20VC: SpaceX Launches Largest Ever IPO | OpenAI Files to Go Public | Uber Cuts 23% of HR | Lovable Hits $500M ARR | Founders Revolt Against VCs: The Fundraising Horror Stories Going Viral

But the one thing we know about Elon for the last 30 years is when he hears the word "morrisks," he says, "Yes, please, I'll have two." I think the IPO nominally will be a dud. I don't think it will trade up dramatically. There's always money when people aren't afraid. When things get scary, it's not that money runs out. It's that money gets scared. I'm kind of contentious of startups that need to be fat. I'm like, "What's your excuse?" In any business, there's only two things that happen. People who are at a making stuff are selling stuff. If AOL becomes the next hot thing, I mean, these guys are fucking geniuses. Anyone who hasn't churned from AOL now ain't churned until they die. We are back at the favorite show of the week, The Two OGs of Sass and a posh British podcaster. It's Roryo Driscoel, Jason Lemkin and me, analyzing the biggest news in tech this week. So what do we have on the cards? We have the largest IPO in history. Space Sets begins, their $75 billion IPO roadshow at a whopping $1.77 trillion valuation. Is the future of AI always on as Sam Altman thinks? Open AI ships dreaming V3? Apple rebuilds Siri on Google. Thank God, Siri being what it is is a disgrace, as it turns on on my device. And then finally, we have ramp raising their latest round at $44 billion. This and so much more, this was a great show to do. But before we dive into the show today, are you a founder working nonstop to raise your next round? Are you an investor doing all you can for your portfolio companies to help them stand out? Funding and scaling a vision is challenging. Banking should not be. HSBC Innovation Banking, Caters to Tech and Healthcare Founders all over the world. You need a really great banking partner that matches their pace, offering fast onboarding, product packages designed for your business, and capital solutions built for high-grow startups and the VCs investing in them. 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Learn how you can get more out of your.com from a Framer specialist, or get started building for free today at framer.com/20VC for 30% off, 30% off a Framer pro annual plan. That's framer.com/20VC for 30% off. Framer.com/20VC rules and restrictions may apply. - You have now arrived at your destination. - Okay, we are back. And what a week it is. We have the largest IPO road show in history. We have to start with SpaceX. We're speaking, and this is important to say, Roy is going to have a fit, because we're speaking on Tuesday, and obviously SpaceX is going out on Thursday. And so there is going to be some time discrepancy there. And so what we say, we'll be able to be scrutinized in intense detail by the time you're probably listening. (laughing) - True. - And so one of the things is, there's usually two questions you're asking at this point. What's it going to price at or what it going to trade at? And the funny thing is, unlike 99% of IPO's, the first question's already been answered. Elon has decided that instead of doing price discovery where the bankers build the book, and then they pick the price, and they announce the price right at the end of the night before the IPO pricing typically takes place the night before the trade opens. So then everybody gets to buy, who participates in the IPO at that price, and then it opens next day at whatever price up or down from that. In this case, Elon has decided in advance of getting anyone's input, that the number should be I think 135 bucks a share, so which value has to come to 1.8 trillion. In other words, he's kind of short-circuit of the price discovery process. And instead, we're not doing price discovery. I'm telling you the answer, and the only question is, how much of a D1 buy at that price? So one thing we can't get wrong is that, how he. Is that a wise move? He's leaving a lot of room for markets to move in between that. That's why you normally leave it obviously as close as you can, because you don't want an Iran-Israel, a broad-com moving markets, and then putting you in a precarious position. It feels unwise, but Elon is a master, so I'm not gonna. Yeah, I mean, calling someone unwise is about two days away from becoming a trillion now as a big call, how he. (laughing) It is what it is. It's no surprise given Elon, it's Balsey. You've got to just way more error creeping. You could be one to the high, you could be one to the low, you could leave, you know, maybe all the orders slurred and you've left money on the table, maybe on the other hand, you're struggling to get the orders in and it feels very high and it opens down. It's more risk, but the one thing we know about Elon for the last 30 years is, when he hears the word more risks, he says, "Yes, please, I'll have two." Right, and this kind of must appeal to him, is like, "I'm telling you the answer in advance, and I'm taking the risk." That's how he became a trillionaire. Is it wise, we'll see him today. It's a huge amount of capital, Rory, but if it's really only 2x subscribed, I'm not even sure if it's the right word, if it's only 2x, right? Plus Elon picking the price, that suggests to me this one will pop. I do believe the day traders will drive it up ultimately, but it doesn't feel like there's an excessive demand at 2x. In most IPOs, it would be almost insufficient to close the IP out. And but there's two separate things in that, Jason, you're right. One is the decision to pick a fixed price logically reduces the probability of a pop with no other information, because the whole point of the banker process is to pick the price the night before that allows the pop next day. And you simply aren't doing that because you don't have the information, you're right. But then the second thing you added is some information that's come out, which is to date the book is 2x covered, and your comment is that feels low compared to normal IPOs, correct? I mean, traditionally you want 8 to 10x to get the deal that you want, but you're not raising the vast amounts of capital, Elon's raising either. Yeah, no, it's hard to get 10x over subscribe on 75 billion. To be really direct, what you're saying is you're pricing something on a fixed price that's not taking your account demand, where you're looking for a very large amount of money such that you only have a small amount of coverage. You look at those circumstances and you say, there's a non-trivial chance that it pops to the downside, is it 30%? I don't know. But if you think about it, normally bankers bend over backwards to try and have the down thing pop, right? So they're trying to get a 10, 15% pop and you're 90% plus at the time it pops, but still 10% at the time it breaks IPO, they get it wrong. Even trying to fix the game, they get it wrong. In this case, they're not even trying to fix the game, and you know, time will tell on Thursday night or they too higher too low, but there is obviously by definition some probably higher than 10% chance that on the day, people go, everyone who put in for it, put in for it, and it's not impossible to trade something. It's just, if you use mechanism A that's designed to create a pop and it works 90% at the time, and now you use a mechanism that doesn't have the information to allow you to make a pop because you've done a fixed price, then by definition, the probability of it going wrong goes up, that's all. I think what will happen, if that's accurate and 30% to retail, I think the IPO nominally will be a dud. I don't think it will trade up dramatically, but I do think every time there's great news, more satellites in space for SpaceX more things, it will, it will begin an inexorable rise up. People will, will be excited, especially if, if the upside is tied to potentially significant revenue, right? As the last announcements have been within Thropic and Google, I just don't think it's going to pop that first week, I think, not enough buyers out there in this universe. It will, at least in this galaxy, had this price at 2X. I'm going to step back. I kind of hate that we got, and I, I caused the so I apologize, got into the technicalities of the IPO because zoom out a million miles here. This is amazing. This is an amazing technical company. It's the, on the iconic company of its generation. It's going to go public this week. It's a huge moment. What do you say to Elon? Congratulations. What do you say? You know, everyone involved. Congratulations. I mean, it's just an a wildly impressive company. I mean, look, I am skeptical of the valuation, but step back. I mean, you know, I've watched some of the launches on, you know, my little, little YouTube, and I'm like, they're just so, the whole thing so impressive. You know, at the risk of sounding a little, sorry, Harry, at risk of sounding a little partisan America, this really is an only in America moment. Right? Where you could, yeah, I can see your little face, Harry, but, you know, who else is going to find the capital to take that kind of risk to go for it? And frankly, also to have a big enough capital market to fund it, a big enough and addressable market to sell to it. It's, it's a great, it's an amazing company. It's a real asset to America. End of day one, prediction, an end of day 90 