20VC: Trillion or Bust: The New VC Game | Coreweave Sell-Off Creates Panic | Town at $1B, Anduril at $90B: Revenue Multiples Out of Control | General Atlantic Eyes IPO & Modal Raises $750M at $15.75B

AGENDA: 04:20 Billion-Dollar Bets or Nothing: Why VCs Are Rejecting Fast-Growing Startups 13:20 CoreWeave Sell-Off Sparks Fears of Cracks in AI Boom 18:50 Anthropic's IPO Valuation Could Fall From $2 TRN to $1.5 TRN 32:10 Modal Raises $750M at a $15.75B Valuation as Inference Booms 35:50 Town at $1B, Anduril at $90B: Have Startup Valuations Lost Touch? 42:15 Berkshire Hathaway Doubles Down on Bending Spoons 45:05 37signals' Profit Machine Challenges the Venture Capital Model 49:20 General Atlantic Eyes an IPO; Harvard's Endowment Hits $68B 54:15 Elon's Flying Roadster and $10B SpaceX Share Giveaway

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

• 0:00Speaker 00

  But you've got to have billion dollar positions in everything in in big boy venture today, I think. It's billion dollar positions or nothing. There's no point in investing otherwise with large funds. The entry price, 50 million, 100 million seeds, you can't make money.

• 0:13Speaker 01

  If the end user demand is there, then everything is going to work out.

• 0:17Speaker 00

  Core weave is B tier compared to Nvidia and friends. Oracle is B tier.

• 0:21Speaker 01

  Compared to Nvidia, we're all fucking B tier assets. How about that?

• 0:24Speaker 00

  I actually think code review is the single most important category today in software.

• 0:28Speaker 01

  Coding is the model load of LLM value.

• 0:31Speaker 00

  We are just taking revenue multiples too far today. Bending spoons is like the Berkshire version of software.

• 0:37Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. It's my favorite show of the week. Rory O'Driscoll, Jason Lemkin, the biggest news in tech. So what are we talking about today? Well, are the AI cracks starting to show? Core weave is hit pretty hard. Next up, we have Anthropic. The talk of IPO town is it could be priced at 1.5 trillion, not the 2 trillion originally suggested. Then we move down to the world of private markets, where we have Modal, which closes a 15.75 billion dollar valuation fundraiser. And your old tenders at 90 billion. And then welcome to the agent land. We have Town that raised 108 million dollars at a 1 billion dollar valuation. This and so much more in the episode today.

• 1:18Harry Stebbings?

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• 2:03Harry Stebbings?

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• 2:48Harry Stebbings?

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• 3:32Harry Stebbings?

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• 4:13Harry Stebbings?

  So for a limited time, you can get $500 a month in Fin credits for your first three months. Learn more at fin.ai/20vc.

• 4:22Speaker 03

  You have now arrived at your destination.

• 4:25Harry Stebbings?

  Boys, I just tweeted something that has got a rather large response from a founder community. I think venture is broken today in the way that I'm meeting more and more companies that fit this profile. I just met a company today and I have a company that's 20 million in ARR, growing incredibly fast, 600, 700% profitable, brilliant business with a great team, crickets. VCs do not want it. Is venture broken today?

• 4:54Speaker 00

  Well, look, I'm sure Rory has a lot of thoughts. I'll just add one one ahead of it, which is, we were talking about this company, which will be nameless, right? I invested in a vaguely similar company, like doing similar things for similar sized companies. They raised about a $3 million seed round and they're planning that's it, even with this type of growth, even with it all being agentic, even with it all being all the things we're supposed to be excited about, right? AI and voice and resolution agents, it does some, it does actually something that's pretty somewhat unique. But they're literally planning to never raise again because, you know, you get the, you get the 15% 18 a month venture update, but no one wants to meet. It's like, well, I'll put in a little more money, but it may have mean some ways in the old days where you're, and if early investors may need to carry you if you're not, if you're anything that's not hyper growth and the right boxes to check, right?

• 5:38Speaker 00

  The three bike chalk, your investors may have to carry you. It's like the old days.

• 5:41Harry Stebbings?

  Jason, you're right. You said earlier, the kind of specificity box has really narrowed in terms of what is interesting to investors.

• 5:47Speaker 00

  Yeah.

• 5:48Harry Stebbings?

  And I'm seeing that more and more with this concentration of capital going to fewer and fewer names and everything else being wholly unfundable, which more so than I've seen ever in venture before, which is surprising for a sheep like market like venture.

• 6:02Speaker 01

  But what you're saying is, if you think about, if you think of the role of venture, of financing innovation, what you're saying, there are lots of companies that look on the surface to have very good numbers, that can't raise money. That's what you mean, correct?

• 6:14Harry Stebbings?

  Correct.

• 6:15Speaker 01

  And I think that's probably true. I mean, we give you the contrast though. At the same time, I don't think it's just going to 10 or 20 companies in total. Cause at the same time, there are a whole bunch of projects that probably in another era would not get funded at all that are getting venture money. Data centers in space, quantum computing, you know? So we're very risk on for stuff that has ultra high upside. And I think the stuff that's struggling to get funded is, as you say, it's software for specific markets where there's some inarticulate fear that AI will make it all go away. Is that kind of a fair next level summary?

• 6:48Harry Stebbings?

  Yeah, I think so. I think you're absolutely right. I think it's this like power law on steroids requirement where it's like, unless you can paint me the trillion dollar market cap, I'm not interested.

• 6:58Speaker 00

  To answer your question a little more, to be more tactical, Harry, I think you're right that you roll with a high powered crowd. I think if you want Sequoia and Benchmark and one of the better partners at Andreessen to fund you, the box is very specific, right? It's cursor better, right? Open router is okay, but let's see what we can do better next time. I will say for, for companies like you described, still growing at numbers that approach the iconic outlier metrics, right? Here's where I think actually the world is today. You got to meet 100, you got to meet every VC. You got to meet 100. It is like the old days and you will find someone that takes that bet. It will not be the seven benchmark partners and all the rest. But someone will take that bet at a reasonable but still elevated valuation because it's the best deal they've seen this quarter. Someone will take it. You just got, it's the old days where you got to meet 100.

• 7:43Speaker 00

  And there are growth investors whose names are not index, Andreessen and Bestumer. And they will take that bet because it's a good bet. To Rory's point, it will lead to a Listen Labs or better in some cases. It's just, you better meet everyone on planet earth now if you just have top decile numbers. But top decile for a while was like an automatic term sheet, right? For years, it was an automatic term sheet, right? You'd walk into Rory's office, Rory knew every, every deal since the dawn of time. You would know exactly if you're in the top decile, if he believed in you and trusted you. You'd walk out with a term sheet from scale, right? The world just doesn't work that way today.

• 8:14Speaker 01

  You might still walk out with a term sheet from sale book. So what you're saying is there's a small number of extraordinary potential startups that the very best VCs are focused on, almost to the detriment of anything else. That's your point, Harry, correct?

• 8:29Harry Stebbings?

  No, I'm saying the whole venture landscape has realized that a certain few categories are the most interesting and exciting and everything else is uninteresting in a way that has not been before.

