20VC: Andrej Karpathy Joins Anthropic & Anthropic Raises $30BN at $900BN Price | SpaceX Files S1: How Does it Trade | Cerebras Smashes Day 1: What it Means for IPOs | Why Mass Layoffs Are More Worrying Than Anyone Sees

as it's becoming painfully clear now, no one in America, other than us here in California likes the AI trend. We have people who are brilliant scientists who politically are utter morons. And the people who are utter morons at AI, but brilliant at politics are gonna have us for lunch. At least when Metta was busy destroying the world, they were smart enough to pretend it was all about bringing friends together of a not destroying democracy. We're gonna have to reflate and hire thousands and thousands of people per tech leader to avoid social unrest. We see no signs that there's a short-term crash coming. This is 20 VC with me, Harry Stebings. It's my favorite show of the week, Roryo Driscoll, Jason Lemkin, analyzing the biggest news in tech. Starting off, Andre Kapathy joins Anthropic and Anthropic I, a $900 billion evaluation for their latest fundraiser. Then we dig into the public markets, data dog up 31%, Figma up 12%. What happens from here? Next we have Serubris IPO, Smash's expectations and breaks the $300 mark. And then finally SpaceX, they set June 12th for the largest IPO in history, $1.75 trillion market cap, raising $75 billion. But before we dive into the show today, let me tell you about Omni. It's an AI analytics platform and it solves a problem every scaling company hits. Your team needs insights, not just data lookups, the stuff that really matters and it's critical to get it right. Like can't pay back periods and net dollar retention. For AI agents to act on your company data, they need your business context, your definitions, your logic, your permissions and that's what Omni's governed context graph provides. Your data team defines it once, then anyone, your obsolete, your CFO, your PM can ask a question in English and get an answer in seconds. Perplexity, Mercury and DBT run on Omni and 20 VC listeners get a free three week trial, three week, very specific, not a month, but three weeks. 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If you want AI that hits the PNL, go to invisibletech.ai/20VC. You have now arrived at your destination. Boys, it is so good to be back. So we're going to kick off with all this week in Anthropic. We have two. We have Anthropic in talks for $30 billion at above a $900 billion price, nearly tripling from 380 in February. Greenotes sequir, altimeter, dragony. And then yesterday, we had Andre Capati announcing that he was joining Anthropic. Over to you. How did we read this news? Well, I did divide up the two. I mean, the financing, yes, they can pick that price, they can pick their investors, they can tell the amount, and they can tell Evan the jump, and Evan will say how high sir, it's all happening. They're going to raise $30 billion, we discussed. Obviously, the question is, you know, how those folks pencil out the return. And so, Rory, I don't mean to be old school here, but I'm feeling old school. Do you think AR multiple still matter? I mean, if Anthropic is, if $900 billion is 18 times June revenue, it still feels like a better deal than any of the ones I did last year. Yeah, I mean, there's no doubt that statement is correct. Agreed. No, I mean, just to put it really simply for listless, is that, you know, you're writing checks in the private market for companies of $10 million in revenue, you might be paying 20, 30, 40, 50 times AR. Maybe it's 3, 5, X, but it's five years away from an IPO. And here's, for the last three runs, really, from the 150 billion round that Anthropic all the way on, there've been so post IPO that you can assume there can be an IPO. So there's no, it doesn't make an IPO a risk. There's no, it will go away risk. Typically, when those risks don't exist anymore, the only risk you're taking is valuation risk. And the truth is, every time the multiple on this has been significantly lower, then the multiple on your median series ARB or series C for a higher growth rate. So it's been the best trade out there. The meta question is, listen, at some point, everything's DCF, right? At some point it has to be. I guess, I'm not even sure I believe that anymore, but certainly that's the public markets, Act 201, everything is ultimately the discounted present value of your future cash flows. But every growth, I haven't been a part of any of these Anthropic rounds, unfortunately, but every growth I've been a part of, it's still AR multiples at the end of the day. No one's really doing discounts for lower growth margins, like we did until say 2021 or 2022. I guess the meta question is, is this a fair metric for Anthropic? It's margins are improving, right? And so if 18X really is fair, these Louise, I think everyone desperate to get it is right because the best you'll go in. If an AR multiple is still fair. If you ask you to, on the side, took me a while. The coffee's gone. Yeah, first, by the way, we're doing this early at eight o'clock this morning. So we're in ups and five, but the coffee's only kicking in. If AR multiples are the right metric, then you should buy the one that's at 18X AR, growing 10X year on year, that's already so freaking large, you will clearly invisibly go public. If AR multiples are the proxy for value, then this is the best value in the venture universe, which is why I'm going to say very smart, capital allocators whose mandate isn't kind of sector-specific, but kind of range anywhere, stock your money in. You know, people like Green Oaks, people like Alteamater are doing this deal, because they're like, yesterday I can do a 20 million AR deal, and the multiples better. When it's so obviously a good deal, as we mentioned, they're giving the trade for investors. Why would Dario and Anthropic do it at that price, if it is so obviously a good deal? Because you're giving away 30 over 900, which is like, let's see, 3% of your business. To DWISC, for another year of Monsters Burn, where you're committing to, I don't know, five gigawatts this year, and the mental rule of thumb is the total cost of, you know, gigawatts of high-end computers, 40 or 40, gigawatts of high-end computers, 40 or 50 billion. So now you're not spending 40 or 50 billion, you're persuading hyperscalers to spend on your behalf, but you have to have, I mean, this is a big-ass balance sheet war, so it's a no-brainer to do it. They're gonna raise and they're gonna raise again, and then they're gonna raise again. Do you think they'll raise again before they go public? I doubt it just depend on their trajectory now, because they're saying they're going public in November. When you stop having to raise, that's a disaster. Why are you raising, you're raising for CapEx, and you're raising for growth? Once that hyper-grotes stops, you don't have a CapEx need, you also don't have a growth story, and that'll be a very different place to be. I mean, right now, this is the highest ROI on equity dollars, so that's what I get in it. So they should just keep raising it well in advance of the need because the needs are so great. My actually read is that Sam has been pushing the valuation to the absolute max since, as long as he could, on the thesis he needed infinite capital, right? He's always been clear on that, right? So the last open AI round was more expensive than almost the contemporaneous and thropper ground, even though and thropper appeared to be out accelerating them, because Sam just pushed it to the max, which you can, if you're a great salesman, and have demand of one more dollar than supply, right? It seemed to me Dario is the opposite. I mean, he actually does own shares in his company, rather than indirectly through a VC fund, but it's pretty diluted. He's giving away 90% to charity. So he just wants to get a deal done in a week that is fair. He does this deal at $380. It seems fair, and all of a sudden, he turns around Sam's at a deal at twice the price. So he does this at $900. I think when Anthropics work two to three billion, he'll do around it like one, six, and 48 hours to get it done. He'll just do it. He won't push it to the max like Sam does and create stress. But I actually think these rounds, ironically, the last two intentionally traded at a discount in order to not rip people off and get it done low drama in days. I actually think that was the tradeoff of, and we've all worked with founders like this, that enjoy maximizing every penny from the round, and others who want a 70% deal, and they truly, it's not just in the email, they truly want it done in a week, right? That's not just a game to get the money. They just like, give me a 70% deal in 72 hours. It's a super point Jason, because I'm remembering now the details. It's so revealing. Compare the last two rounds, D. And topic round is, we're going to raise 30. It's going to be cash. You're going to send me an email confirming your reign, and then we'll collect the money. End of conversation. The open AI round is, well, Amazon, you're going to give us 50 billion. but 25 billion is going to be up front. The other 30 billion is contingent on also going public or AGI. And Massisa, you're going to give us 40 billion from soft bank, but you've got to borrow 30 billion to get that 40 billion. So we're going to be a little time to pay that money. So we're closing on 110 billion of which 20 billion is clearing now, 30 billion in six months time depending on the landing market. It's like Jesus, give me a break. Are you right Jason? I think philosophically the unthrobbing team seems to operate on the way. If I want to raise 30 billion, I should probably get a check for 30 billion a day. Speaking of getting a check for 30 billion. Jason, I really wanted your thoughts on this one. Benioff was on all in and he said that Salesforce spent 300 million on anthropic tokens this year, almost entirely coding. The question I have for you is when you look at your usage and how you use it stay, is that about right and what you would have thought? Is that way more? Is that way less? And how do you think that will change for Salesforce over time? It's actually not that much per engineer. I think that works out to about 15 to $20,000 per engineer per year. Yes. I think that's just table stakes today. What's this fully burden cost for a developer at Salesforce? Probably 500K for an engineer, all in, all costs with their share of the building and snacks. So 20 grand a year is 4% additional. Cheap, man. Good. First of all, I did the math this one because I actually think this is the most important question. And actually I'm going to give you, got to some patronizing. I'm going to give you an A.J. some for math on the fly, which is I think very hard to do. I couldn't have done it on the fly. I did it this morning. And it turns out 300 million is, eh, which is astonishing, first of all, right? So the numbers are Salesforce spends $5.8 billion a year on engineers. So it's 12% to 4% of the spend. If you want a per head, they have 20K developers. They're total 83K heads. So it's 15K per head per year, which is 1.2K per head per month. Right, 