Speaker 1We're bringing charts, we're bringing data, and we're bringing strong, inflammatory comments. 41% of all venture capital was deployed into 10 companies.
Speaker 2COVID-era investors are wiped out and exhausted. And they want to get their capital back, to recycle it back into winners. Everybody is ready to do the deal.
Speaker 3All of your energy needs to go to what is our narrative, what is our story going to look like? If your CEO is not saying that, then you need to ask those hard questions.
Speaker 2It's always very strange when people are like, three exits as founders. And you're like, why are you on a Zoom with me? I bet you're
Speaker 1on your island.
Speaker 2Hey, everybody. Welcome back to Top Line. It's 2026. It's Sam Jacobs, CEO of Pavilion. I'm one of your co-hosts. I'm joined by my good friends and co-hosts, Asad Zaman, the CEO of Sales Talent Agency, and AJ Bruno, the CEO of Quotapath. Today on the show, we're going to be talking about our predictions for 2026. We're bringing charts, we're bringing data, and we're bringing strong, inflammatory comments and takes. We're going to be talking about our predictions for 2026. that hopefully you will negatively react to and possibly send us hate mail around. It's going to be a great conversation. We've got the SpaceX IPO. We've got all of the continued growth of AI. Is it hyper-reality? We're going to find out in 2026. When will this bull market come to an end? We will have your answers here on Top Line.
Speaker 3Gentlemen, start your engines. Start your engines. We are back, Sam. We are energized. We all had an amazing holiday. We didn't do a single thing at work.
Speaker 2Refreshed. I am the epitome of refreshed energy. I completely unplugged. I was on the beach. I meditated 12 hours a day. You were on the beach, Sam? No, I wasn't. I was home. And I had this idea I was going to read like 15 books. And I read one book. And I was going to be totally disconnected and not send aggressive slacks to my team at three in the morning. That didn't happen either. I just continued to sort of half work while we watched Task and some other shows on streaming. It better have been a damn good book. What was the one book you read? I finished Slough House, which I think is book eight in the series. Slough House series by Mick Herron, which is what Slow Horses, the TV show on Apple TV is based on. So crime thrillers.
Speaker 1Book number eight. Okay, we're going to talk about predictions from there to predictions. But before predictions, what do we have? We have quiz throw. Four multiple choice questions to frame our conversation. Test your knowledge. Our favorite segment. Let's get started. So the first question, this is easy. Most of this stuff we've discussed in previous episodes. So let's see if you retain information. Well, AJ, how many new tech companies were formed in the US in 2025? 4,000? 40-ish thousand? 100-ish thousand? Or 400,000? I love that Asit
Speaker 3is now saying ish. He's no longer 102,325. Yes. I'm going to go. I'm going to be 100% in 2026. And I'm going to go with C, 100,000-ish.
Speaker 1Oh, we discussed this. It went from 585 to somewhere around 7. Exactly. So about 40,000. Yeah, 40,000. Okay. I was a little optimistic.
Speaker 3I was putting all my trust in those amazing founders in 2025. It's still an insane amount
Speaker 1of companies to have started in a year. Like, you know, if you think about 40,000 companies, that's madness. Oh, yeah. How much venture capital was deployed, Sam, in the US in 2025? 5 billion? 50 billion? 500 billion? 750 billion? Venture capital. No, okay. You didn't say ish.
Speaker 2Everything's an ish. I'm going to ask you to repeat the choices after I ask this qualifying question. Is SoftBank considered venture capital?
Speaker 1If you look at their investment into OpenAI, yes.
Speaker 2Oh, well, there we go. Okay, so now you tell me. 5 billion? 50 billion? What are the last two? It's not going to be one of those. 500 billion? 750 billion? I'm going to say 750 billion.
Speaker 1It is 529 billion to be exact. But you're right. Like, when you start taking those, your way of getting there was correct. If you looked at some of these big rounds, they're massive. Here's an interesting data point. Oh, my Lord. What do you think that means? That's a great question. The next question, AJ, is how many US tech companies went public this in 2025? You know, there was for a while people were saying the IPO market is shut. There's no liquidity. There was some last year. We know some of the big ones went public, like Figma and whatnot. But how many companies went public?
Speaker 2Whatnot is my favorite. Whatnot is my hottest stock tip for 2026.
Speaker 3One of those companies was definitely not Stripe. They did not go public last year. I will give you three options: 4, 44, 400. I guarantee it was more than four. And we don't hear about most of them. And I can think of a name at least four, including the health company. 44. We're going to 44.
Speaker 1I love how you missed all of them. All right. So I'm going to give you a hint.
Speaker 3Sam, you and I are 0% right. Well, now we're 33% for this. So we can't.
Speaker 2I would have gotten the first one. And to Asit's point, my thinking was correct on this.
Speaker 3Well, I would have gotten the second one, Sam. Okay, last question.
Speaker 1Sam, how many people in tech in the US took on new jobs last year? To give you a little bit of extra information, about a hundred and something thousand people were laid off. Last year. But this is about people finding new jobs. And it's not just salespeople. Not just salespeople, broadly in tech in the US. 11,000, 115,000, 1.1 million. 115,000. You were wrong. It is C. 1.1 million people. Changed jobs. Changed jobs. And this is where data is interesting, right? Because when you hear 100,000 people lost their jobs, it sounds like so much. And then you're like, yeah, but that's 10% of the people that just found jobs. I'm like, whoa.
