Is DPI The Only Thing That Matters? with Sam Lessin, Jason Lemkin & Rory O’Driscoll

Well, we look back in 20 years and say OpenAI was a fundamentally important company.

Maybe the hyperscalers have taken very good cash efficient businesses and they would break Mr. Buffett's heart because they've turned them into capex hogs. Public company investors are just mean VCs on steroids. We turn on a dime from I can't believe you're not spending more to what the frick do you mean? You're spending so much money every company's market share is up for grabs when there's a platform shift.

Will Elon be out as Tesla CEO before 2027? Ready to go. Guys, I am so excited for this. We had so many interesting things that we want to dive into this week. I just want to start with diving in actually on the deep end on a series of Chamath tweets. And Chamath basically said, hey, TVPI is bullshit vanity metric. You can't eat irr, you can only eat net debt. Dpi. When you read this and when you read his quite opinionated stance, how did we feel?

I mean, I hate agreeing with Chamas on principle, but I agree with him.

Well, you know what's interesting, if you read the Wall Street Journal article on, on, on Tomo Bravo, they just raised a $34 billion fund, right? Harry, you're buddy.

What?

It's what the Wall Street Journal said. That's a record fund for P34 billion. It's a record, but Q1 was a low point. No. 1, no one raised a $5 billion P E fund because of lack of liquidity, right? So it's kind of ties to Chamath's point, which is if you have the liquidity in today's world, you're going to get the capital, right? Tomo Bravo had $30 billion in distributions last year. $30 billion. I think that exceeds most guests, right? 30 billion in distributions. Not paper markups, but distributions.

Look, from my perspective, this is simple, right? Which is there's two very different games that are called venture capital or even, you know, private capital in general. One game is actually making people money, finding companies early, making the right bets, you know, paying the right prices and selling. And that is a DPI game. And all that matters is dpi. And that's the game I like to play. That's the game I think I value and I respect. There's also an asset gathering game, right? And the asset gathering game does exist. And here's the thing I say as a seed investor, with full transparency as a business, the asset gathering game is actually a better business. Like if you're just in it to make money, right? And like that's your, you know, then like you're an asset gatherer. Like that's what the market wants and we can talk about why. And in like the whole nine yards, the public market wants that they care about fees, etc. So the problem is like, I just am an intellectual snob and I have no respect for asset gatherers. Like, I think it's a stupid game. And so for me it's like it's, you know, I think they're just two very different things that are called the same thing. And you just should be really sober about what game you're in and what you're trying to do.

I think it's really fun that we had this conversation and we ended up thinking that Chamath's on the side of good. Nice job, Sam.

I mean, I'm the first to say, like I think that's wild that I agree with Chamath. My default instinct is to completely disagree with him on whatever he says. But like, in this case, I happen to agree with him.

I'm comfortable disagreeing with him. I honestly thought it was kind of a trite comment. It's a very typical Chamat comment. On first glance it sounds smart, but on deeper analysis it's kind of vaguely right, but not useful because obviously he cited his 2013 and 15 vintage funds. Obviously at that point, DPI is the only thing that counts. If you're 10 years in and you're still selling promises, then you're in trouble. So that's a trivially obvious comment. But at the end of the day to say TVPI doesn't count. The truth is Venture is investing in illiquid assets for five to seven years with the expectations of meeting a greater return. That means that for five to seven years you don't have dpi. You've consciously, you can just have one thing. You've consciously undpi'd yourself. You've taken money and you've given to the tide in the ground. So in that period of time, you have two choices as an investor gauging these guys. You can say TVPI means nothing. I'll stick my head up my ass and I'll look in seven years, I'll see how they're doing. Or you can use TVPI for what it is, a proxy, a loose proxy for performance.