1,200 per month. We did a survey on 40 companies and external companies. What are you spending per year, per month, per developer? And the average was 1.2, 1.3K. And the median was lower. Right? So obviously you have some token maxing and then wider dispersion. So first of all, you exactly, it's in the strike zone of normal. It's not, I mean, it's only the big number because they obviously have so many developers. Right? So that's the first thing. So you're kind of, well, fast to the math exactly right. And then the question is, what does all this mean? Where is it going? This is probably the only vendor line item that's louder than maybe rent that comes anywhere close to this amount. So from nothing two years ago, this is the largest single external spend that every software company's making. That's the first big a-har, right? Yeah. And it's both nothing and explains and tropics, media or cries. It explains everything. It's both, and you say it at the same time, right? And then you've got to say to yourself, because go and remember, I kind of said it, when it comes to valuation and tropics, is it good or not, when you've tried to figure out how much money these companies can make, what you figure out is trying to come up with some kind of heuristic relative to R&D spend is the key, right? In other words, how much of every knowledge worker wage and how much of every coding wage is going to get translated into tokens, right? And you know, we did a rough and tough estimate and we're finding it more is that if you start thinking about a trillion dollars worth of token revenue across an tropic and open AI, which is the four year projections are saying, and they better get it, because otherwise that cap ex is going to look pretty sick. If they're going to get a trillion dollars, right? My wealth math says it's something roughly like five or seven percent of every knowledge worker salary and 20 percent of every engineering salary. If that math is correct, that's kind of what it takes to get a trillion. So in other words, Salesforce might only be a quarter of the way there. Now, one of two things is going to happen. Either they stay at 300 million, in which case, for some of these kind of token businesses like open AI and tropic, will have been overestimated and there'll be a real correction. Are they keep going? They four X are token spend from here and two years time, Benny offers on saying, we spend a trillion dollars, sorry, a billion dollars on tokens, and we'll talk about the people consequences for that in a second. But one of those two things has to happen, because even on the macro level, worldwide software business across everyone is about 1.2 trillion dollars, R&D spend is roughly 20 percent, 240 billion dollars, right? The interesting thing is, if you get 20 percent of that, you want to get 50 billion. So to justify these on tropic valuation and these open AI valuations, you're really going to have to eat a sh*t ton of what is otherwise RPEX. You've got to replace 20 percent. Out of those valuations, however, Benny offers only a quarter of the way on the journey and he's probably ahead of most. The numbers for open AI and a tropic are so large that you really have to start thinking about what percent out of total wage bill of engineering in the software development market do you get? And if you're not tracking to 20 percent across most R&D spends, then the three and four year projections for some of these companies will be a bit lofty. At a metal level, you have to be a bull, right? Because the trend has just begun. Mark's 300 million is just a start of what he's going to spend. On the other hand, I hate to use myself as an equals one case taste, but it's asked for itself a million, "Now we have 21 agents of which three are autonomous, okay?" The direct token costs that we spend, the direct AI altogether for both of us is about two grand a month. And that's going to go up, but the bear case, the bear case is the models will get better and they will get more efficient. We will get more efficient. The bear case is one K for each of us. And listen, this doesn't include third party apps, it doesn't include tokens we buy inside a sales source. So it's higher. If you think about it, there is a bear case there that everybody is using, every knowledge worker has this attached, but the numbers Mark are throwing out is about right for folks not at the bleeding edge of token maxing. This is the bear case. It's not today when SAP and Uber CIOs are said, "We're out of tokens for the year." But I do think we're ahead of most, right? At our little team, and we're only spending two K a month in direct token costs, that's a bear case on the next end throp a crown, I think. I'll give you another example. We had Sastry Anu was last week, Rory was a celebrity, Harry, we could talk about it. He was literally mobbed, you saw the pictures. But our very last speaker, it was kind of him to come 'cause it was the last one people are tired, was Andrew Bilecki, who's the co-founder and CEO of Clavio. Very interesting 'cause he's a true engineer and turned B to B founder. He requires every single employee at Clavio, if they're anywhere close to product to be committing code, anyone in product, anyone in design, anyone there. And every single person has to be running AI or agents to do their job. I couldn't believe it was 100%. And they built their own custom framework to require it. He went through it all, it was very cool. And so my point is he knows his stuff, right? And we built this AIVP market, the AIVP customers, everyone thinks it costs like $8,000 to run these autonomous humans. I go backstage with Andrew, we're talking about it on my phone, he's like, how much do you think it costs to run an API? Because he's done it, he's like, maybe $250 for both of them? The answer's $257, just to run the agents. And his point was at the end is a lot of this stuff is not as expensive as we think. We do not need to worry about token maxing at Clavio and everything we're doing is agent. We have our own agent, we're waiting with, every single person has to be doing this. We have to manage it and they have a harness that manages the model and gets it thoughtful. But he's like, if you do this right, it's not as expensive as, and the fact that he guessed it, he was the only person that got it right, because he's doing it. (laughs) The only one that got it that's number right, because he's doing it. And so this is the bear case, it's just we need a half or a third or a quarter as many tokens as we think we do outside of the folks running massive workflows, 48, 14, right? - At 1% of our end day spent in the noise, at 5%, it's real, that's a layoff. At 20%, which let me repeat, is what it takes to get to for these overall models to work, but for these overall time analysis to work, that's huge. It's one fifth of your paywall costs in engineering. - Joe, just every public company CEO wants your advice on agents in AI, are you more bullish on Clavio post seeing the end workings of Andrew, and is he a top 1% public company CEO in AI? - It's a good question, right? The one thing I've been thinking a lot recently, when we kind of bounced off the lowest of the SaaS apocalypse, right? You think about it last year in Figma, two others that have seen, at the end of the day compared to their highs, very, very modest bounces off the heart, but more importantly growth is reaccelerating there. That's the most important. So when you see Figma reaccelerate to almost 50% growth, when you see it Lassian seemingly struggling, when Mike was on the show reaccelerate north of 30, with Lassian, it's definitely from Rovio, their agent with Figma, it's a mix, right? But when you see these, when you see Twilio come back from the dead to 20% growth, you have to ask yourself, is there a little more time than we thought? A little more time. The whole world is not in San Francisco, of all the buyers of all the users. So it's both the question for Andrew and for Mark Benioff and others, these founder led companies that are iconic with great CEOs. In the end of the day, maybe they have enough time, maybe another year, if they're just getting going on their gender journey and sales, and sales resources further along the clavier. I am not sure that means their stock will reaccelerate until it is proven. I think that's what we learned from last quarter. Monday, Monday did sort of beat expectations and bounced HubSpot and said, "The Q2 is gonna be tougher and it got hit hard, so you gotta show me the growth." That's the mantra. But I am somewhat more bullish than 90 days ago that there's just time. Clavier was arguably the single most beaten down public company software stock because of the delta from Shopify. Like it's trading at three something times revenue and Shopify is at what 12 or 14, I gotta look it up. So if I were a long short team, I might propose that one on Monday, but you gotta show the growth man. And even though he's ahead of the internal agent, he's not way ahead of the game for the external one. And that's the bear case, right? If your competitors are there, why aren't you there today? So yes, I'm optimistic, but my flip side is you've had 18 months and you've had since December, since the Clod 4s to destroy your space. Why do you let these dumb little startups outhustle you? You've got 2000 engineers spending 300,000. $100 million a year. That's the bull case, like you've had time. But I'm getting more optimistic that if the leaders build the best agents in the space, 2027 could be good for them. I'm getting more optimistic and I was pretty bearish a couple months ago. - I am in the same place and I made some comment about that and positive reinforcement from Data Dog and Figman. Everyone's like, "But they'll never get back to 21 prices again." And I commented on that because of course they won't. I said in my comments, "They'll never get back to 21 prices and I'll never be 21 again." - Yeah, I like that. - There's nothing you can do. Every tech cycle has a set of industries that for the once in a life get valued on prospects and futures. It's like been 21, it literally is like been 21. And people will believe everything about you. Five years ago that was SAS, today it's AI, once you lose that for nearer, you are going to be valued for the rest of your life on some variety of revenue, revenue, growth, and cash flow. And what that means is you're highly, it's almost impossible to ever get back to 50 times AOR again. All these companies, you exactly, and everyone goes, "It's the Figman thing, "it's so annoying for them." I feel so bad for them. Everyone's over your stocks, down to 80%. Yes, from the idiot price that idiot people price to that, right? In terms of objective performance, which is how you got to measure these companies, you write JSON, so many's like, "Figmas, we accelerate data dogs doing really well." And you know, you're going to be in a bound from, I mean, the outer edge is probably data dog at 17 or 18 times sales. You're good performance, Figma, six to 10 times sales, and you're crap is three times. So you have time to become a good, normal company. I mean, the big comment is, the SaaS