# AI Compute Reallocation and SaaS Valuation Reset

**Podcast:** The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
**Published:** 2026-05-14

## Transcript

Are there really enough developers in all of the solar system to keep anthropic on the unprecedented growth path we have this year?
There are categories of software where if they don't have a reason to exist in an agentic world, they will go into a terminal state of decay.
If you're not accelerating, you're going to be destroyed, right?
And at a minimum, you've got to raise guidance.
I think Zoom Info's growth was stolen from it from Clay and Friends, and it's a brutal case study.
It's a brutal case study.
Give me 30% growth, give me profits, give me a story that's got some future in it, and I'll get you back to five times.
There you go.
In capitalism, great.
This is 20VC with me, Harry Stebbings.
It is my favorite show of the week.
Rory O'Driscoll, Jason Lemkin, here to discuss the biggest news in tech this week.
Anthropic partners with SpaceX to use their Colossus One data center, a mega move for both Elon and Dario.
Plus, they commit $200 billion to Google over five years.
Cerebrus IPO is 20x oversubscribed, and they bump the range to $150 to $160.
Then, Ramp is a $40 billion valuation on their new fundraise.
And finally, Applovin, HubSpot, Cloudflare post banging numbers.
But the street doesn't necessarily share the optimism.
What is going on?
We analyze the public markets.
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We are back.
I am so looking forward to this one.
As always, we're going to start with this week in Anthropic.
I think I'm going to be really unfair, actually, and just go off on one because Rory loves it when we go spontaneous.
So Anthropic have come out in the last 12 to 18 hours and said, nope, all sales of secondaries and SPVs need to be approved by the board.
Basically brings into question.
the legitimacy of the transactions that we've seen and will be able to get out of moving forwards.
This is a very big deal, actually, and we're seeing it impact their price in secondary markets significantly, 200 to 400 billion reportedly.
Guys, how did we analyze this as an announcement from Anthropic?
In one sense, not surprising.
Companies like to keep control of their cap table and they'd probably lost a little bit of control.
And stepping back, because the SPV word is a little misleading.
There's a lot of different ways shares change hands, a lot of different ways SPVs are used.
So let's distinguish them.
One is sometimes an SPV is when a venture firm has a big allocation, can't take it all up.
So it forms a special purpose vehicle and that company invests directly in Anthropic.
maybe raises money from the venture firm's LPs, and the SPV appears on the cap table, nothing wrong, nothing to see here.
But that's not what we're talking about here.
What we're talking about here is secondary sales of Antropic shares, outright sales, we'll come to that in a second, or transfer of economic value.
In other words, I own shares of Entropic.
I'm an early employee.
For whatever reason, I couldn't access the company structure tender offer.
And I decided to do something outside of that.
So the first thing I do is I try and sell directly to Jason.
He's willing to buy.
I'm willing to sell.
But Entropic says, we're not going to affect that transfer.
We have rights to approve transfers.
We're just not approving this.
And I don't know what they've been doing in the past, but that's what they say they're going to do going forward.
In other words, they have the right to say yes or no, which makes sense.
It's not unusual.
But the real thing that's going on, and this is where it gets interesting, is...
What I can also do is say to Jason, hey, Jason, I can't sell you my entropic shares because they won't let me.
But I contract with you that whatever I get for my entropic shares later, I will transfer that value to you.
And I will structure a document that says, you know, I owe you contractually all the money there is that ever comes from that share.
So now Jason thinks he doesn't have the shares, but he kind of has the economic right to the share.
So his money good.
And there's two problems with that.
The first is.
Probably the Entropic documents say, Rory, not only can you not sell your shares, you can't transfer beneficial ownership to those shares to Jason.
So I may not be able to do this.
So Entropic could say, hey, we don't agree to that.
And that's fine, though.
But the funny thing is, Jason and Rory might still have their contract.
Because I promised Jason something.
Just because Entropic says they don't agree to it doesn't mean Jason and Rory can't contract.
But the tricky thing for poor Jason, two years later when we got public, is, He doesn't have any structure.
He can't go back to Entropic and say, my shares are in the cap table.
I'm good.
I can just sell.
All he has is a commitment from Rory.
And Rory turned out to be a liar and a cheat.
And he never owned those shares.
Or he owned them, but he sold them to someone else as well.
And it's just going to get really messy at that level as individuals start trying to enforce contracts, not against Entropic, because they're not in the loop, but against other investors who sold.
So there's going to be a lot of losses at that level.
And I think Entropic is just trying to distance itself from that and probably also worried that if there's been a lot of transfers, I saw someone suggest that even though they say they don't allow these, you get into all sorts of equitable remedies.
In other words, the court starts saying, hey, dude, you knew this was going on forever.
You kind of acquiesced to it.
So maybe you are involved in this mess.
And they don't want to be involved in this mess.
So totally makes sense.
As you get ready for an IPO, you're like, I've been a little sloppy here.
Time to tighten up.
And then the real thing is we'll see the second order impact.
To me, listen, maybe I'm missing something.
To me, this story seems like a nothing burger made up on social media.
Let me tell you why.
First of all, all companies have had this for a long time.
Most of our portfolio companies have the same provisions in it.
This has gotten more and more locked down over my investing career, right?
It used to be the lawyers wouldn't put this stuff in in default.
And then maybe four or five years ago, every set of charter documents say no transfer without the board permission, just like Anthropic and OP&I.
Okay, so nothing new.
Two, Anthropic last year warned Memo, one of its best investors and others, enough with the SPVs, they said publicly, enough with the damn SPVs.
This isn't new.
They said, stop the SPVs.
If you want to invest, you have to invest directly.
Okay, they were clear on this last year.
I think this is Anthropic just saying this is still happening.
They named a bunch of entities in there, which you never see.
They named like five hedge funds or something and saying, these guys are bad actors.
I think no one was listening to them is the problem.
They banned it.
They were clear that one of their lead investors, you know, greatest and one of the greatest venture investors of all time, they told them to stop SPV and they told everybody there's so much greed in AI, people wouldn't listen.
And so they named actors.
And I think the interesting thing to me is when folks don't listen.
I don't think they listened to the company last year.
So then you have to go public on the megaphone and make sure everyone hears, hey, these are bad actors and don't do it because people, people were, they're so greedy.
They take the risk anyway.
The triple layered, quadruple layered 20, 20, 20, 20 SPVs.
This is the hottest share of the century.
We're going to discuss the next big deal of the day, which is Anthropics deal with Elon.
We've said before about Dario's difficulty in his job in terms of forecasting capex requirements.
Rory, do you want to just provide some context into the deal with Elon and what it basically means?
Just shows needs must when the devil drives, as they say.
Elon in the past has said horrible things about Antropic.
They're evil, they're woke, they're anti-white, they're anti-Chinese.
It's been as recently as three months ago.
And suddenly, he wakes up one morning with excess capacity.
And Dario wakes up one morning with a need for capacity.
And Elon ends up in trial with OpenAI.
So the enemy of my enemy is my friend.
And here we are.
Totally sensible deal.
It says a lot about both markets.
It says this is a market consolidating.
And even though they will deny it till the day they die, what this is is x.ai slash SpaceX slash Grok basically saying we're not going to be right now a leading edge model contender.
Grok is not growing like OpenAI and Entropic is.
And we're going to effectively switch from being a net buyer of CapEx, because we're trying to build Grok, to being a net seller because we're not going to be able to build Grok.
the data center was 11% utilized.
So this is the market consolidating.
The stronger players have the capital to buy more CapEx.
And in the context of this, Grok is a weaker player, and they very wisely are opting to stop.
for now at least, the dream, and instead take probably $4 or $5 million a year, which is a big slug of revenue.
I mean, depending on the estimates, $3 to $5 billion a year of revenue, which for an asset that was losing money, and for context, the total SpaceX revenue run rate is around $20 billion.
So this is like a 15% revenue list from something that, you know.
a couple of months back looked like a money pit.
So the combination of this and cursor, I think they've taken X.ai from a $250 billion, which is what they paid for it in SpaceX stock, which is astonishing, from kind of a, huh, why are you doing this?
To, okay, I get it.
It's at least notionally pro forma profitable and has some kind of existence, right?
But it's not a competitor anymore to Entropic and OpenAI and trying to pretend it is as different.
So you've got your own little core weave.
Congratulations.
You know, we talked about this a couple weeks ago and I said something, you know, I usually don't use these kind of lines, but I said something like this wouldn't be hard to imagine because like Samsung does it with Apple.
