20VC: Anthropic Surpasses OpenAI Revenue | OpenAI Acquisition of TBPN: Analysed | OpenAI Management Team Reboot | YC Kicks Delve Out | Mercor Hack and Why Now is the Time for Cyber | Supabase Raising at $10BN & Doug Leone Returns to Sequoia

their training costs or a quarter of open AI. It really feels like the investors in open AI got a much worse deal in the last round than the anthropocou instead. - I taught the acquisition of a TPPN was just insane. I'm gonna call bullshit. Start to finish on this whole discussion. Owning a media asset in very big takes way more time than you think for way less money than you expect. C. Jeff Bezos for details. - There's no way that deal's gonna happen today. Like it's dead because of management change. The big three SpaceX plus open AI plus anthropocouming the L IPO and certainly SpaceX won the next 12 months. Their valued IPO will exceed every other IPO for the last 20 years. - This is 20 VC with me Harry Stabbings. It's my favorite show of the week. Roryo Driscoll, Jason Lampkin, analyzing the biggest news in tech every week. So what do we have on the agenda this week? Open AI reboots management team. 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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, welcome back. I've been looking forward to this one. I was doing the schedule over the weekend and last night, and I was like, wow, this week we really have a lot of meat to get into. So I want to start with OpenAI and Anthropic. And the news today that Anthropic have surpassed OpenAI in terms of revenue. So Anthropic now have 30 billion in revenue. It's all intertwined with the subsequent things that we will discuss with OpenAI. But as Jason put in an email to us all, holy cow. Jason, holy cow indeed. What did you think? Even in an era where we're getting ignored and anesthetized to crazy numbers, this one I did fall out of my chair, right? Getting to 30 billion up from 9 billion at the start of the year. I mean Salesforce is the largest software company, right? They're at least cloud one. And it took them 25 years to get there. Anthropic got there in five, but maybe they really got there in three depending on how you count. But it was incredible to see where they were in February. We couldn't believe it. And then essentially adding 10 million of net error. Let's not debate whether it's how many ours there are and whether it's recurring. At this level of growth, it really doesn't matter. And that there's still capacity constrained. And that cloud still shows us when we're in there that it can't finish chats. Every engineer and tech has been told to consume more tokens and move faster, right? The crazy thing is, what will it be at this rate at the end of next year, right? It grew 3.3 X in four months. We need Rory's math help to figure out what Anthropics run rate will be at the end of 27. The estimates that we were just looking at two months ago just looking incredibly wrong at this stage. Yeah. These are on amazing numbers. I think a bunch of other interesting things start to happen here. One is you're kind of munching in some stuff. One is the announcement on OpenClaw and not allowing that to be in the base plan. I think it kind of gets back to the massively interesting situation. Now, the revenue is exploding. Despite the revenue explosion, they're still compute constrained. In other words, they could sell more if they had more. And what do you do when you can sell more if you had more, but you can't make more? But you can't magically make data centers. Though obviously they have that big announcement to do that. What you start doing is allocating capacity based on money. And one of the first things they've figured out is these folks using the OpenClaw type agents are consuming vast amounts of tokens on fixed price plans. And they probably want to stop that, which is what they've done. So you're going to see them do exactly what anyone in economics would say do, which is trying to find a way to maximize and extract even more revenue. And we saw it even with OpenAI last week, where you deemphasize things like video which consumes huge amounts of compute for small amounts of revenue. In a tropics case, obviously they have much less of that pure slop. But you deemphasize things like OpenClaw access, where it consumes a lot of your compute and doesn't make you a ton of money. And I think you're just going to see a continued trend to pricing tokens, pricing closer to the value. You don't want to overcompensate, because you want to get people addicted on the product. Because the truth is, the thing you have in your favor with any digital good is the complete certainty that prices, Protocan go down over time. So you do at least want to start allocating it a little more sensibly while you're constrained. So that's kind of I think the trend here. The other interesting thing was the Wall Street Journal today had a bunch of leaks on the financials for Anthropic and OpenAI. And the one that jumped out at me when I contrast it with the fact that Anthropic is caught open AI, right? In half the time is that their training costs are a quarter of OpenAI. Their training costs for models are a quarter of the OpenAI. Now maybe that's because they're focused. They don't have to do video. They don't have to do images. They don't have to do a lot of consumer stuff. But if you just think about it for a moment, the compounding effects of catching OpenAI in half the time, right, at roughly the same revenue or more, 30 billion in five years, and having training costs that for now are a quarter of it, you know, that's a double code red. (laughs) It's one thing if you have two classic startups where one is blood money and it's artificial, there's other things. But if you have a dramatic cost benefit and you're out accelerating your competitors and there's management team turmoil at your competitor, it really feels like the investors in OpenAI got a much worse deal in the last round than the Anthropical ones did. Just crazy. Just having both. You usually don't have both together with your competitors. You're out accelerating your competitor and your training costs are a fraction of your competitor. Good God. That just compounds. - That's actually a good point 'cause you take the Uber lift struggle, right? Uber had the, oh my God, we're out accelerating. Oh, but by God we're spending every dollar we have to do it. And we show no fear. In this case, you're out accelerating the opposition while being more efficient on a bunch of interesting measures. No, you're right, Jason. That's a scary fact pattern. If you're running the game theory and you're the other guy, it's like, hmm, that's not good. Right? They're growing fast in the nose. The gross margin economics are roughly the same slash slightly better and their cost below the line and to a rounding error costs are compute and scientists to run the compute for training are better. And that's a bad fact pattern. - Have we ever seen a bigger seeming cousin between where they're at? With the greatest of respects, it seems like anthropocase is accelerating fast and never and open AI is having more challenges than ever rule at once. - I'll tell you the one I think about the word and where I didn't realize when we did this show the last because the press is always focused on the headline stuff, right? Yeah, the open AI era was barely real. And Jason's money appears to be real. It came in out front, right? The 13, 14 billion, whatever they put in, that's real, 11 billion. You know, all I have to do is get 20% carry and double that and it's a nice side bet in an SPV. But that was real. The soft bank money comes in tranches. They have to borrow money to pay it. The Amazon money is tranched in part on IPO or AGI. And the Nvidia money is almost all not money. It's almost all offsets and compute. So, you know, I thought about it, but then in context of anthropocs growth, like I think open AI would have rather had all the cash. Like it's not a sign of strength where the majority of the people are. of the round is not cash upfront. Like that's no, I don't think that's a sign of strength. That's a sign of like classically at least barely getting the round done, barely getting the round done versus getting because why wouldn't you want all cash upfront? Why wouldn't you want 140 billion upfront? I don't have a bit harsh on the barely because I thought they tacked on another, I can't believe I said the sentence, they tacked on another 10 billion. Think about that sentence sometime that I think was cold hard cash. So I agree your comment is correct, Jason, the vast bulk of the dollars weren't cash, but enough money changed hands that it represented a bona fide price at the time. But yeah, you are right. And again, I mean, look, and topic does some of the same stuff in the sense of given that your biggest expenses are, you know, compute and then distribution from Microsoft on would open AI to all the recent on tropic deals, there's a lot of this round tripping business. I'd say make two comments, perhaps. In both cases, there was enough hard dollars changed hands to represent, born of them represent price estimates. But to your point, would, based on what you know now given the revenue equivalent, what's revenue equivalent? We shouldn't assume until open AI releases their numbers, maybe they've exploded too. But definitely, and topic at 370 billion feels a little more comfortable, let's just say then open AI at 820 or 840, whatever the final closing was. Right. Well, open AI did say two billion last month. I think that's why inthropic rushed out the 30 that they're at a two billion dollar rate. And no, we have the whole gross on that thing. But the bottom line is this, when you look at those two graphs, you definitely don't say to yourself, I mean, I think what you, if this was a public stock, let me put it this way, if both of these companies were public, there would be a bunch of those New York hedge funds, shorting open AI, longing and tropic and saying they have the perfect AI bet. Would you short open AI 870 and go long and tropic at 372? I'm not a risky guy, but even I would contemplate doing that. It feels like a no brainer bet. You have roughly the same revenue, a better trajectory and a management team for half the price. And if you short the one and along the other, you're diversifying away the AI overall risk and you're just making a relative performance bet. That would be an interesting one. What would you say to an open AI employee who is now looking at that incredible stock price appreciation with tens of millions of dollars in equity that they now have at the 820 price? Salad all at 820, the minute a tender comes. What would you say to them? I have some things in opening. I want a pile on this time. And if you recollect, in the last couple of weeks, I've tried to avoid the pile on when someone's down. I think you always want to be more tempered. But I always say to everyone in any private company, I say, when the liquidity window opens take it seriously, because it might end up in again for a while. But yeah, when the liquidity window opens at $0.8 trillion, the alert reader should say, you know, if you're planning to buy that house in San Francisco, you might need an extra few million just based on what I'm seeing in the market now in terms of house prices. So take advantage of this thing because all your brother and half, the company's still doing a lot of great stuff. You got a lot of turmoil. We got a lot of drama at the top. We'll