20VC: SpaceX, Tesla, Neuralink: Elon’s Empire After the Firestorm | Are Circle and Coreweave Meme Stocks: IPO Analysis | Anduril Raises $2.6BN & Becomes Founders Fund's 1st and 2nd Largest Check Ever | Cursor Now 20% of SaaS Spend and the SaaS Slowdown

How fricking awesome the US Capitalist system is. I mean, the big I was thinking the sound bite on this. The United States has 4% of the world's people. We have roughly 23% of the world's GDP. We have 67% of the world's market cap and the stock exchange. Right? We won. US Corporations are efficient. They're highly valued. They have international businesses. I mean, not just our gdp, which is like our income is higher than our population ratio, but our wealth, our corporate sector is even higher than our gdp.

It's my favorite show of the week. Jason Lemkin and Rory o' Driscoll join me for a news breakdown.

Today we Discuss all the IPOs that.

We'Ve seen happen in the last week.

Including the incredible pops from coreweave and from Circle. Then also we discuss Elon and Trump, what it means for Elon companies. And then we also discuss Rich Wong's statements From Excel that 20% of unicorns will fail.

Is that correct? And how do we think these zombie corns will play?

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Members of fdic you have now arrived at your destination. Guys, I'm so excited for this. You know I love this time more than any other in the week. I want to start with ip. We were talking about it just before. It is the most important topic for us to discuss.

And so I want to start with.

Circles, the strongest IPO since 2020 and bluntly much needed positivity for the ecosystem in terms of public market response. How did we analyze the response and Circle being so well received?

It's a super interesting transaction in the sense that, you know, we've gone from oh, IPOs are hard, nothing's happening all, all the way straight through the oh my God, we left so much money on the table, period without the intervening period of gratitude for the ipo. I mean literally we went from the window was shut four weeks ago to the window was open yos to oh my God, we underpriced this thing. And in the case of Circle, the data Says, I mean, they filed, they raised the range, and then it opened. I mean, I think it's almost 2x plus the opening price. So, first of all, great success. Amazing. It was a good company at the IPO price. It's an amazing outcome at the current price, even if it's not sustainable. Couldn't be happier for all involved. I think the interesting question will then become the underpricing issue will be even more acute here than normal, because normally when you have these IPOs, and there's a planned 15% pop, and instead there's a 40% pop, everyone's kind of miffed, but, you know, the money goes to the company. So you have 100 million less than you thought you would. In this case, over half of the IPO was sellers, which means you just opted to sell a security. I can't remember. I think it was 31 bucks a share. And two days later, it's trading at 80 bucks a share. That's a lot of money to leave on the table. So I'm sure if you chose to sell in the ipo, you're sitting back and going, hmm, I feel amazing about the outcome. But, oh, my God, that's a lot of money on the table. Like, 20 million shares, I think were secondary. And, you know, at 50, 60 bucks of extra dollars a share, that's a billion dollars that went to the buyers, not the sellers. So that's a fun one.

All the last IPOs, except for SailPoint, are up materially in the last. On average, they're up 76.8%. Averages are confused and misleading, but I thought it was interesting that Mountain Hinge Health and I guess Etoro, which I know less about, those are not high hype stocks, and those are up substantially. It's just Circle and Core Weave are the crazy ones, and they're at. I think they're at the edge of meme stocks. Core Weave is an attempt to invest in AI, which is on file, and Circle. I mean, Rory and Harry, you may have more thoughts. It's an attempt to invest in crypto when it's an exciting company, but it has so much interest rate sensitivity. I think these are meme stocks, and I don't know what Bill Gurley thinks about meme stocks, but my. I suspect at the start of a run of IPOs, you have to be careful on the meme stocks, and toward the end of the bull run, you price the hell out of them.

Just, I don't know, maybe pedantic is they're good companies that have meme Value as well. I mean, I think something like GameStop was just a meme stock. Both Core Weave and Circle are exceptionally good companies in big ass meaningful industries. But also, you're right, what they have is on top of that, that meme value, which makes pricing hard. I think it's a great point, Jason. The other three companies that are just solid, boring companies doing great, did exactly what they're meant to do, had that little 20% pop, trading nicely, everybody's happy. These guys really ran away from them. And the fun thing is you can say that, but the interesting question is what can you do about those kind of, what do you do in those kind of trades? Because I mean, Bill Gurley has been very vocal and oh my God, you left all this money on the table. How do you avoid giving up the population? Well, the first point is some pop is necessary and you have to start with that fact because these stocks haven't been traded. You're asking people to step up and write a check and there's no prior pricing information, so you got to get paid something for the volatility you're incurring, you know, the risk of a one day lost. So you start off in the IPO structure, unlike the direct listing structure, having to give some kind of pop. And then the judgment comes on, are you underestimating the real retail demand? Are you underestimating institutional demand? And are you leaving money on the table? And obviously in these cases where there's strong retail demand, you've ended up leaving a lot of money on the table. The fun question, and this is right down in the weeds, is the bankers will say, and it's very zany, they'll say, if we didn't take these anchor investors at this lower price, the retail demand wouldn't be there. And I sat in the room and had those discussions and there's a little party who thinks that sounds plausible and correct and then there's another party who says, but that's like, it's a total violation of the efficient market hypothesis. And I just don't believe it. What happens in the end on these deals? And this is a concrete example of very intelligent investors leaving money on the table. I think the biggest advantage the banker has is you do this once in your life, or maybe if you're VC 10 times and a banker's doing it every week and you have an informational symmetry there and they're going to tell you, hey, at 31 bucks you get fidelity and T roll, but at 35 you only get a bunch of head funds and they're going to slip it and they're going to flip it. So you opt for 31 and then the really frustrating things, it pops to 70 and then fidelity and T will flip it and you feel like you're a sucker. But then you just go away back to your business and they get onto that thing next week. So it's a very problematic structure. But it's also worth pointing out the other alternatives don't work. Amazing if you step back. I mean, at various times, I think folks, including Bill spacs have been a disaster. Direct listing only works when you're an amazing company and you're not raising primary capital because of the regulations, which has not, arguably not been the case here. And then going back, there was a couple of companies that did those kind of Dutch auctions, including Google, and they seemed to work, even though Google on the day was a little troubling because I remember underperformed early on. But obviously, amazingly, since I think it's.

Going to encourage everyone to go IPO this strong performance, you know, chime I saw in the media, they were saying it's going to be a banger IPO because it's 10x over subscribe. 10x in my limited experience, like 10x actually isn't enough because those are soft commitments and people put in over allocations to make sure they can get it. And you really want to be like 30x oversubscribed to pop hard. I don't know if that's what you've seen on your public companies, but that's tough to get right at the start of an IPO market, like how much that X needs to be 10x20x30x. You certainly don't want it to flop, right? Yeah, 5x is not enough IPO.

All those 10x5x20x over, they're just so bogus because you've got this game theory thing of buyers are putting in bigger orders than they actually want because they don't think they're going to get cut back. So the demand is entirely theoretical. And the truth is you have all these. The funny thing about every IPO is you have all these, what I call them, relationship bankers. They know all about the business, they know all about the story. They've been calling on the company for three years. They have a relationship with the CEO and the CFO and none of it matters a damn the night before because you're sitting there and then there's some person from Equity Capital Markets that crawls out of the hole in New York and sits there and says, here's the big long list. But this guy's lying and he won't flip. This guy will flip, so he will flip. This guy won't flip. This guy doesn't really want 10 million. He only wants two. He's pretending to put in 10. And the entire decision gets made by someone you spend a little time with, but not as much on the basis of things you don't quite understand. It's a wildly frustrating process, which is why Bill Gurney is right to be angry about it. The hard thing is, what do you do better? The very biggest, when Stripe finally goes public, they can do whatever they want. They can do a direct listing and not raise any primary capital. They could do the Google type auction and no matter what, it'll all be fine. But the median company, the typical company, is looking to raise primary capital. Can't afford to get it wrong. This is a one time debut. You probably aren't so strong that you could power through. Like if no more than if Google had failed or Stripe were to fail, everyone would say it's not about Stripe, it's about the market. Was weird that week. If your little $2 billion market cap company doesn't get done, your deal didn't get done. So you as the team, you're in intrinsically weaker position. So you end up being discouraged from any innovative process. And it's worth pointing out most of the innovative process, like SPACs, fail anyway. So you're back to the time honored build a book, raise 200 million in primary capital, deal with the informational asymmetry, do your best. And then some days, especially on the memes, you're randomly wrong. It's a wildly flawed process to which we can find none better.

