20VC: Anthropic Raises $13BN | Why Canva Will Not Direct List | OpenAI Buys Statsig for $1.1BN All Stock | Lovable Raising at $4BN + Vercel at $9BN: Justified or Not | Quarterly Results from SNOW, Mongo, ZOOM and more

Agenda: 04:00 – Anthropic Raises $13BN: The Analysis? 19:00 – Is Zuck's $14BN Scale bet the biggest blunder in AI? 27:00 – Lovable Raising at $4BN and Vercel at $9BN: Justified or Madness? 36:00 – Quarterly Results for Snowflake, Mongo, Okta, Zoom Skyrocket: Is B2B SaaS back from the dead? 48:00 – Is Jensen Huang right there will be $4TRN in AI gains? 57:00 – Will AI wipe out SaaS margins with 10% GPU taxes? Or is Notion the exception? Items Mentioned in Today's Episode: Try NEXOS. AI for yourself with a 14-day free trial: https://nexos.ai/20vc

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

• 0:00Speaker 00

  Wall Street is the madman in the backseat. In the end, the thing that bails out our incompetence is your growth rate.

• 0:06Speaker 01

  We've had a billion sitting on our balance sheet for ages and it's about around.

• 0:09Speaker 00

  That's a flex, people. That's just, I've had a billion lying around for ages. What have you guys been doing this week? It's the Mark Twain. Reports of my debt were greatly exaggerated. Well, it turns out reports of the debt of SaaS and software were greatly exaggerated. No one wants to say it, but if you get the direct listing totally successful, the people buying don't make any money.

• 0:28Harry Stebbings?

  This is 20VC and it is that time of the week. My favorite episode of the week, Rory O'Driscoll, Jason Lemkin. And joining us, we have Canva co-founder Cliff Obricht. Now, today we are discussing Anthropic's new round. OpenAI buying Statsig, Nvidia's latest results, as long as the incredible results from the slew of B2B enterprise SaaS companies that came out last week. This is a phenomenal episode, but I want to make it the best for you. So let me know what we can do to make it better. Let me know any feedback, [email protected]. But before we dive into the show today, let's talk about agents, specifically Piper, the AI SDR agent brought to you by Qualified.

• 1:07Harry Stebbings?

  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. Three X increase in meetings booked and two X increase in pipeline. Wow, that is some results. Hire Piper, the number one AI SDR agent and grow your pipeline today.

• 1:44Harry Stebbings?

  Learn more at qualified.com/20vc. That's qualified.com/20vc with the 20VC spelt out in letters for goodness sake. And while Piper builds your pipeline, HubSpot gives your business the AI tools to scale faster. Think about listening to this podcast right now. You're probably multitasking and catching 70, maybe 80% of it. How dare you? This voice is so captivating. Now flip that and imagine catching. Only twenty percent. That'd be pretty crazy, right? Yet most businesses only use twenty percent of their data. All the important details in call logs and emails in chats, they're just left floating in digital space. Well, HubSpot gives you access to those insights to help you grow your business. Because when you know more, you grow more.

• 2:29Harry Stebbings?

  Visit hubspot.com to get the full picture today. HubSpot keeps your CRM humming, and when you layer in AI, Nexus takes it to a whole new level. Who's the biggest AI threat to your business? It might be your own employees. They use unsanctioned AI tools and personal accounts for work tasks and feed company data to places, honestly, it just shouldn't go. Well, this is what we call shadow AI, and it could cost you millions. IBM found that ninety-seven percent of organizations reported an AI security breach that's in 2025 alone. As a CTO, a CIO, or a head of AI, that's a mistake you just can't afford. nexos.ai fixes it with an all-in-one secure AI platform. nexos.ai stops shadow AI in its tracks.

• 3:14Harry Stebbings?

  So it's a unified platform for secure, company-wide AI adoption and productivity. Tech leaders set policies and oversee usage. Business teams get the models they actually need. Try it yourself with a fourteen-day free trial at nexos.ai/20vc.

• 3:30Speaker 00

  You have now arrived at your destination.

• 3:33Harry Stebbings?

  Guys, I am so excited for this. This, as you know, is my favorite time of the week. And we get to bring in my buddy Cliff from Canva. This is gonna be great fun. I just wanna dive straight in this week. Rory, as always, I'm diving in with a late addition, because you love late additions. But we had to. Anthropic raises thirteen billion dollars. Started with five, moved to ten, now thirteen, at one eighty-three post. Wow, it's a lot of money. It's a high price. Rory, going to you first, because you prepped for this one.

• 4:07Speaker 00

  Well, funny enough, Harry, I did because it was a little bit anticipated. And I think to some extent, yeah, it's a high absolute number. Because one hundred and seventy three billion, three billion is a lot of money. But is it a high price? And it's interesting, and we talked about this a little last time, and relying on reported numbers. If the growth trajectory is really a hundred billion, oh, sorry, a hundred million two years ago, to a billion dollar run rate started this year, to somewhere around five now, maybe eight or nine by year end, right? Let's just take that as kind of roughly true. Let's say one to nine, which typically means the GAAP revenue is roughly the average of the opening and closing ARR, which means GAAP revenue could be, again, subject to around four or five billion dollars this year. What are they going to do next year?

• 4:50Speaker 00

  If they go from one to nine, and these are the facts, up until now, all I've talked about are facts, things we know today. The million dollar question is, what does today's trajectory say about the next even year? You know, because I mean, you know, you throw a rock forward and it falls down, but it moves forward and falls down at the same time. How much does nine X revenue momentum this year persist into next year? Do the math here. Even if they go nine, I was doing it roughly, nine to thirty, which is three X growth, down from ten X growth. Then GAAP revenue, average of thirty at the close, nine at the opening, it's around twenty billion. This is eight times FY twenty six revenues. The stunning thing with this growth rate, if it persists, big underline,

• 5:34Speaker 00

  is you're only buying in at eight to nine times next year's revenues if the growth lasts. Now, will it is the billion dollar question, but high absolute number, absolutely. Does it make sense? If you think the growth rate's there, then it's not crazy. And I did not go into that math expecting that answer. I mean, I went in saying, oh, aren't those guys so silly paying so much? And you look at the numbers, you go out, maybe those guys are being quite smart.

• 5:58Speaker 01

  This round was also super oversubscribed. It was, I know folks in the industry have been clamoring over this and it was hard to get into. So they could have raised, I think, ten X, ten X that multiple of funds that they put in.

• 6:11Speaker 00

  Totally. Because I was just saying, you're exactly right. And you're looking at the cast of characters who did it.

• 6:17Speaker 01

  If you're a growth stage investor, you know, you're the big growth fund, it's hard to kind of imagine a world where you say, well, we're growth stage investors. But the two largest market cap companies in growth in the last three to five years, the two LLM models, we don't have a piece of that. So there's probably some kind of huge corporate imperative at every growth stage firm saying, you know, we're either taking a big balls call that this isn't going to work, or we need to get one of those. So yeah, I imagine you're right, Cliff. I'd say there was huge demand.

• 6:42Speaker 03

  As insane as on its surface, you know, Anthropic at what 160, Databricks at 100, Canva at 42 sounds, there is multiple.

• 6:51Speaker 01

  We're barely 10x for us. We sound very cheap.

• 6:53Speaker 03

  That's the point. It's not that high. It is, it is. I mean, literally, if you're using AR multiples, these are not, especially if you use forward ones, to Rory's point. Like if you use next years, Canva, Databricks, Anthropic seem reasonable, right? As long as the growth can persist. I mean, Canva, I mean, again, I'm a super fan since the old days. I wouldn't have thought it would be this big, but the growth at scale is epic. It's crazy, Canva's growth, that it's not growing 8% today, right? It's growing five to six times that. I don't know if you predicted that in the old days, Cliff, but I mean, it like breaks your rules of TAM, right? And it's not even Anthropic.

• 7:31Harry Stebbings?

  My question is, we mentioned the oversubscribed element there. Cliff, when you literally have a five X over subscription, I'm sorry if I'm being naive here, but in the same way that Dario did, how do you literally choose which dollars you take?

• 7:46Speaker 01

  It's very tough. And for us, we priced our round before Figma went out and had all those conversations and relationships. And so the Figma IPO kind of throw a cat amongst the pigeons, proving that we will close the year very close, if not at four billion, growing close to 40% growth rate and re-accelerating growth. So we are compounding growth at scale, which is, which is a good place to be. When it comes to investors, we really need to think long-term. We have a lot of long-term partners and you all, you want to pay a lot of loyalty to people that have supported you along the way. But also we're thinking through what an IPO looks like. Who are going to be the, the cornerstones of that IPO? How do we see this not as a point?