• 8:42Speaker 00

  Rory, back me up here. If you're raising a $5 billion plus fund, you, you have to have billion dollar positions in everything. You even need a $5 billion position here or there, right? So what a $2 billion Listen Labs just doesn't, is not good enough. Cause the odds, unless you have 51% ownership, which most founders are not cool with, it's pretty hard to build a billion dollar position. I mean, if I were working at one of those mega funds and we were playing our game, that would be my final question to the team. How are we going to get at least a billion dollar position out of this? And I'll take 1% of Anthropic. I think that still gets me to a billion dollar position, even with dilution, right? The Eric Schmidt story, but you've got to have billion dollar positions in everything in, in big boy venture today, I think. And I don't mean boy with a gender attribution, big, big, big folk.

• 9:24Speaker 00

  You've got to have billion, it's billion dollar positions or nothing. There's no point in investing otherwise with large funds.

• 9:29Speaker 01

  Well, I still go back to the statistics we cited last week, which is, you know, 10 to 20 decade cons per decade in the entire US tech industry. And we clearly believe that there's going to be 90 of them this year. And one of those two facts is going to be at variance with the other. And I'm willing to bet on the 50 years of data, albeit lifted up for growth. You know, it's not going to be just predicting on the past because you allow some kind of growth over the years for bigger exits. But I don't think, I don't think you can confine yourself to saying, I'll only do deals where I can get a billion. To work or a billion or it's a once in a while coming 25 billion dollar outcome. I mean, you want some of those, but it's the whole industry is not going to be able to say we're all going to do those and have more than five funds because it is not enough.

• 10:11Speaker 00

  Maybe five is enough.

• 10:13Harry Stebbings?

  Jason, I think Rory is Rory is not going along with our thread here.

• 10:16Speaker 00

  Listen, I haven't sat in an Andreessen or index partner meeting, but I'm pretty sure the math is something like, how can we make at least a billion dollars off this deal? It's not even enough like that's, I don't know. You know, everyone has like the four different scenarios when they write up the investment memo. A billion dollar position, not an exit billion position is just the B outcome. Right. This is 10% probability analysis, 25 billion or higher, 25, you know, this percent, we only make a billion on the deal, right? We're raising these funds every 18 months, these five to 10 billion dollar funds. We have to have so many billion dollar positions, positions gains to even be playing at this game. It's just math, it's just the maths.

• 10:54Speaker 01

  To take the other side of the argument and actually to talk about seed, which is your world, Jason, you probably, I'm assuming you would agree that from a multiple perspective, it's going to be far easier for the best seed investor to generate a five X net fund than it's going to be for someone who's writing billion dollar checks into things.

• 11:11Speaker 00

  No, it's harder. It's much harder because unless you really do the Roger Aronberg find something at Antarctica, right? The entry prices are so high and the ownership typically is lower unless the seed fund is very large that actually, and all these values are cutting my proratas Rory, how am I going to make it up on the backend with my SPVs and my triple? I can't make any five X is so much easier. I'll do it at one billion in town and we'll raise it five billion next week and I'll take the rest of the year off. The entry price 50 million, 100 million seeds, you can't make money.

• 11:45Harry Stebbings?

  Just to add to that, not only can you not make money, you can't make money even worse because they're a multi-stage product for those big players in terms of they're the ones who lead them and they crush your allocation. So not only does the price go way higher, but your allocation goes way lower. And so you have three to 500 K at best. And I've got this and I've got this in a company that is going now to 18 billion. It still doesn't move the fucking needle, Rory.

• 12:11Speaker 01

  Because what? You only got 300 K in the deal?

• 12:13Harry Stebbings?

  Because you're 300 K in and it's at 100 million price.

• 12:18Speaker 01

  Yeah, no, that doesn't move the needle. No, that I would agree.

• 12:21Harry Stebbings?

  And so not only do you have a way higher price, but you have a way lower check going in.

• 12:24Speaker 01

  Look, over time in a rational capital world, the return multiple from early stage investing should be higher than growth, just logically over extended period of time. Cause otherwise, why would you do it?

• 12:36Harry Stebbings?

  I agree, but would you not say for the first time ever that we're actually going to see that inverted?

• 12:41Speaker 01

  I totally agree. I think the last five years are going to be clearly inverted. It's clearly going to be, I mean, look, someone said it, it was a very good line. He said, the aggregate market cap of SpaceX, Anthropic and OpenAI went from around $400 billion three years ago to something like five billion, four, five billion dollars today. That means a trillion, add up change billion in a trillion, 400 billion to five trillion, right? So you've got four trillion plus of value created in the late stage business. Nothing else matters. And if, you know, if your theory is there's going to be 10 more than next year, then you're right, that's all you do. And if your theory is that was amazing, but it's probably not going to be a run rate business, then you make different bets.

• 13:20Harry Stebbings?

  We will go back to schedule, which is, are we starting to see a crack in the AI trade? Core weave have had a tough week. I admit I'm a holder. It is not been great. Rory, can you please provide some context as to what is going on? What do we need to know as background?

• 13:37Speaker 01

  Yes, Corey had a tough week last week, I think down 15, 20%. Kind of bond prices went up implying, you know, lower is going to fall. But zooming out, when you think of the whole AI trade, these kind of neo clouds, they're always going to be more risky than anything else in the system because they have, you know, they're underwriting high growth with large CapEx and lots of debt. So you're trying to thread the needle. If you grow too slowly, you don't meet your customers happy. If you go too quickly and demand slows even slightly, then you're screwed because I'm doing it from memory here. I think, you know, core we've, I think it's like seven billion dollar run rate or whatever, 10 or 20 billion of CapEx, you know, 35, 40 billion of debt, right? I mean, that's the way you have to do it because you got to build these data centers and fill them full of compute.

• 14:21Speaker 01

  So it's just very tight. It's not like a software company where you can hunker down and cover your nut, right? There's just no way out here. So they're always going to be risky. So anytime someone wakes up and says, oh, AI is growing a little less quickly, all these things are going to go down. And anytime anyone says AI is growing amazing, they're all going to go up. And last week was an AI go down week because probably because a little bit because of the anthropic numbers, which in retrospect is a bit silly, but there's no doubt last week was a things are slowing down week. And when that happens, core weave jumps down.

• 14:50Harry Stebbings?

  Was this a gross overreaction then?

• 14:52Speaker 01

  If the end user demand is there, then everything is going to work out, including core weave. Cause look, I think their biggest customers are people like Microsoft, OpenAI, like provided the demand is there, they want the data centers. It will all true up.

• 15:05Harry Stebbings?

  Is that not like a generational buying opportunity though? It's like down 25%. Of course, demand is not cracking. We will see that every single day.

• 15:13Speaker 01

  More precisely, but the problem, yeah, well, if it was that easy, we'd all be doing it, Harry. But I mean, the real question is, how does the demand compare relative to what these guys are spending? Can they fill everything they have now? Of course they can fairly quickly. But if you're continually investing for next, like I said, if your CapEx budget is 20 billion, it's not enough that demand go up. It's like demand go up by a lot every year. The beating heart of the whole thing, and we're seeing people share it is you add up OpenAI and Anthropic's numbers together. So that kind of gets rid of the shift in market share and the growth rate of that overall is what's going on in the AI economy. And that's the growth rate you have to look at. You know, the question is, how does core with CapEx plans look at relative to that?