The question for me is does this very positive response across the board with the IPOs that we've seen not does it lead to the window opening more? I think we all agree it does. It's does it lead to the window opening to databricks, to Space X? And then we saw Figma confidentially file for ipo. And I thought maybe how do we think about those two questions, which is does it lead to the juggernauts? And then what do we think about figma?

The window is, was and always has been open for databricks and Stripe. They just don't want to go through the window. The windows open and shut for the $2 billion market cap IPO. The window is always open for the $50 billion market cap IPO. As someone said to me years ago there's always room at the top. Their decision not to go public is an entirely separate choice about what they think they can do. Private versus public figma is kind of maybe the low end of really amazing, like Stripe at the high end of more than amazing. That to me is more of the normal. The Windows Open companies especially, I would say especially if you nearly had a liquidity event two years ago in terms of an M and A sale and obviously you lost that. All credit to them for regrouping from that going forward and continuing to build. It must have been a very difficult management challenge to pick yourself up, having decided to sell to adobe for 20 billion, not getting the deal done, getting some capital, doing a secondary at 10. My guess is it totally makes sense for them to get a great IPO under their belt and not do the Stripe thing of stay private for another three or four years. So I think that totally makes sense for them. And if you nearly had the win and it was taken away from you right at the last minute, you're like, this time I'm getting my fricking win. I am posting the ipo, I'm ringing the bell, I'm declaring victory.

The only asterisk and dagger I would add is that these decisions, especially when you get a bunch of VCs and other large shareholders, they're trying to guess all of this. And when everyone's caught up in feeling this is the time to ipo, I think people are going to try to go. Even if they could have six months ago, even if this data shows, hey, Mountain Hinge, Circle, Corey Vitoro, even Sailpoint, all could have IPOed last year, right?

It could.

The window was sort of open. I just think when everything's trading up, every meeting is starts to be about should we go public now? And once everyone starts talking about it, you kind of convince yourself and you start having those conversations, well, it's time. It'll give us more rigor. We'll get the biggest deal done. And so when people are kind of in the middle, on the edge, they just kind of go forward in this environment.

And I also like your comment, Jason, about how the stuff just changes in months. I mean, you mentioned Core Weave, a wildly successful ipo. Interesting. That was one that reduced had to come down from the filing range. In other words, as recently as four months ago, five months ago, the bankers tell you you were at X. When it gets closer to the day and we actually find out what the end investors are willing to pay, you're reducing that range. Fast forward four months later, it's 2x up from the IPO. It just does. These high growth companies are hard to value. Sentiment matters a lot overall market sentiment and specific sentiment about the deals. And to some extent the only way you find out is putting them out there and seeing what the demand is. I think pretending you have this a priori knowledge of how these things are going to trade or when, quote the window is going to open, you just have to internalize. It's so random, it's so outside your control. You just have to build the company. And once you, once you're at the stage where you could go public and conceptually you think you want to go public, you should do all the preparations to get ready and then just accept the fact the timing to some extent is a bit out of your control.

When coreweave did IPO and we were talking about it, not only did it. Rory, you've got the narrative. Not only was it difficult to get done, they had to reduce the range. We almost made fun of this existential risk they had with coat, which was this clock ticking down on them, this debt they had to repay, but because the IPO was so strong, they were able to raise $2 million of additional debt and completely de risk the company. So that existential risk is for all intents and purposes, gone. Maybe you don't need the money like Stripe, but man, if you not only can you IPO in this market and trade up, but if then you can do things de risk the company even further. Like core weave. That's like a triple hat trick they got right. They went from a company teetering on the edge of not being able to repay its debt to set for the better part of a decade.

Two comments is that one is what I highlight, Jason, is the public markets in the United States are pretty damn amazing. You know, you can access large amounts of capital in short periods of time, which is why I believe the whole stay private unless you're cash flow positive. If you're the kind of company that needs to raise capital in the end at scale, the dominant and best and most cost efficient way to raise capital is in the public markets of being public and with debt. Kowi's proven that. And then the other thing, just to put it out and prove that. How little. I'm not to say I said anyone else knows how little. I know. I mean if we all had great opinions on Kowi, there was a 2 1/2x on the table. In four months you could have bought all the core weave your little heart desired, held it for two or three months. They'd be 2 1/2 x up. I didn't buy any. What kind of idiot am I? Where we rank on the omniscience factor is probably a 2 or 3 out of 10. And just internalize that, Rory.

It's much easier than going from seed to series A. Rory, I'm going to.

Tee you up on this one, okay? I'm teeing you up so nicely. We've had Deliveroo bought by the Americans, so taken off the London Stock Exchange. And this week we had Wise transfer Wise, otherwise known, announced that they're gonna also list on the US Bluntly, a pretty big fucking hammer blow to the London Stock Exchange.

Look, it would be fun to make this a ding on the Brits, cuz I'm Irish and we always want an excuse to ding on the Brit. But it's not, it's not about you being bad, it's just about. Again, going back to how fricking awesome the US capitalist system is. I mean the big. I was thinking the sound bite on this. The United States has 4% of the world's people. We have roughly 23% of the world's GDP and depending on the day, we have 67% of the world's market cap and the stock exchange. Right? We won. It's so funny. US corporations are efficient, they're highly valued. They have international businesses. I mean, not just our gdp, which is like our income is higher than our population ratio, but our wealth, our corporate sector is even higher than our GDP when you look at those. So a couple of things from that and probably two big conclusions. One is about wise, but the first one to just put it out there is this is an amazing place to make money. When you look at all the. Oh my God, things are awful when you look at those numbers. Whatever this system is, whatever this economic order is, it's been pretty damn good for America for 50 years. Let me repeat. 4% of the population, 24% of the income, 67% of the wealth. Yay us. And then now to the wise thing. You're exactly right. And you just look at that and you go, there's just way more people who want to buy my stock when it's listed in the States. And it was interesting when they announced that the stock popped 8%. That's basically like saying you can make 8% free money just by listing in the U.S. but fundamentally, if you want to list your stock in a market, you want to be trading on the biggest, most liquid market. And that's the United States unless you have structural legal reasons, like Chinese companies, where you can't be here. Unless you're purely a domestic. Maybe if you're just purely a domestic company, like I don't think the NatWest or whichever bank survived the great crash over in England is going to list in the United States. But for big public companies with an international business, why wouldn't you go where 70% of the cap is and just join the team?

Rory, I don't know if you've seen your public companies, but sometimes as lay folks, we overestimate how much liquidity there is. For a lot of tech stocks, all but the biggest ones are not. Are some relatively thinly traded, right? Relatively thinly traded. Especially if you do a smaller IPO like Mountain or Hinge, you might be surprised just how you're at the edge of liquidity. So why wouldn't you like, I wouldn't want to do anything but the US if I was at the edge of that. Right? We overstate the liquidity that's out there.