talk about that. But take advantage of liquidity just because you should always take some advantage of liquidity. That's not going on the hat. Let's talk about the drama at the top. I mean, talk about a management team turnover. You have brand, the COO, who's been moved to special projects. Never a good sign being moved to special projects. I'm going to be the SVP of special projects for 20 VC in my next Facebook live. Jason, I would love you to be the FFP of special projects. Your special projects, yes. We have the CMO stepping down due to health reasons. We have the CRO out. We have Fiji, who's head of apps, taking a short leave of absence with health problems. How do we read this very significant multitude of changes at the management layer? If we step back, I mean, it ties to anthropic passing them. You don't just sit there and make no changes on the team when your competitor over the last six months has radically changed the competitive posture. So look, I don't think any of us like the amount of change in any management team, right? It feels almost a wholesale change at some level. And it's risky, but calling code red three months ago didn't magically change the trajectory here. So it ties. You got you got to try to mix things up in some fashion. Hopefully you can do it with the team you have. But in the context of anthropic now out accelerated open AI, it just makes sense to reboot the team. Yeah. Does some rebooting some to use your phrase? Do we have who's been hired? Who's the what's the additive reboot? Well, the dramatic one, which is always risky for like any startup is you take Dini's dresser who was CEO of Slack, who came from Salesforce just a couple of months ago, and you put her in charge of basically everything go to market and related, right? That's a good bet on a seasoned executive, but that's the type of change that we've all seen as investors is like super risky, right? You bring in the one the person with the perfect LinkedIn, right? And the perfect background that's still getting to know the product. They're still on a get to know you tour. They haven't quite been to the to the New York office yet. They're getting to know the product and all of a sudden you give them this massive portfolio because they're proven executive. In my experience, I don't know what you guys think, my experience that is about a 30% chance of success just just roughly that bringing in the big that the perfect LinkedIn, giving them a massive portfolio and either attaching them to an attaching to something in tumult. If it's executing to perfection, it always seems to work. Bringing in Mr. Mr. LinkedIn is like, but when you're in tumult, there's not a lot of time to learn everything, right? There's not a lot of time for the get to know you tour. So it's just risky, but it's a play. I get where you're going, they're worried, which is like for the replacements to be additive, that needs to be great talent at it. And that seems to be a lack of people coming on the field when they come on. And you know, I'm all, as I say, I have a couple of comments. One of them always load the comment on the illness related is, because you just don't know what's going on in people's lives and that's tough and people have challenges and you know, you wish people all the best, especially in these kind of chronic diseases and hope they can get back to full health. And let's just start with that, because that sucks, right? At the same time, you know, you have a lot going on here. I'm tempted to make that, you know, that the famous Oscar Wilde quote in the importance of being earnest, you know, to lose one parent might be an accident when he was talking to this one, was talking to the orphan, but to lose both parents' smacks of carelessness. Right? Well, you know, you're getting at a stage of carelessness here, but I actually don't think that's the real issue. It's fun to say. I think two, I'll tell you, we haven't mentioned the two most surprising things in the last week on Open AI. One is, I'm just going to say it. I taught the acquisition of a TPPN was just insane. In the particular, it doesn't matter, but you don't launch an e-code red edict and a focus edict and, you know, no more side projects, edict. And then within the space of a week do something that's so obviously a side project. We can discuss whether it's stupid on its face and whether, you know, buying media assets is the way to go. And I acknowledge the injuries in articulated thesis that, you know, you have to control the media story, though, doesn't seem to be on topic because then you need to do that. But stepping back one level, you're running a $25 billion company, the most exciting company on the planet. And you just told your entire internal team that you need to focus. There's nothing that's more of a vanity project than buying a media company. Just one thing we could talk about it more or less. The one thing just to add, when you look at the press, that deal, the outreach was in January. That's a lot of time in Open AI and AI time. Did you was new? Thought this would be a great thing to elevate Open AI in January. Now it's April and maybe the deal seems a lot different, but in January it was a different world, right? It didn't happen last week as my only point. It happened in January. It took some time to close, right? And I will say one thing, I'm 90% sure it wouldn't happen today to your point. Priorities change, right? It probably wouldn't happen today. If you only noticed in the last week that you need to focus, then yes, I'll give you that, right? I didn't just notice in the last week you need to focus. And if you did, maybe you need to focus. Let's see, prior to that, come back, right? If you have realized you're in code red for the last two or three months and if you have realized this is the kind of thing you don't do when you're in code red, then you just not paying attention. So I challenge it. I think it's a vanity project and absurd. And then the other kind of weird. Can we just pause on that? And I know you want to, because you want, like, where's your 200 million, Harry? But yeah, let's pause in your lack of 200 million. No, no, I just want to actually articulate. A bull on a bad case rationally for an audience for how this acquisition could be seed from both sides because it is very confusing. So if we were to start with a bull case, Rory and Jason, please chime in too, because you're the master also of kind of media and venture as well. What is the bull case? I'll give you the bull case. The strategic one's more interesting. But let me hit the tactical one because Rory, because Rory made a good point. Look, this is not going to make or break the company, right? There are certain acquisitions that can. But there are some things you acquire where they run almost on autopilot. They are not massive distractions. And if the price is small relative to what you hope to get out of it, that does factor into the equation. If you have to rebuild your whole team, it's a total distraction. You're going to rip out your guts. That's a big deal. Once in a while, it's pretty rare you can acquire something that isn't massively distracting to some management team level. So even if it's not the perfect decision, I don't think it's a huge, it's not going to require a huge amount of senior executive time. So it's just important, general to the calculation. The one point I'll make, and I wrote a post that every, every profitable public company should do a deal like this, of which open air is neither, right? It's clearly not profitable, it's clearly not public. But let me tell you why, Rory. You might end up agreeing with me on this, because, and this is why the bar stool deal almost worked but failed, right? If you are a profitable B2B company, especially, you are under insane pressure to get more profitable. I actually can't overstate how intense the pressure is. They're looking at every head count, every sales efficiency, everything. Now it is brutal and your cash is trapped on your balance sheet. And so it is very difficult to increase marketing spent. It is very difficult to spend another 100 million this year on marketing. But at least in the short term, if you can buy a marketing asset that is at scale, that is at scale, you can turn your balance sheet into marketing. It's hard to do. I think maybe TBN is not the most successful way to get OpenAI's brand out there. We could debate that. But it is a way to turn a balance sheet into a marketing asset. I'm going to call bullshit on start to finish on this whole discussion. OpenAI is the most known company on the planet, perhaps out of the nap. Right. Within the last two years, the CEO of OpenAI has been able to meet every world leader he wants. Right. He's gone on world tours. He's met Macron. He's met the president. He's met every single Prime Minister of India, whatever. Right. They get constant attention, constant. The AI story has been the entire zeit guest for the last three years. And they're the leader of the AI story. So in terms of media minutes, there's nothing left to get. Now, if what you're saying is I don't like what they're saying about me, ooh, they will mean to me. Then yeah, maybe you can pay these guys to say nice or things about your dinner. Now, but you don't need more. It's not like you're making fucking widgets in the heartland here, right? You are the most exciting tech story on the planet. You don't need a little bit of help and to just get out and get covered. I mean, literally everything Sam does gets covered. So I hear you Jason, most of the time, but not for these guys. If you were to pick the one company who doesn't need media attention and does need to focus, it would be OpenAI. And this is non-focused and getting media attention. So I'm like, where 100% aligned the only thing I would come back and you would say, is they have consistently shown an inability with how to respond on social to negative moments, whether it's lemonade stand, whether it's anthropic adverts, they've consistently messed up crisis PR and crisis communications and made themselves not look great. The only way I could justify this is by saying they are vibe maintenance for those shit times to make us better cooler, better responders to bad things because they have no editor. Like this is the most important thing. And recent are right, the importance of owning media, but they have no ability to own the content to influence it, to impact it in any way. It is editorially completely impartial. So they have zero benefits. This is the only reason this does not make any sense. If they had the ability to own the media properly, it would make sense. But they have zero impact on it. History is riddled with people who by media has to try and change outcomes. It generally my observation is owning a media asset in very big takes way more time than you think for way less money than you expect. C Jeff Bezos for details. It just is a single. You can control the story than higher better storyteller, you know, higher better calms person, higher better marketing person, think before you speak and before you hit on your bitch about lemonade stands. And look, in turn, it's in the noise. And Jason, you are right. I'm not going to spend a lot of time managing it in this case, at least in the short term. My comment is more, it's just really silly when you say, we've really got a focus. Nothing else matters, but these two or three big things. Oh, but by the way, here's his one last play thing project at a meta level, just