Cursor Acquired for $60BN | Anthropic Hits $1TRN in Secondary Markets & Figma, Adobe, Canva Dead?

SPEAKER_01

I'm not sure they're buying them for $60 billion. There's a lot of stuff going on between these companies. Now this week on the agenda, breaking news. Cursor acquired by XAI or SpaceX for $60 billion with a $10 billion break clause. Tim Cook announces he's stepping down from Apple. Anthropic turns down $800 billion funding offers and crosses the trillion dollar mark on secondary markets. And then Anthropic launches Claude Design as if it wasn't eating everyone else's lunch. Now it's going after Figma, Adobe, Canva. This is an epic one.

SPEAKER_01

[SPEAKER_02] If your stock is valued at 100 times revenues, you can buy things that are trading at 10 or 15 times revenue all day long. I think there'll be a $100 billion deal in the next 12 months. I think this will stand as the high watermark of private M&A for a decade. Ready to go?

SPEAKER_01

Boys, we recorded yesterday and last night some very big news happened. I messaged this morning saying I think we should actually do a little segment this morning and discuss this because it is so notable. And so last night it was announced that Cursor was... Rory, you're going to correct me whatever I say. So I'm just going to do it and you can correct me. Cursor is being acquired by XAI, SpaceX, in other words, for $60 billion with a break clause of $10 billion by the end of the year.

SPEAKER_01

[SPEAKER_02] Rory, please correct me on... It's too ironic, Eric. We shouldn't overthink. What it is is they have an option to acquire Cursor and if they don't, they pay $10 billion for the work. But it amounts to the same thing, right? And yeah.

SPEAKER_01

[SPEAKER_00] Well, we'll see. We don't... Listen, it's very interesting because first of all, this is an epic deal, right? If it happens, $60 billion in about three years from seed funding. I mean, we thought Wiz was big, guys. We thought... I mean, when we started the show, we were talking about Windsurfer. That was $2.5 billion. Now it's 60... I mean, these are numbers that we have not seen in $3 billion from founding. Now, having said that, look, we haven't read whatever the deal is, right? To me, it looks a little... I'm not sure they're buying them for $60 billion. There's a lot of stuff going on between these companies. Senior engineers have already quit and gone to XI. It appears that Cursor may be, at least notionally, the largest customer for Grok for coding, okay? Their market share has fallen and they've already committed to using a lot of the million GPUs that SpaceX, whatever we're calling it, is in Colossus. So there's a lot of stuff going on here. And what this call and option is and how much it's tied to Cursor having enough of a state-of-the-art model that they're worth buying because an IDE isn't enough, there's a lot up in the air. And it's probably why the deal is structured this way, beyond the fact that SpaceX is going public. Which adds to the complexity. There are a lot of moving pieces here. So I wouldn't be surprised if it doesn't close because I think there are big milestones that need to be hit. Cursor needs to make progress. And maybe I'm wrong. Maybe I'm wrong.

SPEAKER_01

[SPEAKER_02] Wow. Such a lot to unpack. But I want to actually cover all this. But first of all, you're right. The first sentence is, this is the biggest private acquisition ever in venture. It used to be Wiz at 32. Before that, it used to be WhatsApp at 16. I mean, individual private check before going public. Now it's a $60 billion outcome in three years. You're right. So start with it. If this deal closes in three months, this is the biggest ever privately held venture acquisition, period, full stop, end of story, an amazing result. So you're right, Jason. Before you get into the noise, that's the venture takeaway.

SPEAKER_02

Jesus. I know. And wow. And we'll come back to who's made money. [SPEAKER_00] And it didn't even take 20 years like most of our funds take. This will be three and a half.

SPEAKER_01

[SPEAKER_02] Big picture here, guys. It actually makes sense. I mean, I was actually thinking last night of doing a cute tweet before I got your note, Harry. It's like, you know, you got these guys called Cursor walking down the street saying, hey, good news. We got an exploding business, a couple of billion dollars in ARR. But bad news, we have shitty gross margins because we need our own model and we need compute. And Elon goes, hmm, hold that thought. This is a guy walking around with a whole bunch of compute, a reasonably good model, and literally no revenue. It's a marriage made in heaven. You guys, I mean, because let's get real here. There's not a whole ton. It's one of those deals that makes sense for both sides, which is why I think it'll close, right? Which is different than saying it makes full financial sense. I'll come back to that. But if you think about it, from SpaceX's perspective, all the narrative has been, SpaceX is amazing, Starlink is amazing, WTF with its X.AI, why did they stick in Twitter? And X.AI, I know Elon loves AI, but it makes my head hurt, right? Because the truth is they'd spent 20 billion plus or minus on the most amazing data center, the Colossus data center with literally hundreds of thousands of GPUs, but they're not doing a very good job of selling them. So they have relatively little business, right? Which all other things is a bad place to be. Now, capacity is scarce. So I'm sure they could have found white label work selling to one of the hyperscalers. But instead, they found this company that's in the mother load, the mother of all AI markets, which is coding, that has customers, has revenue, but has shitty gross margins because it doesn't have yet a full standalone model and massively needs compute. So they put this on top of their thing and the vertically integrated thing just looks a lot more attractive. You literally have a company that's spending, that's making 3 billion in revenue and spending 3 billion on gross margin. And you have another company that's burning 18 billion, you put them together and the 3 billion gets canceled and at least they have some revenue. It's still not enough to cover the X.AI nut in terms of that, unless they can grow this thing, but at least it looks a business now. And I think what's really clever from SpaceX's perspective is they couldn't do it before the IPO because you can't close that deal. It delays everything. It's actually a very clever structure. So they're basically going to be able to say to the public, you know you love Starlink and you love our space business and you didn't like this other thing, but we got a plan to fix it. Once we close for 2 trillion, we'll exercise our option, we'll buy this thing, and suddenly it will be a 4 or 5 billion dollar revenue AI frontier lab, which my cloud code equivalent is called Cursor and I actually

SPEAKER_01

[SPEAKER_02] the X.AI nut in terms of that, unless they can grow this thing, but at least looks like a business now. And I think what's really clever from SpaceX's perspective is they couldn't do it before the IPO because you can't close that deal. It delays everything. It's actually a very clever structure. So they're basically going to be able to say to the public, you know you love Starlink and you love our space business and you didn't like this other thing, but we got a plan to fix it. Once we close for 2 trillion, we'll exercise our option, we'll buy this thing, and suddenly it will be a 4 or 5 billion dollar revenue AI frontier lab, which my cloud code equivalent is called Cursor and I actually have the rest of the stack. And there I told you I'd make a good business out of this.

SPEAKER_01

Which is an important note just for people to understand it. This is not a transaction closing today. This is in six months post going public and it's a very strategic way for them to do it because they can't do it now just before going public.

SPEAKER_01

[SPEAKER_02] And that's why I think of it as an option. And you're right, Jason, there's been some commentary that said maybe this option is in part, Elon doing a try before you buy. Let's see if the model works on our stuff and vice versa. And if it doesn't, we'll just pay you 10 and walk away. I don't know. I'm not going to guess. And there's probably some of that. But fundamentally, it's costing you nothing today because you're not writing the check today. And what Elon's basically saying is, if my IPO happens, and it probably should, and I want to buy this thing, I will because I can. And if it doesn't, I'm promising $10 million that I don't plan to have to give unless, God forbid, the IPO doesn't happen. So it kind of mentally says, I haven't fixed this story today, but I have a plan to fix it. You can see the plan to fix it. So stop bugging me in the roadshow about X.AI. Let's talk about rockets and space.

SPEAKER_01

[SPEAKER_00] Yeah. I mean, look, you're right. I think, listen, Elon walked away from the Twitter acquisition. So he'll walk away from a bad deal. Don't get me wrong if things change, but you don't promote it the way SpaceX did all over X if you're not basically saying this deal is going to close, right? This isn't a change. Otherwise, if it's just vendor financing with an option to buy, you bury it, you bury it because it's round trip revenue so that someone will use our Colossus for model training, right? You'd hide it if it was just a vendor deal.

SPEAKER_02

Right. And I mean, even though I don't think the whole business effort here makes sense, right? Trying to enter this market, trying to be the third or fourth foundation model player as X.AI slash SpaceX. I don't think it made any sense. But once you've decided to do that, this deal makes sense at the margin because you've incurred all the negative parts of being a subscale hyperscaler with 20 billion and burn, and now at least you have a business. So I'm with you, Jason. I think they're pushing this because they're like, oh, this makes sense and actually solves a problem for us. And obviously, it solves a problem for cursor in the sense that it makes the P and L of their business look very different. And therefore it's a win both sides and it closes. I mean, we can talk about...

SPEAKER_02

[SPEAKER_01] If I push you, who is getting a better deal? They're expected to finish the year at 6 billion. So this is only 10 X end of year revenue. [SPEAKER_00] Jason Sperry Seriously? We just talked on this pod before about Figma 20 billion and about... Sorry, Grok to... You just said Grok to NVIDIA for 20 billion and getting to not have to be a public company CEO was the second best gift to Sales Loft selling for 2 billion. This is a gift. They don't have to do the hard work. They've only been doing this for three years. They've only been doing this for three years. I was watching some images of like... What's Michael's last name, the CEO?

SPEAKER_00

True.

SPEAKER_00

Okay. I was watching something on Twitter with him and Gary Tan a year ago. Okay. Gary Tan's got a big job, right? Gary Tan looks like he's aged eight years since the video. Michael looks the same. This is the time to sell because you don't... Listen, this is... Maybe this is a little meta, but what I've learned as a founder is you don't get... It doesn't hit you until around year four to five. This is just the way humans are. Okay. And he's young, but look at founders you've invested or met with around year four to five, the weights there. Okay. You can see it in the bags under their eyes, whether they're 21 or 61 and you got to double down at four to five years old. You got to sit around and say, do I want to sign up for another tour of duty? These guys don't even have to do a second tour of duty. They're out at 80 billion. This is a pretty good deal, Harry. If you're 10 or 15 years in, you know what to do. Three years in, you go, you got to go home. There's no... Guys... You got to go home after three years for 60 billion. Three years. Three years after 60 billion. Can I help you on this?

SPEAKER_00

[SPEAKER_02] It's weird. You're thinking about... You asked which of the two is getting a great deal, and the answer is the boat getting a great deal. For two reasons. [SPEAKER_02] Right? What? You got to give one name.

SPEAKER_00

[SPEAKER_02] No. I'll tell you who's losing. Hear me out. There's two reasons they're doing... There's two reasons they're getting a great deal. Everyone's getting a great deal. The first is it actually industrially makes sense. The two things go together well. Right? So there's some business logic. Whether or not the SpaceX-Elon team can manage these kind of researchers over time, that's TBD given how the X stuff has unfolded so far, but it makes industrial sense for these two companies to come together. Right? Why are they both getting a great deal? Answer, you're missing the point because there's a third player in the game here that you're not mentioning. The future SpaceX public shareholders are valuing a $20 million revenue company at $2 trillion, which is 100 times revenues. If your stock is valued at 100 times revenues, you can buy things that are trading at 10 or 15 times revenue all day long. Right? As long as SpaceX is worth $2 trillion, then if Elon wants to scratch an itch to clean up a subsidiary of SpaceX that isn't quite working out, and he can chuck $6 billion on the table, it's for context, it's 3% of SpaceX alleged market cap in return for 15 to maybe 20% of their total revenues.

