Jason M. Lemkin and Victor from Synthesia discuss how AI is reshaping SaaS valuations and growth rates. AI-driven businesses are hitting 1-7× growth compared to traditional SaaS, but the real question is COGS impact on margins. Victor argues that despite hype around new models like Deepseek, most customers stick with established providers like Anthropic and OpenAI.
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So now they, now, now they have AI and you, Jason, you and I both know this, like the growth rates of AI companies are much faster than say the classic SaaS businesses just because there's so much in them. And so now you have companies that are growing 1 to 7 or some massive growth rate before they used to have challenging gross margins and now they'll probably look the same as SaaS companies, which means you have pretty significant multiple and valuation expansion.
Yeah.
So I think it's At the application layer, this is like an unbelievable Christmas present that came on January 22nd.
I want to share a story, but Victor, will this— is your COGS going to— is your COGS a huge issue and is it going to plummet? Or just from the perspective of Synthesia, is this not as big a deal as it sounds from COGS and the rest? What's your learnings in 48 hours?
We have great software margins already, so I wouldn't say it's not something we'd like to put a lot of focus and emphasis towards, but obviously as we scale up, it's great. I would say though, I think I totally agree with Thomas. It's a massive technical breakthrough. I think it's interesting when you look at the market. I think if anything, to me, this is just your confirmation that humans and markets are driven by stories and emotions, not fundamentals, right? It's absolutely hilarious to see all the world's tech analysts who know nothing about AI just panicking because there's like a new model out. I think people have a tendency to overestimate the impact of this in the short term and maybe underestimate in the long term. I think the long-term, uh, tail effects, as, as Thomas just, uh, said for the application layer, is huge. I think that's really massive. But I think in 2 months, I think 99.9% of the people who are using Anthropic and OpenAI today is going to go back to using their products, not Deepseek's model. And there's a big differentiation between those two, right? I tweeted the other day that smart people talk about models and benchmarks and customers talk about app flows, apps and workflows, right? And there's such a big difference of a model that performs better and is interesting technically, right? They'll probably have a big again, long-term effect in the market. But, but, but yeah, I think this kind of the panning that's going on right now, I think is pretty funny. I don't think that most people who are using OpenAI or Frogpic today is going to switch over to Deepseek magically within the next couple of weeks.
I'll tell you just my— and again, I'm the least smart, but my gut, just from my little portfolio and little slice of the world, is I think cost is less important in B2B in some cases. Than that you can use more. Because when I look at a couple of companies, one, one I invested in the contact center, which is all about AI agents called Gorgeous Free Commerce. They're at almost $100 million. Okay. At first, the AI was $1 million a month, right, to deploy these agents. Now it's fine. They've optimized it. And then I was a small investment at the low end of video in a company called Opus Pro, Opus Clip, that Victor probably knows. And when I invested, I'm like, this company's got to be burning. You're uploading billions of videos. You're creating clips for free. Like, this business model can't work.
