# AI Capital Concentration and SaaS Valuation Reset

**Podcast:** The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
**Published:** 2026-02-19

## Transcript

You've never seen a company grow 10x in gap revenue and runway year on year for three years.
So you're leaning into the singularity here.
Wall Street has decided this is the bet they want to make.
Capital has decided this is the bet they want to make.
People are going to try and make this bet.
Wall Street fell in love with AI.
And to do that, had to fall out of love with SaaS, right?
Everybody should get a little bit of a grip and not extrapolate to the end.
But whatever.
That's the movie right now.
Who wants to get back to early stage?
I want to do the anthropic round.
Give me a fucking break.
I don't want to have to pick which accounting software in four years might break out for AI.
No one wants to do that.
Just show me the carry.
This is 20VC with me, Harry Stebbings.
It is my favorite show of the week.
Rory O'Driscoll, Jason Lemkin, analyzing the biggest news in tech that has gone down this week.
Anthropic raises $30 billion and a $380 billion post.
OpenClaw creator Peter Steinberger joins OpenAI.
Thrive closes on a mega $10 billion fund.
One for early, nine for growth.
We also have Stripe versus Adyen.
Finally, Applovin down 70% and Shopify getting no love.
What is going on in public markets?
But before we dive into the show today, I run the 20 VC fund and I get this question from founders all the time.
Oh, Harry, I can't find a good .com.
Do you have a good hookup?
Well, let me tell you now, the answer is always going to be no.
I don't have a guy or a gal for that.
I do have a recommendation though.
If you're building a tech startup, get a .tech domain.
Tech startup, .tech domain.
It could not be more obvious.
As an investor, I appreciate founders who put thought into their...
branding.
When I see .tech in your name, it tells me right away that tech is at the core of your build.
It'll say that to your customers too.
A clean and sharp domain like .tech pays off in the long run.
You know, nothing.tech, 1x.tech, Aurora.tech, all of these great tech companies, they all use .tech as their domain.
These are my two cents.
If you're building a tech startup, don't overthink it.
Get a .tech domain.
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You have now arrived at your destination.
Boys, it is so good to be back.
Now, we might as well rename this show for the first segment, at least, this week in Anthropic, because my God, the news announcements that came out.
I want to start with the fundraise itself.
Anthropic raises $30 billion at a $380 billion post money.
Now, it was originally $10 billion and it upscaled to a $30 billion round.
How did we think about this?
I think if you're not that, you're not of interest to 98% of venture.
I mean, I'm not even in the loop.
I don't have an allocation to Anthropic or a pro rata, but people I saw on the periphery of this investment that I didn't even know would be on the periphery investment shocked me.
So we can talk about whether it's cheap or not on a forward multiple basis.
There's probably arguments each way.
There's arguments it's cheaper than the last round, right?
Just on a forward revenue basis.
Not to be an echo or captain obvious.
This is just, you know, it's the same day Thrive or the same week Thrive raises 10 billion.
This is what everybody wants to do.
This is the only play in venture when, you know, the public markets for software stocks are down 20 some odd percent this year.
This is the play.
There's almost no other play other than showing up to demo day.
I think actually Jason nailed it.
The comment that this is the play.
Look, the last three, four, five rounds have worked.
The two rounds in 25 have worked really quickly.
You know, the $60 billion round at the start of the year, the $160 billion round at the end of the year.
Remember, we talked about it.
We said, oh, that's not actually crazy.
And here you are getting a 2x again.
You've now clearly reached the point where, as Jason says, if you have a multi-stage fund, you just got to put some money in and get your 0.01% ownership and add value.
Because otherwise, you're not showing up in the only thing that's working.
And it really is one of the only thing that's working.
I mean, if you eyeball down the unicorn list, what's amazing is, and I'm just doing it, reflecting on this.
Even two rounds ago, it was the second, the third largest unicorn.
And it's probably outperformed most of the unicorns that are one-tenth its size in terms of share price appreciation in the last 12 months.
This thing is a juggernaut with momentum.
In the short term, momentum massively outperforms value.
So everyone is wisely getting in on the momentum play.
The thing that I think too is just like the elasticity of capital supply.
I'm doing rounds today where even at the early stage, a $30 million Series A round has $1.2 billion of demand.
And I've never seen so much money chase seemingly such a small concentrated number of companies.
But they are hoping there'll be another.
I mean, here's the thing about Anthropic.
I was thinking about this with the SaaS crash is just, you know, gravity's almost gone up to Jupiter levels in tech.
Everything's being pulled down.
$6 billion is not enough for Atlassian.
You've got to be $6 billion like Databricks growing 60%, okay?
Gravity is just pulling everything down.
And so you've got to invest in these handful of folks that can achieve escape velocity, not just on Earth, but on, I mean, I'm no Elon Musk, but on Jupiter or something.
Because the flip side is everything else is getting pulled down by gravity, down a fucking gravity well, right?
They're unsellable.
I mean, you look at Apple oven, 70% growth isn't good enough.
Look at Navon for the gravity well coming down to a $2 billion market cap.
Okay, that is a gravity well sucking everything down when the ship can't leave the planet.
And so with Anthropic, it's left the planet.
I mean, Claude Code from 1 to 2.5 billion at the end of the year to today.
That's escape velocity.
You know, the early stage ones, that's why it's a head scratcher for folks that have been around for a while, because the bet is that you'll escape this massive gravity well.
But if you do, there's 10 billion from Thrive last week and 30 billion from Andreessen.
But man, the gravity is, it's a bitch right now.
I get the analogy.
It's like, I think it's almost like it's a black hole in the sense of these two or three companies are sucking everything else in and spitting them out.
Now, over the medium term, is that massive overextrapolation?
I think so.
I think there's an element of projection going on here and, you know, a fair amount of discarding babies with bathwater.
But short term, I mean, short term, we're narrative creatures, right?
And you're right, Jason, the narrative right now is AI is going to eat everything.
Within AI, the narrative is arguably less clearly, but nonetheless, the models are going to eat everything.
And anthropic looks like for enterprise, it's clearly the best model.
You take all that together.
And this is the thing that's going to eat everything.
And once you have that, you know, you can justify any price.
And conversely, at the same time, you see everything else just trading down to points where you'd sit there and you go, some of these SaaS companies are trading at eight or nine times cash flow.
And are they really going to go away in that period of time when they're growing 10, 15, 20% at the moment?
In the end, it will equilibrate because that's how price works.
But you find yourself trying to articulate what's the forcing function that will kind of break this overinvestment, break the spell.
And that's actually a hard question because we're talking a lot about the value of the company, but really you should also be talking about the performance of the company.
I mean, this stuff is working.
And that's the aha, the revenue acceleration.
We've seen, I mean, the soundbite is going to be three years of 10x revenue growth, right?
Technically ARR growth, but yeah, revenue growth as well.
And that's not only unusual.
I went back and plowed through the early Microsoft, the early Google, the early compact.
It's unprecedented.
I even started trying to adjust for GDP growth, trying to adjust for inflation.
The truth is, you've never seen a company grow 10x in gap revenue and runway year on year for three years, right, at this scale.
It just hasn't happened.
So you're leaning into the singularity here.
Now, it's worth pointing out, Microsoft, many of these other companies that had 3x, 4x year on year growth for...
three or four years, were also wildly profitable while they were doing that.
Was this company still losing a ton of money?
But from a growth rate perspective, this simply has never been seen before.
And at the margin, we're all growth chasers.
What's interesting to me is that it seems like what other $380 billion company is there a CEO where they say, but if we misspend on compute for a year, we're bankrupt?
There seems to be this absence of fragility not being priced in when he openly says it.
First of all, you're right.
And this is a reference to Dario's long Drakash podcast where one of the very sensibles, and I always find him, frankly, way more grounded than some of the other leaders in the space, where he basically said, this is tricky because if you underinvest and you miss a cycle, the other guys pull ahead and then your growth dies and we know what that's like.
If you overinvest because the money is so much, if you overinvest and you hit the point where you don't get the returns to scale, then you are really long compute.
And then one could go bust.
But I think part of the message was we are trying to be a little more circumscribed than the other major player, OpenAI, in terms of our future commitments to make sure that doesn't happen.
Again, it is back to the same thing.
These companies aren't like the explosive growth of internet companies or software companies like Microsoft because they are wildly capital intensive.
They are much closer to semiconductor companies in terms of structure.
Even Dario talked about the amount of capex he's looking at over the next three to four years.
It's an astonishing amount of money.
tens and hundreds of billions of dollars.
These are not software companies with free cash flow.
And that's probably one of the big risks.
At some point, people go, hmm, it's just better to own companies where there's free cash flow than companies where there's not.
And intuitively, you know that you can get the free cash flow by slowing down.
And that's actually...
Getting to free cash flow probably also assumes slowing down growth.
And once you slow down growth, you wake up and rely as well on a gap revenue basis.
You did four and a half billion last year, maybe 15 plus or minus this year on gap basis.
You know, maybe 30, 40 times gap revenue is a little pricey.
So it's going to be hard to manage that.
What percent of the one to 14 billion in revenue do you think is customer acquisition from OpenAI customers versus net new customer acquisition?
Doubt it's a huge amount.
We're seeing lots of enterprise having relationships with both, which totally makes sense.
So maybe at the customer count, at the logo count level, probably not a lot.
But at the individual token usage basis, I actually don't have insight to that.
Someone like OpenRouter might have that.
And that's where it would show up.
But I mean, to be fair, stepping back a million miles, most of...
OpenAI's revenues comes from ChatGPT on the consumer side, and Claude, less than 20% of the revenues consumer.
They really are slightly separate companies with an overlapping Venn diagram.
Same raw technology, one very much gone to enterprise encoding, the other mainly consumer, but with some enterprise encoding.
So I don't think the narrative is, at a direct level, Entropics winning, so OpenAI must be losing.
I think the narrative is venture, and soon Wall Street just loves AI and doesn't love anything else.
Still, it is crazy.
It's too early for Anthropic to be stealing enterprise deals for OpenAI because even those deals are one year and they've just been signed, right?
Anthropic said its 100K customers are up 7X in the last year.
So there's not enough time to steal deals.
Having said that, going from 5% of OpenAI's revenue to 64% in 14 months, that is stealing budget.
Even though the budget is accelerating in ways we've never seen before, global software spent up 14% this year, which is unprecedented.
It's still a fixed pie, even if it's growing.