They compete and sell them components.
And we talked about this, said, no, you're ridiculous.
So yeah, they just, they would sell it to each other, right?
Actually, the most obvious candidate now is SpaceX because they've got to have different BUs.
I can't even keep track.
You've got the rocket guys, you've got the Starlink guys, and now you've got XAI, which is two things mashed together.
And they each have their own P and Ls, BUs, and responsibilities.
And if I'm stressed.
and I'm running this XAI Twitter thing, and I can get another four to five billion in Terori, it doesn't just make sense for the IPO, it makes sense for me.
It just selfishly makes sense for me.
So I don't think the deal is as surprising.
It's a reminder to like, keep meeting with your competitors.
This is a classic Sastra post.
Always meet with the CEOs of your competitors.
You never know where it's, it's never a bad idea to have lunch once or twice a year with your competitors.
It's never a bad idea.
Cause this is one of those deals.
And two, the more interesting thing to me is my God, you know, this, it changes so quickly just a couple of weeks ago.
It's like, well, Anthropic can't launch Mythos because it doesn't have enough capacity.
And now Anthropic, I hate the 5D, 8D chess metaphor, but now it's going to, it's figured out a way to have more capacity than open AI.
Like it's pretty epic.
like to just hoover up anything that's available on planet Earth and possibly orbiting soon enough, but it will hoover up everything available, right?
CoreWeave, XAI, anything, right?
It'll probably buy capacity from open AI if Sam lets them for some reason.
You know, capitalism works and assets should get reallocated to the person who can create the most value from them.
And, you know, right now, Anthropic can turn that CapEx into the most amount of money the quickest and Grok could not.
So I agree.
person who is in charge of making the P&L work for the data centers is sure glad to get an extra three to four billion to make his math work and not get fired by Elon.
Pretty happy.
It will be fun, by the way, to watch the SpaceX Roadshow because someone's going to have to perform it out.
Well, this is what we owned a year ago.
Then late last year, we bought X.AI.
So bear with me.
We dropped all this stuff in here.
That's what it is today.
And we have a whole quarter of combined revenue.
Oh, and by the way, we then sold all that capacity.
And that should hit next quarter.
So you got to perform that in.
And then the quarter after that, we're going to drop in Cursor, which hopefully Colossus 2 will be online then.
And you got to perform that in.
So basically, Mr.
IPO investor, you're buying a $15 billion runway company today.
And it'll be a $23 billion runway company in two quarters with two totally different business is on top.
That's why the bankers are going to earn a couple of hundred million dollars.
But it won't just be an extend the model and grow 20% Q&Q kind of analysis here.
Another deal for Anthropic.
They also did a deal committing $200 billion to Google over, I believe it was a five-year period.
To your point, Jason, on Samsung and selling it to partners.
Ultimate sign of a circular economy.
Ultimate sign of Google's superiority in their positioning, owning both Gemini and then TPUs and where they sit selling now to Anthropic.
Anything of note there?
To some extent, at places like Google, it's like, okay, like obviously we want to win.
We want Gemini to win.
We want to beat everywhere.
But we're not strong everywhere.
We're not.
But let the best model win.
Like we're going to win, but we're okay with internal competition by selling capacity on Thropic as well.
Like it's okay at their scale to let the best buyer of these different things, I mean, they don't have infinite capacity, but it's not necessarily a bad way to keep everybody on your toes to have a little bit of the competition inside of you.
It's not necessarily a bad thing.
It is interesting though.
I mean, I think there's a couple of things, but one is, you know, I think now the Anthropic Rev commit is about 40% of Google's total future backlog.
So it underlines quite how heavily dependent the hyperscalers are on these two privately held companies, which are effectively providing more of those revenues.
And you're right, Jason.
I mean, reminder, everyone, Google has Gemini, which in theory is a direct competitor of OpenAI and Entropic.
And this is Google giving a separate...
part of Google giving Anthropic the compute they need to grow.
And I think in one sense, you're right, win both ways.
I'm sure at the margin, you'd prefer at Google to be the winner of the model company because I think, and I could be wrong, I think in the end, the value will accrete mainly to the model providers and everyone down the stack that's selling to them, even though they're all making out like bandits today, starting with the memory guys all the way up to the hyperscalers.
Over time, that's not the obviously differentiated place.
And I could be wrong on that.
Maybe CapEx and the ability to invest hundreds of billions, millions of dollars in a data center is, in fact, the moat itself.
But over the long term, if I'm Google, I'm like, I'm happy that I'm doing $200 billion of revenue with Anthropic.
No more than Microsoft is happy they're doing $200 billion of revenue with OpenAI.
But deep in your heart, you should be saying to yourself, God, I really wish Gemini was so busy that they needed $200 billion of compute.
And in Microsoft case, I really wish I even had a model that was worth a damn, which I don't.
Because all you're doing is you're enabling your balance sheet, the two most exciting next generation tech companies who are going to draft on your balance sheet air cover and become huge.
It's for sure.
I mean, there's a trade-off.
You're enabling your competitor, right?
It was interesting.
The Wall Street Journal today published the market shares in the enterprise for OpenAI, Claude, Gemini, and Grock.
Grok is a rounding error going to the prior conversation, right?
It's not making any progress.
But everything is so multimodal that it said Gemini went from 27 to 40% market share, I think in the last nine months, and Claude went from 21 to 48, okay?
And obviously OpenAI actually only went down a little bit.
They don't sum to 100 because you're multimodal, right?
But if Gemini has gone from 27 to 40 and Claude, as we know, has gone from 21 to 48, now Google's got both pieces.
It's got its own winner.
going to 40 and 50 and 6% of the enterprise.
And it's got a large share of this other leader, 48%.
There's worse ways to solve to revenue growth than having both the fastest growing players yourself and your competitor.
You get a piece of each.
Jason, I was so intrigued to hear your thoughts on this Goldman piece, where they essentially summarize saying agents will push tokens consumption up 24x by 2030.
Again, our job is to kind of invest on the back of this and invest in companies that provide these services.
When you heard that and living as you do with the company structure that you do today, do you agree with that?
Do you think that is enough?
Do you think it's underplaying it, overplaying it?
How do you respond to that?
Well, I wish I had the fluency in numbers that Rory has, but 24X sounds...
I know I highlighted this, but it sounds just way too low.
Agreed.
The theme of a lot of the rest of the year, it's just taking off now.
The theme of a lot of the rest of the year is parallel agents.
Now we don't need parallel agents in everything.
We don't need a hundred SDRs hitting up our 1000 potential customers every minute.
Like you run out, there are definitely plenty of workflows that do not need 10, 20, a hundred parallel agents.
You don't need a thousand flights going to the Bahamas for your vacation, but workflows that can benefit from parallel agents, it's just kicking off inside of these LMs, their models.
And so not only is this 24X sound alike, what if we have 10 agents that's 250X, right?
And more.
And then we also.
forget how under penetrated the enterprises are.
It's so early outside of tech, right?
So I don't see why it's not 250X, but I got to put it on a better spreadsheet.
But I think we're underestimating.
the potential impact of parallel agents.
It's still, still most of us live in a sequential world.
We fire up something, Claude, Claude code, chat should be, it doesn't matter.
And we're kind of have a human interface where we're doing things sequentially because that's how our brains work, but it's also how the LMs have worked.
But now that they can natively run parallel agents, we just get these superpowers we didn't have a couple of months ago.
And what these parallel agents are doing, if you haven't seen it even in action, is they'll be even better because like first things like coding, they'll go out and do 10 different versions of the same feature or of the same iteration.
And then the LM will decide which is the best of the 10.
It can present you the two or three best options and you can approve it.
So why build a feature once if you can build it 10 times, have the LM decide which of the two to three expressions of the feature is the best, and then you pick the best combination of the expression.
And so you can see hints of it like in image generation.
You know, you use some image generation, sometimes you get four images.
But what if you were in real time blending the best of all of these with much more complicated workflows?
So 24X just sounds, it sounds conservative.
I think that's why Anthropic's right to buy every TPU, GPU, every Cerebus chip, 12-inch chip they can buy.
Yeah, and I think the token count is always a miss.
Because I mean, I've tried to do these numbers, Jason, and it's just so hard.
And I saw the summary of the Golden Report.
I haven't read the detail, and I really want to, because I was trying to think through the same stuff myself.
But what do you know?
Every 18 months, the raw performance of the chip gets roughly 3x faster.