SPEAKER_00

[SPEAKER_02] point because there's a third player in the game here that you're not mentioning. The future SpaceX public shareholders are valuing a $20 million revenue company at $2 trillion, which is 100 times revenues. If your stock is valued at 100 times revenues, you can buy things that are trading at 10 or 15 times revenue all day long. Right? As long as SpaceX is worth $2 trillion, then if Elon wants to scratch an itch to clean up a subsidiary of SpaceX that isn't quite working out, and he can chuck $6 billion on the table, it's for context, it's 3% of SpaceX alleged market cap in return for 15 to maybe 20% of their total revenues.

SPEAKER_00

Yeah. I mean, it's such an important point. It's not even material. [SPEAKER_02] Yeah. When you have a high price stock, you can buy anything pretty that you want. And what happened here in the island is. And you should. [SPEAKER_02] And you should. You should because it may not last. Right? [SPEAKER_02] Yeah, exactly.

SPEAKER_00

This is the opposite. When we did the other versions of this pod, we were talking about how so many public software companies. If you're now trading at $10 billion, you can't even spend a billion to buy a couple of kids. Right? For Elon, this is immaterial to SpaceX's market cap to Roy's point. And at the margin, it helps that he doesn't care if he makes them billionaires. Yeah. That's another. It's a micro learning, but there are issues in making targets billionaires. It is issue.

SPEAKER_00

[SPEAKER_02] As long as SpaceX is worth that kind of multiple, it's revenue accretive, story accretive. And another reason it makes sense to Cursor is the number of people who can write a $60 billion check for a roughly break-even gross margin business can be counted on the fingers of one hand, removing at least one or two of them. Right? Of said fingers. Right? And of those acquirers, most of them in most situations would be unable to do so for the DOJ. This is the only game in town. [SPEAKER_02] Right?

SPEAKER_02

It helps to be founder-led too, to write a check like this. [SPEAKER_00] Yeah. Oh, totally. Yes. This is a. [SPEAKER_00] If you're going to Google again, you're saying, I know he did whiz at $32 billion and it's crushing it, but we want to buy Cursor for twice that? I mean, it's a tense board discussion, right? [SPEAKER_01] If I'm an investor in the business, what does it mean for me? When do I get my cash? What are my LPs getting back? Yeah. You're getting a lot of money. I mean, look, you're getting your cash if this deal closes, I think, in six months, which is back end of this year, assuming the IPO happens in June. You're ecstatic, it means. I mean, it's.

SPEAKER_02

[SPEAKER_01] And I'm getting cash or I'm getting space?

SPEAKER_02

Well, you're almost certainly getting stock. Again, I'm going to opine on that without looking, because the IPO is 75, Bill, allegedly. Again, we haven't seen a printed S1 yet that's been publicly unveiled. But the IPO is, it's highly unlikely that you're going to raise $75 billion and write a check for $60 billion. So, almost certainly, you're getting stock. So, then the second order questions are, is it registered? If you're getting that stock in the restricted period, is that going to be restricted too? Because the dynamics of the SpaceX lockup, given the size of the round, are going to be one of the most interesting parts of the whole transaction. There's talk, as you say, employees getting out early. There's also, to be fair, talk about some shareholders being held in for much longer, because the combination of a two. I mean, it's going to make a difficult problem around float management slightly more complex, because a $75 billion raise on a $2 trillion valuation is a teeny tiny float, right? And going from there to the other 97% of the company being freely tradable in six months just doesn't work. So, I'm sure there's going to be a convoluted float management thing. And then this stock will probably go into that. So, I wouldn't be surprised to discover that as investors in Cursor, congratulations, you are now investors in SpaceX. And, you know, you've got that fluctuation risk for six months, plus or minus. But, you know, on the other hand, you are getting $60 billion. Shut up.

SPEAKER_02

[SPEAKER_01] And do we know if the $2 billion at $50 billion happened? That round happened last month? [SPEAKER_01] We don't. I don't know. And then, do we think it would be.

SPEAKER_00

Well, they're tied together. That's what I'll. I don't know all the machinations, but I guarantee they're tied together in some fashion. I saw one that said. Can I stop you there? I think I saw one that said it's not happening because this obviates the need for it. Because if you think about it, they probably had reasonable. I'm just winging it here, but they probably had pretty good cash on the balance sheet, but they knew they had to spend a lot on compute. And now, one of two things is going to happen in September, October, six months. A, you're going to get $60 billion and you have all the compute you'll ever need from Elon. And B, you're going to get $10 billion in cash, in which case, you can buy some compute then. So they can probably do some forward contracts. So if the round hasn't closed, it probably won't close now because there's no point to it and no one would want that stock, because that's basically buying SpaceX and you prefer to just wait for the IPO.

SPEAKER_02

[SPEAKER_01] And then if I'm in the. If we get stock back and we were locked up for 12 to 18 months or whatever that is, how am I feeling as an investor? Am I still ecstatic? Again, if you're in the Figma IPO and you're locked up for 12 to 18 months, that's been brutal. But Andreessen's all in on Elon anyway, right? If you wanted that action, you got more of it. And if you don't want that action, you're going to bite your nails. Look, I mean, you've got a blank check to Elon for the take private of Twitter. Of course, you're going to go long on Elon now, right? You're doubling down on the same founder. It's not even. I don't know the cap tables, but for Andreessen, it's almost merging two portfolio companies at a meta level. Maybe not. Maybe that's not accurate, but intellectually, it's like that, right? But as yet, Harry, you are right. And look, this is where the beauty of being in early at a low basis. If you're in. I mean, I looked at. If you're in at the B, which is where. The A was Andreessen and Thrive. The B Thrive led. The C. I can't roughly a 5X. The B is a 20X. I can't even calculate the A, but it's huge. And then the.

SPEAKER_02

[SPEAKER_00] It's not even... I don't know the cap tables, but for Andreessen, it's almost like merging two portfolio companies at a meta level. Maybe not... Maybe that's not... Maybe that'd be accurate,

SPEAKER_02

but intellectually, it's like that, right? But as yet, Harry, you are right. And look, this is where the beauty of being in early at a low basis. If you're in... I looked at... If you're in at the B, which is where... The A was Andreessen and Thrive. The B Thrive led. The C... I can't roughly a 5X. The B is a 20X. I can't even calculate the A, but it's huge. And then the most recent round is a 2X. If you're into SpaceX at 2 trillion and that's only a 2X, you're scared, because there's a lot of volatility in that stock. So that's the thing. You could end up... I'm going to say something Harry's... You could end up breaking even. The stock could go down. IPOs do go down, apparently, at times. Facebook went down plus or minus, I think, 40% from the IPO price in the first six months before 10X and subsequently, just as a reminder. So you've got risk in that deal. On the other hand, if you're sitting there at 20 times in the case of the B or 50, 60 times in the case of the A, you're like, oh, well, so if my 80X becomes a 40X, it's still a 40X. I'm fine. So you can roll that dice. Does that make sense?

SPEAKER_02

[SPEAKER_00] You know, thinking through that, Roy, it's almost... You know, it's almost a defensive move if you're like Andreessen. You've added value to your net asset by combining these on paper, right? You're shareholders in both, right? You have an IPO. It has risk. You threw this crazy asset in there that's very immature, where the debt is exploding, right? Your balance sheet has been blown up. How can I de-risk my IPO for a couple percent dilution, right? It's just a couple percent dilution to de-risk my massive investment. Done. My sense is that entire... I think you're correct in

SPEAKER_02

your analysis though. My comment is the entire sentence implies that Elon consulted with anyone. My sense is Elon solved Elon's problem and everyone else is along for the ride. So they'll get the shareholder consent in the DocuSign and they'll say, thank you very much, sir, and sign. But you're right. If I owned a lot of SpaceX, oddly enough, I mean, to say it succinctly, I'd have been pissed at the X.AI merger because I didn't need that dilution. But having done the X.AI merger, I'd be clever deal with Cursor, dude. You had this negative thing. Now at least you've got a full-on, full-stack story. Is it the best story ever? No. Would I prefer... On a standalone foundation model lab bet, would you prefer to own Entropic then X.AI plus Cursor plus the Frankenstein of Twitter? Yeah, you would. But at least it's a full-stack story now. So this is a clever deal. Again, enabled by the 100X valuation you have, or at least allegedly have, but at least 50X. Even at the low end, I mean, if you play it out here, even if SpaceX trades shock horror at a trillion, which is a 50X revenue multiple, and even if Cursor gets to 6 billion by year end, so it's a 10X revenue multiple, SpaceX is still buying stuff at 10X with stock that's trading at 50X.

SPEAKER_02

[SPEAKER_00] It's a great country. Those arbitrages are real. You really should do a deal or two in those moments in time because they don't last... One way or the other, they don't last, right? At the risk of stating the obvious, there is a lot more differentiation in putting rockets in the sky than there is making... Forking an open source IDE and running it on top of clawed code. So I think the boys and the folks at SpaceX have done a much harder task, so they deserve a higher revenue multiple. But nonetheless, it's why you can write the check with such abandon.

SPEAKER_02

[SPEAKER_00] And look, if the next deal's at 120 billion, all is good. I think we just need the next exit to be at 120 billion, right? [SPEAKER_01] Going to your point earlier there, Rory, of comparing it to Whiz, the other thing that's just amazing is the scale. It's not a little bit more, it's double Whiz, give or take. I mean, literally 32 versus 60. I mean, it's double the largest before.

SPEAKER_02

And again, it is back to the... It's that I was thinking about this this morning, for arguably a much less defensible business. And I think the truth is this, it's why venture capital is amazing. If you... It's the aha, it's don't play small ball. If you play in the big markets, if you lean into the risk, in the part of the cycle where the big guys want to win and want to catch up and want to be relevant in the space, then this kind of exit can happen, even if the fundamentals aren't great and gross margin... I mean, Sequoia, who might think of the die-in of the whole industry, always say, we hate negative gross margin businesses, right? This is a break-even gross margin business, but it worked because the overarching comment is AI is the biggest story of the last five years and big tech wants to be a player and Cursor's a player in the biggest markets. Don't overthink it. You know, it's the SAS motto, who dares wins. Those guys dared and they won, right? And all the other questions aside, when... Now, the minute the tide goes out, you know, we saw this in 99 too, you know, once the tide goes out and people are scared of .com or scared of .ai, you know, all these high burn, high growth companies can get a real hit. But what you're selling now, what they were selling is a ticket to matter. And x.ai wanted the ticket. So to your comment on all the other guys, the factories of this world, there are 10, 20... This is what Jason's point is, right? There's 10 or 20 other companies that are staring at irrelevance over the next three to five years, because they're all part of the old software development lifecycle. And they, you know, maybe they can't pay 60 billion, but they're going to all have to buy themselves or build themselves into relevance. So I think a lot of these can still have decent exits. The lad's right. You should be thinking about this. But, you know, I don't even know what computer associates does now. It's part of Broadcom. But however, people make software in 2021, they're making different today. And I'd prefer to be in something like factory leaning in than in some old school code development tool. It doesn't matter anymore.