That's a good point because I thought where you're going is, oh, it's not great, but you're exactly right. If it's mediocre and it is off soften at the 2 and $3 billion level, you just don't have a chance anywhere else.

You're exactly right, is that there's no analyst coverage. There's the institutional buyers are not there in the single digit billions, right? You better be wherever there is any liquidity.

Should those companies be public, though, those two to $5 billion companies where there's a very thin layer of liquidity, should.

They even be public?

I was with the founder of one of them last week and he was.

Like, no, we shouldn't be. That's the point.

We shouldn't be public.

At some point you're going to want to be because the liquidity in the private markets is even worse. Now, yes, if you're amazing, you can access capital, right. And there are some arguments for founders to say private. But look, let's take another example. As an employee, would you prefer to work for a company where your equity compensation can be earned over time, but can only be accessed once or twice a year to some extent with the approval of management? And depending on the specific markets on that day, would you prefer where your equity compensation is freely tradable every day of the year? I think it's pretty obvious when you ask that question. So once you get to some kind of scale and the trade offs are different for different kinds of companies. But in the end, successful big companies are in the main going to tend towards an IPO.

There's 1500 unicorns today. That's what Crunchbase says. Close enough, right? Rich Wong from Excel said this last week 20% will fail. Okay, so that leaves us with what? 1200? How many can do easily do tender offers of scale? 1% done. 2%. Like we've got 1200 viable unicorns, many growing at abysmal rates. But like, like if they don't have a shot at a small IPO, how many of these companies are there? 15, 20 that can do these tender offers.

Right.

Jason, can I just understand what does he mean by fail? Fail to be a billion dollar company fail.

Rich Wong, this Excel said 20% of unicorns this week will just fail. They'll just gonna, they're, they're, and they're not gonna limp along, they're just going to fail. Of unicorns.

This is pretty rough and tough, but my gut would be it's roughly 20% will be good enough to get public in the end. 20% will totally, maybe 25 on each side just for arbitraryness sake. And then 50% in the middle are meaningful enough to be valuable, but not so meaningful that they'll get public and they'll be merged, they'll combine with someone else, they'll be ped, but it's probably a distribution, something like that. Maybe the low end tail is not 20, maybe it's 30. But I think broadly speaking it's correct. Some companies that were once worth a billion dollars can go to zero easily done, especially if you have debt, especially if you have a high cost structure. And if you're asleep at Switch, many companies that were worth valued north of a billion can flatten out and you know, struggle to get 5,600 million, but will realize some value. And the percentage that will actually get public, my guess is it's 20% plus or minus, maybe even less. So if it's 1500, I mean that's still 300 IPOs. That's a lot. And it's only, this is the key point and it's only that last 10 or 20% who have quote IPO potential, who could get a tender done. And what that says therefore is. So the consideration, the equity compensation for a lot of these companies is notional and not accessible. One thing we're definitely seeing now is as the holding period goes on, there's not just the ability to do tender, there's a need to do tenders because you can't tell People sign up at 25 to join the startup. It used to be work really crazy hours for four years. We'll go public, you'll ring the bell, you'll do really well as an employee. It's amazing. Now it's like sign up for four years, that turns into 12 years. And then at the end we're still trying to put a tender offer together that's just less compelling. And finally, people have lives. They need to move on, they need to buy houses, they want to start families. So the need to just get liquidity to solve employee comp problems just becomes acute. And Most can't do 10. If you can do a tender, I think people are starting to do that. But at some point you're going to say to yourself, I'm doing tenders as well, I'm not striped where I can do them on demand. Should I just ultimately access the public markets?

I'm increasingly impressed with the liquidity solutions there are for private companies later stage.

So I have to say, unless you're in the elite, that may fall apart next year. It may not exist next year if they don't hit the growth targets. Right. There's always lots of liquidity these days around a financing event. Right. And there's often one more. I don't know what you're seeing, Harry. I think if your growth struggles, it instantly evaporates. I mean, honestly, if I was a top tier engineer or almost anyone that wanted to kind of have the comfort of a later stage company, I might only join someone with a perfected tender offer program. I mean, I wouldn't even bother for anything else. That might be my first question in the interview. How does your tender offer process work?

I mean, no, I seriously, look, by definition if you have more risk, you better have more return. If there's two private companies and one of them is the small number of entities that have this monetizable stock and you don't have monetizable stock, there's a premium for illiquidity. And I think you'll see that in terms of what it takes to attract people, which is yet another. I know I'm sounding like a broken record now, which is yet another reason why as you get larger in scale, it's just going to be more efficient not to be even doing these tender offers. And just going back to. Once you hit critical mass, wouldn't it be a lot easier to just go public?

While we're speaking of financings, obviously there's going public. There's also later stage rounds and great Great companies raising later stage rounds we've discussed before the value of capital concentration going very very long in your best companies.

I didn't realize but specifically with regards.

To Amdrills raising two and a half billion Series G, I don't know if you guys knew this. They got a billion from Founders Fund in this latest round. A billion again making it their largest ever check. And Founders Funds prior largest ever check was also to Anduril.

I didn't. I mean Sam Lesson said it was the only really important company he could think of more than OpenAI. So I found it par for honestly, I mean in all seriousness when I after Sam's insights I thought that hey dude's right, he said that and allbirds were the ones. So it's probably sort of joking but honestly my learning from, from that comment he made, it's probably an even better company than I realize it's the old rule.

Just because you think someone's being a jerk doesn't mean they're not right. You ask Harry. Am I surprised? No, I'm not surprised because all credit to Founders Fund, they told you to do this back in when they started the firm they said we're going to have highly concentrated bets in our best industries. The best companies tick. And they've also had again to be extraordinary all credit to them, the theme of national security investing. I mean Thiel co founded Palantir in I think 2003, 2004. It's not like they came Johnny come lately to this space and started doing it recently and are rushing in to kind of catch up late stage. They've had this thesis for 20 years. They founded the company and they've said very clearly we're going to double down and treble down on their biggest bets overlay. On top of that, there's clearly not just a purpose in terms of capital, but there's clearly a felt purpose in terms of national security that animates the principles in that fund. And I respect that, I really do. When you put all that together and you're also, let's be honest, at the Maslow hierarchy stage where minimizing risk for your investors is not your 1, 2, 3 or 4 priority, you probably sit there and say what do I want to do with my life? I want to give as much money as I can to the company I love the most, that's doing the cause I believe in the most, which is defending the western world. I mean right back to. And then you cite your Lords of the Ring and you're done.

I Mean they're putting a billion in. Right. That's much more ambitious than throwing a growth fund, throwing 50 million into the last round of anthropic. Right. Or throwing 20 million into level. It's a big bet.

I mean, yeah.

Rory, what percentage capital concentration would be.

The peak of what you would be.

Comfortable with in a fund?

We have a capital concentration limit of 10%. We typically aim to, you know, our typical expectation is 20 deals on an average of 5. Fairly lower standard deviation. So I'd have guessed 7. Do you think that's enough?

Brian Singerman has said to me before they've done.

I'm going to answer exactly that question. I think we typically haven't done a whole ton of later stage follow on. Even in our best investments, our focus has been early dollars at work maximizing multiple. Ironically. This is a really weird comment. The bigger the fund you raise, the more late stage you're going by definition. And oddly enough, the more concentrated you have to make the bets, which is counterintuitive because there's lots of things that valued at 100 million that might go to a billion. There's very few things that are 10 billion that might go to 30. So when you find one, you got to put a lot in. At the stage we play at, it hasn't been necessary to have the level of concentration. Our limits have been more than fine. We've been in that 5 to 10% range. I think to do what again, to be fair to them, founders fund said 20 years ago they're going to do and have done, you have to have a much higher ability to concentrate, to put that 12 billion to work in late stage. It's not been our business, but I think the people who are doing it are doing it right.