• 8:27Speaker 01

  In time deal, but a relationship building exercise through the next eighteen twenty four month period with these really long holding investors. And how do we instill trust in them and and for them to trust us as a leadership team that can take this through I P O and beyond and and make good decisions. So we're not looking to ratchet up the price. We're not looking at kind of playing any silly games. We're really seeing this as like, how do we build these long term relationships that are going to be with us a while?

• 8:54Harry Stebbings?

  Do you have fidelity?

• 8:55Speaker 01

  Yep.

• 8:56Harry Stebbings?

  It was super interesting. We had Brian Halligan on from HubSpot and he was talking about the central role that fidelity play. And I actually wasn't quite as aware as I'm sure Jason and Rory were as how important and strategic that was in terms of aligning them for when you are public.

• 9:10Speaker 01

  I'm not, I'm not sure how much I could. Yes. But yeah, they're, they're, they're the anchor of the round. They're the largest check in this, this round.

• 9:17Harry Stebbings?

  I thought you promised that to me, though.

• 9:23Speaker 01

  Shake some trees. So, so the problem now, so this is all secondary. We've got over a billion dollars cash in the bank. We don't need to raise money primary funds. And we've been a profitable company for eight years. So when we go out and do this employee secondary, and also we have some investors that want to sell. And then they see Figma go out, a lot of that sell side demand dried up. So we, we do have, even though we're already oversubscribed, we've got this supply and demand imbalance at the moment. That, um, yeah, it's, it's an interesting dynamic to work with. It's a hard problem to have, but you don't want to disappoint people.

• 9:52Speaker 03

  How do you coach employees on that? Do you stay out of it? You know, especially when you see Figma go out in the multiple, right? It's tough for employees to process the decision, isn't it?

• 10:01Speaker 01

  Yeah, I, I like to be very transparent and I think Figma are absolutely incredible company. They don't have a massive float. There's dynamics to any float that, that, that can make things go higher or lower. What we do, we show them a spread of public companies. We show them their growth rates. We show them how we really think. So if you compare us to some companies, we're undervalued. If you compare us to some, we're sort of on par. And we give them that spectrum so they're not just taking one single point and and referencing all their kind of marks to that. Oh, and also just talking through the long game nature of this, I mean, we have been through.

• 10:37Speaker 01

  And tribulations ourselves, we in twenty twenty one were worth forty billion dollars, uh, which was a, I think it was a fifty X multiple on our revenue at the time. Twenty twenty two, everything came crashing down, the market came crashing down, uh, and that took us down to twenty six. And so that was, that was, uh, a tough pill to swallow. When we thought we were riding high and we've slowly just compounded that growth. I mean, the company hasn't stopped growing. We were still profitable. All of the, the, the foundations were right. And that's what, I guess, what we really focus on and educate the team on. The markets will do what they're gonna do, but as a company, we can compound growth. We can compound margins and increase margins and we can deliver value to our customers first and foremost.

• 11:21Speaker 00

  And, and you're exactly right. I mean, it's, it's kind of just talking about that because even the little example you gave, two things are clear. Look. Very smart people with MBAs swore blind you were worth fifty X ARR in twenty one and twenty X ARR in twenty two. And now you were ten X ARR. So.

• 11:38Speaker 01

  Do you know, do you know, a very funny, funny point. It took discipline to take the fifty X because we, I won't name names, but we had people coming in at higher multiples and they were like, this is, this is batshit crazy.

• 11:48Speaker 00

  Totally. And it is always, I mean, I did a post years ago, beware the madman in the backseat, which is Wall Street is the madman in the backseat. It changed, I mean, finance, we all do. You, you change your mind so drastically and so quickly, right? But as you said, all you can say to the team is they're gonna do what they're gonna do. They're gonna fifty X, they're gonna twenty X, they're gonna ten X. What you can do, and it's very impressive, is we can, finance can be wrong literally by five X. From fifty to ten, and you've been able to recover that valuation by just working hard and growing for five years. In the end, the thing that bails out our incompetence is your growth rate. And God, and that's, that's the dirty little secret of the positive. If you get in these companies which can compound for five or six years, they can cover a multitude of sins.

• 12:33Speaker 01

  That's what worries me about some of the IR companies now because I've seen this time and time again with people trying to copy Canva or be Canva for this or Canva for that. There is an early adopter syndrome that pulls forward a lot of revenue and I think one. We've done well with Canva is cross the chasm to the mainstream, middle America, people all through Europe, not the Twitter sphere or the X sphere, whatever you call it these days, that are always using the latest and greatest products and paying that because they're happy. And then then then there's consolidation of those early adopter products. And a lot of those products struggled across the mainstream because then it comes about comes to distribution. And distribution at scale is a lot harder to reach those people in middle America

• 13:16Speaker 01

  than people that are actively tracking what AI is doing actively on product hunt or whatever. And on X seeing all that sort of stuff. So crossing from sort of fifty to a hundred million dollars to a billion dollars in revenue. That that's a big leap and I'm interested to see how some of the companies can navigate it.

• 13:32Speaker 00

  It's interesting because yes, there's two separate things embedded in that, though. One is, yeah, just the sheer fact of going from a hundred to a billion is a grind. But the second thing, and I thought you were going to go there and I want to ask you about it, is separate comment. Our nagging suspicion is that some of the year two ARR renewal rates for some of these AI AI products will be pretty low. In other words, that the AI product market fit is getting covered over a little bit by, you know, AI enthusiasm. Right, early on. And be curious, how are you guys thinking about your AI products? Are they doing great? Are you getting the usage you want? Do you think users are grocking them or, you know, where in the AI adoption curve are you and your users?

• 14:12Speaker 01

  Firstly, we're all about creating workhorses, not gimmicks into Canva. So the mission of Canva was to empower the world to design. And that's to take anyone's idea and create a great piece of visual content, whether that be a video, a marketing material, a poster, a presentation, et cetera, et cetera. AI is just accelerating that massively for us, making it quicker, faster and better for our customers to achieve their goals. So we already have a user base, AI is accelerating that. And I think what you're seeing now, when it comes to companies applying AI into their products, people threw a lot of shit at the world, right? And hoped hoped it'd stick. And that was the right thing to do, like every company on earth, or hopefully, we're running AI hackathons, what we don't know, what we don't know, what what can we get into the product? Let's test it. And then then it consolidates down to a small number of things that add true value.

• 14:57Speaker 01

  And then there's a lot of periphery stuff that is kind of neither here nor there. I think to answer your question in a different way around sort of AI consolidation and year two renewals, particularly around enterprise customers. If organizations were approaching AI the way Canva was approaching AI, the cost of implementing these tools and a breadth of tools, as long as they meet our security requirements are negligible. Our approach was spray and pray, use all the tools. I'm happy to open up an extra 10, 50 million dollar budget, hoping we can drive employee efficiency and get more done with the same amount of people using all these tools. And I'm not going to be the arbiter of this tool's better than that tool. We're running four coding tools at once, right? Cursor seems to be the one that's kind of leading the pack. Same goes with all the L L Ms.

• 15:42Speaker 01

  We give everyone a choice. You can only have two that we limited. You can't have Gemini, OpenAI and Anthropic. You can kind of pick two. So where we're like, use what you want, as long as it meets our security requirements. Over the course of the next 12 to 24 months, we'll start consolidating down as the clear winners take charge. And so to answer your question in that way, 100% there's going to be consolidation down from, um, yeah, year two renewals.

• 16:06Harry Stebbings?

  Sorry, I do want to retain some semblance of structure because you mentioned clear winners there. And we spoke about Anthropic and the large raise. On the flip side, today announced, OpenAI buys Statsig for 1.1 billion dollars in stock. So it was the same price as the last round that Iconic led. It's an incredible team with Vijay, super obvious matchup, given Fiji obviously joining OpenAI. Business is doing 75 million in ARR. My response to the team WhatsApp group where one of our partners is an angel was, that's cheap. And I wanted to know how you guys thought about that. Do you agree with me? A billion one in stock for a 75 ARR company with an amazing team. Guys, how did you feel?

• 16:48Speaker 00

  Let's take the perspective of the person who just did the last round. In May of this year, I valued this thing at 1.1 billion. On the other hand, I'm probably the same investor. In fact, it was, I think Iconic did the round. They just did Anthropic at 170 bill. They might be very happy. Oh my God, I got some, I got me some OpenAI. Now, and you know, if you know, you're effectively within four or five months, you you you rolled forward into the next OpenAI round and the next OpenAI evaluation. Maybe that feels just as good. I'm doing the math in my head, but the revenue multiple mightn't be that much different. So you're you're kind of like, yeah, I thought I was investing in staffing. Now I'm investing in OpenAI. Worse things can happen.