to founders, especially if listen to this. Honestly, this is why you should default. Yes, to a good deal. I'm pretty sure this is this deal. I just read the press. This things things at open air. There was stress in January, but it's not like today. Fiji comes in, she has an idea, this is not the biggest bet the company's going to make, but they have a team meeting. She's like, I love TB and what if we brought them in for a little bit of good promotion? And everyone around the corner is like, whatever. Yeah, let's go talk about buying some open clause or something, but, but they say fine. And things are good and they caught a shake hands on a deal. It takes a little while to happen and it closes last week. There's no way that deal is going to happen today. And I can't tell you how many times I've seen this for portfolio companies. And it's happened to me twice where it's not just time is the enemy of deals. It's management turnover, right? Priority turn of so the meta lesson is I just don't think this deal would have happened today. It has nothing to do with with the team at TB and it just when you say no to an attractive deal. Just be sure you're okay if it's no never because the odds that VP that wants to do the deal is there in 12 months and that their priorities have not changed. You know, approaches single digits. It's back to the liquidity window comment. Yeah. But my God, I think it's worse for M&A because so many times in M&A that guy just isn't there next year. But I'll tell you one of the things about being the big boss is that even when you're a long way down, if you don't think it suits what you're doing now, you should stop it. I remember fun story 25 years ago, we were selling a company to GE. I'm not going to name the company, right? And it was a mediocre company and we were down lucky to get the bid. And it was going all the way to and it went every level at GE. And then it came to the CEO and you know, he's not perfect Jack. Well, it's but he's willing to take a tough decision. We were long way down. Everyone was about to sign and be all happy happy. He looked at the numbers and said no. And I remember thinking damn, I thought we get away with it, but he's right. I should have. And at some point, I never think it was impressive. All these people were in. He was a long way down with the process and he just said, I'm thinking no. This is one where you say I'm thinking no. I'm going to give you a hard one before we move to SpaceX. I have the chance to buy anthropic at 850 or open AI at 3 AC, which would you rather buy? You may have that opportunity in the secondary market as we speak. I wouldn't be surprised. I think I'd, but I mean, having said I do anthropic last time, I mean, six months ago at the 300 something thing. I think I'd go the other way this time because again, I'll tell you this for certain. If you, if the choices were on traffic at the last opening I price of 850 post or whatever, like 20 something post or open AI at the last on traffic price of 370 post or 380 post, I would argue that you would buy open AI on one proviso. You could sit down with the board and say, what are you going to do about this? Because it doesn't take a lot to fix this thing. Right to just stop screwing around and focus. Oh no, no, no, no, no, because you've got to stop then a machine that is anthropic, that is now picking up more and more pace with every day that goes by and picking up. First of all, you still have to consume or ask that way you are by far the dominant thing. Again, it goes back to what we said last week. You have to do two things. You have to figure out a consumer monetization model and you just have to get a codex, the codex competitor to clawed out there. It's mission clarity is pretty simple. You do have one big advantage we didn't talk about though it's changing a little bit and give us time. He was more aggressive on compute purchases. And I'll admit, I was someone thinking from the peanut gallery, is that a bit aggressive? But now it looks like compute constrained is a real thing in 26 and early 27. You have that asset. Maybe you figure out how to deploy that aggressively with codex so that there's buttons you can press, those things you can do if you focus and do them. Jason, you've got that same choice. I'd say by both if you can invert the valuations. That's what all the growth VCs are doing if they can get away with it anyway. So let's invite that. That's amazing, but you can only buy one. Yeah, but conflicts aren't important in our firm anymore. They don't matter. It pre-seed and they don't matter. Can you, Jason, you only have one shot left? Well, look, I mean, I've said the same thing on the show. I'm just not into the tumult at OpenAI. I'm not into the drama. I'm not into a non deeply technical founder leadership. It's just not my vibe. Like I would invest in anything like OpenAI at a high price. It doesn't matter what it is because it's just I just find it so risky that the turnover and not being led by a deeply technical CEO. It's just in my life at investing, I ain't doing those risks anymore. And maybe I'll miss a lot of opportunities. It's just, I want someone Dario or smarter technically running these companies. It's just too much change. You get too lost on the pan and the TBP ends. Although I don't think Sam and anything to do with TB and all fairness. I think you said fine in a meeting and moved on. No, because and related to that just for folks, I don't know how M&A works at OpenAI. It's not that sophisticated. But I will tell you when I was at Adobe a long time ago for M&A, basically every senior executive got a big chip and a small chip. The big chip was a big deal. Back then it was maybe a billion dollar deal. Okay, that would move the needle. If it doesn't work, you get fired. It's that simple, right? And everyone got a small chip. It could be like 50 to 200 million deal. And you had to justify it and you didn't get five as a forcing function. You got one, but you really weren't challenged that much to do the smaller chip. You won a year and you didn't get fired if it didn't work out. There was there was an idea that maybe 20% of them would work out. And so I bet he spent five, this was a small chip deal and he spent five minutes on it. This is the one, is this the one that you really want to do this year? If you then just do it, let's move on. We got bigger fish to fry. That's why I don't think it's that big of a deal. It was a small chip deal and no one loses their job in Adobe over the small chip deal. Otherwise, it would never happen. No one would take any risk in buying an emerging company, right? They just wouldn't do it. We got a move on SpaceX. Finally, finally, confidentially files for IPO targeting a $2 trillion valuation. It would be the largest IPO in history, surpassing Saudi Aramco. They could raise up to $75 billion. This obviously includes XAI, otherwise known as Twitter, which I've seen corporations earlier this year, 2025 revenue, 15 to 16 billion, eight billion of ebit at the end of the year. one one one insight. I think to say that at least venture is different every made as an understatement. The big three SpaceX plus open AI plus and THROPX, assuming they all IPO and certainly SpaceX won the next 12 months, their value at IPO will exceed every other IPO for the last 20 years combined. All of them, all of the last 25 years, these the big three, every other little deal. I mean, Rory's had some great IPOs. There's been tons of them out there, but this exceeds all of them combined, right? So I found it almost depressing in a way when I thought about this way, because it was like, what's the guy we had earlier in the show from Slow Ventures who kind of bothered me a little bit? It's Tom Lesson. Yeah, and he kept saying box doesn't matter, and then he said, open AI doesn't even matter. It's not that important. And he was very triggering to try not to get triggered directly, but he kind of rattled in my head. I was like, maybe the guy's right. Maybe nothing were doing matters because the big three dwarf, the last 25 years combined, like, what are we doing, guys? What are we doing here? First of all, I think that is a real phenomenon. And what you're simply saying is, especially in SpaceX, in case the longer the holding period, the more dispersion, which sets in, which is more the big become bigger, and the little ones fade out. And you know, you know, and you exactly right at the tail end of a power law, it does mess with your head because the combined value of the top three privately held companies are larger than everything else in much as the same way. It's even more concentrated than the public markets, which are more concentrated than they've ever been where the market cap of the top four or five Nvidia Apple, Microsoft, Alphabet, and what I think matter is, you know, approximately 30% of the total S&P, right? Which is everything for the last, you know, X 100 years. Psychologically, the thing about a power law they don't tell you is you can have the third best outcome in venture history and be only one tenth as large as the largest outcome in venture history. And if you're going to let that in your head, it's going to be, yeah, it's just going to be a tough business psychologically for you. Because you can have a life changing event that's your down in the noise of 10 or 20 billion dollar outcomes, which can be enormously great for you, when you're family and for your co-investors, and forever involved. And if you're going to let it in your head that it's not two trillion dollars, then you're doomed and you're just going to need therapy. I wrestle with these things all the time. I mean, it is the thing that your mama told you, right? It's like you just have to not let other people define you. I mean, you said it really is. It is a psychologically weird thing. You're going to have these three deals got public. They're going to be worth literally everything else that's happened in the last 20 years if they trade anything like their current prices. Will SpaceX rip and hit the two trillion when it does go out? I try and not spend time talking down an amazing company. Not least because I'm going to be a buyer of SpaceX 15 days from the IP I surprised you. Because 15 days from the IPO, it's coming in QQQ. I have a big QQ holding, right? If you're an index fund, you're getting this thing in 15 days. And if I don't know when it'll be for the S&P, but it'll be fairly soon thereafter. So we're all going to be buyers of this thing. So in terms of the valuation, you do any kind of meaningful analysis of some of the parts and you come up with a lot lower number. And then as we've discussed this before, and then the gap between what you think the assets are worth on any kind of normal basis and two trillion dollars is huge. And it's also Elon premium. And what you're really asking therefore is how big is the Elon premium sometime in June? And I don't know. You're definitely seeing the Elon premium come off on Tesla, which has been worth pointing out. It's down significantly here today. And it's definitely, and you know, I was interested in CJP Morgan put an actual sell on Tesla with a prediction of a 60% price decline. So really what you're asking me how he is, what is the Elon premium in June? And I'd hell, I don't know. Well, I'm asking actually, do you think it will materialize in public markets? And they hit that to try it in? Well, Laura, here's what you're, you're, you're thought, well, obviously I don't think either of us have worked on