SPEAKER_02

[SPEAKER_00] Another way to flip it around on the one end, sure, you should sell. On the other hand,

SPEAKER_02

because they're all part of the old software development lifecycle. And they, maybe they can't pay 60 billion, but they're going to all have to buy themselves or build themselves into relevance. So I think a lot of these can still have decent exits. The lad's right. You should be thinking about this. But I don't even know what Computer Associates does now. It's part of Broadcom. But however, people make software in 2021, they're making it different today. And I'd prefer to be in something like factory leaning in than in some old school code development tool. It doesn't matter anymore.

SPEAKER_02

[SPEAKER_00] Another way to flip it around on the one end, sure, you should sell. On the other hand, there's six leaders with market caps above 2 trillion, right? And we're adding SpaceX. So there'll be seven, maybe above 2 trillion. They can all afford to pay $100 billion, 5% of their market cap, plus or split it with some cash to not fall behind. But Jensen stressed about Tanium. He can spend 100 billion, right? He already did a small deal, a $20 billion tuck in. Nvidia, Apple, Meta, Amazon, Alphabet, Microsoft all can buy a startup for 100 billion. This might be. And I remember back in the day at SaaStr annual, Ryan Smith came and Qualtrics had just been acquired for 7 billion and our jaws dropped back then. That was a lot for a software company. And I asked Ryan, will this ever happen again? He's like, I don't see why there won't be one for 14 billion next month. He's like, it's just getting good. And he was right. It kept going to Rory's point until it ended. I think there'll be a hundred billion dollar deal in the next 12 months. Which one it is? I don't know, but you have to do it. There'll be a hundred billion dollar deal. This is going to be one of three. That's my prediction. And I may be wrong, but there's seven folks that can do a hundred billion dollar startup.

SPEAKER_02

I think this will stand as the high water mark of private M&A for a decade. There, I'll take the other side. This one, this clip is going to embarrass you, Rory. That's okay. I used to be embarrassable, but now. Or me, or me.

SPEAKER_02

Because I just think it's anomalous in the sense of, yeah, it's a combination of the absolute amount and the revenue multiple. The number of people who can write the check, the number of people who can, let's do it here. The number of people who can write a check for less than 10% of their market cap where that's greater than 60 billion is by definition people above 600 billion. There's only eight or 10 companies above a trillion, right? So it's a very finite group of people who can do those kinds of deals. Everyone but Elon trades at under 10 times revenues, plus or minus. Yeah, it's pretty much minus. So they're not going to do a 60 times. So if you're going to be working, I might actually contradict myself in a second. Watch this. If you're going to, with the exception of Elon, because he can overpay because he's trading at a hundred times, or at least plans to be trading at a hundred times. I want to spend a little time on that in a second. Everyone else trades sub 10. So you're not going to buy anything greater than 10x, which means to pay a hundred billion, you have to buy something worth 10 billion, right? So rounding down. As I did that, I realized, hmm. And at that point, a privately held company has to be done. Let's say, let's round down again, five to 10 billion a year to be worth 50 to 100 billion a year to meet the Jason criteria of bigger than this. If JP Morgan wanted to buy Stripe, you actually would be right. So I can imagine a few circumstances that could happen tomorrow.

SPEAKER_02

Yeah. And then you also have the, what do you call it, the DOJ stuff, which is obviously suspended for a while, but there you go. So you're not impossibly wrong, Jason, but I just think this is such a special circumstance. It's a combination of a couple things. One is it's a company trading at an amazing price, it's feeling the imperative to execute a transaction in an amazing space where there's a company willing to transact like that, right? Because the other thing I was thinking about is one of the big ahas on this is Elon is so risk on. And, you know, and it's what point, I like, how do you put this? He is, I would use the unique expression in poker when you're on tilt, when you're just, maybe it's not going well and your response is to double down and double down, right? If you look at the whole Twitter X transaction, unlike SpaceX, which has been a worker genius from day one, you know, it's been, I bought Twitter, I didn't want to do it, shit, now I have to do it, that's 44 billion. Well, if I'm going to do that, then I'm going to want to do the AI thing and I'm going to spend 20 billion on CapEx there, got no revenue, let's put them together. Ooh, that's not working. Let's flip them into SpaceX for 250 billion. It feels notional, but whatever. That's not great. So let's buy Cursor for another 60 billion. This is a guy, he's basically going to keep doubling down until he wins at AI. It's astonishing. It's terrifying if you're a stakeholder, but that's the game he's playing and it's his company.

SPEAKER_02

[SPEAKER_00] Let me just tell you why you're wrong about the hundred billion dollar deal, Rory, just to process wise. Okay. And I think your math suggests I might be right, I hadn't even thought about JP Morgan Stripe, that literally could happen tomorrow. Like we could open up our accounts. It would make some sense, right? So that's what I, even I missed, but here's what happens in time when times are good but of stress, which is what's happening with all the leaders. Okay. Microsoft, Google. Yeah. Yeah. I agree. I've been the one thing I have been that I don't think you guys have been, I know Harry, I've been a senior VP on the other side at a big tech company during moments of change. And what we talked about all the time is who can we buy to get ahead. And so I will tell you in all of these boardrooms, especially Zuck, you can already imagine in your head, they are saying, I'm willing to pay up to, I can, I want to buy something that is going to actually move the needle for us. We'll do some tuck ins. You guys can all have a

SPEAKER_02

[SPEAKER_00] leaders. Okay. Microsoft, Google. Yeah. Yeah. I agree. I've been the one thing I have been that [SPEAKER_00] I don't think you guys have been, I know Harry, I've been a senior VP on the other side at a big [SPEAKER_00] tech company during moments of change. And what we talked about all the time is who the hell can we buy [SPEAKER_00] to get ahead. And so I will tell you in all of these boardrooms, especially Zuck, you can already [SPEAKER_00] imagine in your head, they are saying, I'm willing to pay up to, I can, I want to buy something that [SPEAKER_00] is going to actually move the needle for us. We'll do some tuck ins. You guys can all have a

SPEAKER_02

[SPEAKER_00] chip. You can go buy a little thing for 50 million, 500 million, maybe even a billion, leave me [SPEAKER_00] alone. The scale, what's his name from scale can go buy something from a billion. I don't [SPEAKER_00] care, but I want something that will move the needle in AI now bring me your candidates and [SPEAKER_00] they will be debated. But if it is above the line, those deals will get done for 5% or less of your [SPEAKER_00] market cap. I guarantee you the discussion is that because I was there. It happens every week. Yeah. First of all, even though I disagree on the number, I 100% agree on the description.

SPEAKER_02

That is exactly what happens. You wake up as the leader of this big company, you've got your

SPEAKER_01

[SPEAKER_02] $2 trillion market cap to defend. There's a technical thing that could make you obsolete. [SPEAKER_02] If you can spend 5% and de-risk that you do it. So I totally agree. And a large part of why venture [SPEAKER_02] makes money is every once in a while you find yourself with companies that are on the

SPEAKER_02

to-do list for corporate America and they just write huge checks. So I do agree with you. I was pushing back on the hundred, but do I think it's the Overton window, a 10 or $20 billion acquisition from Zuck tomorrow morning, people wouldn't even blink. They'd be like, yeah, of course he's going to do that. So I agree. I was just being, as you know, me annoyingly precise about a hundred billion, but I agree with you. Every other CEO is looking at going, what do we do now in coding? What do we do now? Yeah. I mean, [SPEAKER_00] And the other crazy thing that happens, I know it sounds crazy, but it is true.

SPEAKER_02

[SPEAKER_00] On the other side, on the acquirer side, big company, right? Once certain numbers are breached, [SPEAKER_00] it doesn't mean you also get 60 billion. It does not. You can't walk into the meeting and say,

SPEAKER_00

I'm better than cursor, but it does psychologically change the breakpoint for what it, because when people go into deal mode in big companies, as long as they can afford it, they want, and if they identified the perfect target, remember it's minor, but remember when Benioff was willing to give his next firstborn to buy LinkedIn, he tried everything they could, every share, every piece of debt. He couldn't get 30 billion to buy LinkedIn. That's a hundred billion dollar deal today. You're exactly right.

SPEAKER_02

[SPEAKER_00] Benioff would, if Benioff could get a hundred billion to buy something, to change the face of sales [SPEAKER_00] source, the LinkedIn of AI, he would do it tonight. I guarantee you, because he already tried to do it [SPEAKER_00] with LinkedIn, right? He will do a hundred billion if he had it. All these guys have a hundred billion. [SPEAKER_00] So it literally, you go in a meeting and I saw it at Adobe as cloud took off, people's views [SPEAKER_00] of price changed in my tenure as a VP. As soon as you see a cursor deal, every, we don't give a [SPEAKER_00] shit. It's we're not the founders. It's not our money. It's not even our dilution. We don't

SPEAKER_02

[SPEAKER_00] care. What does it take to buy the next cursor? 68 million done. Boys on the Corp dev team, [SPEAKER_00] Stebbins and Lemkin on the Corp dev team, close the deal. When you're fighting for relevance and defending an existing business,

SPEAKER_01

[SPEAKER_02] to some extent you do what you have to do. I don't think that I, as you say, and even if I don't think [SPEAKER_02] they get to a hundred, the fact that someone's done something at 60 means something at 10 or 15

SPEAKER_00

[SPEAKER_02] will seem like, yeah, that seems like a good idea. Let's get it done. [SPEAKER_02] Right. So yeah, I think it's expanded the Overton window of doable in M&A. [SPEAKER_02] Your last thing to say is this, great outcome for the VCs. Great outcome for, I mean, OpenAI, [SPEAKER_02] I'm just, as a reminder, everyone, Sam Bankman-Fried did the seed, poor Sam, and they liquidate did his [SPEAKER_02] job and sold it for a 1X, that it could have been a couple of hundred X. OpenAI did the A, I think. [SPEAKER_02] Actually, OpenAI did another seed. Andreessen and Thrive did the A, then Thrive led the B and doubled

SPEAKER_00

[SPEAKER_02] down the whole way through. I don't know what the returns are on the A, but on the rest of it, [SPEAKER_02] I think they put in a billion and got 800 million and got roughly a 4X. You know, [SPEAKER_02] great outcome for everyone. It's a great venture story. And all credit to the founders. [SPEAKER_02] I mean, this is pretty good three year run. The two best deals at Thrive that are amazing are [SPEAKER_02] this one and OpenAI. And the aggregate return on OpenAI, I think they're at a 4X, [SPEAKER_02] maybe 5.2X, I can't remember which. And on this, excluding the A, I saw the announcement,

SPEAKER_00

[SPEAKER_02] but it excludes the A, which is bullshit because the A is going to be at 50X. On the rest of the [SPEAKER_02] money, it's a 4X. What it says is there are small numbers of growth funds that can deploy [SPEAKER_02] masses of capital, hundreds of millions of dollars, and get a high-end venture [SPEAKER_02] return of a 4X, which is a good return, which is a, if you're doing an A or a B, that would be, [SPEAKER_02] yeah, that's a high-end of good outcome, not yet great. You want a 10X plus on your best stuff. [SPEAKER_02] But the fact that you can do it on a billion dollars is what makes this special. It's not

SPEAKER_02

that you're going to outperform some little seed like NIO. If you only, again, it's the classic thing, Harry. It's actually why even though you think it's simple to one-dimensionally measure venture return, it's actually not. Because if you have only one dollar to invest, right, and you can give it to NIO and get a 16X, or you can give it to Thrive Growth and get a 5X, you give it to NIO, right? And that's why, from that perspective, you just rank on pure return. But if you're sitting there with $2 billion to invest, it doesn't matter what you do with NIO, and Thrive has proven they can

SPEAKER_02

take $2 billion and turn it into $6 billion, and you're like, give me that net to the limit,

SPEAKER_02

thing, Harry. It's actually why even though you think it's simple to one-dimensionally measure venture return, it's actually not. Because if you have only one dollar to invest, right, and you can give it to NIO and get a 16X, or you can give it to Thrive Growth and get a 5X, you give it to NIO, right? And that's why, from that perspective, you just rank on pure return. But if you're sitting there with $2 billion to invest, it doesn't matter what you do with NIO, and Thrive has proven they can take $2 billion and turn it into $6 billion, and you're like, give me that net to the limit, and give me that product all day, every day, right? From a personal net worth perspective, if you run the math as being the lead GP on Thrive, it turns out to be a remarkably good business.