Here's the upshot. You have to understand that LPs are just incentive driven, right? And from an LP, what you should do As a rational human being, if you were, it was me investing in fund, you say, yeah, the money's in the ground for five years and after that we'll see where we're at. And that's all that matters, what you deliver. I know full well, I know this is an investor that the marks that you made up or the marks as Softbank listed something somewhere completely irrelevant. In fact the negative signal in a lot of cases. So like the marks are irrelevant and stupid. Now here's the reality is institutional LPs are people too, right? There's some junior guy who wrote the check, right? And he wants to get promoted, right? And he exists in an organization that's trying to deliver something. He doesn't want to wait seven years to get promoted, right. For making a good call or a bad call. And so it really is just a marketing thing where you're saying, hey, I'm going to give the person who wrote me the check some marketing thing they can then use for their own internal purposes. Because everything in life is about get laid or get paid.

I think that, I mean there's no doubt that part of kind of having a positive TVPI is all that marketing. But I think at some level. Look, let me ask a question here. If you had two funds three years in and one of them had no markups and one of them was a 2x TVPI, would you regard those two funds as exactly identical?

No. What I would regard them as though, and this is how I actually do regard them when I look at my own portfolio or things like that is very simple, which is how many credible things do you have that are going to be fund returners? That's it. Just give me the list of four things. I don't care where they're marked. Like you either have a set of true legitimate shots on goal for important companies and important outcomes, or you don't. If a company is marked at 2x where it went in Softbank, some crazy person marked it up in some crazy market.

My point about the CHAMAT comment is to say it means nothing. To say it means nothing is a gross exaggeration. There almost certainly is some signal in that data. Let's kind of take it. Let's go right down into TVPI means nothing. I am willing to bet if you got some kind of machine learning algorithm and looked at all the funds that 3 or 4 years in had a TVPI of 2x and all the funds that 4 years in had a TVPI Of 0.8x and then correlated that to the ultimate outcomes. I bet you there would be data in that signal that says it has some value. Therefore it's not the only source of data. You're right. There are better sources of data if you're in a position to evaluate better data. But as an lp, in the absence of anything better, there is signal in the data, which means the comment is wrong.

It would be fun to look at. I actually bet that firms that hold positions at zero or cost or even are willing to mark down positions that are more honest about it in reality might actually, I don't know, we can look at it. But the reality is I think there's this. I mean I. As an lp, in many funds, you have funds, you get their statements and you laugh because they hold everything at ridiculous value. The high water mark they can possibly come up with are these numbers that make no sense. And you look at, you're like, this is like kind of funny. And like the numbers look. But you're like, this is not real. Right. And I just think that like, it's because there's no like, because everyone has methodologies all over the board. It's all marketing. Right. And I kind of, unfortunately, I hate being with Chamath. I hate it, right? Like I've known Chamath a long time, not well, but casually. And I gotta say it drives me nuts that I have to be. But with him it's like all I care about early is give me five names that matter and all I care about after you've had enough time is did you make me money or not? Okay, but I get your point. Like it's zero is an extreme statement, but you know, we live in an age of memes.

Yeah, that's the real. Yeah, go Howard.

We said we're living in this kind of two dichotomy world or this kind of binary world of venture in the middle. SVB did this great analysis and they were saying that middle of VC funds is getting really hollowed out. In other words, your kind of mid tier firms in terms of size are really falling apart. What happens to them? Is it a game of the very small and the very large? Do we think when we look at this report.

Yes. There's no middle. You can't be. A billion dollar venture fund.

Is a billion middle.

Well, I'd say this, I mean we're, we try to raise what we, we target. Call it $200 million early stage funds. That's what we do every few years. I'm very confident we know how to deploy that. Like, I believe there's a market where you can, from a DPI perspective, make money on that. It's not a great fee business, but it's a great, it's a great DPI business. I don't know how you make multiples on a billion dollars consistently. Right. In VC, I think once you're doing 10, you're playing a completely different game of asset gathering and asset deployment where you no longer have the same goal. So I personally think that the billion dollar zone is like the death zone.