an IPO quite of the scale, right? But, but one by definition, no one has them to fucking universe because it's the difference. So the process is going to be different. But here's my point. At some level, there is a tough negotiation sometimes between the company and the underwriters on valuation. And oftentimes some CEOs are like whatever that whatever the Lord brings and some are extremely aggressive on the number they want, right? And depending on the situation, sometimes the CEO wins those debates, gets out with the valuation, the underwriters are very uncomfortable with. And sometimes it works. And sometimes they stumble because of it. I think what Elon said publicly on X, it ain't going to be too trillion. And maybe he'll change his mind. He said two trillion was two. I so whatever his number is, I think he's going to get it on IPO day. He's going to will it into existence. The underwriters are not going to be able to argue with them for more than five minutes. And there'll be enough demand between retail 30% of the IPO. It's a lot, right? They'll be enough whipped up demand. I think to support it for one day, he will will it into existence. Whether that evaluation is there in 30 days or possibly even in one day, I don't know. But I do think the sheer force of will, the lack of power of underwriters and the 30% retail will will his 1.75 into existence for one day, at least one day. I think that's quite correct. It's worth pointing out. I think less than 12 months ago, there was a meaningful transaction, SpaceX at 400 billion. Then there was this much smaller. I don't even happen in the end. Secondary 800 billion. Then in conjunction with the merger with X slash, yeah, X slash slash Twitter, the SpaceX would value the billion to value the other asset with its negative 12 billion in cash law at 250 billion. So they added that in to get to 1.25. And now, you know, you're at you're talking about 1718. And it's all been walked up in a very interesting way. It is worth remembering that the last time the useful asset was valued on a standalone basis, it was worth 400 billion dollars. So if the deal went public at 1.5, 1.6, less than the whisper number, I still think that it had done a magnificent job of walking the value of the asset up. Because it's not clear to me that the X AI asset has a positive NPV in anything like the near term. We just had a long conversation on a topic versus open AI. And they're kind of number one and two in this space. And Gemini Google is almost certainly number three. So X dot AI is number four in the kind of model LLM space at best, burning 12 billion dollars a year. So I don't know what that's worth. But I would argue that they won't be talking about that in page one, two or three of the slide deck at the IPO. They'll be talking about SpaceX, which means the entire addition of that probably was net negative. So I go back to my comment. I think you're right Jason. They'll will something amazing into existence for a short period of time because this has all the leverage in the drive. And I think you know, only in the long term are markets weighing machines in the short term, the voting machines. And we'll see over time how it settles as you know, people just look at the dynamics of a 20 billion plus or minus business. Ebert the a positive cap X not clear excluding X dot AI and then add an X dot AI and see how that trade it'll settle into a long term value over time. What happens on the day I think you're right, it'll be much more function of the will and it's a small float. So and people will push. I'm switching it up here. We're going to go to private markets. We had big news from Sequoia this week for context, always like to contact set. Doug Leone had taken a step back from the firm back from day to day back from investing, Pat and Alfred had recently taken over the leadership from roll off. And now Doug is back in an investing capacity, not in a leadership capacity that's still very much with Pat and with Alfred, but Doug's back in the firm investing, which is very big news given he is one of the OGs. How do we read Doug back and back in the trenches? From a distance, it feels like something to calm the LPs. I mean, everyone is raising so much capital, so much change there. I mean, you guys have even more experience than I do. LPs are uncomfortable with change. LPs say that they're looking at the new generation in the Vanguard, but they are comfortable when the old leadership is still actively involved in the fund. It does make LPs more comfortable, whether they're writing investing half the fund or a few deals. So it struck me as that simple as you you bring back someone that makes the LPs comfortable and you get through this crazy amount of fundraising everybody's doing, but I don't think it's just to get somebody on your slack and get a little wisdom. You don't need to bring them back to just to to get an hour or two of insights on deals. That's your already half. I think it was a sensible move. I don't think it's an earthshaking move. I mean, they've made the changes they've made already as a firm and they all made sense. I think at the margin, you're right. It helps on a bunch of different things. It just provides some continuity, which is important, I think, for LPs, for the firm even for entrepreneurs. Also, let's not lose sight. He's a damn good investor. I mean, one of the questions we always ask when we're hiring someone and thinking about it. In this case, you are effectively hiring someone. Do you think the next check that they'll write will be better than a check than one of us will write? And I think Doug Lee Owens proven that he can write pretty good checks. So I think even at the margin, from a check writing perspective, kind of makes sense. I'm having made one transition to roll off and having had to make another transition abruptly means the first transition wasn't that successful. I'm sure there's an element of scratching the itch for Doug. Yeah, want to come back and make a work. You know, it's put a lot of his life into this firm. They've done an amazing job and it just felt a little janky late last year when that transition happened. So if a couple more years can help manage that transition and send a continuity message, why not do it? With the greatest, as I spent a lot of time with LPs, the insatiable appetite from LPs for sequer has never been more prominent still. And so I don't respectfully. I don't think it's LPs. I think it's actually just like in the face of increasing competition from a founders fund who've got an angel on a SpaceX at their tailwinds for founder brand and Andrew Easton, which are more attractive than ever found is you asked a question, how can we be more competitive and Doug is the ultimate winner of deals? You telling me the kids at YC have heard of Doug Leoni or even know how to spell his last name, I doubt it. I'm telling you when Doug Leone goes to that meeting with them, whether it's Christian Hacker at Trade Republic in Germany, or whether it's the team at Waze, he fucking closes the deal. - Yeah, 'cause maybe not the YC founder who's 24, but you write, "Across, look, let's be real here "across the venture and tech ecosystem. "This is someone who's had wild success." And even in a meeting can bring knowledge to bear that would move the needle on a close. I agree. I mean, well, it's called a gravitas, whether it's the founders or the LPs, it is adding gravitas back into Sequoia in a time of a lot of change, right? - Agreed. - It says they needed more gravitas. That's just what we need a little more gravitas, guys. Who can we bring in? - Yeah. - Yeah. One of the things I admire about Sequoia to be fair, if I've always said this is, like literally, even if we're winning on every round, but one, they'd be like, well, how do we win on that round as well? And as you say, how it's never been more competitive, there were widely talented, similar sized firms. Even if you have 10 grade players, you want to get an 11th. - Jason, you mentioned the youngest founders from YC, some very young founders from YC obviously founded Delv, a Sok2 compliance business, the Soror root don't know it pissed at me, but it is. - Not a pass to look. - Okay, good. Very young, 21-year-olds. And as everyone knows, Delv has been in the news for not providing a product in the Sok2 compliance base that they said they were a lot of problems around that. YC have since kicked them out of the YC community, which was announced this week, or leaked this week from bookface YC's internal product, which obviously wasn't meant to be leaked. Is this the ultimate sign of that guilt? Inside invested 32 million bucks into the company within the last year. Should there have been more diligence from an investor perspective? How do we think about this? - My guess is, you know, they, listen, obviously a lot of things went wrong, right? One was making up a lot of audits with AI. We're gonna find more, more portfolio companies did that. The second one was stealing from a fellow company, stealing IP, forking a fellow company. And I think, listen, I don't know how you manage it with YC with thousands of companies, but there's a limit where you cross the broker code or the girl code or the founder code with other folks at Weecent Portfolio Companies. And there's a line you just can't cross. And whether they see it as open code theft or what happened, whether you're manipulating, you can't allow that within the corporate portfolio. And I think they were ejected for the combination. And it wasn't just some young kids misusing AI. I think it was the second. I think it was breaking the code. And that's why they were just, there was no need to comment more. You broke the code, you're out. You're out of the team. - I totally agree, Jason. I mean, look, these things are gonna happen. I mean, I just run on the math in my head, you know, YC 200 companies a quarter. So that's 800, 900 a year. Step back, United States, we have 300 million people here. We have approximately three million people incarcerated at any one point in time. So we run worth 1% between felons and misdemeanors, right? Across the whole population. So if you just index to that, that means out of the 800 YC founders a year, statistically, if they're just no better or no worse than the rest of the country, there's eight of them that are willing to cause their life commit some kind of crime. It's gonna happen. You're gonna have fraud. And at the end of it, when you have a portfolio of 30 companies or 40 companies as we do, then mostly sees avoided. And every once in a while, one VC gets unlucky. If you have 200 companies a year, it's gonna happen to you a lot. So first of all, no drama there. No, I mean, I saw all this, oh, YC is bad because this guy's fraud would do it. When you have this number of companies, statistically, it's just gonna happen. So that's the first comment. And then the second comment, Jason, I love what you said. You're exactly right. What do you do if you're running YC? You can't stop this shut up front. And especially when a lot of your value add entrepreneurs is the community. Right, that is what you're selling. And you do business with each other. Anyone who did business with these guys was at the very least discombobulated and embarrassed because you rely on this for sock two compliance. And then it wasn't true. And then on top of that, you stole from another YC bro. It's like in the old West, when there wasn't much law, you have to take the law into your own hangs and hang the cattle