Then on top of that, other optimizations, how they run LLMs, how they do all the quantization, all the other clever stuff that you can read about and try and understand gets you another 3x.
So you're probably roughly 10xing the number of tokens per unit of money every couple of years, right?
So you have that, right?
So if you were using more tokens, right, ironically, the total revenue would be going way down.
Because if you only needed a million tokens and it cost you, I mean, you see it in the prices, they're down 10x.
If it cost you five bucks now for the same number of tokens at the same efficiency, it would be way cheaper.
But then what you have on the other side of things just getting better, right?
So you use more of them to get to a better result.
But what you see, as Jason said, is when I looked at the token count to support a chat two or three years ago, when you're interacting with an LLM, whatever it is, it's X.
10x that now to do some kind of simple co-work analysis.
And it's 10x that again if you're doing coding, and it's 10x that again if you're doing kind of parallel work and kind of where these agents are going.
So you're just going to see token utility.
The cost per token is going to go way down, and the use of those tokens is going to weigh up.
And then the question is, you know, the interesting thing is you're dealing with two numbers, one on each side, that's moving an order of magnitude every 18 months and trying to forecast where the net multiplicative effect of that comes out.
is hard.
I mean, you know, that's what you're trying to do.
And I wouldn't fool myself into saying that you can be wildly accurate on that.
You can get the rough direction, but it's hard to say, you know, I know exactly how this is coming out.
There is a little bit of a growing counter argument that's growing here when you talk to some of the best CTOs and engineering leaders that we don't need as many tokens as we think.
And if you talk to folks.
that didn't just get their team the last quarter or so to get going right on cloud four, seven, but have been deep in this for a while, right?
There are multiple releases into their whole team being AI pilled.
You know, there is a theme that like, we actually don't need this much code.
We don't need this many lines of code.
It is too much.
We cannot process all of it.
And this is just a lot of token maxing that is just unnecessary to deliver what the end customer needs.
And we're all learning.
We're all excited about these.
tools they work and people are running they're running claude code and codex eight ten hours a day but it's not necessary guys you're producing too much code that's never going to be committed to production you're wasting your energy and there is this there's the token there's like the whole from the press the whole token max at amazon where people are pretending to work because they have quotas but this is different this is some of the smartest people saying the folks that need this this many Cloud coding, these are the mediocre web heads, web developers that don't know what they're doing.
Okay.
These are like a little bit better than Lemkin.
How do you think about that then with respect to your Mike Cannon Brooks at Atlassian saying, hey, our demand for new software, new products, new features is infinite.
And so we will continuously need labor supply of great developers and we will continuously need more tokens because the demand for new technology and new products is infinite.
Yeah, but the question is, can the average Atlassian engineer...
really effectively consume $10,000, $20,000 a month of tokens and be productive.
Okay.
And there is a growing micro backlash that the best, the best developers and engineers now don't need $20,000 a month necessarily.
And that this is going to fade and we're not going to go back to, to hand crafting code.
Right.
But that this is, we don't need to be, to be running cloud code 10 hours a day.
This is a bad way to ship enterprise grade software.
This is a great way to, to ship hacks.
and proof of concepts and impress my boss.
But do we really need this many lines of code a day?
Do we really need it?
There's a lot to unpack.
I'm a little tentative because it's more my inf for colleagues doing this, but I've been talking to them about wrestling with this question.
So I just want to pick this apart, Jason, because there's a lot to do.
One is...
This whole idea of monitoring people's token consumption and what impact that has.
There's an economic concept.
There's actually an LSE professor, Goodhart's Law, which basically says whenever you monitor a variable, you actually change the causal relationship of that variable.
So once, which is a way of saying, if you say to people, I'm going to monitor your token production and how much you use, you will in fact distort the result.
And that's what Jason's hinting at.
And I think we saw it for either Amazon or Meta or one of those, where employees...
are internally just burning tokens on stupid tasks, which is easy to do just to make sure they quote unquote make their quota.
To assess the market size for these companies at a highest level on shopping, you do have to have some mental model of how much LLM spend, for which token is a tricky but meaningful proxy, it is going to be relative to salary.
And that's one of those macro numbers I'm kind of trying to figure out all the time.
Does the average developer spend 2% of their salary dollars on tokens?
Is it 5%?
Is it 10%?
It's a huge number.
It's a very important number.
But the odd thing is the more these big companies target their employees based on it, the more likely the employees are to distort the outcome.
So that's the first big picture comment.
And I agree.
I think there's a ton of that shit going on.
And to some extent, when people find that out, and I think there will, I think there is going to be a push to get more grip on costs, because there has to be.
Because if you think back to December, when Entropic was at $9 billion run rate, by definition, very few of those CIOs had in their budget, oh, by the way, you're going to spend 10x that next year.
And it's a big sum of money.
Someone's going to have to find $50 or $60 billion of budget across US corporates, and that's real money.
And what that means is it's going to start being some kind of pressure on where is this money being spent, even if they still want to kind of AI max conceptually.
So I agree with you, Jason.
So on that, I agree.
The thing that I don't know enough about, and I'm just going to ask you because you said it is, do the quote, best engineers.
not need as much tokens.
I hear you.
Two questions on that, and they're questions that I ask my info guys where I don't have the answer.
The first is I've heard them articulate a perspective that actually says it's the opposite.
The very best engineers can, in fact, manage because they have the conceptual vision of what they're trying to build.
They can be more productive with these tools.
And the less productive you are, the more you're getting yield loss in the sense of you're using tokens that aren't turning into effective code.
Yeah, but I think both are right.
I think now they really are becoming 100X engineers, right?
Let them use whatever they want, right?
Give them all the tools in the world.
The concern is that...
There's kind of a snarky term, web devs, there's others.
Folks, one or two steps above me, or the mediocre folks on your team that just aren't that good, okay?
They're web devs.
They're consuming massive amount of tokens for relatively low amount of productivity gains, right?
And it's not all performative, like the Amazon thing.
Some of it is attempting to keep up, but they need so many tokens to contribute so little value, right?
It's the 100,000 line of code where...
Some folks were made up on Twitter.
Do you really need 100,000 lines of code to run a blog?
Well, maybe you don't, right?
Which is why the question I'm always asking the rest of my team, and I don't know the answer to, is what is the objective?
How do you think about measuring this?
I mean, you're right.
Lines of code is a dumb measure because this stuff grinds out lines of code.
You need some kind of conceptual effective lines of code.
And I haven't found anyone.
In fact, we just surveyed, I think.
30 of our VPs range to try and understand, you know, what's going on in terms of spend.
And they're all spending a lot.
They all think they're going to spend more.
But you're right.
I didn't get clarity on what is the heuristic for success.
And there has to be one over time.
But it's just hard to know what the ratio of like web devs and token trashers is to 10x or 100x engineers, right?
And this, it just goes to the question we asked before, are there really enough developers and all of the solar system to keep anthropic on the unprecedented growth path we have this year?
Probably, but a counter argument is these web devs and trash tokens.
And we like, we're going to, this is going to play itself out.
We're not going to, in a year from now, we're not going to be wasting tokens on mediocre web developers playing with stuff.
And we're going to clamp down on it because it's a huge waste.
We're going to give the S tier guys all they want the hundred X, but that's always been true.
Probably there is.
And then also Anthropic released 10 financial agent templates, killing a load of YC companies in the process doing them.
In a couple of weeks, they are scheduled to come out with a legal.
product, which will challenge Harvey and Nagora, apparently in a very meaningful way.
And so there probably isn't enough developers to satisfy the insatiable market cap increase, but there is when they take legal and there is then when they move into financial analysis, financial modeling and everything in between.
I don't want to go too far.
I just...
We're still trying to see, we talked on the show about Claude design, whether it was a killer, right?
It isn't a killer yet.
I just don't, it's hard to predict some of the stuff.
Listen, there've been many YC and other startups that have been destroyed by a Claude feature, right?
I've invested in one or two.
Being able to innovate faster than, than Anthropic is tough.
Okay.
It's pretty effing, this is not classic slow company, slow pace, right?
Having said that, boy, if I'm a lawyer billing $2,000 an hour and doing this, I don't want to take a risk.
It's not that I'm not going to ask Anthropic and Chachy B my questions.
I'm going to ask questions too, in addition to Harvey Lagoer or other tools, right?
But man, I don't know.
I don't want to take any risk that this is not have the level of domain investment in anything that is close to regulated or has other, I mean, people already got the memo, the Wall Street Journal.