I mean, if they put a billion dollars into Anduril and they really believe it can be worth 100 billion, the partners themselves just make a billion dollars off that one bet. This is an incremental check. But that extra billion, if that goes from 13 to 100 and they keep 20, the partners clear $1 billion personally off a one day decision.

Honestly, I think the most interesting question to ask managers today is what would you do if your LPs would let you do anything? I fundamentally think if you have a 400 million fund, you put in an OpenAI anthropic cursor and anduril. And I totally agree with you that Lockheed Martin is $150 billion market cap doing this at 40, you can see a 31 a half X and this being the next generation of Lockheed, I.

Think the truth, it's an interesting question. What would you do if you could do anything? I think the probable answer would be just like if you told your teenage kids they anything someone will do amazing. But a lot of them will go off the rails. The question as a parent is would you want to sign up for that? Right.

You're such a smart strategist of venture. What would you do? You are, you are. I interview so many. What would you do if your LPs would let you do anything?

I found this job hard when I started and it's hard to be good at one thing. And I would say I probably have a conservative bias to keep doing what we're doing and doing it well versus trying to do lots of different things. And I think the more you widen your aperture, yes, the more upside you have, but the more risk you take on probably I absolutely am probably more risk averse at the margin and being willing to sign up for trying to do everything versus sticking to a strategy that, you know, works. It's the buffer thing is you know, know what's in the box that you can do and understand the limit of the box. We do a really nice job on every dimension of seeing these early in revenue enterprise software companies looking to scale, investing in them A's, B's, and sometimes C's. I think trying to go for that, especially as a firm and trying to do and now I'm going to put 100 million and 200 million into something else. It's just harder to do. It's not a constraint from the LP as much as it's harder to do. That said, as I reflect back, I do believe a little more standard deviation in your bet sizing probably for the market we're in now might be appropriate. I'm wrestling with that and thinking about that is you don't want to go hog wild, you don't want to lose your discipline, you don't want to deliver the. Deliver the product and the consistency you are. But at the same time, if the market has moved, if staying private for longer has consequences, you got to think about what does that mean for your bet concentration. So I mean the bizarre thing about Founders Fund is they appear to be brilliant at everything and I give them all credit. I just have to say I'm not sure I could be that brilliant. I mean you have to go back to wow, they've demonstrated a range of investment acumen across a range of different challenges. That's just very impressive. Back to your hypothetical LP question if everyone was set free to do whatever they want, I think for the median firm it would be value destructive.

I'll tell you what my answer is for what it's worth. Just think when I thought about it, if I could do what I wanted and offset the risk into other vehicles, into SPVs, into the ether, then I get that the Anduril OpenAI thing is the smartest play. But what I personally would do would be to do every dollar up to a billion. That would be my version of it in every winner. So if you do a seed investment and it turns out to be a winner, top 5% deal, you do every round, A, B, C, D, E until a billion and then you stop, you buy, you maximize the ownership and you maximize the capital in until a billion. If I could offset the risk in those later checks, that the returns might be mediocre. If the world didn't go perfectly, that's.

What I would do.

I would do and I'm watching that in currently, like in my little portfolio, the two hottest companies and I put hot in quotes. That's what investors on the cap table with access to unlimited capital are based, like wildly oversubscribed because they're trying to just put every single dollar into every single round because they have access to, for all intensive purposes, unlimited capital relative to the startup's ability to consume it. Right? Why not Instead of putting 5 million or 7 million in, why not put 100 in on the way to a million or 150, but still have the benefits of starting with the seed fund. Maybe you have three funds, right, and you stack them. I mean, Harry, you have two, but that's what I would find a way to do that if I didn't have to worry about some of the risk of doing it.

The interesting thing about the hypothesis, oh, I double down on my winners all the way, is it sounds plausible, but it's interesting actually when you run the math, there's not as big an opportunity to stuff money in even most late stage quote unquote winners as you'd think, right? Because if you think about, as I said, going back to our likely distribution, we do 20 deals, 30% of them fail, you don't want to put a dime in those. 50% of them are 1 to 5x on the money you put in, which means by definition the next round, the 2x that is a 2.5x or less, not a compelling. Only 20% of deals in any fund, if you're doing A's and B's are going to Be amazing. So now you're down to only four deals out of the 20 where you can quote stuff money into and remember Amazing is a 10X but still 4.

4 is not 0, it's 4 is a 4. That could be $400 million right there.

It's still 4. But yes, it could be. But what was amazing to you with the A and the B mightn't be amazing on that last round. So probably of that four, let's say the four of them are 10x + type returns from the A and B prices. By definition from the C and D prices they're going to be 3 and 4x returns. It's only if you have the one or two amazing compounding winners that you can stuff big money. When you raise that late stage opportunity fund, one of a couple of things happen. Either a you right size it, such as a relatively small percentage of your core fund because there's actually not that many opportunities. The second thing that happens, but people don't do that. The second thing you do is I don't have enough money in my portfolio. I'm just now going to do general growth investing. I'm just going to find other deals that do it. Or the third is, and I think people who are doing are doing it well, you just ratchet up the end count the number of deals at the series A and B because you're basically saying to make my math on my overall thing work, I need to have not just a really good one to $5 billion outcome, but a fricking amazing five plus billion dollar outcome. And the only way to do that, you can say you can do it with great picking, but we've discussed that over and over again. You can, but it's maybe at most one per fund. But if you treble the number of at bats then you probably roughly 2 1/2 x the chance of being able to move big money at the late stage. The point I'm making is this. There's a whole series of things you're driven to do once you adopt this, oh, I'm going to quote stuff a load of money into my late stage deals. It's not as simple. The sound bite always looked good in retrospect. Look, If I knew DocuSign was going to compound to where it did, I would have done the round at 19 bucks a share too. I didn't. We did the round at a buck and two bucks. But those outcomes are few and far between. And the amount of distortion you get to try it's really hard to pull that strategy off in the quote unquote typical portfolio.

When you reflect Rory on that, could you have known? Is there a lesson that you take from that? I did it at a buck, I did it at 2 bucks and it's now at 19, it's now at 80.

And I didn't do a lot of the round at 19. Is there a lesson you could know? It's always the lesson on the good outcomes that you could have done more. And the only way you can be intellectually honest is think, what other deals did I have that looked equally promising? That in retrospect, you shouldn't have done the round at 19. Everyone does this in retrospect. I wish I'd put more money in my winners. Duh. Right? It's not an insight, it's an obvious. The question is, can you put enough money in your winners to move the needle without putting enough money in your SO sos to drag down your return? And that's a challenge. There's five or seven amazing companies in the last decade. We know the names. If you end up with one of those, you probably can stuff to your heart's content. Chime being a good example. It looked like something you could stuff to your heart content, but it turned out that the price wasn't $25, it was 12 15ish and stuffing didn't work.

The DocuSign and even the Echo Sign Adobe Sign lesson, looking back, having been there, right, I think the venture lesson, be visionary but relentlessly honest about tam, because it's a TAM story. At the end of the day, if you have a number one or number two player in the space and you see a TAM explosion happening, that's where you get a big lift, right?

It's hard to know which ones are going to be your best and how much they're going to run. I also think there's probably been a little bit of a fake signal in 21 because even your okay ones got highly valued. Late stage looked a lot easier in 21 than it probably will look across a decade.

With my first fund, after 18 months, I predicted my top five fund returners. You had your hoppins, you had your B reels, you had your clubhouse. And none of the five outperformers ended up being the outperformers. And the five out performers I always had in the middle bucket, actually, they were always in the mid tier. And actually it was Roger Ehrenberg at IA who said, that is exactly the same as me. And I see exactly that in our portfolios.

