Speaker 1But you got to have billion dollar positions in everything in Big Boy Venture today, I think. It's billion dollar positions or nothing. There's no point in investing otherwise with large funds. The entry price, 50 million, 100 million seeds. You can't make money.
Speaker 2If the end user demand is there, then everything is going to work out.
Speaker 1CoreWeave is B tier compared to NVIDIA and friends. Oracle is B tier. Compared to NVIDIA, we're all fucking B tier assets. How about that? I actually think code review is the single most important category today in software. Coding is the motherlode of LLM value. We are just taking revenue multiples too far today. Bending Spoons is like the Berkshire version of software.
Speaker 3This is 20VC with me, Harry Stebbings. It's my favorite show of the week. Rory O'Driscoll, Jason Lemkin, the biggest news in tech. So what are we talking about today? Well, are the AI cracks starting to show? CoreWeave is hit pretty hard. Next up, we have Anthropic. The talk of IPO town is it could be priced at 1.5 trillion, not the 2 trillion originally suggested. Then we move down to the world of private markets, where we have Modal, which closes a $15.75 billion valuation fundraise. And your old tenders at $90 billion. And then welcome to the agent land. We have Town that raised $108 million at a $1 billion valuation. This and so much more in the episode today. But before we dive into the show today, Base44 is one of those products I used and I just thought straight away, man, I wish I'd had this when I started 20VC with $50 and no contacts in venture. I wanted to see what it could do. So I built a guest research hub for the show. Upcoming guests, company notes, previous interviews, sponsor contacts, follow-ups, all in one amazing location. I described it in plain English. A few minutes later, I had the product open in front of me. Database, login, backend, and hosting already handled and just all in one. It made it so easy. And that's what I loved. I didn't write a long spec. I didn't stitch five different tools together. I built the thing and I started using it. For any founder listening, that's the point. The faster you turn an idea into something real, the faster you launch. Apps, dashboards, internal systems, AI agents, whatever you need to build, Base44 gets you there. Go to base44.com forward slash 20VC. That's base44.com slash 20VC. While Base44 helps you build, AlphaSense helps you find answers really, really fast. We used AlphaSense on an investment that helped us close an $8 million deal. $8 million? Baby, that's a lot of money. That's why I'm genuinely excited to have them as a partner on 20VC. AlphaSense combines AI with one of the world's deepest libraries of market intelligence, including expert interviews, broker research, earnings calls, company filings, and real-time news. Every answer is grounded in this incredibly trusted evidence and fully traceable to the original source, which is so important. So you can make really high conviction decisions with confidence. But the best part? They're building super analyst and always on AI analyst. So instead of starting your day with another search, you'll start with work you've already done, your coverage monitored, the important developments surfaced, and your investment brief already waiting for you. See for yourself. Head to AlphaSense.com slash 20VC. That's alpha-sense.com slash 20VC. While AlphaSense finds insights, Intercom helps you serve customers. As AI agents become more common in customer experience, teams often end up juggling more multiple siloed tools for every job. Well, Finn was built to change that. It's a single unified agent that works across your entire customer experience, from service to sales to success and beyond. Finn is the agent making perfect customer experiences possible for thousands of customers. It's powered by custom models, trained on years of real customer interactions, so it understands the nuance and complexity of customer service better than any other agent. That means faster resolutions, more consistent support, and just better experiences. For every customer, it's also designed to be fully self-manageable, so you can easily improve and adapt it as your business evolves. No third parties required. Leading companies like Gamma, Asana, DoorDash, and Crypto.com already use and love Finn to deliver better customer experiences. So for a limited time, you can get $500 a month in Finn credits. For your first three months, learn more at Finn.ai forward slash 20VC. You have now arrived at your destination. Boys, I just tweeted something. That has got a rather large response from a founder community. I think venture is broken today in the way that I'm meeting more and more companies that fit this profile. I just met a company today, and I have a company that's $20 million in ARR, growing incredibly fast, 600, 700% profitable, brilliant business with a great team, crickets, VCs do not want it. Is venture broken today?
Speaker 1Well, look, I'm sure Rory has a lot of thoughts. I'll just add one one ahead of it. We were talking about this company, which will be nameless, right? I invested in a vaguely similar company, like doing similar things for similar sized companies. They raised about a $3 million seed round, and they're planning that's it, even with this type of growth, even with it all being agentic, even with it all being all the things we're supposed to be excited about, right? AI and voice and resolution agents. It does actually something that's pretty somewhat unique, but they're literally planning to never raise again because, you know, you get the 15%, 18 a month venture update, but no one wants to. I mean, it's like, well, I'll put in a little more money, but it may even mean some ways in the old days where your early investors may need to carry you if you're not, if you're anything that's not hyper growth and the right boxes to check, right? The three by check to your investors may have to carry you. It's like the old days.
Speaker 3Jason, you're right. You said earlier, the kind of specificity box has really narrowed in terms of what is interesting to investors. Yeah. And I'm seeing that more and more with this concentration of capital going to fewer and fewer names and everything else being wholly unfundable, which more and more, you know, more so than I've seen ever in venture before, which is surprising for a sheep-like market
Speaker 2like venture. But what you're saying is, if you think about, if you think of the role of venture financing innovation, what you're saying, there are lots of companies that look on the surface to have very good numbers that can't raise money. That's what you mean, correct? And I think that's probably true. I mean, let me give you the contrast, though. At the same time, I don't think it's just going to 10 or 20 companies in total, because at the same time, there are a whole bunch of projects that probably in another era would not get funded at all that are getting venture money. Data centers in space, quantum computing, you know, so we're very risk on for stuff that has ultra high upside. And I think the stuff that's struggling to get funded is, as you say, it's software for specific markets where there's some inarticulate fear that AI will make it all go away. Is that kind of a fair next level summary?
Speaker 3Yeah, I think so. I think you're absolutely right. I think it's this like power law on steroids requirement where it's like, unless you can paint me the trillion dollar market cap. I'm not interested.
Speaker 1To answer your question a little more to be more tactical, Harry, I think you're right that you roll with a high powered crowd. I think if you want Sequoia and Benchmark and one of the better partners at Andreessen to fund you, the box is very specific, right? It's cursor better, right? Open routers, OK, but let's see what we can do better next time. I will say for companies like you described, still growing at numbers that approach the iconic outlier metrics, right? Here's where I think actually the world is today. You got to meet 100. You got to meet every VC. You got to meet 100. It is. And you will find someone that takes that bet. It will not be the seven benchmark partners and all the rest, but someone will take that bet at a reasonable but still elevated valuation because it's the best deal they've seen this quarter. Someone will take it. You just got it's the old days where you got to meet 100. And there are growth investors whose names are not Index, Andreessen and Bessemer, and they will take that bet because it's a good bet. To Roy's point, it will lead to a listen labs or better in some cases. It's just you better meet everyone on planet Earth now if you just have top decile numbers. But top decile for a while was like an automatic term sheet, right? For years, it was an automatic term sheet, right? You'd walk into Rory's office. Rory knew every every deal since the dawn of time. You would know exactly if you're in the top decile, if he believed in you and trusted you, you'd walk out with a term sheet from scale, right? The world just doesn't work that way today.
