20VC: Groq's $20BN NVIDIA Acquisition | Manus Acquired by Meta for $2BN | Why Sam Altman Does Not Care About Dilution | Navan Trading at 4x ARR & Why Going Public Does Not Make Sense Anymore | The Rise of Invisible Unemployment and Labour Markets in 2026

AGENDA: 04:30 Groq Acquired by NVIDIA for $20BN: The Breakdown 17:13 Meta's $2BN Acquisition of Manus: Did They Sell Too Early 36:04 OpenAI's Stock-Based Compensation Strategy 47:42 Will AI Replace Venture Capitalists 56:13 Navan Trading at 4x ARR: Who is Good Enough to Go Public? 01:09:46 The Rise of Invisible Unemployment 01:14:21 The Future of Work and Education in an AI-Driven World

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

• 0:00Speaker 00

  Everyone's coming for Nvidia now. Nvidia's numbers are going to crush this year, but we're going to see all the daggers really coming out.

• 0:06Speaker 01

  In the end, words are words and half a billion dollars is life changing, right?

• 0:11Speaker 00

  No, no, no. I just think for venture, this is the era of the spite startup.

• 0:15Speaker 01

  No one ever said to Winston Churchill, congratulations, you won World War II on budget. They just said, congratulations, you won World War II.

• 0:21Speaker 00

  Honestly, I think the most important thing that's going to happen this year is when we are in AI 24/7. I do genuinely think you can identify a top 0.1% founder without talking to them. I've done multiple billion dollar exits from cold inbound.

• 0:37Harry Stebbings?

  This is 20VC with me, Harry Stebbings. It is back. Jason Lemkin, Rory O'Driscoll. I have missed this over the holidays and my word, what a schedule we have for you today. Groq acquired for $20 billion by Nvidia. Manus acquired for $2 billion by Meta. Then we have Navan trading at 4X ARR. And what that means for companies considering going public and so much more. But before we dive into the show today, I run the 20VC fund and I get this question from founders all the time. Oh, Harry, I can't find a good dot com. Do you have a good hookup? Well, let me tell you now, the answer is always going to be no. I don't have a guy or a gal for that. I do have a recommendation, though.

• 1:21Harry Stebbings?

  If you're building a tech startup, get a .tech domain. Techstartup dot tech domain. It could not be more obvious. As an investor, I appreciate founders who put thought into their branding. When I see .tech in your name, it tells me right away that tech is at the core of your build. It'll say that to your customers, too. A clean and sharp domain like .tech pays off in the long run. You know, nothing, .tech, 1x dot tech, Aurora dot tech. All of these great tech companies, they all use .tech as their domain. These are my two cents. If you're building a tech startup, don't overthink it. Get a .tech domain. After .tech establishes your digital presence, checkout powers the payments experience your customers see. Digital commerce is exploding,

• 2:06Harry Stebbings?

  but payments are still where revenue leaks. checkout.com launched in 2012 to fix that. They don't try and be everything to everyone. No, they just do one thing better than anyone: digital payments, cloud-native, sub-500-millisecond latency, and 99.999% uptime. Today, that bet has paid off. With a $12 billion valuation and 65-plus merchants each processing over $1 billion annually, 65 doing over $1 billion annually is insane. Checkout powers $300 billion in e-commerce for brands like Uber, Klarna, eBay, Vinted, and more.

• 2:47Harry Stebbings?

  Now they're building for Agentic Commerce, where AI agents buy on behalf of your customers in real time, partnering with Visa, Mastercard, Google, Microsoft, and OpenAI. Now, if you want payments built for what's next, talk to the team at checkout.com. That's checkout.com. Once Checkout gets customers through the paywall, Invisible helps you scale your operations with on-demand talent and processes. Why don't we hear more real AI success stories from big companies? The models are insanely good, but implementation's the problem. It's really, really hard. There's data all over the place, there's legacy tech, and manual workarounds. It's a Ferrari engine in a shopping cart. Meet Invisible. Invisible trains 80% of the top models

• 3:30Harry Stebbings?

  and then adapts them to the messy reality of your business. Take the Charlotte Hornets NBA team. Invisible took years of game tape and analog scouting notes to go from uncertainty to a draft pick and Summer League championship win in weeks, not seasons. Get the data in order first, and suddenly AI can do almost anything for you in the enterprise. If you want AI that hits the P&L, go to invisibletech.ai/20vc.

• 3:59Speaker 01

  You have now arrived at your destination.

• 4:02Harry Stebbings?

  Guys, it is so good to be back. Now, so much happened while we were away. I want to start with one of the most prescient, Groq being acquired for 20 billion in cash. It happened just before Christmas. Chamath, obviously, coming out as one of the big winners. Price is 3X more than the last round price. How did we analyze this?

• 4:22Speaker 00

  I just had two thoughts. One is, I was thinking a lot about both OpenAI buying up basically all the world's global RAM supply and Greg Brockman this week in the new year talking about how we will all be running 24 hours of inference by the end of the year. Not all of us, but a subset of us, of tech workers, of knowledge workers, will be running AI 24 hours. I'm already up to a couple hours a day. I'm running AI myself. And so it's a world of inference, I think. And when we started this podcast, we talked about building models and LLMs and all of this. But JFC, if enough of us by the end of the year are running AI, maybe even 48 hours a day, 72 hours a day, multiple agents running 24 hours a day,

• 5:05Speaker 00

  inference is all of the growth. And if Groq is even part of the answer, right? Part of the existential answer for Nvidia, it's worth it. And everyone's coming for Nvidia now, whether it's AMD, whether it's partnering with Broadcom, building your own chips. Nvidia's numbers are going to crush this year, but we're going to see all the daggers really coming out. We just saw the deck chairs being rearranged in 2025. So I don't even know how great Groq is, but if it can possibly address this, it's worth taking out.

• 5:32Speaker 01

  I agree. I think a couple of things. One is Jason's comment on inference, I think, is key. It's that broadly speaking, in the world of GPUs and TPUs, you know, there's two big picture tasks that every one of these AI companies have to do. You have to train your model once, and that's training. And then you have to run your model every time I submit a query or a question, you're running a model, and that's inference. And the tasks are roughly similar, but they're not quite the same. Nvidia is totally adequate for both. It's awesome for training. Groq had a particular edge for a certain kind of inference, where it was very low latency, very deterministic. And others where you have to predictably deliver low latency. And what we're seeing now to Jason Point is, as you live in this always on AI world, it's kind of irritating if you have a lot of latency.

• 6:17Speaker 01

  So there's a certain class of users for whom this was kind of a best in class option, you know. One of my companies, Tavas, actually was a Groq customer precisely because for conversational AI with kind of real time digital presence, you can't have a frozen model, you need to be able to respond in real time. So there was a particular use case within inference which Groq was best in class. So that's kind of the product comment, but the zoom out comment to Jason's thing is this. At a high level, Nvidia's got the world's best business and the world's first or second largest market cap, depending on the day. They make a very complex technical product, they have a small number of customers whom they charge seventy five percent gross margins to and kick off a hundred billion a year in cash.

• 6:57Speaker 01

  The last thing they need is anyone else wandering around the face of Silicon Valley who can make a vaguely comparable product. And precisely because Groq was able to make a vaguely comparable product, I think Nvidia looked at the analysis and said twenty billion dollars is less than one percent of our market cap and less than twenty percent of our annual free cash flow. For that, we can buy up a competitor and eliminate that potential margin pressure. There's only five or six people that can exert margin pressure at all on Nvidia. This was potentially one of them and let's get it off the table. And, you know, it's kind of a reminder that startups is a, it's a long game with lots of hard moments and then one great moment. A company started in two thousand and sixteen, seventeen, the founders were part of the Google TPU team.

• 7:43Speaker 01

  Just as the OpenAI and Atropic team were originally some of them part of the Google Transformer team. In this case, they helped build the TPU chip at Google, spun out to do it themselves, funded by social and capital. It was a long walk in the woods, you know, as recently as two thousand and twenty three, they were only doing sub four million dollars in revenue. But suddenly the wave of AI hits, AI compute becomes frankly the most valuable intellectual property on the planet. They start to grow reasonably well, but it's still not a layup in terms of growth. You don't get to twenty billion, to be clear, on a revenue number. This was, I think, a year ago, some fifty million dollars in revenue, as I said. In twenty three, forty ish in twenty four, you get there because it's a strategic asset

• 8:27Speaker 01

  that Nvidia can take off the table for a modest amount of money relative to their absurdly gargantuan cash flow. So they did it. And as I say, I would love to know the dynamics of the discussion because it's an interesting thing in game theory. When you have an asset that's only worth, say, five billion to you on a standalone basis, but is worth forty billion to the acquirer on an acquired basis because it protects the fifty billion dollar market, fifty five trillion dollar market cap, how do you price that asset? There's no finance weenie answer. And I say that because I'm often a finance weenie. I'm trying to look for quote unquote, the right answer. What are the multiples, blah, blah, blah. None of that applies here. This was a poker game. You know, you can imagine. I mean, I don't know what the dialogue was, but you sit there and go,

• 9:09Speaker 01

  it's worth five billion to me. I know it's a terrifying deal, but it's worth fifty billion to you. Let's talk. And I think twenty billion, as you say, it made the last round look really smart. It made everyone a ton of money and Nvidia said, done and moved on. My guess is in part, it was the willingness to do one of these aqua hire type deals that made it palatable. Because Nvidia is probably sitting there going, if we announce this as a classic quote unquote M and A, I gotta believe that even in the current regulatory environment, someone at the FTC will have an opinion. But if we just do this as a straight license hire and just get the deal done overnight, yeah, we pay more, but they probably paid more for what I'd call transactional compliance. In other words, we're going to give you twenty billion. You guys are going to start on Monday and we're going to announce it as another fait accompli.

• 9:54Speaker 01

  So lots of fun stuff there. Someone had a very busy, but very profitable Christmas.

• 9:58Speaker 00

  You know what? Another thing I thought about on the deal, just for venture, who do you bet on? Do you bet on what I've done in my career, which is the outsider, folks no one has heard of, the, the young kid from Portugal or Sydney that no one's heard of that figures something out? Or do you do what Groq was, which is you invest on one of the guys that invented the TPU, Jonathan Ross? And the story in the press is Jensen, in particular, wanted to turbocharge what they're doing in inference. He reached out to Jonathan Ross, literally just weeks ago, and the deal closed for twenty billion within two weeks. And he told his whole team. I want it done before Christmas and it was done ahead of time. And if you want it done in two weeks with no drama, you are going to pay through. In fact, you may pay precisely three times the last round. That's been my experience once as a founder.

