, Neo, South Park Commons, all these folks are creating very smart, good candidates. That, yeah, it's hard and you got to hunt and it's competitive, but the funnel is better. The top of funnel is the best it's ever been. So even if it is hard, this should be the best of times to be Series A because the funnel's the best. The one layer up on your funnel is the best.

• 1:06:10Speaker 00

  And I think it's the worst for seed because everyone each year wants to be a seed investor even more. You know, Jake Paul, Jake Logan, whatever, which are the Jakes? You know, it's not just the chain smokers anymore and Jared Leto. It's everybody is playing at that at the hot seed startup level.

• 1:06:25Harry Stebbings?

  That's one for both.

• 1:06:27Speaker 00

  Yeah, all, everyone, everyone's in. So it should be a gift to be in A. It should be the best stage, stressors and price aside.

• 1:06:34Speaker 01

  And I think the stressors and the price are the issue, but yes, I actually do agree. And the other thing that's actually helpful is the direction of travel is now clear. In that last couple of years before ChatGPT, we were at the end of the SaaS era. It wasn't obvious what was going on. A lot of the deals you did then turned out to be evolutionary dead ends. I do at least feel now, since ChatGPT, that the direction of architectural direction in enterprise B two B for the next 10 years is pretty much obvious and a given. You know, it's some form of a genetic software. I hate that word. It conveys a lot. But some form of re-architecting the enterprise stack to enable AI to do more of the work. That's the mission. The task has been assigned.

• 1:07:15Speaker 01

  And the only question now is which verticals first, which tasks first, who will be an early adopter, who will be late. So the direction of travel is pretty clear. That's the good news. But unfortunately, I think the bad news is there's just a lot of capital doing it. And, you know, we're finding from a just a raw competition and speed and need of speed execution. It's a lot, but that's life. It should never be easy to make a lot of money.

• 1:07:38Harry Stebbings?

  The most recent person I lost to was Andreessen Horowitz. Who was the most recent person you lost to?

• 1:07:45Speaker 01

  I would say earlier on this year, very talented senior investor, Atlanta Perkins. Great name, can't argue with it, you know, right? So, yeah, I mean, and I think the relevant point there is I would have maybe to a lot expand on that versus just having a be a litany of shame. Five years ago, I would have said some firms would be earlier and, you know, we'd run into a slightly different peer set. But what's happened now is, you know, we typically do in revenue A's and B's. So it's kind of early product market fit on, given the fund size, all the large firms that were, you know, typically seed and A are doing all those deals. So the competition set has stiffened. You're up against tougher, better firms and you've got to bring up your A game, right? There's no doubt. If I was to list things that worry me, it would be that.

• 1:08:29Speaker 01

  And in the face of that, you've got to do all the things you've got to do. You've got to work on your relationships with the entrepreneur earlier. You've got to see the deal earlier. You've got to be more decisive. You've got to play to win when you want it, which means you've got to know what you want to win. I showed my LPs that I would say that the talent of the people we are competing against has gone up markedly. And the good news about this is, you know, we're fishing in the same ponds as some of the smartest investors on the planet. And the bad news is you're competing against some of the best investors on the planet and you've just got to find a way to win.

• 1:08:59Harry Stebbings?

  Final one, I would rather be in Calci at $5 billion than Polymarket at $9 billion. Agree or disagree?

• 1:09:08Speaker 01

  I'm a Calci user, not a Polly user. And I actually think the real, my comment will be this, and which wasn't one of them. And I don't mean that just glibly because they're good, right? It's typically consumers not our focus, but I really like that space. I really like the idea of prediction markets. I think it's a very clever and good idea. I think there's going to be a lot of issues around the sporting, I mean, the sporting gambling side of that. You can get troubled by that. I know in the States we can be. Coming from Europe, we bet on sports all the time as you know, Patty Powers and Irish companies, a lot of great sports betting goes on. I do think the fascinating thing about Calci and Polly is the whole Brian Armstrong trend about you have these prediction markets. And then the person can put their finger on the scales of who wins. In this case, Brian Armstrong, by using a certain set of kind of phrases during his earnings call.

• 1:09:54Speaker 01

  Basically dictated at, I think it was a Calci bet one way or the other. There's going to be a lot of weird stuff that happens as a result of this. Some of these policy bets where you just know an insider is making a trade. You know, one hour before the administration announced something, you see it hit on Calci and Polly markets. So there's a lot of fun stuff. But as a deal to be invested in, they would be fun. And at some level, that's worth having.

• 1:10:15Speaker 00

  They're Calci.

• 1:10:16Speaker 01

  Why? I mean, as I'm a customer, yes.

• 1:10:18Speaker 00

  Jason? If it is accurate to say that Calci is fully US compliant in all 50 states today. And Polly market is still in an ambiguous position, even with Nasdaq's investment or Dice investment, if that's true. I don't know if that's true.

• 1:10:31Speaker 01

  I think it's changed now. I think it's under the current administration, pretty much everything is legal.

• 1:10:35Speaker 00

  Yeah. So what I was gonna say is my, listen, politics aside, there is a chance there will be a new administration. That will be less sympathetic to this category. So based on my limited knowledge, I'm going Calci because I feel like it is a safer long-term bet. Then someone that is riding the current political vibes, which are all in favor of everything here. It just could, it was a lot different a couple of years ago. And it could be a lot different in a couple of years to come. And so if I could slightly de-risk the regulatory side. Cause it's, you know, CFTC approved or DCM approved, I would take that bet just because I don't know who the heck's going to be president next. I don't know. But the first act could be to undo everything, everything that Saks and buddies have done.

• 1:11:18Speaker 00

  That could be January 1st, whatever. I mean, these edicts, it's all going. Crypto's out. Polly market's out. Everything's out. Could be the next administration. It's all gone.

• 1:11:28Speaker 01

  Just to make a prediction, which is in keeping with the idea here. I predict that any re- Regulation won't happen because of any new administration. I think the real challenge to sports betting like this will actually be the leagues themselves wrestling with the fact that when you have sports betting, you have sports cheating. And if it becomes endemic like some of the European soccer leagues, it'll be a problem. So I actually think a fun problem for the next baseball commissioner, basketball commissioner, NFL commissioner will be what the hell do you do about this thing? When you have these very particularized bets, not will the Cowboys win by seven, but in the third quarter, will the quarterback throw a throw that misses? The possibility for cheating just becomes high. So I actually think that problem,

• 1:12:14Speaker 01

  the next administration will have plenty of other things to deal with. That particular problem will be the purview of, as I say, the sports folks.

• 1:12:21Harry Stebbings?

  I hope you Americans don't watch any Pakistani cricket then, because that'd really show you the way to do it. But uh.

• 1:12:27Speaker 01

  Happy hell, American spends a single second watching cricket, you know, it's wa- it's just torture. But we respect that you guys love it. Even though you're not good at it.

• 1:12:35Harry Stebbings?

  Do you know, Roy, do you know what, Roy? I would love to take you to Lord's. Come to London, we'll sit and watch a five day game and we'll watch every day and then it's going to be a draw at the end.

• 1:12:46Speaker 01

  No, absolutely. Yes. A product that was not built by them. The one thing you know about cricket, it was not designed by an American TV executive.

• 1:12:53Speaker 00

  Hopefully, mobile phones are collected outdoors too. That's my hope. You have to put it in a in a basket so that nobody, nobody could be on their phones.

• 1:13:00Harry Stebbings?

  Silence in the stadium. Yeah, absolutely.

• 1:13:05Harry Stebbings?

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