Speaker 2You might still walk out with a term sheet from scale, but so what you're saying is there's a small number of extraordinary potential startups that the very best VCs are focused on. I don't think that's a detriment of anything else. That's your point, Harry, correct?
Speaker 3No, I'm saying the whole venture landscape has realized that a certain few categories are the most interesting and exciting and everything else is uninteresting in a way that has not been before.
Speaker 1Rory, back me up here. If you're raising a $5 billion plus fund, you have to have billion dollar positions in everything. You even need a $5 billion position here or there, right? So what a $2 billion listen labs just doesn't is not good enough because the odds, unless you have 51% ownership, which most founders are not cool with, it's pretty hard to build a billion dollar position. I mean, if I were working at one of those mega funds and we were playing our game, that would be my final question to the team. How are we going to get at least a billion dollar position out of this? And I'll take 1% of Anthropic. I think that still gets me to a billion dollar position, even with dilution, right? Derek Schmidt story, but you got to have billion dollar positions in everything in big boy venture today, I think, and that don't mean boy with a gender attribution, big, big, big folk. You got to have billion. Billions dollar positions are nothing.
Speaker 2Well, I still go back to the statistics we cited last week, which is, you know, 10 to 20 deca cons per decade in the entire us tech industry. And we clearly believe that there's going to be 90 of them this year. And one of those two facts is going to be at variance with the other. And I'm willing to bet on the 50 years of data on, be it lifted up for growth. You know, there's not going to be just predicting on the past because you allow some kind of growth over the years for bigger exits, but I don't think, I don't think you can control confine yourself to saying I'll only do deals where I can get a billion dollars to work, or a billion, or what's the main outcome, a $25 billion outcome. I mean, you want some of those, but the whole industry is not going to be able to say we're all going to do those and have more than five funds, because it's just not enough.
Speaker 3Maybe five is enough. Jason, I think Rory's not going along with our thread here.
Speaker 1Listen, I haven't sat in an Andreessen or Index partner meeting, but I'm pretty sure the math is something like, how can we make at least a billion dollars off this deal? It's not even enough. Like that's, I don't know, you know, everyone has like the four different scenarios when they write up the investment memo, a billion dollar position, not an exit, a billion dollar position is just the B outcome, right? This is 10% probability analysis, 25 billion or higher, 25, you know, this percent, we only make a billion on the deal, right? We're raising these funds every 18 months, these five to $10 billion funds. We have to have so many billion dollar positions, positions, gains to even be playing at this game. It's just math. It's just the maths.
Speaker 2To take the other side of the argument, actually to talk about seed, which is your world, Jason, you probably, I'm assuming you would agree that from a multiple perspective, it's going to be far easier for the best seed investor to generate a 5X net fund than it's going to be for someone who's writing billion dollar checks into things. No, it's harder.
Speaker 1It's much harder because unless you really do the Roger Ehrenberg, find something in Antarctica, right? The entry prices are so high and the ownership typically is lower unless the seed fund is very large that actually, and all these valors are cutting my proratus. Rory, how am I going to make it up on the back end with my SPVs and my triple? I can't make any 5X is so much easier. I'll do it at 1 billion in town and we'll raise it 5 billion next week and I'll take the rest of the year off the entry price, 50 million, a hundred million seeds.
Speaker 3Just to add to that, not only can you not make money, you can't make money even worse because they're a multi-stage product for those big players in terms of they're the ones who lead them and they crush your allocation. So not only does the price go way higher, but your allocation. Goes way lower. And so you have three to 500 K at best. And I've, I've got this and I've got this in a company that is going now to 18 billion. It still doesn't move the fucking needle. Rory.
Speaker 2Because what you only got 300 K
Speaker 3into 300 K in, and it's at a hundred million price. That doesn't move the needle.
Speaker 2No, you, that, that I would agree.
Speaker 3And so not only do you have a way higher price, but you have a way lower check going in.
Speaker 2Look over time in a rational capital world. The return multiple from early stage investing should be higher than growth. Just logically over an extended period of time. Because otherwise, why would you do it?
Speaker 3I agree. But would you not say for the first time ever that we're actually going to see that inverted? I totally agree.
Speaker 2I think the last five years are going to be clearly inverted. It's clearly going to be. I mean, look, someone said it. It was a very good line. He said the aggregate market cap of SpaceX, Anthropic and OpenAI went from around $400 billion three years ago to something like $4 or $5 billion today. That means it's a trillion out of change, billion in such a way for $400 billion to $5 trillion, right? So you've got $4 trillion plus of value created in the late stage business. Nothing else matters. And if, you know, if your theory is there's going to be 10 more of them next year, then you're right. That's all you do. And if your theory is that was amazing, but it's probably not going to be a run rate business, then you make different bets.
Speaker 3We will go back to schedule, which is, are we starting to see a crack in the AI trade? Cool. We've have had a tough week. I admit I'm a. Holder, it has not been great. Rory, can you please provide some context as to what is going on? What do we need to know as background?
Speaker 2Yes, cool. We had a tough week last week. I think down 15, 20% kind of bond prices went up implying, you know, lowest default. But zooming out, when you think of the whole AI trade, these kind of neo-clouds, they're always going to be more risky than anything else in the system because they have, you know, they're underwriting high growth with large CapEx. And lots of debt. So you try to thread the needle. If you grow too slowly, you don't make your customers happy. If you go too quickly and demand slows even slightly, then you're screwed because I'm doing it from memory here. I think, you know, CoreWeave's, I think it's like $7 billion run rate or whatever, 10 or 20 billion of CapEx, you know, 35, 40 billion of debt, right? I mean, that's the way you have to do it because you've got to build these data centers and fill them full of compute. So it's just very tight. It's not like a software company where you can hunker down and cover your nut, right? There's just no way out. There's no way out here. So they're always going to be risky. So anytime someone wakes up and says, oh, AI is growing a little less quickly, all these things are going to go down. And anytime anyone says AI is growing amazing, they're all going to go up. And last week was an AI go down week because probably because a little bit because of the anthropic numbers, which in retrospect is a bit silly. But there's no doubt last week was that things are slowing down week. And when that happens, CoreWeave jumps down. Was this a gross overreaction then? If the end user demand is there, then everything is going to work out, including CoreWeave. Because look. I think their biggest customers are people like Microsoft, OpenAI. Provided the demand is there, they want the data centers. It will all true up.
Speaker 3Is that not like a generational buying opportunity? It's like down 25%. Of course, demand is not cracking. We will see that every single day.
