20VC: Anthropic Unveils Mythos | SpaceX's Financials Leaked: Is it Worth $2TRN | Meta Debuts Muse Spark: Are They Back in the AI Race | Jason's Critique of Dario Amodei & How OpenAI Could Win the Enterprise Game

I don't buy Dario anymore. So I'm pretty bullish actually on OpenAI and the enterprise. I think it's a two-way fight. And Tropic has the advantage of clarity and focus. OpenAI has the advantage of the consumer business. If your agents are only 60% as good, you're in a slow death spiral. It appears to be the most expensive IPO at scale of all time. The Elon discount rate is zero. And the Elon probability of failure rate is zero to get to $2 trillion. I can't open the straight-of-hormouse myself. I can't do this like enough already. Let me just use my tokens. This is 20 VC with me, Harry Stabbingson. It's my favorite show of the week. Roryo Driscoll, Jason Lemkin, analyzing the biggest news in tech this week. Anthropic unveils Mythos. But with holds it from public release, because it's too good at hacking. Public software stocks tumbled to new lows with city saying there really is no flaw, optimistic. And then finally, MetaDabuse NewsSpark. 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Guys, I am so excited for this show. We're going to start with Anthropic. What else could we start with? But Anthropic unveiling Mythos with the preview withheld from public release because it is too good at hacking. Discovered thousands of zero-day vulnerabilities. Admittedly, some were quite old. How did we think about this? Did it deserve the reaction that it got? I would say widespread fear that there was then shown in a loss of market cap of a lot of public companies in the US. Let's leave to one side. The was at a market in Stant, where did they have not have compute? Let's focus on what Mythos does in terms of cybersecurity and what your response to that would be. And if you read a lot of the stuff, it finds a whole ton of vulnerabilities, including some that have been lily there for years. That's kind of the, oh my god, that's scary. That's why they withheld it and shared it with a bunch of security vendors. And then you see a bunch of counterarguments that basically some version of this, which is using older models and using them well, you can actually get to the same outcome. You can find the same security vulnerabilities, right? And that's the counterarg, and there was a whole bunch of twitters that said, "Eh, this is not a big deal." And I'm processing truth from the outside. And my conclusion is those people who said it's not a big deal or wrong and then topic is right. And I was thinking about the metaphor here today, right? Because what they were saying is, and it's actually very interesting about the whole agenteic revolution. It's kind of a microcosm that allows us to talk about a lot of things. It's like, basically the naysayers are right, which is as you can take an older model, you can point it at some of these issues, you can kind of query, you can direct it a couple of times, and someone actually did the exercise of, "Here's how I found the same bugs, I had to steer the model a little bit and you got it." Right? But the comment is, "Mithos just kicked off on its own, agentically goes and looks at all the code and finds them on its own." And the metaphor I was trying to look at here is very simple. It's like, "It's the difference between a rifle and a machine gun. In one sense, both of them can kill someone. But one shoots one bullet and then stop and reload. And the other just spews guns, bullets out. And in the First World War, you know, we all tragically learned that machine guns are, it might be the same thing, but quantity makes a huge difference." And I think that's what's really going on here. The speed at which this can process, reason across large code bases, means that they're just gonna find more bullets. They're gonna shoot more bullets. So the Twitter cynical, it's not that different. It isn't true because it's the capabilities to do so much so quickly with such human direction that makes it definitely a quantum step difference in terms of real capability. My big ahaha was, it's not overblown in the sense I can find stuff. - I think that AI is enabling every single breach possible, every security hole to be found. Not a subset of the hottest companies, not folks trying to attack open AI APIs, but everyone. And like, for example, you know, the other day, my fitness pal bot, Kalei, right? Cool story, right? What was it? Harry, $100 million, 19 year old kid from Miami, something like that. A great story. Two days later, it was instantly breached. All the records were stolen. 3.2 million records, everyone single use. Everyone, all the data on you, all your HIPAA data, every single thing on you was stolen within days. And it became a sport for a hacker. They just stole it all. Now, the root cause was, and actually this is surprisingly common. It's an issue super based on others that to deal with. They didn't have any authentication on Firebase. As most databases are now built by AI, as more and more apps are built by AI, the number of issues is going to explode. And if mythos and friends let's bad actors find every site the second it launches with any PII and steal it, we may enter an era later where sites get more secure as it's flipped on the other side. But I think we're going to go through a transition phase where security's just getting worse and worse and worse, because every single website can be instantly hacked and stolen from it. And the whole mythos run, they said, Claude said it took $20,000 of credits or a couple hours or something like that, right? And hey, that's enough that I'm not going to do it against Scales website. If I could simplify that and distribute it against every single thing with any PII on it, you know, bad actors are just going to hit everybody. They're just going to hit everybody, right? I think it's a big deal. Whether this is publicity stunt for not having enough capacity, I know, maybe a little bit, right? But everything's going to be found every security hole, right? Great, which is why the second comment I'll make is the reaction to it in terms of security stocks going down to me didn't make sense. Yep. Because going forward part of the process of security will be to use on Tropica another code model to check your code before you deploy to find these vulnerabilities. This will be a thing. But someone's going to have to administer that. Someone's going to have to build frameworks and harnesses to do pre-screening code. But then more importantly, everyone's going to have to operate on the assumption that if you miss anything, they're going to find us, which is different than if you miss anything and you're really strategic, they might find it, right? To Jason's point, if the other side now have machine guns, then you've got to build tanks. So what security is my change? The vendors who step up and meet the challenge will try them. And the ones who don't will fall away. If anthropics say that their model now allows anyone to find any vulnerabilities and they're going to it for six months. That means that in six months and one day every bad guy in the planet is going to be pinging your code and trying to find the bad bits. So you're going to be investing in cyber. So I think the part that made sense was, this is a big deal. The part that didn't make sense is the cyber stock should go down because I think you're going to want way more defenses because the bad guys are more heavily armed. And yeah, just it is an arms race. Dubai, Darios, it's too powerful we can't release to the public. Is it just great marketing? I don't buy it anymore. I'll tell you one thing that changed with me with a missus thing for what it's worth. What I mean is listen, he may well be the second greatest founder of all time behind Elon. Look what he's done in five years, right? Five years to 30 billion. The greatest grudge startup of all time, right? I mean, it's hard as a as a founder to not to your jaw not to fall on the ground, but I am just so burn out of the boy who cries wolf every job is going to be destroyed. Everything is insecure. Everything like enough already. And like, I've heard it so many F and times. And then about mythos, I have to hear that like he's created the spawn of evil if we're not careful. Like I just can't, I've rotated back to to team Sam after all this because I just can't take the can't take the endless boy of cries wolf. It's a like even if you're right. There's a I can't open the straight of hormones myself. Seriously, I've lost confidence in his not in him as a CEO, but this endless marketing machine. I'm tuning it out now. I don't care anymore what he says about this stuff. I don't specifically do you not buy? I'm just trying to want to listen to every out. Dario's like 80% of jobs are going to be destroyed in two years. We need we'll need no programmers by next week. Okay. That endless thing. Maybe he's right. But what can I do about it? I heard you. I heard you the 11th time. I heard you the 80th time. I heard you on Joe Rogan. I heard you on on on on on TBPN. I heard you on Harry. I just can't and then and then the mythos thing and they were holding it back and it's like I believe you're you're a safety guy. But if you talk your game too much, I just got to check out at some point. Show me something that's inspiring. Like I actually I honestly feel like his message is uninspiring. That's the problem. It's uninspiring. I'm going to push back a little on that. But in the following way, I think a lot of the doom warnings are wrong. And the doom warnings to date have been wrong. If you look at the unwillingness to release chat GPT-2O which in retrospect was overdone. But I think the concerns are sincerely held. And yeah, it also is good marketing. I acknowledge that too. But I think the starting point is there is a belief here that these things could happen. To be very concrete, I think it's totally wrong about the economics. Fifty percent. I think that's beyond madness and I'm not worried about it on the slightest. But I do believe and I thought about this a lot because what I realized is if I'd met them at the sea, which I didn't because it was outside a price bracket. But if I'd met them, I would have done exactly what you did, Jeff. And I would have listened to the doom warnings and I said, that's all silly and wrong. Therefore, I won't do the deal. And what I've learned is something more nuanced. I think a lot of Silicon Valley companies have this have a culture that's overreaching and you listen, you go to the grandiosity. If you're kind of a grounded person, you reject the grandiosity. But what I've internalized is the grandiosity is a rallying is sincerely held because I don't believe you can portray grandiosity consistently for five years if you don't believe it. So, unless you're really psychopathic, so sociopathic, I should say. So I think it's sincerely held and I think it has a huge unifying effect on the company. Like take for example, Elon and we're going to Mars. The minute we have to file an S1 and someone had to say, you might have to go to prison if you say things wrong. We said, we're not going to Mars. We're going to the moon. So you could be cynical. If I looked at that deal much earlier on, I would have said, "Decinnical but incorrect approach would have been to say, I don't think they're going to Mars for here's 10 reasons. Therefore, I'm not going to do the deal." The more evolved approach, and this is why I'm pushing back in on topic is, I