20VC: Anthropic Raises $45BN but Falls Short on Compute | OpenAI Crushes with GPT5.5 and Codex: Back in the Game? | China Blocks Manus $2BN Deal to Meta | Thoma Bravo Hand Back Medallia Keys to Creditors | Why Google is a Bigger Buy Than Ever Before

It's entirely plausible in a world of super big exits, that 10 super big exits cover the entire nut from the LP perspective, such that it's still a good business. It's a whole new world where I think OpenAI is even more competitive again. The dirty little secret of entry again is how much of your money you make in that one year in 10 when everybody buys the dream. More and more, the agent is going to choose what models and just what vendors we use. It's possible you look back and see that as the first disconnect from Compute Equals revenue. They didn't weigh of a levada, they just weigh of a paid foot. You can't serve us two billion plus of debt on a one billion low growth company with a pre-AI story that has to transform to AI. This is 20 VC with me, Harry Stabbings. It's my favorite show of the week. Roryo Drisco, Jason Lampkin, the biggest news in tech. In other words, this shit's going to make you much smarter at a dinner party. So what's on the agenda this week? Number one, $45 billion poured into Anthropic from the hyperscalers, next China blocks matters $2 billion acquisition of Manus. And then finally, Tom Bravo hands over the keys to Medaliya, to creditors, 5.1 billion of equity wiped out. What is the future of this stage of private equity? But before we dive into the show today, are you a founder working nonstop to raise your next round? Are you an investor doing all you can for your portfolio companies to help them stand out? Funding and scaling a vision is challenging. Banking should not be. HSBC Innovation Banking, Caters to Tech, and healthcare founders all over the world, who need a really great banking partner that matches their pace, offering fast onboarding, product packages designed for your business, and capital solutions built for high-grow startups, and the VC's investing in them. With HSBC Innovation Banking's rapid onboarding, you can get access to your new accounts and facilities quickly. 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Feeling spicy, I just came from an LP meeting. I wanted to start with open AI, missing numbers, specifically across user growth and revenues, with the two of you matches, missing numbers on. It's led to core weave dropping and oracle dropping, I think five and seven percent respectively. Is this being made too big a deal of? Is this justified in terms of the response that we're seeing? How do we analyze this? It feels a little overdone and a little overlaid. Overdone in the sense of, it acquitly flexed what happened last year, which is, if you think of the two big picture jobs here, you know, you got two jobs when you're going to want it. You got to build great models and you got to buy enough compute to be able to run them. And there's no doubt in the back half of last year opening AI failed at the first part of that job. They didn't build great models. And as a result, their attraction well to the, on topics declined markedly, their market share declined markedly, right? That's probably the shoe that's dropping now. If you look at the model, they ship with, I think, 5.5. Reviews of the coding say it's pretty, I'm good and arguably better than the current on topic models. So I think to some extent, this is a late dropping shoe on facts that were probably knowable three, four months ago if you were paying attention to the traction. And the funny thing is in the super connected Twitter AI universe, in fact, on topic is the guy that's getting a slamming right now. There's a whole bunch of, oh, Claude can't keep up, can't support the users and the current codex model is better. So this feels a little like old news that maybe is news to the Wall Street Journal, but probably isn't news to anyone paying more attention. It's funny, this is looking backwards, right? This is looking backwards, a lens into last year. It confirms what we knew, right? Anthropic, obviously, the rate of growth was incredible and some of that was market share, right? It wasn't all AI, some of it was market share and it stole market share. Elon was clear about this that Anthropic had, quote, something special in coding, which underestimates how much of the overall growth in the market coding was, right? And I think OpenAI acknowledged it by double coding red and getting codex better. Just two thoughts, one, as crazy as it sounds, I think this is also yesterday's war, but I think going forward more and more the agent is going to choose what models and just what vendors we use. Do we use Canva or do we use native AI based generation tools like Fall? The agents are going to choose which LLM we use. Just like everyone from Daro down to said there's going to be more and more agents doing coding. The agents are going to make the decision on everything and I would say as a consumer of LLM, forget about coding, which is the number one by dollars, right? As workflows expand to do everything, as agents do more, they will pick the LLM and I see no competitive advantage to Claude for most workflows. It is so good. OpenAI, whether it's codex, if I was just state-of-the-art of the models, it's so good for my workflows that I think the advantage that humans get out of Claude in Claude code, which is huge, right? This was a story last year, humans shipping code, shipping products built like we got an advantage. We got more superpowers from Claude and Claude code. I'm not sure our agents are going to get the same advantages. They may get just as many advantages from OpenAI and I already see that with our agents are AIVP and marketing, AIVP customers, our applications, they love OpenAI, they love it. I think this is another benefit that is ephemeral as agents take over more and more of the workflows of our lives and we're going to look back at last year's this transition era where most workflows were managed by humans and late 2026 into 2027 is most workflows are going to be managed by AI agents, not AI agents working autonomously, not crazy open clause blowing up our Mac minis, but running everything. And I think this is where OpenAI is very well positioned, very well positioned. The agents will pick what they want and it's not about what makes humans better and our agents like OpenAI. One of the many reasons I've come back to Team Sam and Team OpenAI is not because I care because my agents like OpenAI, they love it. So I got to follow my agents, just like you got to back your team of humans in the old days, like 2024. Today I have to back my team of agents. If they pick OpenAI, I got to be on the team. I'm not exaggerating. It's a radical change that most folks are just in the still in the human ledi, where they're not seeing it. - We're off-piece already, but I'm going with it. I'm going to paraphrase and then I'll have two questions. What you're basically saying is, in a world where agents pick the models, you don't have this human anchoring bias for my favorite agent and thus it becomes more of a, every day is a new day kind of market. - Yeah. - They have very different perspectives on what vendors to pick. - Yeah, great. And presumably has better perspective. So the interesting thing about that, so I'll be up this question. What does that mean for the large AI companies? And so I have a couple of questions. One is if the choices between OpenAI, Claude and Gemini, then it's still a nice cozy little oligopoly. To get in the game where you can be chosen by an agent between it, do you still think it's just the state of the art Foundation models who are going to be in the next video. going to be relevant here. Over the weekend, my 996 project was I built an agentic API grater where we went, I just had Claude, OpenAye, and Gemini together take the top 120 APIs and grade which ones they thought were the best, which tools are the 11 labs, everything on down. Interestingly, Stripe got the highest grade, got the only A plus, which is a reason to go along and Stripe. I did not think Stripe would come out of the top. My captain obviously is learning and you'll see, see the same thing if you just ask Claude what to use, very biased toward the leaders. Now, very biased toward momentum, they're not going to recommend Marquetto for your agent to do market in animation. In fact, it mocked Marquetto outreach and sales opt as tools useless agents. Okay, this API grater. They said there's no place in the agent will never send an email through outreach sales opt in Marquetto because it will just craft and send a better email itself and said these are worthless products in the age of agents. But they are very, if you had to do a two by two, they want market leaders that are innovative. That's who the agents pick. So I think for now that three by three is Gemini, open AI and Anthropic, right? In fact, the order is Anthropic. And so the greater it graded Anthropic just above open AI. And then Gemini was just down here. So it was interesting. That's what all of them wanted to pick. And I think that's the world we're going into. And the old guard are going to be bypassed or useless. So to your point, I think this is an interesting story. But it's a whole new story. And as the agents pick, it's a whole new world where I think open AI is even more competitive again. So let's go with that. So my mental model remains it the three way oligopoly, just like cloud is a three way oligopoly with, you know, Google cloud, Amazon and Azure, right? What you're saying here is which is fine, got it. And then the other question that I'd be curious to get your thoughts on is, you know, what open AI just announced that agent product, it seems to be if I was if you're running one of the foundation model companies and Jason's world is the world you agree is going to happen, then you just make damn sure that you build the agent harness such that the device picking the agency's your device are the agent. Underdiscussed underdiscussed the public markets have the right idea, but the wrong direction, the public markets think vibe coding and clawed are their threat. No, the threat is what the agents pick. And actually, if you look at overall, the markets are they almost get right. They're worried about Atlassian and Monday, because agents don't need project management tools. They have no use for them. And the ones that are actually about performed, right? The Tuleos, the cloud flares and others, the agents still have use for it. So our whole narrative that public markets somehow saw the future that most podcasts couldn't see, which is what matters is what the agents will pick. And to your point, this is why the agent wars, I mean, Mark Bannyoff gets it even more. This is why Sam Altman, they're all like, you got to win the agent wars. Because if open AI wins agent wars, then you have locking the open AI will probably pick open AI as the API and the now, maybe it maybe they will evolve where they're actually agnostic at some level, right? Where these agents are so successful, they have to pick the best of breed one could imagine it. But there's you got to own the agentic layer, not just the fabric, but you got to own the agents too, because