Speaker 2More precisely. But the problem. Yeah. Well, if it was that easy, we'd all be doing it, Harry. But I mean, the real question is, how does the demand compare relative to what these guys are spending? Can they fill everything they have now? Of course, they can fairly quickly. But if you're continually investing for next, like I said, if your CapEx budget is $20 billion, it's not enough that demand go up. It's that demand go up by a lot every year. The beating heart of the whole thing, and we're seeing people share it, is you add up OpenAI and Anthropix numbers together. So that kind of gets rid of the shift in market share. And the growth rate of that overall is what's going on in the AI economy. And that's the growth rate you have to look at. You know, the question is, how
Speaker 1does CoreWeave's CapEx plans look relative to that? The simple learning is the markets are going to be very sensitive, right? As Rory said. Any bump with Anthropix, any bump with OpenAI, any bump anywhere. Of course, CoreWeave at all and Oracle should be hypersensitive because they have massive debt loads and massive risk. But they're also the B-tier players. CoreWeave is B-tier compared to NVIDIA and Friends. Oracle is B-tier, right? So I don't know. You can make money in the B-tier, but why would you want to hold the B-tier? CoreWeave exists because NVIDIA and Friends need it to exist for now. It has no inherent reason to exist. It is not producing a singular set of silicon and GPU and software today that no one else can do. Oracle just can't sell enough enterprise software. People don't want to install enough of this crap on their servers. So they're stuck renting out their excess capacity and buying GPUs and doing Stargate. These are B-tier assets and B-tier assets should trade at a premium. And I think more importantly, they should be more sensitive to shocks in the system. The B-tier assets. The A-tier assets should be, in theory, less sensitive.
Speaker 2The only comment I'd make is I think B-tier. B-tier, A-tier, CoreWeave versus NVIDIA. I understand what you're saying, but it's almost like you're comparing apples and oranges. I mean, NVIDIA's core IP. Yeah, it's the dominant provider of the whole ecosystem. Look, compared to NVIDIA, we're all fucking B-tier assets. How about that?
Speaker 1Yeah, but why buy the B-tier? Harry just asked, listen, why buy the B-tier? If you just look, it's like IPOs. Braze is getting acquired for whatever, 5.8 billion. It's down 40% from its IPO. Like, why buy any IPOs that aren't A-tier? There's just nothing in the public. You can make money as a. Get your nice seed entry at 8 million post. You can make money on the B-tier, right? It's the start of this conversation. It's A-tier bust. There's just. The discount's too high. What the hell am I going to do with my CoreWeaves? Yeah, Rory. It's five or six. I'm not going long on. I want a whole. I'm not passing CoreWeave to my great-grandchildren. I'm not putting it in their 529s that I'm giving to my great-grandchildren. You know, there's no way.
Speaker 2This is the Jason stock picking is dead. This is the public equivalent of the private comment. Only the biggest companies matter. And again, the great thing about this is I can prove you wrong more easily in the public markets because what you know, when you go back over a year, I mean, NVIDIA's up 18% and Nevis is up 50%. Sox, I mean, that's. Micron's up 350%. I mean, the truth is you buy the second-tier assets because you think they're going to pop. So, you know, I hear you, but no.
Speaker 1Well, let's see if you put 20% of your personal portfolio into the Microns and Schmicrons. There's a lot of risk there, right? Agreed. I wouldn't dare.
Speaker 3So, Rory, you know we have Jason's IC we're going to have Rory recommends. No, we're not.
Speaker 2No, we're not going to do it. Genuinely, we're not going to do it because I'm not going to sit here. One thing I've learned about doing this now is pulling stuff out of your ass because you've done a little bit of work is just not right. Is that venture?
Speaker 3That's what I'll struggle with. Yeah, so no. Okay, okay. I'll leave it there. I'll leave it there. It's okay. And we can talk about what maybe caused a slight crack in that, which is Anthropix numbers. Anthropix announced that they had turned profitable on an adjusted basis. Gross slows. IPO price potentially rumored to be going down from $2 trillion to $1.5 trillion. Q3 revenue was $16.8 billion, up 45% on Q2. 85% gross margin, which we'll talk separately about. What should we take from these numbers? I think that was good.
Speaker 2I mean, I think that, look, again, You should tell your voice that, Rory. Sorry, long day. I mean, look, growth is, it's clearly slowing fairly quickly, but from an unsustainably high number. I mean, it had 10X for the last three years. It's highly unlikely to 10X, you know, what was the run rate coming into the year? $10 billion. If it, you know, two more 10Xs and, well, let's say $100 billion, you'd be at a trillion. So growth was going to decline. This is all about how quickly is the growth going to slow, right? And honestly, I thought, I'm sure people are sitting there going, if you add linearly, if you did five in Q1, 11 in Q2, 16 in Q3, you kind of lean in and you're at, 20, 21, and Q4, if you keep adding $5 billion billion bucks a quarter. I'm not saying they will. And you do that. So you start next year, which would be when you go public, the future year. If you're at a $20 billion run rate, adding five a quarter, then you do 105, 110. And now you're saying it's 12, 13 times forward revenues for the most exciting company in the world. It doesn't feel crazy. It doesn't take a lot of squinting to make that work.
Speaker 1I'd add just one thing. For what it's just tactically, I thought, I think, Rory, you'd agree. I mean, Chamath's tweet was just raise whatever you need at $1.5 trillion and move on, right? If you can raise it $2 trillion, but it's going to stress your capital needs, it's just a valuation. So in absolute terms, everything's great, right? This is unprecedented on all levels. Great team, great application. What I suspect, well, a reminder is it's going to be very choppy after the IPO because going to Dev's point when he was on the show, developers are not loyal. And the amount of market share since this show started, the amount of change, in Anthropic versus OpenAI versus OpenWeights versus Jev, right? Which didn't even exist, what, 45 days ago. This is a winner, but the amount of variability in the incremental growth and in the market share, there's only so much predictability in this revenue. There's only so much R in the ARR here. And I think it depends on how effusive the markets are. It may create stress. It wouldn't surprise me if at the end of next year, Anthropic's market share is down 10% from where it is today. And it still could be great. On an absolute basis. But down percent, it wouldn't be a shocker at all. Not just in tokens, but in revenue. Easily could happen. Look at, despite whether OpenAI is at 70 or 50, it's a lot.
Speaker 2When you say, you mean the share is down?
Speaker 1Yeah, market share could be down, right? And so when you're building your models, right? Not just DCF models, but your top line models, you could be materially off from your good case, right? Your best case. And it should be expected. It should be expected.
Speaker 2To state the banal is a little scarier than the average recurring revenue business. Right. And that's what people are wrestling with. How do I think about, I mean, if you have continued market share shifts between the key players, then the next shoe to drop is typically, well, I want to keep my market share, so I'll look at price. And I think, you know, everyone's trying to work out from a game theory perspective, what does that look like as a P&L going forward? Which is why going back to the boring thing I keep saying is that provided the end user demand at the top is there, everybody can win. And we all love businesses where everybody can win, right? If that starts to slow down, and then price competition becomes not, you know, literally the thing you got to do to take it from the other guy to keep your growth rate going, then it could get pretty tougher.