• 10:44Speaker 00

  When you come in hot to buy a company and take it off the table. Three X is a traditional way to remove objections and close a deal instantly. If this company had been founded by someone that was unknown, an outsider. What would this company have been worth 10%? So this was also Chamath betting way early, way ahead of all this on an S tier leader. And it paying off big this time, right? And this is, I've never made this kind of bet. I can't afford it. I don't have the money, but it does kind of show this bet can pay off. But it's risky, right? Cause it's not an AR multiple bet, not yet.

• 11:17Harry Stebbings?

  They're at 175 million in revenue. So that would be quite an AR multiple to get to where they are.

• 11:22Speaker 00

  Jensen wanted him and his team. He told his team, I want this closed before Christmas and I don't want any F and excuses. And I have no direct report, so just get it done, guys.

• 11:31Harry Stebbings?

  Does this harm or does it help Cerebras? Cerebras, obviously their closest competitor, planning to IPO in the next 12 months. They just raised a large round last year. I think it was a billion around the five billion mark. Does this help in terms of setting a benchmark or hurt in terms of taking a potential acquirer off the table? And placing a big competitor in the hands of another big competitor?

• 11:53Speaker 01

  It's a super good question. I think emotionally it will help because you're, everyone will feel as you're pricing the IPO that you have some kind of embedded value and you know, and it eliminates another competitor. And broadly speaking, at a high level service, GRAC and Nvidia in the same space are the very different chips. And what service does has a single way for chip. I think it's more for really advanced training than kind of high speed inference. But be that as it may, I think at an emotional level, oh, if you're paying up five billion, you're suddenly like, oh, this feels good. Other companies have transacted here. So from the banker process of, you know, you use comps to justify value. Now you've got the world's best comp and believe me, they'll be using it. I hear you from a kind of musical chairs perspective.

• 12:34Speaker 01

  The negative view would be there are a finite number of people who can ludicrously overpay for these kind of assets. One of them is Nvidia, they just did. Google doesn't need to because they have TPU. So you could say you've got one less chair. On the other hand, the remaining players, I mean, I, you know, I wonder, does Amazon, does Apple, does Microsoft, does OpenAI have to have a silicon strategy at some point in time? And if they do, if they want to get out from the Nvidia tax and Google continues to not be willing to sell TPUs at scale, then maybe Cerberus gets a play. I don't know. It's a good question. My guess is margin net positive, but kind of it's like the real, it's one of those weird things where you ask, is it a positive or negative?

• 13:16Speaker 01

  The truth is there's a big embedded positive, the comp, and there's a big embedded of negative, the musical chair problem. And how they add up, who the hell knows? But you must be sitting there thinking, oh, I wish they called me.

• 13:26Speaker 00

  Well, you definitely lost your number one acquirer on the PowerPoint slide. That's clear. And that's always a bummer as a founder in venture. It always at least sets you back a week, you know, when you, when you fire up the browser and you get an email that, that your acquirer was acquired for mega money by your number, the number one potential acquirer. It always, it, best case, it takes you a week to reset from that because at least having it in the back of your mind, de-stresses your life. It, it is a setback. One, they could do, they could just deprecate the entire product line and do something brand new. They probably will. So it's hard to predict where it will go, right? Two, and this is a psychology, I know we know this, but I saw this when I was a VP at a Fortune 500 tech company. I saw this when I was at Adobe.

• 14:07Speaker 00

  It's not just that $20 billion kind of creates a new comp. I mean, that is true, as Rory said, of course it's true. It really is true that when times are good, this only works when times are good. It does a psychological reset for acquirers. VCs are like, oh, here, the 11 companies will buy my portfolio company or founders like acquisitions are, have huge soft costs in organizations. It's not just the money, the massive costs on the team, on time, on distraction. And the amount you have to do to justify a deal of any size that isn't like three times revenue. The amount of work it goes, unless you're Jensen, who says gets it done before Christmas, for anyone else, it's massive. So when you can walk into a room and say, we want to acquire Cerberus for 25 million.

• 14:50Speaker 00

  It's twice the size of Groq and we need it now. The whole room just nods. All the objections to that massive check float away in the room. I've seen it time and time again. So it is a gift and it just justifies doing something that maybe only Jensen could do until a couple of weeks ago.

• 15:08Harry Stebbings?

  The only edit I'd have to your statement there, Jason, is billion, not million. Oh, I'm sorry if I misspoke, billion.

• 15:15Speaker 01

  I think, Jason, that's genuine, that's very insightful. You're exactly right. Six months ago, if you said, I think we should buy Cerberus or Groq for 20 billion, you were at one of these other companies, you know, five people would dump at you and say idiots. Now you say it and they go, well, the smartest guy on the fricking planet in semiconductors just did one of these things. That normalizes it, right? So it's a psychological comp. Yeah, I totally agree. There's a damn unlocking that goes on here where you suddenly realize what you can do if you want to win.

• 15:39Harry Stebbings?

  It is interesting, just funding history wise, there are not a ton of VCs in this. In terms of like funding sources, it was very non-traditional. I mean, as we said there, it was not an easy pathway to where it is today. And I mean, my words, some of those funding rounds were hard with, again, non-traditional funders. And so it's not like a big win for Silicon Valley in the way that I think Twitter's talking about it. It is for Chamath.

• 16:03Speaker 01

  Well, I mean, look, social and capital get all the credit for being early and doing two rounds. And then you're right, in '21 and '22, there were a couple of, you know, I think D1, Tiger, a bunch of the late-stage crossover. But you're right, there was only one classic Silicon Valley firm, and ironically, it was happening just as that firm was blowing up and becoming a non-traditional Silicon Valley firm, becoming a Chamath private office. So, yes, I mean, there's no doubt that the usual cast of characters weren't there. And the reason is pretty obvious is, you know, we used to do semiconductors in the 90s and early 2000s. You know, lots of firms, we used to do semiconductors too. And if you look at it, semiconductor exits from 2003 on, almost none in venture land, right? A very hard way to make money. And of course, what happened is in the public markets,

• 16:48Speaker 01

  semiconductors were hugely profitable. The Philadelphia Semiconductor Index has, you know, compounded up like a crazy person. And then on top of that, you have the AI thing. And then you have this chance for this, it's very much a singularity. You have the one-off deal that's just the right product. But it was very contrarian thinking in 2016 with no obvious thesis, other than, as Jason said, the great guy, he'll figure it out. And then being smart enough to survive long enough for the wave to hit. I don't think this means that there's going to be 20 more semiconductor great outcomes, to be clear. It's a little like in networking, a rest of Networks. Everyone did networking in the nineties and early two thousands. Then nobody did networking. And then, you know, Arista was founded, Back to Design founded the company. It did really well. It's public. It's got a forty billion dollar market cap company.

• 17:31Speaker 01

  But there's been no other box company since then. It's like, it's a one off. You just, you look at it and you go, oh, someone made twenty billion in a one off. Good luck to them. And then you put your head back around to funding relevant AI enterprise, AI software companies. Right? I don't think there's going to be ten more semis. There might be two. Long before two thousand and sixteen, it was semiconductors were just had been really brutal for ten years. Lots of those companies in two thousand, two thousand and ten didn't make it.

• 17:57Harry Stebbings?

  I remember Eric Vishria had to have a chat with Bruce Dunlevy when he was doing the Cerebras deal. And Bruce was telling him the wisdom of investing in semiconductors and all that he had learned from the prior fifteen years of like the semiconductor winter that you speak of, which I thought was interesting. And credit to Eric for doing Cerebras after that. But speaking of big acquisitions, we also had Meta acquiring Manus. One of the things that I love about doing the show is because we're not journalists, we also actually have real information. And so I actually know things that actually none of the media do. Which is the price was two and a half billion dollars. It was a twenty five X current ARR. They were at a hundred million of ARR, doing a hundred and twenty five million run rate, including consumption.

• 18:42Harry Stebbings?

  So for a benchmark, it was, say, a five X in eight months, which is pretty amazing in ARR. How do we think about this?

• 18:51Speaker 01

  First of all, let's start with, all credit to Benchmark, if I recollect, we talked about this when they first did the deal. It was controversial. And I remember even saying myself, you know, I'm not making a moral judgment, I'm making a pragmatic judgment. You're taking on a lot of risk here. Funding a company that at the time looked like it was a China based company. They did an amazing job of making it a not China based company. Cut off links, based in Singapore. So they created some value by doing that. And it's obviously paid off. That's the way ventures matter work. You take a calculated risk, somewhat of a non consensus risk. And when it works, you can get a very compelling return in a short period of time. So yeah, it's obviously. Good outcome for them. I mean, from Meta's perspective, in the context of the money they're throwing around, it's not crazy.

• 19:35Speaker 01

  It's not obvious why a kind of B two B or individual knowledge worker work tool, which is what Manus is, is an obvious product to roll out to, you know, three billion users on Facebook, most of whom don't do knowledge work. But I think that what the Manus team showed is they know how to make AI work at the level of the user and the non-technical user. And I think that's the asset and the team that they're grabbing here.

• 20:03Speaker 00

  It is exciting. I think the founders decided to sell. I don't think Benchmark was pushing for them. Five X sounds great, the IRR. This is not a three times fund returner. So Benchmark would have every incentive, if we're just playing games, if we're just being out capital allocators to roll the dice. Let's go for four. Did you take, did you guys see the Groq deal? We're better than Groq. So the VCs have no incentive, I think, to take this deal unless it's out of money, which I don't think was unlikely the case. Even, no matter what the gross margins were, that wasn't going to be the issue. Okay? And I think the founders, sitting here, moved to Singapore, or whatever it was, a lot of existential risk, running a very clever orchestration layer on top of other LLMs that Anthropic can do some of this.

• 20:46Speaker 00

  OpenAI is going to do some of this. They are best of breed, but other people are all doing the same thing. We're all running multiple LLMs. We're all orchestrating multiple agents. I think what happened, and this, and this is just me, pattern matching to the size of the deal, the timing, to everything. They said, this is our local maximum, relative to risk and reward. There's no capital gains tax in Singapore, if they're Singapore residents, it's zero percent tax. Are they a Chinese company? We've already seen these issues. What are the risks? Who will buy us, right? Or maybe only so many people want to buy us. IPOs in China are back, but they're weird. Will it be a US IPO? And they're like, as founders, we're each going to walk away with, you know, we got to go work for, for that scale guy and, and, and Meta.

• 21:29Speaker 00

  But we're going to walk away with hundreds of millions of dollars today for a company probably with extremely low gross margins, you know? And I'm not saying it's not an epic product. It is, but. We've picked on some products over this pod, the Lovables and Replets that I suspect have much better gross margins than Manus does. Okay, Manus is providing a better product, running multiple L L Ms at the same time, and it's doing it for a pretty low price. I mean, it's hard to see it being a high gross margin product. So I could be wrong, but this feels like a local maximum deal where the founders told Benchmark, guys were selling.