So I don't think anyone thought when ChatGPT broke out that Anthropic would have 64% of its revenue at this point.
And that's a lot of momentum, right?
That is code red.
We thought code red was about Gemini.
I guess it was, but maybe it's like missile command.
They're coming from everywhere.
I think you're right, Jason, and that's a great point.
I mean, you know, there's a reason when we were talking about CEO of the year that it was clearly dire, because if you look at where the story was a year and a year and a half ago versus where it is now, I mean, Anthropic just ran in and scooped the money.
Can't be great if you're the other guy.
Software spam is at 14% today, as you said, the highest or higher than it's ever been.
What do you think it is in 2030?
The reason I pause is, look, software has grown pretty steadily.
2%, 3% above GDP growth for a couple of decades.
And that's kind of the low rent, the kind of the low drama version of the Andreessen software will eat the world.
It's kind of growing now.
But it's still, you know, 3% plus or minus of GDP.
So the probable answer is, it gets back to the discussion we always have, it probably regresses to something like that unless...
you really see that AI unlocks productivity and labor spend, in which case you probably could see 5% or 6%.
My guess is the swing on whether it goes back to its GDP plus 200 basis points or stays at GDP and 400 or 500 is all about massive labor and efficiency and productivity savings have to come from the AI.
And if they don't, growth will decline.
You struggle to articulate a lot of bear cases.
most of these AI companies, which is why we're all investing in them.
Everything's working.
Yeah, competition is tough, but the markets are huge.
But there has to be some bare case.
So probably one embedded one is, are you really getting the ROI from this $10, $20, $30 billion of spend that you're making in enterprises?
If you are, then you'll probably do more.
It'll go to $60, and everything will be fine.
The canary in the coal mine would be if a year or two enterprises are saying, that was great, but we're going to slow down on spend for a while because we need to get the ROI.
We didn't make the labor savings.
That's probably the thing to watch to the downside.
Here's what I think, though, and this has changed since we did this show.
I think it's even changed in 90 days or 60 days, which is that more and more enterprises are going to will this into existence.
What I mean is you can make a decision.
Do I want to invest?
No matter what anybody says, for a large enterprise, AI does not miraculously replace 10,000 employees in an hour.
It doesn't work that way.
So you have to make a one, you have to make a bet, just like we've always made an enterprise software.
But then you have to decide.
Also, I just don't want a bigger company.
I also want to do layoffs.
I also want to be smaller.
I want to be leaner.
I want to do it.
And so I'm going to lean into this bet.
And not only am I going to do it, but my friend Rory over at Nabisco is going to do it.
And my friend Harry at Walmart.
And I see this.
It's not just all the Dario and waving his hands.
I mean, he's great.
And and all these podcasters, I think.
enterprises are going to will this in existence.
They want it to be true.
And with AI, you can build almost anything you want now as we're doing this.
You literally can build almost anything you want in software.
So I generally, even if it didn't have to be true, even if this was less, a little bit less revolutionary and people might back off in two or three years, they might be like, you know, I didn't see, this is classic enterprise.
I didn't see this, the ROI I thought from that Salesforce module or Workday Financials.
I'm going to, I'm going to slow it down for a while.
I think you can will these things into existence.
I literally think you can make a decision.
And I think by the end of this year, that train is going to be so far out of the station that these growth numbers will be jaw-dropping because the Fortune 500 or Global 2000 will decide we are replacing humans with AI, even if it's not the right decision.
It's not the wrong decision.
It's doable.
I think actually, Jason, you're right.
And I think that's the single big picture statement here.
Corporate America has decided they're going to make this bet.
The zeitgeist is making this bet.
It's unstoppable now.
I mean, even what you're saying on the...
Wall Street has decided this is the bet they want to make.
Capital has decided this is the bet they want to make.
People are going to try and make this bet, which is very different than saying when they made the bet, they'll like the result.
But that's two or three years out.
My gut would be people will overbet, overinvest, and you will have a retrenchment period two plus years from now.
But I think right now you're just looking at two years where, just as the hyperscaler said two years ago, we're going to do this and we're not going to blink.
You're right.
Corporate America is now going to say, we're going to do this and we're not going to blink, which means you're looking at one to two years of mega AI budget, not regardless of ROI, but on the presumption of innocence, which is the presumption of success, maybe is your word, Jason.
I like that.
That's what they're going to do.
They're just going to say, it's going to work.
This is the thing you got to do.
And CEOs generally have only two or three agenda items at any one time.
It was a whole period in the 90s, Jason, when it was all about right sizing and efficiency.
Then it became about getting on the internet.
then getting on the cloud.
And you're right.
The number one thing now is make your big AI play.
So everyone's going to make it.
Everyone's going to spend.
There's going to be a couple more years of great spending.
And then we'll see.
That's the movie, which means that the next two years would be a good time to access the capital markets.
It's also why I hate to say, I'm just not, I want to be really bullish and say that a lot of these public software stocks are oversold.
And maybe it's true, but.
I mean, Harry just had Sebastian from Clarnon, right?
And he likes to be a rabble rouser, but he's like, I went from 6,000 to 3,000 employees.
We know that.
But then he said, in two years, I want to be at 2,000.
Now he's trying to be a rabble rouser and he was trying to say, I, you know, I fired Zendesk two years ago and AI was magically perfect.
But I think that's how everybody's thinking that I talk to.
And that is great for anthropic because we're going to replace those humans with anthropics, man.
And it is terrible for...
Not every software company.
Maybe Shopify is oversold.
Maybe Nirvana is oversold.
But overall, even for Mike Cannon-Brooks, it's not great for Atlassian if we're all going to shrink our teams from 6,000 to 2,000.
It certainly is.
And maybe HubSpot and Monday.
We're like, why the hell are these horizontal apps oversold?
It doesn't seem fair because the numbers are great.
But if this is the mode we're in and nobody wants people, it's hard for me to feel there's a bottom.
And it's not valuations, right?
It's hard for me to feel that enterprises are saying, you know what?
I want to buy more seats next year, guys.
I've changed my mind.
I'm tripling my seat count at HubSpot next year.
I've changed my mind, guys.
We're going all in.
We're going to hire 20,000 more people next year, humans who complain and whine and quit every three months.
And we're going to get them all seats of software.
Nobody I talk to has that feeling today.
Nobody wants to do that.
I broadly agree on the kind of sentiment.
And I disagree on the statement that there is a bottom.
I mean, in the end, price clears all markets.
And what happened on the public SaaS stocks is you've gone from, as I said, the presumption of success, which is what AI now enjoys, to the presumption of failure.
But that doesn't mean you fail.
It simply means that you just look cold-eyed at it and you say, what's the growth rate?
What's the free cash flow?
How do you value that?
There's going to be a price at which these things stop declining and compound at a normal 15%, 12% to 15% return a year.
Markets work.
The other side will overshoot.
This will be doable.
But it's just not a number you'll like.
But here's the thing.
And of course, you're right.
If you have stable or growing free cash flow, there's a number, right?
But here's what makes me pessimistic.
And I don't want to be pessimistic.
I want to be the guy saying, we're never going to remove our systems of record.
I want to be that guy.
But as a cohort, public software stocks are approaching, have fallen to almost 10% growth annualized, okay?
Now, if AI just reduces that another 30%, we're in essentially the dead zone.
right we're in that area in the deep dark water where nothing grows because even the plant the dead bodies don't fall that you can't like five percent four percent it's even worse it's it's all just price increases and suing customers there's nothing if ai was bringing us from 30 to 20 you could make a whole bunch of arguments you could say listen we're we're got a little sas got a little older we've slowed down we're in senior marathon but things are still good at 20 growth at six percent growth I don't see any future other than the next five years of free cash flow.
I think it's a valid worry because things were bad before AI.
Like, let's be honest, things had already fallen into the mid to low teens before the AI wrote.
It's not like SaaS was healthy, public SaaS companies.
These were not thriving.
Dropbox growing minus 1% a year is not crushing it, is it?
That's why I think the market isn't overblown because we were already at risk going into 2026.
We're already weak and anemic, the overall blended growth rates.
And Rory made the point with Mike last week, part of it is because we haven't put new names in.
When we drop Databricks and Anthropic, and it's all going to, and if we allow them to remain of a pure basket, it's going to look great.
But the existing group is not looking healthy.
If we look at like a duo, a Monday, and a van, these businesses, they're all doing okay to decent, actually.
But the price is through the floor.
And we keep on saying, oh my God, it can't go lower.
And it does.
Genuinely, what happens?
I think the markets, it's like the old cliche, in the short term, it's a voting machine, in the long term, it's a weighing machine.
We're going through the voting stage now, right?
My big aha is, you know, and Jason mentioned it earlier, I was thinking a lot about the SaaSpocalypse and, you know, did AI kill SaaS?
And I think what really happened is Wall Street fell in love with AI and it fell promptly.
And, you know, and to do that, I had to fall out of love with SaaS, right?
The burden of proof is the other way, right?
But...
You've got to shake out between them.
If you take something like Shopify, I'm going to say it.
I don't think there is a credible near-end story that replaces a website for shopping and a payments mechanism, which is 60%, 70% of their business, with some kind of AI arm wave in a way that there is for many of the workflow automation software companies.
I'm just picking on Shopify, for example, in a positive fashion.
I'm super positive on Shopify.
Exactly.
Super positive, right?
But it is in the basket.
It is cousins of the rest, right?
It is probably over.
We could argue it's oversold.
And if we were running a long, short hedge fund, maybe we put 5% of the fund into Shopify.
It would make sense.
There is even though here, just to be clear, I do think Shopify is oversold.
It's easy for us to say on a podcast, right?
I do think though there is a bear case for Shopify.
What's the commonality between ServiceNow, Salesforce and Shopify?
It seems like nothing, but actually they all could be abstracted away into a database.
Even Shopify can't.
If I am shopping on ChatGPT.
I may not go to that merchant store ever.
And in the short term, it doesn't hurt Shopify because it is the plumbing of the store, right?
And it takes a piece of the GMV.
But ultimately, if...
The future of e-commerce is conversational commerce, and it does not happen on the Shopify platform.
That is not a net positive.
And Toby says the same thing.
That's why he's done more code commits in the last 60 days than the rest of the history is because the Shopify software, even if it's only 25% of the revenue today, that software in two years may be obsolete.
If Toby thinks it, and this is the most resilient AI, and Toby thinks it, what hope is there for mere mortals?