Speaker 2I think that is a strong argument for a positive view on AI. That is labor mobility, right? That is like, that's not all of the customer success people got fired and they don't know what to do. Or all the truck drivers got fired. That's okay. The system was redesigning itself on the fly as capitalism tends to. And people found a home and it seems like the invisible market is, the invisible hand is working as intended.
Speaker 1That's cool. And you're seeing this in a few different places. There's some companies that are now saying, you know, I, one of the things I was quite concerned about was junior employment, entry-level employment. And some companies are saying, man, the thing is these young kids that are coming out of university. They're just so much better at using these AI tools that we actually need them in our organization to be good at using those tools. And so initially it was junior hiring went down, senior hiring went up, and now that's reversing itself. So it's just interesting. It's hard to like make these long-term calls. This is just playing out in a very interesting way. That said, we're done with QuizProQuo. Great one. QuizProQuo.
Speaker 2Can we give a shout out to Leonard who helps us put together QuizProQuo? Leonard. Leonard works
Speaker 1hard on this stuff. Yes. What's his last name?
Speaker 2People should know who he is.
Speaker 1Ask it. Leonard's last name. There's a Vaughn in there. And then it's Hintzer Stern. I think it's Hintzer Stern. Something like that. But I love Leonard. Leonard lives in Hamburg. Leonard is my chief of staff. Shout out to Leonard
Speaker 3and not a shout out to Samurai who got 25% correct on that. I would have gotten the last one and Sam would have gotten the first one. So really we were 75%. Which is like a C. So passing grade.
Speaker 2That's pretty good. When Leonard shows up on a Zoom, I get happier. He tends to agree with me a lot. He nods sagely when I make a great point. It's great. He's good energy.
Speaker 1I like him. Studied the classics. Really sharp. Solid person. Okay. Now, time for predictions. Sam, why don't you launch us off?
Speaker 2I have a controversial prediction. But let me just tell you. Here's my prediction. General prediction. 2026 is the year of the deal. That is my prediction. Chart number one. Here we go. So this is total global M&A value in 2025. It went in 2024 from $3 trillion to $4.55 trillion in M&A activity value in 2025. What does that mean? That means that the M&A markets are back and my prediction for this year is that M&A activity but overall deal volume will continue to surge. Now, in 2025, 68 transactions were completed that were more than $10 billion in M&A activity. It was the year of the mega deal. And I think deals will flow down through the middle market in 2026. And I say that it's called the year of the deal, not because of just M&A activity, but because deal structures will become more elaborate and more flexible. more interesting and more creative as the market clears and flushes the system from 2021 vintage funds, which is something we've all been talking about offline. I think the conversation we've been having offline is endemic to where the market is right now, not specific to, for example, my company, just using an arbitrary example. So what I think is that investors are, of the 21 vintage funds, and maybe a little bit of 22, but basically the COVID era investors are wiped out and exhausted. And they want to get their capital back to recycle it back into winners. And I also think that founders and CEOs are also equally tired and everybody is ready to do the deal that they weren't willing to do two years ago. And so my prediction is that we're going to see even more M&A activity. We're going to beat four and a half trillion dollars in M&A volume. We're going to see more M&A volume. But also, we are going to see more smaller transactions. And those transactions, that doesn't mean everybody's going to get rich, because I think high growth, meaning like 30 to 40% growth SaaS businesses that have 10, 20% EBITDA margins, so rule of 50 to 60, those are only going to trade at six times ARR. They're not going to trade at 10 times ARR, but they will trade. And I also think that there are going to be companies and founders, there's going to be three, one path is AI-native companies that are going to be pursuing four to 500% growth. Owner.com, Elise, obviously, owner's not going to pursue 300% growth on 100 million. But there's going to be these companies that are growing like gangbusters, lovable, telling us that they got that 4 billion in ARR quicker than any company in the world, whatever. There's going to be non-AI-native, but AI-first SaaS businesses that are going to try and inject AI into their business in order to stimulate growth. It's going to have to show up in the growth numbers, or in the efficiency numbers. And then there's going to be a third category of businesses that say, you know what, we're not AI-native, we're not an AI company, that's okay, but we're going to retrench and focus on long-term compounding value, which is what Pavilion basically is going to do. My point is that there's going to be a lot of founders that are going to create creative deal structures to reorient their business based on which lane they take. So if you are structured, if your cap table is structured in such a way that you're sort of optimized for hyper growth, but that's not really the path that you're going to pursue, and you have these exhausted investors, then what you might do is you might, for example, take your Series B investor, offer them pennies on the dollar to go back to the Series A valuation, get them off the cap table, and reorient so that you can pursue the growth plan that you have, where everybody has upside, and the old investors are gone, and you can now make money in a way that feels sustainable and healthy. I think a lot of that's going to happen. And again, I had a conversation, again, this is going to be in my top line newsletter. This podcast will come out on Sunday. It will come out after that. But I had a conversation last year, $10 million business growing to 14 last year, claimed that they had rule of 67, because they claimed that they had 27% EBITDA margin. So 67. Turned out when I spoke to my friend, that was adjusted EBITDA. True EBITDA was 6%. And the bankers adjusted it up by fiddling with stuff to get it to 67. The business traded, it traded like five and a half to six times ARR. You know what? That's great. That founder, that CEO made money. The investors made some money. They didn't make as much as they thought they were going to make, but the deal cleared. And I think that one of the signs of 2026 is that there's going to be a lot of activity, where finally the price clears, the market's clear, and everybody will be sort of refreshed in a way to pursue the growth path that they are, that is specific to them. That's one chart and one thesis that I have. That's the main thesis that I have. And then the second thesis-
Speaker 3Sam, before you do that, my chart's actually really related to your first chart. So I can actually tie into that. I also love the random example that you gave of investors for pennies on the dollar. No one here has any experience with that. The chart that I wanted to kind of jump in is the Silicon Valley scale-up investments per year and the total versus AI. And you brought up COVID investments. That's- All the investors are doing COVID. So the total investment in 2021 for scale-up, this is from Crunchbase, so they're going to define it. And I'll share my screen in a second because I want to ask you guys a question, was $161 billion. What percentage of that do you think was directed to AI-native companies of 161? Lost it? No, 2021. 2021 to AI companies? 5%? Yeah. 23%. So 23%. It was 37%. 7.7 billion of the 161 was, so last year-
Speaker 1Is that like Gronk thought they were an AI company back then? Like, you know, I think-
Speaker 21 million percent.