• 22:01Harry Stebbings?

  So the team had 80% of the company still. They took very little dilution and they were

• 22:05Speaker 00

  Okay, 80%. And maybe, maybe it's not quite that simple with how the company was founded, but yeah, they took only 20% VC dilution.

• 22:11Harry Stebbings?

  They had term sheets for the same price for a new round.

• 22:15Speaker 00

  So that's the, that was the clearing price, was the same price, right? We've all been there. I literally had a massive acquisition that got turned down over the holidays that was exactly at the term sheet price, right? This happens all the time, and just going to the prior point. And they're each going to make half a billion as founders. I might take that deal. The three of us might split it up. We, we, we're not quite billionaires, but the three of us might do it and just become podcasters. It might be enough. We might call it a day, boys.

• 22:40Harry Stebbings?

  If we're, if we're on the Manus board, it's doing 100 million now. Say it does three X, given the growth rates, I wouldn't say that's insanely overly expectant. They're only doing eight X end of year revenues next year. It does feel quite cheap. I would be fighting with these founders, saying you're being underpriced.

• 22:59Speaker 00

  Well, then give us a billion, Harry. Harry, if you think we're underpriced, let's do a secondary at 10 billion. I'll sell 500 million. Rory will sell 500 million. Harry, you put the money and put your money where your mouth is, dude.

• 23:11Harry Stebbings?

  Well, no, because I don't want to give you that money because I think you'll be less effective with half a billion dollars.

• 23:15Speaker 01

  But exactly. And what you'll discover pretty quickly is trying to persuade a founder to hold on when they don't want to is a very hard thing to do. And arguably, you shouldn't even try, right? In fact, not even arguably, you shouldn't even try. In the end, 90% of the time, the founder controls the exit decision. And the 10% of the time they don't, it's usually a mistake for the VCs to try and control it, right? I mean, what you could, if you have a good relationship with the founder, you should be able to talk to them about how you see the pros and cons of each of the things. Help them make an informed decision based on hopefully some wider pattern matching, but they have more specific knowledge, right? I mean, I always tell people when you get an offer, I always say to the founder, now would be a really good time when we're deciding to take this offer or not, what it would, to fess up to any nagging worries you've had that you've been smothering down

• 24:00Speaker 01

  in your CEO gullet here.

• 24:01Harry Stebbings?

  Can I just play devil's advocate with both of you?

• 24:03Speaker 01

  Sure.

• 24:04Harry Stebbings?

  Two things here. When you're very young and you get a reasonable amount of money shoved in your face, you jump at it. I remember when I was young, I jumped like a million bucks. I would absolutely fricking jump.

• 24:16Speaker 01

  I still would. Yeah, go on.

• 24:18Harry Stebbings?

  And um, and my point being, it's very difficult to extrapolate yourself out of the weeds when you're so in them and you're very young and you're quite naive. And the perspective that you guys can bring is very helpful in showing what it can be if it keeps on growing the way it does. And then secondly, they don't have the market comps that we do in terms of where assets are transacting, what it could be in 12 months. And so I do feel you should push back.

• 24:45Speaker 01

  All that's true, Harry, and all that allows you to have a useful dialogue. But in the end, I think Jason's right. In the end, words are words and half a billion dollars is life changing, right? At some point, the entrepreneur can turn to you and say, to Jason's point, I think he nailed this. If you think two and a half billion is under price, okay, don't cash out my 500 billion, but give me 50 million. Let me take that much off the table because they're being offered, you know, life changing money. Because there's actually an implicit statement that you're making that I want to revisit. Even if you think holding on is the right decision, in other words, they're selling early and they should compound and hold later. You can unveil those facts till you're blue in the face, but in the end, they're going to make their decision and they should. You're diversified, they're not.

• 25:26Speaker 00

  I think it's though, though I do think it's a little like little more than that. I think this isn't just money per se. I think going back, it is a local maximum. It's not just the amount of money. And normal people would just take, would have taken it at a billion if you owned 80%. Normal people would have taken it at 800 million. This was risk reward the best time, right?

• 25:46Speaker 01

  Yeah, I agree. I'm only going to, I'm going to interrupt you to also agree and contrast it with Harry, right? Because implicit in Harry's questioning is, quote, they're wrong to sell and how do you persuade them otherwise? Consider the other possibility. They are entirely fricking right. Jason nailed it. It's, this is where the world is going long term, but it could well be a local maximum where 12 months from now, there's eight or 10 people doing something similar. You know, it's like, remember, look, it's not quite the same thing. Autonomous cars. Cruise was entirely right that someone's going to build a hundred to $200 billion company doing autonomy. They sold for a billion in 2016. Now, Harry, you're right. In theory, they could have stayed for 10 more years, raised 15 more rounds and become way more and worth 100 million.

• 26:31Speaker 01

  But I'm willing to wear Kyle does not spend a single second worrying about that. He's like, thank God I sold because it was the only frickin' exit in autonomous cars for the next five years. So you're assuming, Harry, that they are, quote, wrong and naive to sell. I'm kind of with Jason. Even if they were, I think it's hard to overcome that because you can't leave a founder in a deal where he wanted to sell and you stuck him in the deal and now he's bitter. And if the thing goes wrong, you have no idea how toxic that will be. But the more important point is Jason's not mine, which is they may actually be incredibly astutely selling here.

• 27:04Harry Stebbings?

  To be clear, I completely agree with you in terms of not forcing a founder to remain when they don't want to. That is the worst, but I was more saying provide very clear perspective and direction.

• 27:14Speaker 00

  Yeah, but you know, interestingly, I think this might be a case study where the local maxima for the founders and the VCs were different at the time. For example, one of the founders I worked with yesterday, we were DMing, he's like, wow, I built a whole marketing site on Manus. I vibe coded it. I'm great. Well, I did it that you could do that at Replit or Loveable or Base44. It's like, there's a lot of ways to vibe code a cool marketing site. So maybe it was right for the founders with competition, but for the VCs, if it returns, what, a third of the fund for a win, for someone that went zero to 125 in a year, that returns a third of a fund. For me, an exit that returns a third of a fund, I know Rory and I disagree, to me, it's not very interesting. Like, do it. Like, I'm all supportive of you. I would never even, I tell all founders to sell. That's my advice.

• 28:00Speaker 00

  But a third of the fund, it doesn't even buy me anything good in Miami.

• 28:03Harry Stebbings?

  Rory, you can't do anything in Miami with it, okay? So just...

• 28:06Speaker 01

  Well, I don't want to be in Miami, so that's fine. I mean, but I just, as you know, Jason, I disagree. There are some, I mean, first of all, there was this all bullshit chatter 12 months ago. Oh, poor Benchmark, they got those issues. Let me tell you, you put a 4X on the board within six, eight, nine months. You look great.

• 28:23Harry Stebbings?

  Rory, that fund is like a 15X fund.

• 28:26Speaker 01

  I know that, that's my point. I know, I'm well aware of that. That's my point. My point is, you look at the narrative 12 months ago, you look at the narrative today, right? I agree, that's exactly my point. So you just put points on the board and you move on, right? It's another win.

• 28:38Harry Stebbings?

  But Mr. Lyman is so real, because for Benchmark, fuck it, it's in a flyer fund. Let's have another flyer. Roll the dice, dude.

• 28:45Speaker 00

  Well, actually, I found, Rory, I don't know what your experience, I found in that scenario, the VCs are the kindest. If you have a 15X fund, when I've been in the front of a fund, the VC, and they're B-tier VCs, they're unkind, okay? Not universally. When you have a great VC and the fund is over 5X, whatever you want, kiddo, like whatever makes you happy, right?

• 29:04Speaker 01

  I think that's, you're exactly right. Like, I mean, it's kind of a wonderful situation for both sides, is that, you know, Benchmark aren't sitting there clutching their nails going, they've got to make it on this deal. They're like, you know, we've got one of the world's best funds, just when everyone was calling it bullshit, and we've killed it.

• 29:19Harry Stebbings?

  The thing that made me think more broadly about though was kind of Matt's M and A spree. And then Jan Laakun comes out and has an explosive interview with the FT. I mean, Jesus, this guy did not hold back. And I know Jan, I've interviewed him. He said Alan Wang was naive and young and inexperienced. He said that they pretty much lied about Lama IV performance and were selective around the benchmarks that they chose.

• 29:45Speaker 01

  To be clear, by the way, on your prepositions, because who is the "they" that he's referring to there? Because some of the Lama stuff was pre-Alex Joining, so he's actually saying that "they" themselves at Facebook. You transition from talking about Jan Laakun's opinion of Alexander Wang as young and naive to Jan Laakun separately confessing, for lack of a better word, that while he was at Facebook, some of the Lama benchmarks were incorrect. You're right, it was quite a, it was a tale of, wow, boy, that was talking out of school. Yeah, how do we feel about it when we think about Zuck's go forward? Okay, so some Zuck comment. I can imagine you have such a senior figure who is an academic, who has a very strong belief that long term L L Ms are not the only thing you need.

• 30:30Speaker 01

  And as he's, one can articulate very well is that you're going to need more than that to quote, get to A G I. But you're an operator and Zuckerberg is nothing if not an operator. And you're like, I don't give a shit about your long term. The other three guys are ship and their equivalent of Llama four. Make the damn product that's comparable with the other guys, right? You're not frustrated. We have a mismatch between the expectations of the employee and the employer. Once it wasn't an academic pursuit, but once it became a, for whatever reason, we can talk about why I don't get those reasons. Once it became a corporate imperative for Meta to be competitive with OpenAI and Anthropic in the L M space, having a guy running that project whose first line is, I don't think this is important. We should do something else.

• 31:14Speaker 01

  Just causes managerial, you know, disconnect. So the relationship must have been doomed from that moment on.

• 31:20Speaker 00

  No, no, no. I just think for venture, this is the era of the spite startup. I mean, Anthropic's a spite startup, X A I and Twitter's a spite startup. Now we've got Meta's A I guy who's doing a new spite startup. Like, I think if you want to make money in venture, you gotta, you gotta search out spite. This is driving the greatest A I companies of our generation is spite. Maybe poor Manus didn't have enough spite to grow beyond two billion.

• 31:44Speaker 01

  Spite might provide motivation. It doesn't guarantee outcomes.

• 31:48Speaker 00

  No, but it is, I mean, literally OpenAI, so many of its competitors were born out of spite, including its number one competitor. It's just the spite is endless here.