prediction. I actually think it's, so you really are determined not to learn half his great moment. You just wanted to see, you're like those commentators and politics who want to talk policies. All they want to talk is the horse race. All you want to do is talk the horse race here, Harry, because you know that's what sells. You're such a little media slut. But just to, I'll answer. I don't think it's noble in the day one. I think all three scenarios are equally likely. One third, it just goes down just because those weird pricing mechanisms, so they don't have the man. One third, it's flat because whatever. And then one third, to your point, retail enthusiasm, it goes up. There's no information here. Now I will make a call though. I think over the next 12 months, I doubt it will retain this price. There I will make that step. I disagree with you. So I think fundamental value here, reasserts itself. I mean, it was two reasons I say that. One is, again, I always go back to the base rate. The base rate on IPOs in general is, you know, you do see quite a lot, dip. The base rate on IPOs more than 10x forward sales, even more dip. The base rate on IPOs at 70 times forward sales, there hasn't been any, but you've got to believe there's a dip. So I think valuation reasserts itself over the medium term. And the probability of it being higher than the IPO price 12 months in my gut is lower, significantly lower. So I would say I haven't a clue day one. It's a tactical thing based on the mechanisms. And any over the medium term, this amazing company might shock horror, only be worth one trillion instead of 1.7. And it's still a huge win. Two thoughts. I don't know what you guys think. One is, listen, there are many great IPOs like Facebook and Google that IPO with a whimper, right? It would not be surprised me if this IPO was with a whimper at the end of the day. It doesn't matter for SpaceX. We will have multiple layers of generational wealth created. Elon will get his liquidity, right? It'll all be great, whether it's a nothing burger IPO or not. I guess it might hurt OpenAI the most because they've been so aggressive on their valuations and so aggressive on their capital raise. If that means they have to cut back their aspirations for the amount of capital raise, valuation maybe doesn't matter as much, but they are related. That could be the biggest negative effect. It's just they need so much capital to that it just could be, it could take some of the wind of the sales out of OpenAI. The other thing I'll just say briefly, before I am in Hong Kong as we record this, but before I got on a plane, I spoke to one of my LPs who's getting lots of cash here, got cash and Syribus getting cash and all these other deals. It does kind of tie to a conversation we had before, which is the expectations are so high now for performance. I think that will permeate through the ecosystem and I do think it's a minor negative, but I do think it's something for founders and others to understand that it's not a free lunch, right? The bar will continue to go up after these events when LPs are looking for seven to eight extra teenly from GPs, which is hard to do, right? Outside of anomalous periods of time, the expectations that GPs will have from founders continues to go up. As this LPs said to me, I don't know that little $5 to $8 billion IPO's really make this math work anymore. And so we've talked about it, but to hear it from a large LPs, it echoed in my years of how the bar goes up. I don't think you can take a once in a decade event and start extrapolating as a norm. I think in life, you should take this as the once in a decade. Maybe four or five of these once in a decade event. There's going to be ontropic opening. It's interesting. It's interesting that you said that, but of course, the one in a decade, SpaceX was once in a decade. It was last decade. We mind are here. Founders wrote that check in 2008, but it's now 2006. It's 18 years ago. So for that kind of huge return, I mean, yes, there's been a 10X. When was the closer seed check right now? Again, remind me. The most of seed check three years ago. Yes. So maybe they do happen more than once a decade. There they seem to be. I think you're going to have one trillion dollar outcome from the last decade and two, it looks like from this decade, if it all happens according to plan. But my point is, yes, you probably can't assume 10. You don't run your business on the expectation that every track you ride is going to be a trillion dollar outcome. If you're really smart and you get one, you should say, yeah, so I think eight billion dollar outcomes will make everyone perfectly bloody happy. Obviously, unless you have a 10 billion dollar fund in which case it doesn't, fund sized dictates the amount of market cap it takes. It's a Josh couple of things from ages ago, you know, the venture arrogance index, whatever, right? The bigger the fund, the bigger the deal, there has to be the make it worth. There's nothing surprising here. Will this have knock on effects in terms of LPs direct investing more and see an increase in fund investments from LPs? You've got our higher teachers who will make, I think, over 10 billion dollars from their space X. To clarify, I know you think the entire Midwest is the same, however, but I think it's Ontario teachers, right? Fair enough. But now at this point, you're conflation Canada and America, which is an easy mistake to make because we're making it ourselves starting with the president. And it does begin with all when it's kind of in the middle. So I understand your ignorance. But the bottom line is yes, Ontario, Ontario pension nailed it. I mean, they're going to make a magnificent, and there's a bunch of others. It's great. And they've extremely savvy CIO and by the way, Washington, how he just confused you further is not in either Washington state or Washington's city, but we'll keep that for now. But yeah, look, by definition, these are going to be the best investments ever because it's the best deal ever. I mean, there's nothing surprising. I know. I think RLP is going to come back and go, those will get liquidity from this. Hey, we're going to reinvest more and well, that brethren be like, hey, we're going to join this because we want the next generation, even if we didn't have them. Yes, because everyone's just going to go wild. That looks amazing. As I said, again, it's back to the extrapolation from the unique event. Of course they are because it is going to be amazing. I saw, I think in the journal this morning, not University of Washington, University, one house again, I'm not going to confuse like it's 10 or 15% of their endowment. It's awesome. It's awesome. This is the best venture capital deal ever in terms of absolute return. And yeah, anyone involved is going to do really well. Do you hear of it once in a lifetime or once in a decade moment, as Roy, Roy, I'll actually put another once in a decade moment is obviously open AI filing to go public, not so confidentially. Anything to say here that we haven't covered? The only thing I don't understand is maybe it's a question for Rory because I don't get it. Other than the captain obvious element, what's the point of hedging your bet on the timing but filing? I mostly get it, but I don't totally get it, right? Yeah, I only have to get this. Oh, we may want to stay private. We want flexibility, but we're going public. I think it's actually all they're doing is being smart a little bit of managing expectations finally, which is I read that as we're fine to go public in a perfect world. We'd love to go public as quickly as we can. But if it's delayed for whatever reason, we don't want to have a whole bunch of negative stories then that says see it's slipping. So if you preemptively say manage expectations and say we're filing, but we're not committing to a timeline, we're not all going to be sitting here in late October going. They said that we're going public in early November, WTF is going on. The big aha here, we said it's two weeks, it's everyone's suddenly gunning for the door. At some point you need the capital markets, the public capital markets because the scale involved is such that that's where you got to go. And it ever just hit that point and they're going for it. I didn't go back to your comment earlier on this base X. It feels like the market is very risk on them and we had that little dip last week and then everyone got over it in two days. So it's as good a time as any. You keep cranking while you can and see if you can get it done. I mean, I'm sure that they made that caveat of will take our time, but they made that statement and the press department. My guess is in finance and legal, the mandate is get this puppy done as quickly as possible. So we have maximum optionality. And we're pointing out by the way, the SpaceX S1 went through the SEC very quickly and normally that's it. I mean, I remember when that used to be a painful process with multiple iterations and it seemed to happen here extraordinary quickly probably because we don't regulate anything anymore. So go team, this may all process through real quickly in which case brace yourself for a fun fall. Rory's on fire this morning, hey, gosh, I really want to touch on something kind of beneath on the product layer for open AI, which is, you know, Sam Orton's