You can't submit briefs to a court with hallucinations in it.
Everyone gets that's a problem now.
The question, are these guys going to take away everyone's vertical business?
And I don't know.
I think it's what Jason said is that I think the model companies have a lot to do building their models, building broad horizontal harnesses, building products like Co-Work.
It's not clear to me that they'll be able to have the time and the focus to do all these specific verticals, nor should they.
I agree, but I think there are some very core verticals like customer support, like legal, like financial modeling and accounting, where they are mega and very clearly winnable.
I don't think there's any chance that Anthropoc is going to...
do applications in CX.
And actually, and I could be wrong, I will bet you a lot of money they're not going to go all the way in legal at the app.
That's why design was interesting.
It was an application.
Okay.
Now what does Harvey cost on average?
$150,000 a year per law firm.
I don't want to roll that into my $200 a month.
I'm paying for Claude.
If there's any risk, it's just not worth it.
Right.
It is just not worth it.
I need a solution.
I need it to do everything.
I needed to integrate with DocuSign.
I needed to prepare the brief properly.
I needed to review it a different way.
It's just not worth.
This is not a career where saving a few pennies is worth it outside of the low end of the market.
Maybe the ambulance chasers do use Claude, right?
That's fine.
I may be wrong next week, but I'm not confident that these verticals are going to put the resources to build an application.
That's the thing.
They're not going to build a CX application.
They're not going to rebuild Decagon or Sierra or Finn or Gorgias or any of these other.
It's not that they won't build chunks of it.
It's not that like OpenAI hasn't taken away pieces of 11 labs or other pieces of other folks, but we haven't seen them commit to building applications.
That's different.
If the LLM can express what an application does, that's where the YC companies get killed because all of a sudden you don't need an application.
It just works in the prompt.
That will kill a thousand stars.
It already has killed one or two of mine that are on, one is on its third version because it was super innovative a year ago.
And then it is built into Claude today.
Step back here.
This is not the first time you face this question.
If you look at every single platform, there is a dominant compute level provider.
And the million dollar question is how much of the app player they take over.
Right.
I mean, let's just do two obvious ones.
Microsoft in the 90s, they were the operating system.
So they dominated broad, horizontal application software for the consumer and the individual knowledge worker, the office suite.
I think co-worker could be like the office suite.
And they dominated networking at the kind of infrastructure layer, you know, just connecting things.
But there was hundreds of application software companies on top of that, Siebel, Vantov, Scopus, Clarify, BAN, SAP, that said, we run on top of Microsoft.
We build specifically for this vertical or this horizontal use case.
And Microsoft tried.
They bought great planes.
They never really made it happen.
Fast forward a decade later, hang on, Amazon, same kind of question.
Does AWS eat everything?
And I know lots of brilliant investors who passed on Snowflake, which is not even an app.
It was an infrastructure level player because they said, oh my God, Amazon Redshift is just going to eat their lunch.
It's not going to be a thing.
And it turns out it was a $50 billion thing.
So my point is you have to have some...
approach to thinking about this, but you have to face this question every compute revolution, and this is just the latest turn on the crank.
And to me, the default is the Microsoft outcome, which is the equivalent of broad horizontal compute is now broad horizontal intelligence.
And that's going to be provided, maybe not by the monopoly like Microsoft, but the oligopoly of Entropic, OpenAI, and maybe Gemini.
Probably the kind of knowledge tool Microsoft will regret to their dying day, why they let slip on this and let...
Claude Cowork be there, take their lunch, but that's their problem, not mine.
But at the app layer, I'm kind of with Jason.
I think all these individual apps, especially, and this is a key point, especially to take legal.
If all you're going to do is mark up a document for an individual user.
I think there is an argument that an individual user might get a skill from Claude and they'll be fine.
But most of these companies are selling coordinated workflows across an enterprise.
And I think once you get to that point, I'm with Jason.
I think Lagora, the Harvey rep, if you sell into Amlo, GCAI, which is ours, if you sell into corporates, you're going to want both the relationship, you're going to want the ability to customize it to what you want.
There's just going to be a whole bunch of work that's just better done by a focused firm.
I mean, I think history is on our side.
That's the way it shapes out.
Well, I would just, I just offer two thoughts maybe.
One, this is more open AI than Anthropic.
Sam did hire Fiji to be the CEO of applications and- There no longer is a CEO of applications.
Now she's CEO of AGI.
So that is really walking back.
Now you could say it's a little bit different, but just think about hiring a CEO of applications and say, you know what, that's not a business we want to be in.
Anthropic not seeming to invest 100, 500 people in design, right?
Which they could.
And so that could change next week.
But right now, neither of them seem to see applications.
Now.
paradigms do shift.
They're also going to Rory's point of the low end redlining or whatever.
That could get more powerful.
I'll give you a different example.
It's not the same, but I don't think in a year we're going to need any traditional marketing automation software.
It's too dated.
It doesn't work for agents.
There are categories of software where if they don't have a reason to exist in an agentic world, they will go into a terminal state of decay.
Agents do not need HubSpot.
or Marketo or Salesforce or any of these marketing automation tools because they have no need to hand compose an email in a third-party template.
And so I'm not saying that would happen in legal, but you could see if they don't keep up ahead of it and the paradigm changes, you can become obsolete over time.
There's two separate dynamics.
One is the, does new software get eaten by new models?
In other words, Harvey Ligora eaten by Anthropic.
You're referencing something different, which is, does old software get eaten by agents, either clawed agents or new agents?
But new software can get old too.
Yeah, well, yeah.
So you're conflating the two, but yes, agreed, it can.
But I just think they're different questions, right?
And I'm just trying to...
I just think the rate of decay might accelerate in the agentic era.
That's the connection I didn't make.
It used to take a decade.
Now it could be 18 months.
And if you talk to folks, senior folks at Lovable and Replit.
You will hear they are well aware of this.
They do not want to be clotted out of existence.
They think about it every day that they have to stay ahead of it because they're closer to the core, right?
I just think stuff gets old much faster than it gets.
That's fair.
The evolutionary pressure from a model that's underneath you, an intelligent model that's underneath you, a company building that intelligent model to not answer both of them.
Is, you write, Jason, more powerful than the pressure of an operating system or a compute system like AWS?
So I do agree with you.
day you wake up as lovable or replet.
If you could be behind by a year competing with Redshift, you can't be behind by a week competing with these guys.
Jason, you said HubSpot.
We had some public market activity.
We had HubSpot crash 20% despite decent and consistent growth.
We had AppLovin at a 7 billion run rate.
Stock crashed.
And then Cloudflare beats and then lays off 20% of its base.
What one do you want to pick on first there, guys?
Maybe it's not as exciting as the Anthropic Wars.
I just thought that the slight contrast that was interesting was Monday versus HubSpot.
So they're both decelerating.
They come out with a quarter and Monday trades up after being maybe the most beaten down stock out there, right?
Trades up, I think 20% and HubSpot down 18%.
And what's the difference?
They're actually not much further than each other on their agentic journey, which is early.
Monday's in production and HubSpot sort of in, but I mean, they're pretty early.
All Monday did that I can tell was for the next quarter, they're still decelerating, but at least they raised the guidance for real.
HubSpot couldn't do it.
HubSpot lowered their guidance.
So if you're not accelerating, you're gonna be destroyed, right?
And at a minimum, you've gotta raise guidance, right?
Even if you're not accelerating, like Monday, you've gotta at least raise your guidance to get some breath because at least it says, I think it says, when Monday says, hey, we're raising our guidance next quarter, at least it says we're not going to zero, right?
We're not being destroyed by AI if you're raising your guidance.
But I think even though the SaaS apocalypse is behind us, I think for many, there is still a worry the terminal value is zero.
I don't think that fear has gone away.
If you keep decelerating while budget is accelerating everywhere around you, it's not that everyone's decelerating.
The budget is accelerating and you are decelerating.
It's not a, those aren't two good lines to cross.
They're not crossing over each other, but at least it's nice.
We see some, some bounces off the hard deck.
I agree.
I think it was a super interesting quarter.
Lots of different people reported, did different things.
Some of them cut expenses.
Some of them had decent quarters and the stocks, you know, we had all sorts of weird movements.
I mean, cloud flare.
Yeah, had a really good quarter.
I think mid-30s growth, I meant, yes.
Laid off a bunch of its base, stock went down.
HubSpot, decent quarter for the record here.
Decent growth, stock went down.
You write Monday early on, a little bit better.