• 17:27Speaker 03

  Maybe the angels don't like it. I think when I saw that the round was exactly, apparently exactly the price of the growth round from iconic, right? It just makes you wonder if you're if you're just getting your preference, you don't really care as a late stage investor. You don't care whether it's one, one or one oh six or nine eighty four, because you're you're making the exact same amount. The fact that it was exactly the last round showed this was something that everyone wanted to roll into. Obviously, the CEO wants now that what's the CEO? He's like number three at OpenAI, right? He's going to run it with with. Yeah, I mean, and and he pushed the CPO aside and now he's running the that's a big. For me, I'd rather run my own company. I'm I'm guessing Cliff would too, but but for ninety five percent of people, this might be a quick upgrade without risk, right?

• 18:09Speaker 03

  So he got what he want. Iconic rolls over a hundred million into OpenAI. They're not allowed to invest because they led the anthropic round, right? So this is the only way they can put nine figures into it because they're soft banned or hard banned from the round, right? That maybe the angels don't like it because they wanted to play another card, but everyone else, the fact that it's the exact price of the last round, not not not two X, not less. It's it's just it's just perfectly engineered to check everyone's boxes, right?

• 18:35Speaker 00

  And the people we didn't name who did the A and the B, Sequoia are presumably, as always, happy and successful. So there you go.

• 18:42Harry Stebbings?

  Cliff, here's a hundred billion dollars of OpenAI stock.

• 18:45Speaker 01

  I'm not doing it, but.

• 18:51Speaker 01

  We love them, but it's just not. I mean, we're cutting our own course. We've had acquisition offers.

• 18:55Harry Stebbings?

  Dude, I will always put you on the spot and ask questions like that. Rory knows that well. The the tough one. Poor old Zuck. Zuck is getting a batter. You know what I love is the transience of Zuck, where it's like, you know, Zuck's a hero. And then Zuck, what a fool for buying scale. And I mean, the the wheels seem to be coming off the scale acquisition in terms of the talent that's leaving. And the satisfaction with the quality of scales output, everyone wanting to use surge. Edwin, great guy, liked him a lot actually, and McColl portfolio company, go McColl.

• 19:31Harry Stebbings?

  And they're just very upset with the output of scale not being good enough. Is this the wheels coming off the scale and the meta train? Or is this media overhyping coming back on Zuck in a way that's just unfair?

• 19:45Speaker 01

  I just feel sorry for Paul Zuck. Imagine Paul Zuck opening the newspaper or his phone every morning, looking at the news. He's got to be a challenging life being the CEO of Meta.

• 19:55Speaker 00

  Yeah, look, I mean, I don't think it's profitable for me to speculate on how he feels. I don't know and frankly don't much care. And it's not my problem. And if he's not feeling great, he can cry into his $200 billion and get over it on his own. Right. Take it up with a therapist. The actual most substantive question is, does this new information make you feel better or worse? Just as I objectively seeing how the deal is going, is there actually a real fact based takeaway, right? Here, there's information, it's not wildly surprising. I mean, when the deal was announced, you kind of go, that feels an odd way to solve this problem. Maybe it'll work, but it'll be messy along the way. And this just feels to me like there's two different shoes dropping here. And they both feel like exactly the shoes you expected. The first shoe to drop is people.

• 20:36Speaker 00

  It's hard to give people $100 million and then give someone else a billion dollars and then give someone else $10 million. And then have them all work together. There's going to be some fallout, even if they're all amazingly talented people who want to work together. People have egos, people are human, it's just going to be messy. So the fact that some people are leaving, whatever, I don't know. I don't know about the attentive package, but it's just not surprising. And some of it could be directed. Remember, we talked only last week, back to your comment on what kind of up and down on this, that they seem to be organizing the thing in at least a structured fashion. You're in, you're out, you're in, you're out. So there's human fallout that was predictable. The second thing is just the asset itself, right? The comments about how the meta team aren't as excited about the scale, data labeling stuff makes sense to me.

• 21:19Speaker 00

  I mean, from what you read, the requirements of data labeling have evolved a lot from very simplistic, this is a dog, this is a cat. You know, answering much more complex, the training data that it takes to, you know, pass advanced bio, to pass advanced math. And it's a different thing, and I'm sure that scale aren't dummies, they're trying to do it. But there's other firms, and you mentioned two, one of them is your portfolio company, because that's what you do, promote the product. There's a bunch of others touring and all that. There's a bunch of folks out there, I mean, none of them, just to be clear, so no agenda. There's a lot of competition. And if you're sitting there as Meta and your ass is on the line to deliver, then you're not going to say, oh, I'm going to buy from what is now our biggest investment, which is in scale, just because that told me to do it. You're going to buy from the best. So there's probably going to be some of that, oh, we didn't get what we want.

• 22:04Speaker 00

  Which raises a third. If you remember the structure of this weird deal, they put fourteen billion into scale as if it was worth fourteen billion. And to your point, Harry, it's kind of a one, it was a one X to the last round. And then the VCs promptly took out that fourteen billion, leaving scale as an empty shell, because all the money's gone. And then there's this remaining asset that we agreed wouldn't last a year, but we had to pretend was like a company. And now Scale and Meta on its balance sheet has a fourteen billion dollar investment in a company that probably isn't worth fourteen billion anymore. There ain't any cash and there ain't a great business. At some point, the auditors are going to say, hmm, you've got a fourteen billion dollar venture investment there. Do you really think the empty husk of Scale,

• 22:46Speaker 00

  without all the team that's moved over to Meta, all the team that's left is worth fourteen billion? We'd like you to take a write down. And that's going to be the entertainment factor back end of this year, early next year. It was a quirky deal. It has a bunch of problems. It's just been a step on the journey to fucking up a fourteen billion dollar acquisition.

• 23:03Harry Stebbings?

  Rory, do you have confidence Zuck's master plan will play off? Or does this leave you less confident than you were before?

• 23:10Speaker 00

  He has a master plan. He's won already. He's worth two hundred billion dollars. And he's got one of the most ten, seven most influential companies on the planet. He's won already. All you can say is you've had some big bets that have worked amazingly, like WhatsApp. You've had some small bets that worked brilliantly, like Instagram, best acquisition of the last, of the prior decade. And you've had some big bets that have flopped, like Meta, Metaverse thing. My gut is this is more like the latter than the former. I could be wrong.

• 23:37Speaker 03

  Culturally, I think just the simple fact is he's he's assembled a pack of mercenaries. He's gone out and hired all the best mercenaries out there, forced them to report to each other, a weird structure, power struggles, fiefdoms, but he's put them all together in a matter of weeks, right? Maybe months. When I was a B2B founder, trying to be driven, but touchy feely, I was sort of anti-mercenary. If you're not on my journey, I don't want you, right? This is a long path. Canva's been doing this for, I don't know, 20 years, right? Something like that. Like, but as time has gone by, I'm more nuanced. Sometimes, you know, maybe you need mercenaries. And sometimes there's cultures where it's okay. And sometimes there's a tool for the job. But I just think this is, we can pick at this. And I think

• 24:19Speaker 03

  the criticism, but it's just, I think Zach knows this is a bunch of mercenaries. Some of them are going to fall in battle. Some of them are going to quit. And he's given 20, 30 billion to a pack of mercenaries. Canva seems anti-mercenary from the outside, right? But maybe there are times when you've had to hire a pack of them to go into, go into battle.

• 24:39Speaker 00

  Can I ask a question on that? Sorry, Harry, because genuine interested. We, you know, we've, we're trying, as we look at kind of big classical SaaS companies, we're trying to figure, and you're trying to figure out their role in the AI world. How much of your re-acceleration would you attribute to the stuff you did in AI versus just, you know, getting through 2022 and kind of finding your sea legs again and just executing?

• 25:02Speaker 01

  COVID for us, we were growing faster than ever. So you got to decouple valuation and company growth.

• 25:08Speaker 00

  I agree. Decoupling valuation, just.

• 25:09Speaker 01

  Yeah, COVID was a mass discovery event. Everyone was sitting on their ass on their computer all day. It was great for Canva. So what was the question? It was.

• 25:17Speaker 00

  I didn't post, I wasn't clear about post, like 22, 23, you de-accelerated, right? And then you leave valuation out of entirely, just talk revenue. And now you're obviously re-accelerating at huge scale. And you're doing what every SaaS company, pre the AI companies wants to do. And that's the only way they're going to be back to being relevant, being exciting. And obviously, every one of us owns lots of them. We're trying to figure this out. So for you, do you think that AI was the reigniter of growth in 24, 25? Do you think it was just execution? How much of it do you attribute to the AI initiatives you guys took in the last year and a half?

• 25:52Speaker 01

  I would probably say 20%. I think one thing you need to buck the trend of as you become a larger company is internal thinking and treating your user base like a wet tea towel that you need to to wring out. Ninety percent of our user acquisition is organic. And so we just needed to reaccelerate all our core flywheels and AI enhanced that. Going really heavy on international enhanced that.

• 26:17Harry Stebbings?