Gotcha. Good to know as a $900 million fund. Yeah, that's a tough one actually. I did actually look at the SVB debt. First of all, I was thinking, are they throwing me under the bus too? I checked the data and they were actually saying the 2 to 500 was the middle zone. So then I felt even more depressed. Now I'm a small bohemian, which is even more degrading. I'm kind of a low rent conglomerate. But I saw this stuff, I don't buy it. I mean, I think your statement is, I think in the end you have to be sized for the stage you're playing at and to achieve the portfolio construction you want to achieve. And I'm pretty confident that our typical check size is 20 to 30 million and 30 to $40 million rounds. We want to get 30 checks, the mat works, 30 deals total. I think you have to be sized for the game you're at. It still doesn't mean you can't get it wrong. I do think to your point, one of the things Jason and I have been batting this around over the last eight weeks is I do believe the impact of the conglomerates has made everything harder, including it's harder for us to make money. So I totally buy that the existence of people with $10 billion to spend makes it very hard for people with 900 or 500 or $600 million to spend to do that rationally in a way that probably, and I'd love to hear from Jason on this, in a way that if you're putting out 100 or 200 million, you're probably a little more inured to it.

Maybe the more interesting question is for founders, right? If you, if, if I think the SGB report which I wrote up, I don't think it was really saying 800 to a billion was the hollowed out middle, but I guess, I guess it is part of the analysis, right, that they're not raising funds. If, if, if, if that is true, then every founder wants to raise 20 or 30 million in their A now no one wants to raise an $8 million series A is now three safe notes, right? So does that mean in a couple years your candidates outside of some scales are going to be limited to mega funds? Like, are they the only people that can be able to write Series A checks? And because 20 to 30 million isn't even a large Series A today, right? It's a normal one. So if, if there, if there is no one in the middle, then we're all stuck with mega funds to do to, to fund the seed companies, right? I mean, I guess it's an obvious point, but founders just, they better get to know folks with five or $10 billion funds before demo day or they're all going bankrupt.

And these are all bad companies. Like, I, like, I think that's the other way to look at this is like, you know, I know a lot of people are pulling out a Series A's entirely because these are completely mispriced and, and like these make no sense. And like, I think that the other possibility, right, is that we're in an era where there are good companies to be built and there are places to make money, right? And if you are going into corners of the economy or funding things that other people won't, and so you're an N of one or an end of a few looking at spaces that are kind of really novel. There are places to make lots of money, but I think we also have to look at the other way, which is like there's just a massive amount of capital being massively misallocated right now.

It's always funny when people simultaneously have the worldview that, you know, the big funds are going to win everything, but all the money's being wasted. I mean, at some point, I don't know that well.

I think the thing that with human mind is like, I don't even know the big funds need to make that much money, right? Like that. Because they're asset gatherers, right? Like they need to make enough money to generate, gathering more assets and they need to justify their own existence. And it's a good business, right? That's different than saying you're trying to make a lot of money in venture capital.

Broadly agreed. But I actually think, Jason, I want to go back to what you said because I thought it was spot on. It's like you say, if there's only to take, if there's only $200 million funds and billion dollar funds, then you're exactly Right. Logically, those 20, 30, 40, 50 million dollar checks are going to come from only 10 names who are writing 40 of them a year, not eight like us. Right. And that's possible, but it's just a weird fund construction because those people are then going to be writing, you know, 40, 50, 60 checks of this size. You're going to have a very spread out partner base. I don't know if they'll be able to meet the founder needs where it is. So I do believe.

Is that not what your insights have today though? I mean we've mentioned before kind of the outcomes that they have with your hinge. Health is returning.400 million on a 6 billion fund and them having like hundreds of positions. And actually that being the construction they.