Bill.com, one where I used to be on the board of.
Unfortunately, I also had to lay off a bunch of people.
Stock bounced up in part because of a buyback.
So you kind of look at all this and go, what's going on?
And I think there's really two things.
And Jason's done a really good job of articulating the important one, which is where's your business structurally?
Are you getting better or worse in your business?
Is AI messing with your head?
Is AI, are you accelerating?
Or are you on that, as Jason said, think about Monday and HubSpot, are you on the agentic journey, right?
I think one of the things that happened, interestingly enough, to definitely Cloudflare and possibly the HubSpot is a little bit of the, oh my God, you're cutting 20% of your costs, which had been perceived as a net positive.
Now there's a little bit of a, huh, Cloudflare, you're a good company, WTF, what's going on, right?
A little bit of uncertainty.
But if the first big bucket is that whole kind of what's going on in your business, then separately, this is going to sound really Captain Obvious, as Jason would say, the second half of this is you just got to look at price.
In other words, If you have a muddled quarter and your stock's already at the bottom, you might get a bounce.
If you have a tricky story and your stock is like Cloudflare or AppLoving, I think AppLoving was, and the two of those were among the two highest valued companies, right?
You're going 30%, 40%, 30% in the case of Cloudflare, but you have a story that's even a little bit messy.
People are like, I might be okay with this at four times.
I ain't okay with this at 15 times.
And sometimes you forget that there's both the strategic journey and then there's the How is price dealing with that?
What you saw in the case of AppLoving and Cloudflare is it turns out high price stocks at the start of a paradigm shift, no matter how amazing the quarter is, are just vulnerable to disruption.
Whereas when you're trading like Monday, poor Monday was at like under two times revenues with a bunch of cash.
You're like pretty much anything you do other than burn the fucking company down, the stock goes up.
It was basically priced at nothing because at one point it was basically like almost one and a half tax cash.
And that's basically just saying, you know, just any positive momentum, you will get rewarded.
And it's like, as I say, it is very much Captain Obvious, but price is the vector.
And we forget about this often on the private side because you're not really dealing with price on a day-to-day basis.
But on the public side, that's how it works.
I think the most brutal one, and I love Henry, but the most brutal one that was under-discussed was ZoomInfo, right?
And the reason I bring it up is ZoomInfo.
also tanked when, you know, they're growing 1% now.
And I think they got it to some negative revenue growth going forward is the reason it's just a tough one is ZoomInfo just won the pre-AI game of sales intelligence, data on your customers, even just basic stuff, emails, phone numbers.
It just won that stuff.
And then like really Clay and others.
in some ways they're pre four or five, right?
They're not epic products in some ways, right?
We use Clay, we love it, but I wouldn't say it's epic.
I would just say it's LLM infused, it's AI infused, but that's just a one-to-one loss of dollars.
Okay, whatever, what's Clay doing?
200 million, 300 million, right?
Something like that.
I mean, it's hard to say.
So Zoom Info is doing a billion something, right?
That's AI taking all of Zoom Info's growth away from it.
I only bring it up as a tough case study of how Even if you're treading ground, you can turn around and these AI, they're not all Harvey and Lagoras, just these kids can just take all your growth from you.
I think Zoom Info's growth was stolen from it from Clay and friends.
And it's a brutal case study.
It's a brutal case study.
Agreed.
And for the record, I mean, I think the Clay story is amazing and it's much less to me a kind of AI first story.
I mean, it's even simpler than that.
They built a waterfall product that allowed them to optimize among multiple different data providers and allowed rev ops.
to kind of waterfall a bunch of different data providers and pick the best.
And what that means is instead of being ZoomInfo being the only game in town, you can compare and contrast five or six data providers.
Data then becomes a commodity.
And you're right, your business is commodified.
Then on top of that, they've done a much better job than any, because they're really, to some extent, a pre-LLM company, much better job of building clay agents and having an AI story.
So the funny thing is it's a pre-AI company at its core initial value proposition that's morphed brilliantly.
And you're right.
It sucked all the value out of the data providers.
So yeah, those guys need to figure out how to become relevant in an agent-first world pretty damn quick.
What happens to a Zoom info growing at 1% a year?
Nothing stays growing at 1% a year in the public market for a long period of time.
So then it gets bought by PE.
Does it take private?
You know, bought by PE.
I resist that thing because it's such a lazy man's approach.
Because the implicit assumption is, you know, no matter what happens, you can get bought by PE.
And yeah, that mightn't be true going forward.
Though I, again, contradicting myself, a friend of mine used to say, price clears all markets.
There's a price at which PE will...
buy something like that and say, we'll do the hard things for two years to fix it.
Just might be a particularly compelling price.
I don't know what it's trading at.
It's trading at one times revenue with 35% adjusted operating income.
At that point, you will get PA.
Yes, yes, cancel that time.
One times revenue with 35% adjusted.
That is a classic take private if you can put the, I mean, you have a hard time finding someone I think better than Henry, but that's the counter argument, right?
But if you, on paper, that's the classic take private, right?
Trading at one times revenue, 35%.
percent adjusted operating income, right?
Reasonably stable, not adding customers, but reasonably, you know, it's net neutral on customer growth.
Or even we just said it two minutes ago vis-a-vis Monday, get your, I mean, it's your point, get your act together for two quarters, get a small amount of kind of AI enabled growth.
And you probably, you know, you won't ever go back to 30 times or whatever absurd number you were trading at in 21, but it doesn't take a lot to get you to two times and that doubles your stock to state the banal.
I mean, the big picture comment is this.
The market is not asking these old school $500 to $1 billion revenue SaaS companies to become the next Entropic and double, treble, and 10x every quarter.
Just give me 30% growth, give me profits, give me a story that's got some future in it, and I'll get you back to five times.
I'll never give you 20 times again.
I won't fall for that one this time, but I'll give you five or six times run rate, right?
Provided you have the growth, provided you have the rule of and the profits.
That's what you can do.
Now, when this goes live, Cerebrus will be going public.
This is one of the most hotly anticipated IPOs of the year.
In terms of oversubscription, 20x oversubscribed.
They've bumped the range from a starting of 115 to 125.
It's now 150 to 160.
Offering will raise 4.8 billion, valuing the company at 48 billion fully diluted.
How do we think this IPO is going to go?
We've spoken before about Andrew being fantastic.
How's this going to play out, guys?
Look, it's going to go great.
The fact that they've raised the range, which you only do when you're highly confident, especially that much, that you've got a killer IPO on your hands.
There's no more new information.
It's going to go out and it's going to trade amazingly.
Now, it's an entirely separate question.
How's it going to do two years from now?
That's a business question.
But the technicals, look, I'm not a banker, but- When you say it's going to go out, it's going to trade amazingly, comparably to a Figma, which had incredible power.
Let's put it this way.
I think what the bankers would say- in the boardroom, when the pricing committee starts giving them shit, are we leaving money on the table?
What they'll say is something like this.
We believe at this price, we'll have that nice 20% pop.
Everyone will be happy.
I know we should hate the pop.
Thank you, Bill.
But they're probably trying to get that perfect IPO.
Can it run away from them?
Totally.
Can you have a Figma phenomenon where retail piles in?
Entirely possible.
Nothing excites the mind.
like some of this AI stuff.
It fires the public imagination.
There's a dirt of opportunities to play.
It's entirely possible that you have a whole host of retail demand that you can't forecast.
And in the short term, it runs away from you.
But reminder, when Figma popped to 100, when it priced at 35, I think I said, I think it's worth 35, 40.
And now it's actually significantly below that.
You can't control the weirdness of retail.
And as we've discussed, it's impossible.
It's impossible to try.
And frankly, it's also impossible to let it drive the narrative.
I think I really feel for Figma in that their narrative is this.
Well, you're at 100.
Now you're down 80%.
No, you're not.
You were priced at 35 and now you're at 20.
It still sucks, but it's not 80%.
Same thing here.
Who the hell knows?
Will it do the normal pop or will it do something crazy?
But fundamentally, it's going to go out price well.
trade to the upside because otherwise these bankers would have been manifestly incompetent to do that raise and they're not manifestly incompetent they're smart dudes of course i agree with rory when when they raise this much like there's no question it is so that people are going to buy they're going to buy into the first day so you're going to get you should get a pop maybe there's examples where the the range is raised this high and all that where it doesn't happen historically.
But in my limited experience, you're always, I mean, it's just, it's almost built into the system.
But I mean, we just have to see, listen, it's a fun one to watch because on the one hand, demand for inference is infinite.
