Panel-style YouTube discussion (Feb 14, 2025) led by Jason M. Lemkin with Thomas and Victor. Early conversation emphasizes that AI companies exhibit much faster growth than classic SaaS (examples cited as "1 to 7" growth rates), that AI-driven cost structures may improve gross margins and drive valuation expansion, and that market reactions to new models tend to overreact in the short term while the application layer will see large long-term effects. The speakers contrast technical model improvements with customer focus on app flows and workflows.
Chapters
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 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, that came on January 22.
I want to share a story, but Victor, Will, this is your cogs. 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 like 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. It's absolutely hilarious to see all the world's tech analysts who know nothing about AI just panicking because there's 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 tail effect, as Thomas just said, for the application layer is huge. I think that's really massive. But I think in two 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 Deep Seeks 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 it's 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 are using Open Air. Frappi today is going to switch over to deep seq 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 then 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 a million bucks 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 and you're creating clips for free. Like this business model can work.
