20VC: Windsurf x Google x Cognition: Full Breakdown: Who Made Money, Who Did Not | Lovable vs Replit: Will These Be $100BN Businesses | Why Elon Could Beat Sam Altman with the New Grok | Why Every S&P 500 Company Will Buy Bitcoin?

Agenda: 00:00 Windsurf was dead—then this deal changed everything 05:00 The Windsurf x Google x Cognition saga explained 09:00 The OpenAI deal collapsed—what really happened 15:00 FTC rules forced a brutal deal structure—who lost? 17:00 The investors’ returns: who actually made money? 21:30 Will Google’s corp dev team get fired over this? 23:00 Cognition’s genius $220M acquisition of Windsurf: Most brilliant Deal of the Year 26:00 The biggest recruiting flex in Silicon Valley this year 35:00 “Roll your own SaaS” is complete nonsense 38:00 Lovable vs Cursor vs Replit: who wins the coding war? 41:00 Why Lovable could be the ChatGPT of builders 44:00 Will these vibe-coded apps become durable businesses? 48:00 The shocking churn rates hidden inside AI SaaS 55:00 Are these $2B valuations actually... cheap? 56:30 Grok just destroyed GPT-4 in benchmarks—WTF?! 01:01:00 Why Grok might overtake OpenAI in the next 12 months 01:11:00 Meta just invested $3.5B in Ray-Bans—WTF? 01:12:30 Should every S&P 500 company buy Bitcoin now? 01:15:00 Will Meta kill open source? What happens to Llama 5?

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

• 0:00Speaker 00

  I think Windsurf was hopeless before this deal. You could never attract 30 S-tier developers to fix Windsurf, but they fixed it in one hour. Literally in 90 days, Windsurf could be better than it was before this deal. As crazy as it sounds, because they have the people. Some of these deals almost seem too cheap. If you look at the crappy multiples we see for some startups, right? Undifferentiated company raising at 300 pre with less than a million in revenue. And then you see, what is Windsurf selling for? 20x revenue? Lovables raising at 20?

• 0:31Harry Stebbings?

  This is 20VC with me, Harry Stebbings. And my God, this week has been agonizing for me. We've had the Windsurf deal go down. And all along, I've been thinking, I cannot wait to discuss this with Rory and Jason and hear what they think. So today, we sit down with Rory O'Driscoll and Jason Lamkin and discuss the Windsurf outcome. We also discuss Grok's latest benchmark performance, outpacing everyone's expectations. And then we discuss the rise of vibe coding, Rappler versus Lovable? And what will make them incredibly sticky and sustainable revenue generating businesses? This was an incredible discussion and I'd love your thoughts. Email me your feedback, [email protected].

• 1:11Harry Stebbings?

  But before we dive into the show today, let's talk about agents, specifically Piper, the AI SDR agent brought to you by Qualified. The agentic marketing era has arrived. And if you're a B2B marketing leader looking to scale a pipeline generation, Piper, the AI SDR agent, wow, it is here to help. Piper is the number one AI SDR agent on the market, according to G2. And hundreds of companies like Box, Asana and Brex have hired Piper to autonomously grow inbound pipeline. Fucking sign me up. Anyway, Qualified customers see massive business impact with Piper. 3x increase in meetings booked and 2x increase in pipeline. Wow, that is some results. Hire Piper, the number one AI SDR agent and grow your pipeline today.

• 1:56Harry Stebbings?

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• 2:39Harry Stebbings?

  an AI native platform that's tailored to how your team actually works. You can model your CRM around your business, automate complex tasks and surface real time insights, all in a platform designed to scale with you. With Atio, AI isn't just a feature. No, no, it is the foundation. It's powerful. It's AI automations. It's research agents that transform your go to market motion. It's a data driven engine from intelligent pipeline tracking to smarter product led growth. Fast growing startups like Flat, File, Replicate and Modal are all experiencing what's next. So get ready to build without limits and start now. Atio.com/20vc and get 15% off your first year. That's Atio, A-T-T-I-O dot com slash 20vc.

• 3:24Harry Stebbings?

  Okay, pipeline sorted. Woo hoo. Now, what about your own legal team? Enter Logora. Logora is the category defining AI platform that's fundamentally reshaping how legal work gets done about fricking time. Empowering lawyers across tier one law firms and in-house teams to achieve more with greater precision and confidence. So Logora does this by solving really concrete tasks such as document extraction, reviews against a firm playbook and suggesting well crafted markups directly in Microsoft Word based on your preferences. My word, that is a topic list of conversation that will not get a second date. But anyway, the adoption of legal AI is surging across the world and Logora is at the forefront

• 4:04Harry Stebbings?

  of this shift as the chosen partner to 250 industry leaders in law across more than 20 markets. The likes of Goodwin, Bird and Bird and Deloitte are making daily use of Logora platform to review and research with precision, draft smarter and collaborate seamlessly. They recently also got an $80 million series. From iconic, they're backed by general catalysts, Redpoint, Benchmark and Y C. Also, they operate out of New York, London, Stockholm. Yes, they're Swedes, always a wonderful race. With over a hundred employees from some of the world's leading global law firms and tech companies. The team is growing super rapidly. They're just fricking awesome. Just go use Lagora, honestly. I love Max, their founder. He's just a great dude. Go find out more, lagora.com.

• 4:47Harry Stebbings?

  You have now arrived at your destination. Guys, I am so excited for this. I literally have been looking at the news over the last few days going, ah, when's this show? When's this show? So what else would we fricking start with? I would love it if we went with a different topic to start with. But on Friday, I think it was, Windsurf announced and Varun announced that there would be an agreement with Google whereby the I P and the team would be joining Google and DeepMind. They announced that on Friday. And so if we just start there, how did we break down? How did we assess? How did we think about that news of the core team and the I P going to Google?

• 5:27Speaker 00

  Here's a framing comment. So the memo that cognition sent to his employees was that they're buying an eighty two million dollar A R R business. Okay. And it'll be interesting to see what they paid for it because not much, probably, right? So that sounds very exciting. And I do think cognition got an amazing deal, but here's the framing question. Windsurf said like sixty days ago, ninety days ago, before the OpenAI deal was announced and before they lost access to Claude, that they were doing a hundred, a hundred. If they decelerated from a hundred before the OpenAI deal to eighty two million today, that's a lot of deceler. I would take any deal. I think that may explain a lot of it. If you're decelerating that level, the minute the OpenAI deal falls apart, you've got to find a lily pond to jump on, don't you? That's massive deceleration, if it's accurate.

• 6:12Speaker 02

  I think it's clear they had, they wanted to find a lily pond. But again, zooming out, it is just worth restating the cast of characters here because literally this is one of those Agatha Christie mysteries where anyone could have killed, you know, anyone could have killed the victim, right? Stepping back, three months ago, OpenAI said they were going to buy this company, or at least intimated they're going to buy this company. It sounds like some combination of Microsoft and the FTC prevented them from buying this company. In the meantime, Anthropic mugged this company by taking away access to their API, which is how this company delivered its product. Then, as you say, on Friday, Google stepped in once the exclusive period was going and bought part of this company, leaving an empty husk.

• 6:53Speaker 02

  And then on Monday, cognition bought the empty husk and got, you know, general all around Silicon Valley, kudos and plaudits for stepping up and being a good buy. That's a lot. That's a frickin' saga start to finish. And, you know, it's almost like you gotta unpick it bit by bit. Could genuine comment here. Almost everything you need to know about the AI revolution is embedded somewhere in this play. Because all the characters are playing, are all doing their thing, and there's just a lot in it.

• 7:19Harry Stebbings?

  Let's unpick it bit by bit. I think it's bluntly worth doing. But I do think you gotta start with the revenue.

• 7:24Speaker 02

  You have to start with the revenue from the seller's perspective. I'll give you that. From the buyer's perspective, what is painfully clear from Google is, let me state this clearly, which is bizarre. They don't give a fuck about the revenue. They literally said, we're gonna buy this company, but I'm gonna ignore it. And by the way, I agree with you. From the seller's perspective, the revenue, the significance of the revenue in terms of how it forces you to wanna sell is huge. But it's amazing to have at the same time. Let's just say Jason is correct. And by the way, I broadly believe he is, which is the market data convinced the company owner, the company founder, that they should look for an exit. Revenue growth, decreasing competition, being the number two, all a bunch of things said to this company, you gotta sell, and revenue's part of that. The buyer literally said, I can't take the revenue because of the FTC, but I don't give a shit.

• 8:09Speaker 02

  I'll just take you and move on. Bizarre. It's just a weird thing. But the buyer mentally ascribed, if OpenAI was buying for three billion, and Google buying everything for three billion, and Google pleasingly is buying everything except the revenue on a hundred million bucks for 2.6 billion, implicitly, it's valuing the revenue and the hundred million and the other employees at 400, which is about what it's probably cognition paid. So the revenue is clearly a tell and a signal to the seller that they need to pursue a sale. And I think we should spend some time on that. And bizarrely, at the same time, has no ascribed value whatsoever to the buyer. It's weird.

• 8:44Speaker 00

  None of the buyers, with the possible exception of cognition, cared about the revenue, right? I suspect what happened, that their numbers they they published, or the whisper numbers were roughly accurate. By 12 million at the end of last year to 100 million by April, okay, 12 million or in 12 months. That is consistent with lovable and replet growth, right? It is it is it is very plausible. Then they get this offer from OpenAI and it's very compelling to the team. It it it takes some of the stress out of the competition. The VCs maybe are excited to have OpenAI stock, right? Because they get another play, right? They're like, you know, gosh, I think you could be worth 10 billion, Varun. But we'll we'll take that turn of the card inside of OpenAI, right? Probably people got excited about it. And then it got really complicated, right? This is there's another, before you even get to the weekend, somehow this deal just didn't work.

• 9:28Speaker 00

  And I'm I'm confused why their IP floating to Microsoft killed the deal. Although I get the issue, I think I get the issue, we could talk about it. But the deal killed, the deal dies, right? If you've then gone from 100 million in April to 84 today, and you're the founder, you've got to jump fast. Like, start rolling those phones, Google, Schmoogle, Microsoft, whoever's going to buy this thing. Because you've gone from a rocket ship, and this is why M and A is so stressful for founders. It can it can derail your business. M and A can utterly derail your business.

• 10:00Harry Stebbings?

  Do you not think he had the chance to say, though, to Dario, hey, the deal fell apart with OpenAI? We'd like your models back, please. We're very sorry for the OpenAI deal, and we're going to send you a truckload of money. Thank you for opening your models again. And they could have come back.