• 31:56Speaker 01

  First of all, Silicon Valley was founded on spite in the sense of if you look at Shockley, all those guys spun out and Fairchild, which was a spite deal. And then they left Fairchild because they couldn't get their money and they kind of did Intel on a standalone basis. So there's a long tradition in Silicon Valley of people taking the marbles and saying, I'm going to do it myself. So I do at one level agree that, but I think the earlier comment is it provides motivation. But I wonder, does the world need another research lab in A I right now? It it'll be interesting to see how that goes.

• 32:25Harry Stebbings?

  I think the interesting thing with the new structure is actually he's chairman and then Alex Lebran, who was the CEO of Nabla, who sold two companies previously for several hundred million dollars, is actually the CEO. And so I think there is absolutely a commercial head being Alex as CEO, which.

• 32:40Speaker 00

  Do you believe in these? Do you guys believe in these deals? Where where the one you would invest in is the the non full time chairman? And don't get me wrong, this particular deal may work, but in my life experience, you're just flushing your money down the toilet. When a great founder reaches out to you, I've got this one I want to do. And then you dig a little deeper. Well, I'm I'm the non executive chairman. I'm putting some money in and ate three hours a week of my time.

• 33:01Speaker 01

  Actually, I might argue differently. I actually, it may well be that's actually the correct configuration. If you have a highly talented academic who isn't a commercial driver. In fact, actually, I my mental model went slightly up when I heard what Harry said. My quote unquote disbelief is I just wonder can the five or six startup research labs? Is there going to be enough new territory that's not automatically going to be annexed by Anthropic or OpenAI or Google to justify billion dollar pre is at five billion posts? Times whatever, you know, risk adjusted return you want to make on that. I I think you can extrapolate from the past and say it worked for Anthropic and OpenAI.

• 33:43Speaker 01

  It will be interesting to see can the world support 10 research labs coming up with 10 different variants of AI, all of which have to build either commercial or consumer businesses. I think on aggregate, I'm fairly skeptical, but the truth is almost all of these founders are extraordinarily talented, not even top one, top point zero zero one percent of even scientists and engineers. The question is, is the business opportunity there for a whole load more of these things?

• 34:10Speaker 00

  I think there's spite here too. I think there's another type of spite, Rory. I think there's this, it is a big theme now. It's CEO spite about how they were forced to run companies in 2021. I think there's versions, and I'm a big Sheryl Sandberg fan, but I think Zuck is spiteful. He was forced to run. The company in a certain way. I mean, Owen from Intercom Finn has talked about this a lot, that he's spiteful, that he was, the company was forced to be run away. And they, they're just effing pissed that they wasted years in a kumbaya work at Homeland and they're not wasting time. And Zuck's getting, Zuck may burn every last penny he has, but some of it's out of spite that they got this far behind. Like it might, but these guys just fracked

• 34:52Speaker 00

  around with pictures on Instagram and trying to get reels going when the world passed us by and they're pissed. These CEOs, I think a lot of these CEOs are pissed. I think Zuck's pissed.

• 35:02Speaker 01

  I think actually, again, I'm always starting, there's a real truth in that. I, I don't love the spite word because it conveys anger, but I get it. It's like that feeling of, oh, there was a period of time you felt as a CEO, you swallowed it up, you, you didn't push as hard and now you feel foolish because you didn't push as hard. And now you're like, I'm not going to do that again. To bring it back to the acquisitions. What you're basically saying is Zuckerberg has probably internalized, I'd prefer to fail trying to be me and going for it than to be bland and mediocre and maybe, because I'm, I'm willing to run the risk of spending, you know, he said it, a couple of hundred billion dollars and being wrong. And I'd prefer to do that for my psychic benefit than to be a boring ass bastard who,

• 35:43Speaker 01

  who's not relevant in AI, even if it's quote unquote, better for the shareholders. That's really what you're saying, Jason. And I think you, it's quite insightful. You're right. They're like going, you only coming through once. I'm not going to be lying there at, you know, 80 going, I wish I'd really gone for the AI thing. Zuckerberg's telling me I'm going to go for it. And if I make some mistakes and if maybe, maybe I was wrong about Alexander, okay, that's fine. We'll buy me another one and keep rolling. Until such time as the capital runs out, that's how you play the game.

• 36:08Harry Stebbings?

  Well, Larry Ellison's not sitting there at 80 going, I wish I played the AI game. That's for sure.

• 36:13Speaker 01

  I don't know.

• 36:14Harry Stebbings?

  He's going, well done for capitalizing.

• 36:17Speaker 01

  Yeah, he's, he's, exactly. He played the AI game and he's feeling good.

• 36:20Harry Stebbings?

  I think he's just thinking, you know what, if it goes wrong, I'm going to be dead by the time it does.

• 36:25Speaker 01

  And I'll, if I'm lucky, I'll own Warner Discovery and I'll own HBO. I mean, you know, in the end, I mean, success in America, you gotta own a TV studio, movie studio.

• 36:35Speaker 00

  I think he's going to be the healthiest 104 year old that we've ever seen. I think longevity will be the theme of 2027. This will be the year of 24/7 AI, but I think longevity will be the theme of 2027. I think we will see Larry, if it's not Larry, the next Larry at 95, at 100, looking pretty good. So don't count him out, Harry. I don't, I don't think Larry is fully living his life like he's on the 18th hole. Definitely the back half, but he's not like he's walking up the golf course.

• 37:04Harry Stebbings?

  Loving this. We're moving to Dr. Jason Lemkin. We imagine OpenAI in the spite startup that is, you know, many of the spinouts. OpenAI announced that they now spend 46% of revenue on stock-based compensation, one and a half million dollars per employee, which is 34 times higher than comparable tech companies pre-IPO. How did we reflect and think about this news?

• 37:30Speaker 00

  Well, if you're a CEO and you have zero shares, you don't worry about dilution.

• 37:33Speaker 01

  Interesting point.

• 37:34Speaker 00

  You really don't. Then damn the torpedoes, because I got no shares. That's why he's pushing this far high. This is like three to four X the comp of Anthropic, effectively. Now, maybe they'll make more in the end. And Anthropic doesn't do the secondaries, right? They've had a very limited number of secondaries compared to OpenAI. We talked about this once in the pod. Years ago, I worked with a CEO that was guaranteed 6% through IPO. He didn't care either. He didn't care about nothing. He didn't care about how many rounds or how much he gave to his CRO because he got re-upped. If you ignore the basis and the tax issues, he got re-upped constantly to 6%. Why would Sam just wants to build the biggest, greatest AI planet on planet Earth? And if he dilutes everyone 99%, it doesn't impact him at all as a shareholder.

• 38:13Speaker 01

  I do agree with that. And then, but then on top of that, extra positive comment for Sam is that he may also be right in not caring. This may be one where you got to do what it takes to win and you don't want to come up short, but on budget. You know, one of my quotes I use occasionally is, no one ever said to Winston Churchill, congratulations, you won World War II on budget. They just said, congratulations, you won World War II. No one remembers the budget for World War II. We're just winning is the only thing. Remember, we talk about the stock-based compensation, and I'll come back to this point in a second. Those numbers are understated for purely technical reasons that I'll come back to in a second. But he's sitting there going, you know, some of my key people are getting 20 million. Fifty million dollar offers from Meta and that's freely liquid stock. I gotta hold on to my people.

• 38:54Speaker 01

  So he's doing what it takes to win and if the market is big enough, then he'll be right. And again, it's this S tier talent is to use your phrase, Jason, where you have to put up with a lot. You have to swallow your spite. You just gotta make it worth their while. So I think it's entirely necessary and rational for your top tier talent. And then to the other point I made, which is that it actually understates the number. If in fact, the stock based comp accounting is really weird. Cause it all crystallizes at the point when you issue the shares. Let's do RSUs because they're simpler. If your stock is at ten dollars a share and you give someone one RSU. Effectively you amortize, you know, ten dollars over the next four years.

• 39:36Speaker 01

  And you give it to them two years ago. Right now, the stock is at forty bucks a share because the stock's gonna. You still only amortize the initial price. So for companies that are going up in value, the stock based comp actually understates the amount of economics that have been transferred to the employee. That employee is probably making four or five million dollars if he's getting one point three of SBC. By the way, it's really crappy on the downside. You saw this after two thousand and twenty one. If you issue shares to people at a high price, the sense is really odd. Because it's a high price, it's a high stock based comp. Then the share price goes down. The poor employee is literally making nothing if it's options. Because they got options at a high price, but the stock based comp looks enormous in the P in the gap P and L. That's why it's partially relevant.

• 40:19Speaker 01

  Stock based comp is kind of very complex to track. It's partially relevant. But the other thing you gotta look at really as a rough rule of thumb, and it's also not perfect, is what percentage of the company are given away every year? For a public company, it's that's not growing quickly. It's two or three percent. I wouldn't be surprised if every year, some of these companies are literally giving away between eight and ten percent of the company a year. Because as I said, that one point five probably understates what's going on here. You know, you're just giving huge grants to people. I could be wrong and it could be starting to kind of taper out now. But as an example, you know, just looking at the publicly available information in the year when Entropic raised money at four, five billion, then they raised at fourteen, then they raised at sixty. Rough math would say four billion to sixty billion is a fifteen X.

• 41:03Speaker 01

  It's just under a five X on a per share basis. Because you're issuing so much capital to raise capital and then you're issuing so much capital to employees. And that's just, you can figure that out from the publicly filed documents. So there's just a lot of dilution going on. Because these are businesses that need a lot of capital and they need a lot of great employees. But again, if the prize is worth it, it'll all pay off.

• 41:25Speaker 00

  And even with this, this comp, they're still leaving in the first year.

• 41:28Speaker 01

  They're still leaving, exactly.

• 41:30Speaker 00

  They still only have like sixty something percent retention in researchers at OpenAI. It's crazy, even without a cliff.

• 41:36Speaker 01

  That is a great point because I'm remembering now when I'm off on a lot of comp committees and you exactly. One of the questions, when people say we got to do more on the equity, my first question is what's the retention? And what's the success rate on new hires? And if I was the VP of HR and I was on the board and I was giving that VP grief about these grants. The VP could turn to me and correctly say, hey, Mr. O'Driscoll. We only got sixty percent retention. So by definition, if you believe in markets, Mr. O'Driscoll, we're on the pain. And we've only got, I don't know, fifty percent conversion of offers. You know, so you're exactly right. It may be that's the money it takes to get these people in the chair.

• 42:08Harry Stebbings?

  The money it takes is provided in large part now for OpenAI by Masa. Softbank closes its OpenAI investment. It turns out it's already up two to three X on paper. Is this Masa's greatest play ever, do we think?