Speaker 3Do you think Sam was super strategic raising his supposed round at 1.4, just in terms of some form of anchoring and message to market?
Speaker 2I think when you need money, you take money. And I don't know if there's a big sophisticated, oh, 1.4 is a messaging versus 1.5. I think it's as simple as, you know, we spent a lot of money in compute, we didn't get our IPO done, we spent all of Masa-san's money, better get another 40 at a price. I mean, you know, what are the constraints? It's got to be up on the last round, otherwise the messaging is shit. And it's got to be down below reality to leave room for the upside. You know, there's only a finite number of digits between, well, there's infinite number of digits, but there's only a finite number of one decimal plus digits between one and two.
Speaker 3There are a couple of elements beneath this story, one of which, or beneath Anthropic is a week, was Ratplit made OpenAI its default. Jason, I am intrigued. Anything from you on that, especially given your Ratplit power user status?
Speaker 1I think it was a stupid media story. I mean, we do use Ratplit about 14 to 15 hours a day. Basically, Ratplit has its own router in it, right? Its own model selector. It can be visible or visible to you depending on what category you're in. And OpenAI models are just cheaper for the same rough quality output in Ratplit, so they just made it the default. And TechCrunch miswrote an article saying they were no longer working with OpenAI, which wasn't true. They just made it the default from Opus and Fable to Astra. That's just the default. And it's what we're all routing, right? We're all open routing one way or the other. It's just, if you're Ratplit or Lovable or Base44 or vZero, you have these extra incentives because your average user just wants to have a high quality output, and they're very incented to get this quality price thing just right for you, right? Unlike, you know, the average idiot pre-configuring OpenRouter themselves, hoping they get it right. These guys are, it's more interesting to watch what Ratplit, Lovable, vZero do because they have an incentive to nail the routing, right? They have a very strong incentive. They can only partially pass it on to the end user, right? So we can actually squint and see the future based on what these guys are doing. And what they're saying is, listen, what Amjad's saying is the quality is sufficiently peer level here, and the price is 30 to 40% better for us today. Why would we use Fable and Opus? And you know what? Next week, he may be at a different event and get on stage and just go into this market. It may change. It may change. They may not have fully thought through how to use Sonnet 5.5 and Haiku 5.5, and they have Kimi and others. But if Kimi actually was so great, you know what? All those guys, Ratplit would be using it entirely, which is maybe the more interesting learning that was under discuss because it will route through them too, and it doesn't. Amjad didn't get up on stage and say, we'll route everyone through Kimi, did he? He said, we're going from Claude to OpenAI because it's just as good and materially cheaper.
Speaker 3Well, what's the takeaway from that? That Kimi is not as good as people think.
Speaker 1In practice, not seeing the benefits for his billion dollar of revenue, for his customers. He's not seeing the benefits. Or he would just auto-route it. The customers are very cost-sensitive at Ratplit and Level. The SMBs are very cost-sensitive because they want to get everything for like 25 bucks a month, so they even have free LLMs. But the enterprise customers are very cost-sensitive because they don't want these massive variable bills for the product teams going off and building prototypes. It's a super cost-sensitive model, right? Hosting, database, LLMs. If you slow down and see what they're doing, and they're each at like a billion in revenue, right? It's like a little lab that we should be paying more attention to. It's a more interesting lab than the idiots spending all the money and misallocating it and hoping it works. That's a great business model, but we learn much more from the massive investment these guys are making in optimizing high-quality output for low cost. Maybe others are doing this each at a billion in revenue, but I don't think that many people are doing it for
Speaker 2end users. I think it's a great point because, yes, it is a very objective calculating test. How do you think about the value you're leaving on the table by paying top-tier prices for, you know, less than top-tier intelligence? And what do you actually need? Because with a billion dollars, you've got enough time to really think about it.
Speaker 3Jason, you are the best user and analyzer of these tools. Under the anthropic what happened this week, Claude Code Review is out. We saw Boris Cherny tweet about it. I'd love your thoughts. Which startups are destroyed by this? What did you think of it?
Speaker 1You know, I don't want to talk out of my rear because it's so much change, right? I mean, you just raised whatever this week, right? $75 billion. I think Rory's and CodeRabbit, or I could be wrong, they're an epic player, right? There's all these great folks. They all have benefits. They all have the benefit of being, I think, in many cases of being able to run on LLMs, which is very valuable, right? Having one LLM check another LLM's work, having an open AI check, Claude or vice versa. So there's a lot of, just like there have been since the dawn of time in software, there's a lot of benefits to having pure plays, right? But it's also always scary because this is the core of anthropic. Claude, is the core of anthropics engine we've talked about and making code review, making all of this process. It's actually arguably much more important than building code today. You know how much time we spend now reviewing the code because the LLMs are so good at getting you 95% of the way there. You talk to any engineer, they're like, Oh, I'm out at dinner. And I'm, I built the feature for Harry. I'm, I'm having, I'm having a, you know, barbecue and my phone is building the feature for Harry. And you did build the feature that Harry asked, but you're gonna have to spend the three days testing it and fixing it. So it's a big deal. How big a deal is it? I have to imagine it's a bigger deal than the nothing burger, which was, uh, you know, Claude design or whatever the heck it's called. Right. Which didn't kill Figma, but how much it's, it's so hard to predict. It's scary. If you're working at a competitor, it's always scary, right? It just has no matter what you say on Twitter, it's always scary. Even if it maims you 30 or 40%, you just got to be better. One of the
Speaker 2things we said last week, and I stand by it, the best markets for standalone AI apps. And I put coding as effectively an app. The ones with the highest growth rates have also been closest to the sun. They've been closest to the foundation model. If I just did a tweet on that today, but you know, it's, it's the Icarus moment. Icarus had no choice. He wanted to get warm. He got to fly close to the sun. I think these big use cases are interesting. You know, it's like code generation, code review, legal. They're all very close to the foundation models. And every six months you have the terror moment of, Oh my God, they're going to do it. Right. And that's the downside of being in that real estate. But the upside and being in that real estate is they are marquee. They are superb use cases for the technology. And as a result of that, you know, code rabbit, all these companies are going faster than we've ever seen. If you want to avoid that risk carry, then you go back to your like dull little three X year on year software companies that you were bullshitting on about earlier, right? That no one wants to invest in, right? You can't have a boat waves, you know, you can't sit there and go, Oh, I want infinitely fast growth rate, utterly undifferentiated from foundation models. Even though the only reason we're getting fucking growth rate is because the foundation models have unlocked new capabilities. It just doesn't make sense. That's not a thing. I mean, I'd like to be, you know, a lot of things in my life, but it ain't going to happen.