It's an Interesting fact, because actually we have a different experience because we're just slightly, I think, at seed. That's totally true. At seed, you almost know nothing. At the A and B stage, what we've observed is this. The going in probability of a 5x plus win. Our mental model, remember I said, is 20% chance of that outcome. If after two years the company has done what we said it would do, roughly in terms of performance, in other words, it's ramped. The probability of it being a 5x plus outcome goes up to around 60 or 70%. And it's just because we're slightly out of stage. We're paying for companies after they have product market fit and are looking to scale. And if in fact they scale, your probability of a strong outcome goes up a lot. And if they don't scale, it's obviously a lot harder. So our data comes back quicker than yours because it's a little further along, but it's still what we remain uncertain of. At seed, you're like, does it even work at the stage we're at? Is it a decent business that can grow fast? And then the late stage question is, how big can this be? Which is a TAM question, as Jason pointed out, and how will it be ultimately valued by the public markets? That's the thing that two or three years in, we don't know. And if you look at it for everyone as we're all on the same journey at different stages, you can be good at the thing you have and then you internalize at the outer edges. There's the things that just aren't knowable as easily, even when you're in the deal.

I think an important point that you've pushed back on me before, on Rory. You said, like, oh, I'd still take these companies, but the how fast can you grow? And the financing providers find that rate still attractive. You've said before the double, double treble, treble. But I met a company in vertical SaaS the other day. I was talking to Jason about it. They all scale to from 1 million to 7 million over the next three years. It's not attractive. No one's going to touch that.

I would change that word because you're beginning to sound like our recent friend. It is attractive for them and that's the most important thing. It's a great entrepreneurial opportunity. It's just not compelling for our business model. And I think it's an important thing. I was actually reflecting on the conversation last week. You never want to diss down the entrepreneur. Most businesses aren't venture fundable to the conversation last week. Most venture fundable deals don't turn out to be the most important company of the last decade because by definition only one company can be the most important company of the last decade. That doesn't mean you piss on the entrepreneur on the journey. I love the fact that this company that's going from one to seven over three years, great for him. He probably has a great business. It's just not our business. That's all.

I would respectfully push back and say I'm not pissing on the entrepreneur. I'm saying if you take money with that growth rate, I think there will be an impatience from your venture investor that will make your life hard and I want to save you.

Agree. And that's why I would say I'm just going to push it and let Jesse. I think if you said that's not attractive for us, that would have been a fine statement. Right? I think not. Again, it's back to just a cloud that's no good isn't a helpful thing. It's like that's a really good business for you, but it would not be a good business for us as venture people. That way you're not downing their journey, but at the same time you're saying it doesn't suit our model. It's not you, it's me.

Agree. Sorry, Jason.

Well, I might do that deal. Harry. For what it's worth, if I thought the founders were incredible, I thought the true TAM was large and I thought there was upside at growth scale beyond 10 million. And I hate over discussing price but in this case, if the price was was commensurate with that bet, which was much easier to do a few years ago, I would take that bet. Like in the older days I did that bet in pipedrive. Okay. And. And that was. And I did it at 16 million. Right. And it's not that it's the same, but it's basically the similar metrics at the time. I would do that bet at 16 pre or 20 post. Like if I love the founders and believe the market was large enough, I might take that risk. At 20 posts it's just they don't want to do it. That world doesn't exist today. But I might take that honestly, I might take that risk.

How? He's got his skeptical face on. I share his skepticism.

I'm just saying literally I would say it so you could be skeptical. I'm saying honestly, based on what I know that we talked about it. Right. It's interesting to Me if. If this is a multibillion dollar opportunity and it's just going to take a little longer and it's still going to double at that rate. And I love the founders, founders matter and I take that bad. If the. If the valuation give me gave me time, I'm patient. If it gave me time, that's fair.

But implicit statement is what you're saying. It's quite an interesting thing in the context of what you're saying is the near end traction to seven over three years you're saying may not be predictive of the ultimate potential.

Because Open View just did a great report on it. I wrote it up, they just did one day. That velocity to 100 is not the perfect predictor to success at scale. You just need to grow fast. Didn't that with the Open View report said it said you just have to grow faster enough to 100 to get there. But the super fast historically pre AI hasn't fully correlated to success.

We've looked at every deal we've done. This is a really interesting one and we ranked it based on the quartile of growth rate relative to the peers at the time of investment. So first, second, third or fourth quartile. Now, as you'd expect literally at the time of investment, we've done almost no deals below the second quartile because obviously we'd be incredibly stupid to do deals that were slow growing out of the gate. But the interesting fact is this very little correlation between great outcomes being top quartile or second quartile. In other words, they're almost as likely, they're growing quickly but not astonishingly quickly, has just about the same probability of giving you a great outcome as the hyper growth from day one. Which is I think validation what you're saying, Jason, Bill.com, it compounded to a huge network and obviously it was an amazing outcome for us. But the growth rate was always, I think second quartile. There were companies always going faster than.

It was slower than me back in the day with Rene, it was slower growing than it was whenever I would see him. It was always going a little slower than I was.

When we did that work. I was really actually happy because what it shows is it's not just a metrics business. And I think because I tend intellectually to be quantified, it was really good pushback from my own brain to say Rory, it's not about rank them all and do the highest growth thing based on the growth rate of time of investment. It turns out that that would Be a very bad rule because it would exclude some amazing deals. My aha is you want to be a top half growth rate but then after that you have to take into account things other than just the absolute. As I say, you can't just rank them and buy. It turns out there's nuance within that capital, efficiency matters, tam market, entrepreneur, growth, persistence, all the other things. A friend of mine years ago had this wonderful saying about venture when you'd complain about how hard it is to figure all this shit out and he would say to me, if it was factory work, they'd pay you factory wages. In other words, if it was simple, they'd pay you 20 bucks an hour. And they don't. It's not as simple as rank on growth rate and buy from top down. We did the work. It was pleasing. I think HubSpot actually was for a couple of quarters right as we invested only second quartile and it's been an amazing outcome.

Absolutely it has. Speaking of growth rates, I do want to get to an important topic I think actually, which is a piece of work done by Jammin Ball, that we've seen this real slowdown actually in SaaS spending for H125. The question being is this an ongoing, more permanent trend? Is this a h at a time and we will progress through it? How did we think about this in context of where we are today in terms of this SaaS slowdown in spend?

But yeah, this was tough news to see that the rate of growth has actually declined more this year. There can be different reasons. I look, I wonder why Okta has slowed. It's still two products, why Salesforce is still in the single digits. It's so big. But I do worry that the pressure of AI sucking up all the spend. Another person pointed out on Twitter. I added to my summary of it like if Cursor did, almost half a million, half a billion dollars in revenue in the same time it sucked up an enormous amount of that dollar that would have gone to Okta and Salesforce, right? 500 million. That's a lot in that period of time, right? So AI is sucking up budget. Here's a real example of it happening. And consolidation is still coming. It's still coming. So I just think this pressure, it's just this pressure is not Even if the 2024 days are behind us, it doesn't appear to be any easier.