businesses are amazing, but the AI businesses are an order of magnitude that maybe two order of magnitude larger and are at, you know, earlier in their growth life cycle. So you're never going to get the attention back on you again. That's the deal for SaaS. But you can still be worth $10 billion and, you know, as a company, be doing a billion in revenue and growing nicely. And just for a bright context, data dog, to have that first billion dollar revenue quarter, 32% up, all time high, air across four billion. This was a great quarter, Oli and team crushed it. So to the point, it's now more realistically priced from its exuberant pricing. Is that the summary? - Yes, the summary. - Exactly. And in that context, it's worth trying, I mean, the difference between being in the shadow and not getting out and being in the penalty box and then getting out is quite significant. You got to like where you are, as Jason said, if your team's at last thing you got to like where you are a lot. If you're a data dog or a thing, you got to be pretty depressed about where you are if you're wicks given, you know, you did the buy back and how's it work? So we're going to discuss where, so I just want to cover a thing, my first say, Jason, you're always rather opinionated on that. - Yeah. - But accelerating for the second straight quarter and the R139% two year high, this was a great quarter results. Fucking sold all of mine at the end of the loss. - Well, you're still ahead. - I know it was the right time to sell the R139. I'll tell you what I got wrong on Figma for sure. Like the dumb Lemkin, okay. I got to come up with something asinance with the L, right? A limited Lemkin or something like that? - Luzer Lemkin. - Luzer Lemkin, I like limited. Can we go with limited? Can we be a little bit longer? - No, we're a limited Lemkin. - I was completely right that make is the worst vibe coding product I've used since I've been on this journey. And I'm right that it was not important to the senior management and I'm right that they left 500 million or more on the table by not building a reputter level. I'm 100% right and I think it's the tragedy of folks being slow. However, limited Lemkin, I missed the captain obvious point. Figma is a building software. So everyone that is in the business, there is an AI explosion, but part of the explosion is a software explosion. And you can see it in companies that Harry and I have invested on like Work OS and revenue cap that have exploded because there's a software explosion going on. And even though Figma lost the vibe coding race so far, it is a beneficiary of the software explosion one, right? And two, it has internal AI tools like Andrew from Clavio was talking about. So one, it's selling credits to make your product a little better. That almost sounds cynical, right? But what it's really rolling out now is the ability to internally vibe improvements to your Figma designs. Like the agent can look at your Figma design. It actually officially rolled out, I think today it's been in data for a while, but it rolled out well, record this. And instead of just designing something, it can say, hey, let's up, let's update the workflow in here. Let's update the journey. This is not like incredibly difficult, but it is difficult at Figma scale. So even if they're not going to help you vibe products, the fact that they are making the building of software more efficient for their audience, you know, it's like Atlassian, not adding massive new customers because of AI, but adding massive more value for their base. So I got, there are little slow to that. It's in beta today. I mean, it's, you know, it's getting to be summer, but it looks like it's pretty good. And I utterly limited Lemkin Mist. Anyone like Figma should be modestly accelerating today 'cause we're building more crap. If you're in the tooling for software and you're decelerating, you've lost product market fit because everyone's just building more crap. Like they're just building more crap. They're new, they're new ability to agentically improve design, likely will be a big deal for their customers. They likely can get another 50% or more of revenue out of their base. The question is to the extent that folks who would have been using Figma are now doing mock ups for software products using Lovable, which you hear a lot about, you know, which is using it as a way to describe your product rather than doing a favor. That's actually a work stream that you would wanna own if you're Figma. 'Cause what you don't wanna have is people going around your product flow. So I do think you're right, Jason. I think it's not just the extra 500 million. They probably have an imperative to make sure that their customer doesn't leak out to a design flow that's do your actual design and something like Lovable, where you have a working prototype, not just a Figma design. So-- - I think so. That one for the moment appeared to be more of a Twitter media overstated. - I don't know if you-- - I'm not a designer. - The design capabilities in Lovable, which is a little bit ahead of rep. But they're pretty limited for anything that's professional grade, like for a Figma person. They're still pretty early. What Figma missed is I create this design. It's beautiful. I loop in the product team to approve it. And then I click a button which is says, push into full production prototype. And it just works. It works. And the irony is, Repplin Lovable both have that as a native insertion point for a reason. If you use these products today, they have up right in the prompt, upload a Figma design. Because they know, this is their number one ICP wants to take that static design and put it into production. Why Figma doesn't have that natively is a loss of 500 million dollars in going up. - Totally is. On the flip side of these two great quarters and kind of exciting, happy news, wakes down 45% since the start repurchase. Where you mentioned it and touched on it, they're now a $2.2 billion market cap. Base 44 announced last night actually that they had 150 million of ARR. - Which is the core business isn't growing. The pre-AI business is no longer growing, right? Maybe it's not, I think it says the pre-AI business is terminal. That's what the public markets are saying, right? And they don't think that the AI play is enough to rescue it from terminology, right? The 150 from base 44 is very impressive. But its substitution revenue at a high level, isn't it? Because it hasn't materially grown the revenue. - The evolution. - The evolution. - If you would assume then that it's a terminal business in terms of the core business is existing forgetting base 44, surely you would then ascribe the same to a Squarespace. Which doesn't have to be. - I think it's terminal as well. I think Wixin Squarespace, one thing people forget, this is at the end if you look, it's true. Not only they're being terminated by two vectors. One is obvious, one is less of it. The obvious one, but is more true than people think, is in many cases, they say it's already better to vibe code your own website 'cause you get what you want. And they already have templates and they already have integrations. Not for folks that are truly tech fearful, they should still use Squarespace and Wix, they're great products. But they're so limited, and you can build something in a vibe coded platform so nicely in 10 minutes. Anyone that's not tech phobic should use these products. The other thing that we kind of forget is that Wixin Squarespace, for the last five years, they were low and Shopify competitors. That's where their growth was. From merchant services, payments, e-commerce. And there was a whole world four or five years ago where you had WooCommerce from WordPress, you had Wix, you had Squarespace, and you had big commerce, who all were viable competitors to Shopify. The other thing happened, Shopify destroyed them all. There's no reason to use. This is another category where the low end was destroyed by Shopify, who amazingly went up market and down market successfully at the same time. And there's just, it's not worth it. You can't save enough money to not use Shopify for your store. So the folks are trying to say $14 a month have just kind of evaporated for the low end of the market. They don't need these sub-shoplars in big commerce, even though it's not low end, it got destroyed too, right? The most visceral competitor, just dead. It's dead in the water. So they got hit both ways. It's too bad current sitting in them. - Broadly agree. I mean, I think big commerce right in the strike zone is Shopify. I don't know the wicks mix between, think of it as kind of information only sites versus e-commerce sites, but you write JSON, it really matters. And if it is high on e-commerce sites, then you have that vector to think. - And it was all the growth. - It was all the growth. - Interesting. A lot of those businesses have to be customer, it's super low end SMB, especially for the non-ecommerce sites. If your core acquisition engine works, you should have been able to, it is still possible that if you can convert most of your customers to the new product, then over a couple of years, you can maybe make the math work, right? If you are a wicks, if you at least they have a new product, they did do the acquisition, right? It is possible to, you know, you get this weird compounding 'cause when the new product is a hundred million and it's doubling and the existing product is a couple of billion and it's flat, for the first kind of year or so, it's really hard to move the overall aggregate gap revenue growth rate. But if you can compound quickly enough on the new product, it does move it up. That's on the revenue side. I want to come back to, I want to separate the stock buyback from that. That's on the revenue side, but separate comment on the stock buyback. That sucks because it's like, you do the classic investor banker thing of, oh, if you buy back the stock at four times, it's cheaper than it's ever been and that'll be good for the stock and it sounds like it makes sense. But when shit's going wrong, things can go lower than you ever think and sometimes it pays to keep the money in your back pocket because the stock will go even lower. And I think that's just a strategy that didn't work right now, right? You took on a bunch of capital, you bought the stock back and you didn't, you know, by definition, if the stock is 45% down since that moment, that buyback strategy didn't work. And the most, it's better to have bought it back cheap than bought it back at even the crazy high prices that some people are doing stock buybacks in the past. But when your businesses in trouble, things that are bad can get worse and the actual ability to have another billion dollars on your balance sheet to maybe make an even bigger acquisition. In my view, it's worth more than trying to juice the stock for the short term. So I think to look back on that stock buyback and go, that wasn't the best move to make. We optimize for the short term value of the stock, not the long term destiny of the business. The flip side is Mark Baniath said they did a buyback. What did he borrow? 