Speaker 1Yeah. That's like with an asterisk.
Speaker 3There's an asterisk. It's a generative AI. So use the term generative at that time. The follow-up question to that is, okay, 111 billion through Q3 of last year, what percentage of that was AI? 90%. 70%. 93%. So this is what it looks like. Look at this striking difference. The reason I wanted to talk about this, Sam, is because your M&A point is spot on. What I will say to this, though, is that you have to have an AI-native story to have an M&A transaction. Otherwise, it will be pencils down. You have to fill a need that the buyer wants to buy something. They don't want to be sold something. And it needs to fit a need. So if you're sitting there as an operator, you're going to have to fill a need. You're going to have to fill a need. You're an executive, and you're planning in the 26th, and you were born in this probably traditional SaaS world. Everything, all of your energy needs to go to what is our narrative? What is our story going to look like?
Speaker 2Yeah. Let me say, AJ, I don't think you're right. I think that you're right that if you want to get a premium valuation, you need to have a great AI story. But there is a deal to be done for non-AI companies. And my point is-
Speaker 3Well, five to six times.
Speaker 2What's that? Five to six times.
Speaker 3You said five to six X.
Speaker 2Yeah, exactly. Yeah.
Speaker 3Well, if you ask any founder out there, now you mentioned the $14 million story, ARR, but if you ask any founder out there that's clawed their way over the last 10 years, hey, I'm going to get you a deal that's four to six X. Are they going to be excited about that?
Speaker 2No, my point is I know that they're not going to be excited about it, but they're going to be more excited about taking the win and starting over than they are because they don't have another option. Every day. That's what I think. I think people are tired. I think that company that doesn't have a clear growth strategy and doesn't have the energy. I think that person, man or woman says, fine, let's do a deal. I'll call it an exit. We saw a lot of those last year. You know, I saw a lot of companies that it was an exit. Sure. You know, nobody made any money, but at least we can refresh or restart. I think that those deals will happen. I just don't, I agree with you that people won't be excited about it. I agree with that, but I think the deals will happen because I think people are
Speaker 3tired. Well, that, that tired point is an important part of it. And I don't have any idea of what percentage of founders out there are tired, but if you're a founder and you're looking for an opportunity to re-ingest some inspiration into your team or re-innovate yourself, I guess I should say, then you have a huge opportunity to do so. And it'd be a miss if you didn't. I would think any of those founders that kind of like throw in the towel at this point are going to look back and be like, man, we were at the precipice of something.
Speaker 1I agree that I think to get a premium valuation, you need an AI story. I also agree that there are deals to be made for those that don't have that type of a story. I just yesterday spoke to a founder who has completed a pretty significant acquisition of a larger competitor and is going to do is in late stages for another three deals that they're going to do in the first half of this year. And these are all cashless transactions. And it's really interesting because they've captured a lot of customers. customer market share by doing these deals. And those companies were basically in a corner where they were at the point where you can survive like this, but it's not going anywhere.
Speaker 3Well, that was going to be my question. Were they running out of cash?
Speaker 1There wasn't much to do from here on out. They could have cut their costs down, but there was no path for growth. There was no ability to get more risk capital to invest into growth for those organizations. And so they were stuck. And this company was really sharp with how they structured their deals, how they moved on them. But I think there are a lot of these cashless transactions that are happening where you might not get money up front or might get a little bit of it, but you will get a stake in maybe a better business. And I think there's a lot of those deals that are happening as well. I think the challenge with put your head down and try to reinvent yourself is that boards have so. much control with how you spend your money, how you allocate your resources. And these are exhausted boards with negative mindsets. Are they allowing these founders to make the moves they would need to make? And do they have the resources to do it? In some of those cases, the answer is no. They're better off just getting rid of the thing and starting again. So much easier to worry.