they're going to make these decisions. Do we place no value then on large multi enterprise deals? All right, service now, we had Mike from Atlassian on who talked about the increased rate of multi enterprise deals that are very large. Do they just not have value because we're going to see the mass decay? Turn that is deferred still exists. It is where the rent to CEO and the mediocre hide. Okay, workday does three year contracts upfront and five year renewal. So the average workday customer effectively signs up for an eight year contract, three and five is their standard term. Does that mean they they're they're going to stay on work day forever? No, that means they have eight years to find better agentic solutions. Now, maybe the executives are all gone by the time that that comes up. If you believe that public values worries better at this and me, if you believe that public stock prices are the sum of terminal values of cash flows and profits, then deferring Sharon masking churn is doesn't matter. It doesn't help if you defer it for years because of it. If it dies, if the customer dies anyway, at the end, you never have it because it falls off your AR roles. I think that's definitely true. And not sure it's extreme in the sense I can envision a world where even eight years from now, you don't turn off your SaaS system of record, but you're not growing. So interestingly, and again, I didn't expect to be here so quickly, but hey, Jason, I'm going to greet you on something. It was interesting because we want to discuss service now at some point in time, right? Which grew 20% plus or minus, very negative market reaction. And if you listen to the analyst call, this will make it very happy, Jason. A lot of the really really kind of groin the questions were, is your AI agent revenue really real? Are you just bundling it? Isn't growing fast enough? Right? In other words, I buy into let's call Jason the narrative. You articulated, which is if all you are as a system of record for humans, you are a bounded cash. Even if you're not a negative NPV, and I think some companies will be, we'll talk about that later. But even if you're not a negative NPV, you're a slow growth at best NPV terminal value. And the only way to get the high price that you need to make the stocks compelling is to have, yeah, agent based activity on your platform. And it was just super interesting. We had to talk a few weeks ago, right? You kind of gave me clarity on that that you need to see agent acceleration. And then it was funny to look at the call and then, you know, this is the company I should know the numbers doing 16 20 billion. And they're grinding the CEO about a half a billion to a billion dollars. What of agent revenue? Because what they've recognized is that's the tell for the future. And I'm willing to bet in a quarter or two, someone's going to be asking Benioff for how many calls to your agent, your headless API did you get? How do you measure that? How do you measure value? And that kind of stuff. This is the way it's going. So you are right. I think Canvas can have a wildly successful IPO. And they just launched their their agentic suite. Okay. And it's got a lot of great, agentive products. And you can you can vibe images. You can vibe you can vibe everything like it's actually very, very good. This canvature. I think it's called canvature. It's great. And if it had come out last year, it might even be the default that that we use instead of startups. Okay. And it's so so no question. It's canvature. It was great. Is it the best? It's definitely better than make. No, I mean, it's great. It's great. Okay. But ask yourself a question. Would an AI agent use it? No. An AI agent is not going to go in and move assets around. It's just going to create the assets. So an agent doesn't need canva. This is the meta threat. The stock prices reflect, but the narrative misses. Right. Canva, maybe in 2026, built the right 2025 product. But will agents buy? I don't think any chance an agent is going to use canva. I don't think any there's any chance an agent is going to use Jira Confluence unless it's forced to like it has no there's no need for these products. Can you help me? I'm saying I love Cliff. He's been a gas actually. He's really a friend of mine. If he's going out in 28, which I think is a realistic timeline for when he would want to go out. And you just said he will have a successful IPO. But agents would never use it. Yeah. Can you? I don't know when it crosses over at the low end at consumer versus enterprise. Actually, I think this is one area where the enterprise crosses overhead of consumer because we want to automate these workflows as soon as we can. Right. I don't know if the average low end B to C user who gets so much value from canva is going to make themselves obsolete with an agent. They're going to still be designed. They're going to pay 18 bucks a month getting incredible value out of canva. So they may be it may take time because we know none of us really want to replace ourselves with agents. Right. It's our team. So the more people you have on your team, the more you're going to deploy more more agents to replace them, the more you're just yourself a solo printer, the more you're going to use AI tools, but not agents to replace agents to enhance you. So this is going to harm enterprise workflows before it hits the sort of prosumer market. I think there's a lot in that. And I want to just put a bookmark on it. I can't tell you what you have. What it means. How is it if you think it's a big category for software companies, a loading terminal value melting iceberg. You're in trouble. You have a low stock price. We'll talk about it later. And if you've leveraged your debt, then the middle category is system of record. They're going to keep you forever, but no active, but not a ton of agentic activity on top. You're going to be worth something. You know, there is a positive terminal value. It's calculatable and the price of which you should buy the stock. And then the happy outcome is the agents are using you when you're getting increasing returns for AI leveraging your technology. If you put those three buckets, I think what Jason, you're right. And saying Jason, in those three buckets, successful enterprise software companies can easily get to that top bucket because you're right. Companies want to automate because it's called taking costs out and it's called making yourself more efficient. So successful sourced companies and the enterprise that adapt to this reality can probably reignite growth. Obviously, unsuccessful ones will fail. It's what you're saying about Canvan. I don't have a I don't I'm not a design person. I don't have a feel for the like the team, but I'm not a designer. I haven't zero creativity. But I think you could be right, which is that individual user, small user. They want to have AI tools, but they don't need to create a whole AI automated workflow because they're not doing enough to matter. Right. So intuitively, what that says is they end up in that middle bucket where I think now bringing it back to the IPO. The point is they have the scale and the profitability to be an IPO. This company is going to do great. The problem is, as we've discussed before, so much adventure is about the pixie dust upside and any IPO without pixie dust upside just gets priced like a real company. And it's always a bummer for venture people when their company gets priced like a real company because it's just so much easier to make money when you get pixie dust credit. And the truth is, SaaS pixie dust credit expired in 2025. You know, we talked about rippling growing 70 some odd percent of the billion, right? That this should be if this were an AI play, it would be a jaw dropper, right? AI will will a trade it a SaaS discount. I sure hope not. No, I know it'll trade it. I don't like the second after I think it's I think whipping is a great story. It said, and I know you do too, but it's like it's going to trade on a sensible adjusted PE multiple based on growth, based on cash flows entirely rationally in a way that any value investor could buy it, which by definition means it's won't trade like SpaceX, which is going to trade hopes, dreams and prayers. And the dirty little secret adventure again is how much of your money you make in that one year in 10 when everybody buys the dream. It's a great outcome. And so it's not going to trade. I don't even assess discount as much as I think it's going to trade at fair value. I mean, maybe that's the way to stay even stalker. A lot of venture capital makes money when they're asked it's don't trade at fair value. They trade at a narrative premium to fair value. And in those one year in 10 when you make 30 to 40% of your total cash back, you get an unexpected gift. Good SaaS companies that aren't AI first are going to trade at fair value, which means if you've created value, you'll get value. And I think Canva and Ripley have bought creator the normals value. So they'll get value. But what they won't get is that stupid 30 times revenue premium that looking back, you might have gotten 2021. We started this conversation on open AI missing numbers switching to anthropic. You had Google committing up to 40 billion, 10 billion in cash now at 350 billion and then 30 based on performance milestones. And then Amazon adding up adding another five billion to the round. This was kind of latest fundraising news from anthropic. How did we analyze this? And is the ultimate loser here when I read this, not Nvidia? You're training on training and TPUs and getting closer there with no Nvidia. I mean, there's just such a lot to disentangle me. Let's put it a pin in Nvidia for say and go back to the big picture on what the details mean. And I've been thinking a lot about this is that remember I said earlier, right? You have two jobs when you're running an enterprise foundation model, leaving aside the consumer business. You have to build amazing models and you have to buy enough compute to make sure they can run them at the demand you can at the demand you see. And both jobs are incredibly hard. And the funny thing is right now, open AI got one job right. They have enough compute and they got the model wrong. So that's why they're in trouble. And then shopping did an exact opposite way, right? They got the model perfect. In fact, they may have over succeeded. And as we've told of that, they're light on compute, right? So that's what's big picture going on in Amazon. I'm sorry, I'm tropically constrained on compute, which is why they're doing these big deals. And Darryl has articulated in the past, you know, I'm a little careful about this. And this is a and you know, let's get real. No one had a business plan last year when they went from one to nine. That said, they're going to go to 30 by the end of q one. So they were hit by their own success. So that's kind of what happened. And at the bigger picture going back to the two big jobs is, and it just internalizes how incredibly hard and risky the second job, the buying compute job is on how capital intensive this is. I don't think we internalize that right. I was thinking about it. If you're at a $10 billion run rate right now, you know, which is roughly on traffic and the last