Speaker 1I don't know if this is true from a venture outcome or revenue, but I actually think code review is the single most important category today in software by far the most important category. It does not mean it will make the largest fortunes. It does not mean there'll be a 600 billion code review cursor. But what I mean is you cannot vibe code your own SAP and Salesforce, but the rate at which we're building code, is unprecedented and the code now is is pretty darn good, but it's never production intent. This is what everyone misses. It's never production ready or production intent. And so if we step back a minute and define code review more broadly, it is the most important category in building. It is so important. Everyone is building 10, 12, 14 hours a day in cloud code or cursor, whatever. But the amount of time it takes to review and process it and make it production intent is still an order of magnitude more than building. And we have not figured out, we're pretending that this work is complete. It's not. If I could find the best next generation true code review, the best team, I'd make 10 bets because we need it. And they may all get killed by Anthropic. We'll see. But it's much more important than code generation. This is back to Amjad's point. I can rotate between Astra and Fable and whatever. They're all great, right? And maybe Kimmy if it catches up, but how am I going to get into production?
Speaker 2Agreed. Big picture. It's pretty clear that we're making way more software than we've ever made, right? Probably. Or there's a magnitude. I mean, just looking at the Anthropic thing, they did unemployment and recent that paper, they did an unemployment. So given that, the whole software development life cycle is going to change, right? Because how that gets deployed successfully, it's probably going to be very different in an agentic world. So I agree. I think there's a whole bunch of compelling related opportunities, not just around code review, but the end-to-end memory management, testing, sandboxes, Harry, where you and I have an investment. So yeah, I just think, you know, I said it last week. I said, again, coding is the mother load of LLM value, right? It's where it all happens. And therefore, there's going to be a whole bunch of ancillary opportunities around that. And, you know, there mightn't be $25 billion so you guys might pass, but if they're a $10 billion outcome, I will take my humble check and be very glad.
Speaker 1Yeah, maybe I shouldn't call it code review because Rory's point, it might be construed too narrow, but build to prod is the biggest category. Absolutely. Build to prod. How do you go from it's built, it works, it works in dev, it looks great. How the hell do I get that thing into prod? That's where the big money is going to be made now. We. The money's already been made in frameworks for build and they're great. And let's say I'm in Dario and friends duke it out every day, we all benefit, but how do I get this crap into production?
Speaker 3I want to move actually to one of the most interesting rounds I thought was modal closes at a $15.75 billion valuation. Run rate surpasses a billion dollars. It's $750 million series D led by Excel. I just actually interviewed Eric the other day. He was amazing actually in the studio. How did we think about this round and what it means in terms of the wider inference market?
Speaker 1I like it better. I like adding value to the universe rather than just being some outsourced racks of GPUs. I like this one better, even though to Rory's point, the competition appears to be infinite and limitless, right? So you better have some cojones in venture growth to do it. But yeah, I like at least adding value to the universe.
Speaker 2The interesting thing about modal is they appear. They were like six. I mean, they were always perceived strong by developers, but I think they were like 60 or under 100 million mid-late. mid-late last year, right? And that level of acceleration is just amazing, right? I mean, it's just. It's stunning when you see it. Yeah. So, I mean, that's. The first big picture is, oh my God, inference is exploding here, right? And yes, they are very developer-friendly. They have a whole bunch of products. So yes, that's the takeaway. The other thing I was just thinking about it is, you know, how big can this market be? I mean, I think you look at the four or five key inference providers. I mean, you add them all up and maybe they're plus or minus $5 or $6 billion in run rate revenue, which is a lot. But if you think about it, they're all. They're serving all the open weight models. In a world where right now, and it's not like we'd like, the sum of the open AI and anthropic revenues is probably north of $100, $110 billion right now. So by dollars, it's less than 5%. So it just points to the opportunity here. I mean, going back to Jason's Replit guy, think about Amjad at Replit sitting there going, do I want to give money to Cloud Code and give them a 70% gross margin for this token? Or do I want to buy it on modal and give them a 30% gross margin for this? Well, if the tokens are roughly the same, you know what you're going to do. So, yeah, it does point to the upside there.
Speaker 3I completely agree. It does. I'm constantly shocked by like the infinite expanding size of the inference market. Absolutely. No, it's stunning. It's the one thing that I know today that I wish I'd known 12 months ago because I would have done things slightly differently 12 months ago had I been more expansive around my mindset here.
Speaker 1Well, so you had to be smarter than me to understand how much this revenue could be captured outside of open AI and anthropic. A year ago, I wasn't smart enough to really think through this. I didn't think it. I didn't think enough of it would be captured outside of it. So I didn't think it was that interesting.
Speaker 3But are these inference providers going to be worth three, four, five hundred billion dollars?
Speaker 2I would say it's a race between two things. You can put your MBA hat on and say, you know, open weight, going back to Jason's comments on CoreWeave, all the neoclouds are saying, oh, my God, let me get this straight. We do all the building work. We buy all the compute. We borrow all the capital. And then these bozos come in, buy from us, sell it to developers and make a shit ton. Why don't we do that? So, you know, you put your MBA hat and you can imagine a lot more. There's a competition here, right? And then you say to yourself, I doubt, you know, you get those kind of valuation. On the other hand, when you have this kind of growth rate, nothing else matters. It covers a multitude of sins. My bet is their margins have crept up this year, right?
Speaker 3They have. Fireworks are mid-30s now, and they'll be, you know, hitting 50 pretty soon.
Speaker 1Even mid-30s, if it stays there, I mean, the public markets can tolerate that. It's just the multiple you ultimately get on all of it, right? There's plenty of folks like that. So it's OK wherever it ends up, right? I mean, it's important for Excel. Probably nailing it at $16 billion, but I think it works either way.
Speaker 3Do you think the three kind of hyperscalers of inference are Base, TAN, Fireworks, and Modal?
Speaker 2Probably in some simplistic, who's the winner? You're probably right. Those are the three biggest. But maybe the statement is this. I don't think it's like the hyperscalers where no one else mattered.
Speaker 3Jason, this is a big funding round, but it's too easy for you in the investment committee to decide that you're probably going to do Modal at $15.7 billion. Yeah. And so if we call an investment committee, there was another round that was announced, which was. It was Town at $1 billion. I think it was $108 million Series B. Are we going to do this from our growth fund, Jason?