thieves. This is the same thing, right, dude? You broke the code of the West, you're out. And I think from an enforcement perspective, I can tell you see why they did it. Now you can talk about should other people have known? Should you really buy compliance offer from 21 year olds? That's an interesting comment. But fundamentally, I think you're exactly right, Jason. You're gonna have this thing and the only way you can deal with is not a priori policing, but especially when you break the bro and whatever the non-sex loaded term of bro is. When you break that code, you just gotta be pretty ruthless about it. - Yeah, I really think it was the part two that did it. - Yeah, I was telling the same thing. - Taking a customer, Sim Studio, that is also a YC company, maybe even a batch mate, taking their open source software, not attributing it back and claiming it's your own software to like your own batch mate or your own customer. That's, we've all thrown a few things into cloth and pretended we did the work. Like all three of us have done that, but this one breaks the code. You took the open source code from your batch mate and said it was your own software. I mean, and they were your customer, so that's, you can't hand wave that one away. - Okay, moving on, open router, very well known company for those that don't know, a marketplace for Alarm, so to speak, at 1.3 billion price, at 50 million of error, up from 10 million in October. So obviously 10 to 50 and whatever that's been six to seven months, feels quite cheap for an AI leader. - Jason, I'm intrigued to your thought specifically on this one. - I love Open Router. I mean, I use it and it's just very interesting. You know, it's a very simple way to dynamically pick which LLM to use, right? And going to our conversation from last week, sometimes it doesn't matter if you're not price sensitive for certain workloads. Sometimes not only does it matter, but it's incredibly helpful to not have to do all this work yourself. Oh my God, which model should I pick? How should I do it? In Open Router, let you do it dynamically, or you can pick different LLMs for different use cases and it just makes it elegant. And what I love about it, and it's also really cheap. It's quite cheap. I suspect the cheapness is why it's now worth 10 billion, right? When you have such a low take rate from such high GMV, do you do naturally get a little nervous about the address, the true tam, even though we've given up on tam? That would be my guess. They become the market leader in this space. It's cheap and it works and adds a lot of value. You gotta love it, right? It's just when the flip side is, you know, one of the reasons anthropic, I mean, God, 20 billion, right? Is a really good anthropic call at the API level? Is a buck. Okay, here's my simplification. You can do so much on your $20 a month, call out subscription to $200. But I can tell you on all the apps I've built, the complex stuff, it's a dollar. So that scales massively. If you're taking one to five percent of a subset of that, you know, there is in theory a ceiling if you don't expand it. What I like is if you get market leadership and this kind of thing and you're not that expensive, there's no reason to switch. It's not worth switching for a tiny amount more basis points. It ain't worth it, right? - I just for a list of context, what the company does is access, if you're building an application, this product open router, access an interface between you, the builder of whatever software product you're building, and 50 to 60 different LLMs, such that it can dynamically pick in real time, which LLM is the right one for whichever call you're making. And it charges around 5%, 5.5% of the money you pay the ultimate model provider. So if you're building this app and you're spending, you know, $100,000 a year on LLM calls, using these guys, you pay 5% to them, but in return, instead of having to access each LLM separately, you get access to the mall in one kind of API call. And so it kind of just totally makes sense to me, it's kind of in that stripe Twilio business model of an interface, Twilio was an interface between an app builder and all the complexities of telco. And these guys are an interface between an app builder and all the complexities of LLMs. And Twilio's gross margins, 'cause they account of revenue growth with 20, 30, 40% plus, they were pretty darn good, whereas in this case, they're only booking the net revenue at 5%. So maybe there is actually room for margin expansion there over time. So it's an interesting business, kind of the world needs it. The other thing's interesting about it, which gets to the wider question is, number of folks have backed into figuring out what are the most common models, and you see a lot of the Chinese open source models now. So I always think I'd love to spend time thinking about what I just have in this. They must have open and out must have a pretty good sense of what things do you need state of the art models and what things can you do easily on, you know, much cheaper open source models? Well, they can even turn it on for you. That's one of the reasons I think open router is so clever. If you want, they will just decide which model to use for a workflow. You don't even have to figure it out. Yeah. At some point, the people spending $30 billion a year on Antwerpic, corporate IT is going to wake up and say, do I have to spend all this money on Antwerpic? Or can I pass some of these calls to a cheaper model? Just given the size of spend that open AI and Antwerpic are getting, there is at least the opportunity for corporate purchasing to think about is any of this doable on a cheaper model? I'm a super fan, right? Like, great software, super easy to deploy everything. It's like 11 labs, just like super easy to use, super easy to deploy. I give it a 10 out of 10. What I've learned from another investment we can chat about is, okay, so they're at 50 million AR, they said. And the nominal take rates 5%, but some folks probably pay less, right? And in some cases, you don't have to pay anything. So they might be needing to manage 2 billion in inference, just to get to 50 million in revenue. So easy to see how you get to a couple hundred million in revenue, right? In today's world, what I worry about companies like OpenRouter is how do you get to a billion in revenue, right? And do you just wave your hands and say, these are great founders? They're at the heart of AI, you say, oh my God, like even if Anthropic keeps growing, and some folks won't use it because they'll get big enough, they'll do their own things. How the hell does this get 20x bigger when it's already managing two billion of inference? - I'm gonna give you the argument, which I'm not sure I believe, but look, you just look at the OpenAI and Anthropic projections, which cumulatively add up to North of, in 2029 on the Co2 estimates, $400, $500 billion plus. Let's call it $500 billion in API across both companies, right? Actually, take out chat, GPT consumer business. Maybe $300, $400 billion of enterprise API calls across OpenAI and Anthropic. - I don't know. If 10 or 20% of that went to Open Source, that's $40 to $80 billion, and $40 billion to 5% is, please, they need $2 billion. If you can, and now that's 100% of the market, so you're right. - 100% of the market. - No, that's fair. That's why you gotta get 100%. Maybe there's $40 to $80 billion of kind of value going to Open Source LLMs, and maybe you can get 5% of that. Now, the other question to your point, Jason, is right now amazingly, all these Open Source models are primarily Chinese Open Source models. And until if meta reintroduces an updated Open Source model or someone like Reflection ships one, there'll be a US equivalent. But right now, the low, I want to say, the Chinese Communist Party is effectively subsidizing the American small in Pentus software vendor by providing cheap Open Source models, God bless them. Because if you look at the kind of winner list, an Open Vowder, it's all Quinn, Kimmy, and all the other Open Source products. - What I think about Open Vowder, just for investing, right, and what this news is, I do really think about small takes of large terms is intellectually confusing. So, Harry and I are both investors in a company called Revenue Cat. I was the first investor, and they have about 50% market share in managing mobile subscriptions. If you have a mobile app that is paid, 50% chance they have Revenue Cat deployed, okay? It's competitive, and their net take rate is like half a percent up to 1%. Even with all of that, they're only so much bigger than Open Vowder. Now they grew 40% last month because of AI. Like, it's great. And I love the company, I love it. They have a clear path to a billionaire revenue now, but my learning from that is sometimes it's hard to do the math intuitively. If your product is very cheap in a large-ish market, but you don't get all of it, Open Vowder could be one of the greatest 200 million ARR companies, right? It's just a risk that I think about more than I used to. - That's fair, but I will give you the counterpoint, which is the two best financial businesses on the planet of Visa and MasterCard. I sit literally 30 yards away from the Visa headquarters. They don't even get 2.5% because most of that goes to the banks. They get 15, 20 Bips, but on every dollar, every human spends on the planet. It turns out to be a lot of people. - No, I'm just, I guess my personal intellectual limitation is that the notional Bips map doesn't always translate to the real world Bips map, right? That's the thing. The Revolut and Visa sound great, but niche, sometimes products that seem mass scale are more niche in practice. And if your product is $200,000 a year, $100,000 a year, who cares, right? You'll figure it out later. If your product is dirt cheap, you really, really gotta own everything. Oh, own everything when it's dirt cheap. And I think we're all making a lot of AI mistakes here. And our investments are being flattered by high ACVs. Right now, like the ones that have high ACVs all seem to be doing great, 'cause they're 5,200 K per check. Getting to where 11 labs got from the early days is much harder than a lot of, a lot of lagooras and harvies are, just because the large ACV flatters, flatters the inputs and the outputs to achieve that scale. - Agreed. Not sure I could trace it back to open route of what I agree with. - Well, I'm just nervous. I'm personally as an investor and this may be one of my many flaws. It's a long list. I'm nervous about exciting AI investors that have very low ACVs right now. I think their actual tabs may end up being smaller than it looked, despite the epic numbers, when we started this conversation, despite, and throughout by getting to 30 billion to five years, the little tiny crumbs we get out of this 30 billion may not make a whole loaf of bread sometimes, like a bad analogy, but some truth to that. That's just, so rather than shoot from the hip when it's a 7 million post back in the old days, if I've got a shoot from the hip at 100 million posts in the pre-seed, maybe I got to really believe that that small ACV won't scale up. - Do you think I've been able to be a $10 billion company? - It's always a weird question 'cause if I knew for certain I'd go to the deal and not sit here talk to you, right? 