Big picture, I do think the slowdown continues even though we don't talk about it as much. If you zoom out and we had said this literally four or five years ago. This is not surprising. The industry's mature and if you think about five or six years, there was narrative of, oh my gosh, it's been 20 years of SaaS and cloud and we're only 40% of workloads have moved to the cloud. And people would articulate that as if it was good news. And I remember at time thinking and saying, you idiot, it's horrific news. Do you know why? Because you've compounded from 1% market share to 40% market share. It took 20 years and an average growth rate of 30%. Do the math. That gets you roughly there. The problem is three more years of 30% growth and you go from 40 to about 80. The SaaS slowdown was inevitable once you got to 40, 50% market share. These are mature, served markets. The best example of that is let's take it Zoom. A company I love and so wish I'd done. Who the hell do you think is left in 2023 who doesn't have a fricking Zoom account? You're done. Like, I mean, if you didn't buy 1 in 21, you've hit time, you've hit complete time. And that's an extreme example, but I think Docusign wrestled with some of the similar things. Salesforce, most companies have a CRM. I know they'll show you some survey that says on a tan basis, there's other companies. But the truth is you've had 20 years to buy the damn thing. It hasn't changed. If you haven't bought it now, you are a trailing edge adopter independent of AI. The SaaS industry was going to hit the mature stage. And you're right, Jason, it's all the things that happen at that stage. Bundling, consolidation, grinding out the week. Fortunately for us as technology investors, right at the same time you got this new, new thing which is sucking up all the attention and the dollars and it's taking a lot of the attention and definitely contributing to the slowdown. Now the good news is it's not quite zero sum. This is the key hope statement. If you're just replacing CRM with, let's call it aicrm, then there's no time expansion, then it really is a knife fight for limited resources. If in fact the AI is taking over some of the work and taking over some of the labor dollars, then to some extent it's additive, which is obviously what we believe it is. But that's the crucial statement. I don't think it's a fight for table scraps. I think AI is the new, new thing. And to some extent from a economic perspective, the cursor dollars in software development or any other of these things aren't directly taking away from the SaaS dollars. I think it's time expansion. But at the just practical level of getting shit done. My guess is a CIO people can only take on so many projects. There's no brownie points for taking on a SaaS conversion in 2025. There's a lot of brownie points for doing something in AI. The attention has shifted. The SaaS business is definitely in the consolidation stage and the AI business is exploding almost too much in that I kind of overloaded that.

No, it's good. You can't argue. The 40% math is a good one. You can't argue with that. Right. I mean if you don't dramatically expand the dollars going into into traditional business software, you just can't compound at the rate the markets want. It's just not possible.

Yeah, I agree. I think that part was clear. I think on the AI stuff it's a question of unlocking new dollars and expressing that clearly.

There's so much groupthink on social media. I think I want to believe. I want to believe, but I think the evidence that AI will unlock massive budget from the human side of replacing humans from the services budget. There's some evidence of it, but I don't think it's, I don't think it's a slam dunk today when we're doing this today. I don't think it's a slam dunk that the TAM will of overall for B2B will go 5x because we'll, we'll attach from other human budgets and replace it with AI. I don't know that we've proven that it makes sense, but I don't think we have as much evidence of it as we claim on social media.

You've been more apocalyptic in the past so I'm glad to hear that because I think the evidence, it's classic thing is the future is here. It's just unevenly distributed in some areas. You are seeing the unlock and you are seeing the automation. But one of the reasons I'm pretty relaxed about any kind of all these mass unemployment stories. I think it's a long secular 20 year trend that we can invest in and I think you will see replacement of labor by AI on a pretty consistent basis but not an explosive basis. And it's a great investment theme.

It is happening very quickly in the contact center at the extreme right. Agreed. I'm just worried from a tenant going to your point of the tam, because I have a lot of exposure to the contact center. It's it. Half the folks are being displaced to these companies. But you're not getting that much more ACV. That's my worry. You're replacing a 40, $50,000 a year human, $60,000 a year, fully burdened with benefits and taxes, with a. Not with a $20,000 a year bill, with a 20 month dollar a month bill. That's the issue. I don't know that there's enough TAM appreciation when you trade in a $50,000 human for $240 a year.

If that's what's happening, then you're right. But I don't.

It is happening. I can just tell you. I just look at my portfolio when I look at Gorgias, which dominates Shopify for the contact center, right. Their average customer has replaced 40 to 50% of their humans with AI. And their ACV is only up 50%. It's only up 50% with half their humans replaced with AI. Right, so, so how much? You could help me think about it intellectually, but how much does that really expand the TAM? Like if it's only 50%, that's not enough for your compounding math to be exciting, is it?

If what you're saying is correct, it wouldn't be. But I wonder on each of the dimensions, I mean, funny enough, I've just been doing some refresh work on the, as you say, the call center, contact center space and interesting. You come up with roughly the same rules of thumb that I see in robotics, a totally different space, which is people tend to replace labor when there's a two for one arbitrage. In other words, when we're selling robotics, and I've seen this over and over again, you go in and you say you're spending 100 grand on labor. If on a RAS robot as a service basis, we can do it for 50, they'll do the deal. Less than that, it's not worth the brain debt. But you typically can get that. You can have the market and you can get that in call center. For example, email. And call resolution is a two to four dollar email human resolution based process. We are seeing companies getting plus or minus a dollar. So I do think you can get that. You get half the labor you save to you. So by definition, if you're only saving a little bit of labor, you're not going to get enough to uplift. But zooming out the contact center software market is 10 to 15 billion a year of annual spend. The contract center labor market is at least $150 billion. So now I'm going to arm wave just for a second and you can give me shit. So you could look at that and go oh my God, it's 75 billion if you do the two for one rule. So it expands from a 15 billion to a 75 billion market. If you can eat the labor, I don't think you can eat all the labor by any means. But I do believe there is going to be at least a 2x time expansion, 3x time expansion as you take the simple contact center queries and resolve them on a two to one basis for half the price using AI and the AI company will be able to take that capital, take that money. So I do think there'll be time expansion. I don't think it will be all it's not going to eat the whole context. End of martyr. There's going to be humans on phones and answering emails for the foreseeable future, but automation to be done and time expansion to be gained. If you're pricing it so low that you're giving it just at the margin to your existing stuff, then yeah, that's going to be hard. I think the value is there such that you can command more.

I'll give you two other quick thoughts for what it's worth. One, a lot of the folks that are exploding in the AI context and with huge numbers have either acquired or indirectly acquired BPOs attaching into that 75 billion in a very interesting way. Not all that revenue is necessarily software SaaS or AI. I'm not saying it's sketchy but be it might might be the some leaders might be at the edge of slightly sketchy but I'll give you like I look at what's like maybe that's going to happen. The one I'm watching, I'm just curious, I don't have the answers is I'm huge proponent of AI replacing sales reps, right? Everyone out there in the market selling these products is basically trying to sell a 30 to 50 to 60k price point and up. When we get really good at it, it might be 20 bucks a month. It might be 20 bucks a month. It wouldn't surprise me if when the cursor for sales comes out for real, it's not a bunch of traditional sales processes trying to charge 50 grand. It's like this is just software. This is just. This is a really good wrapper and it's 30 bucks a month. I just don't know that we're going to be able to that all these price points that we hope are sustainable in venture and startups. I'm not sure when the underlying cogs approaches zero, if it's going to be as sustainable as we hope. This one for two, I hope it is, but that's my concern for the.

TAM on the software side, it's just like SaaS. At some level you go in 1999, duh, this is it, everyone was going to do SaaS. It was obviously the wave of the future and no one founded another non SaaS client server company at the same time. It took 20 years to get everyone across from non SaaS to SaaS and the sequencing became really important and it wasn't just random. It turns out the things that had the highest value from that shift like CRM went first and the things that are lower value like accounting took longer and I think it'll be exactly the same here. It's not going to be a cataclysmic change in one day. I think you have to pick the spots where it works now and avoid the spots where it's going to take five more years. My mental model is there's a two step process. Step one is does the AI work and allow automation? You're over that hurdle and you're right. The second question is can you get paid for that enough? And I can't speak to the specifics of your company. I do believe, I actually think it's an interesting comment. It's harder to command huge value on top of software on the SMB side because typically the amount of labor you're saving is not a lot. The wonderful thing about automation for large corporate America is when you have 2,000 people in a contact center and you're paying them each 50 grand a year, the quantum of money gets big enough that the quantum of savings from automation becomes compelling. I do think that for those things you will, for those kind of higher end implementations you will be able to command value from what you're delivering with AI.