Speaker 2Let me ask this question to two smart people like you guys. So the one, the pro. The pro on taking pennies on the dollar and just getting out and getting something is you can just recycle the funds, find some way out, restart, refresh. The con. is that you have to mark down the investment and if you're in the market trying to raise new funds and you've got to show that you know fund two or fund three has a you know it's one more thing that points to like 0.2x on you know the florida teachers union investing whatever they did into your into your fund what do you think's a bigger motivation the the fact that at some point you have to mark the business down significantly and present your dpi or lack thereof to your investors or just getting the cash back and putting your money and energy into companies that are winning i said you take that first i
Speaker 1think for a lot of these investors it is you have to get out of the deals like you have to find an exit path because basically they're sitting on funds that they can't raise the new fund and hence they won't have management fees to be able to run their firm if they don't raise a new fund and the the lps is saying till you sort out the mess of these old funds you're going to be able to raise a new fund and you're going to be able to raise a new fund and you're going to be able to raise a new fund and you're going to be able to raise a new fund we're not giving you new capital and so they have to find some sort of a solution and if you go through like the process of elimination what's the worst solution is to liquidate at a loss and return very little capital and whoever is invested into that has lost money but that is still being done with the problem to some extent then just stick with the investment for too long i think what's happening is that these companies are selling at a loss some of their assets which they don't believe that there's a path to make good money on and they are holding on to the one or two or three firms that they've bought and i'm talking about pe a lot of it here if pe looks at their fund and says we have 10 companies here these three or four we'll never make money on let's lose a little bit of money get capital back return some capital then here one or two that we can make money on let's give it all of our attention in the next year let's try to sell this thing for some sort of a return and if needed to generate that return let's take the capital that we are generating from these companies where we see no path to upside and recycle it into this one that we think can work let's concentrate it there let's eat shit for a year then we can sell that and at least we can provide maybe a one and a half x return to our lps and that could get you a new fund if you did a one and a half x on let's say a 2020 vintage you could probably raise more money from there yeah i mean i
Speaker 3only have anecdotal evidence but let's just pretend you're a fund manager at a series b growth equity and you have a whiteboard and you have all of your companies up there it doesn't matter you can anonymize them and you have their their kpis start with retention because that's the one that everyone's going to look at and you just stack rank it that bottom quartile is in that bucket of things that ossa just said like how do we get out of this investment as soon as possible so we can put our dollars to work somewhere else that's objectively what is happening and i uh having gone through some level of that in years prior like one of my investors actually i'll say jr jr literally said like aj think about it from a fund manager's perspective and going through that exercise and just take all the emotion out of it it makes sense and that allowed me to take a step back and say like okay well i gotta we gotta fix this retention issue this is 2023 so we can climb out of it but it didn't once that fund manager had that point of view i will there was no way to get out of that you're you're kind of cycling the drain circling the drain a little bit because it always feels like an uphill battle and as a ceo it's the worst place to be in you can continue to make progress and point to the progress but it is a long slog and until you get board alignment you're not going anywhere and that's what ultimately like sucked and was draining so much that i ended up in the hospital in 2023 because of it i'm on the other side of it but i remind myself daily that this is just an objective exercise that investors are doing and it allows me to be less and more productive and i think that's what i'm trying to about my own business i have a
Speaker 1question for you guys on this there's a founder you guys know a friend of mine um who'd raise a seed round try to build something it's not working and now the decision becomes what do i do do i go back into the market um as a professional do i start something else and this person's done some soul searching and says i want to go be be an executive again now what they're thinking about is do i have to find an exit for this company some sort of a soft landing and the advice they're getting from many people that we know is that you must find a home for this thing now this company has raised a million dollar seed round and to break even the investors who took part in that million i think is an unnecessary burden to take on i think they know what they're doing when they're investing in venture angels know what they're doing when they invest in venture capital deals and so the fact that everybody loses money on this is okay um you try it didn't work move on and go find the best executive job you can find instead what this person's been told is find somebody to acquire this company along with which they will acquire you as an executive and that time of that opportunity is much smaller and so how do you guys think that is what this person should focus on or should they just go and like hey this didn't work let's shut it down move on i've got one
Speaker 3piece of advice uh don't don't you'll never work for he will never hire a former ceo to be your cro as he's told me multiple times
Speaker 2hey jay your memory is great i will hold i have chips
Speaker 3on my shoulder that will last decades uh i i just wanted this person one thing awesome you introduced them to me because i actually love this type of conversation we've all talked to founders that have gone through some semblance of this over the last several years and i know one founder that uh was a ceo it was a part of pavilion you guys know him he rolled back his company didn't find a soft landing went to work for a much bigger company and i'm now talking and interviewing him to come work at quota path uh to help launch our our ai product because of his customer facing experience on the sales side and his uh more product knowledge and pm knowledge on i'm so curious who this is once we stop
Speaker 2recording we're gonna
Speaker 3uh my advice was
Speaker 1it doesn't matter like these are grown-ups making grown-up bets the fact that they don't get their money back is fine sam do you think that's bad advice