'Cause that's what they're paying me to do. Look, I think we're the world right now where everyone is just doing the build out as quickly as possible. What that means is everyone on that journey can attract some capital, right? And get some revenue because if you're solving a problem that's a rate limiting step in terms of getting the AI build out done, you can get revenue, you can grow quickly. And I think OpenVar is an example of that. And you know, you can put on your intellectual MBA hat and say in the end, when things settle out, maybe a lot of these businesses get commoditized and you can worry about that. And a certain amount of that worry is legitimate. There's a whole bunch of markets like there's kind of the labeling marketplace. There's the inference marketplace. There's products like this OpenVar where you say, oh, when things settle down and people starting getting more efficient, then all these businesses will get scrunched a little bit. And that's true intellectually. But my advice, and I say it internally, is please don't overthink it. Because while that is true, at the same time, in the short term, this explosive lift and demand gives you a chance to be relevant. And it's your job to add products on top of that, such that when the great crunch does come, and it will come in a couple of years, you've just delivered enough value. Do I think OpenVar would get 10 billion in value on just what they do today? No. And if they just keep doing what they're doing today, no more than the inference guys and what the labeling guys, when things slow down, all these businesses will get crunched when people start optimizing. But you have a chance to parlay. You're building relationships with a whole bunch of apps, developers, and OpenVar is case. Your job is to find the add on products on top of this that over the next two or three years, give you value or do the adjacent acquisitions that give you value. Maybe you start doing inference, maybe you start hosting stuff on top that allows you to extract more value from those customers, such that when the thing slows down, you're the survivor. Yeah, I think that's the challenge with these investments. I mean, the one that if I'm running it, it's a dream. I'm 50 people, right? At 50 million in revenue at the center of this. Like if I was a founder, I'd be, there's a dream job. But I think my learning is Rory's point. The reality is you have to go truly multi-product earlier in this type of situation. Not just a little feature, right? Not just a little enhancement, but you literally probably have to build five distinct products to get to that billion. You know, not all founders are actually up for that. They say they are, but you need a very distinctive founder to run the AI-ripling playbook and say, "Hey, I want to break something up." In some ways, it's crushing it. With 50 people, if they have it, I mean, again, my dream job, and say we're gonna do five of these. And we're not gonna wait two years. We're not gonna, like, just focus, focus, focus, focus. And I think if they're up for it, I would hold my stock here. You probably have no choice. If you see this sort of steward, Butterfield-esque reluctance to go multi-product, which was very rational at that time and place, then I would be less excited to hold stock. Yeah, you've got to run these businesses right now, like you're in this insane period of time when money is just raining down on everyone. And all the time, you should be saying to yourself, at some point the music will stop, and two-thirds of the people will have to go, how do I make sure I'm one-third that make it? And that's what the smart inference providers are doing. That's what the smart up and down the stack should be doing. How do I lock in? Because look, even when the crunch comes, the foundation model companies make it, because they're on top of the heap, they have the high intellectual property asset. They're going to make it. Everyone else, one level down, has got to be saying to themselves, when people silver up, they're going to say, oh my god, this is a commodity. There's a bunch of adjacencies. How do I make sure I win in that world? Speaking of, will this become a commodity in a future world? We've seen the need and the explosion of databases. We've seen some people like your lovable and your raplets incorporate them, build it themselves. Some people outsource to super base, super base at $10 billion. Jason, you're the man for this. The man who's used more raplet instances than anyone else is super base at $10 billion. A goodbye. I think I like it. I mean, I do think it's an interesting buy. First of all, huge credit to the team. I mean, this is one I call an AI tailwind to the maximum. Super base found I think in 2020, right? This is pre-AI. And they're like, oh, we'll do another fork of Postgres, which is open source and free, and we'll make it easier to use and easier to deploy. I mean, who the hell? I mean, I know it was a hot YC company, which kind of, you know, a lot of folks want to say it's the unhot ones that take off, but sometimes it is the hot ones. But I don't know that that certainly wouldn't have been obvious to me in 2020 that we needed another forked version of an open source database process. I mean, everyone was having issues with Postgres at the low end and the high end folks were having to shard it and it got complicated for big. And it was reasonably difficult to deploy at the low end. But then that just worked with agents. Like they built a product that could basically self deploy a Postgres database. And it's what every agentic product needed, right? They needed to spool up a database without humans and they leaned the hell into it, right? They didn't get Repplet. Repplet went with Neon, which Databricks bought, but everyone else standardized on SuperBase, right? They supported them and then they let everyone lovable and emergent and all these other ones white label it a couple months ago. And now I don't have the exact numbers, but I know more databases are being created by agents and humans. So that is the trend you're betting on. Database is a fundamental category of software that always has been, right? Now the number of databases we're creating is an order of magnitude more than it's been 12 months ago. So why the hell wouldn't you want to bet on the leader in that trend, right? Every app needs a database. Like every, and then what's interesting now, I'm not sure if this is true of lovable or V0, but Repplet changed it a little while ago where every single app has a database whether you use it or not. [BLANK_AUDIO] enough of them are using databases, no matter what they build, right? That it's not worth adding a database later. So whether you even realize you have a database, all the millions and millions and millions of I put it apps have a database in the background. So and with super base, they get to monetize them all. Like they're charging these guys for every single database. So I do like this one. This is one where the agents are so far ahead of humans now. There are categories where the agents are doing like the node and everyone's talking about what the world will be like in four years, right? Databases are world. We're already the agents are creating more databases in humans. We've already we've already crossed that line. And so why wouldn't you want to invest in the leader? And I think it is literally an excellent example of two things we've talked about. One is that kind of thing I just mentioned, which is you start with something and you have to parlay. And then the other thing is Jason that you've talked about a lot is being a pre-AI company that brilliantly finds your way to coattach. These guys coattached that a trend. As you say, did the deals with many of the vibe coding things? And now their job in the next two years is before the music stops be perceived just as MongoDB was the right database for the kind of SAS era and for cloud. You want to be the right database for vibe code of an agent apps in 2026, 27 or 28. And at some point when when things slow down enough for the love of roles and the replettes and the other folks to say, hey, maybe we should just back in and do this ourselves. You want a super base being a position to say, no, every developer on the planet uses us every agent framework supports us. Why would you do this? Your users will rebel. But the playbook is super clear. It is just like the SAS and clouds playbook, but on super fast speed, you know, this is all going to happen in two or three years and make sure that, you know, before things slow down, you are a lot more than you are today in the eyes of your users. Think about how hard it classically has been to deploy a database. I mean, Oracle is still massive, right? I mean, I have never deployed Oracle, but I can only imagine how difficult it is to deploy Oracle database, right? Mongo is work. These products and that was disruptive. These things are work. Mongo has a vector database product and I deployed it for one of our apps. And it only took a few hours, but it took head scratching and headaches and not everyone could do it. Superb as you can do in five seconds. I mean, it's so disruptive. All these databases start being users in the prior alternative. I mean, I don't shark harry. Don't remember when relational started because it was in the 70s, but I remember even until the early 90s, the Rock used to talk about it though. I remember the original database days. And then I, but I do remember when MongoDB started and it was just the drop dead, simple, cloud-based alternative to a lot of these to some of the other alternatives at the time, not so much directly competitive relational databases, but for some of the newer use cases. And then I get more code. For a DBA for someone that could spend a month configuring it and getting it going is disruptive, right? Yeah, because it didn't take a month. It took a few hours. It was easy. It was JSON. It was whatever. And you might know it's five minutes or it actually, it's invisible. You don't even know. Here's what's interesting. You don't even know you have a database until you need it. It's lurking in the background now. You build an app without a developer and you didn't even know you needed a database because you're not a developer. And it's already there and configured and has all your data. It's pretty cool. That's true, but the odd point I was trying to make is the tragedy is that's great. But over the medium term, a white label business to five or six vibe code is won't be enough. So they're going to have to expand beyond that. And ironically, over the next five years, that will mean adding complexity, adding functionality and in ten years time, someone, and it won't be me at that point, we'll be saying, oh my god, those legacy super based products. They're almost as bad as MongoDB and there'll be a new alternative at that point. But that's just the movie. And this is super basis time to crank. Good for them. I think it's also a reminder just that we've given up on worrying too much about intellectual durability in these investments, right? It's a winner. The growth is exciting. The MPS is high. The fact that everyone else may build their own Postgres databases or other things may change. We're not, we don't even care anymore. I mean, I'd say differently, by the way, just to be clear, it's not that we don't care. It's that you just don't have the luxury. There are very few things where you can say, oh, this is something that is highly different. It has that level of defensibility. Arguably, LLM's themselves did because there was only a small number of people who knew how to make the magic. But you're right. Most of the