Jason M. Lemkin discusses how AI startups can reduce platform dependency risk. If you're betting on a $28 billion valuation, you need to underwrite a $100 billion outcome to justify the existential risk of being cut off by a provider like Anthropic. Building proprietary models, multi-sourcing vendors, and licensing are the main de-risking moves.
$28 billion
$100 billion+ company
You should lean into this. The scary fact is what Anthropic did to Windsor, which is the minute you try and do an M and A, they cut you off at the knees and it hurt. Right? So you probably as cursor are saying, I can use all this momentum and all this venture dollars. Do I build my own model? Do I get a second source? Do I have to have a binding contract that applies to Anthropic? Do I have to have a second contract with OpenAI? You have to de risk the big risk. But on the other hand, the price is such that you don't just say I can't build a business here because of this fundamental risk. You have to de risk it because the core market demand you have is just so attractive. Do you think you're being paid for that risk if your entry price is $28 billion? That's a different question. You have to underwrite $100 billion plus company. Well, you have to underwrite two things. I mean, listen, it's a great if.
We go back to 2023 before all of this, right? And imagine you're in a partner room and someone came to you with a deal like Cursor and said, I've met these, these kids, they're so smart, right? But they're 100% platform dependent on another provider that will likely compete with them in the very near future and will raise infinite amounts of capital. Would you, would you have in 2023, would you have agreed to that deal? This is like venture one on one. You don't do these platform dependent. I did a bunch of stuff in Shopify, right. I know it's old school, but like what happened in Shopify is everyone tried to go multi platform. Rory. And it was pointless because Shopify is 99% of the B2B market.
But. That's right, but there's a bunch of differences there. First of all, Klaviyo made it work. And secondly, for now, yeah, and, and Shopify wasn't just a back end partner, it was a distribution point too. But I'll still take on your point and take it. Would you do that deal? And this is why the 28 billion is interesting. What you say to yourself is if the core giant sucking sound of demand is so strong over the next two to three years, then the forward momentum getting to a billion dollars faster than almost any other software company out there is probably enough to allow you to have options. So it's a calculated gamble. You roll the dice. And in this case, as you've so eloquently pointed out the AI adapt. The magic of AI encoding is so strong that you've got that kind of lift, because even though you still got this big existential risk out there, you got more leverage now. There's a bunch of different things you can do. You're seeing licensing whereby you say here's for the product and then you get your API separately. You definitely going to see people building their own models, you're definitely going to see multi contracts to some extent. So there's going to be a lot of de risking happen. But you are at the founding stage, despite the platform risk, you're being paid for the risk.