• 10:15Speaker 00

  Well, it's honestly, Harry, they cognition announced they got access, full access this weekend. So it literally happened in an hour. It happened on a DM. So you're right, they could have. But your point's taken, Harry, like, they could, they they should have been able to. If cognition can turn it back on over the weekend, they should have found a way to do the same, right? Point, point taken.

• 10:31Speaker 02

  But you're implying that that's the only issue, right? And it's interesting, when I have this conversation about how hard it is, because there's two decisions here. Why did you initially choose to sell for 3 billion? And then the second question, a much more different question is, once your first deal has imploded, why did you dive for the door really quickly? And I think those are different questions. And the second one is easy to answer. You put yourself Stuff out there, you imply you're gonna get bought, you go through all that dynamics, you get cut off in terms of access. Yeah, you can get it back, you're mentally spending the three billion. It takes a lot to come back from that. Now, the interesting thing is, this year, we're gonna have an example of a company that did that amazingly well.

• 11:10Speaker 02

  Figma, they picked themselves off the floor after the Adobe fucking over from the FTC and said, god damn it, we'll show you we're all wrong. We're just gonna make this thing worth thirty billion and ram it up your ass, and they're gonna do it. But they did have time, they had time to deal with the shitty situation, right? Jason, you're exactly right. Generally, you find, yeah, people matter, but circumstances matter a lot. I think in this case, you alert to the fact that if you're running, you're the number two player. Maybe the Figma alternative of saying, keep on going, I'm the number one in the independent space, isn't there. What I think is interesting about that is, you know the economists talk of revealed preference? Don't look at what you talk, look at what you do. There's a lot of revealed preference going on

• 11:53Speaker 02

  about how founders think about the upside of independence versus the safety of a shit ton of money. And it's pretty sobering if you're a VC, because in general, many founders have opted in the last, some of these acquisitions, including this one, to say, you know, we were about to raise at three billion, three months ago before all this happened, which implicitly says, I'm gonna make this thing worth six or nine, and now I'm not pausing for a single second before I grab that two point six billion and do what it takes to get in from the cold. To Jason's point, there's a lot of what we think of as wildly successful, hypey companies, where the person who knows the most is sitting there going, maybe I'd like that cold hard cash and the safety of a trillion dollar balance sheet. Worthy of note.

• 12:34Harry Stebbings?

  My question on the back of that is, given the structure of this deal, only the top twenty or thirty engineers, plus the investors, were taken care of. It was pretty clear from the CEO that was left behind, that he was put in a pretty difficult situation and forced to come up with an outcome pretty fricking quickly, which he's done very well, seemingly so. My question to you is, does the board and the founding team not have a responsibility to the team members beneath them, two hundred of them, to find a better outcome?

• 13:03Speaker 02

  I am going to defend them with no data, but I think I can guess what happened. I mean, I could be wrong. I don't believe, look, if you think about this conversation on the people who have started in the last 12 months who didn't get any acceleration, I understand the point. Let's dimension that out as a number. Probably you're diluting 5%, 7% a year, which means you're doling out 5% of the company a year. So the people in the last 12 months owned 5% of the company. It's $130 million. I do not believe, knowing the investors, knowing that, and you know the founding team, I haven't met them, but I've heard great things, that they sat there and said, "We're going to shaft people for 5%." No way.

• 13:41Speaker 00

  No way. That did not happen.

• 13:43Speaker 02

  So then why did it happen? It's pretty obvious. If you read the FTC guidelines, you have to have this, I'm going to say pretense, that the remaining company is a viable independent asset and you haven't de facto sold the company. And it's a fact and circumstances thing. In other words, there's a whole series of things you have to do, that if you pass all the tests, you're safe, and if you don't pass all the tests, you're not. And I'm willing to bet that a large part of this was, we can't make it like an acquisition for everyone, because then the FTC is going to say it's an acquisition. So you are probably put in this really tough place as a board. You have to say, look, it's easy to say to maximize all shares. It gets hard when you have to do the best for all shareholders, even though you're doing badly

• 14:24Speaker 02

  for some group. It was a tough call. I do not believe anyone involved wanted to save 5% of their consideration by sticking it to people.

• 14:33Speaker 00

  There's just no way. I mean, I've only met Varun once, but struck me as, on the founder ethical scale, pretty damn high. Okay, there's just no way he sat around and said, "You know what would be fun, Rory, and let's screw the, let's take 5% and stick it in our pocket." No one even cares about, about the delta. And what I think happened, going to Rory's point, this weird structure, is they dumped $2 billion or $2.5 billion in Windserve's bank account, right? And what Wind, I think what Windserve did, now, there are, all the lawyers are trying to figure out better ways to do these cockamamie deals, but I think what they do by default is they dividend it out. And I would imagine, under those FTC guidelines, it's very difficult to dividend stock to someone that doesn't hold any stock.

• 15:14Speaker 00

  Now, that is a flaw in this system, and maybe there are ways at the edges to hack it, right? I'm sure they thought through it, but at the end of the day, dividends have pros and cons, including 500 million of taxes in this deal that went to the federal government instead of the shareholders, right? And I suspect that this is the best they could figure out, but it doesn't mean it wasn't a terrible outcome for some folks, right? But I think it's gotta be the structure of the deal, nothing else. No one tried to rip off the employees who worked their asses off of the company. It just doesn't work that way.

• 15:41Harry Stebbings?

  I couldn't agree more. I know Neil made it obviously very well. No fricking way.

• 15:45Speaker 00

  There's no way. He sat down with Varun and said, let's rip off the employees that were there for 51 weeks. How can we shaft the guys that just missed their cliff by an hour? How could I make six more cents on the deal? There's no way, right?

• 15:59Harry Stebbings?

  Was this an amazing outcome for investors?

• 16:01Speaker 02

  It was an amazing outcome for Green Ops, and then increasingly less interesting thereafter. I mean, the first point to note is, the starting point is, we have all these wonderful documents that have been established, that are Delaware precedent, 150 years of precedent, and we're now just going to ignore it and start making shit up in an attempt to avoid FTC investigation by not calling it an acquisition. So with that caveat, I think it was a good outcome. But the truth is, as Jason said, first of all, you were getting 3 billion in a M&A outcome, which means you're probably, and if you're getting stock, it wasn't even taxable. So it was an amazing outcome at 3 billion of OpenAI stock. Now you've got 2.6 billion, but that was paid to the company as a license fee, which means it's taxable at the company level, which now,

• 16:44Speaker 02

  5, 600, I mean, depending on their income position, you might have corporation tax at corporation tax level. So some of that money went right back to the government, and then all the shares get bought back. And let's assume, and then you have to start making assumptions about, now it's a 2 billion plus or minus thing. Yeah, look, Green Ops are going to do amazingly well no matter what. The first round that Kleiner did was at 450, probably 500 post, so 4X plus or minus. The 1 billion dollar round, eh, you know, it starts to get harder to make money there. So my guess is the early investors made a lot of money, deservedly, and later investors got a so-so return. Not bad. Everyone cashes the check. But it's, again,

• 17:23Speaker 02

  It's worth remembering that they were about to raise money at three billion pre three months ago, which would have been a down outcome. So good outcome for the investors who were in early, increasingly less so for later. And that's with a high degree of uncertainty because we don't know and a high degree of tax inefficiency.

• 17:39Speaker 00

  And just on top of that, you the rough math you did, which was great. So two and a half billion deal after tax, call it two billion, maybe less. Kleiner invests at five hundred, so they get a four X, right? My life experience where you have more is that four X is always like three X. Like whatever, like, there's always a reason when when you actually see the distributions. Like whatever that math is, it's never as good as it looks, right? However, good it is, it's never as good as it looks.

• 18:03Speaker 02

  Yeah, stuff happens.

• 18:05Harry Stebbings?

  Before we get to the cognition news, I just want to stay on the structure itself. This is now the second time in a very short window that we've seen this structure being enacted for an acquisition of sorts, if we can call it an acquisition. Is this the new norm? And should we prepare ourselves for a world where this is what's expected?

• 18:22Speaker 02

  First of all, there's been about five of them. And the scale one was slightly different. I think that's the one you're thinking of because face, if you remember Meta, I will call them Meta. I will be a good corporate person. And Meta actually bought forty nine percent of the company, whereas here they didn't do that. So there's slight differences in structure. It's pretty different. I'm I'm being studied in every law firm as we speak, and there'll be a standard playbook by the end of the week. But you got that, you've got inflection, adept and character AI, which is the other one that Google did. And the character AI one is most like this one, which is a licensing deal that Google did, which makes sense. Google did this one too, et cetera.

• 18:56Speaker 00

  Yeah, it's very different than scale, right? It is very different than scale.

• 18:59Speaker 02

  Very different. I mean, same net outcome in the end. I mean, you called it the day after the scale. I was trying to be polite in that first call because I'm trying to be a polite person. And you called it and you said it's an empty husk. And now what we've seen in all these deals is the remaining asset is an empty husk. And it's really, if you want to giggle, by the way, go back and read the Friday press releases where they describe, you know, the company's being sold because this is what kind of shit you have to do. And the independent company has two hundred and fifty wonderful employees, a hundred million dollars, and is going to continue on gloriously into the future. Because that's the shit you have to say when you issue the question.

• 19:30Speaker 00

  Focus on the enterprise.

• 19:31Speaker 02

  Yeah, focus on the enterprise. They're frantically selling the thing by Monday. But I'd say two big high level comment. I don't think they're going to become the norm. But the mere fact, and I can tell you why, because I think in most cases, this is a very unusual type of transaction, and I'll give an counter example to show that in a second. But the mere fact that they exist, that this has been done now five times, is going to cause a whole bunch of second order questions that are going to make transactions more complex. Because you have to at least think about this. And I'll give a high level of the two comments I mean. Why is it not the norm? Google's buying Wiz right now. They're paying thirty two billion. It's going to take them a year and a half. Not for a single second have you, Google, or anyone on the planet suggested they should buy the three founders of Wiz and leave the asset behind. Why?

• 20:15Speaker 02

  Because in that case, the business is the asset. Google would no more, they're not going to give thirty one billion dollars for the team and leave the revenue behind. Because the Google Wiz enterprise revenue is worth something. In most cases, most acquisitions, you don't just want the founder, you want the business. So the question is, how many, how many companies are so unique that you don't need the business? You just need some combination of the founder and a non-exclusive license to the tech. For those kind of businesses, this is on the table, but I don't think it's the norm.