Speaker 2no i don't think it's bad advice i don't think it matters i i listen if you're it it you to your point about you know what is the tam like if there's a is there a company you know is is this a big enough space
Speaker 1to like go do cold outreach to like eight companies that could potentially care that they won't care they don't care they won't and so this person's going to just go through this painful experience um for what i think doesn't matter like i think it doesn't really matter some some vc invested 50 000 that they lost okay like they'll get over it i
Speaker 2i think the beauty of venture capital is people shut down companies all the time they view it as learned experience i don't i think it might be helpful uh you know it's a it's a fine story but i also i don't think every i think people think everybody's more naive than they actually are i think a lot of people like you can say that you had an exit it's like but everybody knows that you didn't make any money you know like i don't know if
Speaker 1you made money you wouldn't say the best is putting on your
Speaker 3linkedin that you raised 50 million dollars of capital and then you have quote unquote an exit and i was like well what what happened with the capital you didn't turn any of it it's always
Speaker 2very strange when people like three exits as founders and you're like why are you on a zoom with me why this doesn't i bet you on your island is your definition of an exit different from my ex do you not know how to have fun
Speaker 1oh yeah should i give my prediction or is there another one you guys have i want to know sam's got one i skipped i
Speaker 2brought two predictions this is how much the largest cumulative losses uh before companies turned a profit this is a famous chart at this point you can see uh prior to open ai uh the largest number cumulative loss was uber which lost 40 billion dollars but it lost it over 13 years before turning a profit over the last five years open ai has already lost 150 billion 150 billion dollars billion dollars so here's my uh and and i feel i love that anthropic is 2027
Speaker 3like they're like we're already we're forecasting we got
Speaker 2this in the book right so my my point is i i listen i'm a believer right i'm a believer in ai i i and i use chat gpt every day and i'm happy i you know i'm i don't think i'd be happy to be wrong but i i still believe in gravity i do believe in gravity and when you read about the amount of money that open ai is raising about the 1.4 trillion dollars in commitments that open ai has when you read that there's no more vesting for uh equity from open ai employees it just doesn't compute it just doesn't add up this it's still business it's still business now i'm also i'm happy for you to disagree with me so i think ai is real uh and i and would i invest in open ai no no i wouldn't not at a trillion dollars whatever the justification is to justify those commitments, Would I invest in Anthropic? Yeah. Maybe I'm boring.
Speaker 3What had to happen at Uber for it to become profitable?
Speaker 2They had to raise prices and starve out the competition against Lyft. What do you think? What else needed to happen?
Speaker 3Fire the CEO. They fired Travis.
Speaker 2Well, as you recall, my hot take is that OpenAI is a generational company, but it will be restructured and Sam Altman will not be the CEO in 12 months.
Speaker 1Do you think that in the next five years, OpenAI would be one of the top five most valuable public companies in the world? No. After this restructuring, et cetera?
Speaker 2Oh, after this restructuring? Possibly. I think they're facing a structural disadvantage to the point of all the money you made on Google last year and might still be making, which is that they don't generate cash. They're competing with Alphabet and with, whatchamacallit, with, you know, Meta and with companies that make money. They don't make money. So every time they need to subsidize these data center build-outs or whatever it may be, they have to borrow, they have to raise. They're constantly raising capital.
Speaker 1Something that made me rethink a little bit of this is I've switched just, I don't use these models all that much. Like I try to really measure my usage of it, but I've been trying to switch around and seeing how much I miss the old one. And so I'm using Google and Anthropic more, OpenAI less, just as an experiment. And you don't miss it all that much. The, you know, the stickiness of the product is something that if for them to be this great future company, they'll need to solve the stickiness thing. And right now it feels sticky when you're using it. But once you move to something else, you don't miss it all that much. And so there's not actual built-in stickiness there. And they'll have to solve, if they can solve that problem because they've got the consumer lead, they've got resources, they've got a lot going for them. If they solve that problem, I think the future is very bright. But so far that problem is not solved. And that is an
Speaker 3interesting question though. What percentage of usage of ChatGPT do you guys use for personal versus
Speaker 2business? 70, 30. I will say ChatGPT was super useful in helping me think about my 2026 personal goals and like how to think about them. And how to think about a philosophy for myself. So I find, I think it's a great product, but I think structurally, like you can't, we always say the balance sheet strategy is the strategy. Like you just can't tell me that like, well for this company, gravity doesn't exist. They exist in a different, you know, astrological plane where up is down, left is right. And if you weigh a billion pounds, you really don't weigh anything at all. Like, I don't believe that. I also, the last thing I'll say is to your point, Asik, when you have other work, well, just putting aside work, other applications, you start to see how Alphabet is showing, is manifesting AI naturally in all of their other products. You're writing a presentation. I'm writing this course for introduction of P&L fluency for a pavilion. And I drop a bunch of crappy text into a slide in Google slides. And it just says, you know, tighten this slide up. You click one button. All of a sudden it edits it. You say, beautify the slide. It makes it more beautiful. That's AI as that concept of electricity, that's AI, manifesting itself in other products. And I just don't see that open AI. They don't have Google slides.
Speaker 1AI mode is also really good. Like I use AI mode a lot. Sherry was like, Hey, you underappreciate in AI mode. And she's like at the forefront of all of this somehow. And so I started testing it out. I'm on your phone. Wait, hold on. AI mode. Where? I'm you just go on the website, google.com. You press AI mode and you deal with it that Gemini. Yeah. I'm talking Apple's AI mode because Apple has the Google AI mode that they have built in is, is fantastic. I much prefer it actually.