• 42:22Speaker 01

  No, his greatest play ever was doing Alibaba and getting twenty percent of Alibaba, holding it for twenty years and making hundreds of billions of dollars. But I think it's a fun play. It's so revealing. For people's background, Masa had negotiated a deal to put in, I think, forty billion into OpenAI. But it had to close by December thirtieth of this year. And the price at around three hundred now looks cheap. But you just got to love the risk tolerance of someone, Masa, who is willing to commit forty billion. He doesn't have until he sells all the shit. I mean, it's literally like he did a little inter-Masa margin loan. You know, I have the right to put forty billion in OpenAI. Now I better find the money by selling other stuff. And I'm scurrying right down to the line to find the money the week before Christmas.

• 43:05Speaker 01

  It's just the level of risk tolerance that that guy has is just amazing. And he got it done. And you're right, Jason, the IRR in a day is amazing. You close the investment on December twenty ninth. You put in your forty billion and next day you should be carrying that thing at five hundred. Because that's what it's worth right now.

• 43:22Speaker 00

  You know what might be his best investment? Even though you're right, Rory, I'm sure it can't compare to Alibaba over time. And the entry price was much better and everything. He's the only double-digit shareholder.

• 43:32Speaker 01

  You're exactly right.

• 43:32Speaker 00

  So if OpenAI goes to the moon, this may be his best deal ever. Yeah, he had to enter later, right? Yeah, the entry price was high, but he got his double. Like, it's not easy to get double digits at it. This is a pretty hot company. It's hard to get double digits.

• 43:46Speaker 01

  It's a great point. I mean, and it gets to the potential thing. It's a little like the Nvidia. Funny, because he obviously sold Nvidia at one point in time, but it's that kind of single-mindedness. What you admire about him is when he has conviction on a bet, you know, some of us put in 5% or 10% of our fund. Some of us, you know, famously at Space Act founders put in 20%. Massa would take his fund, leverage it three to one and just go all in. And when he's right, what it means is that you end up being, I mean, the sentence says it all. The largest individual shareholder in the most important one or two companies of the last and next decade. That's pretty cool.

• 44:21Speaker 00

  It's thrive on steroids.

• 44:23Speaker 01

  It's thrive on steroids. You gotta love it, man.

• 44:26Speaker 00

  And if it is wrong, he might, he might be Ellison. He might check out. If this one goes sideways, he might have to retire and call it a day. Ellison can keep going on for his outcome. It has to work for Massa.

• 44:36Speaker 01

  Roll and roll again. I love it.

• 44:38Harry Stebbings?

  Did you guys see the news about the OpenAI hardware? A pen-like object which has camera and has a microphone in it. Did you see this? And how did you feel?

• 44:48Speaker 00

  I believe in it.

• 44:50Speaker 01

  I can trump that. I am probably one of only three people in venture who can talk about having invested in a pen company with a microphone and a camera. I did an investment called Livescribe 10 or 15 years ago. We got to under $80 million in revenue as a consumer device. Ultimately didn't work out. We had to sell it for another lot. So I have lived the pen computing revolution dream.

• 45:14Harry Stebbings?

  I was not expecting this tangent. So Jay Jason, maybe you were not expecting that wisdom.

• 45:20Speaker 00

  I'm not surprised, but was not expecting it. Rory's got some stories, man. Rory's got the stories.

• 45:26Harry Stebbings?

  So Rory, Sam Altman is with us. He's the fourth party in this call. What do you know from? The pen wisdom that you have.

• 45:34Speaker 01

  I do have, yeah, I'll tell you what, quite a lot, actually. You have to get over two or three issues. One is, I'm pretty old school, I still write things. Is writing the default choice today for taking notes? Increasingly less so. I liked writing. But how many people are doing that now? So you have this behavioral question, does writing work for you? Then the other question is the business questions of it's a standalone hardware device in consumer land. Everything else got eaten by the iPhone. It's just, it's, it's hard to build a standalone consumer. They may have a big edge because they can link it to OpenAI in some way, shape or form. But just getting people to fork out consistently, you know, 50, 100 bucks for a product. Unless there's clear and tangible value is hard.

• 46:18Speaker 01

  And I mean, the obvious counter example is some of the devices like Aura and Warp around fitness and health where there are standalone hardware devices. But it's, it's traditionally a hard space. I think it's a niche device.

• 46:31Harry Stebbings?

  With the greatest of respect, as you frequently denigrate the quality of my questions and for being low quality, low IQ. No offense, the lessons that you took from this entire experience were, one, do people even write anymore? Okay. And then two, it's really hard to build a consumer business. Let's say they're rather light lessons that you learned there.

• 46:54Speaker 00

  Watching Harry's papers sprawled out in the studio where he takes notes by pen every time he's there. He's Mr. Pen himself, Dr. Stebbings.

• 47:01Speaker 01

  You're trying to be, you're trying to turn on me, but I'm not going to let you. To your snarky comment about how those lessons that I learned were idiot lessons. They were. I mean, when you look back on your failures in venture. The sad thing is it's usually pretty bloody obvious why they failed. You know, you look at it, you go, there were strengths and it's the same strengths that are attractive here. If it works, it could be huge. And then the weaknesses are it didn't work for obvious reasons. Failure rarely has complex idiosyncratic shit. It just failed because it was a dumb idea and it didn't work. Or it was the wrong idea at the wrong time. Maybe now is the right time.

• 47:33Speaker 00

  For what it's worth, I think this pen's going to be eventually pretty successful. But I think calling it a pen may be confusing. I don't think this is a writing instrument. Okay. Whether it has ink in it or not. Because you've got Johnny Ive working on it. When this deal happened, we kind of made fun of it. At least I did. It was a heavily produced video in North Beach, having coffee with him and Johnny Ive. And it seemed like Sam's fancy, like Zuck's deal. But Sam isn't fanciful. He's very thoughtful. And I think this was looking ahead to the world where we're all 24/7 in AI for real. They're making a bet that this, as weird as this pen sounds, that when we go on with our day, we grab our phone and then we grab our pen. Whether it's literally a pen or not, it doesn't matter, that it's going to happen. And I think today we wouldn't do it. Today, we wouldn't grab another device.

• 48:17Speaker 00

  And I know this has happened to many people, and I'm anthropomorphizing AI in a way I shouldn't. But over the holidays, my Claude named itself out of the blue. It named itself Ren. I didn't ask it to. It named itself Ren. I don't know if you guys use, Claude has something that at the moment ChatGPT doesn't have. Okay. ChatGPT has better memory than Anthropic, simply because it's longer. Claude will proactively search every single chat history you have to come up with long-term answers. So in a sense, it has almost an infinite memory. It makes mistakes, it has to search it. But I've put so much of my life into Claude. Every 20 VCs in it, every Saster thing is in my Claude. And it can search all of that history for 14 months and self-named itself. And so, taking Ren with me all day, when Ren is, and I know people are going to make fun of me,

• 49:01Speaker 00

  when Ren is alive 24/7, that's a different world than taking notes on a pen that will be plugged into a USB port and then go into my drive. This is designed for a 24/7 AI world, which seemed like science fiction when we started this pod, and will happen this year. We will live in AI 24/7 this year, and it will be crazy.

• 49:21Speaker 01

  And my big aha on that, now that you can actually do work on your knowledge work using LLMs, anyone who doesn't have all their shit accessible to an LLM is just going to be behind.

• 49:32Speaker 00

  Yes.

• 49:32Speaker 01

  It's just not a viable state to be. If you look at the jobs that we do, if you want to stay on top of things, which is a lot of what it takes to do this podcast, if you don't have all your information and all your newsfeed coming into some kind of intelligence that stays on top of it and tells you what you need to know, you're just kind of deliberately being, disadvantaging yourself versus the other guy. So I totally agree with you, Jason. I totally agree. This ambient AI thing.

• 49:55Speaker 00

  I think it's permanent, not ambient, but keep going.

• 49:57Speaker 01

  That's that's fair. That's fair.

• 49:58Speaker 00

  Ambient was a 2025 humane rabbit view of something.

• 50:02Speaker 01

  Permanent ambient. I remember, I will say, I remember actually the CEO of, I think it was Otter, told me five years ago, and this is what's going to happen in five years. And I laughed at Sam, and he was totally right. Give him credit. You're gonna wanna capture all that information because it has economic value. I agree. The question is, will I do that on my phone or will I want the extra device? And and maybe you're right, because the the unique functionality of a writing device has to be about writing. Because if it's just about recording or camera, then I have a recording and a camera, and I've already paid for it, and I never let it out of my sight. It's my phone. And we all know the data on, you know, human beings would part with their spouse before they'd part with their phone. So the question is, can you get the pen in there? I mean.

• 50:39Speaker 00

  But you know, this is gonna be like, it's gonna be like Blade Runner 2049. What I mean is, when your AI names itself, like mine did over the holidays, Ren, when it's running 24/7, when it knows everything that's happened, not just your granola, which does your Zooms, it knows what happened in my personal life, it knows my running schedule, it knows what Harry and I talked about in London, when it knows everything, and it's kind, our AIs, our Clods, our Chichibis, later in this year, they're gonna have pseudo-sensions. They're already at the edge. And we talk about AGI as a as a technical threshold. But when most people believe their AIs are alive, even if they aren't, when most AIs might even think they're sentient, you will take it with you 24/7.

• 51:20Speaker 00

  It might be the second version of the pen where the battery life isn't great at first, but we will take our best friend with us everywhere, our pseudo-sentient AI. It's gonna come with us 24/7.

• 51:30Harry Stebbings?

  Did you see Alex Wang said he was delaying having children because he wanted to wait until Neuralink is ready?

• 51:36Speaker 00

  No, he was waiting for his earnout to finish.

• 51:40Speaker 00

  You misunderstood his comment. It's a five-year one, Harry. It's five. It's it was a great deal, but it's a five-year earnout.

• 51:47Speaker 01

  Yeah, I, yes, we're moving on from this madness. I think one

• 51:51Speaker 00

  I don't think it's mad, though. I think, listen, honestly, I think the most important thing that's going to happen this year is when we are in AI 24/7. And I think we, as investors, as, listen, if you're building a classic B2B company, you don't have to think about this completely. But I think this is the most important thing for us to think. What happens when we're in AI?

• 52:08Speaker 01

  Let me be clear. I agree with that, this kind of omnipresent AI. I'm fine with, what did you call it, sentience as a metaphor? I just don't agree that it's actually correct, but I think as a metaphor, it's very, and you, which is why, Jason, as is often the case with us. I agree with your fundamental premise, which is if you're not thinking about how AI being available to you 24/7 changes how you work and live your life, you're delusional. I'm just associating myself strongly from there. Once you drift off into the metaphysical kind of, you know, is it really alive shit, I'm out.