  We spoke about paying up for the team. There's companies that are being paid up for. Rory, I'm not shilling. So before you get me for shilling, I'm not shilling, but one of them is lovable. And it's in the FT and it's like, hey, new $4 billion round. By the way, Cliff, notice what I'm about to do here. I'm about to neutralize my argument. Vercel, another company in the similar space, has got a $9 billion round apparently in the works. Question being, do these markups very rapidly, literally within a month or two, really make sense? Or is it excess capital supply that is exuberant, desperately trying to find a home in an AI company?

• 26:58Speaker 01

  I'll jump in. Definitely the latter is that there's the FOMO of missing out and that that's real and people throwing cash and realizing that we're on a curve here with this AI boom. And I mean, most people are thinking we're not at the top of the curve. It's not going to fall off. We're we're a lot closer to the top than we probably were maybe a year, 18 months ago. But it still feels like there's money to be made. And Rory, I heard you the last time saying you're still investing. This gravy train doesn't, isn't probably going to end immediately. It will sort of start cooling off at some point. And I think investors are just realizing they need a good chunk of their portfolio in this category. I do worry, as I mentioned before, about some of these companies crossing to crossing the chasm to the mainstream

• 27:43Speaker 01

  and turning that 100 million in revenue to billions in revenue. But companies like lovable, they're definitely well positioned to do that if they keep executing at the rate they are.

• 27:52Speaker 03

  The multiples can't make any sense because we knew this when we did the round. You knew, I mean, Anthropic's revenue has tripled in four months and no question, there was some risk. Wouldn't make the plan. Of course, there's some risk, but it wasn't that high. Like, we didn't de-risk. We're all investing on forward multiples. Anthropic, Lovable worth 1.8 billion 60 days ago, 4 billion today. I know the ARR growth has been tremendous, but it's probably exactly as predicted. I mean, listen, if it's, if either of these out-accelerated their plans, it'd be one thing, but

• 28:26Speaker 00

  I'm not loving that.

• 28:28Harry Stebbings?

  This is why I'm getting in super trouble, but fuck it. It's late at night and I'm in London and fuck it. They're out-accelerating plan. Like, they are at 125 to 130 now, give or take. And they had planned to end the year at 175. They'll be above that, I think, at 185 to 200. If you're at 185 to 200 and next year, say what, say they do a 2x to 2.5x, say they're at 450, 500. Is it that nuts to be paying?

• 28:52Speaker 03

  I'm not saying it's nuts, Harry. What I'm, and your data is more valid than mine. What I am saying is most VCs should have had that in the model 47 days ago. I'm not saying that they didn't achieve the progress. You know, in the public markets, your Monday, you miss by 1% and you get your head cut off, right? You're down 30, 40%, even though the range of variation is quite, quite tiny, right? These, we're always valuing future growth. I just, it's not that I'm not saying, if Lovable really in 30 days blew out the highest plan any VC had, then I'm with you. But I don't believe Anthropic did. I believe Anthropic set a crazy number, as did OpenAI, right? These numbers blew our minds when they put them out there. And they hit them or exceeded them. The VCs couldn't put that in their spreadsheet?

• 29:36Speaker 00

  I'm gonna come in, because the Monday comment, put a pin on that, I think, actually proves the opposite point. So stepping back, and I think this is a really interesting subject, that the second round, two months after the first, I've been thinking about it a lot, right? And I gotta do big buckets and then go down each. There's only three reasons largely this happens. One is, it was priced right two months ago. New information has occurred, or something has changed such that the new price is worth more. And that's kind of what we're talking about now, is that happening? If that's not happening, that's option one. If that's not happening, then the second thing is, Somebody underpriced the first round and now someone else is figuring that out. You know, like there's, there's been some kind of misprice. Either the second price, if there's not net new information, either the second round is too high or the first round is too low.

• 30:20Speaker 00

  And the third and the most zany one, but I think is a non trivial thing is there's this validation concept, which is, oh my God, Sequoia were willing to do 2 billion. I would never have offered 2 billion or 2.2 billion before, but now I want to get in and sort of going to offer 4 billion. So you get this kind of, the last round provides the validation for the next round. And those are three different things. And I think they're all going on to some extent, right?

• 30:42Speaker 01

  There's another, there's another point as well. It's like, if this company is going to be a 20, 40, 50 billion dollar company, who gives a shit whether it's two or four, right? So if they're, if you can write the thesis that this company is going to compound some level of growth over the next five years, is going to be one of the major players in a new category, then who gives a shit?

• 31:02Speaker 00

  You're right Cliff, but logically I'm just going to be that painful person. If that's correct, then the people who did the first round underpaid and the company, let's just say if a company says, but just be logical, if the companies did exactly what it said to do and they raised money at 2 billion two months ago and can raise money at 6 billion now, they should have raised money at 5.5 billion two months ago. They underpriced the first round. By the way, it's why it's quite like that whole IPO weirdness discussion. Oh my God, you priced your IPO at 38 bucks and the stock opened at 76, you left money on the table. It's actually the private version of the same thing, right?

• 31:36Speaker 01

  I think it's the Harry, I think it's the Harry effect. I haven't, I haven't listened to a Harry podcast where he hasn't drummed the loveable beat. I think, I think you've had a 2 billion of market capital in this company single handedly. You should get more shares.

• 31:49Speaker 00

  Tell you, but let's go back to the first one, because I think the first one's interesting because it's actually a fact based comment. Is there net new information or they work more? Cause you'd like to think the whole world lives in the first area. And if it doesn't, because then you went to weirdo shit. The second thing is mispricing and then the third thing is just kind of psychological dog hierarchy, high school hierarchy phenomenon of I can invest if A doesn't. So go back to the first. Jason, your point, you said the Monday thing about you missed by 2% and the stock goes down by 30, but my comment is that's actually. Proof why you can in fact see these step ups. If you're underwriting thirty percent in the next two months and you get thirty five. By the same logic that if you miss by five, you go down by thirty percent. If you achieve, out achieve by five, you can justify a higher price.

• 32:35Speaker 00

  And I think.

• 32:35Speaker 03

  Yeah, I mean, the beta is off the charts, right?

• 32:38Speaker 00

  For the A I. Some of the entropic thing could go down as that first example is the performance this year. I think they re and I'm willing to bet it's actually it gets a close point. I'm willing to bet no matter how hard you tried, no one had. They went from a hundred to a billion last year. They're going to reaccelerate in Q one or Q two of this year. And it's obviously with the curse of Claude code, et cetera. So there is new data, I would argue. That's an example of where you have a three X step up from the early round. I think with lightspeed earlier this year to today. And at least some of that is justified based on new information, which is they have reaccelerated at a scale that probably no one imagined they could do it at. So I think so.

• 33:19Speaker 00

  Sometimes that follow on round two or three months later might be based on new information. I don't think it's majority of them, but some of them.

• 33:27Speaker 03

  I'll tell you one, one, just just on this point, what to me shows the inefficiencies in this, right? Or the shoot from the hippeness is that lovable closes Harry's favorite company closes at one point eight billion in July seventeenth, twenty two thousand and five. Thirteen days later, the exact same company called Replit. That's the one I use. Same company closes at three billion, basically the same A R R, basically the same company. Yeah, I can tell you my views of security and rogue A I agents, but come on. I mean, most people can't tell the difference. And then the revenue is basically the same a hundred ish, right? One's worth three billion because it's marked up by Andreessen. One's two, two billion because Excel wants the deal. I don't think either of those deals were perfectly efficient.

• 34:08Harry Stebbings?

  Is this fundamentally bad for companies, Rory? If these companies are getting hundreds of millions of dollars foie gras down their throats a month or forty five days after they've just taken a couple of hundred million dollars more. Do you believe that is fundamentally bad for the company?

• 34:22Speaker 03

  Did it change your values, Cliff, having an extra billion on the balance sheet? Or did it not really change the company?

• 34:27Speaker 01

  We've had a billion sitting on our. Balance sheet for ages and it's about

• 34:30Speaker 00

  That's a flex people. That just, I've had a billion lying around for ages. What have you guys been doing this week? Okay, flex away Cliff, big guy. Okay. You want to sound all wise, hourish and say, don't take too much capital, but the truth is it's a rocky journey. There's probably some bumps ahead. Most founders will be happier with a bigger balance sheet. The really great ones are the guys who can take the capital and then have the discipline not to use it foolishly. Sometime in the next two years, in many of these markets, there will be a shakeout. And if you've pissed it all away in performance marketing, shame on you. But if you have that capital ready to move decisively, you might find a good opportunity for it.