Speaker 3Um, isn't that the default mode? Isn't that the default mode for you guys now that it, I
Speaker 1thought it switched to it. No, it does a normal Google search or you press AI mode and it gives you, or when you do a search, it gives you the top AI mode part and then the rest, but you can go click AI mode, go into it. And then everything is just AI. More is brilliant. Very good. Okay. We will see. We will talk about this a lot more. Let me tell you guys my prediction. And then we can wrap this up. I'm going to need
Speaker 4you to imagine this is being read in Sam's dulcet tones, but this episode is brought to you by glyphic.ai. Most GTM teams don't lose because they lack insight. They lose because execution breaks at scale, follow-up slip, CRM hygiene drifts, and routing quick fixes, create chaos, and your best reps end up doing ops work. Glyphic closes the execution gap with AI agents that turn signals into action. Across your GTM stack, so you can get more done with the team you already have. If you want 10 X productivity without adding headcount in 2026, check out glyphic.ai that is G L Y P H I C dot AI glyphic.ai.
Speaker 2This episode of top line is brought to you by pavilion. The leaders who rise fastest today, aren't just great operators. They understand the business. They know how value is created and they negotiate like executives. At pavilion, our education curriculum is built for exactly that kind of career. Learn the language of the P and L with our new P and L fluency course. So you can read a balance sheet, model unit economics, and challenge a forecast with confidence. Master the art and science of executive compensation negotiation, taught by leaders who have sat on both sides of the table and know how real offers get structured. And join a community where you don't just take courses, you apply what you learn with peers who are building companies, leading teams and shaping the future of GTM. AJ. How has community impacted your life over the last 15 years? Oh my goodness.
Speaker 315 years. I was a wee little Sam. I was a wee little kid 15 years ago. I didn't know anything. How was community? Well, first off, I thought, uh, P and L started, this stood for parts and labor. And so there's that. So the pavilion community helping you understand that I would say it's the most fundamental change. If there was three things. Community would be one of those three things that have impacted my career and what changed the trajectory, uh, across, across everything.
Speaker 1How would you rank yourself? Like, would you give yourself an A plus, an A, a B plus, et cetera, in P and L fluency? I feel like I'm not an A yet. Like I, I will be honest and transparent. I should take, I've done that course. I should take it again. Um, I would say I'm like somewhere in the B, B plus range. Um, where, where do you rate yourself on that?
Speaker 3Oh, B, uh, for sure. Um, and I would say that this is the area that's actually what I told my management team last week is there's an area for us to up-level it is across P and L and in finance fluency. And, uh, and I'm not even kidding about this. I was like, Hey, uh, Carrie, can you please, please, please reach out to pavilion about getting this scheduled for January. Oh, that's cool. Yeah. True story.
Speaker 1That's great. Better be an A plus since you came up with the course. I mean, it's going to be the first time.
Speaker 2Yeah. It would be the first time I'm teaching it. So I'm going to ask for everybody's forbearance, but, um, but that's nice. Good. Well, if you're out there listening, you should join us. Me, AJ Austin, we'll all be in the class. So if you want to accelerate your career, sharpen your
Speaker 3operating edge, it will be like that episode of succession where, uh, here in Colby and has to go to like management trainee class, he has to sit there.
Speaker 1I was teaching, listening that you should do one in person. If you did in person, AJ and I will commentate that first.
Speaker 2Oh, I think it's a good idea. All right. Maybe I will. Well, to that point, folks, if you want to accelerate your career, sharpen your operating edge and get paid what you're worth pavilions, where you grow next join pavilion.com. Thanks for listening.
Speaker 1Let me tell you guys my prediction and then we can wrap this up.
Speaker 3First off. I knew Austin was going to show up with a car to chart. I knew it. Just knew it.
Speaker 1Very low. Oh yeah. So I have this, um, what is this showing us? So this slide shows us the amount of early stage. Venture capital deployed into the market over the last couple of years in terms of total dollars deployed versus how many companies raised, um, money. And Peter Walker shared this in the top line editorial where he said, one of the themes for venture capital in 2025 was concentration, because what this slide shows us is that over the last three years, 23, 24 and 25, every year we deployed more capital into the market, but across less companies. And. And something's changing in, in the venture game where before they used to feel like no one can really tell which companies want to make in, which is not. So let's just spread our bets out as widely as possible. And now they feel a little bit more confident concentrating those bets into fewer organizations. In fact, 40%, 41% of all venture capital was deployed at only 10 companies. And so this is concentration of capital was the theme that he was talking about after spending. Some time thinking about this. I think that theme is much broader than venture capital. I think that was an overarching theme for the technology industry and themes are important because we exist in ecosystems. And in that ecosystem, we all trying to navigate our lives and our companies and our worlds. And these themes, they, they, they have an outsized impact on us navigating and the environment that we're in. And so there's only a few of them at any given point and it's helpful to understand them. And so I do think this is one of the themes that dictated. A lot of the game on the field. And for that one would have to be able to find proof of concentration and other places, which I think we can easily find the S and P 500. Most of the returns were driven by money. 