time right now, I mean, I can regret the fact that there's not a lot of barriers to entry. Or I can just accept that that's just the reality that exists today. And the barrier to entry is as Brian from Andreessen said, it is speed. And if you execute, well, you create these barriers to entry over time, but you're right, Jason. Right now, most of the deals you look at is in the short term, the barriers to entry or low. And what that means is if you stumble, you lose, right? Because if the five of you going out of the gates, one of them wants to stumble and they'll win. And over time by winning, they'll be able to create, I believe downstream, there will be barriers and modes created second order modes, but out of the gate, you're exactly right. It's a race. And I don't know who the super best competitor was, but they didn't get the two or three key white label deals. And there you are. I think also this is why view a lot of VCs today as enablers. It really bothers me because Rory's point is accurate. If you stumble today, you may lose forever, right? And the classic VC thing is guys keep pushing. You've got time, keep at it, you know, a bad quarter or two falling behind the competition. Like everyone, it's not that I don't think you should be supportive of your portfolio companies. Of course, you have to be right. And what choice do you have? I just see too many VCs running a pre-AI enabler playbook, where when folks do fall behind a tick or two, you see cum biaugh activity instead of code red activity. For example, I'm an investor in a company that's cross nine figures in revenue, but it is hitting massive AI competition issues. Okay, it happens. And they have a new investor on the board that doesn't really know the space that well and doesn't really want to learn. And frankly, isn't as close to some of the AI changes as we are. And every email and conversation is great job, guys, keep at it. You know, don't you understand the disruption in the space? Don't you understand the issues? And he's become an enabler and an inadvertent enabler by being a cheerleader, right? I just worry about it because so many folks are still hiding. And I don't think having enablers around the table, even if it feels good on a given month is helpful today. I think enablers can enable a death spiral that you feel good about as you approach the event horizon and your startup implodes. I was thinking about what you said. And, you know, frankly, just checking myself, have I at times? I mean, because, you know, what one man's description of enabler can be another person's description of being supportive, right? And at times when things are tough, you want to be supportive. So I was thinking actually, Jason, could I actually think it's a very important comment? What makes a difference is this you have to be very clear eyed with your companies on where the competition is and understand exactly, you know, what the old guys are doing and therefore how well and not far behind you stack up, right? And that takes it away from enabling it's kind of a judgmental term. Is that my being? You know, because also being a jerk is also a judgmental term, right? Yeah. I think what you're saying that it's correct is you're not a useful board member unless a you understand what the company does and how it compares to the direct competitors, ideally with hands on experience of the products. And then b, you find a way without being a jerk to keep the company honest about where they are relative to competition. You know, what are they seeing? What do our competitors products do? What do the adjacent products do? How do we think about that? Not in a kind of defeatist kind of way, but, you know, how do you distinguish between, oh, these guys leapfrog does for a month and we need to get our act to get our verses. We are a year, year and a half behind in a market. We may never catch up. We should sell while we can. And I think that's kind of threading the needle between, you don't want to be in the neighborhood, but you don't want to be a debit. You want to be supportive. It's kind of a slogan we have internally. It's not so much found or friendly. It's found or honest, but also I think actually as I think about it, it has to be found a fact based. The number one thing, and I'm even thinking on a couple of my deals where I have to do some work this week. Do you really understand where your two direct competitors are? And the strengths and weaknesses of your product? And what did the last three win losses say about how you're really doing in the field? Because if you don't, you're just coast playing a board member. And are you being honest about what has to change? Yeah, agreed. Champs, there are many other topics that we can discuss. I often get chastised in my selection. So I'm going to. No, I would make the selection. You make the selection. How? I'm too tired to decide. OK, I think we will have to at some point address McCore. I think someone in a comment put like, "Oh, how are you often shill them?" And so you can't not talk about them when there's trouble. I didn't like to do that. So for context, McCore, obviously a data provided some of the largest companies in the world, most notably Matter, who they have since reportedly lost part or all of them being customer of their data. It was also unfortunately at the same time that Forbes released their billionaires list of young billionaires where the founders of McCore are on that list. Very unfortunate timing there for them. Jason, I'm sure you've got an opinion on this in terms of, bluntly, the McCore hack and then losing face because of customer. Well, just two thoughts. One, not that long ago, I was with part of the management team of one of the leading hyperscalers or what he said. And I was with him when there was a minor security issue with the third party vendor, relatively minor, not like this, not like all of the private data of all of McCore being exposed. What he said was there's not much higher on our list with partners than when this happened. There's not much higher. Like we have no tolerance. It's not worth it. There is no tolerance. And in this case, they got a pass because it was a relatively minor issue with a vendor that was honest and they fixed it and it did not lead to actually any internal data issues. It was just an external issue, but it was crystal clear that it is not worth it for us. So that is troubling. And the other thing, and I'm not an expert in the data labeling or mercury space. But I don't know is how fungible the products are at some level. The more fungable it is, right? The more freedom you have to route that to what's left at the end. scale or whatever the guys at handshake want to do or whatever they want to do. If it's not fungible, you can bang your chest, but you're still stuck using them. But that moment, like that, I can't tell you the number one criticism of the space is to all the largest customers, all customers of all of them. And so they are generally heavily fungible. So I would be very worried because this comment was chilling from this executive. It's like, this is the highest thing on our list with third party partners is security. We're exposing our applications to folks we'd rather not expose it to because our ecosystem we'd rather have no partners because there's so much confidential stuff flowing through what we do at all levels. So we have no we just have no tolerance for anything that's material. And I just don't see how you would come back from this if you've crossed there's just not unless you have to. I think it's it's potentially death. And the reason I bring it up is in the old days like through 2023 in our lifetime, she always got a pass once as a vendor, even for the worst breaches, the worst issues. Unless your your app was down for weeks, you get called into the C so's office, you'd get yelled at. It was brutal. But she always got at least one because it was just the reality of working with emerging vendors. But then I just I don't know that you get a second one here. I just don't know. I mean, I think a lot of the margin depends on how you handle it. I don't know at this point. Do we have any sense of, you know, was it a state actor? Was it a malicious employee? Was it just a stupid configuration breach? So I don't have any sense of the forensic here. It was it was it was a organization. I think they called Latipus, which basically hold you hold it for ransom and you have to pay for it back. It's a commercial activity. Gotcha. It's a commercial like decent, decent honest criminals. Right. God. That's a very successful. It's I also team if we could invest in them. It seems this is one of many very successful. You'll shine. They don't have very good. They're very good. Right. They're not in much outside capital. Right. That in one sense sucks. On the other hand, the good news is at least they're going to be rational and you can buy them off. Is it fatal? Hopefully not. I think in these things, you gently pay a pretty significant penalty. How you handle it is a key part of it where you're straightforward and honest with your suppliers and with your customers and let them know what's happened. Was it your fault entirely where you crassly stupor it was a bad luck. Was it where and that continuum it was? So you can manage through it. I think it is hard when you have four or five vendors of wealth through the same thing. On the other hand, I don't mean to sinically, but there also appears to be right now an insatiable demand for labeling data. So it may be I think because I think the men of statement didn't say they've I said they've paused, which makes sense. Everyone's going to pause. And my guess. My guess is the likely outcome is you lose a fair amount of revenue. You lose a fair amount of time. You're going to have to spend a ton of money to bolst your defenses. But if you do the right thing, you'll be able to earn your way back slowly and over time. That's the likely outcome here. Hopefully not fatal. But my guess is that. I do think and I think Sam Altman to maybe to tie it back to the start. I think Sam Altman said something this week that a massive cyber security attacks will become from AI, right? Or coming. I genuinely think that most B2B companies are going to get hit worse than Merkur. This light LLM was was one of the weaknesses that they had like tons of B2B folks have how state of the art and strong are their security teams. They're they're not they're relying on a hot potch of open source and other products that are barely monitored in many cases. They're busy. They're under pressure for profitability. They're managing their teams and maybe Merkur. I mean, it's probably a small company. They probably don't have a huge team. But my point is it's going to be really tough on a lot of startups and scale ups because they just don't have the teams to deal with the levels of threats that are coming from AI. This is a start. This is it's going to get worse this light LLM incident. It's going to happen to everybody and as soon as you figure out you can hold all these B2B companies and others hostage they and their network of thousands of affiliates are going to do it. Well, I don't know that the average pretty good to mediocre to actually don't even really have a security team. How the hell are they going to keep up on? I don't even have a team. Remember when Gainsight was offline for a month drift permanently was destroyed and this was pre all this craziness like there was an old saying my CTO told me back in the day the