Next generation AI for B2B as you approach TruSMB, it's more and more going to be base and included with a limited upsell opportunity in the enterprise. We're going to try, we're going to try to do agent force and charge a massive amount of, of money and we'll see where this all leads. But when the AI, when an S tier AI is included for free in an SMB product and when it's charged $20,000 a year to replace one human in the enterprise. We'll see how that works out over the coming years. Instead of looking at the SMB products that are kind of like crummy compared to the enterprise ones, we may again be looking at them in AI and saying, wow, they're better. Look what I get for free. Included with my SMB CRM. It's included for free.

Final one, guys, before we do a quick fire, I was in Sweden at this dinner. Elon's tweet came out and we're not going into politics, so it's not a political question, but Elon's tweet came out and I think half the people around the table had over $100 million in SpaceX and probably another $100 million in other Elon companies. Purely from the business perspective. Again, I'm not going into politics. I'm not going to health or drug use. Nothing. Not doing that. How do we evaluate Elon companies from here? Is it business as usual? How do we think about that?

It was never going to work, so you probably just got through that pain point. It's pretty clear from a company building perspective, most investors would have preferred to skip the whole thing. If you'd stayed on the sidelines making nice, kind, supportive noises, but without putting your head up the parapet, you would have probably got all the benefits that the market was a reminder. As late as December, January, there was the oh my God, it's going to be amazing for Tesla. Trade going on in the market and the stock went way up. If you'd stayed less involved in doing what he did as visibly as he did, you probably could have got the benefits without the pain. Always worth noting. Again, you go back to the shrewdness of Peter Thiel at Founders Fund. Got some of the benefits of perceived support for the current administration, probably get some of the halo effect from that. Without putting himself in the line of fire, Elon, just because he is that entrepreneur who leads with his heart, did the other. And the process of doing it and then withdrawing from it has been painful, given that it was always going to fail. Thank God that's over is probably their feeling. But it would have been so much better had none of it ever happened. From a pure company perspective, is there.

A company that is more materially impacted than others, do you think?

Rory Tesla? Only because the truth is electronic electric vehicles have a whole bunch of specific subsidies both around purchase and around the ability to resell emissions credits to people like gm. And all those things can be withdrawn By Congress. There's no obvious direct political cost is a much better statement of doing that. And there's no obvious impact on the government. I think the wonderful thing about Starlink and why it's an amazing business is you kind of go through the, oh, my God, I hate. I mean, I can see the government sitting in a room going, we love you, Elon. God, it will give you a lot of business. Then, oh, my God, we hate you, Elon. But there's nothing we can do because we don't have any other rockets. It's the definition of a great. I mean, the definition of a great business is when your customers can hate you and still do business with you. And I think the truth is, SpaceX, it's just such an amazing achievement that even if what was your largest customer, interestingly, is now no longer your largest customer because starlink is such a big business, even if one of your biggest customers doesn't much like you, they still got to do business with you. That's not quite as true for Tesla. So, yeah, I think the impact is slightly worse there.

I think. Let's just give it a year. As you point out here, the news cycles are so fast, Right? Clearly, Elon's alienated himself. I mean, Tesla's the closest to a consumer product of those until the. And so he's alienated a certain segment of his population, which has impacted. You saw it in Europe. Most, most extremely. Right. Some of that, some of the sales. But let's. Let's give it a year. I think we'll never forget this episode. You know, stock prices go up and down. This may sound crazy, but I think in a year we will not have forgotten about it. But maybe no one cares. I don't even know if Trump cares anymore, so I don't know if the rest of the world will care. He may not even care.

Yeah, and I'm just glad he's back to doing them. I mean, because we mentioned Neuralink and the fundraiser. You just got to go back to putting that episode behind. What an amazing entrepreneur. Reminder to the haters. Tesla, wow. SpaceX, wow. And then we forget it.

But.

Well, he won't forget it, by God. OpenAI founding wow. And now Neuralink wow. I mean, you just got to step back and say please.

I mean, another one that everyone forgets. The boring company Rewinding City Reinventing city.

Infrastructure around the world.

Have you done it? Have you done it? It's pretty cool. It just works. It's pretty cool. At least in Vegas, it doesn't do much. But what it does do is pretty cool.

And, you know, I think that, you know, I was just thinking about this this morning. It's like, it's such a shame. And that's just such an unparalleled record of entrepreneurial success. And it's kind of like a management failure of massive proportions if you think about it. To hire the guy who did that for something that's not like that, it's something that's political, something that involves making cuts, something that involves making political decisions. It's so good that he's back to doing the thing he's best at. Everyone should play the position where they can score and win regardless. So it gets back to what I said earlier. It's not that it's better, but it's just everyone's back now in the right place. Elon is back building amazing companies. Yay, everyone. Oh, my God, that was a painful six months. Is. I'm sure the mental model skills are not wholly transferable.

One of the beauties to X is we can see how what every billionaire thinks, right? There's so many billionaires on X and text and we can see what they think. The meta question I wonder is, should you invest once a billionaire becomes unhappy? Chamath seems unhappy. I don't know him. Elon doesn't seem happy. Can folks still be as innovative and groundbreaking when they reach the unhappy billionaire phase? I don't know.

The one thing I will say on Chamath is the public Persona and the private Persona are drastically different. He's actually very humble and kind. Privately, the public is a very different display.

The only meta question just is, are your best days behind if you become. Let's leave Chamath out of it? I don't really know, but my very limited interactions are consistent with that. Harry for sure, but I would say at least 50% of the tech billionaires on X are unhappy. Can they still innovate at that stage? Do they still have the same level of drive or passion? Or is their grouchiness an inhibitor to be an innovator?

And I think that's the sentence here, and I love what Harry said, is that you don't know if someone's happy till you know them personally. The truth is social media and politics just tend to drive a Persona. It takes a certain Persona to be perceived as winning. You know, we all understand the kind of the heightening effect in social media of the most extreme situations. So I think, I think it's one of those environments where like Gresham's law for money. Bad money drives out good. Well, the equivalent of that in social media is bad opinionated people drive out good, boring people. So when you're in the political arena, when you're in the social media arena, it just forces a Persona that comes across at least as very angry and unhappy. And I'm like, whatever. I'm willing to suffer the risks of getting a billion dollars. And seeing how I do, I'm not sure what's gonna happen, but I'm willing to run that risk.

I want to do a quick fire. This is Kalshee's quickfire again. This is like the performance marketplace where people bet on different outcomes. So let's start with number one. Sundar Pichai leaves Google this year. Yes or no?

The only thing I thought about when I saw this when I was a VP at Adobe and Shantanu was the CEO, not a founder, but on the rise there. I didn't directly interact with the Adobe board or others, but when I saw the vibe like they were not going to let that guy leave, leave. This was a company that it was no longer found to run and he had figured out the transition to cloud. And you could debate decisions, but his ability to steer that ship in the right direction. Everyone at Senior Duby know, like it was even riskier to have anybody else, right? So I suspect it's similar at Google. None of the large stakeholders want him to go no matter what, and they will do almost anything to keep him. Despite all that on the search side, which is still the majority of revenue, despite all the threats today, that was my sense, because Shot New was just, I mean, he's a great CEO, but I'm sure the board and others would just grab him by the jacket and not have left him ever leave Adobe. When I was there even, even, you know, for many, many years, the question.