Speaker 1Well, look, Harry, as you know, I regret passing on Modal and letting the Excel guys sneak in there. They're aggressive and they're behind in many ways on the AI investments. So, I mean, they did the deal over the weekend. You know, I asked for one business day and I didn't get it at Modal. Modal was, you know, by all intents, it was cheap. Yeah, I mean, $3 billion to $1 billion in five months. At the end of the year, we end up at $1.4 billion. Next year, $5 billion. Even if the margins never hit the 40s, we make money on this deal. Like, there's just no question to let the markets crash. Town, I'm going to pass on, Harry. And if you and Rory and the rest of the team want to do it, I'm fine with it. You know, $1 billion today is the new $100 million, right? $1 billion is just the entry point for like a classic B round. In the old days, when the three of us met, Series B investors used to say, as long as it's $100 million or less, it didn't matter because the classic Series B wanted a billion dollar plus IPO. They wanted their 10X. So, $100 million. $80 million. They didn't care, right? So, a billion is the new $100 million. Town has no data. It's sort of interesting revenue. It has a smart team. This is just a bet. This is just an old classic Series A, Series B with a bow tie at a billion. And if this is one of the 10 you want to make in the next 12 months, just do it. I just consider it a chip and I don't need to be at the rest of the meeting. But there's just not enough here for me to get excited either way. Bunch of guys from Plaid. I mean, it's a great one, but we wouldn't even do Plaid today. I don't even see a $25 billion exit for Plaid, so I wouldn't even bring it to the IC. It's too early to predict, right? Where it's going to go. It's too early. It's just a classic bet. So, we're not doing it, Jason? Well, I mean, the good news is the team only predicts it needs about $500 million of inference over the next 12 months. So, that's much better than the Instinct team, which needs $5 billion. So, in a sense, I like it for the fund because we were a little more conservative than our peers. So, all we need to do is round up some of our SPVs and put in another $500 million to fund the inference. So, in a sense, there's a positive here, right? Because I'm glad we passed the test. We passed on Instinct, even though we look like fools, because I don't know who's going to fund this bad boy. At least Town, again, they only need $500 million over the next 12 months. So, if we're about protecting our downside, let's do it, guys. I just don't know.
Speaker 3Would you rather do Instinct at $30 billion or Town at $1 billion?
Speaker 1All I want to know is maybe we can get back into modal at $20. We just blew that one over the weekend. The Excel guys, they're just aggressive.
Speaker 2I think that we should put this clip in the vaults and two years from now, when you realize that a billion dollars still really is something and we can just revisit it, we can revisit this discussion. Whenever we're throwing blightly around numbers like a billion dollars, I mean, there's only, yeah. I mean, it doesn't sound like a lot. There's only four or 5,000 billionaires in the country. It's real money, right? And that's for $30 billion. It's pretty damn scarce, but okay.
Speaker 1Well, you know what? You know what I was thinking as I was writing my LP report last night? It goes to the next point on Harry's list, Anduril at $90 billion, right? And what I was thinking about with Town and all these is, listen, Anduril is clearly a generational company, right? Got in early on Next Generation Defense, clearly deep, has the contracts, has everything, right? But is this thing worth 40 times revenue with the margins and everything it has? And it's like, I think the meta question is, are a bunch of the rounds we're doing, and maybe Modal isn't one of them, are they so disconnected from public comps that we either need these massive public comps to recorrect, right, in a way, and have the anthropic do, or some of these deals just make no sense, even though the companies are great. Does Anduril make any sense at 90 billion? Does Town at a billion make any sense? I mean, when Braze was just the best exit in the whole public GTM category at six times revenue. Monday's at two, HubSpot's at two, Klaviyo's at two, two times revenue, growing 20-something percent, right? I'm not saying they're the same, the growth is here, but I do wonder if some, if the multiple, here's my point, if the multiples are disconnected from where they will land, the multiples, and that's just venture, right?
Speaker 2I mean, my comment would be this. I think that's almost certain. The multiples are disconnected and the only thing kind of makes that plausible as the growth rate. Look, if you're a mature defense contractor doing $2 billion in revenue, you're worth $8 billion best case. If you're a $2 billion revenue defense contractor and you've doubled for the last couple of years and you think you've got a line to the administration or the Pentagon for the next five years, then maybe you go 2, 4, 8, 20 and you justify the valuation. So it's not impossible. But to your point, Jason, it's leaning in a lot into the future, a lot. And all these valuations, you could wake up one day inside amazing companies just priced wrong. Because of all the things that are likely to bail you out, just because you mentioned one other in passing, it's highly unlikely that the US market, which is trading at an up, you're not going to get huge multiple expansion from here that saves you, I would guess.
Speaker 3Does it not go back to the point that Jason made earlier about the need to move large amounts of money? And actually, if you need to move a billion or 2 billion, I agree with you totally on the multiple compression. You're going to get from here. But is there a chance that it's a $200 billion company? Yeah, not impossible. So it's a 2.2, 2.5x. And you moved a billion to 3 billion.
Speaker 1I just wonder, and listen, whoever's doing this tender, these are very sophisticated investors, of course, right? Let's not make fun of it. But I do wonder if we are just taking revenue multiples too far today. I'll give you a different example. Like Profound or Harry's and Peak, right? These are interesting companies, right? But when you, my God, when you look at the public comps are trading at $200 billion, they're trading at $200 billion. But when you look at the public comps are trading at $200 billion, they're trading at $200 billion. Okay. And you can say, no, no, these are agentic guys. Okay. These are agentic. These are agentic players up high growth. But when the growth even just be slows to 70 or 60, will it trade at a Cloudflare revenue or will it trade at a better than Braze revenue, right? Which until today was trading at three times revenue. It's not, I'm not, I get the growth side. It's the job we're in. But I do wonder if the AI versions of low multiple companies will just, will settle too early into the multiples of their, of their peers. I, I just don't know. Right. Cause I think they're being punished. I think the whole marketing category is the worst public category without question, right? They're not dying HubSpot and, uh, and friends are not dying. Klaviyo is not dying. They're trading it, you know, below three times revenue. I would have a hard time getting the IC excited about it.
Speaker 3Jason, speaking about multiples and how public markets think about multiples where they're appreciated, where they're not. A fascinating one for me was actually Berkshire doubling down on bending spoons. Obviously bought $330 million of new shares caused a massive bump in the stock price and the assets that these bending spoons is buying a traditionally slightly challenged assets, slowing growth rates, not the darlings. And then the price premium that's being placed on bending spoons, the holding company right now in public markets is enormous. I'm just intrigued boys. How did we think about this? Did not expect it.
Speaker 1I think it makes sense. I think, I think bending spoons is like the Berkshire version of software, right? It's like C's candy or Coke. Like they're trusting that the boys, this is not, they're not flipping them. These are holding companies. Warren Buffett wanted to hold C's forever, right? And bending spoons is saying, listen, we're going to be diligent. We look at a thousand deals a year or whatever you have. What is it, Harry? 5,000 deals a year. We're going to do five or six, and we're going to find enduring software assets that we're going to hold for as long as we can hold them. And if you actually step back from it, if the quality assets is improving Vimeo, kind of a dog that they kept, I mean, Evernote kind of a dog. Now they made them work with price increases, right? They're going to make money off both those deals, right? Eventbrite kind of a dog like Miro and Airtable. I'm going to argue better. And so I think Berkshire is saying, listen, you're going to make these into a bunch of C's candies and Coca-Cola's and folks think you can't make them enduring, but you're going to make these endure for a decade or longer. Maybe, maybe I'm wrong, but I think they ultimately probably see some similar attributes that they can make these long lasting assets.