• 35:08Speaker 01

  It all comes down to confidence in your ability to execute and capture TAM and market share. With Canva, we took a very different approach. We were so bullish on where we were going, we wanted to minimize dilution. So we raised as little as possible at every stage to get us, this is a high risk maneuver and I don't recommend this to founders anymore. I say be a bit overcapitalized, but we would run it kind of to the bones in order to take as little money as possible. We'd go for the highest valuation possible just to back ourselves to hit that next level and get as minimal dilution as possible, which worked out well for us, but was a riskier than probably is recommended maneuver.

• 35:47Speaker 00

  Guys, I want to cross the chasm, so to speak, and move from the world of privates to the world of publics. This will be a fun one because we had quite a big week in publics, crushed for B2B. Jason, baby, B2B publics is back. Snowflake, Mongo, Box, Elastic, Okta, Zoom. I mean Zoom. Beat. I mean, that's like Madonna coming back from the dead. I mean, that is like

• 36:14Speaker 00

  Sorry Rory, don't worry, I said it, not you. Jason, is this just like the return of the good old days for SaaS, baby? How did you analyze uniform great results from everyone?

• 36:26Speaker 03

  I mean, I don't know if it was it was quite uniform, but it is interesting that some folks, I mean, let's let's spitball it as half of the public B to B leaders are finally getting an AI tailwind, right? Or they finally are getting one and not everybody, you know, we love Salesforce. We had Mark on, they haven't seen it yet. They have the demand. It hasn't hit yet, but box, Zoom, Mongo should be crushing it because every time I spin up a new vibe app, I need like two or three databases, right? I mean, that's just one corner of the world, but Mongo should be crushing it. And so it's exciting to see it's not even, I mean, the Atlascians from down under the drop boxes aren't all the Asanas aren't seeing it yet. Like Cliff said, you just got to be smart. You're not, we're not building our own L L Ms. If you have a billion dollar install

• 37:11Speaker 03

  base, you have a distribution channel, the Cliff's point, right? It's kind of sinful if you haven't reaccelerated by the end of 2025. You kind of failed as a founder because yeah, you may miss some of the cool kids, right? They may not, they may be using, but but you have a billion plus of distribution. You have no excuse. You had 18 months. So thank God we're seeing it, right? Because it would be almost catastrophic if none of the leaders were getting an AI tailwind boost. And it's good, but but it's not a dead cat bounce, but we're not outside of Mongo and Snowflake, we're seeing modest, modest reacceleration. But it's great to see them have it. Otherwise, we have to give up on all the public guys in bed on the canvas and data bricks and tropics didn't give up on the last generation.

• 37:55Speaker 00

  Taking Mongo because that was the one that jumped 40, 45% of the stock price. It's back to the back to the point Jason made earlier, which is, you know, the year on year gap growth rate is back up to 24%. I think it's higher Q on Q. So I think they guided a little more forward aggressively, but they were at that rate two years ago. Right? So it's not like they're, you know, they're 10 X thing or something like that. I think what happened here is everyone got into the, oh, my God, Sassy is dead. Everyone's sad. You know, none of these guys are going to make it. And even small, and this is back to the Monday comment, because these markets are trying to get, you know, it's not just about fundamentals, but it's about how you perform relative to expectations. If your expectations are low, you just do.

• 38:36Speaker 00

  Moderately well, you can have a forty five percent jump in the stock price in a week. It's back to, you know, and if you look at the the absolute stock price, if you look at the revenue multiple, it's just back to where it was two years ago. It's a great core company. You know, it's the Mark Twain, reports of my debt were greatly exaggerated. Well, it turns out reports of the debt of SaaS and software were greatly exaggerated. If you are a good CEO, and Dev is an extraordinarily good CEO, just like the Cliff story there, because he did, I mean, I noticed Cliff, he didn't say, oh, it was all just AI. We got our shit together, we did a whole bunch of things. We raised our expectations, we said, hey, we're the leader in a big market, let's make stuff happen. And if at that point you're valued at seven tons and then you beat plan even by a little bit, you get that kind of bounce. That's what happened here.

• 39:18Harry Stebbings?

  Cliff, when you see this Monday getting hit for being, you know, a couple of percentage points off. Again, I would never ask on timing or anything quite that ludicrous, but you go like, yeah, that's an arena I want to be in, or do you sit and watch Cheeky Pint with the Collessens and go, that's the fucking arena I want to be in, sitting drinking a non-alcoholic beer with the founder of Cognition, doing a handstand with Vlad, enjoying the wonderful splendor of the private market?

• 39:45Speaker 01

  I still love my beers alcoholic, I haven't, haven't followed that trend, but um.

• 39:49Speaker 00

  I love it.

• 39:50Speaker 01

  I, I think it comes, I mean, yeah, yeah, there's a lot of, there's a lot less scrutiny as a private company, but as a late-stage private company with the likes of all the big cats that are playing in public markets, already invested in us and continuing to do so. Our reporting obligations and our expectations to beat and raise are pretty much the same. So it does get me thinking, like, what is the real difference? And then I think to your point that you've made on previous podcasts, the public markets are valuing companies a lot higher. So when the public markets were valuing companies lower than the private markets, you were kind of like, well, whatever, whenever. But now, now at a lot higher marks, it, it's sort of, it is appealing, it is becoming more appealing.

• 40:34Harry Stebbings?

  In the show, we, we actually mentioned you, you probably heard it, sorry. Where we were like, you know, Figma goes out, Jason's, but like Figma goes out, sees the pop. If I were you, I'd be going back to the team going like, let's Forrest Gump this one. Like, we should go out now, let's run for it.

• 40:52Speaker 01

  I mean, we're gearing up to be ready to IPO. We want to be an IPO ready company. We recently, you mentioned Zoom, we brought in Kelly, who led their IPO and she's been fantastic addition to the team. She was their CFO. So our goal is to be ready. When we actually go out is another question, but yeah, we're gearing up to be an IPO ready company.

• 41:14Speaker 03

  Can I ask a question? We've talked about on this show a bit. You have a billion in cash, you're profitable or cash flow positive. I don't care which one, probably both.

• 41:22Speaker 01

  Right.

• 41:22Speaker 03

  You're able to do tender offers for your employees and provide liquidity and whatever, whoever of your early stage investors want out, you can probably flip their shares. Why?

• 41:33Speaker 01

  I'd love them to sell more shares because it has helped solve my problem right now of not having enough sales side.

• 41:39Speaker 03

  Yeah. So why, why, why at a meta level, why IPO, right? You have, and you, and even M and A probably isn't a reason on its own, right? Unless you want to buy something for $10 billion. Why would you IPO?

• 41:51Speaker 01

  Yeah. I mean, that's the question we've always asked ourselves. And I think there's three key points. There's availability to capital, which we have access to. I think it's probably liquidity and there are restrictions, particularly around employee liquidity and what you can do in the U S and whatnot around that piece. And so we do believe in, we're 13 years old as a company. Our employees should have liquidity. They've created all this value. How can we make it easy for them to, to access that, that wealth that's built up? And while secondaries, annual secondaries are a mechanism for that, it's pretty janky and particularly in some jurisdictions, it's downright impossible. That's probably the biggest one. Yeah. As you

• 42:35Speaker 01

  also get a bit more publicity personally, we don't want to be more in the public eye. We're happy just being in Australia, working away, building great products. But yeah.

• 42:44Speaker 00

  I mean, I'm not going to be too nice to you, Cliff, because after last week, Harry gave me grief for being too nice to our guest, Mr. Bannion.

• 42:51Speaker 01

  No, get it to me. I love it.

• 42:52Speaker 00

  But I'm actually going to be nice this time because I totally agree. And you mentioned the other one in passing, and I just want to put it back on the table because you said it. Oh, and by the way, the public markets now are giving me cheaper capital. And the private markets because if you're if all the numbers are as reported, you're getting roughly 10x revenues and the fine folks at Figma are getting between 17 and 30, depending on how available you think the current price is.

• 43:15Speaker 01

  I think that's a byproduct of these large crossover funds probably have 80% of their capacity allocated to public and 10 to 20 to private. And so you're chasing a smaller pool of capital, even though we're in a good position. Ultimately, the the volume of capital dictates that multiple and there's such an immense amount of capital being deployed in public markets that just is driving up those values.

• 43:39Speaker 00

  In this conversation, which we have rolling all the week, I'm a huge companies at scale like yours should be public. If for no other reason, it is bizarre that we've evolved the system whereby to allow ordinary people to invest in you instead of paying 50 bips to fidelity, we have to pay two and 20 now and enrich the middleman like us. And, you know, God bless it, but it doesn't seem a mission driven company would make that their mission, but call me cynical on that. But it's just the whole structure is absurd of these high and it's exactly what you said, having to get permission from your employer to get liquidity as a secondary after 13 years. It's better than no liquidity, but it's a little bit surf like and you really, when you're public, you can do it, make your own choices. So I'm totally with

• 44:22Speaker 00

  that answer in terms of companies at scale, when they're ready, should go public. And it feels like the better way to run a business at scale.