20 billion or something like that to do it? Not even at the lowest interest rates, but he said I did it to offset slack and teblow. I did it to offset the delusion. I got it back, right? My theory of what does that mean? What does that mean? I actually challenged that. And I hear him saying that and I hear them saying we're doing it to offset stock based compensation. And I want to beat my head off the fucking wall. The only reason you buy stock back is because you think it's way cheaper than it should be. The whole, if the stock was trading at a trillion dollars, would you buy it back at a trillion dollars to quote offset slack delusion? I think it's a bogus bullshit answer for people who are just trying to manage some second order metrics when it just doesn't make sense. I've been on board with people pitch bankers pitch to do a buyback to offset stock based comp. And I literally want to bludge them to debt. Buying stock at high prices is stupid. Buying stock at low prices is clever. End of analysis. I think a lot of these deals and maybe and even Salesforce, maybe it's really just to hold off shareholder activists because that's their first play. That's their first play. So when you are down in the dumps, what you got it, you know, and you've, where you've been on boards of this, you've watched it. You want to, to the extent you can, you want to play Kate, the shareholder activists without giving them what they want. And the simplest thing you can do is use all your cash to buy back shares because that's their play. So if you take them out of the game, you've given them what they've asked for. And they don't really have a play if they buy you, especially if you're also doing layoffs. So if you're doing layoffs and you're, and you're doing the buybacks, maybe, maybe you keep Starboard and friends away because their playbook has already been used up by the management team. That is actually think, and look, if there's nowhere better, you can put the money and the stock is cheap, then it pays to buy it back. And I do get the comment that you're always afraid of management with big amounts of cash that they'll waste it on a bad acquisition. On the other hand, in these times of change, right, hyper change, right? You probably have two choices as a, as a SaaS company. You either decide, I am the old thing and the old thing is good enough. I'm going to optimize for 30% operating margins and 10% growth. And I'm an economic machine. It is what it is. And if I've access capital, I should buy the stock back, give it back to whatever. Are you serious? I might have to do something more than that. I don't know what it is, but at least for the next 12 months, I'd like the option value of knowing if I want to do what was at a base 44, whatever is acquisition, I have the money. So, but I agree, Jason, cynical comment, you're right. People do it because it's one of the least disruptive activist moves that you can do. And normally you get Bernie points for it. But the odd thing is, if you do a buyback of the stock to appease the beast and then the stock goes down 40%, they won't remember that they want you to do a buyback. They'll just say you're an idiot for doing it. In the end, you're paid to be right. And when you buy and then it goes down 45%, unfortunately, you can say to yourself, you're right. Today, they're trading at 1x revenue. In a year's time, will they be higher than they are today or lower than they are today? I'd say higher, just because at 1x revenues for any, unless you, I would like to look at their chart numbers. I haven't spent enough time. Unless the revenue is absolutely evaporating, you can get from 1x revenues, especially if you had the wit and the intelligence, which they did to buy a kind of replete competitor. So, this is the thing. Most mature self-recommies don't go and can easily operate a 20% operating margin. So, you're now down to saying you've got your cash and do you think you can last four or five years before you go to zero? I mean, you can calculate the terminal value here, right? At 1x revenues, you are nearing terminal value. For a product that has high gross margins and is relatively sticky. So, yes, I think you can create more value. You will regret deeply buying a whole bunch of shares of three times revenues or two and a half times revenues thinking it couldn't get any worse. Fatal next sentence maybe now it can't get any worse. And if it's a 0.5x a year from now, are the revenues have gone down by 50%, then you can call me an idiot then how I, which I know you're dying to do. No, no, I can't get any worse. I'll go and buy a load of wicks and then remind you of it every week. Remember, can't get worse, it's not the same thing as it will get a lot better. I mean, you know, the question, I totally separate. I think Jason's right about the upside in these stories. Again, it goes back to the same thing. Your range of outcomes has compressed markedly. It's not clear to me if someone said, "What would you do to get a comp, let's not pick on a way, squares, to make any of these things get 30% growth and be worth 5x revenues, I'm not sure I have a single idea." I think Jason's right. You're dealing with managing, I'll see you say what the British Empire are having, you're managing decline. It's okay, it's history, you wouldn't understand. I do think one of the downbeaten that we think is truly downbeaten, public, public software companies, in the next year will become upbeaten. And what I mean is as slow as they've been to react to AI changes, right? They have the installed base. And so someone will get their met, someone that is still founder led, it won't be anybody that isn't founder led. One of these founder led guys will put his best 50 folks in a room and say, "Listen, I don't even need you guys to innovate. I just need you to build a better version of especially Pro Sumer AI app. I just need you to build a better version, stay out of it and ship it. We're going to sell it the hell out of their base." Arguably, that's what Canva is trying to do with 2.0. It's complicated. The startups are moving faster, the models move. But someone's going to pull this off with their best 50 people because they have 300,000 customers. Every time I'm pitching these AISDRs and I'm looking at HubSpot with 300,000, I'm like, hurry up, Breeze, because you got 300,000 HubSpot customers just waiting to buy an AISDR from you. And if HubSpot can actually make this as good as a startup, they're going to sell 150,000 Breeze AIS to Rages. It just isn't a market today. So I just think there's so many challenges that it's hard to predict, but someone's going to, you're going to turn around and you're going to be like, holy cow, droop hold it off. Drew went from 0% growth. He got his last 50 soldiers holding back the the castle, put them together. And holy cow, he built this thing. But I don't know that we can predict who it is. On the flip side of challenge, we have NABIA's growing 684% accelerating faster than ever. My question is, is it justified? Is this absolutely the sign of just compute starvation and a buy? Or is this bluntly further signs of a bubble and concerns that this is overmarket exuberance? You know, it's a mini core weave. And those have been great businesses because you're right now everyone's compute starved. And let me make the captain of this answer as Jason would say, if compute continues to be starved, then he will continue to be good businesses. If it's not, if compute becomes planifil, they will be they will be commodity businesses and the guys who are overlaid with WogaBust. So it's just that simple. Now I actually think Gavin is a Gavin Baker who had a very articulate comment is ironically the slowness of permitting and the inability to bring on data centers at near the speed that people want to bring them on might save us all from ourselves. The disaster scenarios, if all the data centers people want to build could be built. And then at the same time we do the ontropic and open AI mat that we just discussed. And that trillion dollars of token revenue turns into half a trillion dollars. Then you got a trillion dollars of capEx on a half a trillion dollars of revenue on your phone. But if on the other hand, the half a trillion dollars of revenue stays, but the just inertia of building data centers means you only get half of them built. Then you're saved by the bureaucratic inertia of the great American state. And you only build half a billion dollars. Compute remains relatively scarce. And people like Navi, Asinco, we will have that compute do really well. Does Benny us spend grow faster or slower than data center capacity? That's it. An actual with open AI and ontropic in the middle collecting the money from the first and giving it to the second. That is the bet. You know, I was driving back. We had a little nap a retreat break after saster A and it was here. And it the Tesla took us the long way through the South Bay, which haven't done a while rather than the bridge. And I'm passing Marvell Semiconductor, Sandisk, all these folks, all these superstars of the 90s. They're on F and fire today. Okay. The only thing that isn't on fire today is traditional software. Every other category of the classical connects everything. The old the South Bay where Harry's probably never been. Like he probably has never been South of Mountain View or Palo certainly pala is like, why would you go there? There's like trillions down there, man. Look at the skyscrapers. Okay. And I was thinking I was thinking, you know, that the only thing that isn't inflating today is old school software. Everything else is on fire. So my point on Nebius is in worry made this point. Listen, there's an argument to short it. There's an argument that that that is just surplus. There's not enough capacity in the market. But how far in the future can you short these things? Sure, you can short Sandisk and memory and, you know, we fast pass micron on the drive. Like you can make fun of micron, right? Microns add more booms and busks than California prospector from the 19th century. But how you can't shoot short three years into the future effectively. Certainly I don't have the skills to do so. So we can take potshots at Nebius and Corouven friends. But what's the point? We see no signs that there's a short term crash coming and it's interesting, but anything but traditional software, it's just on fire, right? Every single Cisco, Cisco's back. I should have mentioned Cisco coming up South first or Zanker. I mean, Jesus, every software, every technology company except traditional software is on F and Fire. - Okay, going back to the big simplistic picture here, all of these companies are on fire because the hyperscalers and the model companies have decided to spend, you know, roughly three quarters to a trillion dollars a year of building shit. And 50% of that goes to Nvidia, 10% of that goes to power, 10% of that goes to network and you write, everyone just gets pulled along on the bubble. - Everyone. - Right. One of two things has to happen. Either corporate America has to digest a trillion dollars worth of tokens without any intermediate software layer. And I think it can do some, but I don't