That assumes the UI.
of the future is conversational commerce.
It is the UI of today, Harry.
If you're deepening commerce, you can talk to anyone.
It's the UI of today because it's what the most productive people in the world find the most optimal UI, which is Sam, Elon, Dario.
Actually, when you look at consumer, most often they actually like browser-based UIs.
They like discovery.
They like an option set.
I agree.
I think that, again...
I definitely think, you know, chat is wonderful for research, which is why, as despite your opposition in the past, I've loved the, you know, the geo marketplace.
I think chat is the place you go for considered purchase and doing research on, you know, whatever you're buying, right?
But then you go to the store, you look at the thing.
I don't, we're a long way from, I'll just press the magic button on ChatGPT and have it come.
So I do think- No, but it might not be on Shopify's website.
It might be on an agentic flight.
It doesn't have to be ChatGPT.
It could be Harry and Rory's shopping site that is better than the built-in conversational commerce in Shopify.
Everything's at risk.
Every platform that is open is at risk that an agent is better than the native platform.
And every platform that is closed is at risk of being at least slightly bypassed.
And that's the risk is that I haven't logged into Salesforce in six months.
But we use it every minute.
Our agents use it every minute.
I think it would be disingenuous to say that couldn't happen to Shopify, that agentic commerce agents.
Forget about it.
Part of discovery is going to happen on my sofa, don't get me wrong.
But all the stuff that really matters may bypass the user interface of Shopify.
I just think it's a threat.
Whether the size of a threat is as large as it is to others, probably not.
But it's not to be dismissed given the incredible pace.
of progress we're making.
It's like, I can't keep, I'm struggling to keep up.
What I don't like about this discussion and what makes it hard is, and actually it was one of the most insightful things I saw about in the last couple of weeks about this last discussion is it's really hard to disprove a negative, right?
I think your stock might go down.
How do I disprove that?
I think you might be displaced by AI.
My big aha is.
I'm going to repeat it again.
In the short term, we're narrative and momentum creatures.
And all that's happened now is the narrative and momentum has shifted to AI is going to do everything.
So the people who are left trying to prove that that's not the case, you can always articulate a scenario, right?
And the question is, on a balance of probability basis, is that going to happen?
And the thing is, smart traders don't fight the tape.
Basically, In the short term, the momentum is all around this narrative of AI replaces everything.
That's the way the momentum trade's going.
At some point, I don't believe it will.
I think it'll be amazing, just like software was amazing.
Let me repeat.
Software was the best industry of the last 20, 30 years.
At the end of 20, 30 years, it accounts for 4% of the US GDP.
We'll still want to eat.
We'll still want to drink.
We'll still want to drive cars.
Everybody should get a little bit of a grip and not extrapolate to the end, but whatever.
That's the movie right now.
While that is happening, you would be a buffoon to get in the way at a momentum trade.
At some time, the momentum trade will dissipate, and people will go, ooh, this is really amazing, but it's just not quite the universal everything.
And that's the point at which you'll see a correction.
But until then, narrative dominates valuation in the short term.
And I pity the poor public SaaS CEO who, as I say, trying to prove a negative.
Let me prove to you why I'm fine.
It's just too hard.
Just one thing, the tough thing as an investor, and maybe you do also have this lab, it's called your portfolio.
Yes.
And your portfolio, one thing you can say today is, hey, my early stage companies aren't truly at scale.
Scale is north of 500 million or a billion in revenue, so they don't matter.
But on the other hand, you may be seeing the future in your portfolio.
Public society, when I look at my last fund, right, you know, and I see what's happening and the fund's in good shape, whatever, 4.5x.
But honestly, like two companies, are like massively benefiting from the current world and b2b massively benefit in accelerating one i would say is a push like it's benefiting in nine figures of revenue but also being hurt and everything else is struggling because of ai all the rest of that last fund and and you can you know it's not all growing zero i'm not saying that but man like and it was so similar in 2023 so is that the past or the future i get confused but If you have a portfolio of companies exposed to all these things, they can't hide in high GRR like ServiceNow.
They can't hide in price increases like Salesforce.
They're getting whiplash at a pace much faster than the public.
And so when you see this on the first of every month, when you get updates, it's hard to be optimistic in 2026 about anything not already getting a boost from AI because you see the dramatic effects.
And it's just hard to keep grinning and smiling and saying, go guys, when you don't see any AI boost in your February or March investor updates.
It's hard to remain optimistic.
I think that, on the other hand, is probably true.
One comment on definitions, evidence does the SaaS is dead.
And it's such a useless word because we have to define our terms just a little bit more carefully.
If you think software as a service means selling software on a monthly basis for a fixed or variable price, then the thing is Claude is SaaS.
Harvey is SaaS, and Salesforce is SaaS.
So when people say SaaS is dead, are they saying, there's kind of two separate threads here.
Within the new world of AI, are we talking about how much the model will get versus the next, I call them new school SaaS, like the Harveys of this world, the next generation companies that pejoratively are called wrappers and optimistically are called standalone companies that can leverage on top of.
ChatGPT.
Then separate from that, there's old school SaaS.
So I think what people are, most of the time, people are saying old school SaaS.
In other words, stuff that was built pre-2022, pre-GPT, is what we're really talking about here, right?
Most of the time.
Then sometimes people go all the way to the, you know, all software is dead and the model is going to eat everything.
First of all, you have to just distinguish between those two scenarios, right?
What you're talking about, Jason, and I agree, is, for lack of a better word, old school SaaS built pre-2022.
What you're saying, which I think is also true, is that if you're public already in one of those companies, Salesforce ServiceNow, you're now living in a lower growth world where you've got to make the model work financially while at the same time investing in the future.
Because if you just make the model work financially, as Mike Cannon said last week, the good news is you have five years of 30% free cash flow.
And the bad news is in year six, your revenue goes to zero.
So you've got to be financially disciplined while adding AI to grow it.
That's, again, because I want to distinguish public if it's private.
That's the public SaaS company movie, right?
And you're right.
Then the tough category is the small, private, pre-2022.
If you're not getting SaaS lift, you really got to worry about what you're doing, right?
Especially if there is a credible SaaS story in your space.
I do believe, again, there's a lot of markets, even pre-22, that are software plus payments, software plus...
That aren't all AI.
It's not a baby bathwater thing.
I mean, but...
The sweet spot of your argument is horizontal workflow-related software built pre-2022 that's not public with critical mass.
That's probably the hardest place to be.
I just see a realization in my portfolio now of companies that are in the eight to 20 millionaire range, not benefiting massively, but growing 80 to 100% that are basically like, okay, we've raised our last venture dollars and we're going to have a good business, but we are moving off the venture train because we can't align to what is needed today to make that next round work.
And that realization I'm seeing set in.
Yeah, that's probably fair.
Is Figma a baby getting thrown out with the bathwater?
No, because, so there's two questions, is it and should it, right?
The is it question, it's still valued at 12 billion plus or minus, right?
It's still an amazing outcome.
It's still, I think, roughly 10 times plus or minus revenues.
And I remember, I used to know the growth rate and now I don't.
It's, you know, 30, 40, I don't swear to this in that kind of, it's not 10Xing, it's 30 or 40.
It's not down to, let's call it miserable single digit SaaS.
It's a perfectly great public company, 30, 40%, maybe higher growth rate story.
So at 10 times revenues plus or minus, it's absolutely not getting thrown out with the bathwater.
It's probably just getting valued correctly in the absence of narrative lift.
Whereas two years ago, it would have been valued at its value plus narrative lift.
It's gone from the voting to the weighing part of the capital markets.
So that's from a value perspective.
The other part of it is what's driving that is the where does it go comment.
And I'll refer to Jason on that.
Well, here's the bull case on Fig, but you can't argue like here's the existential problem with Publix.
You can't argue with the current numbers, right?
You can't argue with the current growth north of a billion.
It's great.
The other thing you can say is let's go back to your favorite replica level.
Number one use case for both product teams building prototypes.
OK, this Anton said this last week, number one use case at scale, not when Harry invests.
Number one use case today for both.
OK, that is all revenue Figma should have.
Figma make is a failure.
And I don't mean to be dramatic, but I think folks at Figma, if they're honest, would agree like it's they thought this was revolutionary.
But that is five hundred, four hundred, three hundred, four hundred million of AR Figma should own.
They should own this.
That lovable and replant should not be owning.
product prototyping and development for product people.
Figma should own this.
They don't.
They missed a whole generation here.
And that ties into all of this.
Figma, can't argue with Figma today, checks every single box on growth, market share, everything.
But good God, they missed 300 million of growth in their core for AI.
I'd be pretty critical, right?
It's actually double that.
both rapidly and lovable are 350 independently.
Yeah, but not all of it is probably, it's just the number one use case for their enterprise.
I'm just guessing it's for both.
It's their number one use case for their larger customers.
That's the majority of the revenue today versus the minority, but it's not all of it, right?
So assuming that that morphs to 300 million of bookings, but Figma should have gotten all of it.
If Figma make was better, why do I want to buy another tool to do this?
Especially because these tools weren't even really good until the fall.
As you guys remember when we started this, these tools weren't that great in the beginning.
Okay.
Figma should have owned this.
This is just the bear case, right?
And my God, now we're in 2026.
Why is, and the earnings will come out, I think before this pod comes out, but why is it make a $300 million, $400, $500 million error business?
Like this is much easier to sell than these damn seat licenses where we have to bang our heads against the desk to get 20 bucks or 50 bucks for Figma.
I can just sell multimillion dollar deals of Lovell and Repli just because my product guys can now ship functional prototypes.
Like they miss this huge change.
Base44 have also absolutely crushed within Wix.
I don't know that they sell to product teams like this for Figma, though.
Here's just my criticism of Figma.
And again, it's easy for me to say, good God, I didn't build a good company as Figma, okay?
But the honest criticism behind closed doors is Replit and Lovable shouldn't have gotten here, guys.
We own this space.
We let it go.
And we're just seeing, and this may happen to everybody, guys.
Everyone that's too slow.
If Figma was too slow, what hope is some of these other public companies?
I think you're exactly right.
Well, it's brutal.
First of all, I think you are correct.
So let's do Figma first and then the other comes.
Yeah.
And I think back to the valuation, I think the valuation is perched between if you'd done this and you had another 300, 400 million of revenue growth where it would be north of 120%, you would probably be valued at 20 times revenues, 25 times revenues.