• 44:31Speaker 01

  Yeah, I mean, people deserve liquidity and having our customer base, we got 240 million monthly active users. A lot of them want to invest in Canva and you see Figma had a huge retail demand. We want people that have helped create our success to share in that success and we really want to deliver for them. So it very much works into our mental world. So yeah, we're not, we're not anti RPO.

• 44:53Speaker 00

  I love it.

• 44:54Harry Stebbings?

  Are you not the perfect contender for a direct listing?

• 44:57Speaker 01

  Oh, I've looked into this and while I've looked into it in depth, it just.

• 45:03Speaker 00

  You've got a great consumer brand. You've got 240 million consumers that would love to buy in. Direct listing all the way, baby.

• 45:11Speaker 01

  Yeah, it is an option. I'm not sure it's going to be the option for us. We'll look at all options when the time comes. You can still get all those dynamics. You're not really getting much out of it. And if you look at all the historic direct listings and how they've gone over time. I believe the data proves that none of them have been greatly successful. A lot of them have been really successful companies over a long period of time, but that period post-direct listing, none of them have really kind of nailed it over that short term.

• 45:39Speaker 00

  You are right in one sense, but it's always worth pointing out that the definition of success is weird because you're right, they didn't nail it in the short term. In other words, the stock didn't go up a lot after the direct listing. But a little part of mine wants to say that's the fricking point, right? You know, no one wants to say it, but if you get the direct listing totally successful, the people buying don't make any money, right? And you know, people like their pop, so.

• 46:05Speaker 01

  You've mentioned this in a prior podcast. It is about getting the right long-term investors. So you want people that are going to hold your stock if you deliver, if you deliver being a key point, you need to deliver for five, 10 years and compound that position. And so, yes, from a sort of logic perspective, it makes sense. Supply and demand match that. And you definitely don't want a huge, huge pop. And I think you can sort of manage that through how you stagger the lockup periods, et cetera, et cetera. There's ways to manage that. So it isn't everyone locked up for six months and then it drops. And there's better ways to kind of manage that. But yeah, I think you're ultimately optimizing for the large, long shareholders that are probably going to hold 50% of your stock for an enduring period of time.

• 46:51Speaker 01

  And the relationship you build with those investors is incredibly important. And they're, from what I understand, pretty anti-direct listing.

• 46:57Speaker 00

  And that answer, that very cogent answer is Harry, why everyone in theory will argue this. And then when you're the guy on point with your life's work on the line. Just like Halligan and you're like, do I want to be an experimental baby on the biggest day of my life? Or do I just want to land this fricking plane? There you go, baby.

• 47:17Harry Stebbings?

  Well, I think your point on Figma was totally right there, Rory, which is that everyone was like, oh, well, here's the test case for why we need to have a direct listing. And you were like, well, had it been a direct listing, it would not have listed anywhere near the price that it went. It would have been three to four bucks higher, maybe at thirty six to forty. But it would be ridiculous to assume it would have been a seventy five starting price. And I think that was really well articulated. I was listening to Jensen on an earnings call. This was so great, Cliff, about doing these shows. I actually have to do some work and really listen to earnings calls again. Okay. He said, over the next five years, we're going to scale into with Blackwell and with Ruben into effectively a three to four trillion dollar AI infrastructure opportunity. Three to four trillion.

• 48:00Harry Stebbings?

  Can that level of CapEx be supported by enough AI driven revenues, guys?

• 48:05Speaker 00

  Yeah, I mean, look at it. Four, that's to four billion dollars. You want a twenty percent return on equity. You got to be generating eight hundred billion of profit a year. That's a lot of profit when, you know, Facebook met, all these guys make a couple of hundred billion a year. So you've got to believe in you're going to create another four Microsofts, another four Facebooks to justify that kind of spend. So it feels deeply lofty to me and not grounded in kind of the macro. On the other hand, it's hard to argue against the guy who built a company, the most valuable company on the planet. So, you know, you can give him credit for the specifics. I don't see where the macro works, but whatever. If you want to make that bet, Harry, there are Nvidia puts that I keep my eye on that you're more than welcome to plow into anytime you want.

• 48:47Speaker 03

  Tell me when you do, Rory.

• 48:49Speaker 00

  Yeah, I will.

• 48:50Speaker 03

  Look, I don't know. I mean, Rory, Rory's math's hard to argue with. All, all I do know is, you know, I know it's a small percent of the economy, but when you listen to what Cliff's saying now, when you listen to what Mark Benioff said last week. I mean, basically Mark said, we're like point one percent AI penetrated in the Salesforce space, right? So Salesforce has come in up on fifty billion. They alone are going to have two hundred billion of AI attached to their model. I'm not saying Mark's going to get all of it, but the attach is going to happen. It's just so, it's so early. It's hard not to see everything easily being 100x bigger than it is today. We just started. We just started. It feels like 100x. Now, does 100x get us to that number? I don't know, but I do think that Jensen and Sam Altman have a pretty good sense of it. So I'm not betting against it. We can ask Cliff how much, how deeply AI is penetrated there.

• 49:35Speaker 01

  Yeah, we have billions of AI usages in our product per month, and that's accelerating clip. So it is just beginning and the amount of calls and inference we're going to rely on is just going to grow exponentially as these products evolve. It's easy to see 100x growth, right?

• 49:54Speaker 00

  Let's, let's, let's try and quantify that.

• 49:56Speaker 01

  And they're all going to get it run on device a lot more. So there are optimizations that are coming as well.

• 50:00Speaker 00

  Thank you. Take on that because you'd mentioned the notion common of spending 10% of their revenue on AI, on GPUs and inference and model training, right? I mean, turning back.

• 50:11Speaker 01

  They've gone from a 90% gross margin to an 80% gross margin.

• 50:14Speaker 00

  You know, which is effectively a way of saying to deliver their AI magic, they have to part with roughly 10% of their revenue to the big AI companies, just as maybe they probably did roughly the same to AWS. Turning back to Cliff, do you envisage spending 10% of $4 billion, $400 million on Nvidia chips and our third-party models and GPU acceleration? Or does that feel wildly too much?

• 50:41Speaker 01

  100%, yes, 100%. So, so we do our own foundational model training, which, which requires a huge amount of compute. But then there is a lot of expenses and I think this is where the notions and Mondays and all the other companies of the world are flowing through revenue to the model companies. But those costs are coming down exponentially. You want to have the best model in your customers' hands.

• 51:05Speaker 00

  But do you think 10%? I mean, you're spending like, do you think it could get to 10%?

• 51:10Speaker 01

  Yeah, definitely. It already is. Yeah.

• 51:12Speaker 00

  Wow.

• 51:13Speaker 01

  But especially in the short term, it will be probably less than that over. So you got to separate training your own models versus serving AI. So currently, yes. I mean, if you look at lovable, what are they? What is their pass through in regards to what they're paying Anthropic or whoever the, the model providers are? It will be a lot. It will be way more than 10%. But over time, they're betting on distilling these models down, understanding user queries and where I need the foremost frontier best model versus where I can deploy the model that's on device or the model that we're self-hosting and running. You'll get a lot better. Companies will get a lot better at picking the right model for the right job

• 51:54Speaker 01

  and only using the expensive models connected through an API to OpenAI or Anthropic or whoever for the most premium queries where you need that answer. But 90% of it will be run on device or be self-hosted. And we know that over time, we'll use the best models and that. So take image, for example, if there's the latest and greatest image model that has additional capabilities, it may cost us four cents an image. We know we can get that cost down to 0.02 cents an image and we banking on that over a six-month period. So we view some of those upfront costs that are having a big, eating a chunk into our margin as more of a marketing cost than a long-term enduring cost of goods. Got it.

• 52:35Speaker 00

  And that's a huge difference. I mean, the assumption of getting 10% from every software vendor is crucial to the idea that you can expand $3 trillion. And if Cliff and all the other Cliffs optimize and that 10% becomes 5%, I mean, which is still a hefty tax to pay from your revenue.

• 52:52Speaker 03

  Yeah, but I don't want to speak for Cliff, but like creating a static image such as it is today, you could break it down in order of magnitude. But like, let's, when Canva adds everything that Gamma does. I mean, Gamma's consuming a lot of tokens to build dynamic presentations for every single person at my little team on the fly.

• 53:10Speaker 01

  Yeah, they're coding every presentation from scratch.

• 53:13Speaker 03

  Yeah, that's a lot of, and it's not, and it's only pretty good. Imagine when it's great and they redo every presentation three times and run it through multiple models. And then they, and then Canva does it and Canva has a higher bar because you have 240 million users.