year, right? And you're looking forward two years and you think you're going to go five X this year. And maybe four X next year, not crazy, which means you're going to be, which is 20 times. So that's 200 billion two years from now. But so let's run it. There's even 100 billion two years from now. So whatever you have today capacity to serve 10 billion, you run that model and you say, now I need capacity to reserve to serve two years from now, 10 times that amount, which is 100 billion. I need 90 billion of new capacity. And the capital intensity for every dollar of run rate revenue, it probably takes four or five dollars of capital to support that. So if you're going to add 90 billion in revenue capacity, someone between you and your partners has to find plus or minus 300 billion dollars to buy chips, dig holes on the ground, build data centers and make it all happen. Think about how capital intensive that is. You're doing 10 billion in run rate and you're effectively saying between you and your partners to be able to meet demand two years from now, you've got invest 200 billion, not all yourself, some virtually your partners. But think of it. And by the way, if you get it wrong and you end up doing 200 billion in run rate revenue, you're going to only have to compute you need. You're going to look like an idiot. And if you get it wrong and you only get to 50 billion in revenue two years from now, you're going to be left with 150 billion of stranded capacity. In software land, it was so easy. If you sold more, you made more money. You didn't have to spend a lot to make that happen at worst. You had to hire some reps. Microsoft had to hire no one when they exploded in revenue. They just shipped more PCs, more PC ship and they got their like 20 bucks per PC. In this case, two years before you get the revenue, you have to bet four times that amount on CapEx. So my big a half from this is, it's obvious when you say it, but how incredibly risky this bet is. And you know, it's no accident that if you look at the two CEOs, who is going to take the risk to the upside and just spend the money and just devil take the consequences, it's going to be Sam. So he has lots of compute. And who's the more careful guy and might understand it's Dario. And I don't blame either of them in a sense of the sums involved. It's not that the business is capital intensive. It that does four dollars of CapEx for every one X of revenue, but it's also 10X in growth. Yeah, the combination means you have to bet four or five eight times your current one rate revenue in CapEx just to make demand. And you've got to do that every year. I'm sitting here going all these stories are when topics grew up because they're not enough compute. Dude, if you can predict two years out what the demand is, let me tell you, there's a you can join Leapold in a special situation in the situation, an awareness training game. It's really hard. So that's my big a half, which is that the compute intensity means the capital intensity and the growth means they're the spread and the risk of that capital intensive bet is just huge. Yeah, I don't think it's a huge deal. But if if open air really missed last year, and I think some of its definition, what the miss is right, we're reading an information report. And I think and I don't think this is a huge deal. It's possible you look back and see that as the first disconnect from compute equals revenue because the risk mitigation to Rory's point is as stressful as this is all the spend. If Sam's right that that really compute equals revenue one to one, if there's a perfect correlation, then it all kind of works out in the end, assuming that capital was available. If that breaks for any reason, right, then it just adds a level of risk to the model that's even higher. And I'm not saying that happened for sure, but superficially it seemed to have happened. Right? Superficially. You know exactly, I mean, I think it's a fucking stupid statement by Sam, right? It's it's correlation. It implies correlation. It's just correlation. Let's rephrase that statement because the Altman statement is compute equals revenue. Not true. I mean, I can tell you what is true. No compute equals no revenue, but compute and a shitty model also equals no revenue. See, Grock for details. The truth is to succeed, you need to have enough compute to meet the man and a good enough model to generate the man. And you got to do border them in sync. You know, it's hard. So I agree. The correlation argument, everyone was making that causation argument that, you know, compute equals revenue only because what they weren't because while they were making that argument, the demand seemed almost infinite. But the minute you model underperforms a little bit, it's not quite infinite anymore. The good news is if aggregate demand is growing up five, 10, X per year, these air pockets are just going to be air pockets for both sides. Right? I mean, I think because zooming out Jason, the big picture comment is agents, I mean, what do you think? How many more tokens does your agent use per day than you did, Jason? Our Salesforce bill went up from 12,000 to 22,000 dollars a year and our seats went down from 10 to two plus one. So there's your man. What about your token? I don't know the name. It's derivative of it. It's like, it's like your status center number, like dramatically up. They're using dramatically more tokens. That's my point. I think they're using literally, I saw a number like it's 50 to 100 times more expensive in terms of tokens to serve an agent than adjacent. Actually, then a probably 10 tons than adjacent 100 tons of worry because I'm not, you know, you're well, it's because it runs constantly if you let it. So the good news and that's why you don't want to get caught lost in the who's winning, who's losing on a kind of weekly, monthly basis. The good news and the reason these guys can all take these risks is in the short term, the compute equals revenue is not always true if your model's not there. But the big picture trend is over the next as agents kick off, the demand for compute over the medium term will be there. So it makes sense to lean in, but you should also say you're leaning into a thing where there's going to be wide short term swings. There's probably going to be six months period where you're like, I'm an idiot. I don't have enough demand. And then six months later, I'm an idiot. I don't have enough compute. And it's just going to be the journey. What's easier to ratify? Is it easier to resell access compute that you have or is it easier to emergency buy compute that you don't? It sounds like it's again, hadn't thought of it. But the problem is if you're one of the two big guys, you are so much, what are you going to do? Can imagine it, you open a, you have X, you have a gig of access compute and shopping is desperate for compute that held you seller to them. Oh, my, oh, you want to buy it? Oh, sure. I mean, it sounds crazy. But like Samsung would bill phones and then sell its components to all its direct competitors, right? Totally. That's fair. I mean, you get Zen about it at some point. We're going to have two divisions. We're going to have our compute division and our applications divisions. And they've got their own PNLs and what's more like, remember, you don't have the truth is you actually have the compute on a long term contract, but Amazon, Google, Microsoft, CoreWeaver, Oracle will actually court have the compute. So maybe the way to phrase it is, if, if foundation model company A can't take their take our pay, the hyperscalers will probably take that compute to foundation model company two and say, Hey, guys, I got some cheap short term compute. It's like a sublet. Yeah, just a 10 billion dollar sublet. So yeah, there will be some kind of market. The fact though is that's happening right now to kind of macro. Remember that whole core wave, the, the reallocating and data center from company A to company B that's this going on in real time. Remember that, that forecasting problem I articulated on top of that, there's a two year lead time. So it's not like you're forecasting next month's demand. You have to forecast two years out that 10 times your revenue on CapEx and hope you're right. It makes running an airplane company. - The airline look easy. - The benefits Google too. Google's the big winner here. - Well, first of all, now and Thropics deeply tied to them, right? So Google wins whether you use Gemini or whether you use Anthropic now, right? To Google has infinite capacity because they're the largest provider of traditional web software. So they have all this capacity for themselves that they can allocate even better than Microsoft. Do I want to give it to my own compute? Do I want to give it to Anthropic? Do I want to give it to them? They have the surplus to Rory's point to your point, Harry, that they can route between their customers and themselves and others. They win-win here. They have Gemini, they have Amazon and they have the capacity and they have the ability to rotate it where when they want and they have the cash flow. They have the cash flow to manage it all. So Google win-win-win. - And to stick with the more ways to win, come and we've got Harry's original question on Nvidia. Yeah, the last shoe to drop here is both Amazon and Google have chip products they can bundle into the equation for context GPU spend is roughly 50, 55% of total capex on any build out. So if you're building out a one gig data center and estimates range, $30, $40 billion, $20 billion that is compute. And Nvidia's gross margins are 70%, which means 14 billion of that per gig is raw profit to Nvidia. That's one of what's Google and Amazon are trying to do, which is substitute that for their chips. Now, Jensen will make the argument as he did on the podcast. Dude, it's a mistake, our chips are better. They have more support. And you got to be in the weeds on that to know the exact answer, especially for specialized use like Google and Amazon would say that the Nvidia advantages aren't as good on specialist use, but I wonder myself. But nonetheless, that is what's happening, which is some attempt to bundle. Neither of those two chips, the Google chip or the Amazon chip are widely available on a standalone basis. So what both of the hyperscalers are doing is effectively bundling their chip with their capital and their equity investment to convince a traffic to continue to run on their products and just take more of the gross margin arguably with, as Nvidia would say, a substandard product. But tech is, there's many examples in tech of substandard bundling products succeeding, see Microsoft for details. Many quick fire around. Google hit four trillion in videos of five trillion dollar company for maximum value gain on a per dollar basis, which one would you invest in today? Okay, not the question I was expecting. The maximum dollar gain, it's a bad question. I'm not doing my thing again. I think risk adjusted I would do Google reluctantly because I think if you just wanted the upside, you can paint an Nvidia is a more single threaded story around raw cap extraments. But I think risk adjusted you probably would do Google 'cause to Jason's point, the biggest invention Nvidia has is if this