SPEAKER_02

[SPEAKER_00] Well, probably fine. Maybe thinking through Rory's point, and again, you guys are better experts than me. We'll probably find that these products aren't even the same products. No, absolutely. Okay. Because they were never the same product. But if I can put 5 million, 8, 10 million into an emerging GP, okay, and they don't expand into a multi-billion dollar fund, it is irrelevant to a large endowment, unless you've got a little chunk of guys that are just doing emerging managers, and they'll put in the work, or they'll put in the time, or you're a smaller LP, and as the numbers get bigger, it just doesn't matter making 10x on your NIO if it's irrelevant to your portfolio, right? It's irrelevant.

SPEAKER_02

Different products for different folks. But I just got to call it to the last comment on making Thrive is, if all they'd done was the late-state stuff and gotten that 4 or 5x blended, that would be wildly impressive. But the fact that on top of that, they were in the A alongside Andreessen, is almost proof. The typical rap on only doing late is you'd only doing late, you can't get the early round. It's very impressive to have shown up for the A and doing, then stuffing the money in from the B and beyond. I mean, that's really the best way to play that growth stage. If you have enough ground game to get in even under the tent for the A, and then you can stuff a billion dollars in from there on in, that's the way you get the best of both worlds. You got some action on the table with a 40x or a 50x, is my guess. And then you got a lot on 10 million, maybe 20 million, right? And then you got all the action in the world on the table of 800 million at an aggregate of a 4 or 5x, and that feels great. You will be sweating that SpaceX lockup. You will know the day and the hour when it expires.

SPEAKER_02

[SPEAKER_01] All right, boys, on to the next bit of news. Tim Cook announces he's stepping down from Apple after one of the greatest runs, 350 billion to 4 trillion. John Terminus will take over as new CEO. 24 years in Apple for him. He's been in hardware before. How did we read this news, boys? Is this what we expected in terms of replacement? How do we feel?

SPEAKER_02

[SPEAKER_00] Well, look, Rory probably has better thoughts than me. I think there's, on the one hand, he's 65, right? So it's obviously the board has been talking about this for years, right? They found their successor inside. They didn't go through the chaos of Chanteneau resigning from Adobe when they still don't have a CEO, right? They did it all the right way. They did it at the perfect age optically. But the big question, along with Reed Hastings and Chanteneau and others, is folks turn over every year and I'm sure Rory's going to say that. But are they all leaving because they don't have an AI strategy? I think they are. I don't think Netflix has one. I don't think Apple has one. I don't think Adobe has a great one, even though they have AI. Actually, I learned this week, AI and Illustrator is great. AI and Adobe Illustrator is a 10. It's great. But it hasn't changed the trajectory of the company, right? So what would you do if you take an Apple from whatever, 12 exits market cap successfully chaperone the jobs agenda to epic heights and AI is changing this show gets stale in less than a week. We got to do four of these a week. So I would think about it. I just don't know if this is normal retirement or deep down folks are like, Jesus, I'm not up for this because I think most CEOs I work with are not up for it, that's the truth. Most pre-AI CEOs are not up for the massive amount of what's more than 996, 12, 12, 8. I don't know what it is, but most humans aren't up for it.

SPEAKER_02

I think as a general comment on AI terror, for lack of a better word, and the feeling that you need to be on top of this or get out, I think you're right. I think on the specifics of Cook, I think he's been operationally excellent the whole way through. He was operationally excellent taking over the job. He's run excellency for 15 years. I think he's operationally excellent on exit. And the proof of that is the stock barely budged. I always think the stock is not always right. There's some fun examples of people thinking positive things in the short term and then totally wrong. But the fact is that he resigns not unexpectedly in the aggregate, given it's 65, but unexpected in terms of immediate timing, the stock moves less than 0.5%. Basically, that says organized, well-managed transition. And I think he was smart. I think you get out in the high, recent quarter is great. As you say, you can't argue with it. It's 3 or 4x the revenue, 3 or 4x in 15 years, 3 or 4x the operating income. It's 12x the market cap. And just as a reminder, because they buy back shares, it's 20x the stock price. As a holder of the stock throughout that entire period, God bless you. So just a great run. And handing over internal successor, which as you say, is proof that you had your shit together and you had a couple of options and they went with this option. One of the other guys have pulled back recently. I think getting out in a high is not to be underestimated at 65. I think it's a home run the whole way through. And so just give credit where credit grew.

SPEAKER_02

buy back shares, it's 20x the stock price. As a holder of the stock throughout that entire period, God bless you. So just a great run. And handing over internal successor, which as you say, is proof that you had your shit together and you had a couple of options and they went with this option. One of the other guys have pulled back recently. I think getting out in a high is not to be underestimated at 65. I think it's a home run the whole way through. And so just give credit where credit grew. It's one of the most likely. And 7% down, which is you're quite outside the norm. And in this case, perfectly fine. So, competent execution the whole way through, delivering to plan. And I think, yeah, second comment, you're right. There is still some pending, do you have an AI strategy? But honestly, Jason, I'm going to commit heresy now. If you look at the three companies you named, Netflix, Apple, Adobe, I would argue that Adobe has to have an AI strategy, it's existential. Apple is somewhere in the middle. Yes, it's pathetic that Siri is not good, but you can continue to build the hardware platform that everyone gets AI on, I think, for a long time to come. I don't think they're going to be replaced by the OpenAI mobile phone anytime soon. And Netflix, I think it's the least AI-centric problem out there. I mean, they have interesting challenges, didn't get that big acquisition done. They're a media company, they have media challenges, as Benedict Evans says so well. So, big picture, I don't think, I mean, as I say, it's in the middle in terms of AI terror.

SPEAKER_02

[SPEAKER_00] On Netflix, Harry, not that we want to be Yahoo's on Apple and Netflix, let's stick to the code, but Blockbuster, I don't mean to use the old analogy, Blockbuster peaked in 2004 with 994 stores, six years later was bankrupt. I think what's happening when it happened with Netflix, and I'll tie this together to a macro theme that Harry brought up on Twitter and others, I think all that has to happen is for these leaders to be maimed or for there to be stealth churn. I'll give you an example. I've paid for Netflix. I'm embarrassed to say how many years I've paid for Netflix, right? I think since it came on flash drives or CD-ROMs, I've been paying for infinity. And its price has gone up, but it's not worth my life to churn, right? But I watch so much YouTube, and on YouTube, it's becoming more and more AI-generated content. I've stealth churned off Netflix. I'm still paying. I may pay for another year, but as more and more folks stealth churn off Canva because they're using AI tools, as we stealth churn, Amelia was looking, now that we've moved to cloud, she hasn't used OpenAI in four months. So we're paying for OpenAI because it's a hundred bucks a month, but she's stealth churn. So my caution is, and I think this is why so many leaders at risk is stealth churn is everywhere. If you're like, and not to ramble, but I used to think as a B2B guy, MAUs and WOWs and DOWs were the dumbest metric. I'd get an investor update with, hooray, our WOWs are up. And I'd be like, I grew, I know my moon used to cheer that at Slack, but that's a sign of a struggling startup. I guess I want, show me the revenue, right? Show me the money. Now I want to see the MAUs and WOWs. I want to see your usage of your Illustrator, Figma, Netflix, Canva. I want to see those going up faster than revenue. This I think is the ultimate B2B test or anything is your MAUs, WOWs and DOWs growing faster than revenue. If so, things are probably working for you in the AI age. If they're declining, just like net new customer count, right? If it's declining, you're hiding. And I think Netflix just bought Ben Affleck startup for like 300 million bucks, right? Or something like that, Harry. Like they're not, they're well aware that folks are watching AI generated Star Wars content on YouTube and not watching Netflix. So I don't know. I would step down too. I just might.

SPEAKER_00

[SPEAKER_01] Speaking of Amelia hasn't used OpenAI in four months. So deeply entrenched in her workflows with Claude. Anthropic turns down $800 billion funding offers. I just came back from an LP literally 10 minutes ago. I said, what's your biggest challenge? They managed the money for some of the largest families in Europe. And they said, all of our families just want one thing, Anthropic. And the challenge we have is they don't want anything else, but they all want Anthropic. And that's the only thing they want. Every dollar wants that's home in Anthropic right now. And it's caused secondary market prices to surge to a trillion dollars for Anthropic. The implications are, or the suggestions are there is a clear market belief that they have won the enterprise race and they've surpassed OpenAI now with 850 with their latest. How do we read that? How do we reflect on that?

SPEAKER_02

[SPEAKER_00] Well, look, just two others. I mean, the fun thing in all of this, and I put fun in air quotes, is it's so fluid. So Sam just said Codex usage is up 50% in one month. As we're taping, OpenAI is going to launch autonomous agents, OpenClaw on steroids 24/7. Three, I've run my own workflows through both APIs. I don't care. Right? So our ability to predict what we thought two weeks ago when there was turmoil, executive turmoil, everyone was using the Anthropic API. It's just better. Claude, when we started the show, I was the only guy that used Claude. You guys probably thought Claude was ridiculous. Why is this weird guy? It's less than 1% of the market. Now everyone's using Claude, right? I don't know what 90 days is going to bring, but the fact, but everything could change in our developing environments in a week and OpenAI could win an agents and autonomous agents. We're just starting like agents are just getting autonomous. All these goofballs on X with their Mac minis and macros and 11 of them stacked in their closet. Look, what have they shipped? Nothing. It's performative art. But autonomous agents are what we all are going to live with. We built some and they could win. I mean, literally they're shipping it today. It could

SPEAKER_00

90 days is going to bring, but the fact is everything could change in our developing environments in a week and OpenAI could win at agents and autonomous agents. We're just starting. Agents are just getting autonomous. All these people on X with their Mac minis and macros and 11 of them stacked in their closet—look, what have they shipped? Nothing. It's performative art. But autonomous agents are what we're all going to live with. We built some and they could win. I mean, literally they're shipping it today. It could be the best thing in autonomous agents. Claude has a few now too. I mean, Anthropic, but that war's just started. It's just started. So I can't honestly predict 30 days out. So does this, does a trillion feel like Anthropic? Did that feel like a good deal on our last show? Yes. Am I sure it will three shows from now? I don't know. Maybe they'll invert. And if Jason is correct, look,

SPEAKER_02

I believe both of you are correct. You're correct in the sense that AI is the biggest story out there and Anthropic has, in the last six, nine months been credited as the new winner in that space. So by definition, you're going to have huge momentum for that stock. So you're accurately representing the facts, right? Whether or not that will prove to have an overall holding period return from here that outpaces the S&P 500 adjusted for the risk is something entirely different, right? I think the trajectory from here is actually pretty straightforward, which is when you've got this level of intensity, you go public, right? Because up until now, there's just been no way. We've had an entire life cycle of a technology explosion with very little access to it in the public market. And it's hard to imagine going through the entire cycle of a boom and bust without letting the retail investors lose their money as part of the show, right? So that's clearly the part that's coming up. So my assumption is Anthropic will go public and it will be a fabulously successful IPO, which is different than saying at a trillion dollars, you'll feel really great about holding it six months later. It can be an amazing company. It cannot be worth a trillion dollars, and it can trade at a trillion dollars for a period of time. All those things can be true. What price does it go out at, Rory, if you were to make a guess?