been driving towards kind of persistent and always on AI. They ships dreaming V3 biggest memory architecture upgrades in slunch. I'm just intrigued Jason in particular to hear your thoughts on this is the future of AI continuous persistent 24 hours a day fabric of life always on in your mind. And how do you see this and that? I think we all believe it. I mean, we can make fun of Apple this week, basically, repackaging Gemini and giving up on AI, right? If that's the way we want to view it. But that's a little piece of wanting ultimately AI to be persistent 24/7. We do want this. We already live little hints of it. And it's pretty silly that AI, for the most part, lives in our browser, right? Which is, if you think about it, very dated, so dated that we still use browsers. I mean, who would have-- we got to get Mark Andre. I mean, the fact that we still live in the air of net scape in so many ways. So I do think it's exciting. I do think, as this show continues, whatever we want to call it, the token op-alit, op token apocalypse, I think it will morph into just standard business practice, right? At some point, IT budgets can only be so large. There's only so much. Even if we lay off half of the unemployment keeps growing, we're going to have to manage spend. So there is a conflict. But I do think we're going to look back in two years and think of this non-persistent AI as almost archaic, right? As almost sort of desktop-like. Yeah. I mean, yeah, because you're chewing a lot there, we-- Roy, you pulled several faces there for the audience listening. Roy's facial-- No, no, no. It's just that-- Jason, as he often does, cover a lot of different things. And I'm just processing through it more slowly. Is that on the memory thing? I'm kind of with Jason. Is that it does just totally make sense, right? And the question-- yeah, if you step back, you have the core models. And then you have what people are calling all the harness, which is all the stuff around it to make those models effective. And part of that-- and it should be in the model-- or it could in theory be in the harness-- is just understanding memory. And the impact of that-- and I think, why, Jason went to the token economics part of it is part of the thing should be you should get better answers with memory. And part of the thing should be more cost-effective in terms of token, because you're not passing through all the context all the time. I mean, I think a lot of the trend on these harnesses will be adding stuff to minimize your cost on frontier models. And part of that will be having memory, right? It also leads to a better experience. I think that I actually just went in and tried to see how it has been switched on in mind yet, because it just makes sense. You should know who I am after I-- after I look up 5820 VC podcasts-- I'm probably here to look at my 20 VC podcasts research, your guys. So it just makes it kind of sense. We're exploring most people know who you are now as well. No, I'm sure-- But that's my open AI sometimes does them. So yeah, it's absolutely-- it's one of the necessary to do's. And they're doing it. It's great. Where you pulled a face when Jason said about Apple giving up on AI with Gemini. You're right, though. You're moving on to that. That was an interesting one. Ben Thompson and Stracco, he did a really good piece in the dismorning I was reading, is that to some extent they're paying Google $1 billion to use their model, list of default model. But we mind that Google pays them, I think, $12 or 20-- I used to know the number $20 billion to be the default searching. And so it's a minor offset. I give them credit. I actually think that they're making some-- yes, it would be better if they had their own model. But they're making progress on the use cases that just make a ton of sense for the consumer. And I think the amount of context you have when you want someone's phone is such a-- they should be able to deliver a unique and compelling consumer experience for the kind of things they demoed on the thing about knowing context on which is the model. And so it's like, it's like to your memory common, Jason. It's like knowing which worry Harry is talking about, knowing your calendar, knowing everything, and deliver a much better experience. Now, should they have been able to do it with their own model? Yeah. But the bottom line is they control the handset. And for the consumer, it's a pretty powerful product. So I think they're in a good position to make progress. I don't think they're giving up. I actually think they're progmatically saying, we kind of screwed up on not everyone model. But that's actually now what matters for us, for Apple. What matters for us, Apple, is delivering an amazing experience to our consumers. Because if we do that, they'll keep buying handsets. And if we keep buying handsets, we can probably afford to give someone a billion bucks a year. So I give them credit for getting their shit together. I mean, yeah, it is stunning that Siri is so bad for so long. So I think actually trying to fix it is just awesome. So I give them credit for stepping the right direction. Is my takeaway from it. So the opposite. I think they're doing what it needs to win coming from behind. And they have a great position. And I think it's interesting. The person you have to think about this a lot with obviously is if you open AI versus if you're on topic. Because on topic has made the enterprise bet. And open AI in part has made the consumer bet. And I liked my open AI subscription, because I said to my desk, I'll do research. But for a lot, I mean, it was a great line. I give Ben Thompson credit, he said. Very clear. I thought it, but he hadn't heard anyone say it clearly. He said, consumers don't want to work. There's not a big market for consumers in their non-working life to do a whole bunch of complex research or kind of using AI for productivity. They just want delightful experiences because they want to relax and maintain. So I think actually the consumer space is going to be a tougher space for open. The enterprise space has really been validated. Because in enterprises, all about automation efficiency. And the consumer space is about experiences. Apple's well placed to do that. Open AI has got to compete with that and compete with Google. It's a tough space, especially if Apple's going to ship together. Well, speaking of consumers not wanting to work, soon they won't have to. Uber cuts 23% of HR. [LAUGHS] Just to make Jason happy. We can now have to-- So sorry. I'm so sorry. Obviously, it's people losing jobs. It's terribly sad. But I'm the one who fucking said, no great CEO likes HR. And everyone got angry at me. And then everyone starts cutting HR. And the thing of note here from Uber cutting 23% of HR, remote work rescinded three day in office mandate. Company denies AI played a role despite 95% of engineers using it daily. And the thing of note there. Well, look, HR and recruiting, right? What let's consider them different are the easiest things to cut. You always see any big tech leader stumble a little bit. And they lay off 30% of their recruiting department. Well, you often want them back. I always wonder, I always think this is-- I mean, it makes sense on paper, right? The HR one will be interesting. I mean, we've put out a call for someone to report to our AIVP marketing. And I've gotten my head cut off a lot in social media for that. By people not-- it's OK, not really listening to what I'm saying about that. But I do think HR is one of these areas that many parts of it will be better managed by AI. I think an AI can be a better VP of HR for certain parts of the job than a biased human. I think there are advantages to having an AIVP of HR. Not not-- I don't want to get rid of all of the humans or even lay people off. But an AIVP of HR can evaluate every single thing you've ever done, every little bit of your work, all of your issues, whether an AIVP of HR can figure out, hey, maybe it really is your idiot boss, Jason. Maybe it really is the problem. It's not you. An AIVP of HR can find out a lot of things and process of ass. So I think it's under-discussed versus other areas. But it should be massively disrupted. The big picture question in all these areas is how much efficiency do you get? It felt 23%. I doubt everyone is automating and saving 23% using AI in the non-engineering departments, because adoption there isn't as strong as engineering. Do I think there's some, of course I do. So my bottom line is, my guess is some portion of this is called an AI automation. I doubt it's 20%. Because I'm always calibrating off what percentage, it's the Darryl number. What percentage of quote unquote knowledge work is going to be automated? And it's knowledge work tasks and then knowledge jobs is at five, is at 10, isn't 50, as Darryl has said. 23% felt like a lot, but whatever. Again, what you don't know is how much of it is just too many folks there and they're just partly rationalizing. So it's a data point. I mean, I think the other data point from Uber is far more interesting, which is not the AI for HR, but the AI for autonomous driving that they continue to make progress on autonomous driving. They're actually rolling out some more autonomous driving experience in Europe and Madrid, I think, right? So partnering with, I think it's a wee ride or some