If you don't get on top of this soon, that 10x revenues is going to go down to 5 and 4 and where the other 7% growths are.
markets are doing their job.
There's probably, there's an embedded probability that they make a better product and become, you know, take more share here.
And then some probably they don't, right?
And it's kind of in the middle.
And you're right, fast forward five years, there's really only one or two stories.
They get on top of this, they get a third market share, you know, valuation continues to grow, they're fine.
If they don't get on top of it, you know, you trend down to the horrible multiples.
The argument I would make though is, I do, and again, this is back to the not everything will roll over in one day.
I do believe Ironically, even though Figma, I think, is one of the most exciting companies of the last five, 10 years, I think that space was very vulnerable to disruption because it turned out to be very AI adjacent.
And I do think, and I'm not trying to sound boring, I do think there's a continuum across all these companies of how adjacent you are to what the models could do.
And there are companies that are very close to it and are going to get, as you say, sucked into the gravitational field.
And there are companies that are fairly far away from it.
I believe there will be change in accounting.
I believe the next generation of accounting software companies, we've looked at them.
They're super interesting.
They're adding AI.
But fundamentally, 80% of the value in an accounting software package is independent of AI.
It's debits and credits and a good UI.
How adjacent is Canva to AI?
Probably pretty close too.
Individual creativity, individual coding and individual creativity strike me as extraordinarily close to AI because it's happening right now.
You know, conversely, I mean, I'll say it, even Salesforce, we talk a lot about sales, and Jason, I hear you and your agents, but the truth is the level of disruption in go-to-market software hasn't been as acute as it's been in some of these creative areas, our coding, our customer support.
Now, I'm not saying it won't.
I love what you're doing with your agents, but just being objective about where is the eating happening fast?
Where is it maybe happening slow?
Maybe has it not happened at all, right?
Yeah, but of course, you're right.
Listen, I'm an investor in a company called Monaco that Harry knows.
It's the next AISDR for us.
We already have four, okay?
And they launched last week and we went live last week at the same time.
A couple of things that are interesting.
First of all, from a technology standpoint, it booked us a six-figure deal the first day.
None of our other agents could do that.
It booked it on its own, a six-figure deal.
That is interesting.
because that is the pace of progress our other part products we had asian force artisan qualified and a few others they're all great we use them every day they couldn't book a deal on its own the first day so the rate of progress is accelerating like we couldn't believe it did it on its first day okay and then here's the second point and then uh they have every demo booked up through the summer if they had enough manpower they could do two to three million their first month because the demand is so strong the demand now there's fragility there's turnover we could talk about how prompts are portable and the fact that this is so good that we would throw out an agent we bought a couple months ago shows you how fragile everything is but my point is that the demand is so strong as soon as the products catch up to the demand everything that maybe these sales tools are not safe like so much demand in one week just just a torrent of of demand And I see it in all of these products, that it is inexorable.
And it just gets, it just got, like, this one is better than the one from two months ago, which is better than the other one.
It booked a six-figure deal on its own the first day.
Jesus, holy, people don't like in the pod when I say JFC, but holy cow.
When you say booked, what do you mean?
It reached out to a leading hyperscaler, we've talked at this, that wants to do a six-figure sponsorship at Saster.
On its own, no human required.
It decided who the targets were.
It loaded them up.
It went out to the person and it booked the meeting.
The meeting or the money?
Well, it didn't close it.
That's the end of the year.
But don't be...
None of these agents could do this.
Before February.
They could do a lot of it.
They could send emails.
They could do a Marketo or HubSpot 2.0.
They could customize it.
But they couldn't literally go out to a VP at a very busy tech company and get the meeting entirely booked and loaded and ready to go.
And that's just progress in 60 days.
What will it be like at the end of the year?
It could completely close it.
Yes, it sent a well-written email and was able to schedule a meeting.
Yeah.
And you can, you can crap on it if you want.
But my point is the products weren't this good.
I agree.
60 days ago, you can say, Oh, I have this company in my portfolio that could do it.
We'll show me the money.
Like we've sent, we've done all that.
We have 20 agents.
I'm going to tell you this wasn't possible on its own.
You can get close.
You could have folks qualify themselves in and go to Rory's website and say, I want him.
And the AI would like move it down the funnel.
But to do it raw, people talk about it.
This is why I really wonder if anything is safe from disruption.
And I actually don't think any of the agent vendors are safe from disruption.
Everyone's promiscuous with agents.
We will switch.
This is so much better than what we had two weeks ago.
We'll switch to the next one.
But first of all, as is often the case, I hear you on the narrative just pushing on the conclusions because I totally get the AI SDR use case.
We're in Reggie.
We've absolutely seen things get better and better.
What's been super interesting is the product a year, year and a half ago had a medium level ROI, low level ROI.
It's taken iteration after iteration.
And now you're starting to see with the reasoning models increased performance.
as you say, starting to be able to convert old leads to active leads.
You're starting to be able to predict who you should reach out to.
Definitely a lot going on here at the top end of the sales deck.
But my point is just compare it, for example, with, as you say, to take one of your other two examples, coding.
There's a $2.5 billion market already taking place.
Not all the markets are moving at the same speed.
If you take, again, to your example of Figma, the next generation product tools like Lovable and Replit.
They're doing three, 400 million in space.
My point is merely the pace of adoption is not consistent across the board.
There's a sequencing question here.
At a meta level, like in some ways, I don't think it matters because there'll be spaces that are destroyed, right?
And there'll be spaces that are maimed.
And I don't know that it matters on a terminal basis.
Like if your space is going to be killed in eight years versus eight months, if you've gone on to hospice care, does it really matter how long you stay in hospice?
I mean, to the kid, to the employees, it does to the family.
But everybody pretty much knows when that SaaS company goes into hospice, it ain't coming out.
You will play the game and find out.
I don't know.
if everything gets rolled over in two years give an example not everything not everything the closer you are to code and support the faster the disruption has been no argument let me just rest on one thing just just this is why i i feel anxious about everything but but i don't have to run this figma ipos in july of 2025 like right when we got this podcast going right friggin rocket ship actually at the margin seem to be benefiting from AI at the margin, right?
Just since July, Replin and Lovable take 300, 400 million of their market since July.
And maybe even since September or October, because the product didn't even really work until September, October.
Good God, this is the best.
I mean, we were saying Figma was the best of the best that there had ever been in July.
And now AI is stolen.
And yes, product is one derivation away from coding, like no argument.
But let's not view any islands of stability when in July, this was the best thing we'd ever seen.
Yes.
It's only February.
We went around the room in July when the stock was at 110 and asked, where do you think it'll be in six months?
My vote, I think, was 35.
So it's 20-something.
But I was pretty right at the point in time.
So I get it.
But pushing back, remember the SaaS, again, the question is the velocity it happens.
I was just thinking about kind of the SaaS change.
And we both started investing and look at this stuff.
early 2000s, right?
Salesforce went public in 2004 and Service Titan, which is also a SaaS company, went public in 2024.
So it took around 20 years for the whole thing to transition, right?
I don't think it'll be that slow here, but I also don't think it'll be two years.
And I think that matters a lot in terms as an investor, where you choose to place your bets.
I mean, what we find ourselves thinking about is which markets are going to adopt quickly and which markets are going to take more time.
Because for example, Two of the most interesting apps categories, other than coding and customer support, we've talked about.
But if you look at it, two of the most interesting apps categories have been the entire law field and the entire healthcare doctor information field.
And it's no accident that both of those didn't really have a compelling old school alternative.
It was much more greenfield than some of these places where you are competing against existing SaaS companies.
Just worth pointing out that the sweet spots of adoption, it's this kind of jagged edge idea.
It's not all happening uniformly.
Some places it's happening now.
And those have been amazing categories for categories that frankly weren't great in SaaS land.
I mean, legal was a miserable category in SaaS land.
It's been amazing in AI land because LLMs manipulate language and lawyers manipulate language too.
and however you want to interpret manipulates, right?
Whereas some of the other most structured apps, it's been a lot slower.
That's my point.
Well, you know what?
Maybe it's an interesting investing question, right?
Because we started this on Thropic.
You could have two strategies to investing in AI and software.
One is let's invest in massive disruption today.
That's in Thropic.
That's most of capital.
Another strategy, and maybe Harry would crap on it, is listen, actually, I want to invest in AI.
I want to invest in the categories that are changing the slowest.
But with the best founders, but with the best founders.
That way there's a little bit of extra time.
Some folks may be missing it.
It's not that it's not coming.
It's going to be as disruptive as Anthropic and the rest.
It's just I've got two, three, four years instead of two weeks.
It doesn't work unless you can do lifecycle funding as well.
With the opportunity cost of cash, you have the concentration going to a certain direction.
If you take the second route of the contrarian approach, you have to life cycle fund that until it becomes attractive.
Not contrarian, just slower.
Yeah, it has to be more efficient for sure, right?
You can't raise four rounds a year in that approach, right?
Not for a while.
Look, which is why I think that the best place to be is neither of those two alternatives.
Actually, the best place to be is...
about a year before the posse in terms of saying what's going to happen next.
And that's obvious when you say it.
One of my quotes I often give is the Henry Luce quote of Time.
I think I've said it before here.
He said, my job as the publisher of Time magazine is to be six months ahead of the American public.
Not two years, not a week.
And it's the same thing here.
I mean, yeah.
Fair credit to the smart folks who looked at Entropic in May of 23 at Spark, Capital, and Menlo and said, hey, this is the trend that's going to be, and then you get the momentum, right?
You don't want to be looking at something that's not going to happen for five years because I'm with Harry, right?
The trick is to have, that's why I'm saying, try to construct some kind of thought process on sequencing, which of the markets are most vulnerable, which of them will happen next, which of them will take more time, in my view, is going to be a key part of the app side of picking where to play.
I think, Jason, you also said about customers willing into existence.
What I see in law, and I don't know if you do, Rory, too, but it's just big law firms willing AI into existence in a way that they never did in a SaaS era, where your Justin Carnes and your Atriums were coming with products.
They were not willed in with the same persistence that these customer bases are today.
I agree.
You're exactly right.
I remember, because we have invested in AI companies for 20 years.
I remember for a long time, there was deals where you'd go, you don't emphasize the AI because the customer would get scared.
They wouldn't like it.
It would slow down the sales cycle pre-2022.