think it can do all. Our second software has to start working because only a software starts working, does corporate America get to spend that kind of money? And if Sierra doesn't grow, me put a blunt, if Sierra doesn't grow, then at some point open AI and topic will stop growing because their customers today are primarily software companies for coding and selling through software companies to corporate America to use tokens for business purpose. So in a weird kind of, at some point, this all has to level out. - I just think when we started, when we started this show, I think Corrieve had just IPO, there was about to IPO. And it was easy to mock Corrieve. It's like, okay, well, this is just round trip revenue to create a little supplemental capacity that we won't need in a year, right? Fast already year, we need every every every every, yeah, everything possible. So I do think at some point, Sandisk and Nebius and Corrieve all have to crash and Marvel and even Broadcom. At some point they have to crash at some level because they always, I think AI can grow like we all approach the singularity, but eventually capacity will catch up, things will catch up. I just don't know it's gonna be near enough to the present that it matters at some level. That it matters, right? - This was the first, I didn't know if you followed Leo Aschenbrun, I think he was the famous, yeah. - He hasn't had to worry about 10 years out, does he, he'll just trade in and out of it. - But if you saw his latest releases on his latest filings, he put puts across everything. The guy for the first time added very little and actually showed his first real science. - Yeah, it's a big one, it's a big concern. - He's smarter than me. He's making the opposite point, I'm making that it's, this future is coming much sooner than I think it is. The tough one is, would you invest in a Corrieve or Nebius at the seed level today? That's the tougher event, but this is still 20 VC, right? It's as a public investor, you can say, "Hey, Sanders looks pretty good for the rest of the year, right?" - Oh, I'm so glad. - As a starting investor, would you do one of these deals? - I'll answer that, I saw a really excellent one, would a superb theme, a very good seed investor, I'm not gonna name it. And I really considered it long and hard, it was still a seed round, we tend to be a investors, he was a really talented team. I didn't do the seed, but when I, I always try and give a good answer to people when I turn it down, especially when I think they're a-class teams, 'cause I say, "Hey, look, here's my thinking." Because hopefully they'll remember my thinking, if they, you know, if they proved me wrong that come back for the A, and I will admit, when I wrote out my thinking on why I'm not doing this, and he responded, "I thought he won the argument." So I'm actually sitting here going, "Worry, was I an idiot?" Because he had a compelling at the margin story around capacity that I thought was interesting. So I literally ran, I did the answer question, Jason, largely, I chickened out. I didn't wanna be that marginal capacity three years into the deal, three years into the CapEx boom, but there's a little part of me thinking, "Worry, that might be a dumb decision "that was a clever story with a clever team." And yeah, you are relying on the capital markets being there for the next three years and being able to access them, the sobering numbers is half a billion to a billion dollars to build the capacity, but maybe it could have worked. So I get the temptation, but I literally had that, that was last week. - Roach, you always give detailed explanations to founders. I remember Jason once saying to me, actually, about founders will always kind of argue back, and actually it's easier to be like, "Hey, keep a rush more vanilla." - Yeah. - I think it depends, honestly, you can't do it to everyone, right? So I think to some extent, it depends on how much time you spent with them. It depends on two things, right? How much time you spent with them? If you've taken one meeting and you're a no, just give a clear no, I mean, maybe you're minor feedback. You can't write a long email, right? If you've taken two or three meetings and you've felt you're almost there, and sometimes I like to do it because I think it's helpful for your own self. Some CEOs don't respond well to detailed feedback and they are, some of them are really professional about it and I'm like, "Yeah, I see what you're saying. "If I'm writing you wrong, "I'll be back in 12 months, "and I'll say it here, I told you so, "and you'll pay three times as much. "And I'm back, and I'll be glad to." For any deal you spend a lot of time with, it's actually very helpful to write out your conclusions and keep them internally. I do that because then you can test your thinking and you look back and you look back to yourself and go, "Oh my God, I turned down that for that reason." I was an idiot. I nearly did that deal and I was totally wrong on the mark. It's a lot of, remember, in a model that only gets trained in eight or 10 year increments, based on the two deals you do a year, you get a lot of additional feedback from the 20 or 30 deals you nearly did that you just don't wanna lose. So I do try and write it out for myself and then sometimes I share it with the team, especially if I think it might be of interest. - I did say that to Harry years ago, I stand by it like if you've had between zero and one meetings with the founder, there's no upside in providing feedback. It's just endless. Like, wait, Jason, that's wrong. You miss understanding, like I just, if you've gone deep on a deal, you should share the real reasons why. It's generally appreciated if they haven't already closed around. It's helpful to them to see the other side after two to three deals, but it's gotta be at least to me to, you haven't gone deep enough to actually be able to write that email. It can't be because I just, I don't see it, just don't, like then you just gotta be a one line, right? I think I know the deal that Aurora is talking about, but we shall move on. - Yeah. - I wanna talk about Cerebrus, the biggest US tech IPO since Snowflake, priced at 185, which was a big expansion from where it started. I believe it was 110, 110, 120 in the early days, which went to 150 and then 185. It popped 68% on day one. It was a fantastic IPO. An amazing story. Does this open the window for many more companies of that size and not the $2 trillion companies, but does this open the window for many more companies to go out and IPO? - I think it's good for SpaceX. I think it's good for anyone above their level. It just shows anything that is that or better and it better in air quotes, the demand is infinite. I'm not sure if this is really gonna help folks that are below that level. I doubt it. Even you're looking at Figma and you're like, I mean, I don't think anything sub Figma can IPO and have an decent IPO. This is the new great Better Than Figma, BTF. Cerebrus arguably is a different category. If you look at the backlog of 24 billion and your and your Polly Ann about it, right? What's Figma's backlog? I don't think it's 24 billion, right? So I'm oversimplifying it, but I think it's got to be better than Figma and if you're better than Cerebrus, then this is a good time to IPO. - This is very much the end of one bet. It's an extraordinarily complex technological product that they've brought to fruition just at the time when demand for that product has exploded. And unlike when they pulled an IPO two years ago, they were able to line up arguably the marquee customer for that product, OpenAI. So it's a semi-conductor company. Infrains is hot, they're an inference company. OpenAI is hot, they're selling to OpenAI, right? It's an end of one positioning for a market that's starved of ways to bet on OpenAI and Anthropic. They really only have things like coreweeds and obviously you haven't video. This was a chance to play. So yeah, I'm not surprised. If you remember last week you asked, is it gonna go really well? And we recorded before the IPO and we appeared after the IPO and I was like, of course, it's gonna go really well. They've already raised the range. They're not idiots and it went exactly like that. They went beyond even the range. They went to the max they could do without refiling. It was an obvious win or category. And we're pointing out how sickle the world is two years ago they couldn't get this deal done. So I think you're right, Jess. And actually it is at the margin, it's a positive tell for SpaceX. People are willing into, you know, people are very much risk on for the kind of things that look like they have the kind of upside. Roy, would you add it to your public book at 300? Probably not. I go back to the base rate. Yeah, the base rate, we turn an IPO is not from the day of the not from the day of pricing, but from the first day's closing price, which is typically way above it. The base rate we turn on that is negative. One six months, 12 months, one year. You had two years, right? Is that in other words, across the thousand or so of them, if you buy on the pop, you know, you tend to be in a happy camper. Is it a company at the right price you believe can be a long term in doing company? Absolutely yes. It's got technological differentiation like no one else. So just blindly buying the day every other retail idiot on the plan of this buying is probably not the best way to make money just statistically. And base rates matter. We said it's good for SpaceX and SpaceX sets June 12th for the largest IPO in history, suspected 1.75 trillion valuation, $75 billion raise. My word, this would be epic. It will. That's one word for it. And, you know, again, how does this go? I don't know. I mean, I think it's funny. We're recording this the day that you defiled the S1, but I haven't seen it. I checked before I came on. The interesting about the S1 is in one sense, you really want to read it. In the other weird sense, there's actually going to be very little in it that actually matters at the margin. What do I mean by that? Is that the S1 will tell us, and I'm really curious to read it, because it got you the SEC really quickly. The S1 will tell us everything about SpaceX as it existed in December of this year, which was without X.AI, without the cursor deal, without the anthropic deal. Because if you think about it, the most recent, I don't, I presume, the calendar year end is December. So they'll have last year, which is SpaceX and Starling standalone. You know, the leaked figures are 18, you know, 15, 18 billion in revenue, 20, 30 percent growth rate, even the positive would like to see the cap-ex before I comment, but pretty much a bounded, understood comment. company. In February of this year, they closed an X.ai, which bought them a pitiful amount of revenue and a burn as big as Crosius. You know what I mean, right? So that's going to be pro-added into the S1 for maybe one quarter, right? So that's all you lily of half a quarter's information on something that's kind of taken you from a profitable company to a last making company. Then the other two big deals, the entropic deal won't even be