of the technology providers. But I mean, if you want to talk automation, driving is one of the biggest targets in terms of the number of humans that do that job. And when you see Uber making experimental progress on robot taxi in Europe, that's something I always need to keep an eye on. It's all, it's worth pointing out this stuff is still moving way slower than I think people anticipated. It hasn't been, you know, Waymo and San Francisco resulting in, you know, Waymo is everywhere within six months. It's been a long steady progress for Waymo. And who Uber's doing what it should do? The Travis Kalnik devotees would say the failure cutting of the autonomous project in 2016 or '17 was a fatal error for Uber. I'm not sure. I think 10 years later they can pick up the thread and which is what they're doing and catch up on that because it's not like the technology tip like a domino. But I think they're smart to now start pushing robot taxis and partnering with technology providers. And this is the, 'cause you know, the question on the Uber stock is always, oh my god, is robot taxi existential, which is a bad scenario. Or the good scenario is lots of people build robot taxi technology and Uber's in a wonderful position to be the coordinating thing because it's the app we use. And if they just add, you know, 10,000 robot taxis to the fleet, then things continue just fine. It's fine. It's good to see the Europeans do something. I mean, I said it's respectfully, Harry, but typically, you know, Europe is the slow technical lag or especially on stuff like that. So go Madrid. Should we discuss the Ravalued 115 billion, 115 billion, you know? Amazing. Yeah, thank you. And I think you're doing that. I'm gonna push it. I think you're doing that defensive. You felt I was disung on you and you're up. And you're basically implicitly, saying, "Oh, look at Revolute. It's amazing, correct? Correct." And it is amazing. And you know why it exists? Because the European banks, unlike the American banks, you know, are so crappy, there's a reason that Revolutes were at $115 billion, because the incumbent European banks were fat, dumb, and happy, and making margin after their customers. And there's a reason why China is worth $5 billion. Still a great outcome, by the way. That's because the US banks are now which are a little more efficient. And so you say why new bank is such a valuable business? At least, because the Brazilian banks were inefficient. I think all these thin techs, I mean, it really is a, I mean, it's proven markets. It's a function of how egregiously priced the incumbents are. You know, Europe, especially when it had non-single currency, you had all this foreign exchange, because you guys aren't into Europe. You had, you know, the FX chargers, you had all this transport of bullshit, and Revolute just blew a hole for that. So I think it's amazing. And I know you big fan of the CEO, and I wish him all the best, and pound those old school European banks into the dirt. I mean, at some point, we're going to have to deal with the fact that the largest bank by market cap doesn't do much lending, and that's actually going to be a real problem in the aggregate, because the whole point is of banking is to recycle savings into lending. And right now, you know, Revolute's not a long term lender, but that's, that's by the buy. They're killing it. I'm fascinated to hear Jason's thoughts on this one. What's dominated my Twitter over the last week is Greg Eisenberg's original tweet about a horror story of venture fundraise. It led to hundreds and hundreds and hundreds of founders sharing horror stories, including the CloudFler CEO who said about, you know, his experience with coaster and vinyl co-sla. Jason, I'm really intrigued to hear your thoughts on this one. I'm sure you have some. How did you feel about this slew of founders, Bluntney saying how terrible a VC experience they had in certain cases? Well, I'd say a couple things. First of all, I have, when I was in the most intense phases of founder, I had those stories too. I really, we forget how deep some of these things cut, these slides. Folks that are friends of ours now that we co-invest with, I thought terrible things of at the time. Literally, one that we both know really well would constantly use me just to do diligence on another investment constantly. And now I'm pretty zen about that crap. The founders unlike just take the meeting and do reverse intel. Like if you're just being used for a competitor, then sit down with him and just find out about your competitor. Get the exact information. But man, that stuff really, it really burned me. So, so, couple things. First of all, the whole thing with the CEO of Cloudflare, just remember founders hold grudges. I still do, I'm just getting over them now. I'm just getting over my founder grudges. So founders hold grudges in a way that VCs, actually I think don't, because VCs, you miss the deal, you gotta find another bus, right? Having said all that, get over it because it's sales. The only thing that to really have a true grudge on is if you got fired. I think the folks that hate benchmark from Uber, I think they deserve to hate benchmark. I think there's others, but if you're treated poorly during the fundraising, get over it's sales. Have you never sold? This is what I say to people. Have you never sold anything? Have you ever never thought a customer deal was gonna close? And it didn't, have you ever not talked to a prospect where they told you, "Rurory, of course, "we're gonna buy by the end of the quarter." And then you just send them 28 emails and 87 texts. And the deal never closes. How is it any different selling stock than anything else? So there's a bunch of the issues to separate the grudge, the firing, which is a niche issue, and learn to sell, man, gross them. - In one sense, you're right, but I think the difference for the found, and I think a ton of what you said super insightful, the difference is the founder in this case isn't selling their product, they're selling themselves. So I think you're right about one thing, the rejections caught deeper. And there's no diet, even on the my side, I remember, VCR 30 years ago said to me, you never forget the LP turn downs. And 30 years later, he's so right. You remember those people who turned it. It's just a personal thing, 'cause you're not just selling your product, you're not selling Ford cars on the deal or not, you're selling yourself, and when you get turned down, it hurts. So I totally wait you, Jason. Is that you do have to grow a pair, you do have to get a thick skin, but I totally get the way founders, even if it's something doesn't go on in the process, I totally get rejection sucks. And as yet, so that's the founder side. And I thought you were super sympathetic there. And then just to put the other side of the table, every venture person is in a business where we turned down 99 out of 100 deals that we look at. So rejection is our default ammo. And that's why I always rest with these ratings businesses, right, you know, the kind of rating VCs. It's doable. And I think there actually is a four-bit ways to do it. But you do have to remember the default is a no, and it's really hard to high customer sat when 99 times out of 100, you're going to tell the customer, no, it's why no one ever loves the bank that they apply to the lending money, because a well-won bank turns down five out of six customers. No one likes that experience, rejection sucks. So it's set up for failure out of the gate. Sometimes, you know, in the course of turning down to 300 people a year, you get some stuff wrong. - What was interesting is Matthew was really upset that Vinod asked him to consider getting rid of Michelle, who we know who is great and the CTO, and giving him the shares, not stealing his shares, which I think was misinterpreted. He made it in a suggestion in the pitch, and listen, I'm a super fan of Michelle, I would not make that suggestion, but let's step back for a minute. We've all had those meetings with founders where the team is very unbalanced. And am I even know, would I say it that way? No, but you might know me well enough, I almost would. You know what a difference is, I almost would say that to a founder. I just wouldn't do it during the pitch. I would just say it's not a fit for me, but I find myself constantly post-investing the only one that would say things like, what are you gonna do with your co-founder? Rory's just not committed enough, he's not getting it done. I think his directness is interesting that it bothered CTO Cloudflare so much, but in a way, it was just his read of the team. I think it was wrong, at least for one of them, but the read of the team. - And by wrong, you mean incorrect relative to the subs of Indoward come? I know Michelle, I don't know Michelle that well, I think she's a graded founder, so I would keep her, but the fact that BC's going and you see that the founders are not equal, in terms of their commitment and skill set, right? - Don't comment on this, because look, it's clear given the super-about come that whatever Cloudflare had, it shouldn't have been touched one little bit, it should have just been let do exactly what it did, it's a great outcome. So, but you're right, I think again, Jason, you have a good point. You go in, you see things, and especially at