And what's happened, and Jason said it earlier, it's the big aha here is post-22, if you don't have an AI strategy as a corporate leader, you're a buffoon.
And no one wants to be a buffoon.
So whoever's going to have an AI strategy, therefore, they're going to spend money.
I mean, if you write Harry, if you were running an Amlaw 500 or whatever it is, you're not going to sit there and say, I'm not going to make a play because I don't think it's all going to work.
You're going to make damn sure that you do something.
And therefore, 500 companies, all of them went to spend, I need to spend a million bucks right now.
They are competing on price, just like us as venture investors.
If they are not using AI, they are not able to charge a lower price and win that deal.
And it is that existential threat that they will lose consistently if they don't.
I mean, it gets back to where we started.
There's nothing better than being on board a market where all the participants have decided they want to buy something right now.
I mean, that's why Entropic is working.
That's why some of these other markets are working.
It's picking the markets that just tip.
And it generally lasts only two or three years and everyone's made their decision.
That's what's happening here right now in some of these markets.
Rory, you said about 20 minutes ago about like a narrative chasm or a narrative shift with regards to one of the companies we were talking about.
When I think about narrative chasm and news cycles today, the most striking is Stripe being worth $140 billion and Adyen being worth a third of that.
Can we just try and understand?
Is Stripe wildly overvalued?
Is Adyen wildly undervalued?
Actually, no.
I went into this.
thinking, oh, I want to find some narrative story.
But in fact, those perfectly rational reasons with one caveat why they are where they are.
I mean, for a start, zooming out, Stripe just raising privately, I think $130 or something like billion.
Adyen's publicly traded, looked at it this morning, only my brain is gone here.
Less than that now, right?
So a couple of things.
One is Stripe's doing $5 billion plus or minus.
Adyen's doing $2 billion.
So it's half the size.
So two and a half times the size.
So instantly you have to multiply by two and a half.
Adyen is very, very profitable, right?
But the growth slowed.
Stripe, it's not clear.
It's profitable, not clear as much.
And it's not clear where the growth rate is.
So they're a lot closer together than one would think when allowed for size.
So then on top of that, you have the, it's the classic.
I mean, it's a little like the whole SaaS AI story.
Do you want mid-level growth and massive profitability?
Or do you want...
more growth even at the expense of profitability.
And right now, people are opting for the latter.
I mean, basically, instead of saying, you know, the strike price is wrong, the Adyen price is right or something like that, just saying is that it's the eternal venture question.
How much extra in revenue multiple do you play for how many extra points of growth?
If Adyen's growing 20, and I'm sorry, I knew these numbers, but we're starting early in the morning.
I looked at them last night and the detail is gone, but I'd gone through the...
If Adyen's growing at 15, 20% and you pay...
Yeah, 10 times how much extra revenue multiple do you pay for something going at 25%, 30%?
Those are the contrasting narratives here.
I mean, look, Addy is a wildly profitable company.
It's like almost 50% operating margins.
Growth slowed, but yeah.
This is a company also that just wildly miscommunicates or communicates very little.
about how much cash they have, about how they're going to use it.
Alternatively, Stripe communicates in an incredibly strategic way.
We're telling a brilliant narrative, ironically, given the fact that it's private.
I do think there is this narrative chasm.
And I do think you can actually blame the communication of leadership at Adyen directly for a valuation mismatch aligned to that.
Do they even have a podcast at Adyen Management?
They should give up then.
They should give up the 40, 50 billion.
What did the Dutch drink?
Not a cheeky pint.
They need something to drink.
They're the Dutch.
I don't know what it is.
So Adyen 21% H2 2025 year on year revenue growth.
Would you rather buy Stripe at 130 or Adyen at 40 or 50?
I would go with Adyen because the likelihood of it being mispriced to the upside is lower.
Right, in the sense of- I'm sold, Roy.
Yeah, you're trading on value.
I mean, look, you have access to the data.
You know it's widely profitable.
You can value it.
In the other case, you don't have access to the data.
It's a private market.
It's a wonderful company.
I admire that company enormously.
Again, you have to distinguish.
Disclaimer, people, for the Collisons that are listening to this episode, Rory is not in any way being detrimental to Stripe.
None of his comments are seen as a criticism.
And he is intensely sorry for even talking in any negative light about your company.
Please continue.
Thank you, Harry.
You did that so well.
But that's the role of price is to equilibrate between the other issues.
I'll tell you the simple reason I would take Stripe, and it kind of echoes in my brain from Michael Cannon Brooks last week, right, is just the flexibility and agility today you have from being private.
In today's world, it's so stressful being public.
There's so much going on.
You heard Mike's point.
I got to be more profitable and massively invest in AI.
I mean, he was great, right?
It was such a great one, right?
And he was up for the challenge, like to his kudos, right?
He's up for that challenge.
To not have to make that trade-off perfectly and be private.
Even his sort of cheeky comment of his buddy Cliff didn't have to deal, maybe he'll wait to IPO like that.
I mean, I'd rather be Stripe.
So I'm going to bet on Stripe on this one, just because I think you have more flexibility today to respond to change.
As yet, my prediction is back end of this year.
We'll see the big three guys diving for the public line.
Atropic, OpenAI, and SpaceX.
And I don't think it matters when you're profitable.
You really can't stay private forever.
But companies that need big CapEx for the foreseeable future are going to go public because they've sucked up all the private capital and now they need to go.
Isn't it a funny time where the public markets are both at the same time the most attractive place in the world for a company where it has the ability to be memed or consumer loved like never before, but also at the same time be the single most hellish spot on earth.
And it's both the same time.
for two very different sets of companies.
Yes, it sucks.
It's problematic for the public markets because, yes, you have this thing whereby you can only be in this public market when you're pristine and your narrative value is high.
The problem is that's not all the companies all the time, which is why the number of public companies continues to decline.
But I do think at some point it has to be an easier place to be public while you're dealing with managing transitions.
If the idea is...
Every time you have to deal with a problem, you have to go private to fix it.
That strikes me as a little absurd.
And it's a combination of lawsuit avoidance, board exposure, I think indexing and very much shareholder bases that have little patience, activists.
There's a whole bunch of reasons why it's shitty to be public.
And the only good reason to be public is when you're hot, capital is dirt cheap and there's lots of it.
That's an OK value proposition for the best companies in terms of going public.
But it's not a great value proposition overall.
I'm excited.
You mentioned OpenAI there as one of the companies diving for the line.
Very big news was OpenClaw creator.
I'm going to probably mispronounce it, but Peter Steinberger joining OpenAI, the open source bot becoming a foundation.
How did we break this down, Jason?
I'm so intrigued to hear your thoughts on this because you spoke about how Maltbook was running different agents and how you were experimenting with it.
How did you analyze the news of the acquisition by OpenAI and Peter's joining OpenAI?
On the one hand, when OpenClar, whatever it was called back then, Claude Bot or whatever it was, at first I was like, and I said this to one of the top CTOs I work with, I said, you're going to churn off this because I was already there last summer when an agent deleted my entire database.
And now basically what this app does is it's designed to break guardrails.
It's designed to allow you to go onto your C drive and onto your desktop and access things that the leaders don't want you to do because they know it's a problem.
And it's designed to sort of run pseudo, not really, but pseudo autonomously 24-7, which Anthropic or OpenAI could do, but chose not to do.
So I'm like, you're going to churn off.
It's a dalliance, right?
It's a proof of concept.
Probably still true.
You're not seeing amazing applications in the last month that have come out of it.
But one, it has ignited the developer community like something we have not seen in a long time.
So buying into that mojo has some value, right?
one of the fastest growing stars on GitHub, fastest growing deployment.
The fact that every cool engineer is playing with it, it may be ephemeral value, but it's real, right?
The fact that Zuck lost the deal and cloned it on Manus yesterday pretty much shows you the technology itself is not that differentiated, right?
Now it's available, mostly hosted as of last night on Manus.
You know, is it worth a hundred million to open AI?
Maybe if that's what the price, I don't know what the price is.
I think this would be worth a billion plus.
I don't buy that it was sold for a billion.
I don't buy it.
But maybe it's true.
You have the numbers.
I don't do it.
I think it's about a hundred.
That would be my guess based on a number of things.
Maybe it's more.
Obviously, he probably turned down more from Zuck, right?
Which is the great insult.
I think what it opened everyone's eyes to is that, hey, we and I think this is why Anthropic was so dismissive of it at first was.
The safe thing is we don't want semi-autonomous agents running.
We don't want agents running rogue 24-7 with no guardrails, okay?
Breaking guardrails, saying crazy.
Like this is today's AI nightmare.
There's future AI nightmares coming, but it's too late.
I think it's too late now.
Like now every developer wants to develop truly autonomous agents and whether this platform will decline, right?
If he gets bored and goes on to the next thing or not, I don't know.
But the horse has left the stables for these autonomous agents.
and the risks associated with them.
There's no reason that OpenAI Ananthropic couldn't have built this last year.
They just didn't think it was safe.
They just didn't think it was safe, but it's too late now.
Just like Elon said, whatever, six months ago, I wish we could delay AI three to four years, but since we can, I'm going all in on XAI.
I think this is the moment where we shouldn't be doing these semi-autonomous agents, but it's too late.
We're doing them anyway.
So the risk has been elevated, but...
The developers have just, everyone's excited.
So the amount of innovation that will come, it's hard to predict, right?
When all of our apps run 24-7, making their own decisions, deciding whether guardrails are appropriate, working around them.
Jason, what does this do for inference requirements?
In theory, that's an untenable thing, right?
That's why not only are we buying Mac Minis, we're buying Mac Studios that can run a full model on the Mac, you know, the $4,000 or $6,000 Mac Studios.
But we'll figure it out, right?
I mean, you know, listen, there's a limit of my expertise, but you can run 24-7, right?
And you can run on mini models and you can run on, sorry, I use it.
What's the really cheap one from Anthropi?
It costs almost nothing.
So I think, listen, you can't run Opus 4-6 24-7.
not bankrupt yourself.
But maybe you run Haiku 4.5 and you're actually not running it 24-7.
You're running it every 20 minutes, right?
And so you figure out the cost.
Haiku is like a 20th the cost of Opus 4.6.
It's manageable, especially for apps where there's budget.
I don't know.
I think we'll figure it out.
Well, agreed.
That was awesome.
I think the interesting thing is how does the overlap come between apps for which there's budget and an agent that has that much power?
your desktop.