thing happens, which is capic explosion they get at all, the biggest advantage Google, but if it slows down even a little, they're really in a different place. The biggest advantage Google has, it has multiple ways to win. It can win if AI adopts fast, it can win if AI adopts slow. It's kicking off cash, so it's got a bunch of steady businesses. Provided, only one thing can go wrong. Provided Charche PT does not erode Google search, which is the model load of cash, they're golden. So risk adjusted, I'd probably reluctantly buy Google. - No, you gotta do Nvidia. - Okay. - Despite the fact that it potentially has reached its market share ceiling with Anthropic and deals and others, it's the best pure play into the AI vector. You're good, yeah, you're right. So you don't want to minimize your risk, just put it into VTI or bonds. If you want to bet on AI today, 'cause we can't buy Anthropic or open AI, just buy Nvidia, that's how you buy AI today. Just buy Nvidia, don't even think or spell it, just buy it. - Well, what it's worth, that's totally fair. And I think if you're just going for max upside, if you wanted to create your AI upside exposure, it's Nvidia and then a bunch of other weird things we can talk about another time. - Yeah, don't even buy Core Weaver these crazy things. Just go back the truck up to Nvidia, and if Nvidia loses AI, it's dumbels, it's okay. - I want to be a long only manager. - Fuck it, buy Nvidia by Google, done. Go home for three years. - Seriously, this game is great. I wish a long only seems like the place to be. - Roy, just charge your fees and commissions and just, well, it looks good today. I think Nvidia looks good this week, boys. Let's buy Nvidia. And I heard good things about Google, my friends use it. Let's go buy some Googles. - This is for cash, we're shit. - Yeah, we love Janssen, go Janssen. - Yeah, let's make it work. - The data says most managers are, I mean, we all know that underperform the index, and then especially if you adjust for beta, they underperform the index. So no, it turns out to be remarkably hard, how we, we'll keep telling ourselves that. - I think it's because they don't do Google in Nvidia. I think it's because they try and have a diverse portfolio. - Yeah, that would be, yes. And when you're not diversified, you're either right or wrong. I mean, yes. - Survival bias here, but yes. Move on and, yeah. - Is there anything else on anthropic or open AI that you want us to discuss? There's, I mean, there's a couple of things being mythos, the ads. No, we're happy to move on. - Yeah, I don't want to be on and tropical the time. - Right, let's do it. China blocks matters two billion acquisition of Manus. This was a surprise. Distributions have been made to investors. The companies, Singaporean company, the people on in China, this feels like a regulatory overreach. - Well, Benchmark has their money, all right. Who cares? If I own 20% of Manus and got my 400 million out, I would love the boys. I'd want to get the boys out. Don't get me wrong, but I don't care if I got my money. I ain't giving it back. I'm not accepting the service and process. I'm hiding from the from the service and process provider. I'm keeping my 400 million. I'm taking my 80 million in carry for myself, and I'm hiding. - I don't know if you can hide in Woodside from the CCP. - The, it is a real risk. But I ain't giving my money back. If I'm Benchmark in France, I ain't giving my money back. - I don't want to trivialize that only cause there are humans at the heart of this who are at risk stuck in China. But I do agree your assessments. The investors who've gotten a capital out, the chances of them having to have been willing to return that capital zero. So when China says they want to unwind the transaction, I actually don't think they're talking about the money as much as I think the leverage point is over matter, whether or really saying, you have this technology we'd like it back. And let me give you a clue. If that had happened to Tesla, where they have a massive car plant in China, they'd be coming to the table right now with the Chinese government and saying, maybe we should unwind this transaction because you've got a lot of leverage over me. If you do a lot of business in China, this ruling is going to start a discussion. If you don't do a ton of business in China, it's not, no one's going to be pursuing the venture investors to some extent, it's going to be pushing on matter. And then obviously the more human thing is some of those team are still based in China and they're not going to be able to get exit visas. It's less about getting this thing back than it's pre-eventing it from ever happening again. That's the first last and only one of these deals that anyone will do. Unless literally, as before you wire your money as a venture investor, the night before you put everyone in a 737 in Beijing and say, dude, well, why are the money when you hit Singapore and bring your family? It's just not going to be a thing. So I think China is just sending a very close, and look, like Mattel is his son, just because they've lost the money, they've paid and then I'm getting the down. - No, but they have the technology other than some of the fun. They have the technology and any of the team that's based in Singapore, they have, right? There'll be some resolution. As I said, I got back, I don't remember how much business metadata is in China, but if they do a lot, they'll have to settle, if they don't do a lot. And I think that I can't even remember, I know Google didn't for the longest time, I just don't care what metadata is in China, neither subject interests me and the combination interests me less. But I think that if they do, they're going to have some, they're going to feel some pressure. As I said, just like if you were a big US manufacturing company or Tesla and the Chinese government took this position, you'd have to take it seriously, because they'd say otherwise, we're just going to register a four million judgment against you and exercise it against you, a local plant, have a great day. I think it's just a blip, a human issues aside, to Roy's point, I don't need to minimize them, right? I would just take my carry and hide. I don't think the service providers will come from China. It will be a minor blip in some upcoming AI war between China and the US, that is difficult to fully understand today, how this war goes, right? Well, Nvidia is supporting AI to China, right? Let's do more of that. It's in their best interests. Others are against it. It's clearly a war at some level, but I'm not smart enough to fully predict where it will go, but this will just be the start of, oh, not the start, but one of the first expressions beyond this Nvidia chip drama of where this war will go. It's a war. - Agreed, and I don't love the war word, because I think that implies actual violence, but I think you're right, because it's funny, you often have to step in the other person's shoes. If you think back, if you're looking at it from China's perspective, there was someone going to go to prison somewhere, I think in Singapore or the US, for selling Nvidia chips to China in breach of the sanctions. And they're probably sitting there going, "Well, if you won't give us your chips, "I'll be damned if we're going to give you our researchers." And it feels a lot more balanced from their perspective. And you, evil Westerners, are putting this dude in prison and all they try to do is sell us some, you know, black wall chips back off. - Right. - The sanctions we're exerting on them probably feel problematic to them. Now, I remain on team USA, I live in team USA, I'm with team USA, but just put yourself in the shoes of the other side and think, what they're probably sitting there going, we'll show you with manners, like you showed us with Nvidia. - Mm-hmm. - Marmex sense? - It's slightly tied to deep seek, finally raising outside financing at 20 billion, right? It's, I, it maybe worse the wrong term. I think there's two great battles that will come before this pot ends, right? That are subtle, that we won't hit everyone. Is this China versus US and NAI is a battle that's happening? And the other is just the social dislocation from AI. It's our, happening. I think there'll be more revolts and issues as layoffs happen. I think the California will pass its billionaire tax and the Exodus will continue. I think New York is already is trying to pass its penthouse tax, which is already leading to wars with the Citadel founders and others. So there's going to be this theme of social unrest and this war with battle with China over AI that won't bubble up each week. But I think at a meta, meta non political level, these are the two big things, I think, that we can ignore in our quest to get rich fast. And we're going to have $3 trillion IPOs. Who cares? Who cares about the little guys when we have $3 trillion IPO cares? Who cares? Yeah. But I think what you're saying in the rest of it is it turns out the non trillionaires and non billionaires can see that the billionaires don't care. And you write, I think the political climate had shifted. And yes, this is going to be a continuing social drama. It's not the thing that preoccupies my day because I'm just trying to do my job. But you write, if you were to zoom out and write a social history of the 2020s 30 years time, I think you're exactly right. I think the two historians will talk about the revolt against inequality and AI. And they'll talk about China. I think it's a very good framing. I think those are the two big social/political framing things here provided we don't blow up the world. I haven't seen the polling on the billionaire's tax again. My rule of thumb used to be California de-elect, which is quite sensible. They elect them, but they're pretty profoundly right-wing at heart, which is what no one ever talks about. All the markets says mid 40s now. They're the past. Interesting. Because normally they vote down any tax because they're like, no, we've learned. Just vote no to anything. Right? Yeah. We're Democrats in our heart, but we're Republicans in our pocketbook. But if it's 40% already, that's interesting. I haven't paid attention because unfortunately, I thought a billionaire that I'm not in the price bracket, but duly noted. In the venture game, we have a lot of areas. In the P game, it's right at a zero. Home of Bravo, hands medallion to creditors, 5.1 billion equity. Y-Pound is the first total loss. There was three billion in debt. That seems to all be going. And it's just very significant because you never will very rarely see an asset of this scale being handed back to creditors. And it's the first of its kind. Might be second behind Pluralsight, depending on how you define it. It might be the second big one. We just weren't as focused on Pluralsight, but Pluralsight died under debt too, under a massive debt. Yeah. What was the size of that, Jason? You're right. I'm wrong. Miss Boakin for me, but yeah, it wasn't as big. It was a couple of billion. No, you're absolutely right. I miss Boakin. So I'm sorry for that. Can we just confirm that on this? Because when I was reading it, I didn't quite get it. I'll turn my losing money here. Did they recruit back money? 100% the losing money. I mean, it's from memory. 