don't think they're going to go to Mars. But I do think the Mars vision over 20, 30 years is a rallying cry that will allow them to do amazing shit in the short term, which they've done. And I think the same thing applies to Darryl here. It's like, I think it's all over. I think half of Silicon Valley, I'm going to say it here, is running around thinking they're inventing the next thing after the atom bomb. And I simply don't. I don't think we're going to unemploy 50% of white color work as I think it's madness. I think it has some legitimate dangers in cyber security and bioterrorism, but they're manageable. I think it's all over what. But that over what intensity has allowed them to build a culture with no churn, given a mission clarity, and then with given them a 30 billion dollar revenue line and a possibly trillion dollar market cap. And what I've learned, and it's really hard for me because I find all this problem bullshit. It's like the Airbnb, remember the Airbnb's, the sharing economy. And Uber was the sharing economy. It sounded like a bunch of communism. We're all going to sleep on each other's air mattresses. That was a visionary, fairy bullshit. The turns out what really is going to happen is people are going to buy houses and rent them out. So what I've learned, you know, Steve Jobs was a bicycle for the mind that turns out we're all just going to set on our phones and you know, watch Instagram and get the press about other people's lives. But the vision won't be bit. It just helps keeps the machine of innovation churning here, people. So what I've learned to do, which is really hard is literally listening to the idealism. Don't say do I agree on that, say to myself, will it motivate people enough to do something where there is economic advantage to be obtained? And that's a very cynical or person's perspective. But that's the context in which I say, I think, Dauy, your believes all that stuff. And I think it's useful for them. And I think it's wrong. But it's damn useful. And it's worked. Jason, what do you want him to say then? You said, oh, I didn't find him inspiring enough. What would make you happy? What do you think he should say? Before things got tough, I think Sam was good at teasing at this. I want him to take us to Mars. I want to see the good side, even the node who is very direct that there's going to be a lot of job losses right or wrong. We're going to disagree. But if it goes very direct, his point is it's going to be okay. We will figure this out with AGI. Well, everyone will pay more taxes, even in California, it's okay. Mark and Jason, his point is we're entering an area of deflation and abundance, right? I don't need I don't need too much on the other side. I don't need the fluff, but I just need a little inspiration that there's some good. And I'm not saying maybe the law, maybe the third hour of Dario's speeches have it. But everything I see on social media feels like he's an inadvertent Debbie Downer. And I'm just tuning out now. And maybe in the enterprise, he's got to change his years go on as this works less well with the million dollar customers, right? He may have to be more positive about the benefits in your workflow. And again, I think Jason, the odd thing is we're actually agreeing on one thing. Toon out the noise. In the words of Holderman, you know, don't look at what we say, look at what we do. I always love quoting Nixon White House as what we used to be the most cynical White House we ever seen, but we can come to that another day. And ignore what the people people are saying, oh my god, this could eliminate White collar jobs and wringing their hands and saying, this is awful. Look at what we're doing. We're shipping cold. We're shipping software. We're doing 30 billion and one rate. Our shit's amazing. Turns out you're not buying the guilt. You're not buying the hand wringing. You're actually buying the revenue and the revenue is amazing. I've spent a lot of the last year attempting to help founders that they genuinely need to move more quickly that they are too complacent in their approach to AI that they have a best to 60% solution, 60% answer to the problem. I've tried. I've tried to vibe code in public. I've tried to build my own apps. I've tried to share how we rebooted our teams to three humans in 28. I've done all this and I know it's profoundly helped a lot of people. I get so many messages, so many so many public companies, CEOs, leaders reach out to me. Even me, I'm like, I'm almost done with this face. I have alerted you. Okay. If after me with my 10 trillion tweets and 2000 blog posts and 54 20 VC pods together, if you haven't heard the message that you got to let you got to catch up and AI maybe maybe I'm no jar. But even I'm ready to move on to the new world. I'm leaving the past behind. And if we're all going to live in a world of robots and AI lawyers, so be it. And I'm frankly ready to write off a lot of portfolio companies and a lot of public companies. It's time to move on guys. If you're not going to get there in April of 2026, then so be it. Well, let's mark to a mark down and call it a day. Good luck to you. I'm going to close with the Oppenheimer quote. All these founders have their Oppenheimer moment. They want to be visually the destroyer of worlds. And that's been, you know, they all reference the book. Obviously, everyone, you know, so obviously channeling Sam and channeling the Oppenheimer moment, you know, with the new atomic bomb. My favorite moment in that movie with when Harry Truman says, get that cry baby out of the White House. In the end, Harry correctly says, I dropped the bomb. The equivalent of that is if a whole bunch of people are fired, Jamie, Jamie Diamond will fire them. He doesn't need to bring in your hands with guilt. Darryl, it's okay. But other people, and it was a great moment when Harry, you correctly said, history won't say Robert Oppenheimer, you killed all those people. History will say you built the bomb and history will say I dropped us. And so in other words, get over your guilt, ship the product in a methodical fashion. Do be careful. I do think he was right to keep that product back. But in the end, you know, it's not stoppable. I appreciate that you're actually thinking very thoughtful about it. So I'm on his side on being thoughtful. I don't think it's fake, but it's going to happen. And other people are going to own the problem. Onwards. The final album, which is connected, but not the same, which is, Mythos was trained entirely on Amazon's journey. I don't think that's correct. Straight forwardly. I'm sorry, I cut you off there because I've had too much coffee, but whatever. It feels like a three cup morning for Rory. Doesn't it, Harry? Where you say? Keep going. Keep going. Keep going because I'll let you finish your sense. Well, a bounty myth was trained entirely on Amazon's training chips. Jassy disclosed that it's now a $20 billion annualized business, growing triple digits. The training now is nearly sold out, Uber and one of their biggest customers. Quashon being, if this is the case, are we slightly seeing a loosening of Nvidia's stronghold on the market? And does this change how we feel about Nvidia? First of all, I think you need to be really precise here because I checked, I didn't know this point, so I checked it. It's like, it sounds like you're saying, Oh my God, the shipping training trips to others who are buying chips and using them, they're not. They don't, too, around the hour, have a merchant silicon business. So they're not competing directly with Nvidia. What is true is Amazon instead of buying, Nvidia chips is buying its own chips and then often cloud hosting services and, you know, inference services and model training services. So think of it as less, oh my God, someone's buying chips and competing Nvidia as that Amazon is not buying Nvidia chips instead using its own chips. And most of that one way is internal purchasing. So what they're really saying is Amazon is saying, we have a capex budget of 200 billion a year, this year, which probably means about half of that typically is chips, it's 100 billion. So where we can, we're buying our own chips. Of course we are and where we're not, we're gonna have to buy Nvidia just like everyone else. So that's true. And then in terms of who's caught and caught a customer, all they're saying is this is when they're, either when they're, if they're doing training ones for a topic which I'm sure they are, all they're doing inference ones, which I'm definitely sure they are 'cause that's the part that they offer through Bedrock. When they're doing that, they're running on their chip. So yes, in that sense, some of the Mythos model was probably trained on training trips, but not because a topic said, "Yo, I love training him." It's because to the extent that Amazon is offering them compute some of that compute and training him. That's all that's happening here. You all that said, it's still 20 billion dollars that didn't go to Nvidia and they went to Amazon. So it is at the margin, meaning for its 10% of Nvidia's revenue is a little less than 10%. So it's not a mega competitor, it's just an in-house bundle product that's in significant scale. - I'm loving this rory, Jason. - Yeah. - Well, 10% is mature. I don't want to, we don't need to spend all over time. 10% is material, right? And I guess the bare case is just everyone's building their own chip or deploying their own chip. Everyone's trying, everyone's trying, especially an inference, and that just Nvidia is dented. It's dented sufficiently to see multiple compression. It's dented sufficiently that our 401Ks go down for, right? It's really just that it's, that when things are priced to perfection, there's dents, right? - Fortnite, maming Marcus. - Yeah, Fortnite. Nvidia may have its own Fortnite moment, is. - And remember, I think Amazon and Nvidia had a famously, have a famously difficult relationship. So they're probably the company most interested in not buying from Nvidia. I think what you're saying is fair. At the margin, it's 20 billion to like to have 10% is not meaningless market share. But, you know, the big picture comment is, compute his scares, chips are scarce. They're pretty much sold out, the stocks at 194, it didn't super accelerate it when they did that trillion dollar backlog comment, but it didn't go down either. So, I think we're up against a constraint limit rather than anything else. - We're gonna stick on Antsropic, but Mooseye, Antsropic to now compete with lovable directly. They launched recently and lost 48 hours of competitive product. - You sure it was launched? - Harry, see Harry's a media guy. He thinks, when things are announced at the real, Jason is a software guy, he actually thinks you have to share product. - No, it's all about the announcement. - Sure, you've seen that in the last few days. - As the lovable wepplet guru here, look, Claude is clearly directly competitive with cursor and then you have this slightly different segment. I'd love your opinion, Jason, on the kind of the lovable wepplet segment. How do you think about the competitive threat from a Claude from a slash Antsropic to those players? - Well, look, Eric from Bolt on these screenshots, Eric from Bolt said, "I was at a dinner with the CTO of lovable, "we all knew this was coming, "it was just a question of when." And then I asked him if he thought the screenshots were real and he said it didn't really matter because it was coming. - That's a number three or number four players view. The meta