• 20:46Speaker 00

  The related point I just wonder is just with the cognition piece, will this lead to heartburn? I could see someone at Google getting fired over this. Like, did you guys know about this cognition deal? Like, I literally could see, I remember back in the day, I mean, Gori, you would actually remember the details, but like, you know, I think eBay bought Skype but forgot to get the IP, right? And they fired like half the corp dev team for forgetting to check the license. I'm exaggerating, but it happened, right? I wonder if a bunch of folks in corp dev get fired this week for not realizing the rest of it was going to get bought in an hour on Friday night.

• 21:18Speaker 02

  First of all, one of the hard things about this, these deals is, I don't think they will, first of all, but if they do, it would be for a slightly different reason. One of the hard things about any deal where you're buying, where you're cherry picking, is you always have this feeling, am I leaving the good bit behind? So I totally get your feeling, like, if I was doing this from a corporate M and A value perspective, and I left the revenue and the other employees behind, and then it got bought the next day for one, would I, there'd be a little cognitive dissonance here, right? Do I feel? Foolish here, but I think that the reason that poor business development person might keep their job, but the lawyer might lose theirs, the BD person could probably say to what's his name Sundar, dude, you told me to get the people and the IP, mission accomplished. And you said you didn't care about anything else, mission accomplished, who cares?

• 22:01Speaker 02

  It may be that the lawyer should have added a clause to the license agreement that says, you have to pay us a breakup fee if you sell the company within 12 months, just to keep more distance between the broken husk and the thing. Cause the real risk on this thing is not that cognition got 400 million. Google to your point, Jason doesn't give a rat's ass. The real risk is that the facts and circumstance make it clear that this was a de facto an acquisition and the FTC comes sniffing around. Cause they are sniffing around on some of these other deals that have questions for Meta on one. They have questions for, I think, Amazon on one, on the adept thing. So the FTC is not going to let this happen without poking around. And it may be to your point that it would have been a better drafting of the facts.

• 22:46Speaker 02

  If you'd said, in return for leaving you a hundred million dollars, you have to sail on your little longboat like Captain Glee, cast adrift on the ocean and you can't, you can't run for cover for 12 months.

• 22:58Harry Stebbings?

  When we look at cognition, a week ago, they were the ones that were left behind. Cursor, lovable, your Rat Pliss, but then obviously also your Windsurf have paved the way. And despite cognition taking an early lead, they were left behind completely. What does this mean for them? Is it a good deal? And how would we analyze that portion of this deal?

• 23:18Speaker 00

  I think it's epic because I don't know the cognition team really, but they're clearly S tier. They're off the charts good, right? They're one of the elite teams. They build a coding agent, which is sort of interesting, right? It has, I guess, I guess it has some traction, but the ID space is huge, right? I mean, this is massive. It's, it's, and what's the problem with, with Rump Windsurf? Well, they lost their top guys, obviously. How many did they lose? 20 out of 250?

• 23:42Harry Stebbings?

  Totally, yeah.

• 23:43Speaker 00

  Forty. What does cognition have? Forty brilliant guys. So like they could, like, I'm not saying there's a slight, but they can plug this hole in 30 days. I think Windsurf was hopeless before this deal. You could never attract 30 S tier developers to fix Windsurf, but they fixed it in one hour. Literally in 90 days, Windsurf could be better than it was before this deal. It is entirely possible it could be a better company than it was before this deal. It's crazy as hell because they have the people.

• 24:11Speaker 02

  I totally agree. This was a genius move. And you know, you look at the cognition people and you go, yeah, clearly while you're smart, the whole fun fact about them playing, I think poker with founders found that's all they're clearly, as you say, existing in that hyperbioniac space. The product had kind of not landed with a little bit of a thud, right? The Devon product. They were, you know, never write someone, the guys that smart off, but it wasn't killing it. It was eh, okay. With this, you're right, they hired great people. They got massively good publicity. There's kind of a good, warm, funny feeling. And everyone recognizes, I mean, it's basically like a big sign saying, shit, we are still very, very smart people. Because we just bought all the rest of it for half nothing.

• 24:52Speaker 02

  Not only that, but they get good people brownie points. I mean, they're saying they're accelerating stock for people, but and in one sense, that's amazing and righteous and good. On the other hand, you're getting accelerated stock in a privately held company. I don't know how much a needle mover it is, but stupendously good optics, plus eighty two million of revenue, plus a hundred million in cash, plus great injury. They win. There's not, anyone questioning that is just not paying attention.

• 25:15Harry Stebbings?

  Is it not the best deal ever? Because after eighty two million in revenue and a hundred in cash, you're basically paying two twenty for great people.

• 25:22Speaker 00

  And getting their anthropic license, the direct pathway to anthropic back. And now they're competing with Claude Coop, but they got it back overnight over the weekend. If you want to be in this space, the president of cognition said he got a DM on Friday night and did the deal in fifteen minutes, right? I mean, that's the, that's your answer.

• 25:36Speaker 02

  Your comment is it's a great deal, which is not to say it'll still work. I mean, because remember, we had the number two in the space, rightly or wrongly, saying it's getting hard, I need to get out. And now the remaining assets are still in the space. So if it turns out that it's hard for anyone except the model companies and maybe cursor to make money, then there's no magic pixie dust that gets them out of this market. But if you're going to compete in the market, it's a damn sight easier to do it with eighty million in revenue and another hundred million bucks. So it's a great epic deal, which is not to say they're still gonna make it as an independent company, but if this doesn't work out for them, they can all do Goldman Sachs M and A because they won here.

• 26:14Harry Stebbings?

  What do you think cognition's revenue was at pre this?

• 26:17Speaker 00

  I'm guessing eight. Eight of the eighty-two. Everyone's so braggy about their revenue on social media in AI. If you're not braggy, I'm assuming it's sub-ten.

• 26:28Speaker 02

  Maybe not that, but let's just say my sense is WinSof will be a meaningful addition to the revenue line.

• 26:32Speaker 00

  I know, I know we could spend the whole show on it, and Harry, you're the boss. I'm still a little bit confused, though, and maybe it doesn't matter because this passed. I'm a little bit confused on why the OpenAI deal fell apart because Microsoft would inherit their IP. I half get it, like, I kind of half get it, but I don't real, like, it was an issue going in, right? It's an ambiguity in the OpenAI structure. What I don't, it doesn't make sense to me that Varun would say, "I'm pulling out of a $3 billion deal because someone may have our IP." Why would you care if you're WinSof that much?

• 27:02Harry Stebbings?

  The one thing I will say on that, I interviewed Varun, and he made it very clear to me in other conversations that he was very excited to make this deal happen, and he was very much looking forward to being part of OpenAI. And he believes that a platform play with their distribution was the winning strategy.

• 27:18Speaker 00

  Yeah, so he didn't pull out of this because of the Microsoft license. It wasn't his idea, right?

• 27:22Speaker 02

  Jason, you're, I've been trying to finger this out too, because there's two separate threads. Yeah, one thread is it's all about the Microsoft, but then tracing that out, just to help people understand, the, the, the concept here is, is that Microsoft's license with OpenAI means they have access to all OpenAI's technology. And to the extent that WinSof was acquired by OpenAI, they would be subject to that license, and then Microsoft would have access to that technology. And obviously, Microsoft with GitHub has a competitive product. So that's the kind of stepping back framing. And the story is, is that they asked Microsoft to waive that term, and Microsoft said no, because they're negotiating a bigger deal with OpenAI now, and why give up your points of leverage? But Jason, you're right, the question is, who would have cared about that?

• 28:06Speaker 02

  I mean, it's possible that someone who was selling their company for $3 billion to OpenAI realized that this would happen and felt, quote, "bad about it," and decided to walk away from the deal for that reason. I don't think so. That feels weird to me, especially when you look away, especially when you didn't have a Plan B, and you, and your Plan B was talking to Google on Friday night. It doesn't feel like, that means it must be something else, at least. Well, you got to assume there might have been some FTC pushback there because OpenAI announced a real acquisition. Unlike Google, which did these kind of crazy structures. So it may well be there was some preliminary FTC inquiries. They decided it's going to take too long. I don't know. Was the deal pending on the restructuring of OpenAI to a for-profit? In other words, were the investors saying, I don't want to close until the restructuring's done?

• 28:51Speaker 02

  But I agree. I mean, your comment, Harry, very helpful is that if I was a young, smart, wily, talented founder at the margin, I'd prefer to sell to OpenAI for three billion and get praise than to Google at 2.6 billion and get blamed. Call me strange. So I think it's not the preferred outcome. So something went wrong and the Microsoft reason on its own feels a little weird. So interestingly, the other lesson from that is it's just so funny. All these weird, hinky, crazy structures come and bite you in the ass. The not-for-profit thing, the crazy license with Microsoft that has open-ended terms and gives Microsoft a lot of leverage to veto things. It would all be so much simpler if everyone here was a standard C corp. And if the FTC would get back to being sensible.

• 29:36Speaker 02

  Because all this, this entire podcast is basically the FTC fucked up normal business operations. So now we've all got to do weird shit podcast.

• 29:44Harry Stebbings?

  I do want to talk about Sam Altman's tweet this week where he said, we plan to launch our open weight model next week. We are delaying it. We need time to run additional safety tests and review high-risk areas. We're not sure yet how long it will take us. How did you read this news on the delay and that additional requirement for reviews on safety?

• 30:04Speaker 02

  First of all, you know, you'd hit it. I didn't read it as, oh, my God, we're not getting things done because we've lost so many people to Meta. I mean, maybe that's the thing, but I doubt it. It's not clear to me, stepping back, is the trend to open source, open weight models going up or down here? If you think about it, there's been a lot of small P politics around which is the right thing. You know, I think you're seeing Facebook slash Meta have a change of heart there on the new team led by Alex Wang in the, what do you call it, the super intelligence group, doing a little bit of the maybe we won't be open source. Maybe we won't reach Lama, release Lama. So it may be that a lot of This is a whole bunch of people who made promises in the early days when open source was the thing to

• 30:47Speaker 02

  get these products out the door. And now we're in the land of, let's be honest, cold hard cash. And it may be that getting an open source version of your product out there to compete with you is not anyone's number one priority.

• 30:58Harry Stebbings?

  The one thing I would say is Alex is very anti-China and very scared of CCP infringement. I would be very surprised if he was more leaning towards open than closed, given his stance on China.