Your job as an investor is to tell you what something's going to be worth four years from now, right? Your job as a banker is to tell you what it's worth today. And those are different skills. One is about projecting the future. The other is about valuing the now, right? I'm not going to try and project the future on this now. My guess is I come with a lower number, but ULP is right about the present. Today, if it went public today, right? You would be fighting them off at a trillion dollars. You would have a fabulously successful IPO. And because those guys are wildly smart, and because of the really nice profile of the CFO recently, and because the other thing that's happened is the big counterattack on behalf of OpenAI has been compute is the ball game. These guys don't have enough compute, right? My guess is the Anthropic guys are saying, hey, we've got the better software. How do we get as much compute as possible? It takes money. This is America. Jensen will take a role to provide a given cash and therefore go public. So my assumption is these guys are going to go public in the October, Q4 time period if they can, as soon as it's humanly possible, which is why they're not taking the $800 billion valuation. I mean, why even pause for breath? Especially if it gives any kind of rights, which at this point I doubt it does. They are heads down preparing to go public because as long as this mood lasts, you will probably raise money in the public markets for that stock at a price you might not see three years from now with three years of execution. They should go.

SPEAKER_00

After the IPO, what are they going to do? Are they going to do massive secondaries? Are they going to do PIPEs? Are they going to do weird debt, hybrid equity, preferred deals? Because this isn't the last chance they're going to need epic amounts of capital, right? And so maybe it's minor, but we're talking about an IPO like it's an event, which of course it is. But the ultimate, I think the meta question is, where is it easier to raise ongoing capital, perpetual capital? Is it really easier public than private for these guys? Not traditionally, the answer is yes, of course, but for these guys, is it?

SPEAKER_02

Yes, I think I'm going to say again, being opinionated on this one. Yes, I think it will be, even though so far it hasn't been. I mean, the most stunning fact so far is the biggest IPO in history is talking about raising $75 billion and the biggest private round in history raised $122 billion. What that says is the biggest private round is bigger than the biggest IPO. That is bizarre. And we've kind of grown accustomed to it to the point where we don't even focus on that fact, but it is absurd, right? Given that logic, you would say, stay private, you can raise more. But I absolutely don't buy that. I mean, yes, Anthropic could get one more round done. But the truth is the big liquid markets are public. And Jason, to your point, I think they go public. You raise a big slug of equity out of the gate. You raise more. You obviously expand the capital base over time. And then you have access to a whole bunch of other things. You have access to convertible preferreds. You probably can do more compelling debt structures. You become a viable player for more people to lend against. So if your business model is, as they think, perhaps insanely, but whatever, I need to raise $200 billion, $300 billion—and at some point you have to go public—why don't you go public when the FOMO is at its peak, when your relative desirability is at a peak? It would be hard for me to imagine a better moment to go public if you're Anthropic than like this minute.

SPEAKER_00

But I'll give you this counter argument, that I might be wrong on, which is Figma and the need for capital. So if Anthropic does not need any more capital, go public tomorrow to your point, right? Or Q4 when you're at it, go public. Go public at a trillion. Trade up like Figma did to two trillion, right? And ride it out. But Figma is down 87% from its trough. [SPEAKER_02] when the FOMO is at its peak, when your relative desirability is at a peak? It would be hard for me to imagine a better moment to go public if you're on Tropic than this minute.

SPEAKER_00

But I'll give you this counter argument that I might be wrong on, that admittedly I might be wrong on, which is Figma and the need for capital. So if Anthropic does not need any more capital, go public tomorrow to your point, right? Or Q4 when you're at it, go public. Go public at a trillion. A trade up like Figma did to 2 trillion, right? And ride it out. But Figma is down 87% from its trough. Imagine for some reason something like this happens to Anthropic. It still grows. What's Figma is still growing at top 5% rates, right? But the market has fallen out of love with Figma. What happens if Anthropic IPO is at the perfect time for a company that does not need capital, but the markets fall out of love with it? They get worried the construction costs go up. Those space centers we're arguing over don't work as well. Rory was right about the space centers and it falls 87% like just what happens to capital raising?

SPEAKER_00

[SPEAKER_02] Yeah. Okay. Respectfully, no. Right. Because if everything that you articulated happens, right? Then the person who's public wins and the people who are still private are existentially screwed. The Figma example is driven... The Figma soundbite, which I hate, of the 83% decline is more accurately represented as follows. Figma priced at 35 with sensible people. Idiots drove it up to 100 bucks a share. Then the same idiots sold it down. And so that's one factor, right? But then second factor, at the same time, Figma was at the tail end of a 20-year cloud software boom where the zeitgeist switched to the AI boom and the world fell out of love. So that took it from 35 down to where it is now, which is 20, right? That explains Figma. I don't imagine... Look, if there is a world where the AI zeitgeist goes out... I think we're at the start, I mean, at the start, but where the AI zeitgeist, we're not going to hit a stage in the next year or two where people are saying, oh my God, the story is dead. We've moved on to the next thing. You're closer to the start than the finish of the zeitgeist. So I don't think you have... I don't think even... I think there could be a hit to the stock, and I'll come back to that in a second, but I don't think it's the same as Figma where it's like... I mean, what's happening at Figma is everyone's saying, your operational results are amazing, but we're in love with someone else, so we're just not even going to talk to you, right? I think if Anthropic were to go out and if the stock were to go down, it would be because, oh my God, it's overvalued and this revolution is going to take 20 years, not five, so maybe you're overpriced. And in that case, you'll sit there, and I've been in much smaller scale on this, when you go, it's really bad our stock is down. On the other hand, we've got 50 billion in cash and our head to head competitors still losing money in private, we win. So no, there's no argument. There is no argument for overstaying your welcome in the private markets at this point.

SPEAKER_00

[SPEAKER_01] Jason, you brought up Figma and you brought them into the conversation. Tying that to what we were talking about, Anthropic launches Claude Design. For those that don't know, it's their competitive product to Figma, very bluntly. Obviously, Figma as a result were hit and price was hit significantly, as was Adobe's. Jason, you actually did a like for like and you've tried Claude Design extensively. I'd love to hear your thoughts. What were your reflections? Does it compete with Figma in a very meaningful way? And how do you leave feeling?

SPEAKER_00

Well, look, I leave with a lot of anxiety over Figma and others, but not for the reason the Yahoos on Twitter said. If you use here, let's be clear what two things about Claude Design, if you haven't used it. One, it is definitely better than the design tools that were in Claude the day before. You've always been able to design a website that looks exactly like every other website built with Claude artifacts and purple gradients and they all look the same. OK, half of Demo Day looks like it was built in Claude artifact. OK, you can smell them in 60 seconds, but design was always there. It just wasn't what a lot of designers would call design, but you could always design a website. Now, Anthropic did something which is important. We'll see where it goes. They didn't just improve it. They built an application. Claude Design is an application. There are only so many Anthropic and OpenAI applications. There are skills, there are workflows, there are prompts, there are little things you can do. They went to the trouble to build a design application that works. Whether it's 50 percent better or 200 percent better than the day before. You can design better websites, better properties in Claude than you could before. Does that mean you can build what you can build in Figma, or Illustrator? No. So a lot of the Yahoos are saying, on the other thing that you said on Twitter is, of course, this isn't a threat to perfect design, to taste, because we're all about taste now in AI. Taste, we have no threats because of taste. The combination of taste and moats means we're unassailable. So will your typical, hoping to afford tickets to Coachella designer that takes two weeks to respond to a ticket to develop an asset, are they going to switch? Maybe not, right? They're not going to switch from these things. But it means normal people can design stuff and get into production much faster. So I think it is an existential threat. It is, it will maim and nibble at Figma more, more, more, because if the three of us wanted to build an app together and we don't want to wait for a designer to turn it around in 30 days and give us a Figma file or a still, what the hell do I even do with the Figma file? I can stick it and repl it. Now I can just do it myself. So we will bypass designers more and more. That's the risk. Not that, but I do not believe Anthropic will ever build a direct Figma or Illustrator or Adobe competitor. They don't have to, to maim them. And so yeah, is it a design tool? Maybe it's designed to production like some folks call it, who cares if it maims you, it maims you, right? And I think people are missing the point. The meta question is, and then I'll just say one last thing, that no, I saw no one talk about it. It is an application. It comes up as a full application. It has sharing, it has users, it has hierarchy, it has...

SPEAKER_02

[SPEAKER_00] That's the risk. Not that, but I do not believe Anthropic will ever build a direct Figma or Illustrator or Adobe competitor. They don't have to, to maim them. And so yeah, is it a design tool? Maybe it's designed to production like some folks call it, who cares if it maims you, it maims you, right? And I think people are missing the point. The meta question is, and then I'll just say one last thing that no, I saw no one talk about it. It is an application. It comes up as a full application. It has sharing, it has users, it has hierarchy, it has, it can save assets. Maybe there are, I do not believe there are many other applications that Anthropic or OpenAI built. And this, if you look at what the public markets are, they're scared about a lot of things, but we make fun of vibe coding. Oh, we're going to vibe code our Salesforce. But what if they start building A tier applications, not just prompts, not just outputs? It is something to reflect on. It is something to reflect on. And I'll just, sorry to ramble, but I'll give you one last story to compare. So the oldest piece of software we use is Marketo. Okay. Terrible email marketing service. About two weeks ago, it started to violate the CanSpam Act. We started, I started to see things on tweets. Jason, how come I can't unsubscribe to your newsletter? And they ping me again, again, I don't know. And then you get more of them, right? So that's when a bug's been introduced into the system two weeks ago. We flagged it for Adobe Marketo. They said it was unfixable. CanSpam violation. Okay. This was a week ago. Then they said they would only help us if we got on the phone with their engineering yesterday. We did. They did nothing but blame Salesforce and said they could not commit to a fix. So my point is, this is what old software looks like. Okay. And as if Anthropic and OpenAI are going to build applications, sell them all as a bucket, keep the gems. Don't get me wrong, but they're coming for old software. They're coming for old software. This is an application. This is not a prompt. And, but nor is it going to maim Figma next quarter. There's just both can be true. Those both can be true that we won't see it in Figma's numbers next quarter. And that over four, six, eight quarters, it will maim its growth. We won't want to use grandpa's software anymore.