• 15:53Speaker 00

  The simple learning is the markets are going to be very sensitive, right? As Rory said, any bump with Anthropic, any bump with OpenAI, any bump anywhere. Of course, core weave at all and Oracle should be hypersensitive because they have massive debt loads and massive risk. But they're also the B tier players. Core weave is B tier compared to Nvidia and friends. Oracle is B tier, right? So I don't know, you can make money in the B tier, but why would you want to hold the B tier? Core weave exists because Nvidia and friends needed to exist for now. It has no inherent reason to exist. It is not producing a singular set of silicon and GPU and software today that no one else can do. Oracle just can't sell enough enterprise software.

• 16:36Speaker 00

  People don't want to install enough of this crap on their servers. So they're stuck renting out their excess capacity and buying GPUs and doing Stargate. These are B tier assets and B tier assets should trade at a premium. And I think more importantly, they should be more sensitive to shocks in the system. The B tier assets, the A tier assets should be in theory, less sensitive.

• 16:55Speaker 01

  The only comment I'd make is I think B tier, A tier, core we versus Nvidia. I understand what you're saying, but it's almost like you're comparing apples and oranges. I mean, Nvidia's core IP, yeah, it's the dominant provider of the whole ecosystem. Look, compared to Nvidia, we're all fucking B tier assets. How about that?

• 17:10Speaker 00

  Yeah, but why buy the, Harry just asked, listen, why buy the B tier? If you just look, it's like IPOs. Why buy, Braze is getting acquired for whatever 5.8 billion. It's down 40% from its IPO. Like, why buy any IPOs that aren't A tier? There's just nothing in the public, you can make money as a, if you get your nice seed entry at eight million post, you can make money on the B tier, right? It's the start of this conversation. It's A tier bust. There's just the discount's too high. How am I going to do with my core weaves?

• 17:37Harry Stebbings?

  Yeah, Rory.

• 17:38Speaker 00

  Five or six, I'm not going long on, I want to hold, I want, I'm not passing core weave to my great grandchildren. I'm not putting it in their five 29s that I'm giving to my great grandchildren. You know, there's no way.

• 17:50Speaker 01

  This is the Jason stock picking is dead. This is the public equivalent of the private comment, the only the biggest companies matter. And again, the great thing about this is I can prove you wrong more easily in the public markets. Cause what, you know, when you go back over a year, I mean, Nvidia is up 18% and Nebus is up 50% socks. I mean, that's, that's, Micron's up 350%. I mean, the truth is you buy the second tier assets because you think they're going to pop. So, you know, I hear you, but no.

• 18:16Speaker 00

  Well, let's see if you put 20% of your, of your personal portfolio into those, into the Microns and Schmicrons, there's a lot of risk there, right?

• 18:23Speaker 01

  Agreed, I wouldn't, I wouldn't dare.

• 18:24Harry Stebbings?

  So Rory, you know, we have Jason's IC, we're going to have Rory recommends.

• 18:29Speaker 01

  No, we're not. No, we're not going to do it. Genuinely, we're not going to do it because I'm not going to say to you, one thing I've learned about doing this now is pulling stuff out of your ass because you've done a little bit of work is just not right.

• 18:41Harry Stebbings?

  Is that venture?

• 18:44Speaker 01

  Yeah, so no.

• 18:47Harry Stebbings?

  Okay, okay, I'll leave it there. I'll leave it there. It's okay. And we can talk about what maybe caused a slight crack in that, which is Anthropic's numbers. Anthropic announced that they're turn profitable on an adjusted basis, gross slows, IPO price potentially rumored to be going down from two trillion to 1.5 trillion. Q3 revenue was 16.8 billion, up 45% on Q2, 85% gross margin, which we'll talk separately about. What should we take from these numbers?

• 19:18Speaker 01

  I think it was good. I mean, I think that, look, again.

• 19:21Harry Stebbings?

  You should tell your voice that Rory.

• 19:23Speaker 01

  Sorry, long day. I mean, look, growth is clearly slowing fairly quickly, but from an unsustainably high number. I mean, it had 10x for the last three years. It's highly unlikely to 10x, you know, what was it, run rate coming into the year, 10 billion, if it, you know, if two more 10x's, then what was it, 100 billion, you'd be at a trillion. So growth was going at a, this is all about how quickly is the growth going to slow, right? And honestly, I thought, I'm sure people are sitting there going, if you add linearly, if you did five in Q1, 11 in Q2, 16 in Q3, you kind of lean in and you're at 20, 21 in Q4. If you keep adding 5 billion bucks a quarter, I'm not saying they will, but right? And you do that. So you start next year, which is,

• 20:04Speaker 01

  which would be when you go public, the future year. If you're at a $20 billion run rate adding five a quarter, then you do 105, 110. And now you're saying it's 12, 13 times forward revenues for the most exciting company in the world. It doesn't feel crazy. It doesn't take a lot of squinting to make that work.

• 20:23Speaker 00

  I had just one thing. For what it's worth, just tactically, I thought, I think Rory would agree. I mean, Chamath's tweet was just raise whatever you need at 1.5 trillion and move on, right? When the, like, if you're, if you can raise it 2 trillion, but it's going to stress your capital needs, like, it's just a valuation. So in absolute terms, it's, everything's great, right? This is unprecedented on all levels, great team, great application. What I suspect, well, a reminder is, it's going to be very choppy after the IPO because, going to Dev's point when he was on the show, developers are not loyal. And the amount of market share, the, since this show started, the amount of change in Anthropic versus OpenAI versus OpenWeights versus Jev, right, which didn't even exist, what, 45 days ago? This is a winner, but the

• 21:08Speaker 00

  amount of variability in the incremental growth and in the market share, there's only so much predictability in this revenue. There's always so much R in the ARR here. And I think it, depending on how effusive the markets are, it may create stress. It wouldn't surprise me if, at the end of next year, Anthropic's market share is down 10% from where it is today. And it still could be great on an absolute basis, but down percent, it wouldn't be a shocker at all. Not just in tokens, but in revenue, easily could happen. Look at, despite whether OpenAI is at 70 or 50, it's a lot.

• 21:38Speaker 01

  When you say, you mean the share is down?

• 21:40Speaker 00

  Yeah, market share could be down, right? And so when you're, when you're building your models, right, not just DCF models, but your top line models, you could be materially off from your good case, right, your best case. And it, and it should be expected. It should be expected.

• 21:54Speaker 01

  To state the banal is a little scarier than the average recurring revenue business, right? And that's what people are wrestling with. How do I think about, I mean, if you have continued market share shifts between the key players, then the next shoe to drop is typically, well, I want to keep my market share, so I'll look at price. And I think, you know, everyone's trying to work out from the game theory perspective, you're right, what does that look like as a P&L going forward? Which is why, going back to the boring thing I keep saying, is that provided the end user demand that the top is there, you can, you know, everybody can win. And we all love businesses where everybody can win, right? If that starts to slow down, and then price competition becomes not, you know, literally the thing you got to do to take it from the other guy to keep your growth rate going, then it could get pretty tougher.

• 22:36Harry Stebbings?

  Do you think Sam was super strategic, raising his supposed round at 1.4, just in terms of some form of anchoring and message to market?

• 22:45Speaker 01

  I think when you need money, you take money. And I don't know if there's a big sophisticated, oh, 1.4 is a messaging versus 1.5. I think it's as simple as, you know, we spent a lot of money in compute, we didn't get our IPO done, we spent all of Master Sam's money, better get another 40 at a price. I mean, you know, what are the constraints? It's got to be up on the last round, otherwise the messaging is shit. And it's got to be down below reality to leave room for the upside. You know, there's only a finite number of digits between, well, there's infinite number of digits, but there's only a finite number of one decimal plus digits between 1 and 2.