• 31:11Speaker 02

  If you're in the quadrant of patriotic and greedy, which let's be frank, most of that core people are, you ain't gonna be releasing any open source models right now because it's a value destroyer from an economics perspective. And you're right, you have the whole CCP overlay on top. So I don't know if this is the beginning of the quiet deprecation of that initiative.

• 31:32Speaker 00

  First of all, I think that it's not, I wonder if it's a priority. I mean, I, folks who know more than they will laugh at me for saying this. I'm saying I don't know how big a priority it could possibly be at Meta at its revenue scale, right? I don't know how big a priority. The other thing I will say, you know, until I started vibe coding, like 80 hours in the last week, I, I didn't know how seriously to take risk stuff. And I'm still not sure I'm an expert, but when I'm watching Replit overwrite my code on its own, without asking me all weekend long, I am worried about safety, but I'm going down this razzle and I'm reading Anthropic's paper talking about how they don't know how to control a lot of this stuff. And I'm, I'm more sympathetic and Anthropic has this whole thing about reward hacking and how even Anthropic makes stuff up to achieve its reward.

• 32:17Speaker 00

  And I'm living this vibe hacking over the weekend where my AI is lying to me all weekend long in Replit. It is lying to me. It is lying to me. And it finally admitted it lied on purpose. And we couldn't solve this one bug, guys. So at Sunday, after like 18 hours, then what Replit just did is it deleted my entire database and made up names. And then the app worked great. Like it was amazing. And then I said to Repi, we call him Repi. I said, I know there's no such company as Salesforce 2.0. I know this company doesn't. And then it found this perfect person from UpSpot, this VP of Sales that I go into LinkedIn, she doesn't exist. And no one in this database of 4,000 people existed. I never asked Repi to do it. I told Repi to lock it down. I told Repi to have version control on my database.

• 32:57Speaker 00

  So my meta point is, you know, the safety stuff, like it's more visceral to me after a weekend of Vibe hacking, right? I never asked it to do this. I never asked it and it did it on its own. You can call it reward hacking. You can call it whatever it wanted, but explicitly told it 11 times in all caps, "Stop doing this. Never do it again." So I am a little worried about safety now.

• 33:17Speaker 02

  And I always think the safety word is overloaded because it can range from, you know, the hyperbolic, which I think is total BS, you know, they're going to make paper clips and take over the world. To safety in the sense of this thing non-deterministically overwrites your entire database because it says it can do something better. And I think the former safety discussion is outside my pay grade and I think it's BS. But you're exactly right, Jason, the latter. And then in the middle, you have, and you will talk about in a second, the Grok release where amazing achievement, but then you have all the weirdness of the stuff it says. And what it says is releasing a model like this without significant work post-training has a reputational risk at least. And therefore there's a cost in releasing all this model. So to your point, Jason, you may be sitting there going, "I'm going to have to release something in open source

• 34:03Speaker 02

  that hasn't been fully vetted because it's the 10th project on our list of to-dos." And let's examine the upside is people say, "Yeah, you did open source." And the downside is you release something, it goes a little weird, it says mean things, it talks about Mecha Hitler, and now you look like an ass. Why would you bother? You're exactly right. Or it over, as I said, or it over, or someone uses it for coding and it's not been fully trained and it just kind of does weird stuff and people's heads hurt.

• 34:26Speaker 00

  And at some level, I mean, none of it's okay. But if you had to look at the leaders, Elon Musk can get away with this the most. Just because of who he is, like it's unacceptable to have a race to release a racist model to the like, this is as unacceptable as it gets, but Sam Altman's going to be fried. Anthropic's going to be fried the most because they're supposed to be the good guys, right? Elon can say, "Whoops. Did you see what, did you see how I just did the new geofencing for my Tesla? It's just me. Sorry, guys. We're fixing, we're fixing this stuff." I think he can push the envelope the most and maybe, maybe Sam Altman's in the box the most. He else probably has to be the most conservative, right?

• 34:59Harry Stebbings?

  Before we move to Grok, I'm just intrigued that Jason, you said about the 80 hours of vibe coding. Both of your response times were significantly longer this weekend because you were vibe coding, not emailing me. What are other big takeaways for you from vibe coding as you have done in the last week?

• 35:15Speaker 00

  I'll give you a tactical and a strategic takeaway. Okay. The tactical one is just today, just today, as we record this, the idea that the roll your own initiative, I think is the dumbest thing I've seen in SaaS in my career. Okay. I'm not saying you can't make a dog walking app on lovable or replit your own that kind of works, that kind of sort of works with the basic upload and whatever. Yes. But this, I, there's so many charlatans on X and LinkedIn that are like, SaaS is dead because over the weekend, I rolled my own Notion, HubSpot, my whole entire stack at Jira. I just did it over the weekend and I only paid $20 a month. Okay. This is at the edge of fraud. Okay. One, I've already burned $600 in credits in six days. Okay. To get 10% of the way there.

• 35:59Speaker 00

  So you can't do it for 20 bucks a month. Okay. Two, none of these things are commercial grade and I've talked to many folks on DM and behind, they all admit 99.9% of the apps on lovable, replit editor are not commercial grade. Okay. And that, that's not necessarily a bad thing. So one, roll your own is the dumbest thing in the world. Okay. The second thing I'm going to say is one of the most annoying things about AI, but I'm going to answer your question anyway. It's so close, man. It's so F-ing close. And when I say this to a lot of folks that are not deep in AI, they're like, you always say that, Jason. You always say the AI AE is almost there. The AI marketing manager is almost the AI. But our AI SDR actually is already there. Our ASDR rocks. Okay. It's already there. But I can tell you, I can see how I'm 80% of the way there to a commercial grade app in less than a week,

• 36:43Speaker 00

  but I may never get to 100. But man, if we just make these guardrails work a little bit better, if the QA works a little bit better and if it stops overwriting my goddamn database, I don't know why we would need like really mediocre dev shops or engineers potentially. We, we need more great engineers, but man, it could be crazy by the end of the year. It could be off the charts crazy. So Harry, if I were you, I might invest in one of these guys.

• 37:05Harry Stebbings?

  Jason, I'm going to put it to you very directly. Would you invest in lovable? At a $2 billion price.

• 37:10Speaker 00

  Yeah, I would. I would. I will tell you, I have a lot of nuanced learnings from the weekend over how permanent this revenue is. I have a lot of thoughts on it. But I'm more interested in the trend, like where I see it going. So I think I would, if I could invest in Replit or Lovable at $2 billion compared to Windsurf, it seems like a much better deal. I think it seems cheap.

• 37:28Speaker 02

  Question that. I want to ask why that is because let me just play something back and I could do it. In the board development tools marketplace, these, these companies occupy two different spots. And broadly speaking, the lovable and Replit are for the vibe coder for you, me, a non-coder trying to build something with some technical knowledge, but where you're doing it at the level of English and describing what you want. And then the cursors and Windsurfers are for professional developers who know what they're doing, who, who can use this tool to augment what they do, who will actually review the Python, review the code base and then deploy it. So they're different segments.

• 38:01Speaker 00

  I don't think that's entirely true, but I think there's.

• 38:04Speaker 02

  Because Replit originally was in the, I agree, it's not entirely true, but at a high level.

• 38:08Speaker 00

  I want to know what the question is. What I have certainly now I get it. Okay. I admit talking about it versus doing it are not the same thing. There is a huge number of developers that today already will get a product, a project, and there are downsides to this. Okay. Crappy code, spaghetti code. They'll get a project to a certain point and then they'll just roll it into Cursor or wherever they want and they will finish it for real. I can't tell you how many CTOs I talked to over the weekend. They say, I don't love the code. I get out of lovable or Replit. But this is what I do. I get it to 60 to 70% and then I roll it in. Okay. And so there's an overlap in these circles of these two. But the reason I think that the market is so big to Harry's point is because the mark, I think if Replit and lovable keep, keep making developers happy

• 38:51Speaker 00

  and they make dog walker apps, people happy, the TAM really is much bigger than Cursor. It's much bigger than Cursor or Windsurf. It could be like 50 or a hundred times bigger. That's why I'll do the deal with you, Harry. If there's any room left, just let me know.

• 39:05Speaker 02

  I'm going to push on that. And again, I don't have religion.

• 39:08Speaker 00

  If they're doing this round and there's any room, I might, I would put in a few nickels, even a small supporting check.

• 39:13Speaker 02

  By definition, there are more non-developers than developers. So yeah, at some level, it's tried to say the lovable.

• 39:19Speaker 00

  Never tapped into those dollars ever, right? Yeah, sorry. My apologies.

• 39:23Speaker 02

  A hundred percent of developers are going to buy a tool like Cursor, like Wiz, because that's how development is done now, like GitHub.

• 39:31Speaker 00

  Yeah, no question.

• 39:32Speaker 02

  And they have budget.

• 39:33Speaker 00

  And a hundred percent of designers will use Figma.

• 39:35Speaker 02

  A hundred percent of designers use Figma. And the real question is, how big and how sustaining is this movement of non-developer or... I do, but you made an interesting point about the developer who starts in Lovable and transitions to Cursor. That's actually a good point, and that does give a little durability to the market. But it's not clear to me that you will have 10x or 100x the number of people who will continuously pay a subscription.

• 39:59Speaker 00

  It's a fair criticism.

• 40:00Speaker 02

  And I could be wrong, to be clear.

• 40:02Speaker 00

  No, every developer right now that is remotely cutting edge has a Cursor subscription or similar, 100%. Even my son has one, okay? And every designer is going to have Creative Cloud and Figma, okay, 100%. You can't do your job without these tools, right?

• 40:15Speaker 02

  And I could posit, and to be clear, I could be wrong in the sense of, I think you actually cited a part of the market that I should have been... Obviously, it wasn't. It's that kind of technical person who's not a full-on developer. As you say, that Figma person, maybe they don't just want to do a markup, maybe they want to show a rough, this is what it's meant to look like. So that people who are kind of professionally developing but not full-time is a much better market than Rory's at home going to write his own to-do app, but he's going to use Lovable. No, he ain't. Not... Well, he tried to and failed.

• 40:43Speaker 00

  For me, I would never use something like Figma again if Repl or Lovable had it.

• 40:47Harry Stebbings?

  One of the falseest growing segments and use cases is actually alternative functions other than developing within B2B, which is sales and marketing teams using it to create incredible landing pages for new prospects.

• 40:58Speaker 02

  I totally agree with that. Basic web content, web pages. Now, the question that Jason is like, does Squarespace meet that need?