Speaker 2Yes. It's just like C's candy. Get a C's candy from the 1960s and get a C's candy from the 1960s and get a C's candy from the 1960s. Get a C's candy from the 1960s and get a C's candy from today. And you look at them side by side, they pretty much look like the same thing. I don't think that'll be the case for the Evernote product
Speaker 1of 2080. No, but my point is it may be as close as you get in software, the bending spoons model, because they're going to keep these and keep these assets, right? And invest them. I'm not saying it's the same as a C's candy.
Speaker 2I describe it as it's conceptually the same idea as Berkshire Hathaway, but perhaps in an industry where the idea doesn't apply.
Speaker 1Or maybe you let it's like Jane Street, putting all the money in a can, putting all the money in a can, putting all the money in a can, putting all the money into whatever his name is, Leo Apachal. Berkshire's like, this is close to what we're doing. It's not our core. We're going to let the Italian guys do it. And we'll take a meaningful position. And we think they have something that we think that they're going to be able to maintain this incredible growth level because they will have a thousand assets to look at it a year. And we'll be able to maintain them in a way Vista can't.
Speaker 3Guys, you can also guide. We can do General Atlantic set to IPO. We can do Tesla, the new Roadster. Unbelievable videos of cars that literally elevate themselves with thrusters. We can do Benchmark on stage conceding that competition. It's a bit of a flimsy term in venture these days. Any predilection as to where you want to go?
Speaker 1You know, I wanted to do the 37 Signals one, but.
Speaker 3We can do 37 Signals. David Hanema Hansen, who is an incredible race car driver, has the most extensive library of race cars. 37 Signals made $370 million in profit since 2020. Bootstrapping ain't all that bad, hey? Yeah, I was going to say all, I mean,
Speaker 2you know, going back to the conversation at the start, all these software companies, none of the VCs cares. Well, if you hold on to it yourself and pull out $370 million, I think you'll be fine. That was a great result. I did not, I knew it was good.
Speaker 1I don't think, I think that was wrong for what it's worth. I think it's directionally correct. I think the point there was maybe, which is interesting, is they say they do 10% profit sharing, right? So if you do 37 million of profit sharing, it's 10%. Rory can help me with the math. I think that would suggest overall profits for 370. I don't think that's I don't think it can make that much money. I'm guessing it does 60 to 70, 60-ish million a year, right? And even if it's, even if 40 million can go to the bottom line.
Speaker 240 times six, you are 240.
Speaker 1Yeah, it may be in the zone, right? It may be a little high, but when you look at the fleets of cars and all that, obviously, you know, they've been making this kind of money. I'll tell you a couple of thoughts. One is it's something to reflect on in the era. I don't think we're going to have a lot of one person billion dollar startups, but we could have much smaller teams, right? The one I kind of, the one I thought about for the AI is man, Zapier should have been this. People throw out Zapier, Zapier as the one and done example in venture. Like, and for VCs, it's great, right? You raise one round of whatever out of YC. I think there was a quiet secondary round from Bessemer, but really one venture round and you get up to, they're at 300 million in revenue today. Growth is probably slowed, probably not going to IPO as its current company, but a great company that did something generational. What if they raised nothing and the three of us just split 200 of the 300? Like you could do worse.
Speaker 2Yeah, I think you could do a lot worse.
Speaker 1You guys may make more, but you could do worse, right? So I almost wondered if this one and done, which I used to be a fan of is going to be a trap in the new age. None and done is much better because it's tough to do dividends right in one and done. You can do them right in one and done, but it's tougher. It's tougher to do dividends with the benchmark team, right? They're not really that interested in the dividends, are they?
Speaker 3Can you not just buy out investors? If you're a Zapier, you just go, listen guys, say a 5X multiple will buy you out at a 1.5 billion price. You want the liquidity.
Speaker 1Man, it gets, I mean, it doesn't happen that, maybe we're working a couple of some examples. It does happen, but it gets expensive to do it from free cash flow. Even if you have a lot of it, it's not that simple, right? It's not, it can be done, right? Buffer did it, Expensify did it, but they all did it at pretty mediocre outcomes to the investors. I think Redpoint made like nothing on Expensify, but probably more than if they'd held IPO, right? It's tough. I like none and done better than one and done.
Speaker 2The reason it's tough is because the only way you can pay, if they own a small percentage of the company, then one or two years cashflow can take care of it. But you're trying to buy out an investor that owns 30% of their company, and you want to buy it out for six times cashflow. By definition, you're tying up two whole years cash, so it gets risky if you're doing it with debt. So you're right, they're hard deals to negotiate. But look, if you needed a million or $2 million to get going, you'd do the deal to start. But yeah, the big picture we're saying is there are a number of software companies that mightn't set anyone's little heart to flutter, but are kicking off cash and are extraordinarily valuable to their entrepreneurs. And I think that's great. And it just shows you, not everything has to be through the lens of venture. I want to make 25 billion or die trying. And it's really good that these guys are making money here.
Speaker 1It is. My learning when I compare it to, I just picked Zapier because they were at 300 million and a generational company in their own way, but probably won't IPO. It's like, I used to think this one and done was a nirvana, right? The three of us get together. We want to start a company. We're first time founders. We don't have the money. We raise a couple million from 20 VC seed or whatever. And we just keep growing our company, right? And it's not a lot of pressure. No one, we don't have to have board members and, but we don't, we didn't, the three of us didn't have the resources to do it. I used to think that was a great outcome. Now in the AI era, I think it's a trap because you can't dividend out the profits as easily. You can't become a 37 signals that easily. Now they took money from Bezos or others. I'm sure they figured it out, right? But I almost wonder if no venture rounds is the way to go rather than one in some ways. Rory, how do you feel about GA IPOing?
Speaker 3Are we going to see many more firms IPO?
Speaker 2I think you have to be a critical mass. I was looking at it there. You have to be 800, million plus or minus a billion of fee income, right? That's the real question is look, these companies step back. There's a bunch of, obviously everyone knows publicly held PE backed companies like, you know, KKR, Carlisle, Apollo, TPG. And then the question is, can you do a bunch of these for the kind of growth and venture perspective? And you know, the, the, the binding constraint is the fee income. And it typically the public investors give you a lot of credit for the fee management fee income and very little credit for the carry, which is really odd. In a venture, in a venture perspective, but be that as it's may to get to a market cap that matters because they traded four or five times revenue is best case. So you're probably looking at having to have 800 million in fee income. Now you say to yourself, at 2%, what's that, 50 times 850 times 8? Yeah, you've got a couple hundred million dollars, well more, of actual AUM. So it's doable. You know, Andreessen probably could get there easily from here. But that's kind of what you're looking at here. Now, maybe you'll get to be able to go on a lower amount of AUM because venture A, get paid slightly more, and B, has carry that's more meaningful. So the very largest companies will do it, but not many is the answer. And that's just purely, that was a very financial metrics answer. Let me make a totally separate comment. It's really hard to do that and not change the culture dramatically and become a more risk-averse institution, right? You know, it may well be someone like Andreessen could pull it off, but it's just very, it makes it a very different company. So a second separate and probably more important criteria is, you know, is that what you want to do, you know, as a venture firm? I mean, I think it's great for the founder. You get to take a ton of money off the table, but then you become a corporate venture firm and that's just a different thing.