• 23:18Harry Stebbings?

  There are a couple of elements beneath this story, one of which, or beneath Anthropic as a week, was Replit made OpenAI its default. Jason, I am intrigued here. Anything from you on that, especially given your Replit power user status?

• 23:33Speaker 00

  I think it was a stupid media story. I mean, we do use Replit about 14 to 15 hours a day. Basically, Replit has its own router in it, right? Its own model selector. It's, it can be invisible or visible to you, depending on what category you're in. And OpenAI models are just, are just cheaper for the same rough quality output of Replit, so they just made it the default. And TechCrunch mis-wrote an article saying they were no longer working with OpenAI, which wasn't true. They just flipped the default from Opus and Fable to Astra. That's just the default. And it's what we're all, we're all routing, right? We're all open routing one way or the other. It's just, if you're Replit or lovable, or Base44 or V0, you have these extra incentives, because your average user just wants to have a high quality output.

• 24:15Speaker 00

  And they're very incented to get this quality price thing just right for you, right? Unlike, you know, the average idiot configuring open router themselves, hoping they get it right. These guys are, it's more interesting to watch what Replit, lovable, Base44, V0 do, because they have an incentive to nail the routing, right? They have a very strong incentive. They can only partially pass it on to the end user, right? So we can actually squint and see the future based on what these, these guys are doing. And what they're saying is, listen, what Amjad's saying is, the quality is sufficiently peer level here, and the price is 30 to 40% better for us. Today, why would we use Fable and Opus? And you know what? Next week, he may be at a, at a different event and get on stage and just go into this market share thing with

• 24:58Speaker 00

  Anthropic. It may change. It may change. They may not have fully thought through how to use Sonnet 5.5 and Haiku 5.5. And, and they have Kimi and others, but if Kimi actually was so great, you know what, all those guys, Replit would be using it entirely, which is maybe the more interesting learning that was under discussed. Because it will route through them too, and it doesn't. Amjad didn't get up on stage and saying, we'll route everyone through Kimi, did he? He said, we're going from Claude to OpenAI because it's just as good and materially cheaper.

• 25:24Harry Stebbings?

  What was the takeaway from that? That Kimi is not as good as people think?

• 25:28Speaker 00

  In practice, not seeing the benefits for his billion dollar of revenue, for his customers. He's not seeing the benefits. Or he would just auto-route it. The customers are very cost sensitive at, at Replit and level, not just, the SMBs are very cost sensitive because they want to get everything for like 25 bucks a month, or they even have free LLMs. But the enterprise customers are very cost sensitive, because they don't want these massive variable bills for the product teams going off and building prototypes. It's a super cost sensitive model, right? Hosting, database, LLMs. If you slow down and see what they're doing, and they're each at like a billion in revenue, right? That's, it's like a little lab that we should be paying more attention to. It's a more interesting lab than the idiots spending all the money and misallocating it and hoping it works. Like, we, that's a great business

• 26:09Speaker 00

  model, but we learn much more from the massive investment these guys are making and optimizing high quality output for low cost. Maybe others are doing this, each at a billion in revenue, but I don't think that many people are doing it for end users.

• 26:20Speaker 01

  I think it's a great point, because, yes, it is a very objective calculating test of what value, you know, how do you think about the value you're leaving on the table by paying top tier prices for, you know, less than top tier intelligence? And what do you actually need? Because with a billion dollars, you've got enough time to really think about it.

• 26:37Harry Stebbings?

  Jason, you are the best user and analyzer of these tools. Under the Anthropic, what happened this week, Claude Code Review is out. We saw Boris Sherny tweet about it. I'd love your thoughts. Which startups are destroyed by this? What did you think of it?

• 26:52Speaker 00

  You know, I don't want to talk out of my rear, because it's so much change, right? I mean, you know, Grephtile is super hot, they just raised whatever this week, right, 75 billion. I think Rory's in CodeRabbit, or I could be wrong. They're, they're an epic player, right? There's all these great folks. They all have benefits. They all have the benefit of being, I think, in many cases, of being able to run on LLMs, which is very valuable, right? Having one LLM check another LLM's work, having OpenAI check Claude or vice versa. So there's a lot of, just like there have been since the dawn of time in software, there's a lot of benefits to having pure plays, right? But it's also always scary, because this is the core of Anthropic. Claude Code is the core of Anthropic's engine we've talked about.

• 27:31Speaker 00

  And making code review, making all of this process, it's actually arguably much more important than building code today. You know how much time we spend now reviewing the code? Because the LLMs are so good at getting you 95% of the way there. You talk to any engineer, they're like, oh, I'm out at dinner and I built the feature for Harry. I'm having, I'm having, you know, barbecue and my phone is building the feature for Harry. And you did build the feature that Harry asked, but you're going to have to spend the whole next fucking three days testing it and fixing it. So it's a big deal. How big a deal is, I have to imagine it's a bigger deal than the Nothing Burger, which was, you know, Claude Design or whatever the heck it's called, right? Which didn't kill Figma. But how much? It's, it's so hard to predict. It's scary if you're working at a competitor. It's always scary, right? It just

• 28:16Speaker 00

  has, no matter what you say on Twitter, it's always scary. Even if it maims you 30 or 40%, you just got to be better.

• 28:21Speaker 01

  One of the things we said last week, and I stand by it, the best markets for standalone AI apps, and I put coding as effectively an app, the ones with the highest growth rates have also been closest to the sun. They've been closest to the foundation model. In fact, I just did a tweet on that today, about, you know, it's, it's the Icarus moment. Icarus had no choice. He wanted to get warm, he got to fly close to the sun. I think these big use cases are interesting. You know, it's like code generation, code review, legal, they're all very close to the foundation models. And every six months, you have the terror moment of, oh my God, they're going to do it, right? And that's the downside of being in that real estate. But the upside in being in that real estate is they are marquee, they are superb use cases for the technology. And as a result of that, you know, CodeRabbit, all these companies

• 29:06Speaker 01

  are going faster than we've ever seen. If you want to avoid that risk, Harry, then you go back to your, like, dull little 3x year-on-year software companies that you were bullshitting on about earlier, right? That no one wants to invest in, right? You can't have a boat waves. You know, you can't sit there and go, oh, I want infinitely fast growth rate, utterly Differentiated from foundation models, even though the only reason we're getting the fucking growth rate is because the foundation models have unlocked new capabilities. It just doesn't make sense. That's not a thing. I mean, I'd like to be, you know, a lot of things in my life, but it ain't gonna happen.

• 29:37Speaker 00

  I don't know if this is true from a venture outcome or revenue, but I actually think code review is the single most important category today in software. By far the most important category. It does not mean it will make the largest fortunes. It does not mean there'll be a 600 billion code review cursor. But what I mean is you cannot vibe code your own SAP in Salesforce, but the rate at which we're building code is unprecedented. And the code now is pretty darn good, but it's never production intent. This is, this is what everyone misses. It's never production ready or production intent. And so if we step back a minute and define code review more broadly, it is the most important category in building. It is so important. Everyone is building 10, 12, 14 hours a day in Claude Code or Cursor, whatever.