question, if this were 52 episodes ago, I'd be like, well, it could happen, but it's not important enough, they're gonna have to get into databases and hosting and identity management and OAuth and user support, like consumer level and user support. It's a whole bunch of things culturally that they don't wanna do. But the pace of innovation that Antsropic is so intense, that on a whiteboard, it's hard not to want to grab a couple of billion of extra revenue from vibe-goating, because you're just a database and an OAuth, for them, it's 30 days of work, right? The old school VC would be like, it's distracting, even if they launch it, they're not gonna maintain it, they're not gonna have support, they're not gonna put all the resources you need to maintain it. But the truth is, and maybe Eric from Bolt's point is, maybe if they don't directly compete at the pro-sumer level, right? Even if they don't build a base 44 level repplet, they might just go halfway there and that might be enough. Like it might be something that developers use, who just wanna get something going, right? It might be something that more technical product teams use, which is like the number one highest ROI category for Repplet and Lovable, these product teams, and they may only target the nerdy or the more technical part of the market, and that might be sufficient to, again, name the folks. It doesn't have to be 100%, they don't have to replace shopping sites and stuff like that to have a material presence. So, but you know that Anton and I'm John and everyone thinks this is about this 26 hours a day. How do we stay ahead, right? How do we stay ahead? - But Jason, those product teams could just use FigmaMake, right? I mean, they can use Make. - Don't feed. Now you're just, now you're just like poking the bear, please leave the bear alone. - Well, I'll tell you what we could talk about. - And he's off. - And he's off. - No, I'm just, well let's stay on this topic. It actually ties to, if we talk about software stocks, I've become more pessimistic since the last show on them, but, oh no, why have you become more pessimistic? - Because we are kind of ahead in this agentic thing, right? At least in the real world. I do talk to lots of teams, lots of senior product teams, lots of CEOs, more than I ever done in the last 10 years combined. Okay, every week multiple zooms, multiple calls, and there are exceptions for sure, but I would say, here's why I'm pessimistic and why I think that the drawdown is accurate, even though I don't understand the public markets. I think almost everybody's building a 60% solution. And make is an example. You look and you look what Claude did or Promting did last November, and you spent the last four to six months building something that's kind of similar to what these products were like five to six months ago, but you can't really explore, afford the tokens, you're worried about the cost, you can't build all the features, you're trying to use cheap models to bring cost down, you're trying to limit it and you end up with make, but everyone has a make. Why is make so crappy? It's because you didn't care enough to spend the money or put the team and make is a good copy of Repplet or Lovable from last summer. That's what happens. And by the time make catches up to Repplet and Lovable today, and then they decide it's too expensive, and then they decide they have to lock it down because they can't afford the agents and tokens. Now you're nine months behind and 12 months behind, and so what I mean is, and so it's not just that you have a 60% competitive solution, here's the meta problem for the incumbents. You can't charge for a 60% solution. Here's the problem. If you could charge 60% of what cloud charges or LaGora charged or Repplet charged, that'd be great. That's enough to charge 60%. But a 60% product has to be free. It has to be included with your base charge. And while we're recording this, there's an able today HubSpot's launching its next group of AI agents, right? And I'm excited to try them and I will be supportive. If they're only 60% as good as the standalone solutions, HubSpot cannot really charge for these things. You can't get away with charging another 20, 40, $60,000 to HubSpot customer if your agent is fine. It works like in isolation when I meet with internal product teams at large companies at scale. They're so effing proud of themselves. They show me their agent that they built. They show me their vibe coding thing. And if I didn't use any other products, I think they were great too. Or if this was 51 weeks ago, I would think these products were great. And they're so insealer at their 2000 person company in their fancy campus, wherever they are, with their mugs bringing their mugs to the meetings, because at their pace. And they're failing even as they're proud of themselves with their 60% solution because the market will not, they will use it. Like they'll use your 60% solution, but they're not going to pay for it. You're stuck in this doom loop of, yes, I have an AI product as a public B2B company, but no one is willing to pay for it for a 60% solution. They're not willing to pay 60%. And so we can say all these companies have moats and service now has the biggest mode of all. So it shouldn't be sold off and this and that. But if your agents are only 60% as good, you're in a slow death spiral. And that's what I see. I can't think of maybe one or two exceptions of everyone at scale where their agents are as good as either a standalone company, or just what I can do in Claw. Now, I can't maintain Claw. There's a whole bunch of issues. But if it's only 60% as good, there's no way I'm going to pay this AE that just called me up 100 grand for it. I'm not going to do it. It's not good enough. Checking the box does not work with agents. The check the box feature cannot be monetized in the AI era. And this is why I think they're all properly sold down because none of them, they all have 60% solutions. All of them. It's do or die guys because you can't sell these things. There's two counter examples. We could argue over agent force. The base 44 Wix1 may not save Wix, right, which is repurchased like 30% of its company. But at least they made a bet that got them beyond a 60% solution, right, to nine figures in revenue. I think there's a lot to unpack on what's having been sacked. But I think I've internalized that Jason has articulated one of the big truths, which is, unless you have a product that's good enough to charge for independently, you won't have revenue re-exceleration of any meaningful scale. And if you don't have revenue re-exceleration, then you win a different valuation metric. And I'll talk about how to value it, value mature companies with probably persistent users, but stock-based companies, there's no growth issues. And you can do that. One of my rules is price clears all market. There's a price at which service now and sales force are all quote unquote words something. So zoom out a million miles. Jason is right. If you can charge for your ship, you won't re-excelerate. And if you won't re-excelerate, you instantly move to another valuation bucket. I've listened to you a few times. And I think there's a clarity of simplicity there. Because you can talk a lot about, hey, we're doing this or the other, but the gut level test is, can you charge? So I really, it's a big frickin' comment. Because I've been wrestling with, what do you use to start out all these public SaaS companies? And, you know, what are the, how do you think about it, right? And if you're in a very workflow-centric market for the last decade, you are definitely in an agentic-centric market now. There might be other things that are more payments related or stuff like that, where I think there's different dynamics. But if you were in a workflow-centric world for the last two decades, like Salesforce and Service now, you are in an agentic world now, and if you're in any world now, you better have exactly what Jason says. Agents that are worth the money, which means they do the work. It's actually a very brilliant test. And I think if I'm literally looking at the horizontal software applications, list for Morgan Stanley and Jason, you're right. That puts probably the first, if I'm thinking about how to value this bucket of 1.6 trillion, that is the first test. If yes, then you're on the increasing value scale and you can make it out. And it's still going to be hard, see, wicks for details. If no, then you're in the, how do you value a company with mid-single, high-single digits growth rate at best? Probably, I think an example of Salesforce is very sticky. And that's a separate valuation question, right? I think that at nine times, these things are trading now at eight to nine times cash flow. You might be hitting a point where just the money allows you to be a deep value player. The PEs are something like Salesforce, excluding Stockbase Comp. It's 11 or 12 times forward Pee when the market's 20. Right, this is on powerloud. So if you want to make yourself a value play, money can still be made, but it's a grim way to make money. The only way to still be a growth play is to pass the Jason test. That's my zoom out comment here. You said it in financial terms a few weeks ago, which is reacceleration, but today you're actually articulating the predecessor test. If you have a genetic workflows, then you will have reacceleration. Then you'll be in the Jason happy bucket. And if not, then you'll be in the tragic value bucket. And you will have to do hard things that would make Dowry on Sam Cry. If you're going to make this thing cash flow, it's going to be involved. SBC reduction, it's going to involve headcount reduction. It's going to involve a bunch of Grim shit and you can probably still make money, but you also top stopped. Nothing magical will ever happen to a high single digit growth rate tech companies kicking off cash. At best, you build a mini version of IBM, CA and the top five executives make money. It's not going to be fun. Jason, would you buy service now now? No, I wouldn't buy any of them. I'm looking for products that are more than a 60% solution. The world's moving too fast. When we started this pod, I wasn't sure if I believed it or not, I was probably in the fence, but there was definitely a sense that the models might plateau, right? There'd be parity, that they're all pretty good. They all basically could do a chatbot. It's clearly not the case today. If we tie it to the beginning of this conversation, the models have radically accelerated their power since December, right? Since Opus 4, 5 and more. We haven't used mythos or whatever. It's going to be even more powerful. I'm not optimistic that anybody building to last year's spec slowly can compete. It's too furious. It's too furious. I also think that the problem with moats is they keep your customers in, but they don't lure any new ones in. No one's excited to cross the mode except the folks that want to breach the castle walls. This whole mode discussion, I think, is at the edge of Moronic. It's at the edge of Mor--Horay, you have a mode in your customer. I signed a five-year--the average service now deals between three and five years. So what? That doesn't bring in anybody new. It doesn't bring in a genetic revenue. It just means I'm trapped. Prisoners don't create growth other than at the margin, right? Other than the margins. First of all, I love the mode analogy. That's great. What you're basically saying is, Jason is not a buyer of any stock. That's not a growth story. I've come