Have, it might be to construct. Yes, it is the construction they have. But at some point it gets easier when you're running big sums to put big money in a smaller number of companies than try and diversify away. If we're trying with 900 million to have 30 A's or B's, someone who's running 9 billion, if they were trying to do the same thing, we'd have 300 as and Bs in three years. It would be silly. At some point it becomes a part of their business, but not all their business. Then I think Jason's right there won't. I mean it's so funny. We're going to talk in a few minutes about Sam mentioned earlier this idea of a lot of A's are struggling to be raised. I mean the only way that worldview makes sense is actually what Sam said is that if you have a world where people call it mid sized funds can't survive because of the big guys. And the big guys are quote stealing all the good deals. And at the same time we're also saying many companies are struggling to make a Series A, get a Series A raised. Those things are common almost opposite to each other. One says capital is scarce and one says capital is plenty and the big.

Guys have it all. I would say actually the way you resolve that illogical seeming statement is quite simple. Which is every generation there's only a few companies that matter. Yes, it's very simple. So most of the money at Series A is completely wasted. Right. And they might want it in larger quantums. That just is like kind of. It's kind of a war of attrition. Right. It's just more money being lit on fire. Now the mega funds will just win. It can win because they can say, okay look, I'm going to plow a gazillion dollars at almost any Price in and because of AI or whatever argument they want to make, you know, there's no upper bound, right. And so they say we make lots of money just on lots of money being deployed. And that can logically make sense. Seed funds are fine because you still have to be in winners, right? But it's just a multiples game, right? Which is if you're in it at zero, right. Then like, you know, you can make a bunch of checks and like make the math work from a DPI perspective. You also have a nice benefit, which I very much appreciate, which is I really strongly believe private to private is an important future. And I love being early and small and first because I actually can sell into the private markets in a way that you can't if you've written a 30, $40 million check into the series that you're too big. Right. So I think those two things survive.

But what do you think about. So for selling, if selling early, right. Selling in secondary is unicorn secondaries. How do you think about the goals? Is the goal we talked about, is it one extra fund, two extra fund, half is. Is it just risk allocation? Because this, this is, I think if you have a smaller fund, it's really, it's interesting.

It is interesting.

You get like I just the other day I had a 1x exit opportunity to return the fund once and one of my anchors was I also brought them in as part of the deal and we talked about it, right. They followed me. So it was less for them, but for them it would have been very high IRR and me a 1x. Right? That sounds good on the Internet. Right? But then it's gone.

Yeah.

So look, it's all gone.

There's no, there's no more returns.

In the end of the day. There's a few things that matter, right? And the number one rule as a fund and allocator is you cannot sell the things that matter. Rule 2 is right. Because you know, we were one of the first investors in allbirds, right? Like or Astro Rockets or plenty of things that got out and people were excited about but thesis broke, right? And so I think you have to be really honest with yourself, right? And honest. And you're going to make mistakes. You know, I think one of the things I always say is as an early stage investor, you get hundreds of shots to buy. You get really good at buying. You have so fewer shots at learning to sell that it actually takes much longer to learn to sell well. Right. But it's still as important as learning to buy well. And I Think you just have to be really honest with yourself, which is like, is this an infinity shot or is it not? And the second the thesis is broken and it's not if there's a buyer at a price, that makes sense because someone else has different fund dynamics. Maybe they already own a lot and for them it's like about rounding down their average in cost. Maybe it's their net capital allocator and they don't care as much about the negative return. Like they have different goals. There are opportunities that work for everyone.

Rory, can I ask you if it's not one of the companies that matter, is it lighting money on fire in the kind of binary way that.

No, I'm glad you came back to that, because I would say, again, respectfully, I disagree, and it's a matter of degree, but no, I don't think that's a correct statement. I think that it is true that. And how do you explain in every decade you look back and you go, the vast bulk of the value is driven by one or two companies. It's a power law. We all understand the mat to a rounding era. There was a decade where it was Google and then everything else, right? So you could. And that's true, and it's intellectually absolutely true. So you could say to yourself, if I didn't do Google, I must have lit the money on fire. But then when you make that sentence a few times, then you go in your Schwab account and go, oh, I have money in there, so I mustn't have lit it on fire. There are more wins than the biggest win. It is a power law I would prefer to have done on Google than any whatever I made money on in 2000-2010. But I'm damn glad I did that one too. And the over extrapolation of the only three deals make money. So therefore everything else at series A is burning money. I mean, it's true in that you prefer to be in Google, but it's not the only way to make money. I mean, just in the last couple of weeks, we've had, as you mentioned, a couple of decent IPOs. Hinge Health. We're going to have chime we had something else mountain last week. We have another one this week. Take hinge Hint, someone made $400 million for their investors. 20% of $400 million is $80 million. I say this every time. When someone at the office says, oh, it's just a 3x, every single one of you will cash the fucking check. Every single one of you If I left them on the counter there, you'd all take them home with you, right? $80 million is still real money in America.