2021, the deal, I think, went down to 21. I like, it was a six billion dollar transaction or whatever. And five billion of it was equity. So it was not widely over leveraged. Right. Maybe more. Six of debt, the rest of equity. So, you know, not widely over leveraged. Fast forward today. They have more that debt than that now. So it could be there was a minor dividend recap when they took some money out. Maybe they got 20 cents on the dollar. But the big picture here is this that and it's terrifying is that this is a company. I believe with a couple hundred million dollars in EBITDA, if you look at it from a cap structure perspective, it was 80% equity, only 20% debt. And that should be pretty safe. But when you way overpay for a company that now has way underperformed and for reasons we'll talk about these V.A.I. has very significant terminal value questions, then even though you've only got a small amount of debt, the stunning thing is with less than a couple of billion, did you say there was three billion of that? Right. I told you, I told you, it was closer to two, but that's okay. Right. They basically said the debt smudges the company. Right. Even though it was fairly under leveraged, what that means is at 200 billion, they basically were eyes at eight, nine times adjusted EBITDA. It wasn't worth putting any more equity in. They've massively overpaid and the deals on it performed. It's a business that looked like nothing could go wrong in, which is enterprise software. And people would have said, if something does go wrong, it would be, oh my god, you way over levered it. They didn't way over levered it. It was way overpaid foot. That's the important insight that I think is missed. Right. Pluralsight was both, right? This still apparently lost two billion, but it was very levered. This is not heavily levered, but they can't afford the 300 million of debt service, or it's not worth servicing the 300 billion. You are. Actually, that's something because I'd say relative to the account, and I wasn't precise here, in terms of the transaction size, most of the, most of the consideration was equity. So in that sense, it wasn't over levered, but relative to the size of the company, I think the medallion was doing a billion. You simply can't, and that's the big scary a-ha across all these other companies. It used to be the other, you'd be like, ah, you muddle along, you do 10% operating income, serve us the debt at low interest rates and refinance it. You don't have a chance to do that now. There's nothing good about this, because you don't have an AI story. They'd have to invest a lot to get one, because this is a medallion stepping back is kind of in the measuring customer engagement, customer happiness, kind of survey business. It's not a major system of record like ERP. It's fairly easy to transition to an ex-generation product, and you can totally see a whole bunch of AI first, very much better products in this space. We have an investment in unwrap, it's a small company that has a customer analysis of customer sentiment. There's a whole bunch of much, and I don't push a one product, there's a whole bunch of way better AI first products in this space. So they're looking at an asset that just doesn't have a story that's relevant. It's a full rewrite to change it, and it's just too hard. And this is a full write down, and that's not what this business is meant to be. I mean, that sales quarter attainment was 21% or pulsedly. And the other problem with medallia, and I'm not sure it's true of all the ones that are at risk. There's some big ones at risk. Cooper, New Relic, Anna Plan, even Zendesk, Avilar, a smart sheet, they all look like they may not be able to fully repay their debt. My limited understanding of the problem with medallia, it's just it's one of the ones that that CIOs want, want to reduce. It's just that simple. It's not even whether it's a system of record, that's an ultimate threat. But why it's already struggling to even retain 100% of its revenue is you sit around the room. It's it's one under discussed is the amount of vendor consolidation that's occurring at the same time as AI growth. You know, whether you look at gardeners numbers, 30 to 50% of AI dollars are coming from consolidation. Medallia's a top target. Do we really need that half million dollar a year dated survey product? Did we really learn that much from it guys? No, so it gets cut before you cut before you cut your workday or Salesforce, right? I agree. It's just prioritizations. I think for venture, the question is, and Rory would be the expert here. Sorry, Harry, you're the boss is, does it matter? And what I mean is, okay, so Tom O'Brien was going to take a five billion dollar hit here. I'm like, I don't know, 20 billion dollar fund, right? That's not expected outside of the bound, but it happened, right? Even if all these died, medallia, proof point, even Qualtrics, Alterics, Cornerstone appears to be potentially going under Kupa New Relic, Anapline. Does it matter? Because we got to just move on into the AIH. Does it really matter? It matters a bunch of different dimensions. I'll say it to save Cornerstone ringing and yelling. Don't say anyone's going under because that, but pulls you into saying things that may or may not be comfortable. Multiple term loans underperforming, apparently. That's exactly right. They're already underperforming the loans. Not a great sign, right? Yeah. I mean, no, the horsemen of the apocalypse are, first of all, the debt starts trading well below power. And then the second thing is the debt starts doing kind of payment and kind of activating the toggles that activate when you need more time. And then when the refinancing cliff happens, that's when you face the music. So that's the movie and I'm not commenting. And then it goes coming, but you're right, Jason, every one of them in the category of highly levered 2021 deals, which means high absolute price. So again, back to my comment, even if the equity versus debt mix was fairly unaggressive, the debt as a percentage of current revenue, which is what you got to look at now, because the evaluation you paid in 21 is irrelevant. The debt as a percentage of current revenue was probably pretty high. And you know, it doesn't matter if half of these go, but I think it matters in three ways, right? A bunch of different ways actually. First is a lot of old peace are going to take a lot of losses if this happens. And now we share LPs. You know, this looked like the other part of a balanced private portfolio. And PE was always, this is the safe part of the business. And venture we always said was risky, which is why you had to have the better return to justify the pain. And now if the safe part of the business takes some significant hits, you know, it's definitely going to be just the appetite for risk. But just to challenge that, is that true? And the reason I only asked a question from ignorance, for example, most of the LPs I talked to pre-boom, AI boom, were like, well, we're expecting the 2021 funds are going to perform terribly. We've just got to move on. Okay, they were terrible investments. The LPs I talked to be like, we just got to give them a mulligan on the 2021 fund. It's done. It's time to move on or we got to quit the asset class. I think a lot about peace had internalized the 21 vintage with a tough venture vintage, right? Typically smaller dollars of risk, right? I think the mental model was, but the PE guys in return for never giving me that 4x, 5x upside, they've been consistent 2x earners all the time. And now it's kind of, it's one thing when you're a speculative early state seed fund blows up. It's quite another thing when you're safe as houses, 500 million dollar commit to mega PE fund ABSC ends up with a sub-par performance, right? And there's a lot of co-investments in there. So if a bunch of these names that you articulated Jason do lose money, it'll be significant. It won't be fatal, but it will be significant. In general, I've observed with people including myself that you can be, you can seem calm and flagmatic about the prospect of loss, but when it actually happens, it hurts. Right? So I do think there will be some element of loss there. And then the other thing just to put it out, there is there goes one of our exit routes. Well, that's Evan for sure. That's the biggest impact, right? There, there goes, right? Yeah, I mean, you can wander around to Toma Bravo for all you like and say, you know, and yeah, they'll say they're still doing deals and they are, but the bar is going to be much higher. The automatic you can't build a company big enough to go public, to teach it, don't care. So you can sell this thing for three X revenues to fill in the P from that's not going to be true going forward. And that has significant consequences in particular for your older companies, you know, your 2015 to 2022 companies where if they don't have an AI story in the tracking, they don't have a strategic outcome. And if they don't have a strategic outcome on IPO, what are you going to do? What a hundred million dollar revenue company going 10 percent? Even if it has no leverage, even if it's not blowing up from a performance perspective, because the buyer of last we've thought is no longer in the market. If the three traditional ISIS were sell to a strategic technology provider, one of the large incumbents IPO or cell to pee, if the cell to pee goes and we all agree that smaller IPOs aka non the massive IPOs, Andrew L's or you name it. Do we only have one that is it route left? What's that? Secondaries to each other? I missed the route. What's the route? I think there's no exit. I mean to a strategic incumbent. But they don't have, but here's the thing, they don't have the appetite. P is a much better buyer for most at least B2B plays. The volume isn't there at these guys and the more importantly, what they want is very specific. It's very specific. You can't count on anything. I can tell you when I was a VP in Adobe, you would say, oh, Adobe should buy these companies. Like it's the perfect fit. I'd be in the meetings. They never even heard of that company. It didn't matter if you had a buddy, unless your buddy was shot new, it didn't matter. Like they didn't care. It's more narrow than you would ever imagine. It's more than you ever imagined. What is the exit funnel of the future? I think it's really, I think you exactly, first of all, you're exactly right. The IPO's not gone away. They just have to be big. The strategic's haven't gone away. They just have to be super targeted. The PEs have gone away, except very little prices. What it says to us is our perspectives. And this is contrary to someone that we see at the moment, they're at the stage, all of us are investing at, which even though it's slightly different between us, all to a rounding error is early. And I now define early as anything before you can squint and see an IPO, which is now 400 million minimum. I mean, you put forward your construction has to reflect the reality that we call it internally fewer, but bigger winners. Instead of having a bunch of companies exit early, you're going to have a bunch of companies taper out, maybe get social exits. And then the one that goes the distance and gets