to the conclusion you were right on that. One of the reasons I enjoy doing this part is when we argue sometimes I change my mind, right? I want to play out the value track just for another few minutes, right? I think the problem with the value play. I think at this price, I think you make money on Salesforce. But unless they get regrowth, you're going to make single digits returns and the overall limits in small cap is 11. So are you going to on to perform? I actually think the other thing you're wrestling with in terms of these stocks is the following. The weird thing right now is the public markets don't have access to growth to the growth side of software. So right now the trade is sells, sellsass by semis, which effectively means sellsass by AI, making AI. What you don't have yet in the public markets is AI's native company starting with an topic and open AI. And therefore, you know, it's, it mythos is a wonderful word because in fact, you're comparing the practical values of owning Salesforce with the mythical values of owning this company that's going 10x where you've never seen the actual financials, no one's in gap financials, oh my god, it's amazing. And everyone's always going to want the myth. Pick your girlfriend, boyfriend, analogy, the practical realities of the person you would now versus the mythical example of something that could be. So my other ah-ha is these stocks aren't going to trade in the same fashion until five or six public of these two of the foundation models and four or five other AI native companies are public. And then you can finally as a public market investor say, okay, now I can choose do I want and drop it going at that one probably five x at 30 times revenues with huge losses and big stock base comp. Either way, I want boring our Salesforce growing at 10% with 30% operating margins and at that point, no stock base comp loss. At least now you can have a choice. Then what will happen is then we'll find out how to evaluate those two things and that, you know, it probably going to take six, 12 months after the IPOs. My point is until then what you're dealing with is the mythical desire for the as yet on realized relationship. So these stocks are going to trade for shit until then is my big ah-ha because no one's going to be able to value right. The only people that get out of that mess now are what Jason said. If you manage to claw your way to growth as a public SaaS company, then you do actually have some kind of chance of trading up. But if you got a trade on fundamental value, you always going to be chasing this kind of fear that the model companies can do everything you can. I don't think they can. I think when the model companies got public, people are going to realize, oh yeah, Salesforce in its current form, but probably going to be there for the next couple of decades. It's worth its cash flow. But Jason is still right unless it gets its ship together and makes great agents, it's another IBM. And I don't even know the price of IBM because why would you? I believe it's someone's probably made money, but it's not my problem. You just become a boring-ass old thing. So you're right Jason. And which is interesting because they've done what you suggested Jason, they're trying to get growth and they're getting growth. And as yet, you're right, they did a buyback and the stocks down 20% since then. So my aha from that is them 1.6 to buy back nearly 30%. They bought it at $92 and the stock fell 23% on the week. Whenever that happens, you got to set yourself that wasn't a good week. That's kind of like an inverse bill, girlie. Instead of selling stock and then it goes up, you buy stock and then it goes down. That's like the IPO premium, but the other way. It's like, oh my god, that hurts even more. It's talking about leaving money on the tip. And I think the aha is, to Jason's point, they did one thing brilliantly, which is figure out they got to get product out the door. Every day should have sat on their capital for another six or 12 months, kept it in reserve to maybe buy another AI product or invest behind the AI product. I think these stocks are going to bounce around in value trap land for a long time. So we may be wrong. If they really nail their growth on the new product and the love and they kind of vibe coding product really accelerates and you look back six months from now and you know, growths at 15% and the stocks weigh up. You'll go, yeah, it was fine. It was just the next day reaction thing. But the point is fix the Jason problem, which is core growth before you try and do financial engineering. Financial engineering is useful, but it's not the solution. In the end, if all you can do is grow at 8%, you can, you can screw with your balance sheet to your little hearts content. You're never going to matter a damn. As I said, you'll be IBM. They've screwed around with that stock forever, but nobody cares. You got to do the Jason thing first and put all your effort on that. It is tough that, you know, Salesforce did a big buy back too, right? I think they're about 20 for the, they did 25 billion of money. They're about to get a debt to buy its stock on a spreadsheet. This looks brilliant, right? We can support it. Yeah, we wish the debt was a little bit cheaper, right? It was a little, but, but, but this is the simplest thing we can do. Retire a significant amount of our shares, right? Drive up our EPS and keep going our agentic transition, but arguably, you know, the market at best shrugged it off at best, it would already priced it before it happened. But in the short term, no benefit. All this financial engineering that looks great on a spreadsheet, amounted to nothing in the short term, but 25 billion of debt. I totally agree, just not only that, but I think one of the big advantages you have as a public company with Casual Positives is your financial flexibility. I wouldn't trade that for anything. Because look, one of the two things that happens, if the AI wave rolls on without a blip, then your stocks and you don't have a growth story as a public sask of them, then your stocks can be cheap two years from now. There's no hurry to buy it. Second thing is, if there's a blip, then the guy in the market with a public currency and 25 billion in cold hard cash, maybe you buy five big things in private land that allows you to compete. Maybe you buy not a topic, but a second tier financial model. Maybe you buy one of the big apps companies. But if you can afford it, Salesforce is one of the few people that can make a big bet here. But my point is this, that's why I would have kept my 25 billion in my back pocket. Like it's what you said, fucking around short term with your stock and the number of shares, the only people who care about that don't matter. You've got to win the war and there's some chance that in the next two years there's a blip in the market. All these AI companies are burning money. And if you're sitting there with 25 billion dollars, you could have been saying come to daddy, I got money. Let's talk about how I'm going to be an AI Bohemut. And I think that would be a better use of your time. Come to daddy, I got money on that topic. Alex Wang, founder of Scale, obviously now at Facebook following the acquisition of Scale, Metadeb use Mews Spark first model from Meta Super Intelligence Labs, which obviously Alex runs. I mean, the candidate like truth is I did okay. It was decent. My question to you on the back. of this, it was decent, not quite as good as the others, but good enough. Is this Facebook back in the game and is this encouraging sign for Facebook where you feel more optimistic post it or less given it didn't blow anything out of the water? I think it's a win. If you're not in the game and then you get back in the game, that's a win. So if you're fifth, you win the game. I mean, you read all the reviews. You know, I haven't got hands on the model. I don't have the level of sophistication to a value but I didn't read a lot of the reviews of people who did and you write the summaries, good and some of the things that they were working on at scale AI a year ago, not so good at some of the newer things that the advanced labs have been developing for the last 12 months, which totally makes sense. You took your knowledge from a year ago and you implemented it, right? But leaving aside the question of, doesn't make sense to be in this game at this level, leaving that aside, if you decide as Mr. Zuckerberg that you want to be in this game, then you achieved your mission. You spent $14 billion on your back in the game. Now you got to move up the league table, but yeah, I felt this was a few because, you know, had you done all this and, you know, did a Lama 4, which was disappointing where people are like, it's not even, you know, credible, then you'd have felt like a moron and you don't. So I think it was a win. Also, it worked knowing that they're talking much, being much more close source, which is a significant thing because at some point someone's going to need the American version of open source. And Lama was that and now they're pivoting more to be more close source, which has implications across the ecosystem and is a bit of a bummer. But yeah, I know I think it was like a few exhale, not sure why we're playing this game, but if we're going to play it, I'm glad we're not losing anymore. Stepping back though to where we're going toward the back half of 2026, I don't think if I'm Zuck and I'm looking at Google owns its own models, which have become extremely competitive, right? That's one of my big direct and adjacent competitors. If I want to be in the big leagues, maybe I just have to own this. Like I don't I'm not Apple. I don't want to be stuck by tokens from Anthropica or OpenAI. I'm meta. I have one of the dominant consumer advertising and other platforms on the internet. I have the dominant social networks and I sure better own this. It turns out it is not a commodity and maybe it's way too much money down the drain, but this is this is core to our existential existence, just like it is for Google. And I don't want to wither. That may not have been where this all started, right? But the goal of Facebook is not to provide API tokens like Anthropica. This is not the direct goal, right? It certainly isn't to encourage the open source community to rise up and use meta products. This is to stay in the top echelon of consumers offer companies. And it's worth 14 billion. It's worth 14 billion, right? If you just don't want to become Apple, and dependent on everyone else's models, you just don't want to be that, right? You know, if you can just do better than the the chemi open source, et cetera, stuff Kersh was doing, it might be worth it just for that. Just just to be in that zone between what I can just rework purely from open source into what I can buy from Anthropic. If I'm close enough and this is my core, it might be worth owning. Ruthless, this is as competitive a company as exists on Planet Earth, right? This might be the most competitive company on Planet Earth as meta, right? Ruthless. Yeah, I mean, if you look at the big place goal board for that, it's like better billion on Instagram, win 100 billion plus, maybe 400 billion. Yeah, that's 70 billion on meta and VRA are lose at all. Bet 14 billion on this and clearly have a win and someone in the middle between those two outcomes and you feel good. I agree. The other thing just and again, it's not totally my expertise, but when I look back when we started this show, a lot of folks thought AI would kill