And Roy, that's always my point. But just to put you on chime, like chime's a great example of this. If you're an early stage investor, you're very sad you didn't sell last round in chime and I would argue at 25 billion or whatever the last round was done. When you look at that rationally, you'd say, look, it's a gold company, right? Is it an infinity company? Right? Am I betting on this for infinity or is this a really great place where I did my job, which was to fund it early, to find it early, to fund it when money was scarce. And now we have capital allocators are making a different assessment. I think the answer is you clearly would have wanted to sell last round. And I think it's incumbent on investors.

I only know it's in the S1, but I didn't see any of the early shareholders make the cut on the, on the, on the principal stockholders. When I look at principal stockholders, there's dilution, but I don't see any of the seed guys on table. So that says to me they probably sold the 20 some amount of 25 billion when I literally only see DST.

Crosslink and Memo that did their job.

Well, not if it's a $250 billion.

There's two separate things floating around and I wanted to segregate them. First is I'm going to fight in the fence of mid tier, right? The mid tier investors who didn't do the seed but didn't do the $25 billion round. Are they happy they did that round? The round that Menlo did I think was out of the brc. It was a couple hundred million. Can't remember what the pre was. They're damn happy they did that round.

Right?

And that's a classic example of a mid sized venture firm making a savvy bet, doing good stock, picking long after the seed, but still making good coin. So that's to me, that's the first point which is the validation that you can at that fund size, probably it was a 400 or 500 million dol then make really good coin and move the needle at the fund level. Second comment to your point, Sam and Jason, you're right. You look back and go, hmm, I might have been marginally smarter if I had bought at 2, 300 and then sold at 25 billion rather than holding and selling at 12. But the big advantage they have is they'll still book probably 10 or 20x. Now 40x is better than 20x. Right. So they've made good coin in a situation where as we discussed before, the kind of $25 billion bond is going to lose money. So I think that's proof, it goes back to. That's proof that you can make perfectly shrewd A to C bets, sub a billion pre and make very good money in a non generational company. Chime is an extremely good company. It's not one of the.

I agree with all that, Roy. And again, I'm obviously trying to be provocative on purpose, but I think we direction. Here's my point to bring it full circle to DPI though. Right. Which is when you think about how I relatively value DPI versus TVPI or any other metric. Right. If I'm an early stage funder, really anyone. And you said, hey, I sold my time stock at 25 billion for American dollars, like for cash, and I gave it to you years ago. Right. Like from an IRR perspective and a cash perspective, that is a great move. Right? Yeah. Versus hanging out. Yeah. And so that's, I think the thing to keep in mind we go back to all this is like, you know, again we're talking pretty deep cuts on the game of VC right now. Right. As opposed to the game of company building. But like I do think like when you come back to this, like this is why I believe the chamath line unfortunately. And it's going to get clipped and I'll be upset about it, but like whatever. It's like in the end of the day, good investors, good capitalists make people money. If that's the game they're playing and they're not asset gatherers.

Yes. And of course in the end it's true. Of course, the point is, in the end it's true. In the end, check in the bank counts sometimes even, as you correctly say, it's often even true. I like what you said about Facebook. Sometimes it's even true that a smaller check earlier has more value than a bigger check later. Just for a whole bunch of life reasons. I mean that's why we have interest rates. There's the time value of money. I remember a friend of mine, we sold his company, I was giving him grief and then five or six years later another company in the same space went public at two or three times the market cap and I foolishly gave him shit about it and he called bullshit on me. He said, look, I'D been at the thing 10 years. I made a lot of money. I got married. I have a life. I have a lovely house in Spain. And I started another company. Yeah, I'd have more money if I'd held, but that was my life. Life choices. He was exactly right. So I. I agree.