Speaker 3I don't know if there's a difference. I'm not being a dick, but I don't know if there's a difference between at the scale GA is at now. Like if GC became a public company, I know compliance-wise, sure, there's a bit more, but just like, they're just, they're such behemoths anyway. My laugh is you get in the lift and you're like, oh, where do you work? And the answer is here. And you both go, oh, wow. It's the same for both. So interesting. Is there,
Speaker 1you know, I should know this, Rory. From the public comps, when you do IPO, is there more fee pressure though? I assume when you're not public, you can play a few more games, right? Because it's, the LP is all no, but when you're public, everyone's scrutinizing all of this, right? Where every single dollar goes.
Speaker 2I don't think it's scrutiny. I think the comment is you always have to grow assets. You know, you're always launching products. Well, you always have to grow.
Speaker 1You all, you can't, you can't, you can't just, you can't just pay yourself 80 or 100 as the, as the folks running it and kind of check out, right? You've got to grow.
Speaker 2Yeah. I'll even. Like put it this way. And it's a silly example because they're not big enough, but if old benchmark had gone public at 450 million every three years, you know, Wall Street would have had a shit fit because they're like, come on, dude. And now finally they're giving them what they want. Oh, good. You got the growth fund. Maybe you should do a crossover fund next. That's the way it would roll.
Speaker 3Boys, what about Harvard's endowment? Harvard's endowment returned 27.1 cent to a $68 billion help by venture SpaceX state worth about 2.2 billion. They're an awesome team. Narv CIO is amazing. Love them dearly. Work with them. They're great. Anything here?
Speaker 2Yeah. I mean, if you invest in venture when you're in the big outcomes, it's good. And, you know, they've had a few lean years, but I think you're going to see that. I think one of the other universities who went indirect into SpaceX have made out even more like a bandit. I think it's Washington University. I wouldn't swear on which university, but someone did really well. So, yeah, I think it's going to be a thing. And it's interesting when it's concentrated in only a few assets. The good news, if you're a manager, you probably. Not a manager, but if you are an LP, you probably have some exposure to that. So, yeah, you're going to see a lot of this.
Speaker 3If you are an LP and you do not have exposure to Anthropic, OpenAI or SpaceX, you are feeling a lot of FOMO right now. Of course you are. And I think the venture market is about to get a lot hotter, by the way, because a lot of people are starting to get cash back now from SpaceX. They're seeing Anthropic on the horizon and they're hoping for OpenAI on the horizon in Q1, Q2. And I think we'll start to see that cash recycled. We'll back into the ecosystem that provided it. And I think LPs will come in with more money into venture.
Speaker 1In 2021, the average college and university did 36.6% from venture and PE. 41% was top quartile. And Cambridge had 62%. So, the Harvard's great, but I'm waiting for a banger 27. I want to get back to the nutty IRRs that we saw in the last boom, right? The outcomes here are an order of magnitude larger, right? Maybe even more than an magnitude larger. But I want to see 60% IRRs. Good job, Harvard guys. But this is no 2021 yet, right?
Speaker 3Yet. I feel that 68 billion is pretty impressive, to be fair.
Speaker 2Yes. The scale matters. The 68 billion, you do remember they are the oldest university in America. So, they've been piling the money up for quite some time.
Speaker 1Wesleyan, 95.3% returns in 2022 from the 2021 in venture and PE. 95.3% returns, Wesleyan. Wow. Any others that I've missed, boys? I think the Tesla one, I think it's the last thing we're going to see before the merger with SpaceX. I think it's the swan song, if you want to know my view. And I think Elon kind of said it. He said, this is the last. He said, China's going to take over the cars. This is the last car a human will ever drive, both of which are clearly true, right? China is going to dominate global EV and autonomy. No one can compete with their cost proposition in electric and otherwise. And no one will drive their own cars in a few years. Like, literally no one. And I think this is a, I mean, some of the, I don't know why I did all of it. Some of it's clearly for fun, but I think it's, I think it's the last standalone big hurrah before. it becomes one big company over the next X months, which was always Elon's goal. Having these companies split up makes no sense for him, right? They'll all be merged. And so this is the last Tesla party as an independent company.
Speaker 3Is it not the most masterful marketing from Elon? The brilliance of Elon is the Elon premium and his ability to have extremely high valuations because of his presence. Doing these stunts justifies it like no one else can do and gives it life for another 12 months without any recompense. I think it was brilliant.
Speaker 1Well, that and giving a SpaceX share to every American kid is pretty brilliant too. I thought of it just from a sales perspective. It removes objections. There's so many Elon haters of which I've never, I think he's the greatest founder of our lifetimes. Politics aside, greatest founder of our lifetimes. I really don't see how you can argue with it, but there's a lot of haters out there. Not just on the left, there's a lot of haters on the right, like all across the spectrum. Pretty hard to hate them when you grow up with SpaceX shares in your account and you watch rockets blasting every day to the moon and to Mars. Pretty hard to hate the man when you're a shareholder. It's just that much harder to hate someone when you're a shareholder. It's really that much harder, man. It's that much harder. I don't know. I hate Coolweave today.
Speaker 2I know, but you didn't get it for free. I mean, the thing is Elon's going to park one share in every kid's account. These, you know, these so-called Trump accounts for children is a very interesting way for super rich folks to make meaningful donations. Well, make significant donations to everyone if they want. I mean, I think the idea here is literally every kid gets one share in their account, which is in aggregate, I saw the numbers on like $10 billion. It's real money. So it's a super interesting way. Now, I mean, you could argue 200 bucks, some compounding, what does that mean? But it's better than a poke in the eye and it didn't cost you anything. And because it's associated, as Jason said, with the share, there is an interesting element of marketing to it. So it's good.
Speaker 1Yeah. Hard to hate the man that just gave my kid a SpaceX here. You can hate him, but it's hard to hate him as much. It's really hard to hate him as much, right? I mean, Michael Dell is going to get some kudos too, but this is the big lift. I think this will just gain momentum too, right? This is the next version of the one, one, one thing, which was nice, but it's going to remove a lot of the toxicity around the massive wealth creation. That's only just begun on a scale we've never seen before and giving it directly back to the people rather than through weird charitable Gates, whatever foundation. This is a much, much better way to deflect drama, to give it directly to people that the ultra rich should do this.
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