to 400 million in revenue, could have an even bigger outcome than you've seen before. It's the corollary to the statement that we're having some of the biggest exits we've ever seen. And that's true. Both things are true together. Though exits that you're going to have now are going to be huge, there's going to be a lot less of them. And therefore, from a portfolio construction at the early stage, early broadly defined, you just have to have a higher end count because your probability of getting one right is lower. Now, at the late stage and by late stage, I now mean, when you're investing in companies that could already be public, above 400 million, then you don't have that risk that risk that it won't make public scale. Because you already have public. There was many things that can go wrong with stripe investment, but it's not going to fail to be big enough to go public. So therefore, at that stage, you see this massive concentration because there's only a small number of companies big enough. So that's why you really, there are two venture businesses now, as I say, early, which I think many picker number below 100 million AOR, where it's have a pretty diversified spread, except its fewer but bigger winners and have diversification. And then there's late where it's, you know, thrive puts three billion in company A, two billion in company B. But as I think one of the guests on your show said from thrive, partially it's easy because there's only 40 names you even have to think about. It's just a different business. The number of places where you can park a building is few and far between. And they're both sides of the same coin. The business has totally, I remember when I started the business in the 90s, there were years where there are 300 IPOs a year. And what were the valuations? 50, 100, 200, and 50, 300. It used to be basically the series C. That's that's Harry's average A round right there. The point is is the public markets had an appetite to be part of the IPO process by a process of regulation and a whole bunch of other reasons that's along with the case. And the trend, which I thought would flatten out in the kind of 2015, 2020 level has even further accentuated. It's a different game. I literally had this discussion at a board meeting this the other week with a company that just crossed 100 million. And I'm like great. And your cash flow positive, you're in control of your destiny. Let's be clear though, to achieve your outcome in today's market, you need to hit a billion in revenue probably growing 40% the room one silent. Okay. Because 400 million growing 30% is not good enough. I think you'll get a push. You'll get it done. Yeah, but they're all failed. The Navon, Figma, Sailpoint, NetScope, they're all broken up crappy IPOs. I'm not saying they're crappy companies. They're great companies, but the IPOs are crap. So the bar has gone up even further since the IPO. And there's just no answer. One of the things I think is going to happen is unless Tom O'Brawo decides these are all AI enhanced winners. It wants to buy and vista, which could have actually we could talk about it. I don't spend too much time. It could happen. They could come back into the market for a variety of reasons. If they don't and the bar IPO is a billion growing 40%. I think what's going to happen more is they're just going to give the company to their friends CEOs founders. Okay. What's going to happen is let's say I'm at a hundred million in revenue and my best friend at my peer he's my best CEO. We work great together. He's at 200. Okay. We're both growing 40%. Okay. I'm done after 10 years. It's not that I don't care, but I don't see any path to that IPO. I have not gotten an M&A offer from Google. Harry said it would come. I've never gotten an offer from Google. I used to get P calls. I haven't gotten a P call in three years and I don't see it anymore. So I'm giving the keys to Rory and I'm going to give a third of my company, right? Because I don't see any exit and the founder gets out, right? The emotional weight, the heaviness, the VCs, I guess get to roll over this into a fake company where the valuations line up. But no one really gets anywhere, right? There's no distributions to the LPs. You haven't a create chief critical mass. But this is a micro trend that I think is going to accelerate this year as founders giving the keys to their friends, not completely quitting like eight months after an accelerator that didn't work out. But I mean, it's just I'm it's 40 million, 50 million, 20 million, 100 million. I'm not going to get there guys. So Harry, here's let's merge our companies. I don't know if, um, Grammarly is taking any more mergers. So I'm giving my company to my buddy, Harry. I, I, sounds like I'm kidding, but I think we're going to see this happen all the time. Is give the keys to my friend that's bigger and better than me. Just give the keys away. There's just a huge amount of rationalization has got to happen because look, these numbers are big enough. I mean, you know, if the total privately held F and V is plus or minus six trillion. And if the big three or four and the other guys who can comfortably get out is three or four trillion. And then the world of everyone else is two or three trillion bucks. Let me tell you, no one's going to just walk away from two or three trillion bucks. But at the same time, it's not obvious what has to happen. And yeah, capitalism works. People are going to come up with solutions. But Jason, you are, it's going to be your some guy who's a mid career operator who's willing to take the pain is going to say, I got this. I'll, I'll take these five software companies, all broadly speaking and the systems management space will put them together. I'll run them like a hard ass. We'll get to 20% growth, 30% e but DA and just compound our way because I'm a mid market manager. And this is a chance for me to make 50 million bucks as a CEO. We won't have a ton of stock based comp because only me and five other people are getting stuck and there'll be a whole bunch of tough hard acts that will happen because people aren't just going to say, okay, you can't meet two trillion. I don't want it. You know, I'm not going to walk away from our older companies. We have value there. My LPs have value and frankly, I have value. But you're right, Jason. There's going to be a fair amount of industrial non glamorous work involved in converting that stuff into free cash flow. To just be the cash flow. Before we move to venture, just final thing on this, this is not exclusive to Toima. You can go from Francisco to Vista to EQT. Everyone's got that. Genuine question. What happens to this is that as an asset class, as a cohort of funds, do they just raise the same size funds and then Charlotte? We move on. Do they move away completely? My rule of thumb is this, whenever something looks incredibly easy and it looks like it always works, that everyone who does it make money and everyone says that everyone who does it makes money and it becomes the conventional wisdom that everyone's going to make money, it's going to blow up in your fucking face. And that's what happened in PE. It's like, well, you're going to make two X regardless. So whatever, and then let's talk beyond that. And it's going to happen in venture, you know, when you get, whenever someone says you can't lose, you're just about to lose money. By the way, the fact that you had 20 names all doing the same thing with exactly the same strategy, that was probably a clue. We've pointed out in venture too. Top of Bravo and Vista in particular are like, we're all in on AI enhanced B2B. In my own portfolio, I've only seen one soft offer this year, but it was from a P firm that was exactly that start up at scale that is not growing at astronomical rates, but growing at really good rates that is clearly AI enhanced and AI category got what I would say a decent soft offer. Okay, so those deals are happening. Not at the rate they were in 2021 or even 2023. That's the current, seems like the current playbook is near as I can see it. So they're reviving that play and they've been clear, you know, Orlando Brawl has been clear. That's what he sees. That's the playbook today. The meta question is the whole B2B thesis broken because it's just not a stable category of software anymore. My sense is everyone's talking to their game to Rory's to use Rory's language. I think they're kicking the can on this issue because I don't think most of these P firms have a reason to exist if B2B software is stable. Now, if it just means they need to evolve to a new category If B2B software, no problem. Raise, raise, and another 10, 20, 30 billion. And if these AI-enhanced candidates exist, that are affordable, you just buy them and you do the same thing. But if it's not to use the triterm of durable, but there is an argument, the classic B2B markings just broken. There is an argument that even the high flyers may not, the ones, you know, the one that Clinder just did an a billion for voice agents for plumbers or LaGoura Harvey, we may find they're not durable. I'm not saying that the answers. If they're not durable, then the whole classic P model's broken, right? This massive amount of software. And that's the crack in the debt market. It was, it doesn't appear durable. So I don't know, but there's a chance it's all broken because AI is rendered at all non-durable. That would be what the Yahoo's, the thing Clod destroys everything would say. It's not if it's durable anymore. Doesn't matter if you're great or grinding or struggling, doesn't matter if you're LaGoura or Medallia, none of it's durable. It's a great point, Jason, 'cause in that world, and I'm not sure I believe in that world, but you are at people that these positive, if the AI first ventureback startups that exist adjacent to the foundation models can't make it with equity dollars only, then they sure as hell can't make it with debt on top. All right, so what you're saying is there would just simply be no compelling investment opportunities for PE debt type firms. So the most depressing realization ever, basically exit markets have gone, B2B markets have gone. I do think that the exit narrowing is a little depressing. And I think it will solve itself, I beat myself up. Rory and I first met when I sold my last startup. And the post I wrote just a couple of months later was, did nothing to do with the timing, it was an okay decision at the time. But I didn't know about this PE market. I never would have sold at a million in revenue. If I'd known, PE would come to the rescue and buy me for two or three times more a couple of years when I had 140% NRR and was profitable. But it didn't, it started just a couple months later and a friend of mine called me up and he said, "Hey Jason, I just got an offer to buy my company for a hundred million." I'm like, this is just no way. I love you, your little bootstrap company. Who the hell is gonna buy you? And it was, you know, it was the start of the PE wave. And so it opened up this wonderful era to Rory's point where we had plan B's. Everyone had a plan B, right, for your investment. And I do think it is depressing. I think it'll work itself out. The big exits will solve it, right? The Wiz's and the, I mean, we thought Wiz was big. Now we have cursor now. I'm gonna win the bet of a hundred billion dollar exit in the next year, right? So on the aggregate it'll work itself out. But I do think for the average person, it's a little depressing. It's a little depressing that there may be no exit for so many companies that there used to be exits for. I think it's stressful as heck. It was stressful for me just before the PE wave came in. Oh, God, I wish I had a soul. Just for this reason, only for PE, I wish I had a soul. It's entirely plausible in a world of super big exits. The 10 super big exits cover the entire nut from the LP perspective such that it's still a good business. And they literally nobody cares about the fact that the other 96 companies wither off on the vine, right? And the 96 other VCs wither off on the vine. This is why many of the big firms are trying to get bigger. 