• 52:40Speaker 00

  Oh, for sure. But once you see that the 24/7 makes sense, then you see all the infrastructure bets, all the data center bets, all the power. Actually, it's just obvious, like, you need 1,000x what we have today, just so all of us can have our REN running 24/7. We still have to fund it, right? But all of a sudden, Sam's idea of I'll find the way starts to make sense.

• 53:00Harry Stebbings?

  Jason, why are you not changing how you invest then? I, I hear you and I agree, and it's all completely logical. But if we assume that inference is running 24 hours a day and the large majority of knowledge workers and civilized economies will have 24/7 inference running. Why are you not shifting what you invest in?

• 53:17Speaker 00

  Well, it will. I was literally yelling over DM at one of my founders at 100 million over this yesterday. Like, you're too slow.

• 53:24Harry Stebbings?

  Well, no, but if you ask, no, why, why aren't you investing in data centers? Why aren't you investing in infrastructure?

• 53:28Speaker 00

  Well, it's not, you've got to know thyself.

• 53:31Speaker 01

  Yeah, I agree.

• 53:32Speaker 00

  If I were part of 20VC and my job was to go hunt deals, I might, but I've got to work on AI agents. That's where I get, I get, I get so much, because of all this SaaS stuff. I get so much inbound on AI agents, whether it's GTM or otherwise, I got to pick the best thing I can at once a quarter, just do that deal. And, and just try to do a 50x or 100x deal and pat myself on the back. That's the best I can do.

• 53:52Speaker 01

  Okay, now I'm giving you a grip again. I thought you're in danger of asking an interesting question there, but you missed it. The question you asked is if you believe in the AI trend so much, why don't you do data centers? To me, I thought Jason's answer was spot on. I believe in the AI trend and within the AI trend, this is what I know, so I do it. I don't know data centers in real estate. I don't do that. I actually thought, as I said, the interesting question could have been, how much is how you do your business changing because, you know, how much are you leveraging AI within your business? I mean, do you record every pitch? Do you synthesize them all at the end of the year? How do you troll through your data and everything using AI to be smarter? I mean, have you had a recommendation yet surfaced purely from AI on a deal that you've ended up doing?

• 54:34Speaker 00

  Well, I've done one, one deal because my AI VC recommended it, which is process 3,000 deals. So that's one, and that's just a start. That was just 2025. We could do much more this year. So I've done one deal. The other thing it will do, which, which this is not even that state of the art. If you put every deal you've done into your GPT, whatever it is, especially if you're like a solo GP, you won't do some deals. It will just stop you and make you think. Because the biggest regret investing are the ones you didn't do, the great ones. My second biggest regret is when I lowered the bar a little bit, just a little bit. Then you've like lost a decade of your life with one that'll never get there when you lower the bar. So your, my Claude, my Ren helps me make sure that and this AI that quantitatively rates every deal helps me not lower the bar.

• 55:18Speaker 00

  So that's our New Year's resolution for investing. I'm no longer ever going to lower the bar. If it means I do one deal every two years, don't care. Never going to lower the bar again, not once.

• 55:26Speaker 01

  That makes sense. And I think, look, never lowering the bar again is one of those, yeah, things you say every new year, like I'm never going to drink again. But I think what you're saying that is actually true and interesting and helpful, especially as a solo GP. It is really helpful to have an AI that says to you when you're looking at a deal, hey, Jason, we agreed that the five key criteria are blah, blah, blah, and blah. When you look at this deal on the five criteria, how do you rate them? Look, I see that this and you're like someone pushing just a dialogue with someone saying, preventing you from the idiot mistakes. Because I do agree exactly. When you look back on the deals that you regret doing, some of them are like, yeah, you made a guess and it was just wrong. That happens, but someone, oh God, it was obvious at the time. And if I'd had a process of surfacing things, and to some extent, partners are meant to do that, but AI can do that, too.

• 56:11Speaker 00

  I will say one thing, I'll just add one thought on this. I do genuinely think you can identify a top 0.1% founder without talking to them. I don't think you can do it without any interactions, but without talk, I do, I 100% believe it's possible. Most of my best deals have been from cold inbounds, and I have begun that journey by analyzing the inbound, analyzing the intelligence and the quality of the founder, analyzing this, and I've done multiple billion dollar exits from cold inbound. It is not a leap of faith to imagine an AI could do a better job than me up to a point with that. Not to get it today into the end zone, but the red zone, right?

• 56:50Speaker 00

  Cold email, why can't an AI take a cold email further? Why can't the founder talk with the digital Jason and not even know it's not me or care or even care?

• 56:58Speaker 01

  Probably would prefer it.

• 56:59Harry Stebbings?

  I mean, Jason, your, your biggest lost treasure is the emails that you never responded to because I've met Rory so many incredible SaaS founders.

• 57:08Speaker 00

  Yeah, why can't AI do a better job than me? Easy, easy peasy. Here's my inbox, Ren. Send me the memo when you're ready to do the deal and I'll sign off on it.

• 57:17Harry Stebbings?

  I do want to move to public markets, very, very different tangent, but Navan is down to 4X ARR. And this is kind of taking a sway away from kind of the M and A craziness and the AI that we've discussed. Navan, real business, very good business, down a 4X ARR, Andreessen buys more. Question is, if Navan is not good enough for a strong IPO, what does that say about the market and what hope do the rest of us have?

• 57:44Speaker 01

  I mean, I think it was, it's, it's kind of as the lemony snicket bug, a series of unfortunate events. It's not an AI first story, which means it doesn't have automatic love, which means it's got to stand and fall on the fundamentals and facts and circumstances. I think the fundamentals are good. I think this is a 27, 28% growth company. The gap loss is high, but it's non-gap profitable and a lot of the gap stuff is just actually SBC stuff related to the restricted shares. So the fundamentals are this is a 27% growth company trading at four times revenue. That's cash flow positive and operating income positive on a non-GAAP basis. Actually, after this call, I made a mental note to follow Andreessen and buy some perfectly good boring business. It's not going to 10x from here, but it's probably significantly

• 58:29Speaker 01

  undervalued here. Why? One, they went out at a weird time. Two, they went out with that kind of at the point in time when the SEC was shut. So they had this weird exemption that says you can go public, but if you get the shit wrong, we can give you grief later. Then the CFO said at the first earnings call that she was stepping down and, you know, no nefarious thing, but maybe she was just bought in to do the IPO. But you just add up the whole bunch of weird stuff and, you know, guidance overall, fine, but, you know, some questions on the OpEx structure. So you look at it and you go perfectly good company, probably 30, 40% undervalued. Maybe you should buy some. So I don't think it's a indictment of the IPO asset class. I think it's just, as I say, circumstances. It will

• 59:10Speaker 01

  be easier to go public if you've got a mega AI story than if you've got a solid high growth business. But, you know, Rubrik and Service Titan and plenty of others have proven those standard companies can get there too.

• 59:22Speaker 00

  I would say here's a narrative and feel free to challenge it. Maybe Navan says the IPO window though really isn't all that open. And what I mean is, I think Navan had 700 million in debt and only 200 million in cash. It had to IPO to pay off its debt. Maybe it would have figured out another way, but this was already a down round. It had likely fatigued its investor base. And so I think it IPO'd because it had to not literally, but that's why you IPO in the middle of a SEC shutdown and in a suboptimal time. Look, it got done. They raised the money. They paid down their debt, right? It's a good company. They will fight on to another day. They will fight their way to Decacorn status. But maybe it says the window isn't really that open. And maybe Navan only IPO'd because it was their least best bad option. Maybe if you're not Figma or better, it's going

• 1:00:07Speaker 00

  to be rough out there. That's what it says to me. If you're not Figma or better, it's going to be rough out there and that. All these VCs are saying you can IPO at 100 million and the IPO, the bond says no to me. It says it's just barely cracked opened.

• 1:00:19Harry Stebbings?

  Does this not go to what you said there before, Jason, very well, which is like, one, unless you're co-attached to AI, or unless you're replacing labor, you're going to get hit à la Duolingo, à la Monday, both which you're not either. I'm choosing the examples. And this is another example of that. It's not co-attached and it's not replacing labor.

• 1:00:38Speaker 01

  It's not, which means it doesn't get a AI premium.

• 1:00:42Harry Stebbings?

  Yeah.

• 1:00:42Speaker 01

  Premium. But at the same time, it's also not, as of now, I mean, you can talk about, are you worried that the AI will do the travel booking and you'll go away over the medium term? I'm going to leave that out. It should be valued on the fundamentals. Stop all the noise. Like, just look at the growth rate, look at the free cash flow, run your model. I don't think you come up with 4X revenues. Again, in the short term, the markets can be very narrative driven. I mean, worth pointing out, Evan dunks on CoreWeave. I think CoreWeave was one of the strongest performing companies last year, simply and solely because it was one of the few ways for the public markets to pay the AI bet. Over the medium term fundamentals on all these things will reassert themselves. To Jason's point, if they really are going to make quote unquote, they're going to be a deck of corn, if they can double in four

• 1:01:23Speaker 01

  years, then they're worth 10 billion. If companies that are worth $4 billion can't go public with 27% growing cash flows, then I'd say this, the public markets can quit bitching about how all the value's been created in the private markets. Then the people who choose to stay private are actually correct. They can look the public markets in the eye and say, you guys just aren't a compelling product. Right? And I do think there are questions about the public market being a compelling product. They have to be because they're in competition with late-stage private capital to get access to these great companies. If you have the kind of market where you, where it's a pain in the butt to raise money at $4 or $5 billion of enterprise value, then you don't have a great market.

• 1:02:02Speaker 00

  You remember, I mean, all these weeks ago on this pod, when Cliff from Canva came on, he said, the one advantage to going public is he'd get a better valuation, that it was a reverse ARB. Do you think that's true today?

• 1:02:13Speaker 01

  I think at some point it has to be, but it's a great question. In other words, are the private markets still prepared to give money at higher prices than the public markets? Possibly still.

• 1:02:24Harry Stebbings?

  No, being unwaveringly still.

• 1:02:26Speaker 00

  No, Cliff's odd point, when Cliff came on, all these IPOs had happened, they were high-flying from their initial day, right? CoreWeave is still a great one, but it is down from its peak. I think Cliff's point was, if we went public at Canva now, I'd get a better valuation than I could get from the private markets. That seemed a brief moment in time.