Because when I mentioned to my IT guy that I'm planning to download and try it, he pretty much had a connection.
So obviously, you just have to go and do your own little thing offline.
But I agree.
It was like, wow, this is the agent untrammeled with no controls over what it can do on your desktop.
That's obviously not a sustainable corporate thing.
But as you say, Jason, it opened everyone's eyes to what you could do if you had this.
So now there's going to be a whole...
plethora of how do you have it untrammeled, but with some kind of security guard, some kind of controls, and to get the positives of it without kind of literally having it nuke your entire hard drive or delete everything on your hard drive.
But it's the way it's going.
It was great.
One of the things people got excited about in Opus 4.6 was that it was easier to spawn a bunch of agents.
You could spawn six or eight agents that would go off and do things at the same time.
The humans spawn.
I'm sure it's true and lovable too.
I know on the next release of Replit, not only does it happen because they've built their own set of guard roles, but the agents do it at night.
So I know in the next release of Replit, when you log in the next day, it will have built three to four features for you on its own.
On its own.
That's coming like in the next release in V4 of Replit.
So imagine that happens to every app where you go to bed.
And you wake up in the morning and it's done all your general ledger.
It's done all of your whatever.
And you can say maybe it'll be slower to accounting this and that.
It will have built all of your assets.
It will have rebuilt your entire website.
That might be a threat to Canva.
When you go to bed and you wake up in the morning, it's built four versions of your website.
And I'm not saying others won't do it.
I'm saying Vercel and level.
But I know this isn't the next release of Replit.
That's pretty disruptive.
And OpenClaw is kind of like the hippie version of that.
It's cool.
We may not all use this exact product as it is today, but the idea of autonomous agents doing work for us, I mean, it's coming in 2026.
And part of it is pretty scary.
In one sense, anyone could have done it, but maybe in the big labs, they said you shouldn't.
And you think this guy just put it out there and everyone...
Yeah, that's why Anthropic threatened to sue them.
They're like, this isn't safe.
This is the last thing we want to do.
Get our name off this horrific thing that's going to go and release.
And just, you know, because when...
both OpenClaw and Maltbook immediately published everyone's private keys, private passwords, private.
They're like, this is exactly why we have a safety team.
We're going to sue you if you use our name.
This is terrible.
But then every single developer thought this was off to, you know, off to the Apple store or worst case Best Buy.
They're buying Mac minis and Mac studios because no one was more excited to spend nights and weekends building these things.
And that's why folks are like, Anthropic fumbled this.
I mean, maybe it's just the world, like they thought this was the wrong thing to do.
completely unsafe and zuck and uh and sam altman had another month and a half to think on it and said this is a movement like this is a freaking movement in ai you think anthropic fumbled the bag by not investing in this by not trying to buy him?
I just think the world changed.
This went from something that is a seemingly goofy guy with a shit-eating grin out of his face and can bench press 400 pounds.
And it seemed like a goofball guy almost mocking us with this.
And your legal team and it's unsafe and Dario's about safety.
We don't want this on our platform to like utterly the coolest thing that's been built in six or eight weeks.
I just think that everything changed.
It's just like investing.
I don't think they fumbled.
It was hard to tell at the time.
Maybe threatening to sue him wasn't cool.
Maybe the legal department could chill on the next one and just instead of the cease and desist, maybe just chill for another couple of weeks.
Maybe that was the error.
But I think it was too early to know it would be a movement.
If you talk to CTOs in your portfolio, it's just all whatever it was.
It was only like two weeks ago, right?
Just all of a sudden, everyone was using this two weeks ago.
Everybody.
And I'm like.
You're not going to like this, man.
It's going to delete your database.
It's going to steal your credit cards.
And they're like, but look what it can do.
But it's so cool.
But OK, what's the great app that you did?
Well, I built a TikTok and it sent it sent an email for me last night.
Oh, great.
What it's worth.
I think that's a great take, Jason, because you're right.
My initial was, oh, my God.
Antropic Funnel, but you're exactly right.
You set yourself up as a safety company.
You're extremely careful about what you allow to have happen.
That has been your brand and a wildly successful brand.
You're right.
The idea of some cowboy pretty much half taking your name and doing almost that.
I can see why they reacted as if they've been stuck with a stick.
The fact that Manus built this in one night said it wasn't about building the technology.
You could do it in one day.
we underestimate how important these guardrails are.
They're doing everything from what the agent says to folks that have suicidal thoughts to how they're interacting with your data.
You know, the easiest thing in the world is just to take a guardrail off and sell.
It's like selling data.
Like one of the easiest things to do is sell data you're not supposed to sell, right?
Data brokers.
Another thing that may be easy to expose is removing a guardrail you're not supposed to remove.
You might get a million developers to use that in two weeks.
To go out for details.
Yeah.
Yeah.
Who is the responsible provider of guardrails, do we think?
I don't want to get into like too into it, but is it, you know, the vendor who's offering the agent?
Is it the data holder, which holds the data, your Salesforce, your ServiceNow, you name it?
Or is it an independent third party that sits as a layer between?
I think we're learning, right?
I think there's a lot of responsibility.
I've talked with a lot of the chief A officers and others at some of those public companies, and there is a weight of responsibility on their shoulders for what these agents do that the guy from OpenClaw don't have.
He don't have that weight on his shoulders.
Jason, were they tech providers or tech users?
Some of the top chief A officers at public B2B companies have a lot of weight on their shoulders about responsibility for their own.
guardrails, which are much more narrower than what OpenAI and Anthropica have.
I mean, you take the guardrail off, OpenAI can shoot a gun.
You know, hook a gun up to your LLM, change the outcome of the LLM and say someone's threatening my home.
And it takes it the other way and it could shoot a person.
Ask your LLM if it could do that.
It could say it's possible, right?
You've got to have the guardrails.
Especially if you hook it up to the real world.
Take someone that's angry in the world and allow an LLM to control that.
Crazy things could happen.
So I think the weight of responsibility is huge for guardrails.
It's massive.
It's utterly massive.
Yeah, again, without, I mean, look.
Leaving gun comments aside because I think it's a little far fresh right now.
You are right.
If I'm a B2B software company and my agent goes from a very constrained agent that I'm selling to third parties, goes from a very constrained agent to something like the slightly safer equivalent of OpenClaw, you're selling a software product to your customers that can exfiltrate all their data.
You could make a 24-hour career-ending, company-ending move here.
You're right.
So you are.
Actually, now that I think about it, those guys are bearing it.
Because, Harry, to your point, there's two separate questions.
I mean, you said who's responsible for this.
I actually think it breaks up to who's going to be fired if they get it wrong?
And then what software will there exist to help show they don't get it wrong?
And those are separate questions.
My guess, the answer to the former is anyone responsible for initiating these.
No one's going to care whose fault it is.
If you let it into your company and it goes crazy, you'll be blamed.
I think there's a multi-layered to that because lots of different people can bring in software, but CISOs, chief security officers, will be blamed also.
There's multi-part.
Absolutely.
So my guess is even as we speak, there's people building really compelling agent-first security products to make darn sure that doesn't happen.
And we are about to invest in one.
Of course you are.
Of course we are.
But Roy, you know what?
That's great.
But what about me?
Me.
Can we change the title of the show to that?
I think it's got a catchy ring to it.
Before we, I do want to discuss, actually, you can choose which one you think is more interesting.
Workday and the CEO transition there, and then Thrive and the $10 billion.
Now, $9 billion for growth.
Actually, I know it seems less than Andreessen's 15, but actually their growth vehicle is bigger than Andreessen's at six.
My question on Thrive is just like, how much bigger funds do we get in venture?
Are Lightspeed and GC going to come out with 20?
I mean, again, as we said, thinking of it as early stage venture is just a mistake.
How big should a fund be when companies raise $30 billion rounds?
Now, there's only a few companies who raise those kind of rounds.
But if there's four or five companies valued at north of $100 billion, which is the two model companies, SpaceX, Stripe, and Databricks.
Again, when you deal with $100 billion plus market cap companies, potentially one of them as much as the...
a trillion, you know, a typical 5% ownership position is $5 billion.
It's just math.
So as long as these companies are staying private, the growth funds to finance them are going to get bigger.
It's as simple as that.
We said it in one of the shows earlier on, Drive has done an amazing stock picking job of backing Stripe, of backing Databricks, of backing OpenAI, and of backing them at scale.
The companies need the money.
The investors who have money want to get in those companies.
Drive is in the middle saying, I'll make this happen.
I go back to my comment, in a more sensible world, all these companies will be public and we wouldn't have to pay all these fees to just, you know, someone could buy Fidelity's small cap growth and get, actually in this case, mid cap and large cap growth, pay 50 bps and buy the same stock.
But in a world where these companies stay private, the need for someone like a Thrive with $10 billion is acute and they've stepped up and filled the need.
And there's probably room for more.
Plus, it makes it simple when you're thriving.
Your model is to do every round, not to back off when the number gets big.
Your fund becomes fairly simple.
You quickly consume whatever the maximum amount your winners can consume where you have your super pro rata.
If you don't beg off at the $380 billion or the $760 billion round, it actually makes your fund construction much simpler.
Get into the winner and do all of the rounds.
Just do all of them the maximum you can.
As long as the numbers work, it's a very calming model.
The partner meeting is very simple.
Anthropic also wants to raise $800 billion.
We can do $3 billion in.
It's our model.
It's our model.
We're in.
Next, Harry has this AI agent company.
I don't know about that one.
I'm going to give them credit.
They actually specifically, unlike some of the other funds that have invested in both, they've specifically are a fund that said, no, we backed OpenAI.
We're not going to back on Tropic.
I should have said OpenAI.
It's been monogamous here.
one thing that i do think is interesting is actually in the same week we saw arifian muhammad who i'm sure you guys know just through years in the valley i've known three years and by announcing that he was leaving and starting his own thing we saw max gazaul leave crv and start his own thing striker The question to me is, as we start seeing these AUM gatherers to the extreme, are we just going to see a continuing flow of these great operators within firms?
And I really respect Arif, I'm sure you guys do, leaving in the desire to return to early venture.
I don't know.
It's always about money.
I mean, peak 15 almost imploded, right?
Because the managing partner wanted to keep all the economics, right?
Just the other day.
It's not about getting back.
Who wants to get back to early stage?
I want to do the anthropic round.
Give me a fucking break.