10 companies, even less than that. If you look at AI ROI, MIT shared a study that 95% of AI pilots are providing no ROI at the enterprise level, which means 5% are providing an ROI. If you look at the M&A world, you would look at the data and see there's a lot of transactions that happened. You would talk to some companies that we know, and they had so much demand. But then you would talk to other people that were desperately trying to sell their companies, and their experience was very different. And even on the talent side, we saw talent being concentrated within certain companies. Cursa is a good example of a company that sucked up a lot of the oxygen in the ecosystem in terms of good talent in their space. They had the product market fit, they had the resources, they knew that talent would be an important part of the fight that they're fighting, so they prioritized it. They did some really interesting things we can talk about that were different to other firms, and they sucked up a lot of great talent, which gave them the ability to maintain an edge on the competitors in that space. And now if you look at it, people to a replete looks at lovable as a competitor, lovable looks at replete and bold, but everybody kind of lets Cursa do its thing. The ones who are comfortable competing with Cursa are the anthropics and the open AI is far bigger, far better capitalized. They're the ones that have the confidence to compete with the sort of talent density that this company has sucked up. So you find trend lines of concentration across the economy. So it was a theme. And if it was a theme of the market, then we have to think about whether it's going to stay the same increase or decrease in 2026. And I would say that it's probably going to stay the same or increase by about 10% next year. And why is that important to remember? Because we make a lot of decisions subconsciously and consciously based on the various signals we're receiving through a day, the conversations we're having. And so what might happen is you have two or three conversations in a day with people that are looking for a job and their experience is that the market's really tough. And you come away thinking the job market is tough, but you have to remind yourself there's two job markets. There's a job market for people that are really, really good. And for them, it's never been hotter. And then the job market for everybody else, there is this like split in the market. And this concentration basically means inequality. And these unequal experiences, we need to remember they're happening so that we don't put ourselves in a situation where we're putting ourselves too much in one mind frame, but the reality is far more textured than that. So my first prediction is it stays the same or increases by 10%. My second prediction is that another place where we had concentration, and this is a table that I'm going to show here, is around layoffs that happened last year. So this table shows you the number of people laid off, the number of companies they were laid off at over the last couple of years. And so last year, less people were laid off across less organizations, than all the previous years, all the last three years. But what increased dramatically was the average number of layoffs per company. It increased 86% year over year, meaning that the layoffs were concentrated within fewer organizations. When we clicked into this, we found that a lot of these jobs that were laid off were places where AI had great product market fit, support, design, sales, engineering, et cetera. And so we believe that this was driven by AI to some extent. And what's going to happen next year is the one place where there will be less concentration is of where the benefits of AI are being felt. We believe more of the market is going to feel them, and hence more companies will do layoffs than they did last year. And so these numbers will go up probably somewhere.
Speaker 3Do you think that matches 2023,
Speaker 1Austin? I think it's going to be about 300,000 to 500,000 people laid off, is my prediction. No, but number, so you think it's going to be double 2023? I'm close to double. Yeah, it could double. Yeah, I wouldn't be surprised. Which was the highest? Which was the highest, yes. Oh, wow. So you have a pretty alarmist view on that. But I also think that there will be, listen, I have never seen a hotter job market in my career. And so on the other side of it, there are a lot of jobs. And we just spoke about earlier in this episode, 1.1 million people found jobs. So I don't think that, I think at the same time, 1.5 or 2 million people might find jobs. I think it's going to be that sort of a strange market where both things are going to be happening.
Speaker 3I guess that that's confusing to me, because what gives you the confidence that you're going to double the number of job switches from last year, that given the momentum and just the voice of the market right now is so negative to that, contrarian, that's a very contrarian view.
Speaker 1I think if you look at the companies, every company, when they get the benefit from AI and can cut staff, will cut staff. So it just comes down to like, do you think more people will figure out how to get support to be done by AI? And more people will figure out, you know, it takes time, very small portion of the enterprise was able to get anything out of their AI experiments this year.
Speaker 3Let me ask it a different way. Are you saying the companies that made these cuts, the bigger companies that made these cuts are going to be the ones that are going to be hiring or these brand new companies?
Speaker 1Hiring will be across the board, but driven heavily by the early and growth stage of the market.
Speaker 3That's an interesting take. I disagree with that. I would disagree with that because if you're saying earlier stage and they're bringing on these investors and these institutional investors, the, what I've heard in the market is the opposite of that, that they're pushing heavily to be much more effective with AI and not hire at all.
Speaker 1Yeah. Yeah. But it still comes to a lot of hiring. Like if you still look at all these companies, they're hiring so many people. It's just that as a percent, as compared to in the past for where they are, they are hiring less people than before. So let's say if you look at a hundred million dollars in ARR, you know, a example, a friend of ours joined one of the top AI companies. This company has 150 million in ARR, 30 salespeople. In the past, that company would have had 60 or 70 or 80 or 90 salespeople. That's the difference, but they still can't hire salespeople as quickly as they need to hire people. There's still that they've gotten a bunch of open roles. They're aggressively trying to hire. They gain all the support they can get. So it's confusing, right? Like less than before, but still aggressively hiring. Sam's just sitting there.
Speaker 3He's pondering. Sam is in his pondering state.
Speaker 2What's the, I'm sorry for not paying attention. What is the central debate here? Tim's finding his third chart right now.
Speaker 3He's out there.
Speaker 1The simplest one is there will be more people laid off in 2026 than 2025.
Speaker 2There will be more hiring or less hiring.
Speaker 3There will be more hiring as well. And there will be more layoffs. What is central to Austin's argument though, that he didn't say is that there'll be more layoffs, double the number of layoffs in 2026, than there were at the peak of layoffs in 2023. That's what he says.
Speaker 2That's not true.
Speaker 3Sam joining the conversation.
Speaker 1Why do you think that's not the case? So in 2023, there were 264,000 people laid off across a thousand companies. Last year there was a hundred thousand.
Speaker 2AJ was the one that predicted a million layoffs this year.