Google search and main Facebook that Facebook was dying as a platform. And that why Google search was of course dead, chat GPT was going to destroy Google, right? Fast forward today. These are record growth businesses now. Google search, we started the show talking about AI overviews and other things. Google searches better business than it has ever been as his Facebook and Instagram. So it makes sense to to to triple down there. This is not a time to retreat for either of them. It is not a time to retreat. It is a time to get that lance out, go straight into battle. Just not knock those other guys off. Matt, Matt, I suppose Google, I'm sure you both saw as the largest ads engine in the world. I think Matt and Matt 243 billion. They didn't kill it yet. I hope that stock price comes back. Speaking of ads engine, OpenAI projects two and a half billion in ad revenue for 2026. The ads pilot was 100 million annualized in just six weeks. There were 600 advertisers. We touched on it before. But they're guiding to 11 billion in 2027, 25 billion and 28, 53 billion in 29. Is ads the great comeback for OpenAI and H2 2026? Is this the shining light that we should be directed towards? It's both obvious and inevitable that a consumer product like OpenAI, H2 2026 is going to have to be ad supported. So yes, they're making the moves exactly the moves you'd expect. And yeah, and the little chatter of oh my god, that's bad idea or it's not doing enough that we saw from before a few weeks ago. It's all said. This is just going to happen. Three people have done it at super scale already. Google has done it in 2004 on. Meted themselves have done it in 2000, probably seven and eight on in 2012 in mobile. And then we always forget Amazon, I think got to about a hundred billion plus on ad revenue in the last, you know, kind of half a decade or probably seven or eight years at this point. Right. So the movie is clear, right? And they've taught my get into a hundred billion dollars in four years. It all makes sense. The funny thing is, and I looked at all that and I thought, yep, that take, and I'm, you know, it's funny. I'm mentally giving them 100% credit for getting that opening eyes typically not on aggressive in its projections. So let's assume this progress is aggressive. You know, let's go sound really awful and I hate even saying it. Oh my god, a hundred billion is amazing, but it's not enough relative to the market cap. So the big half of me is you can build a hundred billion dollar ad business in charge, EPT, which makes sense. And in the context of a total trillion dollars of total ads with meta already having 300 of that. Google already having 200 ad. Amazon already having 100 of that TV's got to eat too, you know, right? That's probably a realistic high-end estimate. What it means is you need another hundred billion plus from your enterprise business. That was the big a half for me is consumer alone ain't going to be enough to feed this beast because your competitor who's all in on enterprise is already at 30. I almost feel like a jerk saying it's like, hey, congratulations on your hundred billion dollar ad business. Probably one of the three or four best ad businesses ever one of the best launches ever, but it may be that corporations want to buy more intelligence than consumers do and that 100 billion consumers ads won't support your burn. You need more. The hundred billion is what 15% of ad spend, right? Yeah, 10, 10 at the trend. 10 something 50. I like this as a goal for 2030 because it's clear what people should be doing. We can't just dilly dally. We can't just add a hundred million of ads to Chatcheeby. I would go we have to build something that is essentially as big as several of our competitors. It's well understood why it works. We're not directly in commerce. We don't have the advantages that Amazon does, right? But can we achieve the scale of Facebook and others? Yes, this is our job. This is our job, guys. In every week, we're going to iterate on it. We're going to improve it. We're going to make it better. It is mathematically possible. This is not as aspirational as the enterprise stuff, right? It's mathematically possible. This is our F and job. We're going to review it every week. We're going to put some of our best team on it and it's doable. And if it comes up short a year or two, like Elon, I mean, it would suck for the IPO, but it's not the end. It's doable. It is achievable, right? And so I think because it is achievable, it will be achieved. You're exactly right. And it's clarity a whole bunch of things they've been lacking on the enterprise side. I will say one thing. You know, there was this memo from this week that leaked from Denise dresser, right? Who's the CRO president saying, wow, well, first of all, in tropics overstate in their revenue. We're still ahead and saying, Hey, we have all, you know, we have the capacity. They're out of capacity and blah, blah, blah. Okay. At first blush, this memo to me, it seemed like a flashback to something that Mark Benioff might write, who I love, but more appropriate for Salesforce than for OpenAI when it first read it, right? And her last gig was CEO of Slack, right? So my first blush, I thought it seemed out of place at an AI leader, but then I thought about it. And I'm like, this is the exact type of messaging you want to win traditional enterprise customers. So I'm pretty bullish actually on OpenAI and the enterprise because all this enterprise DNA they have, which probably didn't help a snail's inch the last 12 months in the future when all the models are so powerful and big enterprises are trying to make decisions between a couple of top brands, the ability to sell this directly to enterprise versus coming in from the bottom, coming in through the CTO, coming through the other coming in from functional groups, it's going to be very powerful. So I think it may be OpenAI said they're going to double in size, right? And a lot of it's around selling motions to the enterprise. I think it's going to work. I think they're going to run a lot of the traditional playbook, which is going to work better and better in 2027 than when it did when the last year was ask your developer. That was the land. And that's why Anthropic One ask your developer, I want, I don't want to go pilot. I want Opus. And your developer picked everything, developer picked it for your app. And I'm using the old Twilio mantra because it worked for years until it did. And I think it's going to work for LMS until it doesn't until the bud until you go deep into traditional enterprises. And if OpenAI, which is, you know, it's going to be the number one or number two brand for as long as we do this show, I think they may be able to outsell it versus, hey, the world's going to end from Dario. Thanks for letting me in the lobby. Everyone's going to be unemployed next week. That one made cast a chill in the CIO's office. Thanks guys for having me. Most of you won't have a job next week. I would have two comments because I'm not quite in that place, maybe three comments, right? One aha I had from this is that, you know, the common on computers, the ballgame is, yeah, whatever about the long term over investment, and I still angst about that, there's no doubt in my mind that right now everyone is compute scarce. And there's going to be no restraint. No one's going to blink on their investments for 2026. You actually know the next four quarters of Nvidia announcement. You know the next four quarters. quarters of every one of the infrastructure environment, which is every single thing we can make. If you can count the way for starts at TSMC, you can predict and videos, revenues, everything is going to be sold out for now and for the next 12 months. Because if the rate limiting constraint is compute, then everything's going to buy compute. That was the first big thing. And yeah, they've got some interesting position relative to and topic in that they were more aggressive, so they have more compute. So yeah, that's one thing. The second consequence is people are going to start allocating tokens that are effectively the highest bidder. You're going to see a lot of throttling. You're going to see these plans, like that's why they shot Sora. You're going to see some of the Claude plans get throttled down. You know, that's what money is for. It's to allocate scarce resources. It's actually the definition of economics. It's the study of the allocation scarce resources. And they're going to start allocating those scarce resources of compute via price. So that's one big trend. The second one, I don't know if you're going to see that level of flip from, oh my god, it's all on topic, oh my god, it's open A. I think it's a two way fight. Open A.I. has the advantage of the consumer business. And they're going to have to slug it out. I think and tropic has the little just the way they've played the last 12 months have a slightly better lead right now, but in terms of perception and in terms of developer friendliness, but open eyes are going to roll away and die. I think I want to come back to the point of it earlier, which I've only processed true now, but sometimes it's important to say the big shit very clearly, right? If you do consumer versus enterprise, typically the biggest things have been a, I mean, if you look at Google, Google's consumer business and ads is two thirds of the value and maybe cloud is maybe one third roughly. And the big money has been in consumer bear with me and I say the obvious, but consumers actually don't want to, they want really great, such a PT. There might be some models like, you know, kind of friends and companion models, but fundamentally, when I go home, I want to buy Netflix. When I go to work, I want to buy intelligence. The zoom out comment from all this shit is enterprise is two thirds of the ball game in AI and consumer is one third or less, which is the flip of the last time because you would have thought two years, three years ago in Chatchy PT exploded that that was a really great launching point. But if, in fact, enterprise is the better place and yeah, you're going to have a good consumer business, but the ball game may be compute, but the ball game from a customer perspective, maybe two thirds enterprise, one third consumer, which is the mirror opposite of the internet. And that's just one of those, "Ha, big picture comment." Because I realize I don't go home and want to do cognition. I go home and I want Netflix. I go to work and I want thinking. And they're selling thinking. It's an enterprise business. And by the way, you get into a really fun and interesting discussion, which is above my pay grade, but I started to think comments about it is, do the things you do to make the model consumer friendly, you know, the happy, like does the same model continue to work really amazingly well for both? You know, if the enterprise wants clarity and consideration, if the consumer wants a little more friendly answers, divide the tone and the persona of the consumer model and the enterprise model start to become different. I don't know if that is applications. It's above my pay grade, but it's in a category of something to think about. I think very much so. And I think you've seen it on consumer research studies. So they've seen that actually younger people like open AI because it's much more supportive of their emotional challenges. And in your exactly, and in business, I don't want support. I want to be told, these five things are good and these three things are bad. When we're doing