the earliest stage, if you think the team is wrong, but you want to do the deal, then that's a really tricky conversation. As well as when you're a successful as Vinod, you're like, I could take three meetings and slowly and delicately get to this point or maybe onto say it. Now, it's also worth pointing out, you said very clearly, doesn't believe that happens. So, I think stepping back, I don't know if it's a useful way to rehash. I mean, the more successful you are, the more meetings you'll have, the more meetings you have, the more likely some of them go wrong, especially if you're direct, and Vinod is not direct. So, stuff happens. I mean, as someone pointed out, he was on the minus list the first time for Juniper, and he's on the minus list this year for OpenAI, are those 30 years between those two events. So, he must be doing something right overall. We're just still not to say that on an individual day, you can piss people off. And look, I'm sure I look back across 300, 400 turn downs a year for 30 years. I know there's been somewhere I wish I'd handled it differently. There's been one or two or Lily at the terms sheet level, I wish I'd handled it differently. It happens, it's not ideal. You know, if you're aware of it, you apologize later and say, "Look, I got that wrong," and you just have to move on. Some element of breakage is inevitable. But I have to remember, Rory, I disagree with you. Well, I've been turned down by lots of LPs. The best way to have revangests that you forget, they even existed. And I'm being a dick here, but a lot of them ping me down. I'm like, "Wow!" And one day they turned me down, and I was 21 and I was like, "Whoa!" And you were like, "Holy you!" Yeah, you don't, maybe. Maybe early on, early on you remember, but you're right over time. To Jason's point, he developed the thick skin. And you are, I remember much less the turn downs and fun seven than unfurned. Yeah, the first, first is actually fun. One was fun, so I do remember and fun three are first independent fun, which we foolishly timed literally for the week of the great financial crisis in November '08, getting turned down three times in the space of an hour. So I do remember that pretty vividly, but life goes on. Okay, so I, again, big milestones for lovable and curse of this week. Lovable sort of, let's just pray, let's just pray, let's just pray. Okay, I'm on, love will hit 500 million of error. So 500 million of error with 146 employees. Cursor has hit four billion, and it's targeting six billion at the end of the year. Jason, you're the man at the hour for this month. You're the coder. Any thoughts on this? I think there's two different things you said. One was about the scale, right, of these companies, right, which we've talked, I do think the head count thing is something that we're still learning about, right? And so I think when we started this show, we were in the area where folks were very lean and growing very quickly. But the question was, does this normalize over time? As you approach scale, as you approach 100 million, 200 million, 500 million, a billion, a revenue, well, startups get fat again. Do you just need, do you just need these layers? And I can think of a number of hot AI startups that are getting pretty fat, especially when I go to market teams and others, but we're seeing more and more examples to the contrary. And it is disruptive on many levels if you can stay as efficient as these guys are. It is disruptive to investing. It is disruptive to employees because it will shrink the number of these great roles and it will increase compensation, right? To the click-up point is EBS Point. I'm doing layoffs to give million dollars. dollars to a handful of folks, a lovable compare its team whatever it wants. Well, less than 200 employees, it can pay whatever it wants. But man, if this becomes the steady state for startups, and maybe it was in the old days, maybe in the old days of Microsoft it was true, but it's just so different if they're not going to reflate is what I think about. And cause it's not a lot of people, man. And it's not a lot of, and what people don't understand, I know Repplet a little bit of the lovable, but they're the same. They're pushing out a lot of code. Like one thing you could say is, oh, it's easy because they only have one product, right? That would be a comeback that I think a little bit. Like you don't have to have 22 products like data dog or 7,000 like Salesforce. Well, maybe, but these are pretty complicated products. Okay, you've got database, you've got hosting, you've got management, you've got SEO, you're running. You've got, so these guys are pushed because it's the most brutally competitive space and is they're pushing out more features than any of us did our entire lifetimes in generation ago. So I don't think, these folks are working, they're incredibly hard and they're incredibly productive. And if you wanna be, you wanna have some contempt for VCs tying this together, I'm kinda contentious of startups that need to be fat. I'm like, what's your excuse? What do you need another 200 people for? And when I'm at a board meeting and at VP says, or they're all C levels now, right, a C of something, there's no VP's anymore in startups, they're all C's. And they say, well, I could do that, but I need another 50 or 100 heads. I need another 10 or 20 or 40 million. I just think that person should go. - The only comment on, and first of all, boardy agree, but the only pushback I'll make is this. We're having, oh, they're amazing that, they can do this with only 146 heads. But remember, if you're spending 50 to 70% of your revenue on intelligence from Antropic or OpenAI, you don't have the, I mean, it's a different business. You don't have the option to also have 50 to 70% of your revenue on employees 'cause there's not enough room in the percentages, right? So there's some, I mean, just different businesses with different business models. - They are, but you have the choice of who you invest in or who you work for, right? We have our legs and pocketbooks, right? - No, of course. - You would, and this is actually one of the core challenges many of these other companies are gonna have. If you can be one of the 146 employees, that is, I agree, Jason, 100%. That is getting leveraged from this AI, such that your economics are compelling because you're one of a small group of people making a lot of money in a business that's leveraging technology to have a very high revenue per head count. It means we can pay you a lot. That's a far better place to be as an employee, you're right. Then, you know, one of, yeah, 18, whatever it is, 90,000 employees, it's still for you, exactly right. Because you're not getting leveraged from the models and intelligence, right? And this is the, how much will be labor and how much will be intelligence? This is the kind of what's the split. And what you're seeing to your point, I'm saying, I'm rambling on this, but it's clear in my head, I want to get it across in businesses that are using a lot of intelligence. And I'm using tokens as a proxy for that. Then small numbers of people can achieve a lot and make a lot. And those are better places to be as an employee and often as an investor. Then to be, you know, slogging it out with 10 times the employees, not a ton of new leverage from AI. And you're stuck in 2010's ground game with sucks. That's what you'd want to do if you could as a founder, as an employee, as an investor. You'd want that all if you could, that's the model you'd want. That's where I'd want to go work. I want to go work somewhere around empowered where I'm one of 172 people at 500 million in revenue. I'm an adress. And I do think, and I want to call it a, I do think as you start to develop an enterprise motion and you implicitly said that you're probably talking about the foundation models who are building big go-to-market machines because they have to, we are going to see way more bodies. I don't buy, there's not going to be an infant number. I mean, it's not just, I mean, it's the goal. It's all the, it's your, yeah. When you're selling to enterprise, this idea that 157 people can do it on their own is not going to be true. I think for products, because remember, in the end of the day, someone wants to do it. Hang on, agree. In any business, there's only two things that happen. People are either making stuff or selling stuff. And if they're not doing any of those two things, they're just, you know, there's just overhead. And to your point, if you're selling stuff by a PLG, then you only need people to make stuff. So you can be pretty lean. Once you start selling to law firms, once you start selling to corporates, then you do end up with a big ass Salesforce. And one of my theories is that that doesn't change from cycle to cycle. The entropic Salesforce in five years will look like the Oracle Salesforce, the Microsoft Salesforce, and the IBM Salesforce 50 years ago. Because, but here's the thing. I don't know that that's going to be true, Rory. And first of all, there's, I'll give you, like if I don't mean to go back to, if we compare Repplin' level, I know Repplin' is hiring 250 sales reps this year. So that's going to look very much like a traditional organization. Lovable isn't, okay? And it's different denays and different goals. But the majority of entropics