I just saw Menlo Ventures, so obviously I don't know what their basis is, Rory. Obviously they'll make a ton of money on time. Right? A classic. Great bet. They said they did the Series B, right?

They win.

So they did the series B at 200, 300. Maybe we can figure it out on the fly. They're gonna. This will be nine. There'll be some dilution. They'll 10 or 15 extra money. Right. That'll be a fun returner. Or more than a fun returner, probably.

It'S maybe a little under, but yeah.

Now when I, and I, and I and I do like that team and back when in 2021, they wanted to invest, like in. All of my companies are very high, very high alignment. Right. For better or worse. Right. What's interesting to me today from the start of the conversation is all they talk about is Anthropic today. And this is a smart team. It's every. They have an anthropic fund because I follow all the guys and on LinkedIn, nothing but their series. They didn't do the seed. And they're going to make a lot of money off this, Right? Because anthropic is 1 to 3 billion in revenue in five months. Right. But it's. It's a sign of the times, isn't it?

Probably.

I don't see them trumpeting their coming DPI from chime, which is epic. But Anthropic is on their social media 11 times a day, as perhaps it should be. But there's no. I don't think they're taking any DPI.

They're entrepreneurs that they're not marketing the LPs. I think in venture capital, it is unbelievably difficult to know what anything is worth. Right. And if you're Menlo or you're anywhere in the middle, my God, you have to price things properly, Right. If you're plowing enormous amounts of money and saying late on the infinity dream, price doesn't really matter, which is how you get these ridiculous prices. Right? Like, and like, the reason is very simple. It's like, it's like, what is OpenAI worth? It's like, who the hell knows? But like, it's like one of those things where people can dream, right? You can have a trillion dollar dream. And that means that like there's very little pricing discipline. It's basically a game of pissing of who can pay more or who's willing to go further. And at seed, nothing's worth anything, right? And so you just have to have pricing discipline. And remember that the problem with Menlo is that I don't know how, you know, like, you know, I said this as someone who started my career, Bain & Company. I think with these private companies catching the right price and the right dynamic and being right at series AB is like the hardest game.

I think some parts of that are true. I think price, you are right that the seed investor, I mean, I always say, you know, we typically do A's and B's. And I always say, well, we're at the first point where you can start to do some analysis versus just people and market, which is what you have to live on, on broad directionality. Right. You've got at least some pitiful facts to look at and try.

I have no facts. I exist in a fact free zone.

Yeah, yes, absolutely. And we live in a fact thin zone. So I do agree that we have to be a little. Yeah, you have some data to bring and it's. But I don't agree that our pricing, I don't agree that pricing for us is quote, harder than pricing for the late stage. I think late stage, on average, I think it's much harder to price at that late stage because on average you'll be wrong. And we're seeing a whole bunch of down rounds where the last round loses money and every other round prior to that makes money. So I actually think price discipline is even more important. The closer you get to an exit.

They don't lose money, they just get their pressure.

We've trashed that one to that. In China's case, they're going to lose money because they don't have protection.

That's a fair eye roll, Jason.

But I think the more important thing is the interesting is we always say, and I think anthropic, by the way, I think men are doing anthropic was a genius move. So come to that in a second. It's a genius move too, I think. Look, there's always some deals and it's very surprising that even at that 2, 3, 5 billion valuation level, there's still another 10x from there. Now, there's not many of them. There's literally one maybe every second year. But if you do that one, you're right, you can Price like it's an A or a B, but deploy money like it's an F and make a return 10x plus return as if it's an arb. It's an awesome deal. There's, as I say, one of them every couple of years. Antropic was one, OpenAI was one, probably Andrew was one. But the average late stage deal isn't that. And there's just less degrees of freedom on the average late stage deal to compound. So I think you have to be a little bit. When I look at the people who do it well, like the Meritech, like the ivp, there's a fair amount of shrewd price discipline in what they bring to the table or what the product.