investing, we don't want support if we want to sit. It's almost exact opposite. I want harsh critique. I want the AI to say, this is a stupid deal, where you looked at this three years ago, it was done then. It's dumb now. Stop you idiot. Here are five fact-based reasons why this is wrong. And if you give that in a consumer app, you're not going to have great lifetime value or retention. Yeah, I was interested in you know, Aaron Levy had a tweet this week about his latest road show meeting with CIOs from box. And he talked about how so many of the CIOs meeting with now are token maxing. And what he meant was they're creating a ideally fixed token budget. It's really, I, you know, their dollar budgets rather than numerically tokens for the coming year. And they're making the departments fight it out per project. Now, this is where I think the game is going to change again with the leaders because when most of the budget is essentially rogue, when it's developer teams picking and thropic almost universally last year, when you're giving them the budget because the throughput is so intelligent, you're finding budget for that team or you're using discretionary budget to bring in little agents. It's one thing when the CIO takes control again of how many tokens across a large enterprise, that's a very different calculus of which vendor I choose from. And if the CIO prefers to buy open AI because it's got a more traditional sales motion, it's packaged better. It's better used. And there will be exceptions. There will be exceptions in departments. They will get exceptions. But overall for the enterprise, I'm standardizing on open AI for 2028. It is the right choice for our fortune 2000 company. It's just a different world when whatever the 60 billion in open AI and Chatshebe revenue, all the enterprise stuff is still in some sense rogue today. So much of it is rogue. It is out of budget. It is out of band. And as that changes, it will change which vendor we buy from. If you are correct, and I'm not sure you are, what it says is the people who should go into guidance counseling on Microsoft and open AI because they need to get their relationship back together again, because who is the dominant path to every single enterprise in the world? It's Microsoft. They need to get some couples therapy. They need to accept that they're different. They have differences, but they can reconcile because otherwise they're going to get the clock cleaned. And that's frankly, as I think that's an indulgence that open AI can no longer afford. Because you write is that the only guy who's stolen a march, has stolen a march on the kind of developer loves Microsoft can go top down. I don't care about your long term competitive dynamics. You need to kiss and make up here people. And if we agree that enterprises two thirds of the game, Microsoft is the key. And so, you know, figure it out, go to therapy, talk to your issues and get this thing back together again. And then the other comment to make is I just want to give an advert for Aaron. I said, I read his tweet last week about his comments from the road show. And like I said, just before we were lucky enough to back Aaron 16 years ago, and many of you said, in fact, last year we had him back at our annual meeting just to talk. Aaron is a walking investment insight. I mean, I read his tweets and I'm like, literally, I send it out to the group and say, this is the latest thinking on what you should be thinking about, about what CIOs are thinking about. Just read this and then you'll know. It's just so that there was such an insightful tweet about agents. He's not a doomer on employment at all. He's like, people are going to be rolling this thing out. And if you understand what they're doing, you will have a role here. And he's a really good feeling that he talked about token maxing. It's like beyond Silicon Valley, there are going to be meaningful budgets. There are going to be constraints. And this thing, you know, it's just a real sense of how CIOs on the front line are rolling out AI. I just, I just think it's excellent. So I follow him all the time. I thought it was so actually massaged him and said, do you want to come on the show this week and do it? And he said, I would love to. Let's do it tomorrow. And that was this morning. So I'm actually doing a show with him tomorrow. I'm not this tweet thread. He's in that wear combination of frankly grounded enough in terms of 15 years calling on CIOs, 15 years calling on CIOs to really know what they think. And at the same time, frankly, young enough and flexible enough to really understand what AI is doing. It's lily like an investment inside. It's like one of my colleagues even said it when he spoke last. It was like, he said, literally, it was just like an investment memo spewed out on enterprise AI. Yeah, but here's the thing now, just the one tough thing. And I almost don't want to say it because I love it. You can say it. If he can't reaccelerate box with his incredible depth of like 10 out of 10, right? What hope is there for so many other leaders, so many other unicorns and others, if he can't get boxed to 20 to 30% growth, I'm given up on on the rest of the world. It's a totally fair comment. Given up. And I hope he is. I look, I admire them so enormously. And I really hope that can we accelerate because he knows everything that's happening and he's not pretending. He's not like so many folks that pretending. He's engaged. He's ever been, right? As stressed as he's ever been, he can't work any harder. If he can't get this reaccelerated, good God, who the hell can't who the hell can't we have the financials for SpaceX lead a five billion loss on 18 and half billion in revenue. The reason it's so I think important for the audience is there are so many endowment funds and managers who hold SpaceX in some way who are awaiting the IPO later this year. The loss is driven by the XAR acquisition, not by operations important ad, but the $2 trillion potential IPO is a big number and the mass needs to be worked out. So 18 and half billion in revenue at $2 trillion is $100 and 8x. Did these numbers change a perspective? Did they confirm an opinion? Didn't change confirmed, but let's break it apart a little bit. The first is, okay, I'm going to go all technical accounting on you now, right? I kept, when did XAR close? Because pooled accounting is gone. Pooled accounting doesn't exist anymore where you retroactively recast the financials as if the companies were together. So that's only the last from when XAI was acquired and I think it was late last year or early this year. So we actually don't know the actual runway. Do you understand me? In other words, if the deal closed in October 1st, then they will only reflect one quarter of loss. So anyone hypothesizing on its profit or its profit, excluding that of its own, it's a quarter of a quarter, only a five billion dollar loss until I see the actual gap financials. I don't know shit. It could be 20. Right. Exactly. But I think the rough trajectory of it will be something like the following. We have an amazing launch business with a near monopoly on cost-effective launch and that price could come down with the next generation rocket. We have an amazing business. I'm stalling. I think the whole XA, in retrospect, I think you'll look back and go, I'm not sure I would have paid 250 billion for XAI. And then the question, as you say, is how do you value that wealth to 100 times revenues? And we've talked about this before. I'm not going to say it's right or wrong because I think what I would say is, obviously, very few things trade at a hundred times revenues for any extended period of time. Let's just say that. So it's clearly underwriting a level of growth. It's underwriting a re-exceleration of growth even with the stalling business, which is plausible based on the future things they're doing, but feels like a lot, he said gently. But as a based on revenue multiple, yeah, there appears to have no one at scale that is IPO has ever, has ever IPO'd at a revenue multiple approaching this, right? I mean, the case will obviously be all the future things. What is space? And you read the bull case. And as I say, I'm trying to avoid the, I don't believe it. And I'm trying to express my concern rather than saying, "Oh, I think that's crazy." I just say, you have the existing business. And then you have a series of new initiatives around direct to cellular and all of which. And then obviously data centers in space. You can articulate a massive market. The question, as I've said before, is, so you take these adjacent times, if you give them 100% probability of happening, and 100% probability of them happening right now, in other words, no NPV because it takes five years to make it happen, then you probably get to $2 trillion. If on the other hand, you apply a probability if it's not happening in a time value of money, you get to a lower number. And maybe that's a good way to reduce it. I mean, the Elon believers are saying, these are the future things, and I ascribe 100% probability of success. And it's like, I'm going to give them credit for today, even though it's going to take three or four more years. So it's basically the Elon discount rate. The Elon discount rate is zero, and the Elon probability of failure rate is zero to get to $2 trillion. If you put a more conservative number in both of those, you probably end up in a different place. You still have the upside. You still have the long-term story, but are you getting paid for the risk? And that's the way of framing it. That's not, oh, I think it's silly, because 100 times revenues is just too much. I think that's a reduction in this argument. What you're really saying is, I'm looking at all this future time, and perhaps being more sober about the probability of it happening. I'm revising my prayers from, oh, 100 is crazy, which is just too simplistic, worry, to what are you saying about these other markets when you feel that it should be at 30 times revenue? You're effectively saying maybe it takes four years for the data centers to happen, and the direct to sell you to happen. And maybe the discount rate for that is 15%, and maybe the probability of success is 70, but not 100. And you multiply all that you got to get paid for the risk. Jason, what do you think we should discuss that we have left? Some private stuff. There's some private stuff. Some private can market stuff, simple humble venture shit. The first one, for what it's worth, the topic I put, but I actually don't think it's as interesting as a larger topic. Apple have an 898 employees. This is not a brand new AI company last week, 4.5 million revenue per head. I've been thinking a lot about this. You have the block memo and what Jack Dorsey wants to do. Every Andreessen chart of the week is showing how efficient the next generation is. How 11 labs and everyone's so efficient. Just the meta thing. My captain, obviously, is learning from all the conversation I have is it's a choice. Everyone wants to be small by choice. And this is what I think is going to be disruptive for the next year and half. As VCs, you get really excited when you see an efficient company because all things being equal, hey, they don't need to fundraise as much. I'm going to be deluded less. It's less risky, right? Everyone loves. Everyone wants to invest in the next version of Viva. We raised 3 million and got to 30 billion. That's the, no matter what anybody says, that's the venture dream. We raised 3 million and we're 30 billion. I don't