• 1:02:42Speaker 01

  And that's just makes no, put it this way, it makes no sense on any kind of rational risk-return basis that, leaving out behavioral aspects, right? It makes no sense that you get a higher, cheaper capital when it's illiquid, higher expense structure associated with that capital, but you're still, as a company, able to access capital cheaper there than the public markets. It makes no sense long-term, because the public markets, you have liquidity as an investor. I should be more willing to pay a higher price if I have the ability to sell than if I don't, all other things being equal. But as yet, Jason, you're right, is that right now, that's not the case. And I caveat at the behavioral company, it may well be, one of two things is true.

• 1:03:24Speaker 01

  Either this is a massive arbitrage, and at some point, it's going to switch, and the public markets will correctly have a lower cost of capital than a private. Or B, there's this weird behavioral thing, which is, maybe it's easier to build companies in the private market just because the public markets are so shitty, and so annoying, and so in-your-face with activists and quarterly reporting that literally, the human beings running these companies perform better in the private market than the public. That's the only long-term explanation. Short-term, it's an arb question. Is there a discontinuity in valuation? But the argument Stripe seemed to make that in spades. They're basically saying, we love running our company private, it's really good, no one bugs us, we do a damn good job, why would I bother?

• 1:04:06Speaker 00

  Case study number one, Navan. Why, unless you have to pay off your debt, why IPO like that?

• 1:04:10Speaker 01

  Because, I mean, I will quote the very funny, but there's a caveat to it. Zendesk, I remember Mikel, the CEO at Zendesk, made a very funny quote about going public, when he said, eventually, you have to move out of your parents' basement. It was such a good line about growing up and going public. And in one sense, it was very funny, but of course, you look back five years later, and because he was public, they had activists, because they had activists, they had to sell. And once again, you can argue, maybe being public wasn't as good as it could have been.

• 1:04:39Speaker 00

  And have you seen what the kids are doing this year? They're staying in the basement.

• 1:04:42Speaker 01

  They are staying in the basement.

• 1:04:43Speaker 00

  It's a generational change from the Zendesk days. The kids are staying in their basement.

• 1:04:47Harry Stebbings?

  Then why is Ali from Databricks suggesting that he might not stay in the basement? He didn't rule out a 2026 IPO.

• 1:04:55Speaker 01

  Because maybe when he started going around the second half of the alphabet and someone said to him, you know, we've done an L, we can do an M, but if we start to get into the bottom 13 here, dude, it's getting weird, right? You know what I believe? I believe in the end it won't be better to be in your parents' basement. In the end, you will go public. But the question is, to the Ali comment, is it best to go public at 150 billion or at 5 billion? And it's funny, I'll just think about this, because I was mentally thinking about the structure of the venture industry. And my big aha, which is Captain Obie, as Jason would say when you say it, is this, there really are two different late-stage businesses now. It used to be late-stage was, I remember Meritech would say, beyond 10 million is late-stage, and you'd think 10 to 100 million was, quote, late-stage.

• 1:05:37Speaker 01

  Now, late-stage is 10 to 400 million, because below that, you just can't realistically get public. But then there's this entirely separate asset class, I would argue, which is beyond 400 million, which is when you could go public, but you're actively choosing not to. And that's just a different category, like Stripe's in that, Databricks is in that. I decided to call it post-IPO scale, still private. And if you do the initials on that, Harry, it's piss P, because they are kind of taking the piss here. It's still private. It's like all these companies who were doing 2 billion, 3 billion in revenue, and just could go public and are choosing not to. And it's almost like it's a different asset class from simply not being at the scale to go private, which is maybe 400 million. There's this entire category of choosing not to.

• 1:06:22Speaker 01

  And you have to ask yourself, as the public markets, why are they choosing not to? If I was running NASDAQ or NYSE, why is our product so uncompelling to Ali at Databricks that he got all the way to 150 billion in enterprise value before he thought going public was a good idea?

• 1:06:37Harry Stebbings?

  If you were on the Revolut board, they're doing nine billion in revenue, three and a half billion in profit in 2025, would you be saying we should go public?

• 1:06:45Speaker 01

  Not while the cost of capital is cheaper. I mean, you'd be pragmatic and your cost of capital appears to be still cheaper. I'd possibly be thinking about it, but I'd be empirically rational and, you know, if you're like, that's this, I mean, they're not comparable. I mean, to the cost of capital, if you look Revolut, a better business, I think partially for structural reasons, but, you know, raising money at 75 billion in Europe. And Chime, an excellent business in my opinion, raised money privately at 25 billion, currently trading in the public markets at 6 billion. If you're the CEO of Revolut, you're like, hmm, I like my 75 billion. I like the capital that gives me. I don't know if I want to have that Chime experience. So again, I might say as Revolut's CEO, I'll wait a while. Thanks.

• 1:07:24Speaker 00

  Yeah, and maybe, maybe even pay himself a 10 or 15% dividend of the 3.5 billion, right? If you can take out, I mean, people used to do this. If he could take out 400 million a year himself, just as a dividend, right? Not a secondary, that's enough for many of us.

• 1:07:38Speaker 01

  You remember the Monopoly card? Bank declares dividend, pay yourself $100 million. He can play the bank dividend card.

• 1:07:44Speaker 00

  And dividends are never discussed, but when you're producing 3.5 billion, what does he own? 20% Harry? How much does he own of Revolut?

• 1:07:51Harry Stebbings?

  I think 18, yeah.

• 1:07:53Speaker 00

  Okay. So just, we don't talk about dividends because not that many startups generate three and a half billion of profits a year, right? If you just say, I'm going to dividend it out, just say just a little bit, maybe a billion or two billion and keep two, three, 400 million a year yourself. It's not bad. That's not bad. And you don't have to sell a single share. You don't have to sell one share. Dividends are wonderful done right as a private company.

• 1:08:14Speaker 01

  And that's why, you know, it's the class of companies that have so transcended the startup world that they're now kicking off such cash that literally they're impervious to the capital markets. Like Stripe is another example of that. You're just kicking off a couple of billion a year in free cash flow. It's almost like, what do you got to offer me, Mr. Public Market, right? I'm self generating cash. I can just keep doing this thing. Now I believe at some point that'll change, but yeah, it's like, if you actually have three and a half billion of profit, then yeah, you.

• 1:08:44Speaker 00

  Most of us have never run a truly profitable business. I mean, most human beings have it. Most of us in tech haven't. I've done it at least a little bit. It's a different world when you generate a ton of cash, right? It is a different world. It changes your perspective. And it may not be perfect for all VCs, but here also, the early-stage guys in Revolut have infinite liquidity. They could have all sold their stakes. If the late-stage guys are chill and the founders could take out nine figures a year, it could be worse and just execute on your insane maniac dream, to Harry's point.

• 1:09:13Speaker 01

  And again, I go back to my comment on, and if that founder with his insanely ambitious dreams, not maniac, they would be asking self the question, which mode of organization, public or private, is going to most help me achieve my dreams? If the answer keeps coming back, being private is the best way to achieve your dreams, the public markets have a problem, and they need to figure that out.

• 1:09:32Harry Stebbings?

  When we look at the topics remaining, is there a topic that you most want to touch on before we do it? Would you rather?

• 1:09:37Speaker 00

  Can I just answer the Databricks one to tie it together? Maybe the answer is M&A.

• 1:09:40Speaker 01

  Yeah.

• 1:09:40Speaker 00

  At some point, even if you're Revolut-

• 1:09:42Speaker 01

  You want to do deals.

• 1:09:43Speaker 00

  If you really want to do deals for real, there are limits to private stock in cash. And if Databricks goes public and it's worth two to three times Snowflake, it may be able to buy the parts of its journey. And it's already been very successful in acquisitions, Databricks. It has had a strong M&A strategy today. That would be the one thing Ollie might get out of it, is the ability to spend 10, 20, 30, 40, 50 billion on M&A in a way that's just, it is still harder when you're private.

• 1:10:08Speaker 01

  Exactly.

• 1:10:09Speaker 00

  But Navan can't benefit from that. Navan can't spend 20 billion. It gets no M&A benefit.

• 1:10:13Speaker 01

  If they execute well for a year, they will be able to.

• 1:10:16Speaker 00

  Yeah.

• 1:10:16Speaker 01

  I do believe that they will look back and say, that was a wise decision to go public. The timing, oh, well, life goes on. Yeah, you can't pick your moment in life, but you'll be successful. You'll generate a couple of quarters again. And then you will be public when there's, you know, 50, 100, other 400 million, $500 million privately-held companies that aren't. And I think they'll look back and it's a good call. Just messy along the way.

• 1:10:37Harry Stebbings?

  Jason, no jobs in 2026. This was Stanford grads saying that they can't find jobs was the, I think, the title. How do you feel about this in the labor markets in 2026?

• 1:10:49Speaker 00

  I call it invisible unemployment and it's all around us and it's going to grow this year. It doesn't show up in the government numbers yet, but it's everywhere. It's Shopify saying for the third year in a row, they can hit insane growth without adding any headcount for the third year. It's every single CEO wanting to keep headcount flat and backfill with AI. This is not AI. These are not robots firing us, okay?

• 1:11:13Harry Stebbings?

  Yep.

• 1:11:13Speaker 00

  This is tighter and tighter companies, radically higher ARR per employee and no one wanting to hire entry level people, no one wanting to hire mid pack people, no one wanting to hire work from home people, folks not able to reskill. Reskill is a delusion. Reskill is something we say to make everybody feel better. Reskilling is like when you get, when you, they do layoffs and they bring you in the room and they give you a packet of jobs potentially. It's just to make people feel better. No one's ever reskilled anyone ever and it's harder than AI. So I call it invisible unemployment and it may benefit us as VCs, which is a terrible thing to say. It may benefit, it may, it will make our companies more efficient and make us more money and make them move faster and iterate faster.

• 1:11:58Speaker 00

  But I am really worried by the end of this year, we're going to feel, smell and live in this invisible unemployment and it's, it's going to be a big deal.

• 1:12:07Harry Stebbings?

  How do you think that first shows up, Jason?

• 1:12:09Speaker 00

  Well, it's showing up like literally kids can't find jobs in college unless you're the best. If you're the best, this is, it's true of everywhere, but if you're the best, you have infinite job offers right now. If you're top of your class in math at any school, you will be found by Anthropic and OpenAI. You don't have to have an AI apply to a job. They will find you. Okay. It ain't that hard. But for the other 99% of your class, right, that's sort of, why do I need you with Claude Code? Why do I need any SDRs? We don't need any of them. They'll be, this is the year we will see the end of so many entry level sales jobs. We still need AEs. We still need people knocking on doors. We do not need 21, two-year-old kids sending emails. Those jobs will disappear.