It's great.
On the one hand, they've got support from OpenAI and Amazon and everyone, which they didn't have when they tried to IPO last time.
Right timing, right partners, seeming backlog commitments.
But it's competitive, right?
And everyone's going to buy every solution.
And if NVIDIA Grok is better and they can get the chips, they'll use it.
So it's hard to predict when there's this much explosion and when there's also hedging happening.
There's also hedging, there's hedging for capacity, there's hedging for performance, right?
So I just think this one is, it's impossible to predict, but it's a great derivative.
It's great to IPO before Anthropic and OpenAI IPO too.
It's a great time because I get into that zeitgeist.
It's more interesting than CoreWeave, which is a data center, right?
This is real technology that is fueling inference, but it's so damn early to really know how it's going to go.
This is not two years of massive.
Cerebus chips used in production in data centers proving a massive competitive advantage.
It's early.
So how the hell do we know where it's going to be in two years?
How the hell do we know?
I might take my profits.
I just might take my profits.
Hard to argue with that.
Because when they went and go out, and even now, the historical revenue is very much concentrated on a couple of customers from the UAE, you know, that are remits.
What they're leaning into here going forward is the contract from OpenAI and a less kind of fully fleshed out contract from Amazon.
So you're right, Jason, you are leaning into a future that's not like the past.
So to that extent, you got a lot of risk going on here.
At the same time, you know, their story, you read the CEO letter, founder's letter, it's great.
I mean, what they're selling is speed.
What they're selling is their inference can be faster than anyone else.
And I love the tagline in the thing.
I think it's something like, how much would you have to be paid to have a slower internet?
And you just don't.
Once you see speed, you don't like to go back.
And actually, one of my companies, Tavis, was mentioned deep in the IPO because we use them for our inference because we have these kind of AI humans and you need real-time responsiveness.
And I think there is a focus market for that kind of real-time, blazingly fast inference that they can...
maybe have that market over the medium.
And that is the medium term bet.
If they are the first really reasonable, competitive alternative to NVIDIA solutions, and NVIDIA is a $5.5 trillion company, just roll with me.
Being priced at 48, if you take a 5-10 year potential.
1%.
Agreed.
Now, that passes the Monday partner meeting test.
Doesn't it?
Yeah.
Thank you, Jason.
We could put 10% of the fund in.
Yeah, Kathy and Arker should be into this deal.
It makes perfect sense, right?
You can't argue with the upside.
Agreed.
I think that is the soundbite in a nutshell.
Harry, it's like the other guys are worth $5 trillion.
You are one of the only ways that you have an at-bat to them.
Are you worth 1% of that?
If your probability of making it is 10% and you get that, your expected value is positive.
It's still a risky way to make a buck, but I totally see how you get there.
We don't do risky ways to make a buck, Rory, so that's fine.
No, I hear you.
That's my point.
But yeah, I mean, just to say it, great achievement.
I mean, this guy started, I think, 2016.
It wasn't obvious then.
No, the fucking nuts achievement is the 20.
What is it?
Sorry.
They have 20 percent ownership.
Sorry.
Benchmark.
No, they don't.
Because, you see, Harry, you just listen to Twitter.
But if you go and you actually look up the S1, they have eight or nine percent ownership.
because I do these things, because every VC reads an S1 the same way.
You read the front page, you figure out what it does, and then you push on the index, and then you go to ownership, shareholder ownership, and foundation, benchmark, and eclipse all have incredible 8% or 9% ownership to hold on to that after 8% or 9% years in a wildly capital-intensive business that even in their own S1 said, oh, my God, we were early in 21, 22.
I just think it's an amazing achievement.
I just huge credit to Steve, to Eric, to all those guys.
I mean, just be fair on Eric.
That's a four and a half billion dollar gain on a 500 million dollar.
That's my point.
You don't need 20% to do.
No, it's an amazing result.
It is.
I got to tell you, though.
I mean, hooray.
Good to benchmark.
When I looked at service, this is 20 VC, the show, right?
I would say for the first time in a long time, I was kind of jealous of foundation because they did the hard work.
Steve and the team incubated this company.
You saw on Twitter, the barbecue.
Okay.
Not only was it not obvious, this isn't even after it gets the kudos and why Combinator or foundation socializes the deal.
And this is what VCs are supposed to do.
But no one does this in venture.
No one goes out and finds this really smart guy, plays tennis with them for a year, works the deal, seeds it, incubates it, and then does it even in a crazy category that didn't even totally make sense in 2016.
And then wherever this thing ends up trading has a $40 billion IPO.
I mean, this is what, this is actual venture capital.
My job is to do what Steve and team did.
I'm jealous of this only.
I can't think of another VC.
I'm jealous.
And I put this in quotes.
I'm not literally jealous, but this is the job of early stage investing is what foundation did.
This is not using Marc Andreessen's brand to muscle into the B.
You know, without showing shade on the others, watch this.
You see, my therapy is working.
I tend to take things positively.
Now, rather than being jealous, I'm going to say I'm impressed.
And, you know, good job, all of them.
I'm not going to dance a clip.
They all did great.
It's what the industry is meant to do.
It's innovation.
The industry should be supported.
That implies all the way up to stack to B to C, the round for metro it is, all that.
It's exactly what should be happening.
I agree.
Great credit to Steve.
I can't play tennis, so I'm not going to be able to make it.
I think it was tennis.
Maybe I'm making up the story, but it's directionally correct.
It might have been another activity like that.
OK, good.
But that's real venture capital, right?
That's not leaning into a deal, right?
That's not winning a deal.
Like I said in the founder's note, that's calling a shot on AI in 2016, saying even in the founder's letter in 21, 22, oh, my God, we're way too early, finding a way to survive.
Then seeing the tailwind in 22 from GPT, still struggling to get orders, getting some business from the UAE, and all credit to the guy who said, I'm going to get on a plane, I'm going to Dubai, and I'm going to sell me some chips.
Whoever that sales guy is, I hope he got a big stock order, right?
And then surviving, pulling the IPO in 2024, 25, I can't remember which, when it just wasn't ready.
And then the moment has come.
You get the OpenAI commit, you get the Amazon commit, and now you can go out on strand.
It's a great story.
Whatever they make, they earn it.
I put jealous in air quotes, right?
I mean, I'm not, I'm only jealous in that that's what I should be doing.
The other thought I had just at a high level, and granted, I only met him on Riverside when Harry and I did a show a while back, but I mean, Andrew Felton is just so good.
I didn't meet him in 2016.
Maybe in 2016, it wasn't Captain Obvious.
Maybe it was, right?
But to me, it's also a reminder of, we all talk about going long on Twitter and social and betting on great entrepreneurs.
But so many more folks quit this week on my LinkedIn and Twitter.
But he's so good.
This is the kind of, and it's also a reminder that if you're not quite as good as Andrew, like you're really, really good, but you're not as good as him, you would have quit.
You would have quit.
So the combination, this is just my lines, the slight, the jealousy and air quotes of them.
And then a reminder that.
When it's so fun to do a startup today, you got to be so great to win, right?
And you guys got to be, and so great to have these massive exits in venture.
You got to be, the founders have to be so great.
Not just, this is the tough part of venture.
Very good founders aren't going to build this type of outcome.
Okay, boys, we have Ramp is $40 billion valuation.
Parker, an alternative fintech company, files chapter seven.
And Gusto passes a billion.
Which one do you want to take?
So let's start with the company Killingit.
I think the distinction between the two is that Ramp is a broadly horizontal corporate business card.
And as we've discussed many times, the actual economics on cards are good, but they're not amazing.
You get this interchange revenue, but you have to give a lot of it back to the customer.
So your contribution margins are only okay.
And the only way to make that business better is you've got to add a lot of software and a lot of functionality.
And Ramp are doing a truly amazing job of doing that.
You start doing ACH payments.
They just announced something super interesting yesterday in the market we like, which is agents on top of their system to automate your purchasing.
So you're a mid-sized business.
Now you can have the Ramp agent.
Jason will be so happy to hear they've got agents.
Go out and try and optimize your spend and reach out to your suppliers and beat the crap out of them on price.
That's a market we like independently, but that's a good ad for Ramp.
But the zoom out comment is Ramp was in a broadly horizontal market with a lot of running room to add.
And the other guys were in a very constrained market with a lot of margin pressure.
So to some extent, not surprising at all.
I don't know.
Sorry, Jason.
I went off there, but I love those agents.