• 53:25Speaker 01

  Yeah, but we don't need to code it, right? So that's why we're building our own foundational model to generate a presentation that's like phenomenal. It doesn't need to code every line of a presentation. So there, that's a heavy compute cost to create a presentation. They'll be looking at, we don't need to essentially go to Anthropic and write a whole thing. Whole essentially website every time we want to create a presentation. It's a lot. There's a lot easier ways to create presentations at a lot lower cost. So they'll be thinking about that. Just like we've thought about it.

• 53:54Speaker 03

  But if you were doing the gamma approach, which you're not, you might not going to Rory's point, let's compare.

• 53:59Speaker 01

  We've got the gamma, but we've got camera code, which you can code a presentation, you can code a website. That is a high compute cost. So, so we've got the equivalent of lovable. It's more for creating widgets and for education purposes, et cetera, et cetera. It's got 20 million active users already. It's going really, really well.

• 54:14Speaker 03

  But you, but you could roll that up. I like, it is cool. Like, and I use it today, but you could do much more like you, you have it pretty locked down. Like what you can do with it is create assets and overviews. It's great, right? But you could, you could spend a month and this could be lovable prime if you wanted to, right? But you'd use 100 times the tokens.

• 54:32Speaker 01

  Yeah, totally, totally. Yeah. And that is an expensive product to serve our customers. That is the most expensive product to serve our customers.

• 54:39Speaker 00

  I mean, the, the macro, this sounds really arcane, but it's actually going to really kind of drive a huge amount of downstream implications on the whole discussion we're having on is the ROI there, right? Cause like big picture that the cloud business pre-AI, you know, AWS, Microsoft Azure and Google, you know, plus or minus 150, 200 billion of total revenue. If, if, if every, if every software company spends as much on AI inference and AI training and the whole enchilada as they did on cloud compute. That's a $200 billion a year business. Just as I said, rough analysis. There's probably some double accounting there, right? That's pretty damn impressive and it's still going to be hard. That's the minimum they need. $200 billion top line revenue, $100 billion of profits.

• 55:23Speaker 00

  Going back to that, you wouldn't want to spend $4 trillion to make $100 billion of profits. It's that for three trillion of CapEx to have a return, people like Cliff running business like that are going to have to yield a lot of cost over to the hyperscalers, the model providers, and I don't think a large number of software execs are going to do that at least easily. So I'm, it will be interesting to see how that math actually shapes out. And if you can, in fact, you command a return on that level. My gut is something over and above what we've seen now is required. And Jason, you're pushing and you always do. Maybe that is there. Maybe it is. Instead of optimizing compute, you truck compute at everything and end users are willing to pay for it, but it's something more than what we got now.

• 56:05Speaker 03

  I just think we're underestimated. I mean, Cliff made the point, we're underestimating the processes we run today. We'll figure out how to use on less tokens or our own models or other things. Well, if the world doesn't change, it will come down in order of magnitude a year or possibly faster. But our ability to to use orders of magnitude more tokens, Canva could turn this on tomorrow and we could, we could consume massive amounts of tokens. They already have the product. It's already cool. It's just, it's just, it's here.

• 56:31Speaker 01

  We genuinely have to, we, this is an interesting point. We genuinely have to think about this deeply because we've got 240 million users. We're about to launch in October, a whole slew of new AI products deeply integrating it into every part of the workflow. We need to seriously run the maths on, hey, if 20% of our users, 50, 80% of our users use this 10 times a month, what are the costs going to be? And they can look pretty big and eat into your margins very significantly. So we need to be sort of double hating around.

• 57:02Harry Stebbings?

  Feel comfortable shifting pricing accordingly?

• 57:05Speaker 01

  No, no. So we are doing that. Actually, we're moving to a unified credit model around AI. So your premium subscription free gets a certain amount, premium subscription gets you a certain amount. And then if you're a super active user, and so that means it can't eat into our margins too much. So you need to maintain that margin and, and we'll, we'll have sort of that scaled usage based pricing beyond a certain point.

• 57:26Harry Stebbings?

  Cliff, when you look at usage within the company itself, Jason said something, I think, very apt a couple of shows ago. Jason, you can remind me specifically what you said, but you said about basically equipping developers with, I can't remember the number, was it $10,000 a month in terms of assistance through coding tools?

• 57:45Speaker 03

  And that's where Farhan at Shopify was pushing it, like up to $10,000 a month. If you can prove the ROI, that's the budget.

• 57:51Harry Stebbings?

  When you think of equipping your engineers at Canva today, would you feel comfortable in a future world, equipping them with $10,000 a month of coding agents?

• 58:00Speaker 01

  We haven't done that down to an individual level because I don't believe we've got over 2,000 engineers doing that at scale would be the right approach. But from an engineering leadership perspective, and we encourage all our engineers to use the best security certified coding tools that can increase their efficiency and we're not price sensitive around that at all. We know that ultimately the playing field levels out and there'll be competition. But yeah, so, so, so we're very open with whatever tools they want to use, but it has, there's always the two or three great ones.

• 58:33Speaker 00

  Yeah.

• 58:34Speaker 01

  And it is already consolidating.

• 58:36Speaker 00

  Push on that because, and you probably have got the 20 buck levels a month as a given, the 200 buck level. Because Jason's visualizing a world where you can go one X order of magnitude beyond that to the, not the 200 buck a month, but the 2,000 buck a month level and even beyond that. And yeah.

• 58:52Speaker 01

  We need to rethink our seat based pricing model because some of the tools, particularly around marketing tools we're creating, enable a single marketer deploy tens of thousands of pieces of content. So one person can create so much content, be feeding that into all the social platforms and wherever their marketing visual content ends up and then getting the feedback from how that's performing in the wild and feeding it back into the creation loop. So one person can do inordinate amounts of work and that's using a huge amount of compute. And you can't charge 20 bucks a seat for that level of breadth. So, so then it hits a certain, you give that functionality for a per seat price, but then over that it needs to be based on consumption. So it's a hybrid seat and consumption based model.

• 59:35Harry Stebbings?

  We saw Monday got hit because a lot of that growth relies on SEO. We're seeing SEO really reduces the customer acquisition channel for a lot of companies. I know you've only got 10%, which is paid cliff. But given 10% being paid, are you moving forward with the assumption that SEO is going to be a much smaller part of your customer acquisition funnel moving forwards?

• 59:56Speaker 01

  I think SEO is about fifty, fifteen percent of the ninety percent organic to date. So it used to be our number one channel, but now our user flywheel, word of mouth and people sharing designs are our biggest. No, I mean, we're seeing a lot of, some of it. SEO is growing for us, but also we're the number one productivity app on ChatGPT. And we're the fifth highest domain that ChatGPT refers to. So out of all the websites, it's like Google Meta, but we're number five in regards to essentially it's SEO for LLM. Because we've invested a lot over the years, they're obviously taking a lot of the same signals that Google's taking.

• 1:00:36Speaker 01

  And anything we're losing on the SEO front is translating to LLM SEO, which is a huge tailwind for us. So to give you an example, a year and a half ago, point zero two percent, I think it was of the images uploaded to Canva were from ChatGPT. That's now over five percent. So the fuel and content being generated in these LLMs are being propagated into Canva for that editing, for how they're using it in designs and for that collaboration, storage, deployment, that whole visual communication workflow that we excel at.

• 1:01:10Speaker 00

  I know what I know what Harry's fishing for, trying to figure out how his investments are doing. Have you proactively tried to win in terms of how you show up on ChatGPT in the same way you did on SEO? Or has it just happened organically, just by virtue of being who you are?

• 1:01:25Speaker 01

  I would say a hundred percent we have won. As soon as these LLMs started taking off, we had the conversation. Is our SEO team working on LLM optimization? And there's definitely a team at Canva working on that. Cliff, I'll sort you out.

• 1:01:38Speaker 03

  Yeah, this whole thing about SEO being dead is stupid. It's dead for folks that don't have a brand, don't add value and don't have reach. I mean, I just popped it into Claude and best overall Canva. What best design product to make YouTube thumb? What best design product to make YouTube fun? Best overall? Canva. I mean, it's just.

• 1:01:59Speaker 00

  In fairness, the kind of the SEO, I think you have to distinguish between people like Canva, where they have a product to sell and they're totally happy to sell it via ChatGPT. And then media companies where the only product they have is their content, where if Google or ChatGPT serves up the answer and no one clicks on the website, then they're toast. For Canva, this is not existential. You guys are fine. But if you're a mid-tier review site, you just get scraped and summarized. Well, thanks for playing.

• 1:02:26Harry Stebbings?

  Cliff, you've got OpenAI at 500, you've got Anthropic at 183, and you've got Grok at 100. Where do you put your money?

• 1:02:36Speaker 01

  All of them. I'm, I'm, we're, we're, I'm a big fan of all those companies. I'm not gonna, I'm not gonna choose.

• 1:02:42Speaker 00

  We're still a constitutional company, country. You have the right to remain silent.