enterprise sales are not allowed to talk to a human. And so my point from that, we can't, I'll be entropic. Founders are choosing, they are choosing to have leaner go to market teams. Leaner sales, they just don't want this crap. They just don't want 250 people running around. And they're willing to trade off some marginal revenue. I mean, entropic is less than 5,000 employees, right? So they're just saying culturally. So I don't think that they're all gonna, I thought they would all look like SAP and Oracle and Salesforce. We're not, we're not seeing that. - It's not going to be 147 people doing 500 million when it's enterprise sales. - Nope, but what you might see is two to five times the level of efficiency. And it just changes the culture, the head counts, where people are. That's the difference, right? Doesn't really matter whether it's zero or four X, right? - Agreed, it will be better. No matter what happens, when you start with a clean slate and leveraging intelligence, you just become way more efficient. I agree, these companies on average will be way more efficient. - When you do a comparison, it's over 3 million an hour or about a half versus, and I'm not, but like a Salesforce, which is 350 K per hat. It's nine times more efficient. - Yeah, but again, I'm just gonna say it here. Yes, you're true, but Salesforce enterprise have a R&D heavy no intelligence costs, right? Remember, they have 300 million of, they just set it up tokens, which lets us do it here. We did the math. That's roughly 10 or 15 grand per engineer. And engineers are about only one fifth of what they have. So the member that 300,000 AR, probably only 1% of that is tokens. Do you understand me how? In other words, Salesforce has $300,000 of revenue per head, which means if they're gonna make money, they can pay anyone more than $2,000, and they're probably spending 1% of revenue per head on tokens. Contrast that with, you know, your example of a Repler, they're getting 2.3 million per head, but they're probably spending $70% on tokens. It's just vastly different businesses, and one of them is more aggressively leveraging the new enabling technology. So to Jason's point, it's probably a sweeter spot to be one of the 147 people in that gig than one of the, I used to know the head cut now. I don't think probably could do it by a map that 20, 30,000 people in a much larger organization weed on a leverage. They're just different businesses. But this is, to me, this is much more interesting than layoffs in these stories. I think everybody, every founder, but forget about older companies. Every founder today wants to run a startup that's at least a million a revenue per employee or more. They're targeting 2 million. They want to be in a million, and they want it because they want great teams. They want lean teams. They want the best people. They want to work this way. They want to go to work with people they look up to and respect. They don't want bloat. My sense is that roughly over the coming years, startups will be half the size that they used to be for revenue, including enterprise. This is very much B to be focused. That's a much bigger change than whether this company does a 10 or 15% laugh. If everyone's half the size they used to be, it's a much bigger change. Can I make a comment here? By definition, if you invent something that's meant to augment humans and make them more efficient and that thing is called AI, and it does a trillion in revenue, by definition, you need to see a trillion of efficiencies and the way a patient can show up is less humans per unit of task. You're exactly right. That's the bet. If it wasn't happening, the entire thesis of the case would be bullshit. So you're right, Jason. It's gotta be happening. If the people who sell AI can't be efficient with AI, then what chance is there for the rest of them? Though I agree with you. Did Elon have the acquisition of the year buying cursor for what will be 10 times end of year revenue? Looks pretty pressy and buy if they're gonna hit target. It was a clever deal on every dimension. I mean, what they're thinking about this, 'cause I'm always skeptical on the valuation, but Elon did such an amazing job of meeting the AI moment. You know, you look back and you go, he obviously found it open AI and then the whole drama happened, blah, blah, blah. But in the last 24 months, he moved from ground zero to building colossus, building colossus two, feeling with his model, but just because he had the guts to show up and spend that kind of money, 'cause to be fair, he does have the cheapest cost of capital on the planet. He found himself with, you know, gigawatts of capacity just when everyone needed it, was able to sell it to them and then did the cursor deal also to kind of backfill the space. And everything stems from the fact that he had the big picture conviction that AI mattered and he was willing to put 30, I mean, it's astonishing, 20 to 30 billion dollars of capital in the ground in advance of revenue, because he felt this was the trend to back. And at least right now, it looks like a great trend. You're at press in this exact, or the right word. He found two of his biggest competitors who wanna buy from him, you know, he's getting two billion a month, 1.25 from a topic and 9.50 from, no, the other way around, 9.50 from a topic, 1.25 from Google or the other way around, to Bill in a month, to Bill. a month, 24 billion a year in terms of compute revenue. And then on top of that, he has curse or coming in at the back end to fill those service. So he is the most efficient core weave with the lowest cost of capital. Now, separate common, it doesn't mean you have a foundation model. It means you're just about a core weave. But oh my god, did he, did he turn a loss into a wind in the space of three months? I mean, in January 1st, you could have said, look at all those data centers and you don't have a foundation model. You're screwed. Here we are June night. And you can say, I have a 24 billion dollar outsource business. And I have this other business that's coming in that's going to be doing six billion dollars that are one of my servers. I went. Great move. Incredible transition to private rounds that would large ramp raises 750 at 44. We've discussed ramp a lot tripled in a year across a billion in air or positive free cash flow. And then also, sooner, the AI Music Creator company raised 400 million and a 5.4 billion teasing first license model bond, let that one. It was double the previous valuation just six months ago. Anything on either of those? I mean, ramp we've said it before. It kind of gets to the revel it. They'll trade like financial companies, financial services companies, but they will be adjusted for growth. And you know, we also, we kind of do them. You know, when Brexit slowed down to our, I can't remember what it was 30 40 percent. They sold for six X and here we have ramp. I've heard there actually as much as 1.25 billion. So they're trading at 30 to 40 times, right? Whatever the number is, right? Of that order. It's a growth bet. And if the growth keeps up, this will be a smart line. And if the growth goes down to anything like quote unquote normalize growth, it won't be. And it's the same bet with Revolut. They raising at 100 and something they're doing what? 4.5 billion in revenue, you know, 1.5 billion in operating income, which is freaking amazing. These companies are great. Banks don't trade at 40 times, 50 times earnings. They trade at 12 times. So on board of them, it's really just, I mean, people always say, you know, will this trade like a tech company or like a financial services company? And I was, it'll trade like a financials curfew, but it will be adjusted for growth. And ramp is getting the growth. And they just seem to do a very good job of riding the zeit guest. And you know, their AI story, their adoption story, they just seem to do a good job on all that. So for now, they got the growth and as long as they got the growth, the math works. And it's a big time. So we'll see. Jason, you're trying to know the music AI company. You having feel passing this office sooner, just playing AI music. I do like sooner. I pay for sooner. It's one of those ones that if I are more cost sensitive, I would cancel my subscription because I think I pay 15 or 20 bucks a month for three songs. There are certain apps that I think they're fragile for certain users because I'll pay to continue to pay them, but, but barely the utilities there, but barely, you know, it's, it is amazing. I don't, I'm not maybe even on the customer for a while and user, the rate of which that valuation doubled. And, you know, the, the $20 billion outcome for it, I'm not smart enough to see it yet. So it feels a little bit to me like risk on, right? Because the revenue justifies it. The growth justifies it. The stickiness justifies it. The brand justifies it. You can't lose an AI, but I don't know. We'll see. We'll see it. The IPO. I just didn't know well. This money's coming from, no, I'm saying with all the IPOs and then you mentioned Ravolude again, Rory. Is that targeting 750 million with the secondary sale that they're doing at the 115 and then all the IPOs, we said, should it work? This money's coming from. I also said a conference is important. And in the same thing in a bull market, it's not that more money's