You should check them out.
They're like, that's exactly the kind of thing you should be doing on top of your, they will pass the Jason Lemkin acceleration test.
Yeah.
We're going to rebuild our financial stack after Sastra annual and we will move from Brex to Ramp if it is the most agent friendly and automating procurement is a huge bonus.
Like we just take the humans out of it.
Just have the agents negotiate procurement.
We've all had enough of it.
Just like Delve solved SOC 2, I want an instant solution to procurement without this moronic back and forth, the games, the politics, the fake contracts that procurement cuts back 10% to get their slice.
So you have to overprice the deal.
I'm waiting.
I'm saying this a little facetiously.
This is a problem agents, at least the next generation of agents could solve.
But I'm going to see.
I'm going to leave.
I'm going to either stay or leave Brex in a month or two based on which has the best agents.
The separate issue is, you just got to put it out there, it's a billion in revenue trading and it raised money at 40 billion.
That's where I get confused a little bit.
Yeah.
And again, it's back to my comment earlier, which is, again, as I say, I apologize for saying something so obvious.
You have your discussion on the strategic dynamics of the business and then separately you have price.
I mean, I think ramps on the strategic things they're doing is just amazing.
40x run rate revenues when the comp traded at six in terms of brecks, even albeit.
on a lower growth rate is a pretty healthy valuation.
I do wonder a lot, some valuations, whether there is that scrutiny of revenue quality and revenue multiples.
I mean, we're all just addicted to growth.
So we all pay the same multiples almost regardless of what gross margins or anything are today.
And maybe it's fine.
Would you buy ramp at 40?
Probably not.
I mean, I haven't seen the growth rate, which is the only thing that matters.
I just think there's a gravitational pull, too.
The amazing thing about these fintech businesses, the biggest thing they have is some of them can be just enormous.
Stripe, Revolut, NewBank in Brazil, because you're selling to consumers or SMBs and everyone does this.
Fintech, everyone does finance.
Everyone has a payables division.
Everyone has a corporate credit card.
So they're big ass businesses, but they trade like there's no magic, you know, kind of AI premium.
They trade, you know, just like Amex, but adjusted for growth.
So I think whenever you get wildly far away from a revenue multiple, you really have to be certain two or three years further growth and you've grown into it.
I mean, if you double and double again, you know, that's where I mean, maybe the way to think about Harry is how many years growth do you have to get before you're trading at kind of a normal multiple?
So if you go one, two, four.
Eight.
I mean, it takes probably two and a half years of growth until you're at the Brex multiple.
That's pretty scary.
That's the outer edge of terrifying.
If you're leaning in a year, you're like, yeah, whatever.
It's going to double.
I'm fine.
If you're underwriting two and a half years of doubling to get to the Brex multiple, that's pretty scary.
I agree.
I mean, you have the protection of preference, and it's the same investors who did the prior round.
So to some extent, they're probably saying across the investment, they need the fuel.
I got my return.
It'll all be good.
They're going to make out like bandits here.
Because the bigger ha was 2022 at 5 billion.
That looks like a pretty damn good deal now.
The other cool IPO, which isn't on schedule, but it's just Lime announcing that they're prepping to IPO.
Do you see this Lime Bikes?
I did.
I did.
I had that feeling of, oh my God, they're alive.
Oh my God.
I mean, if you come to London, they're alive and they dominate the city in large parts.
But I mean, that is a hard business that's been through its turnaround of the day.
Incredible journey there.
Shout out of the week for me, Lime announcing IPO, good, healthy business.
Awesome to see.
I will be interested to see the numbers.
And again, it's back to good on you, entrepreneur.
Boys, should we do some more?
Actually, one final thing before.
Musk versus Altman.
It's that moment of the week.
Brockman says Musk wanted a for profit.
We had Ilya today come out and say that he's, I think, worth $7 billion.
What do we need to know in the Musk versus Altman trial of the century?
I mean, first of all, we're going to know a lot more than we need to know, in the sense of, as is the nature of these trials, a whole bunch of stuff that's a marginally extraneous will come out just because that's the nature of the beast.
In the end, you know, a reminder here, it's a jury's advisory, judge decides.
You saw some really nice profiles.
I was actually checking out the judge, Texas judge, Gonzalez, I can't remember.
First name.
Yeah, seems super tough and hard.
No, she's driving here.
She's making the decision.
So it won't.
All this noise will just fritter away.
It'll be fun for the headline.
She'll make a decision on the legals.
You know, my gut continues to be that even though everyone will look crappy, that OpenAI escape with their deal intact would be my gut.
Jason, help us out.
Sasta this year, who will be the best speaker?
Money on.
You do reviews on your audience.
Who's going to be the most popular speaker?
We barely have any speakers this year, Harry, because I think podcasting has kind of destroyed the whole need for a speaker.
So we have a lot of workshops.
We have people.
five coding, showing you how to build things.
Why would I, why would I go see Andrew when, when he was on 20 VC and was better from Sierra, but like, so we don't, we have no firesides and no speak.
Now, I mean, it's going to be great when I have Amjad from Repla who was on 20 VC, we're going to walk through my agents and what they said and why they built and why, why it is right.
Because.
You know, I'm going to have Tyrell here, who is the father, the Blade Runner father of my agents.
But we're not going to we're not talking about how, you know, because podcasts are better.
They're way better.
I want to see it.
And also the edits make them better.
So we're going to have we're going to have everyone showing how they built the agents.
We're going to have Rubrik demoing their agents.
We're going to have Andrew from Klaviyo, the CEO, demoing his agents.
Everyone's going to demo what they built, why they built AMA.
That stuff you don't get on an average podcast.
So I'll have to see.
But we won't do we'll never do.
unless I'm forced to, I mean, if you know, I do it for Sam Altman, but otherwise I'm not going to do the firesides are dead and speakers are dead.
There's just no point when podcasts are better.
What it's worth.
That's super insightful.
You always know when something's insightful, when the minute someone says to you, you go, yeah, I hadn't thought of that before, but you're absolutely right.
The minute you said that sentence, I'm going to go over, obviously, I'm doing a little thing.
Why would you schlep over to see 10 back-to-back speakers say the same thing they've said on a podcast when you can listen to them when you're working out?
Whereas I'd be super interested.
I think I'm conflicted.
I'd be super interested to hear Jason Yu and I'm going to talk about your agents and talk about agent security and all the other time.
And how one of them willed itself into existence.
We didn't even try to build an agent.
Our agent Annie, will the cell phone do, like, how does that happen?
That's pretty cool, right?
Rory, can I just ask you, sorry, should I be buying Micron and SK Hynix?
I feel like I'm super late to the game and I don't want to rock up to the party at 11, but I'm also like, shit.
On the one hand, you kind of go, oh, my God, it's gone up 5x last year.
How can it be right?
But I hate that thinking because the correct thinking is to say, but then you still look at it relative to kind of earnings and they're still relatively cheap.
So really what you're saying is.
on an earnings basis, you basically start trying to say to yourself, how long does the CapEx boom last and how long before they double the number of fabs that make DRAMs and commoditize it, right?
And do you think there's more oomph in the stock?
Because once those two things happen, typically what happens is the boom starts to slow down just when the extra capacity comes online and the combination is brutal to the downside.
And you see that over and over again.
I was actually just looking at the...
you know, the SanDiscs and DRAM guys, because we're going to discuss this in the podcast, but of course you ignore the agenda.
As late as 22, 23, all those guys were in the crapper because you had that post-COVID, everyone bought a laptop because they were working from home.
And then after COVID, everyone didn't buy a laptop because they didn't need another damn laptop.
And all those stocks went way down in 22, 23.
And, you know, the last...
two years and one year in particular have been amazing.
So I don't know.
It's not a good enough reason to say I won't buy them because they've already gone up 5X because you've got to look at the still pricing.
But I don't have a developed opinion on...
You have to decide those two things.
Duration of the CapEx boom relative to the speed at which they can build X more fabs.
Because in the end, they always do build more fabs.
That's one of the things about human nature.
When you start making 50%, 60% net margins on a shit ton of money, the temptation to build a fab just becomes huge.
So I'm sure Samsung and SK Hynix, even as we speak, are digging holes in the ground in Korea.
That'll come online just as Antropic starts to cut orders in 2028.
And there you go.
Ain't capitalism great.
Are you long nebbious?
No, I'm not long or short Nebius.
I mean, you asked me a fact-based question.
Have I chosen to put?