in the financials because it's a signed deal. And then the cursor acquisition won't even be in the financials because it's not closed yet. So you're lily going to be reading this S1 going and no forward projections are allowed in an S1. You're going to read this thing that says, here's the company we used to own on December 31st of last year. Pretty nice fucking company it was too, dude, right? However, we've since got AI piled and now it's totally different. By the way, we can't tell you much about that. You'll have to talk to our bankers. Right? It's going to be the funniest S1 ever in one respect is that revenue, you know, 50%, 30%, 40% of the revenue isn't in the S1. All the last isn't in the S1 except per half a quarter. Some of the bankers are going to be having to tell the story via the roadshow. So in one sense, I'm looking forward to reading the S1. In the other sense, that's the first comment is the story telling around these acquisitions are not going to be in the S1 and it's just going to be interesting how they get that across. There are other markets and other times where people will look back and go, you must have been mad to buy the stock on that little information. So I think it's a, the probability is it gets done and extraordinary well and the excitement is amazing because the market is in the mood for excitement. We're selling, we're selling the most exciting company at the plant and the planet at a time when the market wants excitement. If the market ever wakes up and says it wants cash flow, it's going to be a totally different story. Right now we're, we're into excitement. June 12th, this goes out. It's Elon the pump machine. Does this have the mother of all pops with retail getting behind Elon in a way that we haven't seen before? Gotta do better than GameStop. No. Yeah, I think there's a reason it's 30% retail I think some of it is being Robinhood and democratic, right? He's selling nothing 30% to retail. I just think the Robinhooders and the GameStoppers have got to be more excited about rockets than, then plushie toys a GameStop to me. It's more exciting. I think everyone will want to own some of this, which means we tell them by a lot of this. You exactly what I'm going to put it 2000 bucks on my iPhone into this thing. The reason why I said no is because remember, GameStop, I'm again, I go back to fit numbers. GameStop I think pops 10, 30, 20 X from low to high just based on retail. When you start at 1.7 trillion and the largest market cap company on the planet is five and a half trillion and video, it's going to be hard to 10 X from here. I just heard that. That's what I meant. But you write, the excitement on retail will make this a super interesting story. And then the other thing is as you know, literally, I worry, I'm completely ignorant. Obviously, it's going to be a huge float mathematically. Could the GameStoppers and the Robinhoods, I'm admitting my ignorance, if they could they could believe it go 10 X, this is, they're not doing any DCF analysis. They're trading. Is it possible for them to trade enough shares to create a 10 X pop? Is it mathematically possible to influence the float that way? I just, because sometimes it's a thin float when you're able to manipulate it, right? The float isn't that small. It's 75 billion. I think the interesting thing is if it's it's already healthily priced at a hundred times we're having it, it will be interesting to see what happens when these things and how you can go no comment at this point, when institutions take shares in an IPO, they have a price target. And you know, if that price target gets achieved on the first day, you tend to see additional trading. I mean, it will be, you know, the 70%. BlackRock spends 10 billion dollars on buying in the S and the IPO as has been moving. But again, I have no clue about the facts, right? They run an internal analysis and they say we think we should buy 10 billion because we think over the next 12 months, we can make 40% on our money. And if at the end of the first day, it's up 40%. It'll be solely tempting to have another 10 billion dollars come back to market because you'll be looking at your price target and going, I have a price target, I've achieved it time to go, right? And you see that phenomenon when IPO pops, the institutions, and I used to think, oh my god, they're disloyal, they'll leave. But in fact, it's just we bought, we wanted to be a holder, but we had a price target and you've achieved it. So it will be interesting to see that price actually. If it does, in fact, do a game stop, eat type up price, you could also have the Facebook effect where the IPO was frankly a dismal failure early on it hung around its price for a day or two and then look it up in 2012 and then it dropped, you know, at 1.40, 50% below its IPO price. It was a horrible IPO. It's going to be wild. I genuinely hope it succeeds because I think the damper effect of it not succeeding and trading well would be pretty profound. I think it'll trade up to five trillion. I'll take this bet. I think there will be enough sitting in Brickle and Miami day traders, Yahoo's that love the brand. Folks hate the brand. That's why he lost the trial in Oakland. I think they hate the brand too. But enough folks love the brand that it can float up three to five X based on partially influenced the float. There's not enough. There isn't enough demand. This could be limited Lampkin speaking, but I'm going to take this bet that it's going to trade up three X in 2026 just based on game stoppers driving it up. I think it's going to go to three trillion. I don't discount the fact that it goes down. I don't discount the fact. I didn't say it slightly. I'm just pointing out here, you're paying a hundred times. We're having news. You boomer. You boomer. I am a boomer. Oh boomer. Oh five trillion. I think it's going to go down. I didn't say it. I didn't say it will go down. How are you going to be able to live in probably? Did I tell you when I got into Bitcoin? I've made billions on my Bitcoin. This is going higher than Bitcoin. You do realize that space is bigger than Bitcoin. There's a trillion stars just in our own galaxy and there's a trillion galaxies that is larger than all the bitcoins out there. You have this completely wrong. I tell you when I got into Bitcoin, did I tell you guys when I got into Bitcoin? Okay. I'm just trying to be serious. That's an instant pass on a founder and a pitch telling you when they got into Bitcoin. That's my flip side of too much feedback after zero. If in the first 20 seconds, I tell you about when they got into Bitcoin, tell them to stay in Bitcoin. The reason I made that comment is, and I know it sounds like I go back to Facebook. I remember the IPO. It was the defining company of its generation. It was far more attractive than here. It was profitable, but they pushed a livid on price and they just hit that point where the initial trades went the other way. There was a little worry about mobile. They had managed a mobile transition and it really traded down over the next six months. When everyone thinks something is guaranteed that's just when it blows up in your face. Do I think it's the likely outcome? No. It's probably two thirds positive and of that at least 30% of it is adjacent outcome, which is a pop's amazingly positive retail. But I'm going to go back to it's, you know, fundamentalist training at a hundred times revenues. They've effectively decided to be a nebius, not a entropic by virtue of selling their computer to entropic. So that holds the AI story ain't there. It's Starlink as the growth entrance with a core we've attached. It's been a while since we had a bad worry. This is great. Jason's five. I'm three in your negative. No, yeah, yeah. There's probably some kind of spread betting I can take on that, which is what's the original? I'm comfortable below three. I mean, I'll totally take that. The price is right. I mean, you're basically, you said three. Jason said five. I do not think, let me add, at the end of a month, I do not think this company will be valued at $3 trillion or more. I don't need the do I know this is no, no, no, this is a meme and this is a casino. We're seeing the casinoization of public markets. This will go fast to three and it will come fast back down. I don't do casino betting, but thank you. But do you do? Do you know that over the mid okay? Are you doing adventure in a event? Yes. Okay, keep rolling. Keep rolling. Keep rolling. News last night might drop moment with why combinator and I do think it's actually important. Samultman just offered two million dollars in open AI tokens to every YC startup in the current batch in exchange for equity. They reminded me of Yuri Milner and DST doing the exact same with the very early YC batches. What do we think about this and does that impact the valuations that we ultimately get it out if they can get two million dollars in open AI tokens from Sam? First of all, Thosmart. You know, you have let anthropic steal a march on you more than a march many marches on people on mind share on respect and you got to do all you can to earn it back and that's just one more thing and develop a hearts and minds. So smart. Second, I'm assuming it's not transferable because if it's transferable, then it's money because let's be real. Compute is money. But so I'm sure they've thought of that. So it's not transferable to your comment. And does it impact pricing maybe at the margin, but if you're compute intensive, it does. But probably if you're compute intensive, you're raising 200 million anyway. I mean, if I think of the last YC batch and I said to it, most of them are building software on top of AI, but where agentics spend would be token intensely would be 10% of revenues. So it's valuable, but it's not going to replace the need for humans. You're still going to need four or five humans to build the code to build the agent for call centers or whatever. So at the margin, it takes a little bit of the edge off, but it's not like any of them can build a next generation, whatever with it. It's nice at the margin. I think it'll increase the valuations for sure. A little bit. Yeah. If nothing else, even if you don't view it as inflationary, they have two million of tokens now. That's a real investment. Like let's take this seriously. Like we all can use the tokens. So that is two million of de-risking that investment, two million more that they can use to add value to the deal. There's plenty of YC companies that don't raise two million at demo day, right? So now they've raised another, now they've radically de-risked these investments. It would make sense that typical post might go up to 60. There's some, there's some correlation. I'm not smart enough to do. It may even game stop at higher since they're investing to 100. It's hard to predict. Harry, if you do the deal a month before demo day, it's 20. If you do it the week before it's 40. If you do it after, you're at the open AI price. It's 100. You can, but you are welcome to come in at the open AI price. And it's not even a premium. Okay, we'll do it because we love the pod. We'll let you, Harry and Jason, all in at, and