'Cause they see this and they go like, if there's only a small number of slots and if you end those slots, you make a billion dollars and if you're not in those slots, you make zero. Then do what it takes to be in those slots. Right, I totally get the logic. It's Darwinian, it's firms trying to adapt to that reality. I don't think it's quite as stark as that, but it is definitely on that trend line and you have to adapt to it. Okay, guys, we can do privus. There's a lot in privus. You guys, you choose, maybe choose one with a positive slot. Sorry, sorry, my fault. What are the choices? There's thrive, there's chimath's numbers, there's Gary Tan on bullshit error, there's SPF, the greatest investor of all generation. I think the Gary Tan one's worth a quick discussion. We've hit it before, but I appreciated that he called out these issues. Can you provide some context, Jason, just for those that missed it? I think it was started by a guy at this legal tech startup. What's, what is it? A spell book, a spell book who pointed out, kind of made too much of it, how there's a lot of bullshit error, okay? And for example, I've got one investment I made that's north of nine figures in revenue. I get three different error numbers each month, three different definitions. I can at least, at least they're trying to be honest, right? What's like core software, ARR? What software plus variable usage and what's like committed revenue, okay? And there's a massive delta between these. The point was like, it's just so, what startups are saying they're doing in classic real revenue, gap revenue, certainly, versus what a non-gap number has grown so great it borders on fraud was the initial point, okay? And rather than say no big deal, who cares at the pre-seed level? Like why see who cares at the YC? So early, Gary's like, no man, be truthful and precise about your revenue. And he laid out five points which hit most of the issues. The ironic thing to me is even I felt by the time I got through Gary's whole memo, I didn't even understand what revenue meant anymore. It was so correct, but also so confusing the way we've rebooted revenue. And I don't know what you guys have seen, but I got burned once on this in the old days, right? But everyone's kind of been burned on this that's done a deal quickly. And I've personally found if it's sort of mostly disclosed, it's been okay. If it's been hidden, I ain't gonna make any money. - Yeah. - I ain't gonna make any money when this is bullshit, which is to Gary's point. And obviously, frankly, the fact that he had to say it, probably suggested it is rampant at the seed stage where he wouldn't have to say it. That's my experience is that it's rampant as well. That people radically, like how can everybody get to three million a revenue by the end of demo day? Maybe everyone can't. Maybe only a couple can. - I think it was simultaneously really good and really shrewd. The really good comment is pretty obvious. It's necessary. You write, there's this all ambiguity about what revenue, young founders are overstating things. At best, suckering people into doing investments they shouldn't do and at worst ending up in litigation and potential fraud allegations down the line if they mistake things. So some guidance is really good and helpful. And I predict if it sticks, the shorthand version of the seed stages will be the zest conform to the Y-combinator revenue guidelines. That's why it's a good thing. It needed to be done. Which I want to shrewd thing because if you own a market you wanna make sure that that trust in the market remains. It's a little like the way the beer is placed the diamond market for years. You wanna know that people can transact in complete confidence, right? Y-combinator has a dominant market share in the seed market. 25% it erodes the value of their product. If a whole bunch of people start thinking the numbers are bullshit. So not only was it a good thing, it was a shrewd thing because it's now basically saying, if you look at these deals at the margin, you wanna say you've got the Y-combinator, here's how things are calculated correctly still of approval. So I think again, it was good and shrewd and as such it's gonna stick. A some version of it's gonna stick. - It's a good point. They're a market maker. So you want to have this level of transparency. - If 120 NYSC stocks lied about the revenue, at some point the NYSC would say, "We need to fix this thing here, people. Let's get the auditors in a room." And that's just what happened here. - On the slightly other end of the Banches Bad Shroom, Thrive Eternal, Josh just continuously bringing out new products and new packages for his investors. Thrive Eternal, I didn't wanna say this, but it looks remarkably similar to Sequoia's Avery Green Fund in terms of the whole periods. - I think you miss where it. 'Cause I understand that the verbiage looked the same whole company's forever, but and you were saying is this an example? Again, for context folks, in 21, late 21 Sequoia correctly said, "Over the long term, our very best companies continue to compounding if you held all the companies, even the bad ones, the good ones would have swamped it 'cause you'd have Apple, you'd have Cisco." And the analysis is entirely correct, and it's like that old analysis on any equity return business. Over any 20 year rolling return, it's positive over 10, most are positive over 5 summer positive. I know if it wants to while over one, it blows up in your face. And unfortunately, Sequoia opted to do the eternal hold every stock forever in that one year where it blew up in your face. So they felt a little foolish about that. Though I think over 10 and 20 years, their analysis will still be correct. If you build and doing companies, even in the public markets, the compounding will happen. That was the Sequoia comment that Harry was referencing, but I think the thrive product is actually very different. If you read the prospect of sort of these, the information on it, it's much less about holding our public stock forever. It's actually, it's interesting kind of very marketing and positioning around different kinds of assets that aren't impacted by AI that are going to be eternal. It's an entirely different form of investing because I think the first investment is in one of the San Francisco teams. I can't remember which one is it the giant? I can't remember. Was it the baseball team? I think it's the giants. Yeah. Again, my end. In other words, it's actually just a totally different product line. It's the making the big picture point that there are assets beyond the digital that are enduring and can't be replaced in any way, shape or form by digital. And because they're right about that, there's no amount of automation. It's like that stupid people who say, oh my god, the robots can run faster than people on the half marathon. And therefore it's over. Well, as someone pointed out, a Toyota Corolla can drive faster than people, but we still watch the marathon, right? What they're saying is this group of assets is so different than AI that they're enduring long-run media assets. And at that level, they're correct. I don't know if the average venture investor would be a really good buyer of sports assets, though history would say the Warriors has been a great deal. It's a different bet than the Sequoia bet. It's a different asset type. And you know, if the LPs want to do it and they can pull it off, the guys show on great taste. Good luck to him. It's outside my personal. This is totally off script, but we do business of sport, a sport show where we interview the biggest owners of sports teams in the world. This business of sport is dictated largely in Europe at least. So I don't want to speak from America, but by media rights. If you see the personalization of media, whereby everyone gets very independent media that they consume, whether it's games, TV shows, they can customize craft to their preferences. And it impacts slash to Jason's point, the consumption of sports. Then you have a significant impact on the digital rights package that teams get. That is very, very significant. And so if you wanted to paint a world where AI changes content consumption patterns, that has the ability to significantly maim digital rights for these sports teams, which would significantly impact their revenue generating ability. That would be the bare case. You're right. In the case of sport, you have the individual personal journey. And you're seeing a bunch of that in at the margin in sport. You know, you're seeing it, even at the high school and college level where the athletes personal journey is a large part of it and they can monetize that. And in fact, the way Leo Lionel Messi monetized being Lionel Messi when he came to America as an example of that. He extracted the value, which by definition means that's value that the sports team owner didn't get because he was able to get it. So I do hear you point at the margin. I mean, I still think, you know, you're going to, if you own the entity that's playing the game, you do have the marquee asset and especially in the US, the NFL economics have been widely compared to US in fact, has been even more successful at creating sports money printing machines than even in even in Europe. But so I do hear you, Harry. Mind you, I will say something I said earlier, you do go back to that common I made earlier, which is when something is so obvious that everyone thinks it can't lose. That's just a time when you do. And sports has been a home run win for 20 years, maybe 30 years, right? It's been the one it replaceable asset. I'll give you one fun example when Ryan Smith sold Qualtrics, I think he made about a billion dollars after 20 years or so. And I believe that billion most of it went back into the jazz and it has quadrupled. Absolutely. The sports teams go up quadrupled. Now he needed the billion, of course, to lead that takeover. But you know, he's made he's up three billion on the jazz or something like that versus the 20 years. It's very clear. This is a very, is a super US soundtrack perspective. Sports teams do not go up taught them or on the brink of what? No, no, no, no, no, no, I want to just get very because I can comment on that. I actually sports even in Europe do go up in a sense of one key differences, some of the best worldwide assets are some of the European sports teams. One key