Speaker 1Yeah. He just readjusted.
Speaker 3I know, but I went to the start of the year. I can change. Look, I can be right. Right. One of my predictions will be right, Sam.
Speaker 2All right. All right. 220,000 layoffs in the peak of 2023. Is that right?
Speaker 12023 was 260,000. 2025 was 112,000. In 2023, 1,100 companies laid people off on average of 221 people per company. In 2025, only 218 companies did layoffs for an average of 517 people laid off in the peak of 2023. So in 2023, 1,100 companies will layoffs for an average of 517 people laid off. Our premise is that, or at least mine, is that this, the number of companies doing layoffs will increase. But that average will not come down all that much either. We believe that more companies that are upper mid-market and enterprise companies will start learning how to get benefits from AI. And when they get those benefits, we'll cut. And so if a larger percent of companies receive those AI benefits and start cutting, these numbers will be cut. And so if a larger percent of companies receive those AI benefits and start cutting, these numbers will cut.
Speaker 2That all tracks to me. What I was going to say is that the companies that have done the big layoffs just already did the big layoffs. But I think there's credibility to say those were the leaders. And then there's a whole tranche of companies that are next in line that are going to figure it out. And yeah, like Meta, meta might be first or amazon might be first but then there's going to be thousands of other companies that are not trillion dollar valuations but are three billion dollar valuations and you know and they are going to figure out how to do it i that makes sense to me that is our episode
Speaker 3then guys more episode okay well can we do shout outs and wiles can we bring that back let's do your shout outs aj let's do your shout outs who are you shouting out do you want to shout somebody out uh yeah see i want to shout i'm going to shout you guys out i haven't shouted you out for a while and i need to shout you out and i said it during this episode because i had a really really nice break and i will talk about that quickly which that break included taking my daughter one-on-one time with my daughter to california driving the pch in a red mustang convertible let's go with our top down uh with 50 degree weather and it was amazing and my daughter oh you first of all i want to say thank you to all of you who are watching this video and i hope you enjoyed it and i will see you in the next episode of this episode of the winchester house which was a really cool cool spot that has this like weird situation where the building is tilted and you think you're standing up straight but you're not we also went to the winchester house who was this crazy old lady widow 40 years of non-stop building of a house in san jose uh tide pools monterey museum and it was awesome that's my one-on-one time but my shout out goes to you guys because i had a break and i was thinking about it i was doing my goals for 2026 and reflecting and i've become a much better human being because of you guys i'm clear in speaking and i uh really feel up to date on current events certainly in tech and while we've been doing this for three and a half almost four years guys do you realize this really we're coming up on year four isn't that crazy i thought we started in 2022 2022 we're coming up on year four yeah math and we're more famous
Speaker 1it
Speaker 2took required and
Speaker 1founders like nine years each to nine years so we're
Speaker 3almost at the at the like hump where our inflection point um but i definitely really appreciate the relationship and the conversation and the deep thought thoughtfulness every week so thank you to you
Speaker 1guys i love you and i actually felt less sharp when we weren't doing it so i agree with the premise there thank you so much for having me keeps us very sharp sam you have somebody to shout out
Speaker 2well how can i not reciprocate a shout out to you both you guys challenge me uh you inspire me you're great business people great friends uh the text thread that we had today really helped and your enthusiasm especially i said you're you know hey this will be easy that's a great things that aren't true but feel great to hear you know i love your enthusiasm though it definitely won't be easy but i love that you think it will be um yeah just uh it's great and i'm excited uh you know uh we're uh i guess i'm not a shareholder yet of sta but you know we're all we're we're co-mingled in a lot of different ways and i think we're all ethical people and we're going to build great things together over the next you know 10 15 20 years and that's going to be a lot of fun so
Speaker 1compounding is this beautiful thing like you just never realize like the power of compounding relationships and things and all this stuff like i was doing this calculation over the break and i was like if a person puts at the age of close to even 40 starts putting three hundred thousand dollars a year and compounds at market rate get to like 50 60 million by the time you're 60 um if you can beat the market a little bit and so compounding is a great thing and i think it's a great thing to do and i think it's a great thing to do to compounding is a great thing to do and i think it's a great thing to do and i think it's a great thing to do is a really powerful thing to be able to experience and i think we are all experiencing it together so right back to both of you i would also shout out our wonderful team that has helped us in the last year um neil and kyla and lennon um and they've made this all that much more fun and we will have a great year together amazing
Speaker 2another great episode of top line if you wouldn't mind dear listener could you smash the subscribe button on youtube we need a few more uh and if you have haven't given us five stars wherever you get your podcast please do that and then just tell a friend about it say you know i was listening to this great show you should really listen it's called top line uh if you don't do that that's okay too we still love you have a great 2026 it's going to be a great year together join us we're going to have great guests great conversations great data and insights all of it coming together and culminating in new york city october 1st for gtm 2026 the 10-year anniversary pavilion and we're going to have a special top line track and section for everything top line so it's going to be a great year thanks for listening everybody
Speaker 4bye
Speaker 1everyone okay and against all odds you're still here
Speaker 4look if you want more top line check out the top line newsletter at topline.beehive.com beehive is spelled weird it is b-e-e-h-i-i-v dot com topline.beehive.com or if you're a video person because video is great check us out on youtube topline dash media is what you want have a delightful day everybody
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