been made. It's that people are brave. There'll always be money when people are brave. And there'll be nothing but treasuries when they're not. How long will they be brave for Rory? If I knew that, how I wouldn't be sitting there talking to you, I'd be trading QQQ. I don't know. I mean, at some point they won't get brave, but right now, right now it feels everyone's risk on. So yeah, I think people are brave. But we've all convinced ourselves the rules of change now, right? You can go one to a hundred in a year and so many other things have changed. We throw these number, these growth numbers out as if it doesn't require a massive change in externalities to justify them. Like, oh, everyone, all the best startups go from one to a hundred in a year. You should, one to 20 in a year is pretty good today. You want to be doing five to eight by the time you get out of why see the rules of change and they have changed. But there's a limit to how much the rules can change, right? There is a, it's called GDP. Yes. And it's also called human nature. I think that the rules have changed what's doable. But what we do is in the face of these increased opportunities, we all get more aggressive. And we keep on getting aggressive until the only thing that stops us being aggressive, the summer gets burnt. It's the whole Minskian analysis of, you know, you're going to do what you're going to do. And it's going to continue. And the only thing that will stop it is overreaching and the scalers to figure out when you're at that point. Like, if it was funny, last Friday, there was a little dip. And you never know why stocks go down when things were going price, but you know, the narrative was, you know, the employment numbers were good. So therefore rates won't go down and therefore stocks went down. And you know, intellectually, yeah, I generally find things don't go to hell in the hand basket because employment is good. Right, that's not going to be how this thing ends. Right. Well, it was because of chip guidance, to be clear, was you know, chip guidance of 16 billion, missed the 17.2. You're talking what, you're talking about board come. Yeah. I got. Yeah. We triggered it. It was some of that. And then it was just some, yeah, yes, they got definitely got got. I mean, I think what that, if you're going to talk about that, all that said is when you're priced for perfection, which is always true, when you price for perfection, even a small miss to expectations, you know, filters true very quickly. And that's all that happened there. You know, this semiconductor index is up 100% year to date. So it turns out if pretty vulnerable to correction, well, one that's amazing, which we may not have common on, but it is amazing is bending spoons. This is kind of a roll up play on traditionally, kind of consumer companies, you know, some of that properties are very well known, but you know, ever note, Vimeo, we transfer a well event bright, very massively executed roll up strategy, a billion, three in revenue. And they're finding to go public at $20 billion in the US from Italy. I hastened to add one of few larger talent success stories to be very blunt. I thought it was amazing. I don't know if you guys have comment on it, but I thought fantastic success story. Well, to me, the part I didn't, I didn't appreciate and I do appreciate it is that they turned around these FN companies. I mean, Evernote was dead and they re-accelerated the growth of Evernote with fifth of the employees. I mean, it sure makes shoes. I think a lot of management teams are pretty suspect if Reagan, Bed and Spoon, some Italy can turn Vimeo around, Evernote around, good God. You know, if AOL becomes the, becomes the, the, the next hot thing, I mean, these guys are fucking geniuses. I did read it in detail because I was super interested, right? Turned around is an interesting expression. And so it wakes up. I mean, what they do, their ammo is they buy these things. They caught all extraneous expenditures, including a lot of the acquisition expenditure. It's very like a little ironic, like the Vista playbook in Enterprise. And then they raise prices massively. So if you look, I actually tried to figure out the organic growth rate of each enterprise because they got the growing nicely overall, but a large part of the reason they're growing is they're adding new companies. So by definition, revenue go up, right? I think they had, I had, I'm trying to find my notes here. I had the growth rate last year. It was, you know, stellar, like, not something like 90%. But most of its acquisition. So you're trying to piece true, Jason. You're trying to find out what did they do in terms of growth by entity. That's the next level down. And even then they get pretty good growth rate to your point out of the gate. But then you go one level below that. How do they do that? It's mainly price rising. It's very hard to get any sense of unit growth by individual. So in other words, what they're doing is taking ever note that as an example, it's doing 200 million revenue. They just caught all the marketing in itch because other than high ROI stuff. So they take out, you know, 80% of the marketing spend, you know, focused the team on features raised the prices 80% over the course of two years, 10% of the existing users go maybe 20%. Their net retention is reasonably decent. It's below 100, but it's reasonably decent that it raised prices and the people who really want to stay. And it's really hard to grow new businesses. But what it means is it kicks off cash. And you know, let's get real here. So you can raise money on it. You know, you've had a whole two decades people. I mean, it is 26 years since the AOL time-warner acquisition. You've had 26 years to churn off this thing. You're going nowhere. So they have very sticky inertia customers and they stick it to them. It's an excellent business. I mean, you know, the big three properties are AOL event bright. And I want to say Vimeo was interesting. On the top 10 or about 80% I think ever note, which I use is in the top 10, but not top three. You still use Avernote? I don't use it, but I have a bunch of stuff in it. So I paid for another year. I need to get a lot and figure out where I'm going. It's a long story. But I'm not using it. I'm using ChatGPT, but I got to get all my shit into one place. It's a lump. What was the last supper like? Let's focus on the business. So yeah, I looked at my go. The odd thing is this is a consumer internet version of early Vista's Tomah Brava. Buy those companies, cut the cars, raise the prices and probably tap them out. So the question is, is it a great business? Absolutely. Should it go public at 20 times revenue or 15 times revenues? Maybe not, because you are relying on the acquisition for a guy. I mean, you're not getting organic growth. You get a profitable business. And you know, you probably have to look at the sustainable profit, but it's hard to value it on a growth multiple. And you might be leaning in a little 20 billion. But I think it's a great story, because everyone was playing in the enterprise space. What these guys realize is there's similar opportunity in the consumer side, which simply, you know, just as the whole idea was in these verticals, no one's gonna change they are a car dealer accounting system because they put prices up 20% in the same way. The default consumer has got to stay at it. So it's totally sensible, an orthogonal plate, whatever else was doing. So they deserve the prize. Should the prize be 10 or 20, that's a different question. But yeah, great story. Does it diminish what we've previously said about the ball to go public today? You know, they're doing them wrong. That fantastic scale is a billion, three in revenue, which is awesome. But we have said that we're seeing this kind of bifurcation, and you need to be huge. No, you, you said that I haven't said it. So I don't. They're growing what 70 or 80% what, what, what are Benningsman's growing? The acquisition, yes. I mean, Rory would know better than me. I'm not even convinced the markets care as much as we think whether it's organic or inorganic. Salesforce itself is, is the balance of it is inorganic at some point. And then it becomes organic. We don't even think about a lot of these products as inorganic again. I mean, does anybody really care? I mean, as long as it works, if they can keep finding these targets for the right price, if they can do what they did with Everno, which is raised the pricing from 75 to $250 a year on average. But if they can find enough of these without just running out of affordable targets, going to the founders letter, it sounds better to me than starting something from scratch. It's got to be 800 unicorns to buy. Just go buy those ones. I really liked his letter. He said we're kind of finding product market fed is just a continuous mission of luck in some ways. And then the execution machine built after that requires no locker tool. Billy, absolutely. It's just traditionally, but the the constellation version was two at one to two X revenues, right? I don't know what Benningspoons blended price they have. And maybe it's not revenue based. I just don't know. Yeah. It does its constellation for consumer with a much higher valuation. Because right now, software is under pressure and this stuff isn't being big enough to go public, guys. Data bricks come out today. No, no, we're going to do another round. 