No, I have not put my money in, but that's different than, you know, you can't buy every stock you talk about, Harry.
Fine.
The important round, which was very popular, rage bait, but real.
I upset people because Mr.
Beast basically posted saying that the sacrifice of mental health was essentially required to have the success level that he's had in terms of commitment.
And the willingness to suffer for long periods of time is what separates those that are successful from those that aren't.
Paraphrasing, but very close.
And I agreed with that.
And I said I 100% would not have achieved what I have without.
sacrificing large parts of my health and commitment.
I got a lot of pushback.
Do you think that is rage bait?
Or do you think that is real?
When you look at the $20 billion plus founders that we need, can you have the success without sacrificing mental health?
It's very hard to have the success without sacrifice, right?
And your real meaningful sacrifice, you know, time.
alternative uses of your life.
Sometimes in the case of brutal competition, people, in fact, their family lives, their loved ones, marriages end up in divorce.
You know, it's really hard to do something really intensely.
And most of these things require real intensity.
So I do think that part's probably true.
However, I think at the point of time when you're getting into mental health, you probably actually owe it to yourself to try and find some way to not tilt over to the point of making bad decisions.
Right.
So I kind of, I think it requires sacrifice.
It requires an intensity, but I don't, when I get to that point of being wholly stressed and kind of spread thin, I don't make good decisions.
So you actually owe it to yourself to, at that point, pull back a little.
You actually aren't that useful when you're on tilt, Harry.
So I don't know if that makes it rage bait or not bait.
You know, maybe true, but not worth rage would be probably my advice.
Don't rage.
I'll give you a different learning.
This was one of the first Sastra posts I ever, wrote right when I got out of Adobe.
And it took me a while to realize this.
When I sold my first startup, I sold it for $50 million after 12 and a half months, which today would be more money.
There's been inflation.
And it was great.
It was so hard.
My first startup, I was building implantable batteries from nanomaterials that had never been done before.
We had customer concentration.
I had to close $6 million.
My VCs pulled my term sheet.
I had to do payroll myself.
I had to take a full recourse loan against my house to get the round done.
It was just everything that happened.
Everything that could happen.
I would do day trips across the globe.
I would fly to any airport.
in the world, do a meeting in the airport and fly back to say, I mean, unsustainable stuff.
But we bounced back after a week after we sold the company, right?
It was 12 and a half months.
I was given a two week package to stay and I was okay in a month.
The second time it was five years, which is not long now.
And what I realized after the next one was my brain was permanently rewired.
I was no longer the same human being.
The level of intensity to almost going bankrupt multiple times, to dealing with those issues, to saving the deals, to going through GFC and having to turn a 100K customer to 500K so we can survive and make payroll when no one, everyone wanted to cut the deals in GFC.
Going through all that drama, I was, I could not go back.
I could not, my brain would not allow me to go back.
So yeah, there's a rage bait element, but it's not, some of it is doing the 996 and working all the hours you're talking about, Harry.
But I think what founders understand that have been doing it for more than five years, four to five years, I think is the break point.
And you have been, Harry, is you're changed.
And it's not as simple as mental health.
It's not, vacation doesn't do it anymore.
It's not enough.
It's not enough to go for a run on the beach.
It's not enough to take up to start buying watches, even to buy a yacht.
It's not enough.
You're like you're a different person.
And if you want to win, you have to commit to being a different person.
You're not going to be that happy-go-lucky person where you got into YC and you got your two million and it was great and it was really fun and you told your friends and you went to the hackathons and it seemed really hard.
But you know what?
That first year, it's just fun and games, okay?
And you will be a different person.
You can never go back.
You often can't even talk with non-founders for real anymore.
Founders stick together.
They're in WhatsApp groups.
They're chats.
You're all changed.
It's not just a peer group.
You're not the same people.
You're not the same people.
You're not the same person when I met you, Harry.
And so I think that's the meta issue.
And seeing a shrink is great.
I'm all for mental health, right?
But it's not going to change the fact that you're changed after five years, four to five years.
But I don't think it happens in a year.
As hard as that first year was, man, I was back to runs and cruising and I was never going to do another startup again.
I'd made a couple million.
That was enough.
Life was good.
Check the box.
One of my favorite quotes ever on the show is Daniel Dines from UiPath.
He said, a lot of people think they want to be me, but I promise you when the lights go out at the end of the day, it's very lonely in my head.
And then ask the next one, are you the same person you even were when you started this journey?
He's going to say, no, I'm not.
I've been, well, your brain has been rewired though.
The brain has been rewired.
Because I watched your Apple 11 one with that guy so effing intense, right?
So good, right?
But I could see, one of the things I thought when I watched that one is his brain's been rewired.
The things he's saying make total sense to me after my journey, right?
But they don't make sense to most people.
That was the point of your tweet.
But what he was saying, most people wouldn't get it because they haven't been.
Their brains have not been rewired for the level of intensity it takes to succeed.
It's not just the hours.
It's the intensity that is like nothing else.
It is like nothing else.
Jason, do you not watch shows like that, though, and find it hard to invest in other founders?
Because I'm very lucky I interview people like that for a living.
Yeah, and every time you cut a corner, every time you invest in a founder that's really nice and really hardworking and really good guy, you never make any real money.
That intensity, hard question.
Do you see that intensity in your portfolio?
In your winners, you do.
Because also any normal human will sell for 50 million after a year or 200 million or a billion.
Any normal human will sell.
It is idiotic to not sell.
You don't want to do Cerebus.
You want to do Grok as we talked about.
It just makes no sense to be Daniel Dines after 20 years.
So it's all self-selecting.
You've got to be Daniel or crazier to do this journey.
There was a brief period where you could do it 35 hours a week in late 2020 and early 2021, but it's gone now, right?
When the world was, products were static.
What is basically saying, and I'm violently agreeing here, if only intensity, if it takes intensity to be successful, it's no surprise that all successful people are intense.
I mean, it is to some extent.
The part of that that resonated with me, Jason, you're right, is that good companies get offers along the way.
And if you're not intense, you'll take them.
That's why I tell all founders to take the offer.
I tell all founders to take it.
The opposite of VCs, take it.
It is an intensity test.
And if they push back and say, no, a billion is not enough.
Great.
Then go for it.
But if they're not sure.
You may not make it anyway.
You may not have that level of Harry's tweet to do it.
So take the billion or the 50 million or the 200 million, as long as it's three extra more of what you raised and go enjoy your life, man, because Daniel's not happy and the Apple 11 guy's not happy.
I just want to say one thing, though.
I find myself violently with you on the kind of rewired and the intensity side.
I do still think that you still have to find a way in that maelstrom to keep perspective.
And I see it myself and I see it in CEOs.
When you're working so hard and you don't have any way to clear your head, you actually can become ineffective and a weaker decision maker.
Adam does surfing now.
I was going to say that.
Yeah, actually, I saw, interestingly, Admiral, I'm going to pronounce his name.
Stravidas, I'm mispronouncing it.
The guy, he was Commander-in-Chief Nader.
He was speaking at a Cambridge Associates event recently.
And, you know, someone asked him the obvious, you know, three lessons for life, you know, as a senior leader.
And they were expecting, you know, some kind of...
hire good people, the usual cases.
And his first comment was, you got to stay healthy because if you're not at some level vaguely healthy and functioning in terms of sleep, in terms of thing, you just won't be able to cope with the pressure and the intensity.
It was a super interesting comment from a guy who, remember, has been Commander-in-Chief NATO.
My point is merely when you disappear into your own head to the point where you're not making good decisions, you will not maximize value for yourself.
I know what I'm...
It's hard to articulate, but I'm sure there's times when you're just not thinking straight and just making sure that you have whatever coping mechanisms to avoid doing that.
It's a little like it's about, I don't drink much now, but the day after you've had a lot of alcohol, when you're slightly hungover, you make horrible decisions because you're all jittery, right?
And that's one of the many reasons why I don't drink now.
The reason I love about Rage Bait But Real Is Around is two out of two, you guys have both agreed that it's real, not Rage Bait.
I'm like, yeah.
I'm too hairy.
Both times I've actually agreed it's real and it's Rage Bait because it's something that annoys everyone, perhaps because there's an element of truth in it.
Yeah, yeah.
The Work From Home Friday, Brigade, were pissed off with me about Work From Home Friday.
None of them have figured out, Harry, that you do it because you enjoy the rage.
You know, that's what's the problem here.
Right, boys, rock and roll.
Jason, Sasta, baby.
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