no premium. Just with the, no, no, nothing. Just at 100. - You all right, Jason, if you navigate an optics, it probably causes an anchoring effect. You know, I got two million out of 100. Why would I take another four or a 50? - It may shrink the size of the rounds, too. Like it may make it even harder on VCs to invest in YC rounds, because they've, you know, the average ownership for VC rounds has already been sliced to like five or six percent. At YC, this could slice it to two or three, just because you just don't need as much capital. That might even be the bigger impact potential. - In fact, yeah, depending on how much of your, remember, at scale, if you're successful, any software company can use up to a million in tokens without blinking. The question is, yeah, the interesting question is, how much leverage in that, I'd love to know. In the first 12 months of the typical YC company's life, how much of their spend is either today, is either tokens to serve customers, tokens to build product, and our engineering spend that can now be replaced by tokens. It all goes back to that 20% number. Can you replace, out of the gate, you're probably not selling so much that you're, you know, you're reselling that you're kind of using those tokens to serve customers. Most of what you're probably doing with those tokens is building your product. So if you can replace-- - Maybe, what if you're building a LaGoura or a Repplet, you could burn through all those tokens in 12 months? - Yes, serving customers. But if you are, kind of make it come in, if you are, given that token intensity for a Harvey, LaGoura is probably 20% in terms of revenue, that probably means, so to burn through $2 million, you're gonna be at $10 million in AROF, you are at $10 million in AROF, in today's world, you're gonna raise at $500 million anyway. Right, so-- - Well, hold on, I would love. I don't think that's the early stage map. The early stage map might be, tokens spend is marketing spend. So I'm gonna give away $20,000 a month of video creation, of audio creation, of my Sino competitor, of my Repplet competitor. Now I can give away $50,000 a month of tokens my first 12 months, where it would have been stressful AF before this-- - You're exacly right, I was mentally putting in two categories, which was token spend for engineering and token spend for full price customers. You exactly right, the many of you said it, I agree, but what you'll now do is everyone will have destructive free token programs because you wanna try, there'll be a bunch of free me in products. You're exacly right, that's how it manifests. - And if Sam increases it to like four or eight or 10, as open AROs, then think about how much that could change the game. You get 10 million of tokens to build another LaGora or Repplet for your first year, then you're just B to the wall because you don't have to worry about anything except shipping the best Opus, five point, I mean, I don't know if it's sorry, 5.7 codex, product, you can't, because there's no issue the first year. It's all about mark because for so many of the startups we invested now, tokens are marketing. Their tokens are marketing because poor Michael Canabrax is built an iconic company, but he can't afford to spend the number of tokens the startup can per customer. Two's just could just be the start. I just think this is already disruptive to 200 startups and why couldn't it go up? - It can if you have spare capacity. It's also very telling, it says at the margin, at the margin, if you're tapped out on capacity, that's two times 150. For anthropic, if they really are capacity constrained, that's 150 stuff, that's 300 million, you're giving up every three months, that's 1.2 billion a year, if you say four YC batches, 1.2 billion a year, 18 times valuation is about, it's a 20, 30 billion dollar hit to valuation, that's real money. But if you, on the other hand, you have spare compute, then it sleeps off your vest. So to sum it up. - Yeah, but if you believe in the open air, I mean, at the YC model, in the first case, you're gonna hold it at, like once cash is less of an issue, you're gonna at least be able to hold these investments at 1X, it's not gonna cost you anything. Because if the average, if allegedly, the average batch does 3X to 4X, but you're paying 100 million, then at least I don't have to mortgage you from a balance sheet. - Respectfully, I'll put 'til then you're more right than me on that you wrong, because open AI's investments will be valued at 1X and no one will give many credit. But if to make that investment, they gave up on revenue from selling the Bank of America, those tokens. - Of course you're right on that. Yeah, so you can get it. - It only sort of works if the tokens are surplus or left over or something like that. - And therefore my conclusion is, open AI has surplus tokens and on topic does not. - I mean, I think that's a good conclusion, right? But it's also a thoughtful bet, right? - It's not way to use them. - It beats the shit. - Yeah, it's a smart way to use them. Okay, what else are we? - I just wanna hear before we do a rage bait, Barrel. Jason Ruiz is celebrity disaster. - Okay. - They loved him. - Don't give me. - L-O-V-E-D. He was just, he was like, eight, 10 rows standing room only deep to hear from this guy. They love him. - Did he get selfies? - Okay, you know what I'm saying with me? - He wasn't that into the selfies, but he was lost. He was mocked. - Okay, I hate this shit. Keep going. - Oh yeah, no, it's okay. Do we wanna do that? - In all seriousness, I do think it's a reminder that there's a large threat of Rory's super fans, right? They like the thoughtful to the staves. Rory's got a few skills here. Heroniah's self-aware. We're not claiming we're something we're not. Rory has a set of insights and skills that-- - I'm going self-aware. - That I would say to the LPs listening, at least justify a 6x fund, I would say, at a minimum. - Oh, I agree. - I'll give him that least. - At least. - It's just if I premium carry it a bit at minimum, right? - Training Cal. - At least a $199 fund. - We're gonna go on-- - I'm gonna move on to Rage Bade in a second. - I'll real celebrity. - I just wanna point out in passing, we did call the open AI Mosk lawsuit correctly. Not just dismissed, but dismissed on the technicality. Exactly what I said last week. The jury said-- - The jury said-- - Yeah, they just said, and two, my wife used to be a public defender and one of the real tales was how quickly the jury came back. Like, they went in, had lunch, take the four man, said, look, we can decide on the technicality of statute of limitations, we can be done in here a half an hour, or we can waste a whole bunch of time arguing facts beyond that. What does the vote say, we're done. And I think in this case, the real truth is this, Elon knew that they were talking, I mean, so stepping back for people, the question came, the conversion had already been blessed by Delaware and California. You can't say the conversion is legal, so the case you were making was fraudulent, in other words, that the other two guys were fraudulent when they didn't tell Elon about the planned future conversion and they took his money on a false pretenses. So they were alleging fraud, right? And that fraud took place in 2016, 17, 18. And there's a statute of limitations on a fraud claim. So if Elon only found out about the conversion to for a half that when it happened in 23 or 24, then it's within the statute of limitations and his claim could proceed. But it was obvious to anyone the brain of a P that given that he was discussing a conversion to for a profit back in the day. And therefore, it was a ludicrous allocation that he didn't know. That's why they took, the reason it went to a jury and also to a judge versus just being a black and white thing is that it was about knowledge. When did you know, in the case of fraud, it's when did you know you were defiled? It is when the clock starts for statute of limitations. But it's pretty clear he knew. I think that real truth is anyone saying wouldn't have taken that, wouldn't have been the plaintiff. Elon just didn't care. He didn't do it based on probability of winning. He did it because even if he doesn't win, he can damage the other side. He's really angry and pissed off about what happened. And if you worked 800 billion dollars, so what if I wasted 40 billion dollars on a bullshit case? I yanked everyone's chain. I'm happy. So my take on this one is, just as we serve, Elon got his pound of flesh for the 40 million or whatever he spent on legal fees, he's going to appeal it. It won't get a second past appeal and it'll go away. So I actually think it came out exactly as planned. But that adjacent actually found one of the new stories that came off the back of this, which I didn't actually, which is that Elon spawns dozens of other investigations into Samultman's finances on the side, creating more problems for Sam. I think that's true. I think separate common is the stat. And I feel, okay, words I never thought I'd say, I feel empathy for Samultman in the sense that, he hasn't taken any equity in OpenAI. And he's been asked about that and he said, he's had no economic interest in OpenAI. And we probably all talk that to me, he doesn't know on any equity. But what's going to happen now is a whole bunch of people, including in a congressional testimony, are going to say, but you have an ownership interest in White combinator that has an ownership interest in OpenAI. You have an ownership in these companies that are selling to OpenAI. And therefore, you're nefariously trying to get the money. And in one sense, he may have been factually incorrect to say that in the other sense, it's obviously bullshit. He's not because if Sam wanted to get 4% of OpenAI, the board would have given him 4% of OpenAI. So whatever he gets indirectly is minuscule compared to what he could have gotten. Had he not been so, and the reason all this is binding him in the ass is this whole, we're doing it for the good of the world, I'm not getting paid. What I, the enjoyable part is all these bullshit good intentions are binding him in the ass. It's kind of unfair, right? Had he been a, had he been Larry Ellison and saying, I'm doing it for the money, would all have been clear. So yes, Elon is going to get, he's going to continue to make OpenAI's executive team life a misery, which clearly makes Elon happy. And not only that, but other people are going to be able to pile on too because of the complex nature of OpenAI's structure. In a world where a much simpler structure wouldn't attract any attention. I mean, if he owned 20% to be fair to Samo, he was the founding idea behind OpenAI, he convened that meeting. If he'd taken 10% ownership day one or 10% ownership when the convert, no one would blink an eye. So it's one of those things, good intentions by you in the ass. - Let me add just two final thoughts. We go forever. One, I've said I'm on team Sam now. More importantly, I'm on team OpenAI. Okay, but he did not have no consideration. He set up an entire venture fund where he got all the carry and claimed it was OpenAI. If Elon keeps this