• 30:21Speaker 00

  But the amount of time it takes to review and process that make it production intent is still an order of magnitude more than building. We have not figured out, we're pretending that this work is complete. It's not. If I could find the best next generation true code review brother, the best team, I'd make 10 bets because we need it. And they may all get killed by Anthropic. We'll see. But, but it's much more important than code generation. This is back to Omjon's point. I can rotate between, you know, Astra and Fable and whatever. They're all great, right? And maybe Kimmy if it catches up, but how am I going to get into production?

• 30:52Speaker 01

  Agreed. Big picture, it's pretty clear that we're making way more software than we've ever made. Right? Probably orders of magnitude. I mean, just looking at the Anthropic thing they did on employment and recent that paper they did on unemployment. So given that, the whole software development lifecycle is going to change. Right? Because how that gets deployed successfully, it's probably going to be very different in an energetic world. So I agree. I think there's a whole bunch of compelling related opportunities, not just around code review, but the end to end memory management, testing, sandboxes, how we, where you and I have an investment. So yeah, I just think, you know, I said it last week. I said, coding is the mother load of LLM value, right? It's where it all happens. And therefore there's going to be a whole bunch of ancillary opportunities around that. And, you know, there mightn't be $25 billion.

• 31:35Speaker 01

  So you guys might pass, but if they're a $10 billion outcome, I will take my humble check and be very glad.

• 31:41Speaker 00

  Yeah, maybe I shouldn't call it code review because Rory's point, it might be construed too narrow, but build to prod is the biggest category.

• 31:47Speaker 01

  Absolutely.

• 31:48Speaker 00

  Build to prod. How do you go from it's built, it works, it works in dev, it looks great. How the hell do I get that thing into prod? That's where the big money is going to be made now. We, the money's already been made in frameworks for build and they're great. And let's say I'm in Dario and friends duke it out every, every, every day. We all benefit, but how do I get this crap into production?

• 32:06Harry Stebbings?

  I want to move actually to one of the most interesting rounds I thought was Modal closes at a $15.75 billion valuation. Run rate surpasses $1 billion. It's $750 million Series D led by Excel. I just actually interviewed Eric the other day. He was amazing actually in the studio. How did we think about this round and what it means in terms of the wider inference market?

• 32:26Speaker 00

  I like it better than Core Wave. I like adding value to the universe rather than just being some outsourced racks of GPUs. I like this one better, even though the, to Rory's point, the competition appears to be infinite and limitless, right? So you better, you better have some, some cojones in venture growth to do it. But yeah, I like, I like at least adding value to the, to the universe.

• 32:48Speaker 01

  The interesting thing about Modal is they, you know, they were like six, I mean, they were always perceived strong by developers, but I think they were like 60 or under 100 million mid, late last year. Right? And that level of acceleration is just amazing. Right? I mean, it's just, it's stunning when you see it. Yeah. So I mean, that's the first big picture is, oh my God, inference is exploding here. Right? And yes, they are very developer friendly. They have a whole bunch of products. So yes, that's the takeaway. The other thing I was just thinking about it is, you know, how big can this market be? I mean, I think you look at the four or five key inference providers. I mean, you add them all up and maybe they're plus or minus $5 or $6 billion in run rate revenue, which is a lot. But if you think about it, they're all serving all the open weight models in a world where right now, and it's not like with like,

• 33:32Speaker 01

  the sum of the OpenAI and Anthropic revenues is probably nought of 100, 110 billion right now. So by dollars, it's less than 5%. So it just points to the opportunity here to the, I mean, going back to Jason's Replit guy. Think about, I'm at that Replit sitting there going, do I want to give money to Claude Code and give them a 70% gross margin for this token? Or do I want to buy it on Modal and give them a 30% gross margin for this token? Well, if the tokens are roughly the same, you know what you want to do. So yeah, it does point to the upside there.

• 34:02Harry Stebbings?

  Completely agree. It does. I'm constantly shocked by like the infinite expanding size of the inference market.

• 34:08Speaker 01

  Absolutely. No, it's stunning.

• 34:10Harry Stebbings?

  It's the one thing that I know today that I wish I'd known 12 months ago because I would have done things slightly differently 12 months ago had I been more expansive around my mindset here.

• 34:18Speaker 00

  Well, also you had to be smarter than me to understand how much this revenue could be captured outside of OpenAI and Anthropic. A year ago, I wasn't smart enough to really think through this. I didn't think enough of it would be captured outside of it. So I didn't think it was that interesting.

• 34:30Harry Stebbings?

  Are these inference providers going to be worth 300, 400, 500 billion dollars?

• 34:34Speaker 01

  I would think it's a race between two things. You can put your MBA hat on and say, you know, open weight. Going back to Jason's comments on Core Wave, all the Neo clouds are saying, oh my God, let me get this straight. We do all the building work, we buy all the compute, we borrow all the capital, and then these bozos come in, buy from us, sell it to developers and make a shit ton. Why don't we do that? So, you know, you put your MBA hat and you can imagine a lot more competition here. Right? And then you say to yourself, I doubt, you know, you get those kinds of valuation. On the other hand, when you have this kind of growth rate, nothing else matters. It covers a multitude of sins. My bet is their margins have crept up this year, right?

• 35:09Harry Stebbings?

  They have. Fireworks are mid 30s now and they'll be, you know, hitting 50 pretty soon.

• 35:14Speaker 00

  Even mid 30s, if it stays there, I mean, the public markets can, can tolerate that. It's just the multiple you'll ultimately get on all of it. Right? There's plenty, plenty of folks like that. So it's okay wherever it ends up, right? I mean, it's important for, for Excel, probably nailing it at 16 billion, but I think it works either way.

• 35:30Harry Stebbings?

  Do you think the three kind of hyperscalers of inference are based on Fireworks and Modal?

• 35:34Speaker 01

  Probably in some simplistic, who's the winner? You're probably right. Those are the three biggest. But maybe the statement is, I don't think it's like the hyperscalers where no one else mattered.

• 35:42Harry Stebbings?

  Jason, this is a big funding round, but it's too easy for you in the investment committee to decide that you're probably going to do Modal at 15.7 billion.

• 35:51Speaker 01

  Yeah.

• 35:52Harry Stebbings?

  And so if we call an investment committee, there was another round that was announced, which was Town at a billion dollars. I think it was $108 million Series B. Are we going to do this from our growth fund, Jason?

• 36:04Speaker 00

  Well, look, Harry, as you know, I regret passing on Modal and letting the Excel guys sneak in there. They're aggressive and they're behind in many ways on the AI investment. So there's, I mean, they did the deal over the weekend. You know, I asked for one business day and I didn't get it at, at Modal. Modal was, you know, by all intents, it was cheap. Yeah. I mean, 3 billion to 1 billion in five months. At the end of the year, we end up at 1.4 billion, next year, 5 billion. Even if the margins never hit the 40s, we make money on this deal. Like there's just no question that the markets crash. Town, I'm going to pass on, Harry. And if you and Rory and the rest of the team want to do it, I'm fine with it. You know, a billion today is the new 100 million, right? A billion is just the, the entry point for like a classic B round. In the old days, when the three of us met, the used Series B investors used to say,

• 36:49Speaker 00

  as long as it's 100 million or less, it didn't matter because the classic Series B wanted a billion dollar plus IPO. They wanted their 10x, so 100 million, 80 million, they didn't care. Right? So a billion's the new 100 million. Do I, do I, Town has no data. It's, it's sort of interesting revenue. It has a smart team. This is just a bet. This is just an old classic Series A, Series B with a bow tie at a billion. And if you want to, if this is one of the 10 you want to make in the next 12 months, just do it. I, I just consider it a chip and I don't, I don't need to be at the rest of the meeting, but there's just not enough here for me to get excited either way. Bunch of guys from Plaid, I mean, it's a great one, but you know, we wouldn't even do Plaid today. I don't even see a $25 billion exit for Plaid. So I wouldn't even bring it to the IC. It's too early to predict, right? Where it's going to go. It's too early. It's just, it's just, it's just a classic bet.