I don't want to have to pick which accounting software in four years might break out for AI.
No one wants to do that.
Just show me the carry.
I don't think that's true.
I do think there are people who've made it.
I'm sure Aaron's made a fuck ton of money.
And I think he loves working with founders.
And I think he's bored of the bureaucracy of a big firm.
And he's like, I want to go back to picking cool founders and having fun.
Yeah, there's definitely some of that.
I mean, Jason, your cynicism is often warranted and there's often overlays.
But, you know, first of all, there's the human need to want to do your own thing, which you just got to respect.
You know, you're very post-economic.
Do you really want to be sitting there with five other people having an opinion on your deals?
At some point, you kind of go, maybe I just don't want to do it this way.
You might if you like them.
You might if you like them.
But then if they have too many opinions, you might find you not like them.
Look, the two of you guys are solo GPs, so I can speak to this.
Yeah.
My point is simply, it's a little bit reductionist to say it's about the money, though that can be a part of it.
There's also a sense of autonomy.
And then there is a sense of if you're running a big firm.
especially a multi-stage firm.
First of all, as a senior lead, a lot of your time is spent on firm management stuff, is my guess.
And on top of that, you're right.
90% of the decision-making is about, do you, in Lightspeed's case, brilliantly lead the $60 billion pre-rounded on Tropic?
And it's not about, do you put $10 million into this early stage founder?
And if that's what you want to do and you've made a gazillion dollars, go do it.
For sure.
For sure.
There's no question that, I mean, I certainly, if it were me and I was a partner.
Lightspeed, and I was the same person I'm today, I would retire into my own fund, right?
Just to not deal with the bureaucracy, right?
Jason, they're a well-run firm that get you first.
But the thing is, maybe they're kind, but walking away, very few firms, I'm sure scale's different.
Very few firms, and Harry has more data than me, are kind with carry vesting when you leave.
Very few firms are kind.
I mean, Chamath, all his ex-partners have sued him.
Mamoon sued him.
The Grok guys he sued.
I'm just saying people aren't as kind to carry when you leave.
I'm not saying light speed might be the opposite.
They might be the kindest.
And I know some are kinder than I would have expected.
But my meta point is it's not simple to walk away from vested carry.
It's not simple.
These are carries.
Many funds now vest over 10 years.
Some even backload carry.
because they want to penalize the folks that leave.
It is not free to walk away in many cases from a successful fund, right?
Where you literally could just half check out.
There is a significant economic cost at any point.
I mean, look, especially a successful and the more successful the fund and Lightspeed having an amazing run, the more the cost is.
You're right.
Anyone leaving is going, even if there's nothing kind of crazy, even if there's no loss of carry, you're still walking away from unvested embedded value.
Again, back to being post-economic.
And you got to start from scratch.
Oh, yeah.
As great as it is to work with these early stage founders, I'm walking away from a couple hundred million of Kerry.
I get to start from scratch and maybe in 18 years I get back.
As long as you start when you're 18, like Kerry did, it's easy because then at 34, you're back to where you were.
But Arif looks pretty young, but I don't think he's 18.
I mean, he's pretty fit.
He's got the hair, but 18 years could be a while.
Dude, starting young was such a competitive advice.
I was lucky.
I didn't realize how...
Yes, you are.
Guys, we can choose one more topic.
Is there one more topic that we have to discuss?
Netherlands, Highspot, Anduril, Workday, any that jump out?
I don't want to overdo the Workday thing, but man, it is interesting that Anil had to go back in like eight months to run Workday.
It's a pretty fast boomerang.
You know, and Owen at Intercom makes the point constantly that this is the age for the founder CEO.
And I agree with him 7,896%, right?
You think Anil wanted to go back as the solo CEO?
Just as much as Daniel wanted to go back to UiPath.
I mean, these guys were chilling, but he couldn't even make it a year, right?
And so it goes to Rory's earlier point.
I'm not challenging you, but your point that some...
folks, spaces will see the impact more slowly.
You would think Workday would be one of those spaces that isn't going to be disrupted overnight.
And Anil had to come back as CEO.
That's a fair pushback.
And what it says, because what I do agree is that, and you know, again, Carl Eshmach, Wiley Town executive, but what you're seeing here maybe is a combination of what the problem is not is go to market.
What the core problem is product roadmap.
And typically that's where a founder can do really well.
I can imagine that that's the narrative here, and it probably makes sense.
Because, yeah, Jason, you're right.
It is interesting.
I would have guessed HR software and financials.
would have had a long lead time to adapt to AI.
And it's not obvious that some, I don't think something AI agentic is going to displace the whole damn thing tomorrow.
So it is a canary in the coal mine that they felt the need to make that change.
And I probably should go away and think about that a little more.
It'll be interesting to see, was it, is it product roadmap, anxiety?
Is it identity crisis on the idea?
Or is there something specific?
It would be interesting to see then what changes in 12 months.
And that's probably how you judge a thing.
I think a lot of these boards don't want this, too.
They want the founder back right now.
There's too much disruption.
And you can't, this was Owen's point, too.
You talk to folks at Salesforce.
This is why you should bet on Salesforce.
I mean, listen, most public B2B companies are founder-led, right?
Most of them are.
But the amount of stress in that organization is so high at Salesforce.
And it's a good thing.
because mark is driving mass now we can we'll see whether it's successful right but he's driving more change the last eight months than the decade before that and who but a founder could drive that level of stress and anxiety and change across the company like everyone Everyone thinks they've got to step it up.
Right.
And it's just as an outside CEO hanging out at the SKO, RKO in Cancun, it's just hard to drive that change.
I think you're right.
It's funny.
And I was thinking about this because I normally I try and be contrarian.
And one thing I try and say is, is that really true?
Can it just be the founder?
You know, you love founders, you back founders, but you also want to try and not over dramatize or over attribute.
uniqueness to founders because you know at scale companies are all have to be run by non-founders but i've decided in this case you're right because If you have to do a turnaround with a problem or a business challenge, I can totally see a hired executive saying, you know, we've got a cost problem.
We've got a go-to-market problem.
We've got a segmentation problem.
All those things are classic playbooks.
And there's lots of folks you get.
But if the problem is the core thing you built has to be changed for a new way of building it, then having the memory of how you built it, what were the business choices you made and the kind of customer choices you made 10 or 15 years ago when you were building it the first time, my guess is you're right.
That's a problem where uniquely the founder, if they are flexible, can say, I know the trade-offs I made before.
Someone from the outside would take two years to even figure it out.
I just know.
Can we do it this way?
So in this case, I think you are right, Jason, is that you just come to the table.
Maybe the way to crisply articulate it is what you don't need in this kind of situation is generic business skills.
What you need is massively specific knowledge and skills and courage to make the changes that you know you have to make.
And that is where a founder has a vantage.
Do you think it will work, bringing Anil back?
The board is clearly trying to increase share price over the long term.
Do you think Anil will be able to increase the share price significantly in a 12 to 24 months period?
I don't have a developed opinion because I think that, again, it's back to the, I don't think there is a magic pixie dust that can make the growth rate of this category change from what it is now to something dramatically different.
It's not even like, The Figma example where you say there was an adjacency and if you pick it up, you'll get another 40% lift.
I think this is a mature established category.
Yes, you've got to add AI.
You've got to tell the story.
But it's not obvious to me that there's a magic fix.
It may well be a combination of a whole bunch of fixes, including on product, add up to a better growth rate.
I don't have enough opinion to.
I think at least he will drive faster change and he'll make quicker bets.
Whether he's the jobs coming back to Apple or Schultz coming back to Starbucks, we don't know.
I think a lot of these bets won't work.
But I'd rather have him running Workday or Daniel running UiPath.
Because here's the thing.
The amount of resistance to change is so high on the employee base.
This is the thing.
It's not just that the founder can make these two-year decisions.
in two weeks, to Rory's point.
It's not just Michael Cannon Brooks' point that he can make five-year decisions and today decisions at the same time, which an outside CEO struggles with, right?
Because if he makes five-year decisions, you lose your job if you don't see growth, right?
It's not just that.
Those are hard enough, but no one wants to do the work in the age of AI.
You got to go talk to the regular VPs of these tech companies.
None of them want to do the work.
It is just so hard to drive change when most of your employees do not want to do what it takes to change.
And you can say that's not true, but I talk to senior execs at these companies all the time.
Everyone wants to do the same job of 2023.
That is human nature.
They all want to do it.
And the smart folks actually are quitting all these companies and they're going to hot AI companies that are hiring recycled SaaS executives where it's just easier.
That's what you should do.
You should immediately quit these public companies and go to the hottest AI companies where the product almost sells itself.
Here's the thing.
The 2023-2022 toolkit works perfectly well at the hottest AI companies.
It really does.
It really does.
I released a show with the head of sales at 11.
It was good.
insanely popular show.
I mean, I can't even tell you how insanely popular it was.
The thing that everyone oscillated around was the 20x sales comp.
If you want to succeed in 11 labs in the sales team, you have a 20x on your head.
If you don't hit it, you're out.
Yeah, but I was with another AI leader where the sales team has $4 million quotas.
That's basically the 11 labs map.
They just rolled out their 2026 plan.
It's a $4 million quota.
I saw the commentary on that.
And as someone said, it's not that you're high because the typical you know, SaaS quota is around a million bucks, right?
It's not that they're hiring forex better salespeople at 11 labs.
It's that when people want to buy your shit, it's easy to sell it, right?
It gets back to the same thing.
It's all about momentum in the short term.
And the customers have woken up and said, these are the two or three things we want to buy in 2025 and 2026.
And if you're in those things, you can sell, you can grow like crazy, your stock price can go up.
And if you're not, it's damn hard.
It's just the constant reminder of just keep it simple.
Invest in companies that are in markets that are exploding right now.
End of complex analysis.
I agree.
Final one, and it's a bet.
Okay.
Oh, yeah.
Don't worry.
It's going to be great.
Okay.
Which public company founder will return to the CEO seat, which they left next?
I'd say it ain't going to be Deskin Moskovitz, man.
He just left the keys on the table.
Yeah.
I quit.
This job is stressful.
I don't like people.
I quit.
Dude, I'm within an anthropic holding like he has.
I totally don't blame him.
Halligan?
Sorry, Rory, you can recuse yourself from this conversation.
I know nothing.
I mean, when we're long since I did that.
Yeah, yeah.
But you're looking at $12.5 billion now.