SPEAKER_02

But that's just, honestly, I want to ask a lot of questions because one, that's what we do here. Two, you've used both products and I just, and I tried to look at some demos today, but I just had a ton of questions. So, yeah. Because I think this, it's the Emerson quote. If you understand one thing, one man, well, you understand every man. If you understand one competitive market, well, you want this, you have a framework for all these markets. So I just want to drill down on this because it's the same question in every market. So a couple of things. One is how do you think it impacts? I mean, I believe the Canva design engine is at the heart of what they've done on Claude. How do you think this impacts Claude, Canva versus Figma?

SPEAKER_02

[SPEAKER_00] Well, first of all, kudos to Canva. If you use Anthropic, I mean, Claude design, it exports to Canva. So you can import from Figma and you can export to Canva, right? Should you choose to? Yeah. But what's happening is product teams and engineering teams are already like, okay, if we go back 12 months ago, you had design. Back in the day when I worked at Adobe, there was a design group. We weren't allowed to design anything that was public facing. You'd face a ticket and 60, 90 days later, you'd get a PDF of what your website had to look like. Okay. Then your product team would have to figure out what to do with that PDF, argue with your engineering team. And months later, you could, that's the way software used to work until not too long ago. Then as everyone started working in Claude code toward the end of last year, product and engineering teams just started to work in the code together. Product teams first would vibe stuff and replant and lovable on their own, right? Now a bigger and bigger deal is they're committing to the code base. Product teams are able to do this. And so these PRD teams are becoming more cohesive. And then design still way out over there in their own hipster land. As these combine, everyone's going to want to work directly onto Claudex and Claude code. It's not going to be this designer enforces a collaborative hierarchy on Figma. Because the designers hold the PRD organization hostage. They hold them hostage before AI. It's the worst.

SPEAKER_02

Yeah. When you're saying this, implicitly what you're saying here is it's the Figma digital design websites and apps world, the software part of design, not the part of Canva that is printing out real world pictures, posters, and the physical design where it's decoupled from software. [SPEAKER_00] You're right. Design is such a confusing term, right? It's a bigger threat in the short term to things like Gamma. It already makes slides like Gamma. Yes. Okay. It's not a threat to Canva today. But every single thing you do in Claude designer that you don't do in Canva or Figma or Gamma is a threat to them. Even if it doesn't kill them. Every single thing you do.

SPEAKER_02

[SPEAKER_01] Jason always says, Rory, which always sticks with me, is just the element of maiming, which is quite hard to deny, which is just like, if it takes 20 to 30% away because you're already there and it's easy, that's very meaningful.

SPEAKER_02

It is meaningful. And again, I'm not diminishing that. I always thought one of Google's interesting strategies for a decade and a half was the strategy with G Suite. It was email and effectively a docs and a spreadsheet, which just gnawed away at the bottom end of the Microsoft Office Suite. And if you fast forward a decade and a half, you get both sides of it though. They could spend a billion dollars yanking Microsoft's chain on a $40 billion business. It's exactly what Jason says. I'm messing with your head. I'm maiming you and it's not core to me, so I don't have to win here. You just have to lose. On the other hand, 15 years later, your office is still a plus or minus $40 billion business, lower growth rate. So my point is simply this. There is a range of outcomes from it gnaws away at the low end, takes away a lot of users, but only 5% of the revenue too. It bites 30% of the users,

SPEAKER_00

[SPEAKER_02] They could spend a billion dollars yanking Microsoft's chain on a $40 billion business.

SPEAKER_00

[SPEAKER_02] It's exactly what Jason says. I'm messing with your head. I'm maiming you and it's not core to me, so I don't have to win here. You just have to lose. On the other hand, 15 years later, your office is still a plus or minus $40 billion business, lower growth rate. So my point is simply this. There is a range of outcomes from it gnaws away at the low end, takes away a lot of users, but only 5% of the revenue too. It bites 30% of the users, 25% of the revenue, and it really impacts. And those are big differences in terms of value creation. You understand me? So the-

SPEAKER_00

How much- we'll have a maim meter in board meetings. How much have we been maimed this quarter? And it'll go from 1% all the way to 50%. And our agents will decide. We don't let the founders decide because they're always at 1% or they're the overreactive one at 50%.

SPEAKER_01

[SPEAKER_02] Yeah. There's this cue for the Monty Python, it's only a flesh wound sketch.

SPEAKER_02

[SPEAKER_00] It is. It's like that. That's where you're going to go. It's only a flesh wound. I lost my arm and my leg this week to Claude.

SPEAKER_02

But you are right, Jay. I mean, you look, anything. I mean, I remember thinking that any time they come at you, any time- there's two things you said that resonate. One is any time someone can give away something at the margin for free that takes away some of your load, there's just an impact to that. Right? Bundling is a bitch, and they're effectively bundling here. The other thing that I think is more important that you said is, and I hadn't internalized this, but if the design flow is a preamble to a technology build workflow, and the technology build part of that workflow is already automated using code, cloud code, then you're right. The incentives. Where you get scary as a standalone company is if the other guys have a better together story. And you're right. To the extent that design, product, and engineering can all be in the same tool, there's probably a whole bunch of embedded efficiencies there. And from the perspective of the company building that product, it makes sense to... Because the thing that often happens in these deals is... I mean, OpenAI did a ton of these. If you look back on the... It's just fun to do it now. The GPT store, the GPT plugins. Every single time, Twitter goes all excited. This is the end of everything. XYZ company is screwed. Right? And it turns out, you know, two years later, no one even remembers that. The thing's been deprecated. But you're right. In this case, if you think of design as simple, not as a standalone category like Canva, but as the front end window into product and the end, and if you think that software is the mother load and software coding is the mother load of enterprise adoption, then you probably get enough effort behind it to build a credible product. I mean, that's what you're saying. And I mean, put bluntly, at some point, even when Anthropic has to start allocating resources at the margin, implicitly you're saying there'll be a big enough team here to build, as you say, all the app features to make it a viable competitor.

SPEAKER_02

[SPEAKER_00] Yeah. And not only does it export to Canva, you can just it exports to cloud code. They're integrated. So if we're moving quickly, we're not going to wait. Listen, I still want my human designer to deliver my amazing homepage of my app, my amazing splash screen, my amazing assets. But we're launching. We're shipping features every day, guys. I don't have time to wait anymore. We're going to do it in design to go straight into cloud code, which we already run our company on. We already ship on. Right. It's fully integrated. And if the humans have time to redesign it later and make it better, great. No one's saying it's pixel perfect. I don't have time. So we'll see. But they could have been the only reason I think they want it. They won't entirely abandon it is it's part of the core. It's part of the cloud code core. And it is something you can already do in cloud code or even just clod just crappily. So they're improving the closer it is to the core, the higher the chance they'll maintain it. And it's not a dalliance. Right. Not only are the decliners stressed, not only are Dylan and Mike Kendall Brick stressed, they're stressed at Lovable and Replit and Vercel and Gamma too, because the rated competition is like we've never seen before. Right. And they're and I will say one thing I know from all these founders. I mean, they're brutally aware of it. The older CEOs are hiding from it. Oh, our next agent will catch up. Oh, we'll catch up later in the year. Oh, you haven't seen our next. This is what I hear from pre AI founders. We'll catch up in the next release. They say so confidently. Right. As they go off to complete their triathlon, the AI native CEOs are they're friggin all over this. OK, in 60 seconds, you get a Slack back. They actually know what's coming a month later that all their competitors are launching. They're already all over it. They're already. I hate the 40 chess game, but if you don't play 40 chess, if you're at the core of AI, you're going to lose. So they're all playing this game. But it just gets harder every week.

SPEAKER_01

Excel adds four billion leaders fund to follow into hot AI growth rounds. Sequoia four days ago raises seven billion dollar growth fund. Is this just further compounding what we said, which is that this is the game today and the leaders see it?

SPEAKER_02

It's definitely the game today. It's definitely the leaders see it. Obviously, the question is, is it correct? But yes, I mean, totally. Yes. As long as it gets correct. I think it's I mean, directionally, yes. People are saying private longer. Outcomes are bigger. So capitalism is doing what capitalism should do. It's raising money to put into these companies. Right. Do I mean, do I think the return? I mean, the thing about growth is this. When growth is sexy and attractive from a fundraising perspective, it tends to be hard to make money at. And when growth, whenever it has the way growth makes money is either overall valuations are down like 2022 or there's some insight that the growth investor has that the wider market hasn't figured out yet. Like ChatGPT really matters and you should buy OpenAI. Right. It's a lot. So both of those conditions were two and 22 and 23, which is why those funds are going to be awesome. Right. So if you have a situation where capital is plentiful for those rounds and everyone understands AI is

SPEAKER_02

into these companies. Right. Do I think the return? The thing about growth is this. When growth is sexy and attractive from a fundraising perspective, it tends to be hard to make money at. And when growth, whenever it has the way growth makes money is either overall valuations are down like 2022 or there's some insight that the growth investor has that the wider market hasn't figured out yet. Like ChatGPT really matters and you should buy OpenAI. Right. It's a lot. So both of those conditions were two and 22 and 23, which is why those funds are going to be awesome. Right. So if you have a situation where capital is plentiful for those rounds and everyone understands AI is amazing, then by definition, you've eroded the two things that gave you excess returns. I'm not saying you still won't make great returns. It won't be as clear or as compelling as it was when

SPEAKER_02

[SPEAKER_00] it was unpopular. The other thing is there's room for the capital. And what I mean is, if you look back at 20 VC fund one, $10 million fund, right, I'm speaking for history for Harry. Back then, the strategy was to get into hot seed or a rounds where he could write a 50K check, 100K check. There was always room. There was always room. And that to some extent, it's still today. It's just those hotter checks are at much higher valuations. Fast forward to today. If you're a relationship builder, if you drop by and meet with Dario, if you schmooze with Sam, there's room in the round like you get cut out. Don't get me wrong. People are getting cut out of these rounds. But if you're Sequoia or Accel and you're a good schmoozer and a people person and you show up to poker night and you do all the right things, most of these rounds, you're going to get an allocation. You may be the fourth name on the press release, but you're going to get an allocation. And so, you know, in a way, the funds don't even, sizes don't even sound that large. If you get 20 or 30 checks, they're not even that big.

SPEAKER_02

And that's totally fair for five or six. You're exactly right, Jason, is that there was room. When you're raising $122 billion, right, it turns out there's room for everybody. Even when you're raising a miserly $30 billion in the last Anthropic round, you're right. There's room for everybody.

SPEAKER_02

[SPEAKER_00] Well, people get cut out there to start. They're desperate to get into Anthropic. But if you have the relationship, you're going to you and you're really and you really build it over a period of time when they look at the spreadsheet for the round, they're going to put you above the fold because we like Rory. He's great on the poker night. He came by the office. He loves us. We're going to fine. We'll give 20 million to Rory. It's no. Do you disagree, Harry?

SPEAKER_02

No, he doesn't. Because his first sentence, his comment was, if you're going back to Harry's LP, who's Montsatropic and nothing else, I mean, what I like about Sequoia, they know how to make money, right? They're like, let me get this straight. I have a good relationship with these mega companies. I'm a name that they'll want even at this stage. And I got a bunch of LPs saying, the only thing I want is this. And I'm in the middle. Hmm. Let me think about this. I should take their money and give it to these guys and charge my percentage and call it a day. As long as that works, the marquee names who can do that are going to do it.