care what you do. Absolutely. Yeah, whether it's bagels or health care software. And so we see hints of this and this employee thing. It's not quite that simple when the gross margins are lower. But I think what I'm seeing everywhere is everyone just wants to be smaller by choice. An AI is an enabler because it lets my best engineers do more. AI is an enabler because I can get rid of those SDRs. But, um, Jason, I actually tweeted last night the core test when evaluating a team is knowing what I know now about the person having worked with them. Would I hire them again? And you said that's not the question. What did you say was the question? When I replaced them with an agent, when I rather work with them or replace them with an agent, it's the same thing I'd rather have an agent than a mediocre person, right? Everyone thinks that. Everyone thinks, not everyone says it out loud. But provided it wasn't a mediocre agent as if I'd tickle it earlier. Yeah, but I know how to build a good agent now. As well, everyone in 18 months. They don't know how to today. Everyone in 18 months will figure out how to build an AI because they'll get easier and easier to train. And we touch on this briefly, but like, you don't need prompt engineers anymore, right? For fun, yesterday on Repplet, I built a fully functional website in about six minutes that has video, audio, and everything that my prompt was, create a whole website around my theme of the recycled mediocre in this post. Recycle mediocre are when you keep hiring the same mediocre folks, they get it again. And it did the whole thing from that prompt. It created the whole site pulled up, which mate can't do, pulled up all the context, created an incredible horror image, then created the video out of it, then created the connection, then pulled up all the context. And so my point there is you don't need to, the most mediocre prompts in the world do magic now. You don't need to be a prompt engineer. Right now getting an agent to work, you need an FDE and it takes weeks or sometimes even months and lots of training. It shouldn't be true in 18 months, right? It should be as magical as prompts are today. So I think we're all going to be good at agents in 18 months. And so we're all going to say, to Harry's point, do I want to work with that person again or would I rather replace them with an agent? We're going to, it's not about the money. We're just going to choose to be leaner. We're going to choose to be leaner for many reasons. I think you are right on the directionality. I just want to make kind of a business point, which is the simplistic revenue per employee is just not a useful metric because you can't compare the efficiency, like someone like a cursor has very low employee account but very massive gross margin count. Right? Gross margin cost a sales, right? I mean watch this. Cursor does 4 million per employee, Salesforce does 700 per, 700,000 per employee. Oh, cursor must be more efficient. Well, it turns out Salesforce is 30% operating margins and cursors losing a lot of money. Why? Because they spend a whole ton on tokens. I mean, you can compare companies in the same business on an efficiency metric, but the one shot, I mean, one shot fits all revenue per employee, doesn't really cut it. That said, two comments. One is applovens, one applovens amazing business because they actually have fairly high gross margins and low employee account. They're just one, it's one of those businesses. You just have to go away and understand how it fits in that interstitial moment in mobile ad networks. And it just, it's the only, at this point, given trade desks downturn, it's the most successful ad network business by far and we could digress onto why that is. But it's a one of a kind business. It's a four and a half million per whatever it is, per employee business where unlike a traffic or open at no cap X, unlike cursor, no token costs, it's just a money printing machine. I'm jealous. But Jason, the second comment is, you are exactly, still are, you're still exactly right, is that the trend everywhere is grind down the headcount. Do you need them? What can be automated? So, you know, the truth, so maybe reflecting in my own mind, maybe the way to say it is, it's not fair to say to a SaaS company, hey, applaven, there's four and a half million, cursor is four and a half million, you know, 500,000. But what is fair to say is, last year, you were at 500,000. This year, you better be at 600,000 per employee because Jason's telling you, and next year, maybe you've got to be at 800. If you're not making progress on that metric, as a software company, you are not with the program. So, and that basis, I think you're right. Obviously, I'm just sapping off the knowledge of smaller people than me. Would you buy applaven today? I don't know now. I mean, you always worry ad network businesses over the medium term get ground down, but it's been able to survive for the longest time. It's gotten rid of its game business. It's purely focused on this. And for some reason, it's found a way to exist in the Apple ecosystem, but all the privacy issues is being the only way to do some of this targeting. So, I need to know, I need to spend a lot more time thinking about it, but it's been an astonishing run for it. It's probably the standalone, the biggest benefit with mobile networks, clearly mobile ads, after maybe a matter and a, yeah, a meeting win. There's two that I just wanted to touch on. One was Tom O'Brawo, shutting down the Growth Act Quity Business. Is this foreshadowing of a load of other Growth Act Quity Businesses shuttering, or is this just Tom O'Brawo independent? Well, first, before you guys answer, can you educate me because I'm ignorant? I don't understand the whole Tom O'Brawo Empire and what it truly means they're shutting down Growth Act Quity versus the other vehicles. I don't understand it. I think it's pretty straightforward. The core business that puts 90% of the money on the table is buying control positions in software companies and, you know, with some leverage and running them, doing, building, add-on other companies, two of them are ultimately selling them either to another PE buyer. That's most of what they do. It's 90% of the money. They start doing non-control minority positions in late-stage high-goored companies. It's just a different business. But I just think it's different enough from the control, like in a controlled position business. You're trying to buy value. Now, we may look back and say many of the prices they paid for those control positions in 21 and 22 weren't value, but you're trying to buy value where you have control and you're going to be even the positive when you're trying to pay down the debt and do all those things. You know, classic venture growth, you're still, you're hopefully going 50% or 100% minimum for our discussions. You're probably still losing money. You're not in a controlled position as the PE investor. And in a period like right now where your core business is threatened, the first rule of threatened is you retreat to the core. PE guys regularly come in to growth venture at the top of markets thinking this looks easy and they regularly retreats from those markets when they discover it's hard. But shouldn't they be going back in in 2026 is this a time to be re-entering? Possibly, but again, but two reasons why not. One is your core business is on the threat. The one thing you don't want to be doing with your investors is saying, we have this thing that 90% of your money is in, but what's f*cked son of r*n, which is other 10% even if it's a good business, it doesn't matter. We gave you $10 billion to invest in control positions in software companies and we gave you half a billion dollars to screw around doing something else. You're having problems in your core business. How about you fix that? It doesn't even rise to the level of, is it a good opportunity or not? It's not the opportunity we have. And you said we're treating to core, Rory. I completely agree with you. Cool. or is business, I'm sorry, I'm never shitting on businesses, but challenge businesses like Cooper, like Anna Plan, like Medallia. Can you help me? Like this feels like a clusterfuck of pain. - Separate comment, yes. I mean, I think, look, one of the things is that they're the same type of companies as we're hit or two foreign the public market. So the same discussion we had in the public market supplies here, in other words, these are mature plain vanilla SaaS companies with single-digit growth rates. They're just not traded every day in the public market, so traded in the private. So the question is, what does that mean? The first thing is, these kind of companies are trading at two to four times revenues. So the same equivalent companies in private are probably should be called value today at that, and then in a more broad of 10 times and have leverage. Right, so that's a pretty tough place to be. The negative spin is if you apply the same math of three or four times revenues, and then the duct, dead, dead, you have little or no enterprise value. And that's terrifying. And that means you could see big losses in some of these PE funds. Now, the positive spin that they would give, which kind of goes back to Jason's thing, I'm not sure if I fully believe it is, if these software marks in the public markets are totally wrong and in two years from now, they're back to eight times, then it'll be a tree that fell on the forest, no one will know, and in two years' time, they'll be able to go public with an unplanned again at eight times, and maybe that happens and maybe not. But that would be one part of the why it's going to be okay. If I was articulating, as Tom and Robert why it's going to be okay, the first comment would be, it's way overdone, and these things are really word eight times revenues because they're profitable, and in the end, things trade at 15 times cash loan at nine times will all be okay. That's one argument. And then the second argument could be some version of the Jason one, which is sometimes the advantage of private ownership is acute clarity. And if you're going to make the transform to AI bet, I bet you these guys are going to articulate that we will make that happen because we will own these things, we will replace management if they're not capable of doing it, we will hire other people that can do it, maybe we'll buy assets. I'm not sure I buy that, but that's probably part of the argument, which is PE's argument has always been transformation. Now, to date, the transformation has been about cutting costs and being more efficient. I don't know if they can pull off transformation where transformation is not adding a 60%. If you add a 60% agent as a privately held company, you haven't passed a Jason test. The question you have to ask these guys is, can they add a 100% agent that you can charge for? If they can and they weaken the growth to 20, then they'll have earned their massive carry. If they can't and these things don't bounce back, then you're right, you could have a train wreck. And that's the game, that's their ball game right now, which is why they're all looking for AI experts. It's why on a going forward basis, they're pitching, buying new companies and kind of AI enabling them. But for their existing portfolio, it's all about, you know, what do you add to Cooper, our and a plan to make it AI first, AI forward at least, not AI first? On the one hand, I think we're going to look back on this and see it's all a shame. Because if you have 10,000 happy