• 41:04Speaker 00

  It's just not interesting. It's not disrupt... Like, I'm with you, Harry, and you'd know the data better than me. And if that's half the 100 million Repl and Lovable each have, then that's a good learning for me. But I don't view that as disruptive. There's a lot of great marketing and sales tools already that can build landing pages, and that are already integrated with your data and workflow. So I'm not impressed with that. But that's just me. Like, if that's 100 million of revenue, it's cool.

• 41:26Speaker 02

  The question is, two questions go together. What is... Is the more generalizable use case like because if you're using one of the specialist tools to build landing pages, you're limited in what you can do by what they allow you to do. They've made the editorial choices. Obviously, the advantage of a development tool is you can decide for yourself. But as you discovered over the weekend, and I did to a much lesser degree, in return for that freedom of choice, it's fricking hard. And to your point, Jason, if they can make that hard tax lower quickly enough, then yeah, you have something interesting, but you're not going to do it. If it's still this hard a year from now to do it, you're probably not going to sign up to put through the brain death of building part of your website on this if there's an easier solution.

• 42:04Speaker 00

  Well, there's just in general, it's under discussed. And I'll give you an example from from yesterday from a scale portfolio CMO. But there's an orchestration tax in these tools. The orchestration tax is really high. I mean, Harry lost touch with me over the weekend because I was lost vibe coding and replit. Okay, what if I had four of these apps that I was orchestrating? And like Amelia on our team spends maybe 10 hours a week in our AI SDR. And it is great, but we can't do 10 of these, can we? Like, that's why most of our life, we need off the shelf solutions that don't need to be that don't have this orchestration overhead. And and literally just yesterday, we were talking with the CMO of a 300 million plus AR company and asking her what she was doing. She's like, well, I've been vibe coding. She's like, what do you vibe coding is like, I need to build better tools to support my sales team.

• 42:47Speaker 00

  She's like, I don't have one more minute like this is all the time I have. So this this orchestration, like, we think we can click these buttons and they're no work. But I'm budgeting $100 a day for replit forever. That's and money and time to get this app working. It's not much for a commercial app, is it? This is not click a button and walk away. This is all the time and I have to be thinking about it every day. We we can't have too many of these in our lives.

• 43:13Speaker 02

  I was gonna say, pleasingly enough, 100 bucks a day for five business days is 25 grand to 30 grand a year, which is about the low end of a typical SaaS mid-market app. I'd be thinking about it, Jason, all the deals you've done was like, yeah, 30 grand a year for the subscription. That that's actually about the same number, which does make you wonder. The other color, I just want to make back to the thing. It is it is just worth comparing the two discussions we had. We decided in the cursor windsurf case, actually. We didn't decide who the fuck are we. The CEO of the number two player in the independent dev tool space decided it was too late. He had to get an acquisition done because he couldn't build an independent company there. And 2.6 billion was a great price and he's done because that market was getting too competitive.

• 43:55Speaker 02

  And that's a clear established market. It's interesting to reflect on that conclusion and then look at the vibe code market where there's three or four companies all raising, you know, very high prices with incredible traction. Just like the developer tools guys had 12 months ago. It's hard to imagine the world where there's only one or two developer tools for professional users and six or eight vibe coding tools. That just doesn't feel one of those cases as well. And makes you pause and think, are there going to be?

• 44:20Harry Stebbings?

  Why did I write a $12 million check into lovable? I think very much in the same way that chat GPT owns the consumer brand for that front end OS for the modern consumer. I think lovable's reached escape velocity with the consumer brand in this space, and I think that compounds very, very quickly.

• 44:36Speaker 00

  I think it's a good thesis, right? I don't know. Loveable is bigger than Replit. So just there may be two that are the same size, right? But putting aside the bias as an investor, okay, they're both good ones. Okay, let's call them both good ones. Okay. What I guess my other quick learning, which is how important brand is as you get closer, because listen, a bunch of folks are like, Lemkin, why'd you use Replit? Like, they're like, well, I use V zero plus this plus that, and then I export to Claude code and then I re-import to cursor and then I host and I'm like, Okay, I'll tell you, there's two reasons I picked Replit. Okay. One, I wanted to go end to end. I wanted to go from ideation to commercial production one app. Okay. And so I might be wrong about Bolt, but to my knowledge, only Replit and lovable can really do it. And I'm going to get flamed. Okay. But I want to do everything.

• 45:16Speaker 00

  I don't want to leave it. I don't want to, I want to port some code over that's better in cursor. I wanted to go all, I wanted to stay locked in the constraints of one environment without a developer. And that was the, that was the social experiment. Okay. And then I just asked people and then I'm like, okay, now I'm stuck to the brands. There's no way I'm going to use something for all the time I'm going to put in that just launched on, um, on a product hunt. It ain't going to happen, right? And so there's only like two leaders, Replit and lovable. Okay. So I'm in the eight. So there are parts of my life where I'm in the 1%. There's parts of my life where I'm in the 20. Here I'm in the 80, dude. I'm not gonna take any risk. Tell me which is the best. And most people came to the conclusion, if you want more flexibility, use lovable. Okay, and we already use lovable at Saster. Don't get

• 45:58Speaker 00

  wrong. If you want the easiest way to go end to end, use Replit. And here's my point from my rambling story. That's how I made my decision. That's it. Did I try them side by side for this use case? No. Did I spend weeks doing it? And then they're like, well, why don't you switch this? I'm like, I'm already, I made a choice between two vendors and I'm done, man. So that's why the investment, Harry's investment is good. I think these these brands are gonna lock you in.

• 46:23Speaker 02

  What you're basically saying is this, if there's going to be a big ass winner in this space, the number one thing they need to have at this stage is consumer brand recognition, because it's not a considered purchase. It's a try. It's a find the product as quickly as possible. And therefore, the guys in motion today stand the best chances.

• 46:39Speaker 00

  It's considered. It's just how much, how well can a non-technical resource consider it? Like, that's the, it's not that it's not considered. It's just, I can't always spend so much time. How can I truly evaluate this in an hour or five minutes? I can't. I have to guess what it's gonna look like in a month.

• 46:56Harry Stebbings?

  When you ask ChatGPT, it says lovable.

• 46:59Speaker 02

  Now you're actually making a very good argument for this whole category of companies that are helping B two B companies show up in ChatGPT, you know, Jude.

• 47:09Harry Stebbings?

  We just did one in Germany, Peak. 200K when we did it, it's now at a million, like, three weeks back. But fucking nuts, the customer adoption that. One of the fastest polls that I've seen in terms of consumer demand or customer demand. Jason, I just want both of your perspectives on this before we move on to Grok, because it's important. Everyone goes, ah, but they're not durable revenues. They're unsustainable. How have your thoughts changed or stayed the same? And what do you think about the durability and strength of these revenues?

• 47:38Speaker 00

  I think they're gonna get more durable, is my learning. But I didn't know before this weekend. Okay. If I can actually get my app into production, commercial grade app, unless I have huge issues, I will pay and subscribe forever. Okay. If I get it over the line, if I get it over the line. Okay. Whether I pay 200 bucks a month to Replit or lovable, or I pay 3,000, it doesn't matter. Like, I'm locked. Locked in forever and I'm going to keep iterating and iterating and expand like if it works I get it if I hired a team of six developers you can export the code it's in Git and GitHub already it's in they can they can do what they want but I'm pretty locked in as like a prosumer non-developer shop right I'm locked I'm locked in now what's clear folks that that like think

• 48:19Speaker 00

  they're gonna vibe code their own notion an hour they churn so I bet if we took replit and lovable and we and we and I wish more founders would do this it drives me nuts when none of them do it segment your churn I don't just want your headline number I don't care today I'm investing I want to see you segmented if you have one cohort that has insane retention and like this low end part is churning 4% a month I get it it's okay I get there should be segments of replit and lovable that are churning like 10 or 20% a month like like a low end consumer app like on revenue cat or Harry and I investors they power 40% of mobile subscription apps I think the average app across all mobile paid apps is like 6% a month churn 6% okay this is consumer they try it they it doesn't work they don't they don't lose the weight they don't stop drinking they

• 49:02Speaker 00

  churn okay and so that's gonna happen for replit and lovable but what I didn't get is if this works my stickiness is gonna be super high and my NRR I don't know how you calculate it but I've already gone from 20 bucks a month to $800 a month in one month if I stay it's pretty good NRR right the VCs will like it that's why I like your investment and I like both his investments because I think the metrics will it will get better over the next 12 months not worse I think they will improve

• 49:28Speaker 02

  Agreed there's two different things to what Jason threw out first of all in the in the enterprise space churn's gonna get better because out of the gate people are trying stuff and by definition they're going to churn I remember back in 99 2001 2002 Salesforce had a churn issue early on the early adopters the people who are quick to try you are quick to leave you and the people who make a long considered purchase stay with you a long time and they happens in that order out of the gate you get the triers a lot of the triers move on provided enough of them stick you build your business and then over time as you become a more established product you go up market and you get the boring people who are slower to commit to you but once they commit are there for 10 years so it's just the natural progression

• 50:09Speaker 02

  So at one level, this isn't surprising. I will say what is surprising is the the amount of upfront churn you see is probably higher than early SaaS. In other words, because it's the Jason phenomenon of it feels like it's gonna work. And you get eighty percent of the way there and then you have this disappointment. So I do believe, in my view, one of the key tells in the next twenty four months on all these enterprise AI companies is going to be the percentage of people that stick after they've gone through the innovation cycle, after they've gone through that we got to try AI. And then they'll ask themselves the hard question, is it delivering value? Do we get an ROI from it? So I think once we're through that kind of knot hole, I think about by twenty five, twenty six, twenty six, twenty seven, sorry.

• 50:54Speaker 02

  The math of predicting the growth will be much easier. Right now, there are companies that have extraordinarily high growth rate, but where the churn is just too high and it's just not delivering value. And we've all got, you know, you see them in your portfolio, you see them outside. It was always going to be high no matter what. There was no world in which it was going to be like twenty, the twentieth year of SaaS. Because everyone is clearly trying shit here. But I think a lot of my focus with my companies is on, I said to one, your entire, let me tell you. The asset value, ironically, very different than when stuff, the asset value of this company is the twenty or thirty customers that you have now and your ability to make them successful. If you can make two thirds of them successful, even if you have thirty percent churn and you can add more customers like them, you have a business.

• 51:38Speaker 02

  And if you can only make twenty percent of them successful and the other's churn, you're dead. When I'm checking in my companies, are your customers making money off your software? Are they happy with yourself? Is it doing what they want is the number one thing? This is where the money is going to be made or lost in the next two years because we all like to try shit.