only reason we've been hacked is no one cares about us and that has resonated in my ears for years. With AI, you can hack anybody you want. I think Jason you're exactly right because I think in general, new stuff gets deployed. People shouldn't think about security upfront. They tend not to. They deploy bad stuff happens and then they panic and think about security. That's the way it's always been in every cycle and I think we're just about to hit that stage of it now and I think there's kind of two separate vectors. First of all, the AI apps themselves have security needs that are different than pre-AI apps. You know, they're got the whole prompt injection kind of issues but I think the bigger issue is Jason's point which is using AI, the bad guys can just automate attacks, automate fishing, automate duplication of voice, all that kind of stuff. I think a topic reference this and it's the red army quote that I often used that quantity has a quality all its own and with AI, you can make quantity of fake people. You can make quantity of attacks. You can do this and so I think it's not so much going to be you getting attacked because of your AI apps. It's much more going to be AI apps are going to attack you. A lot of the AI doomerism I kind of discard but this is a legitimate and big issue I think. Right. The ability of AI to escalate the velocity and ferocity of attacks. So which is why by the way I think the response of security stocks going down to the anthropic announcement was absurd. I think anyone who's cutting back on the security budget in 2026 is missing the point. The second statement is really cap the obvious but it's worth saying these stuff get more important every year because more and more of our stuff is online. You know, the percentage of things that we do that are done online just continues to escalate. It's like stupid stuff. It's like all the stuff in your house, all the stuff in your financial life. There's nothing that matters that isn't done online at this point which means that attacks there can attack more and more of our counts. Right. So I think you should be seeing a real acceleration of investment in a different class of security to cope with a different class of threat because look, it's a fatal error if you don't. There's only really two things that can destroy one of these companies. The app goes down for a long period of time or the app gets hacked grievously. Those are the two kind of red card fatal errors and that's where you're going to have to put the money. There's a wave of the second tier that's coming. It's just massive. Even to tie it, I know we got to end wrap it even super based which I'm a super fan of. A lot of times folks turn off the default security and we've seen these issues and in the old days no one would find it because they didn't care about our little Rory and Harry and Jason's app. Now AI will find it in seconds on the internet and it will use every possible way to penetrate that to steal the data to create malicious acts. Everything that is possible on the face of the earth that can be delivered with software. Maybe there's nothing we can do but I think we've all under invested in the attacks to come. You remember it used to be hack-or-farms of people in fill in the blanks of Philippine's Russia. Now it's going to be hack-or-farms of AI agents cranking 24/7. It's going to be miserable. Guys, you can choose one more. Jason Rory doesn't feel like choosing so he's delegated to you. Absolutely. There's the GLP1, two company, again for people who use this as their news on tech. A two-person company who uses AI intelligently scaled to 1.8 billion in revenue selling GLP1s. Interesting, a lot to unpack there. Wix buying back 31.6% of it shares given its low stock price. Oracle getting rid of 20 to 30,000 employees via 6am email. Jason, any that stand out, baby? Obviously, it's some level. People are so excited about the 1 or 2-person billion-dollar company. Facts were glossed over, points were missed, and all that. Over-simplified. They used deep fakes. They made representations about doctors. They did all the wrong things. They did all the crappy affiliate marketing stuff. People have been doing for 20 years. They did it at scale with AI and built a big business on it. But what is interesting about it is if you, let's not overglamorize this company that maybe is at the edge of fraud in many ways in its marketing tactics. The fact that they could use AI to scale this with two people and maybe some consultants and stuff on the side, we are seeing the future. AI is completely changing marketing. Marketing has not gone away. Daryl and Sam are everywhere because marketing matters as much now as ever. This is a different version of how marketing is changing. If you don't adapt, maybe buying TBM is a bad idea. But you got to adapt to the new world of marketing. There will be a number of startups that have tried to automate all this marketing at scale with AI. Most of them are terrible. They don't quite work. They create boring assets. They look like an awful art. They look kind of like make. They're that bad. A lot of the assets. They don't have context. They use too much stock art. But no reason in a year, everyone shouldn't have the AI powered to blanket the entire internet with the best hyper-personalized marketing in the world. Hopefully in a year, we will all have the power to do some of what MedVee have done. I think if we step back, it's a chance to see 12 months into the future. That when we want, all of us will have more of this power. In other words, just because they're illegally selling weight loss reduction drugs that are off-labeled to people without the appropriate FDA safeguards, doesn't mean they're not great marketers. I just, I talked to so many CMOs who are still struggling to run the 2023 playbook. And falling further and further behind, you have to adapt. And crappy automation doesn't work anymore, right? But these guys that were able to do that at mass scale and target everybody, this is the future that we all should know. And I guess the code is marketing appears to be more powerful than ever in the age of AI. And humans have to control it. But if you don't leverage how marketing needs to be done in the future, you're going to be stuck in the past. You're going to, and you're going to be killed. You're going to be killed by folks running in the old playbooks. So, but yeah. I mean, anyone that achieves some sort of scale through marketing as dodgy as some of these consumer guys are There's something to learn, right? Whether it's multi-variant testing whether it's AI whether it's personalization at scale It's a waste as a marketer if you don't learn from that, right? And this is what I think is gonna happen We are just like it is inexcusable to send a dated sales opt-out reach cadence from 2021 today The way we're doing advertising and marketing will seem incredibly dated in two years like only only the creakiest companies We'll be doing marketing and advertising the way they do it today in two years. It makes no sense I should be getting the GLP one ad specifically targeted to you Jason You don't technically need it But I noticed your jawline on 20 VC could be a little bit tighter What if we just micro-dosed you today and so you could get some of that t-shirt look that Harry has like I click on that in 60 seconds In two seconds I shouldn't get that and the versus stock art of some grandpa running with his golden retriever on a beach, right? So I'm both about both think this is fraud and an an over headlined and and the future. We're watching the future Yeah, I think you're right. I mean, I would argue that a huge percentage of it is on the fraud side But none of the fraud side but the hairy edge of regulation side But I actually agree upon reflection what you're saying is correct. It's funny It's a little like the last comment What we're basically saying is the most entrepreneurial people on the planet out there right now are the hackers and The kind of dodgy marketers that are on the front line of pushing things But the tactics that they're using in the way a little leveraging AI everyone's gonna be doing within a year or two It'll be left behind I could go along with that Yeah, there was there was an era in the old days when the best affiliate marketers new things nobody else did and built billion dollar companies out of it Right then there was an era which is now faded when some of the best companies used SEO in a way nobody'd use for millions of pages Right, you know even things you could you know It's maybe it's only worth 10 billion digital ocean was built entirely on SEO farm so is Zapier and others and there was a group of folks That knew how to do this and it worked the next group of folks will know how to do this mass Personalization at scale that really works to millions and millions of people and they will win like the prior affiliate market They will crush folks and the rest of the world just won't get it They'll think it's dark arts and they need to become a gentick marketing experts But in the same way that great affiliate markets is largely originated from Poland and Viagra Good and here I think probably some of the best nation AI marketers will spawn from GLP ones or anything at the border lines of Nationation e-commerce in some way yeah, but I think that Jason since I agree with that by the way Yeah, I mean does no doubt that many of these new technologies are adopted by crime or not by porn or dodgy marketers But I think Jason's insights is a profound one which is marketing tactics that are used by and look very kind of dark Arty over the next 10 years tend to be adopted by everyone and now as you say everyone in any corporate America is an SEO expert Whereas 20 years ago it was a dark art and I think you're right Jason in the next two or three years if you're not adopting a Gentick marketing as a digital marketer You're just going to be left way behind and personalize marketing and leveraging the technology I think I mean I knew it already intellectually, but actually I will say you kind of crystallize it in my mind because I've lived the last I remember when SEO marketing was literally something that only the Legion companies did and there was two or three A period where they had you know hyper grow 100 million dollar businesses kicking off 30% cash and then those businesses went away as Normies adopted the technology and the correct play was to be the software provider helping the normies Tool up and I think the same is true here in a gentick marketing so that's my Stolen insight from you for the day Jason as I go look for those It's just actually all medvy has to do to make 400 bucks is drive a GLP lead to someone that buys a product that just like tokens The world can't consume enough of and most of these folks are selling the exact same product and they're fungible right There's a moment in time where it's a great marketing arbitrage if you're excellent at this you get three to 400 bucks for delivering a customer Already wants to buy your product right it's a moment that's that's how the math It kind of ties back to our open route or another conversation if you've only made ten bucks This wouldn't be such an exciting business, but they are so profitable but also so competitive when you get 400 bucks For just delivering a customer from a Facebook ad man you want to run this you do what it takes boys a lot to discuss this week Thank you for being so good. 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