They'Re selling is, you know, just a different product. Right. The product they're selling is access to this pool of companies that are late for people with too much money or that need private access with a cherry on top of infinity. Right. And they're actually not in the business.

I think that's probably not as true for the names I cited. But I think you're right. There are people who are, there are funds who are playing that game where, you know, it gets back to the whole when all the cute, sexy stuff is private, there are eventually going to be entities whose sole goal in life is to put public investors in contact with those sexy private companies.

The one thing I will say on chime and the 25 billion is every single round in the billions. For Revolut, everyone was saying, well, how much more can it be? How much more can it be? I think everyone is realizing now that Revolut will quite likely be at least $100 billion company and likely 150 billion. If you sold at 25, you would be grossly underestimating and missing 125 billion of gains in a European Neo bank.

But it also just depends what business you think you're in. Right? Like, you know, again, like, I don't, I don't. I think that there's a very, like, I don't.

Aren't you in the business of making as much money for your investors as possible?

Well, so I think there's another real debate, I think, which is, which is a tough one, which is, look, I would argue that there's a strong case to be made that as a venture capitalist you should not have an opinion about the public markets. Right. That like, you're not paid to have an opinion about public markets. People have their own opinions about public markets. Right. And like, you're paid your job is to manage the private markets or private pricing. And then once things public, it's like, look, that's, you know, the game should be over now. There's all sorts of people that juice that or like decide they do have opinions about the public markets. But like, I don't know, it's something I've gone back and forth on, to be totally honest with you, about whether VCs just thematically should be doing that or whether you say, look, you know, we can turn over shares, you guys figure out what to do, right?

But I would probably sell Revolut and Chime right now. Right now, I'll tell you why and you can criticize it. I'm just, I'm still learning, right? I'm going to be a student for too long. I'll be out of this game while I'm still a student. But both of them have about 15% market share. True, Tam, if you're trying to decide when to sell, right? Or whether they have Infinity Runway market share is a limiter, right? And I mean revolution there are folks can get to 100% market share, but for a lot of apps, 15% I find is a little bit of headwind. Like you start to see, you start to see. And a lot of times in B2B when the market's smaller, it's even before 100 million in revenue, you start to get to double digit market share. And just when it gets good because everyone's heard about you and all the leads come in, it's like all the easy 15% market share is a lot. It's a lot if you're. If it's not a monopoly. If it's not a monopoly, the classic.

Thing, everyone comes, you know, as an early stage, you kind of like, well the CAC is blank, but it's to go down. Like, nope, CAC only goes up, right? Like people just consistently get this wrong, right?

And so almost always up at scale, right?

It's like this is how the world works. And like, you know, the kind of argument that you're going to get good at something and all of a sudden it's going to get cheaper is just wrong.

So Chime's interesting one, their CAC has fallen a bit because they track brand brand awareness and virality. And it took a while for Chime to be big enough to have enough viral propagation or word of word of mouth. I don't think it's viral word of mouth, but it's only since 2022 they said word of mouth is their number one source of customers. It's just sort of interesting because it's the only way you can scale, right? Otherwise your cat goes up, goes to infinity. What's that?

You see, I just think I say this with respect. I actually quite like the Chime team. I know a lot of them well I think they're good people. I don't mean to be crapping on them. I think they're good operators and I'm excited for them. But I would say this is like, is Chime an important company? I just don't see it. Right. Like, is it, you know, it's good company. Like they provided some banking products to unbanked people or underbanked people. I get it. It's not bad. They did a good job. They built a good app. But like, is it important? Like, I just don't know that it is.

If the $14 billion market cap was in my bank account, I would think it was a very important company indeed.

Right.

If it was.