• 37:34Harry Stebbings?

  So we're not doing it, Jason?

• 37:35Speaker 00

  Well, I mean, the good news is the team only predicts it needs about 500 million of inference over the next 12 months. So that's much better than the Instinct team, which needs 5 billion. So in a sense, I like it for the fun because we were a little more conservative than our peers. So all we need to do is round up some of our SBVs and put in another 500 million to fund the inference. So, so in the sense, there's a positive here, right? Because I'm, I'm glad we passed on Instinct, even though we look like fools, because I don't know who's going to fund this bad boy. At least Town, again, they only need 500 million over the next 12 months. So, so if we're about protecting our downside, let's do it, guys. I just, I just don't know.

• 38:07Harry Stebbings?

  Would you rather do Instinct at 30 billion or Town at a billion?

• 38:11Speaker 00

  All I want to know is maybe we can get back into Modal at 20. I, we just blew that one over the weekend. The Excel guys, they're just aggressive.

• 38:17Speaker 01

  I think that we should put this clip in the vaults. And two years from now, when you realize that a billion dollars still really is something and we can just revisit this discussion. Whenever we're throwing blithely around numbers like a billion dollars, I mean, there's only, yeah, I mean, it doesn't sound like a lot. There's only 4, 5,000 billionaires in the country. It's real money, right? And as for 30 billion, it's pretty damn scarce, but okay.

• 38:40Speaker 00

  Well, you know what, you know what, you know what I was thinking as I was writing my LP report last night for all, it goes to the next point on, on Harry's list, Anduril at 90 billion. Right? And, and what I was thinking about with, with Town and all these is, listen, Anduril is clearly a generational company, right? Got, got in early on next generation defense, clearly deep, has the contracts, has everything. Right? But is this thing worth 40 times revenue with the margins and everything it has? And it's like, I think the meta question is, are a bunch of the rounds we're doing, and maybe Modal isn't one of them, are they so disconnected from public comps that we either need these massive public comps to, to re-correct, right? In a way, and have the Anthropic do, or, or some of these deals just make no sense, even though the companies are great? Does Andrew make any sense at 90 billion?

• 39:24Speaker 00

  Does this town at a billion make any sense? I mean, when Braves was just the best exit in the whole public GTM category at six times revenue. Monday's at two, HubSpot's at two, Klaviyo's at two. Two times revenue, growing 20, 20 something percent, right? I'm not saying they're the same, the growth is here, but I do wonder if some, if the multiple, here's my point, if the multiples are disconnected from where they will land, the multiples. And that's just venture, right?

• 39:53Speaker 01

  I mean, my comment would be this, I think that's almost certainly true. The multiples are disconnected and the only thing that kind of makes that plausible is the growth rate. Look, if you're a mature defense contractor doing 2 billion in revenue, you're worth $8 billion best case. If you're a $2 billion revenue defense contractor and you've doubled for the last couple of years and you think you've got a line to the administration for the next five, or the Pentagon for the next five years, then maybe you go 2, 4, 8, 20, and you justify the valuation. So it's not impossible, but to your point, Jason, it's leaning in a lot into the future, but a lot. And all these valuations, you know, you could wake up one day inside amazing companies just priced wrong. Cause it's, you know, of all the things that are likely to bail you out, just could you mention one other in passing?

• 40:38Speaker 01

  It's highly unlikely that the US market, you know, which is trading at enough, you're not going to get huge multiple expansion from here that saves you, I would guess.

• 40:47Harry Stebbings?

  Does it not go back to the point that Jason made earlier about the need to move large amounts of money? And actually, if you need to move a billion or 2 billion, I agree with you totally on the multiple compression you're going to get from here, but you know, is there a chance it's a $200 billion company? Yeah, not impossible. So there's a 2.2, 2.5 X and you moved a billion to 3 billion.

• 41:07Speaker 00

  I just wonder, and listen, whoever's doing this tender, these are very sophisticated investors, of course, right? Let's not be, let's not make fun of it, but I do wonder if some, we are just taking revenue multiples too far today. I'll give you a different example. I was like, like Profound or Harry's and Peak, right? These are interesting companies, right? But when you, my God, when you look at the, the public comps are trading at two times revenue. Okay. And you can say, no, no, these are agentic guys. Okay. These are agentic, these are agentic players at high growth. But when the growth even just slows to 70 or 60, will it trade at a cloud flare revenue? Or will it trade at a better than Braves revenue, right? Which until today was trading at three times revenue. It's not, I'm not, I get the growth side, it's the job we're in.

• 41:48Speaker 00

  But I do wonder if the AI versions of low multiple companies will just, will settle too early into the multiples of their, of their peers. I just don't know, right? Cause I think they're being punished. I think the whole marketing category is the worst public category without question, right? They're not dying. HubSpot and, and friends are not dying. Klaviyo is not dying. They're trading at, you know, below three times revenue. I would have a hard time getting the IC excited about it.

• 42:14Harry Stebbings?

  Jason, speaking about multiples and how public markets think about multiples, where they're appreciated, where they're not. A fascinating one for me was actually Berkshire doubling down on bending spoons. Obviously bought $330 million of new shares, caused a massive bump in the stock price. And the assets that these, that bending spoons is buying are traditionally slightly challenged assets, slowing growth rates, not the darlings. And then the price premium that's being placed on bending spoons, the holding company right now in public markets is enormous. I'm just intrigued, boys. How did we think about this?

• 42:48Speaker 01

  Did not expect it.

• 42:49Speaker 00

  I think it makes sense. I think, I think bending spoons is like the Berkshire version of software, right? It's like Sees Candy or Coke, like they're trusting that the boys, this is not, they're not flipping them. These are holding companies. Warren Buffett wanted to hold Sees forever, right? And bending spoons is saying, listen, we're going to be diligent. We look at 1,000 deals a year or whatever you have, what is it, Harry? 5,000 deals a year, we're going to do five or six. And we're going to find enduring software assets that we're going to hold for as long as we can hold them. And if you actually step back for a minute, the quality assets is improving. Vimeo, kind of a dog that they kept, I mean, Evernote, kind of a dog. Now they made them work with price increases, right? They're going to make money off both those deals, right? Eventbrite, kind of a dog, like Miro and Airtable, I'm going to argue better.

• 43:33Speaker 00

  And so I think Berkshire is saying, listen, you're going to make these into a bunch of Sees Candies and Coca Colas. And folks think you can't make them enduring, but you're going to make these endure for a decade or longer. Maybe, maybe I'm wrong, but I think they ultimately probably see some similar attributes that they can make these long lasting assets.

• 43:49Speaker 01

  Yes.

• 43:49Speaker 00

  It's just like Sees Candy.

• 43:50Speaker 01

  Get a Sees Candy from the 1960s and get a Sees Candy from today. And you look at them side by side, they pretty much look like the same thing. I don't think that'll be the case for the Evernote product of 2080.