difference though in England in particular, you have the concept of relegation, which are American friends might not understand, which means in the NFL you're always in the NFL and no matter what happens you in the NFL, same thing in basketball, in English soccer. If you're the bottom of the world, if you're the bottom three teams and the bottom of the division of Premier League, you get kicked down one, right? And your economics go to shit. And that's how he pointed out Paul Tottenham looked like they're going to be relegated, less has been relegated twice. So it is worth noting that Europe, the alleged socialist capital of the world, has a far more performance oriented sports culture than America where it's a nasty little aligoplete. I mean, the NFL and all American things have been constructed partly because they're the only three businesses that have an exemption from antitrust. So they're all constructed as nasty little aligopletes where there's no penalty for failure, which is the definition of socialism. And Europe, you know, in general, from an American perspective, which is meant to be the home of Molly Coddling, socialist whims, in fact, has a brutally accountable soccer culture whereby if you're the bottom of your league, you go down and your revenue goes down 5x. Right? I actually think it's one of the best things about the English Premier League and the English League system in general. It's like there's real penalties for failure and Rexam could go up 100% align, Dory. Of course, it's worth pointing out it's the only part of Europe that has that accountability and we have it everywhere else. But okay, it's just what you think important, Harry. Although I have said, I don't think anywhere hates billionaire as much as the US right now. Maybe Norway does, but I wouldn't say you're exactly pro capitalists of my Jason, you can choose one more. Rory delegates decision making to us on topics. Maybe a happier one, a happier one. I do wonder, I think the last one that would be interesting and then the next show will be all happy all good times. The one maybe that is mixed at the end, but maybe it is good times. I just think we're touching on is Robin Hood ventures one and the angelist US VC fund are these good bad ugly? Should I put a couple hundred grand into each of them? Can I put them on the Saster Fund website? If I do the underlying entities? Are these good investments crappier? Are these just play on the investments for a token amount of your portfolio? And it just doesn't matter. I mean, I think it's for step back. It's catering to a need, which is is that public investors have been denied access to these products and want to do it. So it's a way to say I got an investment in SpaceX, a tropic and open AI. So first of all, at the level of symbolic, I think they'll get some action. And as proof of that, I felt this morning, I put the literally the lowest amount possible in the V.C. product. So I'm now an individual investor in a tropic SpaceX and open AI. And even as we speak, I'm adding to logos to our website. Okay, we have to add a disclosure at the chart of each show. Rory is an investor in all of the show's companies discussed on today's 20 V.C. worry was in the box. You cheap skate. You put in 500 bucks. I just thought I I genuinely wanted to process through the thing this morning, because in anticipation of this, I try to do it. And by the way, wonderfully easy flow took 10 seconds done. And it uses plaid, which we can talk about in a second. But the serious comment is, are they worth doing? I mean, to around it, I think 30, 40% of it is those three investments. It boils down to if you think those investments are good at 1.8, whatever it is, 1.75 for SpaceX. I don't know what these stated value is because look, for 500 bucks, I'm not doing the analysis. Would you put, you know, 1% of your network in there, which is kind of what the level of diverse, I mean, the level of diverse, if the three, if the big three go public around, you know, three or four billion dollars, it's about little under 5% of the S&P. So if you're 60% equities, 40% bonds, and you wanted to get that action a little earlier, putting plus or minus 1% of your network in a vehicle that after those things privately would be kind of logically correct, which is different than saying it is correct because I haven't looked at the evaluations. Before I put 1% of my network in there, I want to do a lot more analysis, but that's the product they're offering. If you think those evaluations are correct, you could, you know, it's a little like the logic for blockchain. You know, do you put 1% of your assets in Bitcoin? Do you put 1% of your assets in these high market cap companies? Right? I personally would be angsty about the valuations on aggregate, but before I'd put 1% of my network, but I get what the product exists, and it's probably going to do reasonably well. Let me ask a question that I'm ignorant on. Harry, sorry, it's your, you're the boss, but there was some controversy on that. So Angelus charges 3.61% a year to manage this fund, right? I'm confused. On the one hand, for a mutual fund that's going to destroy your returns, right? If you charge me 3.6% a year to manage the S&P, not only is it expensive, but over 20 years, I'll make it, it's just destroys your capital, right? Their point was our cost to deliver this product, this complicated venture product and managing these funds, it is 3.61%. In fact, we're subsidizing that because it's not even 3.6. So is this a high load on a mutual fund or a cheap way to get into the underlying managers and underlying funds? What I think what it proves is that it's the argument for companies going public because, first of all, you write, if these companies were public to look at the system as a whole, the companies would have to pay 5, 10 million a year more kind of compliance costs, but individual virtual could buy in mutual funds that are paying 50 Bips or less versus 380 Bips. So it would be a lot cheaper. Looking at on the other hand, from the venture side as a private asset, 3.81 is high, but let every venture, let he who is without sin cast the first stone, the average venture investor is charging 2%, and then 20% of the profits, which typically turns into if you're successful, a 4 or 5% drag between gross and net. So it would be hypocritical of me to say, oh, 3.8% is awful. If we're successful, our fee drag should be around 4% including carry. I guess the counter argument, you're better than me. The counter even might be a for it's a fund of funds. So it's expensive for a fund of fund, right? Yes, but the only reason you can pay in the long term, 2% of VCs and 20% of the profit is because the gross returns have to be high enough 25% plus that the net return is still 20%, which is so far above the Ibits and small cop we turn of 11 12% that it's worth doing. If your gross return is only 10 15%, and you put 4% fees on top of it, then you would have been far better off on the public markets. So the question is, do these companies still have 15% compounding returns from here? The bigger you are and the closer you get to the public markets, the harder it gets. Now, it has to be said, the companies that have proved every sentence that I've just ordered to be incorrect have been in tropic in open AI where you've had 10 x returns at 60 billion in the case of tropic. And that's why these products are taking off. There are some companies that even at 60 Bill have demonstrated wildly great returns over an entire business cycle across all the investments of that size. Will it return 10 x? I don't. The lesson is Roy to your point, who made money from medallia ultimate ones, Sequoia baby, who makes money from anthropic with a 17 and a half percent carry and a 1% upfront fee, Goldman, be Goldman or basic lawyers to take away. You know what a related lesson, yes, Sequoia and like 40% of medallia, right? It was basically bootstrapped, right? I think a reminder lesson is, and you don't want this to be true. But when a top fund doesn't go all in on an investment, it's such a bad signal. Not only is it bad if Andriesen does your seat and doesn't lead your way, that's the classic discussion we could have done on 20 VC in 2015, right? But the subtle one is when you do the growth round, when you do the billion dollar run, when you do whatever, and you don't see the big fund lean in for the super prerada, I just think it's a terrible sign in today's world. I know people are going to challenge it, but it's my experience. Like if they've got the billions to deploy, they're going to it into your winners. And if they don't stick you in the side of your chest with an elbow to get super prerate, it's a bad sign. I'm going to be so honest. I just couldn't take for the last few weeks. It's been gnawing at me so much. My Figma and Juleen go positions. I was like, you know what? I've just had enough. I've had enough after this conversation. I'm selling them all. While you guys are between my SkyDi, I just sold Figma 40% down. How I know where to earn your money. It is. The agents don't need that. I'm up 24% Roy. I agree. But it just seems to be okay. Don't worry the big guys and I have. Don't wait for the shit to come up. Just sell it and redeploy. I agree with that. I think that is very true as a public. Yeah. I've spent so long waiting for Figma and Jule to come back. Don't just sell it. It is by the way, as a random comment, it is the big difference between public investing and private investing. You know, you do as a private investor. You end up, especially when you're on the board and you end up dismantling. We're working this out together and the whole beauty of public companies is no dude, you're working this out. I'm leaving because I don't know how you're going to work it out. It's just a different mentality. It's one of things why I think venture investors can be mediocre public investors. I talk to the best. I remember talking to Brad from Alhtem, you can tell that the guy very dialed into every position has an exit price. It's a discipline that you need as a public investor. Maybe I cancel my comment. If you don't have the way, my version of your thesis is if you don't have an active reason for holding the stock and a belief that cannot perform the S&P 500, which you can get access to for 20 bips, then why are you holding it? If you don't know why you're holding it, you shouldn't be holding it. So yeah, you probably buy. Jason, you sell me this pen on Figma make. Honestly, I just don't know that our agents will work with Figma because they have to, but they don't need it. They don't need it forever. They definitely don't need to do a link. So I can't. I want to see it the turnaround story for the agentic Figma. I do want to see it. I'm just, it's May. I'm just going to leave on the Jeff Bezos' project Prometheus establishes a high lab in London. Kings Cross, baby, we're back. Boys, thank you as always wonderfully uplifting episode. Every week you have to have the feel good story from 20 BC. I'm voting for a new edition of the show. We compete for the feel good story of the week. I like this new edition. But before we leave you today, are you a founder working nonstop to raise your next round? 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