Market cap for them down 45% in the last six months.
Halligan sitting there.
I love Brian.
He's amazing.
We all do.
Amazing.
You know, it's not fair because, I mean, maybe HubSpot and GitLab are the only candidates I can think of where there's just not enough boomerang.
I don't think Brian's going back and Sid seems, you know, he had his cancer scare, but he seems off on his own initiatives.
But I can't think, maybe I'm missing, there just aren't enough.
Like there's too many Michael Cannon Brooks out there for this.
There's not enough candidates.
That's exactly right.
And, you know, another candidate who everything won't happen, but it was he was a great guest.
Jeff Lawson, who was a Twilio, is now like I'm doing fusion.
You people knock yourself out, which are like telco stuff.
Yeah, Jeff could have been one if the ball had bounced another way, but he's not likely going back.
Yeah.
And given that the activists were mean to him, why would he bother?
Again, back to the same thing.
Why would I flog my way through that one when I think you'd get over the act?
Like, I mean, Jeff was very direct.
It was a great it was really a great show.
Greater than people realized.
Right.
My limited experience is when you're treated terribly as a CEO was like Jeff is, if people come back with humble pie and you care, you get over it.
Yeah.
You got to pay the price.
Like they might have to have given them a half billion dollar package.
But if there's a little humble pie, you get like, you know, you get you and a lot, you get over it.
Right.
Especially the activists are gone.
You get over it.
But yeah, not enough sample set, Harry.
So we're ruling the question out of order.
The more interesting one, which I would not touch is who's going to quit next.
Good question.
Who's going to quit next, Jason?
I don't know, man.
You know who deserves prizes for persistence and resilience?
Drew from Dropbox and Aaron from Box.
Just unwavering, resilient, persistent.
Yeah.
As you know, I was on the Aaron's board for many.
I just admire those guys for grinding out.
Because it's so hard, especially now when, you know, blabbermouth like us on podcasts are saying nothing you do matters.
You just don't care.
The ability to keep grinding on is actually very impressive.
It really is.
You know who just retired?
Dave Girard, right?
He said he was 60.
He's retired, right?
So there is a wall of 60.
I barely know him, but he's pretty young, right, externally.
But there is a wall of life where it might happen.
And then there's, you know, I was just looking at Yelp this week.
I mean, Yelp's down to $1.2 billion valuation.
I mean, Jeremy's young, but it's been, what, 20-something years, right?
And it's down.
47% this year to almost just over a billion.
He's great, right?
But ones like that might be vulnerable to personal issues or other things.
It's just not.
At some point, it creeps into the hundreds of millions.
It's just like, you know, like, good luck.
But as long as the founder wants to keep doing it, go team.
You know, I just admire.
I just admire the grind.
Monday at 3.8 billion.
Is that a buy or not?
Again, the thing is how I can make a comment here.
Let me tell you why.
I'm going to answer it very quickly.
Well, I'm going to give you some detail because I know what you're going to say.
Before you do, you have to give it because the interesting comment is this.
Narrative stocks, you can get away with on a momentum story, right?
So you're right.
Is that you could have asked me about pick an AI store.
I'm like, yeah, the market's big.
They're the leader.
Buy at any price.
You're right.
When you're dealing with something like Monday, you got to look at the revenue, the growth rate, the free cash flow, the SBC, the DCF, and it's a grind.
And you're still playing for 15% IRR.
All right, Grandpa.
We got 1.25 billion in revenue at 27% year-on-year growth.
Yeah.
2026 guidance expects 1.45 billion.
Non-gap operating income, 175, 14% operating margin.
Would you buy or sell?
The free cash flows, what do you say the free cash flows?
Non-gap operating was 175, 14% operating margin.
I mean, it's about right.
It's like 10 times plus or minus.
It's 1.7 billion.
What's the stock position?
And you said the market cap is 3 billion.
I bet you they have a billion in cash.
Yeah, it's 3.5 billion.
Of market cap.
Yeah, I mean, it's the classic.
Maybe to make the positive one, there's two questions.
If you can manage the SBC, which is a minor but important question, and the major question is 10 times cash flow for something growing sustainably at 20% is wildly cheap.
The question is, it goes back to Jason's comment, is how durable is that growth rate?
And if you have a product roadmap that can survive in the age of AI, that's probably an underpriced stock.
If you're destined, as Jay described earlier, to the gradual attenuation of your business, then you have to price this thing as if it can go away entirely and you end up in a different place.
So it all boils down to product roadmap, product direction, the age of AI.
I mean, if you believe it's durable, which we all did in December, then the fact that the stock's down 51.3% of the year makes it the screaming buy.
of the value stocks of the public cloud companies if you believe and we all believed it was durable just in december has it really i mean i do believe it's changed for this whole conversation but if you don't believe it's changed that much in 47 days this is the greatest buy that there is this monday you should just load up on monday especially and you have great founders this is still a founder-led company you have two founders at the top incredibly driven incredibly ethical who know their market cold who are still selling primarily outside of tech right which has less disruption um how could you if you believe the revenue is durable how could you not buy this one you must be saying we believe that none of this revenue is durable anymore do you have a durable matrix in your head.
Like, I'm just going to do durability of this versus Salesforce.
Let's take Salesforce because it is the original stuff.
Like, let's make a benchmark of one.
Do you think this is more durable, less durable than Salesforce?
I am long on Salesforce as a platform for agentic agents for real.
But the fact that we are at 10% growth with a lot of inorganic acquisition and a lot of price increases doesn't suggest high durability, does it?
And I mean, durability means it has to organically grow.
Durability doesn't count as dial up at AOL shrinking every year.
OK, that's not durable that we have a 30 year business.
Durable always meant for B2B.
We have over 100 percent.
net revenue retention for real not just based on price increases and threats and that means no matter what we do next year we're bigger the only question is how much bigger that's durable he's waving his hand as if to say give us an answer dude what do i what's that being a rory what's more durable is it monday or salesforce sorry the question is monday or salesforce yeah yeah what's more durable i think they're the same we just just smbs happen faster It may make sense to be more skeptical of Monday and HubSpot only because SMBs buy faster, they churn faster, everything's faster.
And ServiceNow will be the slowest.
99% GRR with...
five-year contracts.
I mean, you know, it'll be the next generation that will really see that decline, right?
Five-year contracts, 99% GRR.
The Mondays will churn faster than HubSpot, right?
And HubSpot will churn faster than Salesforce.
It's just delayed churn, right?
That's the thing is, you know, ServiceNow takes you 10 years to get off that platform.
So you've got, I mean, but you're oscillating here between A minute ago, you were saying, hey, we used to believe it was durable in December.
Now it's down 50%.
Look, I got to tell you.
So I wanted to do this for the show.
I think two weeks ago, I wanted to go and buy 200 grand for fun.
four stocks okay as shopify was my top one okay and i want to do four and i thought it would just be fun because i'm like look worst case it goes down another 20 i lose 40 grand but i can write off the loss it's really 20 grand in california because our taxes are 50 i'm like this will be fun for the show i could i did it last year actually i don't want to tell you what the companies were because we're already invested in some but um i couldn't do it i couldn't do it and i love shop fights because i just i don't see the floor This was me at my gut.
Like, I just want to do it for fun, for the content, for the content.
You don't see the floor.
Dude, I'll match you.
You don't see the floor for Shopify?
I did.
I was going to buy it right before earnings and it crushed earnings and it didn't help.
Bummer, isn't it?
Yeah.
And I'm like, well, and then I said, you know what?
I want to do this for the show, for the content, but I'll wait until after earnings.
And then it blew out the quarter and it didn't help.
And I'm like, I'll still do the bet.
But my honest point is.
I was going to do it for the content and I didn't actually do it.
Like, I'm like, I didn't do it.
Yeah, and the worst exposure was 20,000.
I'm not saying it's not nothing, but it's not as dramatic as it sounds, right?
Because, you know, it's not going to go to zero.
I'm like, and why the hell didn't I do it?
It's just because I couldn't see it.
I couldn't see the bottom.
But we could do it for next week.
We could do the 200.
We got to pick four candidates.
We got to pick four candidates.
What one are you going to buy?
You're going to buy a shop?
No, we got to buy, you got to put in 200 grand and we each pick four candidates, 50 grand for each.
And we watch it for the rest of the year.
No, because this isn't a startup.
You're not going to lose 200,000.
Rory's going to agree.
You're not going to lose $200,000.
At 10 times cash flow, no.
Yeah, it's not as big a risk as it sounds.
So we got to pick four by next week.
And I'm going to put Shopify at the top of my list again, but I'll do it.
Let's do this.
We're going to do this, but we're going to announce which four we're choosing next week.
I need two weeks.
I'm traveling, guys.
Sorry.
I need to think.
Okay.
I'm not trying to force you.
Harry and I are going to do it.
We got to show the receipts.
It's 50 grand.
This is not the end of the world.
It's 50 grand.
Pick your four Publix and we'll watch them ride.
We'll see what happens.
Okay.
I need a sales loft.
Fucking hell.
I'm just throwing around 200Ks just for content shits.
Okay.
I think the competition's gone up.
Everyone's got a podcast.
I think you are right, though.
It does force that discussion of what you really believe, because it is telling that you went to write the check and just couldn't.
It really is.
I just thought it'd be fun to come on the show, I guess, last week and say, it's not that I'm Mr.
AI, but like Shopify can't do any worse, right?
And I just didn't do it.
I don't know why.
It'll be fun.
All right, two weeks.
At least Harry and I got two weeks.
You pick your four.
Take your time.
Guys, this has been so much fun as always.
Thank you.
You've been awesome.
Rock and roll.
But before we leave you today, I run the 20 VC fund and I get this question from founders all the time.
Oh, Harry, I can't find a good .com.
Do you have a good hookup?
Well, let me tell you now, the answer is always going to be no.
I don't have a guy or a gal for that.
I do have a recommendation though.
If you're building a tech startup, get a .tech domain.
Tech startup, .tech domain.
It could not be more obvious.
As an investor, I appreciate founders who put thought into their branding.
When I see .tech in your name, it tells me right away that tech is at the core of your build.
It'll say that to your customers too.
A clean and sharp domain like .tech pays off in the long run.
You know, nothing.tech, 1x.tech, Aurora.tech, all of these great tech companies, they all use .tech as their domain.
These are my two cents.
If you're building a tech startup, don't overthink it.
Get a .tech domain.
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