• 44:02Speaker 00

  No, but my point is it may be as close as you get in software, the bending spoons model, because they're going to keep these and keep these assets, right? And invest them. I'm not saying it's the same as a Sees Candy.

• 44:11Speaker 01

  I'd describe it as it's conceptually the same idea as Berkshire Hathaway, but perhaps in an industry where the idea doesn't apply.

• 44:17Speaker 00

  Or maybe you let, it's like Jane Street putting all the money into whatever his, his name, Leo Appleshell. Like Berkshire's like, this is close to what we're doing. It's not our core, we're going to let the Italian guys do it. And we'll take a meaningful position and we think they have something that we, we think that they're going to be able to maintain this incredible growth level because they will have a thousand assets to look at it a year and will be able to maintain them in a way Vista can't.

• 44:42Harry Stebbings?

  Guys, you can also guide, we can do general Atlantic sector IPO. We can do Tesla, the new roadster, unbelievable videos of cars that literally elevate themselves with thrusters. We can do benchmark onstage conceding that competition, nah, it's a bit of a flimsy term in venture these days. Any predilection as to where you want to go?

• 45:03Speaker 00

  You know, I wanted to do the 37 signals one, but um.

• 45:06Harry Stebbings?

  We can do 37 signals. David Hanimer Hansen, who is an incredible race car driver, has the most extensive library of race cars. 37 signals made 370 million in profit since 2020. Bootstrapping ain't all that bad, hey?

• 45:22Speaker 01

  Yeah, I was going to say, all, I mean, you know, going back to the conversation at the start, all these software companies, none of the VCs cares. Well, if you hold on to it yourself and pull out $370 million, I think you'll be fine. That was a great result. I did not, I knew it was good.

• 45:35Speaker 00

  I don't think, I think that was wrong, for what it's worth, I think it's directionally correct. I think the point that was maybe, which was interesting, is they say they do 10% profit sharing, right? So if you do 37 million of profit sharing, it's 10%. Rory can help me with the math. I think that would suggest overall profits for 370. I don't think it can make that much money. I'm guessing it does 60 to 70, 60 ish million a year, right? And even if it's, even if 40 million can go to the bottom line.

• 45:58Speaker 01

  40 times six, you are 240.

• 46:00Speaker 00

  Yeah, it may be in the zone, right? It may be a little high. But when you look at the fleets of cars and all that, obviously, you know, they've been making this kind of money. I'll tell you a couple of thoughts. One is it's something to reflect on in the era. I don't think we're going to have a lot of one person billion dollar startups, but we could have much smaller teams, right? The one I kind of, the one I thought about for the AI era is man, Zapier should have been this. People throw out Zapier as Zapier as the one and done example in venture. Like, and for VCs, it's great, right? You raise one round of whatever out of YC. I think there was a quiet secondary round from Bessemer, but really one venture round and you get up to, they're at 300 million in revenue today. Growth has probably slowed, probably not going to IPO as its current company, but a great company that did something generational.

• 46:43Speaker 00

  What if they raised nothing and the three of us just split 200 of the 300? Like you could do worse.

• 46:48Speaker 01

  Yeah, I think you could do a lot worse.

• 46:49Speaker 00

  The GA guys may make more, but you could do worse, right? So I almost wondered if this one and done, which I used to be a fan of, is going to be a trap in the new age. None and done is much better because it's tough to do dividends right in one and done. You can do them, right, in one and done, but it's tougher. It's tougher to do dividends with the benchmark team, right? They're not really that interested in the dividends, are they?

• 47:09Harry Stebbings?

  Can you not just buy out investors? If you're a Zapier, you just go, listen, guys, say a 5X multiple will buy you out at a 1.5 billion price. You want the liquidity.

• 47:19Speaker 00

  You can, it gets, I mean, it doesn't happen that, maybe Rory can come up with some examples. It does happen, but it gets expensive to do it from free cash flow, even if you have a lot of it. It's not that simple, right? It's not, it can be done, right? Buffer did it, Expensify did it, but they all did it at pretty mediocre outcomes to the investors. I think Red Point made like nothing on Expensify, but probably more than if they'd held IPO, right? It's, it's tough. I like none and done better than one and done now.

• 47:41Speaker 01

  The reason it's tough is because the only way you can pay, if they own a small percentage of the company, then you know, one or two years cash flow can take care of it. But if you're trying to buy out an investor that owns 30% of their company and you want to buy it out for six times cash flow, by definition, you're tying up two whole years cash. So it gets risky if you're doing it with debt. So you're right, they're hard deals to negotiate. But look, if you needed a million or $2 million to get going, you do the deal to start. But yeah, what the big picture we're saying is there are a number of software companies that might set anyone's little heart aflutter, but are kicking off cash and are extraordinarily valuable to their entrepreneurs. And I think that's great. And it just shows, not everything has to be through the lens of venture. I want to make 25 billion or die trying. And it's really good that these guys are making money here.

• 48:23Speaker 00

  It is. And my learning when I compare it to, I just picked Zapier is because they were at 300 billion and a generational company in their own way, but probably won IPO. It's like, I used to think this one and done was a Nirvana, right? The three of us get together, we want to start a company, we're first time founders, we don't have the money. We raise a couple of million from 20 VC seed or whatever. And we just keep growing our company, right? And it's not a lot of pressure, no one, we don't have to have board members and, but we don't, we didn't, the three of us didn't have the resources to do it. I used to think that was a great outcome. Now, in the AI era, I think it's a trap because you can't dividend out the profits as easily. You can't become a 37 signals that easily. Now they, they took money from Bezos or others, I'm sure they figured it out, right? But I almost wonder if no venture rounds is, is the way to go rather than one in some ways.

• 49:08Harry Stebbings?

  Rory, how do you feel about GA IPOing? We're going to see many more firms IPO?

• 49:13Speaker 01

  I think you have to be a critical mass, you know, I was looking at it there. You have to be 800 million plus or minus a billion of fee income, right? That's the real question. Look, these companies, step back. There's a bunch of, obviously, everyone knows publicly held PE-backed companies like, you know, KKR, Carlyle, Apollo, TPG. And then the question is, can you do a bunch of these for the kind of growth and venture perspective? And, you know, the binding constraint is the fee income. And typically, the public investors give you a lot of credit for the fee, management fee income, and very little credit for the carry, which is really odd in a venture perspective. But be that as it's may, to get to a market cap that matters, because they trade at four or five times revenue, it's best case.

• 49:57Speaker 01

  So you're probably looking at having to have 800 million in fee income. Now you set yourself at 2%. What's that, 50 times 800, 50 times that? Yeah, you've got a couple hundred million dollars, well, more of actual AUM. So it's doable. You know, Andreessen probably could get there easily from here. But that's kind of what you're looking at here. Now, maybe you'll get to be able to go on a lower amount of AUM because venture A get paid slightly more and B has carry that's more meaningful. So the very largest companies will do it, but not many is the answer. And that's just purely, that was a very financial metrics answer. Let me make a totally separate comment. It's really hard to do that and not change the culture dramatically and become a more risk averse institution, right?

• 50:42Speaker 01

  You know, it may well be someone like Andreessen could pull it off, but it's just very, it makes it a very different company. So a second separate and probably more important criteria is, you know, is that what you want to do, you know, as a venture firm? I mean, I think it's great for the founder who get to take a ton of money off the table, but then you become a corporate venture firm, and that's just a different thing.

• 51:01Harry Stebbings?