SPEAKER_02

[SPEAKER_01] Right. Some of the package pricing on these SPVs for Anthropic has just been the most egregious face ripping I've ever seen. It's just, oh, 8% up front. Crazy. One that I thought was fascinating was Rippling crossing a billion, growing 78% year on year. Is this the new bar for a great B2B IPO?

SPEAKER_02

Well, first comment, is this the new bar? Well, it's not going public right now. But I think, let's step back even one level beyond the IPO. I think what this sentence is true, and you never know, but I believe it to be true, exposes the whole SaaS is dead meme is bullshit, right? Low growth SaaS is bad, and high growth SaaS is good, right? This is a market where we can talk about the reasons why. If you're doing a billion dollars growing at 78%, then collapse of the entire discussion about SaaS is going away, SaaS is bad, what's it worth, right? What it really points out is the real objection to these public companies, these public SaaS companies is not, oh my God, you're SaaS. It's that your market is now top stop, then your growth rate is 10%. If Rippling is growing at that rate, that's amazing. It's compelling and they'll get an excellent IPO.

SPEAKER_02

[SPEAKER_00] And they're accelerating. The crazy thing is they're accelerating. So if they were at less than 500 11 months ago, which I do know, right, and they're at a billion growing 70 something percent, do the math with me, Rory, they're accelerating. It's not just 70, which is enough. They're accelerating, right? And you can say that's great for SaaS and it is right. As Parker said to me, not bad for a SaaS company, right? Kudos. But, you know, and we can talk about what that means. I'm not even sure what it means, but not that many are accelerating like this, right? So this is not good news for anybody not accelerating at scale, right? Let's not it's not even 70%. It's accelerating from like under 50 to 70 in a year. I mean, you know, candidate for CEO of the year, right? Not to disparage Dil, but candidate to drive that level of acceleration. I don't even know how to do that. Unless it's people buying unless there's people buying tokens. I don't even know how to do that in today's world.

SPEAKER_02

[SPEAKER_01] I mean, bold candidate for CEO of the year. I mean, yeah, respectfully, he's got a bit of competition. Yeah, but that driving accelerate like they've just launched their agent driving that level of acceleration without a massive AI tailwind, just blowing your phones up, right? I mean, I'll bring them on. We'll talk about it. I don't know how to do that without AI, right?

SPEAKER_02

I think it's what they refer to in sporting terms as a win against the run of play. Against the odds, you're playing the SaaS game where everyone's walking around saying the world is dead. Yes, Anthropic's putting up six, 700% growth, but you put that 78% growth and acceleration up in a category where most ill-informed people were saying you can't do that. So maybe a better a clear expression is highest outperformance relative to quote unquote market expectations. [SPEAKER_00] level of acceleration without a massive AI tailwind, right? [SPEAKER_00] I'll bring them on. We'll talk about it. I don't know how to do that without AI, right?

SPEAKER_02

I think it's what they refer to in sporting terms as a win against the run of play. Against the odds, you're playing the SaaS game where everyone's walking around saying the world is dead. Yes, Anthropic's putting up 600-700% growth, but you put that 78% growth and acceleration up in a category where most ill-informed people were saying you can't do that. So a better, a clear expression is highest outperformance relative to quote unquote market expectations. [SPEAKER_00] I think that's a clear example. It's better than Figma by the numbers, right? It's better than Figma by the numbers by far.

SPEAKER_02

I think what it says is a serious comment—what it just says is there's markets where the entire agentic AI drive coding discussion is rubbish. One of them is financially related stuff and payroll. I've run a business and you guys both run businesses. You can screw up on a lot of things. You screw up an employee payroll and you pay them at three o'clock, they'll be in your office at 3:01, right? You can't get this wrong. You're not interested in vibe coding. You're interested in having it right. You've got legal and statutory obligations that carry criminal penalties if you don't pay your taxes. You're like, I want to outsource this to someone wildly competent, have them take the responsibility. And no, I don't want non-deterministic processes, right? These are entire businesses that might have some impact at the margin in terms of agentic efficiency. But this core business will be there in five, 10 years' time. It'll compound because payroll is not us. We're actually talking about this a lot internally. What gets eaten by AI? What doesn't get eaten by AI? What's defensible? Payroll is one of the best examples of this is just something you do. You might build software better using AI, but the core value proposition is something that it's orthogonal to AI and it has to be done right. So big category, it'll go public, it'll be a great outcome. Good for him.

SPEAKER_01

I think the same with a lot of the fintech players that we see today. Your Ramps or your Stripes or Air Wallets of the world are not all the time.

SPEAKER_01

[SPEAKER_00] Yeah, exactly. And you know what, though? I know it's not to harp on the MAME episode. The moat is stronger. It is less impacted by AI. But I will tell you everything—and I know I'm a few months, not ahead of everybody, but a few months ahead of many. Everything I view now in terms of how well it works with our agents, how well its API and workflow works with our agents. And so, for example, after Sastranule in May, we're going to build our own AI VP of Finance, our own. OK, and the number one thing we're going to do is automate collections. OK, so we've been on Brex for six years. You know what the first thing we're going to look at? Which API works best with our agents? I don't care what Ramp's dashboard looks like. I don't care what its office of GDP. I don't care. I care how our agents work with its API and it's and we're going to pick the best one. And that is just starting. But it is a BFD. And it also means that folks that seem to have a huge moat, it may weaken when—and I'm not just being a Yahoo on X. We're going to build an AI VP of Finance and he don't care what the UX is.

SPEAKER_00

[SPEAKER_02] Yeah, Jason, you're absolutely right. And you're going to build a beefy and therefore the payroll and AP collectibles that has the best API will win. But I'll tell you something, you're not going to build an entire fintech stack. So someone will get those dollars. You're right. There are vendors, but it could be a new vendor. It could be a different vendor. I mean, this gets to the cell phone. There are three or four vendors of AP related stuff. You've got Ramp, you've got Bill—where we're involved. You've got Brex, whatever, right? Whichever of those doesn't have an API forward product will lose market share. Everyone who does will gain market share. And if all of them are dumb enough not to do it, then a new vendor who says I'm an API first product will get your business and all the people like you, right? But in every case, I think you're correct in that, which is a platform shift, which is what we're dealing with at this level. It has implications for everyone in the tech stack. But if you are doing something like what Ramp, Brex, Bill—all these people are doing—the core thing you do itself won't be replaced in a way, for example, Figma might be, right? My point is there are degrees of change here, right. And your point is what—

SPEAKER_00

But the degree of just the comfort that we're protected—you know, Ramp has asked us to switch from Brex for seven years. I bet we finally switch over the summer and it's only because of the agent. If it wins the bake off, we will switch in one week, we will switch and we will never go back to Brex. Which gets us to—you know, we have—

SPEAKER_02

Same with Marketo and HubSpot. [SPEAKER_00] We're leaving Marketo because of this drama, the crappy API that can spam. We will leave Marketo this summer for whoever has the best API and it probably won't be HubSpot. Which is why we should— Probably won't be HubSpot. Hang on, Jason. Say, look, I mean, to your point, Salesforce just announced the whole—an entire headless API strategy. What are your thoughts? Because I thought that was smart. [SPEAKER_00] Well, we debate where to move our Marketo data. We're already using Headless Salesforce to move all of our Marketo data agentically over to Salesforce. It'll be done in a couple of days.

SPEAKER_02

See, that's a great story because give him credit, give Benny Off credit. He's like, if you can't beat him, join him. As they say, right? I mean, remember it's less than a year ago there was talk about we're going to charge you, you know, not going to let you have your data. And now we've gone to getting a headless Salesforce out the door. So yeah. So they've—you're an example of where he's taking share from the adjacent companies like Marketo just because you're doing that. And that's your point. [SPEAKER_00] all of our Marketo data agentically over to Salesforce. It'll be done in a couple of days.

SPEAKER_02

See, that's a great story because give him credit, give Benny off credit. He's like, if you can't beat him, join him. As they say, right. I mean, remember it's less than a year ago there was talk about we're going to charge your, not going to let you have your data. And now we've gone to getting a headless spot out the door. So yeah. So they've, you're an example of where he's taking share from the adjacent companies like Marketo just because you're doing that. And that's your point.

SPEAKER_02

[SPEAKER_00] Well, starting the other, the only thing I will say, listen, we are already living the headless vision, right? We don't log into Salesforce. It's our hub, but it's also, this is a lot of stuff that's going to run on MuleSoft in a couple of months or six months. This is also with love. This is also a classic B2B, Anthropix drops a design tool and we can use it in an hour, right? This is something that will be dribbled out in classic B2B fashion over here. It's just like,

SPEAKER_01

it's different worlds. Can we provide some context also for those that haven't heard in terms of just Benny off the move with headless that he announced just so we set the scene there? Cause I want to ask some questions.

SPEAKER_01

[SPEAKER_02] Sure. I mean, I think that traditionally, the Salesforce app really had two parts of value. There is the user interface that every sales rep or everyone in the organization uses to input and output information and effectively record the work they're doing. And then at the backend, you have effectively this massive database and workflow that records all the information and allows you to track customers, leads, pipeline, all that relevant stuff. So there's two components of value. And by going, offering a headless offering, what he's basically saying is if those people who are doing the work are replaced by agents doing the work, then they don't need my UI anymore, right? Because the people aren't there anymore. They need a totally different agent-based UI. But what I'm going to do as the leader of Salesforce is I'm still going to allow them to access the database side of my product, which means I keep my value even in a world where most of the selling or the customer support is not done by humans typing into the Salesforce UI, but it's done by agents proactively going against the Salesforce backend. So he's preserved, he's given up some, he's given up trying to drive proceed pricing to preserve long-term value because I think he correctly has identified the real long, to Jason's point, he said it as a negative, but it's also a positive. The real long-term value that Salesforce has is it's taken us 10, 15 years to get all those integrations in place, all that data in place. If you make it easy for Jason's agents to work with Salesforce, then he might not get around to killing you for the longest time. So that's the big move they made in the last few weeks, right? I think it was a week or two ago.

SPEAKER_01

[SPEAKER_00] I think Claude designed though, everyone completely misunderstood what headless Salesforce is. So Salesforce is already headless. Salesforce is made, and this is actually pretty crazy. Mark, really Mark and Parker to their credit, JFC in 2006, they launched an enterprise API when this was seen as not possible. You could not build, allow third parties to integrate into enterprise software is too risky, too problematic. They opened this platform up and they have 20 years of it getting better. And I will tell you all the APIs that our agents use, our AI, VPA marketing, VPA customers, Salesforce is the best. It is the best API out there. It crushes everybody. Okay. This includes all the new guys, everybody, but it's because they built this for 20 years and because it's the APIs are so good, the agents can work with it. It's not a problem. What headless is. And that's what Mark's out there. I mean, the greatest marketer in B2B, right. But it's already done this since agents started what he's really pitching, which is the bigger threat to these leaders and the bigger opportunity is an agent fabric is the layer that manages all your agents. This is what it's really, if you really look at what this is, it's about sales source says we are going to be the fabric to manage all of your agents, your 20 agents, your 50 agents, a hundred agents. So some of them will be built on sales source. A lot of them are going to be built on your soft as crazy as it sounds their, their platform, which has been renamed. It will be in their data platform, but we will be the layer to provide the context, the guardrail, the management, the security, the everything. And this is the biggest issue for 2027 is agent fabric. People are under discussing this. They're all talking about evals and this crap. This is what really matters in the enterprise is agent fabric.