Is really, you're abstracting from personal stuff. Random events could cause that there's some probability that anyone can leave at any point in time. It's called death. What is really a proxy for saying is, is he doing an amazing job at Google? I think we've definitely gone from the, oh my God, the world is ending at Google to, you know, they're doing good stuff, they're getting good models out there. It's not obvious. It's all gone to hell in the handbasket. They have the classic innovator's dilemma of the Google model. The search model is awesome. It's a cash spewing machine. But let's be honest, when I get the lineup for the Harry Stebbings podcast. I start on ChatGPT to do my research. Not Google anymore. Right. So they have that long term dilemma. It's not clear that putting someone else in the chair will solve that. My guess is by far the most likely outcome is not leave. Just continue to manage what you've got reasonably well without ever solving the existential problem.

I agree with you both. The only thing that I do think is just interesting is Sergei is back and he's back back and he's speaking publicly about being back and how it's the most exciting time ever and how they have to win more than ever. Having had a hiatus and I'm just intrigued to see what that interplay is about.

I mean if it were to happen that that's been the default. I mean if you look at the the founder comes back narrative is definitely there are precedents, including obviously the most amazing one and then the Starbucks guy who keeps coming back every three years, like it or not. Yeah, it would be the narrative that would easy to sell. My guess is if the founder decided he wanted to do that, it would be on the table.

But Kalshi Way agrees with us. They say absolutely he will stay. So if we go to the next one, New York Times wins OpenAI lawsuit. This one's pretty evenly split. Yes or no to New York Times wins OpenAI lawsuit.

If you include win or settle, then I'd give it 80%. In other words, I can't believe that OpenAI is just going to want to let it run forever. So if you lump settlement into the equation, do I think New York Times is going to come away with, quote unquote, a win of sorts out of this? Yes, more likely to be a settlement just because always in the end, close to the trial, people settle than a oh my God, it goes all the way to. I don't know if it's a jury or a bench trial and then they win. But I think they've got enough of a case to be in the room and it's one of those issues where money ultimately can help solve it. So yes, I think they win something from suing. I think they win more from suing and then settling than the other companies who did smaller media deals with OpenAI. In other words, to make it harder for myself, their strategy of suing will be validated versus just cutting a 20 or $30 million deal with OpenAI two years ago. I think they will get something from their effort.

If they've already determined that they're going to pay in the end, then that has to settle. And in that sense, they'll win. But they may not win the lawsuit because it gets settled. I mean, at some level, if they don't, it's going to go to the Supreme. It has to go to the Supreme Court. And the folks in the Supreme Court will decide what fair use means in the age of the Internet. And that's a big. That's probably a 48% gamble because it's easy to see them coming down on the side of the content providers and maybe Saster gets a chance. I think I deserve a check. ChatGPT scrapes a lot of our content. I get a lot of traffic from it already. Seriously, why don't I get a check? Why does New York Times get a check and not me? I don't think it's right or fair. Under, under fair use, they're directly taking my content, which is very unique and specific to me. So in theory, there's an argument to take it all the way to Supreme Court and win and not have to pay anybody because OpenAI has slurped up the entire Internet. So they should settle because it's pretty confusing. We've basically, in the age of AI, we've decided to surrender a lot of copyrights and surrender a lot of privacy. Now OpenAI can record all of our conversations 24.7in their macOS app already. So we're giving up copyrights, we're giving up privacy, and we're going to learn where these new lines are, but they're not going to be the same as they were two years ago. But the Supreme Court's conservative. It's a bunch of Harvard grads.

I think the most fun thing about that answer is Jason, without blinking or laughing, described Harvard as, quote, conservative. I think they would be so glad. I think they're gonna put that on their Harvard website. Look, Harvard grads are conservative. Leave us alone, please. Dammit.

I don't know whether it's right to take on the Trump administration. I know there's a lot of principled reasons, but I do think there's not. Politically, but with a small C. Gotta be the most conservative organization that I have any affiliation with. Very conservative.

I think one nuance on this that gets to it, we picked up in a very interesting reference we did on another deal, which is really interesting. Obviously OpenAI and all the models need access to modern news to be able to answer the real time questions the way Perplexity initially did. And now everyone has copied. You have LLM plus web search, so they clearly need that. So that's a given. They need access to modern news sources. A really interesting question, rather, is this. If I have as OpenAI, say, Washington Post and the Wall Street Journal, do I need New York Times? In other words, is a third national news source additive or not? It's a very interesting question. I hadn't thought about it until I talked to this person who made the point. Yes, you need news to give the full LLM experience, but do you need the third or fourth marginal news source? Maybe not. And that's the thing that would maybe make my hedge my bet. It may be separate issue from what are the legal rights on this. You could imagine an LLM saying, I need to get modern news from AP and one national newspaper, but I sure as hell don't need six. Because if you think back, if you reflect even on your experience on a Sunday morning when you'd read three or four newspapers back when they were papers, by the time you got to the third, you're like, I know already. 90% of the content is repetitive. The argument for OpenAI gutting it out is they're saying, hey, I already have it from two or three people. Yeah, maybe I should have paid you for the past, and maybe I'll lose that part of the case. But I don't need to license your content on an ongoing basis to be able to Deliver the full search +LLM experience, provided I have one provider. And if that's the case, there'll be an interesting game theory process going on on media content pricing.

And that's why Jason with Sasta will get paid so handsomely, because there's absolutely unique content.

You think I'm kidding? But, Harry, how much do you get paid by? I get like three or four grand from Twitter a month. How much do you get? Do you have it turned on?

That's not cool.

I'm so pissed off about this. I see everyone post it. I don't know how to do. Do you know me? I'm a luddite.

But if I'm making 50 grand a year for now, I know it's not the same because Twitter's opting to pay its creators. I'm getting paid 50 grand a year for my tweets. I want $500,000 a year from opening for its Saster content. It's more valuable. I want. I would just want. I just want like, 40 grand a month.

You have 50 grand a year for tweet? I would get like 200 grand a year for tweeting.

You might.

Yeah, you might I think the fun thing about this is it will drive very interesting conversations about what content is in fact valuable.

Speaking of that final one for you, Linda Yaccarino, will she leave Twitter this year?

You know, it's a fun question. We get glimpses of Twitter's financials, X's financials. We don't see all of them. Right. I mean her job was to bring in the advertisers while and create a buffer there that doesn't seem to have been wildly successful. So I know this is mean to say I'm only judging the public Persona. I don't see how the team is managed internally. I mean objectively it seems like one you could upgrade on the channel team. It seems like of his C level team and his companies, this seems like the VP that maybe I'll upgrade this year.

That may be true. But thinking pragmatic, if I was and I ever thought I'd say this, poor Mr. Elon, coming back from a bruising six months in government work and having five or six amazing companies to work with plus Twitter, I'd probably say to myself, I'm just not going to take on the hard thing. Can I just focus on building cool engineering shit, Twitter, whatever. I mean the person who changes the CEO is the board or in this case, Elon himself. Do you just want the heartache, dude? Just let it run. Don't be a hero.

I hear you. But you know, we forget like Elon recruited Iliad to OpenAI. The guy's a good recruiter, but it seems like she's the weak link on the team. When he has the moment in time, I think he will bring in the best media executive in the world that he can get. Because for all the folks that he has alienated the last few months, there are others who probably are bigger fans. Go find the best one of your like, lean into your super fans if you have them. That's where the magic is.

Guys, thank you so much for doing this with me. As always, my favorite is always the comments. The comments honestly are always my favorites and I so appreciate you both. This has been wonderful. Rory, 6:00am I mean dude, credit, credit and love.

Hey, credit and love. Only time I got.

Jason, you the man. I mean, always the most fun shows to do. If you want to check them out on YouTube, you can find them on YouTube by searching for 20VC. That's 20VC on YouTube.

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