going, he, this will reverberate forever. He did not, the idea that Sam took no, consideration from OpenAI is the biggest load of Malarkey because he set up a venture fund on the side probably without telling the board. This is probably why I got fired and kept all the carry. Like, you know why he did this because he didn't think OpenAI would be worth anything as a nonprofit. So he said, said, I want to do this. I'm deeply passionate about it, but I also want to monetize it. And how do I do this? Do what I did at YC set up a fund on the side and keep all the carry. Call it OpenAI Venture Fund and make all the investments and keep all the carry. That way I can least make 800 million. Like, I did on strike. I want to happen. I want to be if in fact, just as a commenter, if in fact you're correct, it's evidence of a belief that OpenAI is not going to make any money which ironically would actually have helped his case. He could say, hey, I mean, I think what it really points genuine comment here, what it really points to is complex arrangements, especially complex arrangements, bite in the ass because I go back to my comment that once it became a for-profit, if you wanted to just be at paid CEO, you could have got your ownership. You didn't need to do all this other stuff. And you write, Jason, when you do all this other stuff and then you make an enemy of the richest man on the planet who is clearly malevolent and willing to go to the mat for this over and over again, you in trouble, then add to that on top something we haven't talked about, but I think goes back to where you're wrong and you're commenting the jury, right? They didn't find for OpenAI because they've found OpenAI more sympathetic than Elon Musk. I think it's as it's becoming painfully clear now, no one in America other than us here in California likes the AI trend. And I think probably if you asked the jury what they thought of all the people involved, they would say, a curse on all your houses, what a nasty, obnoxious, arrogant, entitled bunch of shits, but we did our job and we followed the law and I hope I never see these buffoons again and only bad things happen to them. My guess is that was the jury. That's probably the jury. That was the jury, right? And now can we get our lunch and our daily stipend and are we done? You're going to see the Irish. Yeah, Irish met got booed. I think that we'll again go back to my comment here. We have the leaders of this thing spending three years telling us how it might destroy humanity and it's going to put us all out of jobs and then we're shocked to discover that people don't like us. Or by the way, your electricity is going up in the meantime, but have a nice day. We have people who are brilliant scientists who politically are utter morons and the people who are utter morons at AI, the brilliant at politics are going to have us for lunch. That's the movie in the next three years. They're going to have Sam for lunch because he's lied to them as far as they're concerned and they're going to have the AI industry as a whole in lunch because we're firing people left right and center and the politics are going to be brutal. At least when Metta was busy destroying the world, they were smart enough to pretend it was all about bringing friends together, but not destroying democracy. We will regret that lack of transparency. Yeah, this is why I'm on team Sam. I think he's doing the best balance he can here. I think it's mostly a positive image. He's not doing the Dorio thing. Yeah. And people still shot at his house because I don't believe it's not funny. It's not funny. Eric Schmidt got off light. And if I'm telling because actually three years ago, I was maybe four years ago, I was at my son's graduation the first year after Chachy PT and it was the exact opposite. Someone at what the speaker's made a kind of a semi nice reference to Chachy PT and all the kids clapped in a totally knowing fashion that basically exuded, we've all treated for the last year using this product. We fucking love it. And it was a really sweet one. I'm like, including my son. And I'm like, Oh, I get what just happened here, right? And we've gone in three years from graduations clapping about open AI because it was like, Oh my God, that got me my final essay done in 24 hours when I didn't do it to we now blew Eric Schmidt. You might want to think about the trend here and the direction of travel if you're representing AI. And that's why there's been a message shift that Daria has got. But most people are now trying to emphasize the positive. But it's going to be hard to do that because as we speak today, you know, meta are laying off 8,000 people. That's 8,000 lives impacted because he wants to put it on into CapEx. So I think the politics are going only one way. Harry knows the British. What did that see of standard charter bank says? We're getting rid of 8,000 jobs. But we don't have job losses. We just have job reductions in favor of the machines. This is the greatest graduations. We have no job losses at standard charter 7800 reductions. We just have job role reductions in favor of the machines. This is a level of honesty. It is just as generous as we get. He's not even seen them as job losses because they're no longer necessary. The machine. They're just in favor of the machines. This just statement should echo through history. I don't want I don't want to end on a negative. But Cisco cuts 4,000 LinkedIn cuts 875, matter cuts 8,000. I will give LinkedIn credit. They specifically said it's not caused by AI to be alignment. But yes, the trends are tough here. Into it's a big one too. It's going to be 16,000. Yeah. Wow. The politics here are going to be interesting. We will need to create policies in tech to rehire these people. I think we need to reflate. First, we're going to get fit. We're going to we realize reskilling doesn't work. We're out of time. Okay. We've got to do we got to be better than Figma. We can't screw on anymore. So we're going to get fit. We're going to replace our workflows. We're going to have AIs and then we're going to have a social obligation. The Eric Schmitz can't just go to graduation and say FU. We're going to have to reflate and hire thousands and thousands of people per tech leader to avoid social unrest. We're going to have to do it. I've had this conversation with a number of high-flying AI CEOs and at first they think I'm ridiculous. And then they think about it and then they're like, well, maybe we need to go we need to have a 2000 and 21 social charter where we just double our head count and we just they have nothing to do but play on chat GBT all day. No, I just want to flag that's only the case if in five AIs capable of replacing these jobs. There is a scenario. I just want to put it out there where by people are overestimating what AI can do and it maybe it's not 20% of our in day head count. It's 5% and therefore the amount of efficiency that AI creates might might be less. In which case, you have yourself are these people being really laid off because they were surplus to voyage all along? Are they being laid off again? We talked about this because you just spent all your money on CapEx or are you a shock? I have you cut too deeply and you have to do a clariner and wind some of it back. Jason, let me be clear. If the reality is as you are articulated, then you're correct. If the tech industry really does put let's say Darios correct. If we put 20 to 50% of white college jobs out in the next five years, then you're going to have to do something massive on the social thing. Otherwise, they will be forming the guillotine in the square in San Francisco and then I have a long list of people that I would suggest to bring up in the tumbles. I actually don't think that'll happen. I think we're over exaggerating the impact of it, but you are right. When you can't do it, what you can't do is say it a half. What you cannot do is what's happening right now, laying off a whole bunch of people saying it's AI and then acting surprised when it bites you politically in the ass. I mean, I wonder, do anyone come and go back to something you said? How do you think those 8,000 X Facebook employees are going to vote on the well tax next week? They're going to vote on, you know, it's worse because first of all two things. Let me see. We can take 5% of fucking Zuckerberg's money and he might leave the state. I'm in. I agree. That's why I think we have to have this reinflation of hiring. First of all, I'm sorry. I know it's one. You do that. He'll just leave. He may have left. He may be a citizen of Nevada. My point is politics when you're calm and rational and you can talk, I think it's a horrible idea. You can talk about it very rational like this because if they leave you lose all the tax, right? Politics when you've been laid off by email at four this morning because the CEO of your company has decided he'd prefer to buy to Jason's point, a hundred million dollars of machines than a hundred million dollars of people, that politics becomes very different and I don't think you think as much. I think you are pretty pissed off. That's my point. I actually think it's worse than that, Rory, because I think these are going to be by far the layoffs that Harry just rattled off in the ones with this year. I believe we're going to be far worse than any layoffs in our lifetimes and I'll tell you why. And I know this is brutal. No one's going to hire these people. No one wants it has always been a scarlet letter to be laid off from a tech company, but it is a double scarlet letter today. And these people are going to be angrier. No, I'm going to go up. I'm into up them because late breaking news, I just saw a headline command that says, "Open AI might file as soon as Friday." What this says to me is they have figured out that the money, the last trains are leaving for money station. I don't know if it's true or not. I'm literally responding in real time here, but I think when you look at the service market, you said yourself, "Go, go, go, go, go." So when Sarah said, "We need another 12 months to start the process, what we really meant was we're going today." So yeah, it was happened tomorrow. We might have to do another supplemental podcast like HRSA will point out. No, it will only be a filing. It will be a close filing. You'll learn nothing. All you learn is what we've just learned, which is at the point. It's the April period for SpaceX, not the flip. What really counts is the flip. And the flip is happening for us. We'll see SpaceX tomorrow. We'll know Open AI's filed two months from now, they'll do their flip. But there you go. What an ending, Rory. There you go, man. My god. I got you got a just a little broad meaning and try and make a buck. Goodbye. Good luck. But before we leave you today, let me tell you about Omni. Your team needs insights, not just data lookups, the stuff that really matters and is critical to get it right. For AI agents to act on your company data, they need your business context, your definitions, your logic, your permissions. And that's what Omni's governed context graph provides. 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