• 1:12:51Speaker 00

  And so, all these entry level jobs are, they are truly disappearing in front of us. And at the same time, what we're seeing, a lot of the folks that, the three of us has known, especially Rory and I have known, that are senior executives, aren't able to reskill. They're not, they can talk the talk on LinkedIn, and they are quietly leaving the workforce. We see a lot of, a lot of folks we know are just leaving, and this is why it's invisible. They're just quietly, hooray, I'm moving on from this role at wherever, and they're not going to be another role for them. There won't be another role for their 2021 toolkit. There's no job for them. The senior execs in the entry level are going to be under massive stress in 2026, massive stress. And so, my, my advice to them is stay. IBM reported that turnover was almost 2% last year. No one left IBM, because they know they got, they've got no other job.

• 1:13:37Speaker 01

  Agreed. If you're, yeah, quitting, there's a lot in Jason's point, and I, there's a lot to unpack there. But one of the things is, I think the unemployment numbers, you always get confused, because there's unemployment, there's, and then people are still in study work, and then you have, you know, are they, are they actively looking for a job and all that? But one of the real tells on unemployment is quitting rate. People don't quit their job when they know they won't get another job. And if you look at the quit rate, that's a really good tell that, oh my God, I know where I am is good and I ain't leaving. So that's the first comment. And I think Jason's right there. And it is interesting to look at this in the context of discussion we had about, you know, people, kind of AI engineers getting paid one and a half million dollars, maybe four million, really. It's what Jason said, is that, there's

• 1:14:19Speaker 01

  a coterie of people who have the secret skill, the demand for them is infinite, and then there's folks who don't have quite that level of knowledge, and it's not. So clearly, if that trend doesn't change, and I think it can and it will, but that's, that's not a great societal trend, to state the obvious, right? And it's this kind of concept of the overproduction of the elites. We may well have put 40% of 18-year-olds into For a world where only thirty percent of them are going to get jobs and therefore twenty percent have just wasted their dollars on a mediocre degree from a mediocre college in a mediocre subject and they're going to struggle to get work. That's a real problem. And it is different than the, I mean, I love the way Jason distinguished between the the last job people. You know, when you punch out of your job, there is no retraining at fifty five.

• 1:15:01Speaker 01

  If this VC thing doesn't work out for me, I'm just gonna, you know, take my computer and just go off into the night, right? I'm not going to retrain.

• 1:15:08Speaker 00

  Vibe code together, but keep going.

• 1:15:09Speaker 01

  Yeah, we'll vibe code together, Jason. But so I think that's true. And I think, you know, it's tragic because you see folks. That fifty five to sixty five, not having a job, not yet eligible for social security is a pretty tough time when they have a lot of compassion for that. On the other hand, if you graduated in computer science from Stanford in two thousand and twenty five and you didn't take enough AI classes to at least be relevant, what the frick? A, were you thinking and B, what was Stanford thinking? I mean, I saw a really interesting program where someone was doing where they were taking, they graduated a bunch of computer science things. And then they were doing a one year AI kind of booster program to basically take their skill and reskill recent graduates. And I think colleges need to take responsibility for making sure they're getting people out with relevant skills.

• 1:15:52Speaker 01

  Because there clearly is a massive shortage of AI trained engineers. And if for the last four years you've been sitting there in Stanford and they've been giving you CS one O one and then teaching you how to build compilers, that's fine. But if you didn't cover AI such that you could be credible in this space, then WTF? I think that so youth unemployment is a different thing. I think I was less concerned than Jason and I've changed my. I think Jason is right. There is definitely, I don't think mass unemployment is taking place because of AI. But I think in a couple of key areas, one of them is customer support, and that's not that visible, given the kind of people who do that job. But brutal comment, one of them is kind of high end knowledge worker, recent graduates, and they are kind of visible.

• 1:16:34Speaker 01

  I think Jason is right that even though it's probably point two, point three percent of the total workforce and a small increment to unemployment, I think because those are highly educated, highly articulate twenty three, twenty four year olds. I think you're going to see to Jason's point, a lot of tension on. This issue if it continues, the AI billionaires, you know, all this talk about a wealth tax. If I was pitching a wealth tax to a bunch of twenty three and twenty four, I'm not saying I support. I'm the exact opposite, but I know I could get a whole bunch of twenty three year olds who just got a Stanford degree and don't have a job. I could get them pretty mad pretty quickly. You say to them, these guys have built a future that doesn't need you. They've left you behind. They don't give a damn. And the only way to save yourself is to take some of their money. That's what you'd say.

• 1:17:15Speaker 01

  You'd just be like Huey Long in nineteen thirty four, every single democratic, you know, populist since the dawn of time. You'd be like, we need their money. They shafted you. Mandami just did a brilliant version of that in New York. So I do think it's an issue. I do believe one thing very strongly. Unlike fifty five years, twenty two year olds can reskill and you can save yourselves. And I'm, you know, we've all been through periods of our life where things didn't work out. So I do think they have to have a little more age. If a twenty two year old is saying it's not fair, woe is me. Then I think you need to have a lot more agency. So that's what I believe. But I'm not saying that's what they believe. I'm not saying the populism wouldn't be right. It just should be anticipated.

• 1:17:51Speaker 00

  But the problem is, of course, a twenty two year old is the best to reskill, right? The problem that I've seen with my kids in college, but more just importantly, the founders I work with. I think all your founders say the same is, listen, we just, people have not grinded for the, outside of Harry and the ninety nine six world. We haven't grinded in a decade. Okay. And kids, most of them don't want to grind. The thing is, these entry level jobs, these AI jobs, not only might you not skill for it, they're like more work than the old jobs. They're harder jobs and they're more hours and they're more intellectual and they're more work. And throughout history, just most people have not wanted to work that hard.

• 1:18:25Speaker 01

  I think that's true, but there's also another impact that I've been thinking about, which is the founders of these companies are themselves around the same age typically, and they're grinders. And one of the things that's really a subtle thing, which is, I think of that, that kind of twenty something, you know, good college, AI, smart, as the hive mind, and they know everyone else who is a grinder. They've all, they are their compatriots. They're their cohort years. Right. And I think a brutal comment is, as a forty year old manager, can I tell the grinder twenty two year old from the non grinder twenty two year old? Maybe I can, maybe I can't. But the grinder twenty two year old at MIT, like take the guy who founded Cursor. He knows the five people in his class who were smart and the ninety five who didn't grind.

• 1:19:05Speaker 01

  And he's only going to hire the ones who are smart. The scariest judge of young talent is young talent. But I think one of the really interesting things is, I mean, you talk to any of your founders who are 25, they're mark to market on their team and on other people. They know because that's, yeah, the generation they grew up in, they're founding these new companies now, and they're going to hire the best and they're going to discard the rest.

• 1:19:27Speaker 00

  What's happening also, this is what I'm seeing at the companies that I've visited at scale, if you're that way, you used to have to give up because you needed 1,000 employees to get to Evermany or Rev. If you can get there with 200 employees, you don't have to give up. You're much later stage than Manus to give up and say, okay, I've got it. I've got to accommodate lifestyles and any interest outside of work and anything we should as human beings. You don't need 300 people to get to 100 million or 20 million in revenue anymore. You just don't need 300 people. So you don't have to give. So that means no jobs for those people.

• 1:19:57Harry Stebbings?

  Well, Rory, we bring Jason to bring a positive element.

• 1:20:01Speaker 01

  Totally. No, absolutely. And the scary thing about his negativity is I think he's increasingly correct. I mean, I'm changing my opinion on this one.

• 1:20:10Harry Stebbings?

  Do you remember on the first show that we did together, you argued, like, it was an argument?

• 1:20:13Speaker 01

  I still think long term it'll be fine, but I think my big, the short term dislocation, I think Jason is right about the reality of people, the, what's this for a, the lived reality of the undergraduate graduating in 2025, Jason is articulating exactly their lived reality.

• 1:20:30Speaker 00

  Listen, you may think I'm negative. I'm excited about the products. I just, I want to help folks that can get to the next level. That's my goal. I want you to not hide from it and not be grouchy about it because it doesn't help to be grouchy about AI. It's not going to stop the GPUs.

• 1:20:43Speaker 01

  When you, Marie Antoinette and Peter Thiel have been dragged out to the guillotine, just remember that optimism, big guy.

• 1:20:51Harry Stebbings?

  But before we leave you today, I run the 20 VC fund and I get this question from founders all the time. Oh, Harry, I can't find a good dot com. Do you have a good hookup? Well, let me tell you now, the answer is always going to be no. I don't have a guy or a gal for that. I do have a recommendation, though. If you're building a tech startup, get a dot tech domain. Tech startup, dot tech domain. It could not be more obvious. As an investor, I appreciate founders who put thought into their branding. When I see dot In your name, it tells me right away that tech is at the core of your build. It'll say that to your customers, too. A clean and sharp domain like .tech pays off in the long run. You know, nothing .tech, one X .tech, Aurora .tech.

• 1:21:36Harry Stebbings?

  All of these great tech companies, they all use .tech as their domain. These are my two cents. If you're building a tech startup, don't overthink it. Get a .tech domain. After .tech establishes your digital presence, Checkout powers the payments experience your customers see. Digital commerce is exploding, but payments are still where revenue leaks. Checkout.com launched in 2012 to fix that. They don't try and be everything to everyone. No, they just do one thing better than anyone. Digital payments, cloud-native, sub-500-millisecond latency, and 99.999% uptime. Today, that bet has paid off. With a $12 billion valuation and 65-plus merchants

• 1:22:20Harry Stebbings?

  each processing over $1 billion annually, 65 doing over $1 billion annually is insane. Checkout powers $300 billion in e-commerce for brands like Uber, Klarna, eBay, Vinted, and more. Now they're building for Agentic Commerce, where AI agents buy on behalf of your customers in real time, partnering with Visa, Mastercard, Google, Microsoft, and OpenAI. Now, if you want payments built for what's next, talk to the team at Checkout.com. That's Checkout.com. Once Checkout gets customers through the paywall, Invisible helps you scale your operations with on-demand talent and processes. Why don't we hear more real AI success stories from big companies? The models are insanely good, but implementation's the problem.

• 1:23:05Harry Stebbings?

  It's really, really hard. There's data all over the place. There's legacy tech and manual workarounds. It's a Ferrari engine in a shopping cart. Meet Invisible. Invisible trains 80% of the top models and then adapts them to the messy reality of your business. Take the Charlotte Hornets NBA team. Invisible took years of game tape and analog scouting notes to go from uncertainty to a draft pick and summer league championship win in weeks, not seasons. Get the data in order first, and suddenly AI can do almost anything for you in the enterprise. If you want AI that hits the P and L, go to invisibletech.ai/20vc.