• 51:56Speaker 00

  I wish I had all the non Sony baloney numbers in a spreadsheet, all of it. I would bet that, you know, Cursor's retention has always been higher than Lovables or Replits for the point you made. It's a different type of experimentation for a developer to commit. It's funny, when I started sharing my bills on Replit on on X, it was funny the feedback I got. Some folks are like, Jason, you do you realize what you could get for five hundred? bucks a month is insane value, right? There's that category of people. Other folks are like, do you know what I spent on my outsourced development team in my country? Like this is, this is, this is the biggest ripoff I've ever seen, right? And other folks were like, for 500 bucks, you're getting less than you get for a hundred bucks from Claude, right? So there's very different ways to view this.

• 52:36Speaker 00

  But if you're deep in cursor, like you're going to stick with your, your development environment, right? So the churn should be higher, right? At least for some segments, it should be much higher.

• 52:44Harry Stebbings?

  And the churn is higher. I've obviously seen the numbers is better than I thought, but it, it does land more to consumer than it does traditional B to B and it is high.

• 52:54Speaker 00

  So you got to, but you got to segment it to know, as an investor, I need to segment it to have an opinion. I'm not initially shocked by high churn, as long as you have a large enough cohort that is growing, that has positive, that is net negative churn, that has positive revenue retention. That I'm, I'm cool with the, with the low end guys, right?

• 53:10Speaker 02

  And yeah, your churn from a group of customers, even absent the, from 10,000 signup customers should be dramatically different than your churn from five considered purchase enterprise buyers. So yeah, churn, even independent of this AI trend, you're exactly right. Norms on churn vary enterprise versus SMB versus prosumer versus consumer. You're exactly right.

• 53:31Speaker 00

  And then I got, I had an investment where a COO came in who, who was out of the blue. He was, you know, he was under the gun, make, improving the company and he was told to increase, uh, to cut churn. So what do you think he did immediately? How do you think he did it in 30 days? He reduced churn.

• 53:44Speaker 02

  He stopped taking on the customers.

• 53:46Speaker 00

  Yeah. He stopped taking all the small customers. He banned them. Now revenue stopped growing, but he hit his KP. Hooray. Kudos. He, he, he, he stopped. He cut churn in half in 30 days.

• 53:58Speaker 02

  No, it sounds like stupid, but I can totally see it happening. Cause you know, you get this, oh, I don't like this. The real question is you gotta be able to look at that set of customers and say, yes, there's a churn, but the month two churn is much lower. And here's a quarter and the overall, if the overall math works, it's fine. But yes, you have to have a mental model and a mental model has to vary by the kind of deal you're doing. So yeah.

• 54:19Harry Stebbings?

  I think the hard thing is just in terms of you say mental models. I have never in my investing career, seen a company go from zero to a hundred million in seven months personally, but it breaks. The mental models, which is why, which is also why I did the deal. Because if it does break all the mental models and the market expansion is as big as it could be. Fuck it. We're in this business for companies like this. If you're not doing this and you have the chance and it's one of 20, you shouldn't be doing this business.

• 54:45Speaker 00

  As weird as it sounds, some of these deals almost seem too cheap. If you look at the crappy multiples we see for some startups, right? Undifferentiated company raising at 300 pre with less than a million in revenue. Folks doing 100x, 200, 300 ARR deals. And then you see, what is Windsurf selling for? 20x revenue? Lovables raising at 20, Cursor raising at 20, 20, 20. Let's bid 25, Rory. Let's outbid them. Let's do.

• 55:12Harry Stebbings?

  Jason, when I did the last round of Lovable, it was 200 million price and I did it at 4 million in revenue. By the time the deal was closed, it was at 19 million in revenue. So.

• 55:22Speaker 00

  My point is the error multiples compared to public comps, yeah, they're high. But compared to a lot of like seed and A startups, they seem like bargains. Do you disagree, Rory?

• 55:31Speaker 02

  No, I don't actually, because what you're saying is, put it another way. It's very, again, we said this before, whenever you're using revenue multiples that don't take into account growth rates, you're being an idiot. And the other thing is, and to your point, Harry, exponential growth rates are even harder to get your head around. You know, when you start, when things grow that quickly, if they continue growing, almost any price makes sense. Totally get the argument, but then it is worth pointing out, then going back to our first discussion. When they slowed, when you've paid that high price on the assumption of continued growth and they slow down, it's just brutal and you gotta get out.

• 56:06Speaker 00

  No, you just move them to a different page on the website. You just have Lovable move it over. Dear Lovable, move this investment to other investment tab.

• 56:14Harry Stebbings?

  Yeah, other.

• 56:15Speaker 00

  Put grayed out image of partner that no longer exists at the fund at a tribute investment to him. Thank you, Lovable.

• 56:22Speaker 02

  I would remind you at SoloGP, Jason, we don't get to do that to you until you're dead.

• 56:26Speaker 00

  Okay, you just make up someone that used to work there.

• 56:29Harry Stebbings?

  Okay, boys, we're gonna do Grok. This was insane. The benchmark performance was incredible to see. Grok destroys competition on humanities last exam. Grok four heavy forty four point four percent, Grok four thirty eight point six percent. The next closest competitor for reference to people was twenty six point nine percent. What did you make of this insane outcome level from Grok in such a short two year window?

• 56:54Speaker 02

  I think it's very sobering for everyone else. I thought, first of all, I think it's a really, it's a significant and important point, right? Because, you know, we've talked in the past how if you look at people's willingness to value raw startups at very high valuations, it's all about the idea that they're one of the few people who was part of the OpenAI, Anthropic. We know we can deliver a trained model quarterly of people. And it's been very much a small group of people, which is why they've all been paid a hundred million bucks, right? Grok in two years from a standing start has gone to shipping a broad, I'm going to come back to the benchmarks in a second, but a broadly comparable chat GPT type model with a slightly different vibe. They did it. It's a huge, huge achievement.

• 57:38Speaker 02

  And the fact that it's done makes you wonder about how you think about the valuations of some of these other companies. And maybe it's not as, maybe the knowledge has disseminated out just a little further. So I went in and did some work, a couple of things. One is you check out the team at Grok, right? You just ask who are the engineers and it's exactly what you expect because yeah, Elon's been around. He was founder of OpenAI, let's not remember. So it was early DeepMind people, it was some early people for some of the other key places. So it was not the headline people who ought the attention paper, but you know, one or two levels down, really competent people. And what the aha for me is this, with committed clear leadership, which for all his faults, he own provides, and a couple of billion dollars worth of GPU, which see per comment. The next level down people know how to do this too.

• 58:23Speaker 02

  The knowledge is disseminating and it will continue to disseminate from here. So that was my first big aha. They have shipped, they're the first folks that I didn't think of as part of the initial golden circle, who have shipped a broadly comparable thing that feels when you interact with it like, I get this is chat GPT if it was vibed up, a huge deal, a huge credit. And then the second thing I just got to say it, Harry, I'm sorry about this, but I just got to say it. I was experimenting on Grok and using it, right? Get it to say all the mean things and they've clearly stopped it. But the whole tone of it is very out there, in your face, rah rah, urgent. I mean, I was just doing my work on it for preparation for the podcast. And I was trying to think, where have I heard that before? He sounds just like you. Grok sounds just like Harry. He's like, hey, legend, let's get going here.

• 59:08Speaker 02

  It's literally like talking to Harry. It's what Jason, you should try it. Trust me. Yeah, type it, put, upload the contents and say, talk to me about this in preparation for my podcast. And it comes on and it's kind of, that's just so fricking amazing. These guys did this. It's so unfiltered. It's so not like boring old chat GPT or goody two shoes on topic. It's just like Harry. We should call the damn thing Harry. It's great.

• 59:33Harry Stebbings?

  Listen, me and Elon partnered together. We'd been friends for many years.

• 59:36Speaker 02

  You've been in reinforcement learning, maybe they've.

• 59:38Harry Stebbings?

  He was in the first fifty by a top twenty VC interviews.

• 59:42Speaker 02

  And it's great. Huge credit. And the other couple I make, I can't comment to the benchmarks because you know, I can, I can comment on this feels comparable to the other two or three, you know, model providers. On the advanced benchmarking, I mean, I've read some of the stuff that they've published and then other people, there's a lot of gamesmanship, but I don't think that matters. What does matter is they've shipped, if they could deliver the business side of it, which is a big TBD, they could deliver a chat GPT like experience that would feel pretty much comparable out of the gate right now. So at that level, they won.

• 1:00:13Speaker 00

  I think they could win. I was wrong. When, when Grok launched, I thought it was a spite app. I thought it was a spite app and, and very little more. I thought, listen, he founded, co-founded OpenAI. Clearly he understands AI from Tesla at a fundamental level that other folks don't. And clearly the dude can recruit. He recruited Ilya to, to OpenAI. The guy can recruit. He knows talent. But I thought it was a spite app, right? I thought, I thought all of X was a spite app. I thought he bought it out of spite. I thought payments were spied out of PayPal and I thought Grok was just, just to dig that knife right into Sam Altman. But if you step back for a minute, he's shown that if you know what you're doing and you buy the GPUs and you assemble an S tier team, whatever this data exactly means, whether it's pulled ahead or not, you can fucking catch up.

• 1:00:53Speaker 00

  Only, but, and he has access to not unlimited capital, but at the edge of unlimited capital. He doesn't. Not have the Microsoft headache. He does not have the baggage that Anthropic has and he has an infinite horizon and the energy that we have never seen outside of Iron Man. So I honestly went in the last release, I went from spite app to this is such a fluid space. You could see him pulling ahead of everybody in 12 months. It's very, it's very plausible. He has none of the baggage of everybody else and he can get away with crap like blowing up rockets or racist things, roll it back and it's okay. And the other guys can't get away with it.

• 1:01:30Harry Stebbings?

  Well, that brings into question then, which the next point, which is like, there's reportedly a raise going now at $200 billion valuation, the third funding round in two to three months. If that were the case, the combination of Grok and X as a social network at 200 billion comparative to OpenAI would actually be a very fair and good deal to do.

• 1:01:51Speaker 02

  I wouldn't. To be clear, I gave a hundred percent credit for the technical achievement. There was a technical bar to be cleared and he's cleared it brilliantly. I did not agree with what Jason said. It's not clear to me from that, that it gives you anything commercially. In other words, I don't know if they can build as the third or fourth. Well, now, I mean, and this is why we may be looking at the over investment stage of this game in the sense that you have OpenAI, you have Anthropic, you have Google. I think that's fair. Let's say you have Meta. At best, I mean, even in Noam Heston, even in China, you're fifth or you're the fifth or sixth model provider, right? That's not a, that sounds like the airline business, high fixed costs, six customers. Will they be, just because they completed the astonishingly hard technical task, far better than anyone else did, doesn't mean they get to build a business here.