• 1:02:46Speaker 01

  Yeah, yeah, yeah. Well, yeah, they're all doing great work.

• 1:02:49Speaker 00

  Mutual. He doesn't fall for your traps, Harry, not like me who foolishly feels the need to answer these questions and get into trouble.

• 1:02:55Speaker 01

  No, but I genuinely believe they're all, they're all companies that are gonna be the foundations of our AI future. They're gonna feed pretty much every single product. So it's like betting on Amazon and betting on power. You know, it's and every, every sort of, and that come, the power question is an interesting one because every big revolution when it comes to technology shift has largely been power-based. And I think one thing that's interesting is the amount of energy that Jensen's $4 trillion investment is gonna take is just insane. And I think it's akin to really what Tesla have done with electric cars.

• 1:03:34Speaker 01

  And so while I see AI pessimists and environmental pessimists saying, oh, so much more energy, it's gonna be bad for the environment, I actually think it's gonna rapidly accelerate our shift to, to green energy, particularly nuclear, which we're just gonna have to solve. And once we've solved it and it's way more economically viable than burning fossil fuels, it's gonna kickstart the entire shift to renewable, renewables or zero emission.

• 1:04:03Speaker 01

  Um. Energy sources, which I think is ultimately going to be huge for the environment long like midterm.

• 1:04:08Harry Stebbings?

  Before we wrap, there's, there's one interesting topic that we said about before, which is that you said, oh, you should invest in Riverside. And I was like, oh, no, I saw it at seed and I missed it. And then I've seen it every round since and I, I didn't want to do it. You said it was an interesting thing about kind of the VC regret pathway and, and not engaging later on. I had it again today with Revolut. When people asked me why I weren't investing in Revolut and I was like, well, it's a bit embarrassing as an early stage investor to buy Revolut off Goldman Sachs. My bang. That's when you really fucked up as an early stage investor. Rory, Jason, I'm intrigued to hear your thoughts on the ones that you've missed and the regret pathway on investing later.

• 1:04:46Speaker 00

  I think you should do it is a short answer. And this, for, for the viewers, this happened before the compass, before we kind of went live. Cliff was talking about folks who'd looked at Canva early on, passed and then really struggled later on to pony up and pay obviously much higher prices. I am the exact opposite. Many of my most successful deals I've passed on prior. And I've just learned if you pass on something and then you get another data point, like a year or two later, and they've done what they say they'll do. You literally don't need any more information. It's so much more telling because with a new deal, you're starting off and all you're seeing is one data point. The difference in information content between two data points over time, both of which are positive, and one data point.

• 1:05:28Speaker 00

  And where you have no calibration is almost infinite. I can think of two or three deals way back in the day I passed. I didn't get on the show in 2003 and a year later I saw it at twice the price and I bought all I could. Same thing on Box, passed at the start of 2010, the round didn't even get done. And nine months later, I literally woke up and said, what's the dumbest thing I did all year? I didn't do that deal and I went down and did it. And I think I'm trying to discipline myself to do it even more because when you go back, let me just repeat it again. When you see the company, when they sell, they'll do A, B and C. And you pass, you don't believe they'll do A, B and C. And then they do A, B, and even if they do C prime, a little less than C. You have what you need to know. And then, then Cliff's comment applies is now you're seeing a category leader.

• 1:06:11Speaker 00

  You know, you can lean into their execution. You really should say to yourself, unless you think there's a TAM problem. Unless you think there's a TAM problem, you should say to yourself, I was wrong. How do I kind of change my weighting and lean in here?

• 1:06:24Speaker 01

  Does that leaning in apply in an AI world where sustainability of revenue is a question? Because a lot will say, oh, I'm gonna do 10 million in a year.

• 1:06:34Speaker 00

  I think they're two separate issues because you are right about one thing. Sustainability is a lot harder in AI. We're seeing a lot of people drift in and out of product market fit. But that's going to be true on the new deals as well. You know, the new deal that you see where you have no context from two years ago, and it looks golden today, that can drift out of product market fit too. So it's a separate factor. And I do think even in an AI world, so taking it one step beyond, I think the really positive sign in an AI world would be you find the founder, whatever reason, you passed two years ago, the best of all signs is this. The product has evolved three times because that's what's happening in AI land. And the founder has been able to evolve it. And then you're like, oh, my God, this guy has a survivor gene. Run, don't walk.

• 1:07:16Speaker 00

  Because I think that's one of the identifying characteristics of the people we see figuring it out, which is the damn thing keeps changing, but they just keep changing faster than the other guy. So again, I think there's always signal. Because the hardest thing, the thing you can't change in this business is time. You can't compress time, you can't fast forward, you can't rewind. So when you have two data points over time, that's just so fricking powerful. And I totally get it because I wrestle with this. You get hung up, oh, my God, I could have done it for 10 million or 100 million or whatever. Now I gotta pay 500 million. And you just gotta look yourself in the mirror and say, that is the tax you pay for being stupid. Pay the tax and just get off the stupid train.

• 1:07:53Speaker 01

  Does the same apply for follow on rounds as well? Because it's amazing to me when I've seen investors have the inside lane on all the company data and the company is performing like crazy. They've got a big chunk very early, call it seed A or B. And the best investors that have done best out of Canva, like they were early stage funds, but they realized, holy shit, we're on to something here. So they raised SPVs or additional vehicles to move further up the value chain, like going later and later stage and compounded their position or at least didn't get diluted over time. They've done the best first. There's a lot of early stage investors being like, they call themselves as being disciplined. Oh, we're only stuck here. But if you're

• 1:08:34Speaker 01

  On a winner, keep betting on that winner is my approach, but it's amazing to see how different investors kind of treat follow on investors as investments as well.

• 1:08:43Speaker 00

  It's a great point, and I think two separate issues. You have the individual, the investment, are you making the right investment? In other words, did you really think that the third follow on round was overpriced because you thought the market was smaller? Were you wrong on the investment? So that's one factor, and we can talk about that. But then separate from that, you know, you have the institutional thing. Are you set up to do those big rounds? Do you have to raise an SPV? Are you able to raise an SPV? And I would say, Cliff, one of the things I've internalized is, I think especially being scarred by the probably three decades doesn't help sometimes. And you're right, in a company like yours, the correct response is pile in at every level and find some way to do it. So there's two separate things. One is, do you think and still think it's a good deal? And to your point, one of the things we've observed is the round after the round we do.

• 1:09:28Speaker 00

  If it gets a quick outside lead up round and you have positive data, it always feels expensive going back to, oh, my God, it's two X more. That's the round you should do every dime because it's roughly in the same strike zone as your sweet spot. It's not like we typically invest plus or minus a hundred million pre. The 20 billion round is hard to get your head around. But if you do the round at a hundred and then 12 months later, they're at three or 400 and everything's working. That's a signal that we have constantly underestimated and are correcting, have constantly corrected and have been validated on.

• 1:09:59Harry Stebbings?

  Or actually, or not, or actually, there's been a price inflection point, but there hasn't been a company inflection. And so you're actually paying up for little company growth. I'd rather pay up for the 800 to a billion where there's real company inflection and the price inflection matches that.

• 1:10:15Speaker 00

  Well, there's two things. One, if it's price only and you're not, yes, if you believe your inside information pushes to the negative and you know something, then yes. But I give Peter Thiel said it is that the outside, the data on an outside, a good, and maybe not in this market, and I haven't processed that yet. But he's very cordial as saying, you know, the outside lead up round, the follow on on the outside lead up round was the strongest positive signal and they consistently underestimated the value of that. And I do believe that, to your point, Cliff, is the case. I do admit sometimes that, you know. If you're doing, if your business is relatively early stage, it is hard to think, how do you go at 20 billion? And what do you do? And how much do you put into it? But there's no doubt, and we've talked about this before, that concentrate,

• 1:10:56Speaker 00

  being willing to massively concentrate on a small number of deals gets you the last absolute dollar of outperformance. Yet you do have to, as you say, though, the key thing is to be able to distinguish the Canva from the 10 other companies you've had that got a billion prevaluations in 2021 that aren't worth a billion.

• 1:11:11Harry Stebbings?

  True, true, true.

• 1:11:12Speaker 00

  In the end, you still have to be vaguely good at picking.

• 1:11:15Harry Stebbings?

  Guys, listen, I can't thank you enough for this. You've been fantastic, Cliff. I so appreciate you joining us in the morning. It's so great of you to join and I really appreciate it, man. Thank you so much for having us. I appreciate it. It was a great chat.

• 1:11:27Speaker 03

  Rock and roll. Thank you, Cliff.

• 1:11:30Harry Stebbings?

  I think you can just tell how much fun we have as a group. I want it to be the best show though for you. So let me know any feedback that you have, [email protected]. I want to know what we can do to make it the best show of the week for you. But before we leave you 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.

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