165 billion price up from 134 billion earlier this year. Obviously, not going public with that announcement anytime soon. How do we think about that? I mean, look, the argument we said for why the big model providers are going public are they have a huge capital need. And you know, I actually think I was might have been diamond or someone who said, I mean, the Goldman guy said recently, there's three reasons to go public. You want capital, you want currency, the buy out of things, you want to get liquidity for your shareholders, right? If you don't have one of those three things, then, you know, do you want the hassle? So I think data bricks unlike these guys, but now at least may well be in the position where their capital needs are still manageable. I mean, for context, we mind the last private round at Unchropic was 30 billion and the last private round at OpenAI was 122 billion. So this is less than, oh my god, it's 0.1% of the last OpenAI private round. So what that says is, if there's money to fund OpenAI, there was money to fund data bricks private. So they can do it for longer because it's just not the same need. It's a software company. It's not a, they don't quote-unquote have to know. I personally think you should at four or five billion in revenue at the margin. I think in the end, you'll find logically in the end, the cost of capital should be cheaper in the public markets, but right now it's not. Data bricks can get capital at a higher revenue multiple because they're higher growth rate than snowflake can and on hassle-free terms. I also think the other argument he did make, which is does resonate a little with me is the idea that this is just going to be a noisy year. I mean, you've got, you know, SpaceX by Friday, you've got the two big model companies by the end of the year. There's just a lot going on. It may well be next year as a clean deal, but yeah. I mean, the bigger hard was they don't need, it's just the amount of money that you need to build a foundation model is two or three orders of magnitude more than anything else. So the imperative for those guys to do public is just different. All right, boys. Is there anything that I've missed that you think we should discuss? Other things that made it to the top, SaaS now trades at a discount to the S&P 500 for the first time in history. Wow, that's sad. Meta weighing tens of billions more for CapExpand, following in the suit of Google. Zuck, out of boy. I'll tell you about the one what small one I'll pick just for fun if we're breaking. I think it's actually a more important story, but maybe it takes time to track it is, you know, Microsoft's new models that it launches, right? Which I think it said would they were clear there? I don't know what terms they use. I'm traveling. It's in beta. I found it very interesting that the models can't even search the web. So there are certainly use cases where that's not important, but it's interesting to me that you would launch a model that can't extend its knowledge by searching the web. It's a flashback to when the show started when basically, you know, every each talk to chat GBT and everything was nine months ago, right? I don't remember. My memory is only through September 2024. The only thing that says to me is hard to predict whether anyone can really, we think everyone can catch up. We think Microsoft can catch up. We think deep sea can open source can catch up. But if Microsoft launches these models and it doesn't even search the web, can we really keep up with the pace and then the topic? I mean, the pace of change is so rapid. It's so impressive. Like so much progress. I just can't predict. I can't predict where we'll play out over the rest of the year next year. But you are right, Jason. It did matter because it was the final recognition that frankly, for ages is you can't for Microsoft to have such a core foundational technology and the the way they don't control it just wasn't the long term sustainable state. And you know, day and open AI are somewhere between an open relationship, but actually divorced. I can't quite figure it out whether allowed out of partners, but they're still together. I can't quite, but whatever, Microsoft needs its own control and they needed to do this. And you write, Jason, is it, you know, the reviews I have news yet, the reviews are like good, but not even as good as the best open source. But my takeaway on this, you know, well done because you need to do something. And you it's hard to imagine not playing here. And they tell a story about, you know, local use and you know, range of models and which I read all of some version of, we don't have to be the very best because we know we're not the very best in general in life. You need to be the very best, but at least you need to be playing. It's a step. It's a step to the goal. And it's why Google is so much further ahead. They would be staying in the game. But yeah, this was the end of the period where you could fool yourself even slightly that your plan for AI is to partner with open AI. That's just not the answer anymore. And it hasn't been for a couple of years for Microsoft. So yeah, onward from here, my guess is they'll, you know, they will become the next sucking sound for talent and money. And you write, they need to add the stuff that the other guys added two years ago. It's an interesting question. Can they do the Microsoft thing and grind their way to good enough over three to four years like Azure was never as good as AWS, but it was good enough for most of their corporates. Can they grind to something that's good enough in this space over the next two or three years whereby they're not going to be as good as a tropical open AI, but they're good enough for the bulk of low end intelligence work. I don't know. I mean, they never cut up in mobile. They never cut up and search. They did catch up in cloud compute with Azure and, you know, who knows here, but you write it. It is the one that matters. One of the big questions is between Microsoft and then the open source vendors are the open source vendors, especially, is there going to be a non Chinese US open source vendor that's kind of even within a spitting distance of the frontier models, because that matters a lot from a pricing perspective. There's a lot of open source models today that are within spitting distance, no? You know, there are, but many Chinese. And yeah, the question then is, you know, is that sustainable? And a lot of our companies are using them and they're, is that sustained? Even though it's open source, is that sustainable over the medium term? If your only plan is you can download Kimmy or deep seek and you can fine tune it. That's great. But hey, some of those Chinese companies are themselves going close source. I think what happens in terms of an open source competitor in the US matters. And obviously you've got, I think it's recursive in poolside, a couple of reflection in poolside doing that. But that's to Jason's point. Sometimes you get caught up in the stories and you're the worst for that, Harry, because you just love the gossip. But Jason's right. What really matters is, is this going to be an allegorporate? I was going to be four or five players in foundation model and two years from now, which is why what Microsoft did matters. I just did a share with the founder of NABIA. And he said the single biggest threat to NABIA is consolidation of models. If we have concentration of model winning, we are in a tough space and we want an ecosystem, Northern monopoly. Those are really from yes, that everyone other than a threat pick and open AI, shoving money furiously at anyone else who can help a world that's competitive advantage. I just did a show with Aaron that applies to him. He said that export controls have actually hurt the US in many ways, because it's meant that they've innovated on architecture that they wouldn't have needed to and really built muscle that they wouldn't have had to and combined with the open source model capability that they have. It's now a competitive threat that's even stronger. It was an interesting discussion. Rory, I have to say, will wrap my mother text me after our last episode and said that your quote on making money is like sex was the favorite moment of any trio show that she's heard. And I got about 50 tags from people being like, that is the quote of the century. I gotta tell you, I think it's not in direct format, but there's a version of that either in Fred Schwed's, where are the customers yachts from the 1960s or in reminiscent of a stock operator from the 1920s. One of those two investing books hinted at that, but I always remembered it. So I am not the original author, but what the books are kind of three to five times older than you are Harry. So it's kind of like the Bible as far as you're concerned. But before we leave you today, are you a founder working nonstop to raise your next round? A HSBC Innovation Banking Caters to Tech and Healthcare Founders all over the world who need a really great banking partner that matches their pace, offering fast onboarding, product packages designed for your business, and capital solutions built for high-grows startups, and the VCs investing in them. 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