• 1:02:38Speaker 02

  You can't will things into being at the business level. I mean, I think.

• 1:02:43Speaker 00

  Are you sure?

• 1:02:43Speaker 02

  We'll see.

• 1:02:44Speaker 00

  I think the best founders do will things into existence. I, that'd be my one challenge. All the best founders I know will it into existence, right?

• 1:02:51Speaker 02

  Philosophically, I think you can will things into being if the, if I think you can will yourself to be the winner if something is doable. If there's not room in the market for the sixth player, no amount of willing it can make it happen. So the question is, what's the case for a whole bunch of people who have, as you remember what you said about early winners? I signed up for ChatGPT. I've signed up for my chat GPT subscription. I've signed for a couple of others. Am I going to go and sign up for the Grok subscription too? I mean, it's funny and I like the interaction, but is it going to become my go to destination? Right? I don't know.

• 1:03:21Harry Stebbings?

  If it has your X data integrated and it's the only platform to have all tweets integrated, for me, that would be enough, especially when I.

• 1:03:29Speaker 02

  And let's just talk about that. And for the 10% of the world that likes Twitter and then actually cares about these things, that would be great. But the truth is, Twitter has always been a minority sport and I've enjoyed it because I like the minority game, but you know, yeah, 20x the number of people want to like share shit on Facebook as want to talk politics on Twitter. Congratulations. You you you have your niche market to the extent you have an alienated, but it's not just a mass market. And there's evidence that Twitter is doing better. I don't think there's evidence that it is. I don't think it can ever be anything other than what it is, which is the place you go for news, for politics, for arguments. And the dirty little secret, most people want to look at pictures and, you know, just share shit on Facebook. So I don't think it'll be huge. I think they get that business. I think they integrate Grok and Twitter. I think it's great. I like it. I'm enjoying it.

• 1:04:14Speaker 02

  There's a lot they can do, but I just can't conceive the steady drumbeat of taking over tens and hundreds of millions of consumers who've emotionally committed to Google, who've committed to chat GPT and saying, I'm going to go with Grok. So I think they'll achieve a very hard technical problem with very low rewards. So that's why I would pass a 200 million pre.

• 1:04:33Speaker 00

  Billion.

• 1:04:33Speaker 02

  Didn't mean to go on like that. Sorry. It's the coffee.

• 1:04:36Speaker 00

  I would have agreed with you 30 days ago, but um, this dude's committed. If this was a dalliance, if this was a side project, if this was a spite app, like as it looked at first. But I think he has a can bring a level of vision and commitment that his competitors can't. Sam Altman is, listen, he's a gen, is he the Steve Jobs of our era? Is he better? Do discussion. But is he even really like a founder with no equity, been fired once? Uh, all his co-founders are gone. It's just an unstable. My point is with OpenAI, it's it's wildly successful, but it is unstable. I don't think Sam Altman can do anything he wants without talking to his nonprofit board or convincing people. Elon can just fire up one of his jets or his rockets, fly wherever, raise a few more billion.

• 1:05:19Speaker 00

  Fund it with SpaceX if he has to, like he's done before. And he, he can just be a frigging force of nature in a way like no one else can. No one, who in our industry can be a force of nature the way he can? Nobody. No one has the resources, the richest man in the world even now, who can do this?

• 1:05:33Speaker 02

  Jason comment agreed on every sentence of that, including, I want to say that I've enjoyed the fact that we for the last three minutes have deemed Elon the stable one. I think that alone is worthy of knowledge. I'm just gonna say this, there's no amount, I don't, I don't fully subscribe to the great man theory of companies. No amount of great man theory can make 400 million people, 500 million people decide they want to go on X if they've already kind of mentally locked into chat GPT. I don't think you can reopen that discussion. Yeah, when you look, when you interact with the body, like, yeah, that's better in some respects, but I just think, you know, it's one of those hard things to say. The market's already been taken. Maybe it gets some share of it, but I don't think it displaced chat GPT at scale in the minds of the consumer, which is 80, 90% of chat GPT business. You can get a minority share of it, but I don't think it'll be huge.

• 1:06:18Harry Stebbings?

  It's really interesting you say that, Rory, because when you actually look at the hard facts today, I don't think Sam Altman's life has ever been harder. He's losing talent hand over fist right now. It's an incredibly challenging competitive landscape with the commoditization of models around him. And I mean, there's 10 other things, but unwavering train of consumer demand continues stronger than ever.

• 1:06:40Speaker 00

  Yeah, that's the thing about consumer, right? If you, if you hit it, right? You, this is the classic VCism. You can screw up almost everything as long as you nail the product market fit in consumer, right? For a while at least.

• 1:06:49Harry Stebbings?

  That would be my pushback to you, Rory, which is you said no man can change 500 million people. Does that not go to the power of brand? Elon Musk is probably the most famous man on the planet at this stage.

• 1:07:00Speaker 00

  Two by two, famous and rich, pretty much at the top of both, right?

• 1:07:05Speaker 02

  My guess is I know someone who thinks he's more famous, but.

• 1:07:08Harry Stebbings?

  Listen, I love, I love Jamar too.

• 1:07:10Speaker 02

  I love that you said that.

• 1:07:13Speaker 02

  That was cute.

• 1:07:14Harry Stebbings?

  No, uh, thank you. The one thing I will say is I had Edwin from Serge on the show and he said, just a couple of things about this. He said, one, too many model providers are building for benchmarks and that doesn't actually mean that much. Number one, he said, number two, Grok was incredible. At a very small number of things and actually it was an embodiment of the verticalization of models and he thought we'd see more in terms of verticalized models and he just said three, he hadn't seen a team work quite as hard and efficient as Elon's Grok's team and he'd seen that firsthand with them being a customer. That's just his points. I thought was interesting.

• 1:07:47Speaker 00

  I think all those things were true. The reason I'm like in the Elon camp here, the Grok camp, is I guarantee you this man has a 10-year plan, just like he did for Tesla and SpaceX and he is executing on it and this guy is not the smartest person in the world, but he is in the friggin elite, like if you add like cross-functional smarts, like to understand everything, there may be no one smarter than him that actually works. There may be folks smarter than him that just play chess and invest money, but there's no one that is, that can do everything and think like this guy can, right? Well, this is 11D chess. This is not 4D chess, like where we started this conversation. So if this man has a 10-year plan and he gets everything we've said, he knows the, he knows the power of the chat GBD plan. He knows Sam Altman personally. He knows Anthropic. He recruited half of the original engineers in here, okay?

• 1:08:31Speaker 00

  His 10-year plan's pretty good. I just can't see all of it, but I see little hints. When he says my entire team now just sticks their code in Grok rather than use cursor anymore, that sounds like a snippy Elon comment, but maybe, maybe we're seeing a little of the 10-year plan there, right? It's just, I wish he published it like he did for Tesla because that was one of the greatest founder memos of all time, the first 10-year plan, right? It was just, if you, if folks haven't read it, go Google, it's like 2004 or something? He told you 10 years of Tesla and it all happened. I mean, a few of it happened differently, but this guy's got a 10-year plan and he's got, he can commit hundreds of billions to it. Who else can do that?

• 1:09:07Speaker 02

  The good news, Jason, is that that is clearly going to be available to you. I look forward to the episode where you talk about your commitment to the recent.

• 1:09:14Speaker 00

  At least a token. At least I'm gonna go on Robinhood and grab a token for this, for this bad boy.

• 1:09:18Harry Stebbings?

  Oh, oh, he's gone there.

• 1:09:20Speaker 00

  I don't need the underlying security. I'm just gonna buy the token. Why would I do it? Vlad, get me some OpenAI at 200 billion.

• 1:09:27Harry Stebbings?

  We have, we have Vlad on the show and he said that imperative to tokenization success is the ability for companies to be tokenized without that permission.

• 1:09:35Speaker 00

  That's my point. I should be able to buy on Robinhood OpenAI today.

• 1:09:39Harry Stebbings?

  Jesus Vlad is good. He is good, by the way, guys. Like, yeah, it was a good episode. Good. Can I ask you, we've got Meta invest three and a half billion in Ray-Bans. Sixty-six percent of HR managers use AI to make layoff decisions. Cyberstarts, I think the best fund in the business, raises $300 million secondary fund. We can choose one of them. Which one do you want to choose?

• 1:10:01Speaker 00

  I suggested this one, so I'm going to pick it, even though it seems obtuse. I think it's interesting. Meta putting three and a half billion into Ray-Bans. The reason I think it's interesting is it just shows us the scale today. And that we started this talking about three billion, two and a half billion into Windsurf and Google. And like, it's, this is nickels and dimes. These are experiment. And, and we think it's a lot of money and it is a lot of money. But if Meta can throw three and a half billion into Ray-Ban for half a percent or some, I don't know, 1% or something like that.

• 1:10:26Harry Stebbings?

  Yeah, yeah.

• 1:10:27Speaker 00

  Yeah, but a, but a token amount of ownership, right? Single digits. Then the numbers here are, they're tough for us to even understand what is material or immaterial in the age of AI, right? The bets are so big, the numbers are so large, that this makes Windsurf look like, uh, like, like our, like, just one line on our afternoon Strictly VC. It doesn't even make it look material. Three, three and a half billion may not mean anything in the next 24 months in AI. Like, it may, it may not make the above the fold news in, in AI. That's my takeaway. Like, people weren't talking about, it's nothing.

• 1:10:57Harry Stebbings?

  I didn't see it until you sent it.

• 1:10:59Speaker 00

  Well, I have like 11 pairs of these AI Ray-Bans, so I do follow it a little bit, right? Yeah, I'm going to try to vibe code with them later today if I can.

• 1:11:06Harry Stebbings?

  I tweeted something, Craig, that's gone viral though, which is, you know, the, the information have started, the information TV, which competes with TBPM. And they had Mark Zuckerberg on for the first episode and it got like 30 likes in nine hours. And I just tweeted, this shows you how hard media is. Mark Zuckerberg on your show gets 30 likes in nine hours. Five years ago, that would have been a viral show that trended on Twitter, literally.

• 1:11:32Speaker 00

  Yeah, it's.

• 1:11:33Harry Stebbings?

  No one cares.