  I don't know if there's a difference. I'm not being a dick, but I don't know if there's a difference between at the scale GA is at now. Like, if GC became a public company, I know compliance-wise, sure, there's a bit more, but just like, they're just, they're such behemoths anyway. My laugh is you get in the lift and you're like, oh, where do you work? And the answer is here. And you both go, oh, wow. It's the same for both. So, interesting.

• 51:24Speaker 00

  Is there, you know, I should know this, Rory, from the public comps. When you do IPO, is there more fee pressure, though? I assume when you're not public, you can play a few more games, right? Because it's, the LPs all know, but when you're, when you're, when you're public, everyone's scrutinizing all of this, right? Where every single dollar goes.

• 51:41Speaker 01

  I don't think it's scrutiny. I think the comment is, you always have to grow assets. You know, you're always launching products.

• 51:46Speaker 00

  Well, you always have to grow. You all, you can't, you can't, you can't just, you can't just pay yourself 80 or 100 as the, as the folks running it and kind of check out, right? You've got to grow.

• 51:54Speaker 01

  Yeah. I'll even state it, like, put it this way, and it's a silly example because they're not big enough, but if old Benchmark had gone public at 450 million every three years, you know, Wall Street would have had a shit fit because they're like, come on, dude. And now finally they're giving them what they want. Oh, good, you got the growth fund. Maybe you should do a crossover fund next. That's the way it would roll.

• 52:12Harry Stebbings?

  Boys, what about Harvard's Endowment? Harvard's Endowment returned 27.1 cents to $68 billion, helped by venture SpaceX, worth about 2.2 billion. They're an awesome team. NAV CIO is amazing. Love him dearly. Work with them. They're great. Anything here?

• 52:30Speaker 01

  Yeah, I mean, if you invest in venture when you're in the big outcomes, it's good. And, you know, they've had a few lean years, but I think you're going to see that. I think one of the other universities who went in direct into SpaceX have made out even more like a bandit. I think it's Washington University. I wouldn't swear on which university, but someone did really well. So, yeah, I think it's going to be a thing. And it's interesting, when it's concentrated and on a few assets, the good news, if you're a, if you're a manager, you probably, not a manager, but if you were an LP, you probably have some exposure to that. So, yeah, you're going to see a lot of this.

• 53:01Harry Stebbings?

  If you are an LP and you do not have exposure to Anthropic, OpenAI, or SpaceX, you are, you are feeling a lot of FOMO right now.

• 53:08Speaker 01

  Of course you are.

• 53:09Harry Stebbings?

  And I think the venture market's about to get a lot hotter, by the way, because a lot of people are starting to get cash back now from SpaceX. They're seeing Anthropic on the horizon, and they're hoping for OpenAI on the horizon in Q1, Q2. And I think we'll start to see that cash recycled back into the ecosystem that provided it. And I think LPs will come in with more money into venture.

• 53:30Speaker 00

  In 2021, the average college and university did 36.6% from venture and PE. 41% was top quartile, and Cambridge had 62%. So the Harvard's great, but I'm waiting for a banger 27. I want to get back to the nutty IRRs that we saw in the last boom, right? The outcomes here are an order of magnitude larger, right? Maybe even more than magnitude larger. But I want to see 60% IRRs. Like, good, good job, Harvard guys, but this is no 2021 yet, right? Yet.

• 53:59Harry Stebbings?

  I feel that 68 billion is pretty impressive, to be fair.

• 54:03Speaker 01

  Yes.

• 54:04Harry Stebbings?

  Scale matters.

• 54:05Speaker 01

  The 68 billion, you do remember they are the oldest university in America, so they've been piling the money up for quite some time.

• 54:10Speaker 00

  Wesleyan, 95.3% returns in 2022 from the 2021 in venture and PE, from 95.3% returns. Wesleyan.

• 54:18Harry Stebbings?

  Wow. Any others that I've missed, boys?

• 54:21Speaker 00

  I think the, you know, the Tesla one, I think it's the last thing we're going to see before the merger with SpaceX. I think it's the swan song, if you want to know my view. And I think Elon kind of said it. He said, this is the last, he said, China's going to take over the cars. This is the last car a human will ever drive, both of which are clearly true, right? China is going to dominate global EV and autonomy. No one can compete with their cost proposition in electric and otherwise. And no one will drive their own cars in a few years, like, literally no one. And I think this is a, I mean, some of the, I don't know why I did all of it. Some of it's clearly for fun, but I think it's, I think it's the last standalone big hurrah before it becomes one big company over the next X months, which was always Elon's goal. Having these companies split up makes, makes no sense for him, right? They'll all be, they'll all be merged.

• 55:03Speaker 00

  And so this is the last, the last Tesla party as an independent company.

• 55:07Harry Stebbings?

  Is it not the most masterful marketing from Elon? The brilliance of Elon is the Elon premium and his ability to have extremely high evaluations because of his presence. Doing these stunts justifies it like no one else can do and gives it life for another 12 months without any recompense. I think it was brilliant.

• 55:27Speaker 00

  Well, that and giving a SpaceX share to every American is pretty brilliant. Kid is pretty brilliant, too. I thought of it just from a sales perspective. It removes objections. There's so many Elon haters, of which I've never, I think he's the greatest founder of our lifetimes, politics aside, greatest founder of our lifetimes. I really don't see I can argue with it, but there's a lot of haters out there. Not just, not just on the left, there's a lot of haters on the right, like, all across the spectrum. Pretty hard to hate him when you grow up with SpaceX shares in your account and you watch rockets blasting every day to the moon and to Mars. Pretty hard to hate the man when you're a shareholder. It's just, it's just that much harder to hate someone when you're a shareholder. It's really that much harder, man. It's that much harder.

• 56:02Harry Stebbings?

  I don't know. I hate Coreweave today.

• 56:06Speaker 00

  I know, but like.

• 56:07Speaker 01

  But, but you didn't get it for free. I mean, the thing is, Elon's going to park one share in every kid's account, these, you know, these so-called top accounts for children, is a very interesting way for super rich folks to make meaningful donation, well, make significant donations to everyone if they want. I mean, I think the idea here is literally every kid gets one share in their account, which is in aggregate, I saw the number sound like $10 billion. It's real money. So it's a super interesting way. Now, I mean, you could argue 200 bucks, some compounding, what does that mean? But it's better than a poke in the eye, and it didn't cost you anything. And because it's associated, as Jason said, with the share, there is an interesting element of marketing to it. So it's good.

• 56:47Speaker 00

  Yeah.

• 56:48Speaker 01

  Cool.

• 56:48Speaker 00

  It's hard, hard to hate the man that just gave it, gave my kid a SpaceX share. You can hate him, but it's hard to hate him as much. It's really hard to hate him as much, right? I mean, Michael Dell is going to get some kudos, too, but this is, this is the big lift. I think this will just gain momentum, too, right? This is the next version of the 111 thing, which was nice, but it's going to remove a lot of the toxicity around the mass of wealth creation that's only just begun and on a scale we've never seen before. And giving it directly back to the people rather than through weird charitable Gates whatever foundation, this is a much, much better way to deflect drama, to give it directly to people, that the ultra-rich should do this. It's, it's brilliant.

• 57:26Harry Stebbings?

  Boys, the brilliance of Elon is a great one to end on and charitable giving.

• 57:29Speaker 01

  Yes, I'll end on a win.

• 57:32Harry Stebbings?

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• 58:17Harry Stebbings?

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