customers, 50,000, 100, 150,000 who are reasonably happy, not thrilled, but reasonably happy. And you've had now 12, 18, 15 months to build them an agentic product. You've had access to the LM's, you've been able to carve out 50 of your best engineers to work on it. And you didn't take advantage of your installed base for real, not in the mode way, not prisoners. But I mean, if you didn't take advantage of the fact that 90% of your customers are not at the bleeding edge of AI and sell them an agent, this is such a missed opportunity for the leaders. It's tragic. It's tragic because most folks have not made their decisions in agents. And we're going to look back and we're going to see these teams were so mediocre and so paralyzed. And I got to tell you when I talk with folks so out of ideas, people should not be asking me what they should do with their agents. They should be showing me their agents and asking me for constructive criticism on them, right? People are paralyzed with fear. They don't want to work twice as hard as they used to and they don't know what to build. And it's a tragedy because even today, so until an install base is much easier than finding a new customer. If they're happy, just call them up. They will take the meeting. And this is the great tragedy. And I think a lot of private equity firms are probably pretending their playbook's going to work. I'm going to hire this AI expert from Stepping's Driscoll and Lemkin. It's two million a year. They're coming in with their ties and their checkered shirts and they're going to teach us how to do AI and get us to a 60% solution by the end of the year. It slips a bit. It's a tragedy. And I'll tell you why it's a triple tragedy. This is something that I didn't know, I mean, granted, in my brief tenure at Adobe as a VP, okay? And that was not a high point for Adobe. It was during the transition to the cloud. But I will tell you, and I never, you know, I never underestimate competitors or big companies. I got to be careful, right? But I will tell you what I learned at Adobe that folks don't realize. There were 100 surplus amazing engineers either by design or accident. Either by accident, they were working on projects that weren't quite going to get there, right? Or they were available. They were available more. Now sometimes they were on the back half of their career. Sometimes they weren't quite as, as RAS, as the top engineers at Repel It or Loveable or Cursor. But I mean great, my CTOs, the toughest critic would actually say, let's go steal these five guys. They're actually great. They exist. So it is a crime shame. You can't take a team six at Anna Plan, at CUPA, at whatever. Build the world's best product and ship it to your 10, 20, 50, 100,000. We're watching tragedies in the making. And it's sad. It's sad because they're still deep down running the dated playbook of a big release every four to five years in a quarterly release which changes a few pixels and adds some workflow. The deep down, all the companies that I talk to are still running that playbook. And it's a tragedy because they have the opportunity. But Stebans, Driscoll, Lemkin, AI, consulting is not going to get them there. And that's who PE firms want to do. They bring in these guys. It's not going to work. And everyone is right. They have the base. They have the opportunity. And they're going to end up in these medallia death spirals where they're defaulting on debt and defaulting on billions of dollars. And they can't afford it. And it's just, it's not too late to sell to your install base. To make the math work on the LBO, they don't need to attract a whole bunch of new customers. Once you do the PEDL, you've already accepted that you're not going to grow story anymore. But to Jason's exactly right, if you can upsell 20, 30, 40% more by delivering this 100% agent, it might be the next most amazing company. But you'll cash flow positive. You'll pay off your debt. You'll create an appraisal. You and 5,000,000 customers aren't going to have to do a migration in two years when you file for bankruptcy. So I agree. It's a bounded problem. It should be solvable. But it's not going to be in many cases. I'm going to ask you two questions. You got the binaries on them. Who's going to go out first? Open AI or on ThropPak? On ThropPak. Basics on ThropPak, open AI in that order. Well, look, it appears that SpaceX is already filed in their own track. So we already know the answer there. The fact that on ThropPak just added the Novartis CEO to the board, that's a sign they're getting ready to IPO as soon as they can. I mean, I'm sure he's going to add value in healthcare. But that means nothing but we're trying to IPO very soon, right? That and finding who the hell will chair the audit committee. Our clear signs are going to IPO as soon as possible. So given that they have that in Open AI sending out war memos, I'm just voting that they go out first. Yeah, not even a difficult question. Will Sarah Fry, the CFO of Open AI, be there when they go out? Yes, will I? Look, I do know one thing. CEOs and CFOs, they have to be widely aligned. And be the CFO should probably report to the CEO. And right now, I believe the CFO, in this case, reports to the president, which seems an anomalous arrangement. And so maybe rather than kind of doing so and so and so is in about what I would say is this. If that IPO is going to happen, and if this team is going to make it happen, then they need to be in absolute sync. And they probably need to have a more traditional reporting structure so that people don't have one more thing to think about. And why this company is weird. I mean, I was told my CEOs up and down, I said, dude, on the thing where you're unique and different, you know, where you change into world, do it as different as you like, but all the boring stuff just give the market what it wants. It wants to CEO at the CFO reporting to them. They want to be in sync. It makes everyone's head hurt. If the CEO and CFO are saying different things about something as fundamental as when we're going to go public. Stop the leaking, stay in sync. You know, that's just not a thing. No one wants to hear that. No one wants to hear that because those are going to be the two people on the road show. They should be able to finish each other's sentence. You should be able to put them in separate rooms like a police interrogation room. And each of them should say exactly the same thing and they should stick to their story. The idea that you have separate stories from the two, it's just probably absurd. So rather than saying who's in and who's out, that's what you got to do. The same therapist that they're using for their relationship with Microsoft could actually do. Some internal relationships too. Interesting. But I will say two things. One on the one hand, in isolation, if I'm running something like anything at scale, but especially open at it, I want no daylight between me and my top lieutenants, no daylight. OK. Now you could argue a CFO's job is to create a little bit of distance to be that objective person in the room. And there is some truth to that, right? But there can't be daylight or it's not going to work. So if there is that daylight and it were that simple, you make a change and you make a change before the IPO. So it's least disruptive. Now having said that, if you are running a company at scale and there is already a ton of transition on the senior team, which there has been, ton of turnover, I've seen a lot of times roles like CFO and others where you're like, listen, I just don't want to change one or thing. Yeah, there's some issues here, but Sarah is so experienced that things work. Like the work day finally works. We finally got all these things to work. This is not, I got 99 problems. This is not one that I want to tackle. So I have often seen something like this where you shouldn't have the daylight, but it's not, it's not, it's not poltergeist as streaming through and it's just not enough of a problem. If your management team is super stable, you have time to work on these things, but sometimes islands of stability in your management team, even if they're not perfect, it's just not worth another turnover on the senior team. It takes it's, every time you replace someone, it takes its toll on the team, especially if they're popping especially if they're liked and respected. It's just especially if everyone thinks they're terrible, you move them out and there's a cake and a party on Friday. But I wouldn't be surprised if she's pretty popular in her own way and it takes its toll. - The one ingredients of success are there. The one ingredients of success are there to have open and I be an amazing mega IPO. And I say, Lily, get your therapist to make up with Microsoft, get your therapist to make up. Get aligned with your CFO, focus on the two big things which are getting the ads product out and getting the enterprise cranking state of course. You have the compute and get it done. - If you have an executive that's truly arguing with the CEO in public in the media and or like Dario back in the day at OpenAI going directly to the board with craziness, they gotta go. It doesn't matter, they gotta go. You cannot be out in the media arguing with the CEO and you cannot be Dario. No matter how smart you go into the board and saying, "I will only stay at OpenAI if I directly report to the board." Like it doesn't matter how good you are and this is brutal. Sometimes you have to let some of your best people go because it's too dysfunctional. They gotta go in those situations. - Whenever you get a phone call as a VP from a board member from a VP, you're like, "Okay, there's a problem here." No, maybe the CEO goes, maybe the VP goes, maybe there's a problem and you can solve it. I'm not gonna be as absolute as you gotta go but you and Tanner go up an entire notch when you get that call and you write. And as for briefing, I mean, most companies aren't interesting enough to have a media briefing. It's almost like these companies have become political level drama and actually saw a fun tweet from Martin Cassada who was basically saying, "Enjoy all the drama, enjoy all the pity, "backstabbing and all that." It's 'cause this is such an exciting moment that the media is focused on and because they're focused on it, you get all, this is just what happens when you're in the center of the universe in terms of tech. So roll with it but you are right Jason. You wanna be the tight one ship in this sloppy, sloppy world. - And what if any VP's get this far on the pod? Whatever you do, do not reach out to your VCs to say there's problems with your CEO. You're losing your job. And not only you're losing your job, it doesn't matter if you're right. At some level you're probably right. If you're a passionate VP and you wanna, and you're seeing issues in the company, you reach out to Rory or Harry on the board, odds that you're 100% wrong or 0% like it's not worth it. What are they gonna do? Fire the CEO over you? Zero point, unless there's fraud? Zero point zero percent, you're gone. Maybe in three months or maybe that afternoon, you're gone, just don't do it VP. Just resign, just resign with grace. - What was the Shakespeare quote Rory, the world is a stage? - All the world is a stage and it was play as part, yes. - I had to finish the Shakespeare quote, incredibly cultured. Thank you so much guys. - Okay. - But before we leave you today, are you a founder working nonstop to raise your next round? 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