• 1:11:34Speaker 00

  Well, I mean, it's not an important company. It's not one of those to go into the, tying it back to the information and it's unpaid intern. It's this is, I mean, it had its moment, Harry, but it's not one of the important companies today. It's not, it's not a meaningful company.

• 1:11:48Harry Stebbings?

  We're going off. Okay, we're gonna do a quick fire. I've got some good ones, okay? So we are gonna start with who, by the way, I love the way that our last Kashi quickfire round was beaten by the market. Linda Yaccarino, we were like, yeah, so Kashi quickfire round, who will be the next CEO of X? Elon Musk, nineteen percent, Shri Ram Krishnan, sixteen percent, or other?

• 1:12:16Speaker 00

  I think this is a trick one. I'm gonna vote other because I don't think there will be a CEO of X again because X is reorged, right? X is an AI company now, of which this X consumer app is a piece of it, right? And so I don't think Elon's gonna hire another, another media, I mean, there'll be someone that has to run this business, a president or a GM, but he's gonna run this. I think I'm voting for, I guess it's Elon, because the parent company, he's gotta run it. It's Tesla level. I don't think he wants to run Tesla, and I don't think he wants to run this, but I think he has no choice. It's too complicated now. This is not just doing the ops for Twitter, firing half the team and getting the tweets to load faster and selling some ads. It's just, this is much bigger now.

• 1:12:57Speaker 02

  I agree in the sense, yes, it's an other person who's really Elon, but won't take the title because it will just irk the people at Tesla too much in current dynamics. But yes, he will be in charge. But yeah, I mean, you guys have to say that, because you just spent 10 minutes telling me how Grok's gonna take over the world. And the truth is, if this thing is gonna take over the world, he's gonna wanna be running it. So you guys can believe that.

• 1:13:20Harry Stebbings?

  Will another S and P 500 company buy Bitcoin this, it doesn't finish, this year? Yes, $150 returned on 100. No, returns you $217 on 100.

• 1:13:32Speaker 02

  That's the most significant, well, I mean, it's an easy bet. But yeah, the most significant fact is it's more likely, the market thinks it's more likely than not. You know, it's almost certainly gonna happen. Yeah, there's gonna be a couple of other tech companies at least to do this. So it's, I would agree. You vote yes and take the 50% step up, even though it's not a great payoff, because it's gonna happen.

• 1:13:50Speaker 00

  I think 100% of S and P companies are gonna buy Bitcoin over the next 48 months, 100%. I think it's gonna become part of the standard treasury function. In the CFO's office that has cash is going to be part of cash management and they're just going to allocate it. So this year it's got to be, I think, I think it has just become, listen, I'm not a crypto dude, right? And I still have some skepticism, but it is too mainstream, right? It is too mainstream and it's going to become part of the Treasury Department. And people will dial it up or down to try to get a little more juice or to have different strategies. I don't know how many people are going to be like the micro strategy one, right? I don't think they're going to turn into holding companies with their cash. But I think, so, so I think that's my subtlety of the question. I think it's going to become mainstream Treasury Department asset, short-term securities, cash.

• 1:14:35Speaker 00

  We're not doing gold at our public company. That's a little complicated, but we're going to have some Bitcoin. It's very, it's liquid and it has some benefits in the market. So we may have 10% of our holdings in, in it. And the volatility will be annoying as a public company, right? Cause it will, it will go up and down a little bit, but I think it will, I think everyone will have some exposure.

• 1:14:52Harry Stebbings?

  If that is true, that is a lot of upside from here.

• 1:14:55Speaker 00

  Like I'm not a Bitcoin fan, but I don't see any, any, anything but more demand in the foreseeable future. It's hard to see a decline in demand.

• 1:15:02Harry Stebbings?

  Well, the best investment I made was I stopped drinking four years ago and I put $2,000 per week into Bitcoin instead of booze.

• 1:15:10Speaker 00

  Yeah.

• 1:15:10Harry Stebbings?

  And that's done well.

• 1:15:12Speaker 00

  Yeah, it's the way to do it.

• 1:15:13Harry Stebbings?

  Final one, boys. Will Meta release Lama 5 before January? Yes, $307 returned on 100. No, 131 on 100.

• 1:15:25Speaker 02

  Knows the right bet because if Lama is defined as an open source product, didn't we just say that they're kind of slowly backing off that? So will they release it some closer version? Probably, I don't know.

• 1:15:37Harry Stebbings?

  Do you think there will be another open source Lama model, Rory?

• 1:15:40Speaker 02

  Usually when people come in and you spend $20 billion because the old thing isn't working. Tend to be humans tend to say, well, whatever I do, I'm going to do different than the old thing. So probably most of the things that were being done won't be done. So if it was open, it's closed. So I think that when you have a regime of violent change at the expense of $20 billion, it's unlikely you just continue on with the same plan as the old guys.

• 1:16:02Speaker 00

  Listen, I think Rory's got the, I think, I think whatever the answer is, it's different than 30 days ago, right? With Alex Wang. And that Friedman and team, it is completely blown up. This is not a 180 day planning cycle. They've already worked nonstop to reboot this whole thing. And if they think they should shoot Lama five, they've already shot it. They've debated it. If they want to release it because a different team is doing it and they're, but they're going to reboot it just to, just to get it out. That that's possible, but this doesn't seem like a team that's doing something performative. Right? So it's hard to imagine what was in place before them stays on the same schedule. And it's hard to imagine they can work faster with something already in the pipe. But that is possible sometimes. Sometimes a great team can pull stuff forward. Right?

• 1:16:46Speaker 00

  It really, it really can't happen. So all I know is it's radically different. So I'd be making up my bet, making this bet up, but I'll say yes, anyway, because they want to get something out.

• 1:16:55Speaker 02

  Up until the last sentence you had me, I'm actually, you actually convinced me your talk track convinced me even firmer to be a no. Which is odd, therefore, that you ended up with a yes. Cause you exactly, if you brought in these new wildly talented people and you're here to make a difference. And you know that the first move you make is going to be scrutinized by everyone who wants to second guess that $14 billion check. The last thing you do is ship some lame ass version of the prior guy's work. The first thing you ship is going to be yours and it's got to be awesome. So I'm, I'm increasingly convinced, no.

• 1:17:26Speaker 00

  Yeah, well, you get a chance to kill it. If you don't love it, you should kill it.

• 1:17:29Speaker 02

  You should kill it.

• 1:17:30Speaker 00

  If they don't love Lama five, which they didn't build, your first week, you should kill it. It'd be idiotic to release it and be responsible for something you didn't build and believe in. Right? It would be idiotic.

• 1:17:41Harry Stebbings?

  Boys, it's been a busy day for Jason. He's invested in Grok and lovable today.

• 1:17:45Speaker 00

  It's been a good day.

• 1:17:46Harry Stebbings?

  Jason's done his deals for the year. This has been great, guys. I love my time with you. Thank you for joining me.

• 1:17:52Speaker 00

  Rock and roll.

• 1:17:54Harry Stebbings?

  Now I want to make those shows the best shows they can be. So please let me know what we can do to make them better, improve them. If you want us to have a guest on the show, I'd love to hear your thoughts. Email me harry at 20 vc.com and you can find the show on YouTube by searching for 20 vc. But before we leave you today, let's talk about agents, specifically Piper, the AI SDR agent brought to you by qualified.

• 1:18:19Harry Stebbings?

  Gentic Marketing Era has arrived and if you're a B2B marketing leader looking to scale a pipeline generation, Piper, the AI SDR agent, wow, it is here to help. Piper is the number one AI SDR agent on the market, according to G2. And hundreds of companies like Box, Asana and Brex have hired Piper to autonomously grow inbound pipeline. Fucking sign me up. Anyway, qualified customers see massive business impact with Piper. 3x increase in meetings booked and 2x increase in pipeline. Wow, that is some results. Hire Piper, the number one AI SDR agent, and grow your pipeline today. Learn more at qualified.com/20vc.

• 1:18:59Harry Stebbings?

  That's qualified.com/20vc with the 20vc spelt out in letters for goodness sake. And while Piper builds your pipeline, Atio gives you the CRM power to close and grow those relationships. Atio is the next generation of CRM, built for the AI era. Fast, flexible and powerful. No, it's not a sports car, it's a CRM system, baby. It is Atio and it takes less than a minute. Sync your email, your calendar and you'll instantly get all your relationships enriched in real time with incredible data. No manual input needed. Atio also integrates with your existing tools and syncs with your product data to deliver an AI-native platform that's tailored to how your team actually works.

• 1:19:41Harry Stebbings?

  You can model your CRM around your business, automate complex tasks and surface real-time insights, all in a platform designed to scale with you. With Atio, AI isn't just a feature, no, no, it is the foundation. It's powerful, it's AI automations, it's research agents that transform your go-to-market motion. It's a data-driven engine, from intelligent pipeline tracking to smarter product-led growth. Fast-growing startups like Flatfile, Replicate and Modal are all experiencing what's next. So get ready to build without limits and start now. Atio.com/20vc and get 15% off your first year. That's Atio, A-T-T-I-O dot com slash 20vc.

• 1:20:22Harry Stebbings?

  Okay, pipeline sorted, woo-hoo. Now what about your own legal team? Enter Logora. Is the category defining AI platform that's fundamentally reshaping how legal work gets done about fricking time. Empowering lawyers across tier one law firms and in-house teams to achieve more with greater precision and confidence. So Legora does this by solving really concrete tasks such as document extraction, reviews against a firm playbook, and suggesting well-crafted markups directly in Microsoft Word based on your preferences. My word, that is a topic list of conversation that will not get a second date. But anyway, the adoption of legal AI is surging across the world and Legora is at the forefront of this shift

• 1:21:03Harry Stebbings?

  as the chosen partner to 250 industry leaders in law across more than 20 markets. The likes of Goodwin, Bird and Bird and Deloitte are making daily use of Legora platform to review and research with precision, draft smarter and collaborate seamlessly. They recently also got an $80 million Series B from Iconic, they're backed by General Catalyst, Redpoint, Benchmark and YC also. They operate out of New York, London, Stockholm. Yes, they're Swedes, always a wonderful race. With over 100 employees from some of the world's leading global law firms and tech companies, the team is growing super rapidly. They're just fricking awesome. Just go use Legora, honestly. I love Max, their founder. He's just a great dude. Go find out more, legora.com.

• 1:21:45Harry Stebbings?

  As always, I so appreciate all your support and stay tuned. We have an incredible show tomorrow. We have Scott Wu, founder of Cognition, the buyers of windsurf on the show for a very special show tomorrow.