SPEAKER_02

[SPEAKER_01] You can't let these crazy agents run amok. I'm sorry. I'm just going back. When you say agent fabric, you're saying agent orchestration management training. It manages everything, all the governance, all the security.

SPEAKER_00

All the security. It knows, here's the key part. It knows what every single agent is doing in real time. That's the fabric that is more than orchestration. Okay. It literally knows every data, every operation, everything that's happening through 200 agents running 24, seven in parallel with multiple sub agents in them. Who's going to go to poor, to poor, Jacob O'Driscoll at CIO of wherever that, that if there's any security breach, he loses his job. It's his worst job. He wants a trusted agent fabric to manage these crazy agents his team is deploying. And they can't be done on at a chat GBT. They can't be done out of base 44. Jesus, JFC, this is a security nightmare, right? I mean, even this week, and I don't want to get into it, two leading vibe code platforms arguably had massive security issues this week. I don't want to talk about them, but this is only going to compound. And as mythos comes out and finds every security breach in nanoseconds, I need an agent fabric. I could trust not someone that came out of YC and claims they have an orchestration platform, but I don't know if Salesforce can deliver it because it's so effing complicated. But if you're in their ecosystem, if you commit to everything, all of it, when most folks hear about Salesforce, they think it's CRM it's 14% of the revenue. Okay. If you commit to everything, e-commerce marketing, data analytics, Slack, and you run your whole business on Salesforce, this is the old SAP push. We will give you the agent fabric so you can accomplish everything you want.

SPEAKER_00

And as mythos comes out and finds every security breach in nanoseconds, I need an agent fabric. I could trust not someone that came out of YC and claims they have an orchestration platform, but I don't know if Salesforce can deliver it because it's so effing complicated. But if you, but if you're in their ecosystem, if you commit to everything, all of it, when most folks hear about Salesforce, they think it's CRM it's 14% of the revenue. Okay. If you commit to everything, e-commerce marketing, data analytics, Slack, and you run your whole business on Salesforce, this is the old SAP push. We will give you the agent fabric so you can accomplish everything you want. It can be trusted and safe. You'll add, and you, this is an agentic platform you can trust. This is the big bet coming. And this is all the warmup phase for agents. Enterprises need an agent fabric they can trust.

SPEAKER_00

[SPEAKER_02] Agreed. Because you know, you're empowering these software agents to do things, to change things in your systems, to upgrade things, to change, to approve orders, to make commitments. How do you audit what's going on? How do you know, how do you keep control of it? Yeah. That's exactly right. That's going to be the issue.

SPEAKER_02

[SPEAKER_00] Yeah. I've got 300 agents doing accounts receivable. I've got 200 updating our documents. I've got all of these interacting autonomous customer success agents, our economist data analytics agents. Who's going to manage all of this? Orchestration is the nerdy term, but most folks talk about orchestration. It's just a limited dashboard on top of a couple easy APIs to connect with. It's fine for a startup or for a team that has human resources, but how's an ordinary company going to manage these agents? How the hell is an ordinary company without a team of agent deployment experts going to manage these agents, these rogue agents? They'll go rogue if you don't manage them.

SPEAKER_02

This analogy may be totally useless. It's only because I've been doing it a long time, but I remember in the late 90s when online commerce took off and people really started getting a meaningful percentage of their revenue from online commerce. You have all these executives who were retailers to core. What do retail executives do when they want to know what's going on? They go walk the floor. They want to know what's going on in the shop. Even if you're running a 500-person chain like Walmart, Sam Walton used to walk around, touch the merchandise, see what's going on, and suddenly the whole thing's going on online and you just don't know. People are clicking. That's all you got. You saw a whole wave of companies doing analytics around how do you track your website because the big guy just wants to know what's going on. That was the value proposition. We did NetGenesis. We did Omniture. We made a lot of money in that space. The value proposition at its core was you've moved to this new way of doing business. Senior people want to know what's going on. Frankly, AI is way more powerful than that because at least in that, you had very deterministic. I'm selling stuff at a certain price for a certain thing. Even then you wanted to know you didn't do anything dumb. In this case, you've empowered your agents to make decisions. Now you're the executive in 2026. You're going to know what's going on. What's Gong? Gong is all about listening into calls to understand what people are saying. Once you have AI agents doing all this stuff, you're going to want to know what the AI agents are doing. I think, Jason, you're exactly right. This is going to be the huge thing. How do I think about what my little automated bots are doing in my business?

SPEAKER_02

[SPEAKER_01] My question was, are Salesforce best placed to be the agent fabric or is someone else better placed? If that's the whole holy grail?

SPEAKER_02

[SPEAKER_00] Of course, they're well placed. Of course, just like, it's a bad analogy, but just like in the end, Google, Microsoft, et al. were well placed for the last generation of AI. If they can get their rears together, the leaders are well placed. They are well placed. Salesforce, Shopify, Datadog, Databricks, if they can execute faster than they've executed the last 20 years or eight years, however they are, of course, CIOs want to buy from Salesforce. Of course they do. But it's much bigger than buying one agent force agent. They want this whole agentic fabric. So, and here's my meta point to folks. It's an opportunity to worry. You have time. It's just not infinite. It's like, if you're not building up that whole fabric, right? That's why I'm a fan of Mark. This may not get there. It is a bigger vision than it looked. It's not just headless, like all the Yahoo said, okay? This is a complicated vision and maybe they won't get there in time, but at least he's driving the right vision and forcing thousands and thousands of people to deliver against it. Right? I'm much more worried about folks that are, it's more performative. Right? You got to work as hard or harder than Mark to do it, but it's just, I don't mean to be repetitive, but the saddest thing is when you have an install base and you're not delivering the agentic solutions they want. This is the tragedy of 2026 and 2027. I have the customers, but Logora or Repli or whoever, pick any application you want. What's the, what's the AEO one you invested in, Harry, what's it called? The AEO, the AEO, the AEO startup. Peak. Peak. Yeah. HubSpot launches their thing and it's a dud. It could, should have been, it should have been peak or the other one. It's just a tragedy because HubSpot has 280,000 customers. It's a tragedy. You did not deliver them the best in class AEO. It is a tragedy. It is not just a test or a miss. And I just, it's, so, but so that's why I think Salesforce is extremely well positioned and we are right to be stressed. Everyone is stressed that they will achieve it on time. We're right to be stressed.

SPEAKER_02

[SPEAKER_01] It's really interesting. Yeah. They've had inbound to be bought by so many people. And Eli Gil today tweeted a load of predictions. And one of his predictions was that a load of these AI companies should actively sell and try to sell. Do you guys agree? To whom? [SPEAKER_00] So, to HubSpot. To, literally, Harry, I was on the phone last week with the CEO of a 20 or 30 billion dollar market cap public company. Okay. And doing massive revenue. And he's like, I get, I get these M and we're talking about M and a a little bit. I brought it up. He didn't bring it up. I'm like, well, go buy some of these kids. Right. You have the base, right? He's like,

SPEAKER_02

[SPEAKER_01] And Eli Gil today tweeted a load of predictions. And one of his predictions was that a load of these AI companies should actively sell and try to sell. Do you guys agree? To whom?

SPEAKER_02

[SPEAKER_00] So, to HubSpot. To, literally, Harry, I was on the phone last week with the CEO of a 20 or 30 billion dollar market cap public company. Okay. And doing massive revenue. And he's like, I get these M and we're talking about M&A a little bit. I brought it up. He didn't bring it up. I'm like, well, go buy some of these kids. Right. You have the base, right? He's like, well, everyone wants a billion on 5 million in revenue after their last round. He's like, it's almost a waste of like, I have a corp dev team, but like, I haven't seen a single one that I'd want to buy that will sell at a valuation that makes sense. So Google can buy them, but HubSpot, what's HubSpot's valuation as we record this in the teens of billions. They just can't afford a billion dollar for every YC startup. They don't have the money.

SPEAKER_02

Yeah. I would say try harder, stay close. [SPEAKER_00] There's going to be plenty. Plenty of exits. How many wizards can Google, is Google really going to buy them? No, I'm not talking about those kind of exits. I think to your point, what's that? [SPEAKER_00] 12 billion HubSpot. Yeah. So who, so they could afford 50 million, right? To take a risk, right?

SPEAKER_02

Not a billion. I mean, it's a stunning fact. And, you know, I the space, but I, someone told me that is it G2 Crowd said there's like 250 AEO, GEO competitors out there. Maybe you can't afford numbers one to five, but somewhere between 10 and 250, there's going to be one that has a good product. So I think a lot is entirely right.

SPEAKER_00

But isn't a lot saying sell at a billion, I think is implicitly what he said. Oh yeah. Yes. And if you can sell now for an easy billion, right? I'm optimized for a hundred billion dollar outcomes at my fund, but sell for a billion now while you can. Honestly, that's what I think you say, right? What? Oh, okay. I'll sell for a billion.

SPEAKER_00

I would agree if the exits were there. I would agree. His other point was you should have an exit discussion every year with your portfolio companies, right? I'm going to have one tomorrow. It's a great tip. I just, he's super smart. I just wonder where the, where the billion at five million AR exits are coming from. I would, I want their number. Give me their WhatsApp or their text because I'm going to send them a couple of deals before this, right after we get off this show.

SPEAKER_00

[SPEAKER_02] My point is this in various ways, but you're saying, right, when you listen to what Jason says about the public markets and the dilemma they're going through, they absolutely should be looking to acquire some of these things to get some of this technology. And maybe what we're really saying is the biggest rate limiting factor is not their unwillingness to do it, but the prices at which the venture crowd think we're going to get for them has made it hard to make those transactions. It's been my experience that if that's the case in the end, things true up, right?

SPEAKER_00

But you know what's tough? I picked on this HubSpot AO product. Okay. And I, and I love HubSpot, right? I picked on it, but I didn't know they bought that company for 30 million like months ago. So everything just gets stale so quickly. I'm sure HubSpot sat around and said, listen, we need to be in this place. It makes sense. We need to be in AO. What can we afford? Well, Harry just funded this one. We can't buy that for 30 million. There's the other one in the US. We can't afford them. What is available we can afford? And I think in five years ago, that was a good strategy, right? Because the world moves slowly. Now you buy something that, let's assume whatever they bought, this company was competitive four months ago. It's just not competitive at today's pace. Right? I don't mean to pick on them, but it's why M&A is tough, right? Who wants to buy something that's going to get stale? Look at poor Tben. We can't even see it on our feet anymore. It's disappeared since the acquisition, right? Gone. It's gone.

SPEAKER_00

You know, why even buy any of these things if they instantly become stale? You do these tuck in acquisitions, which used to be like, if you go back to corp dev, you had the best strategy was the barbell just starting to invest. Buy something small for 50 to 80 million, for product, a couple million in revenue to prove it works and rebuild it over a year. Rebuild it natively on Salesforce or HubSpot or go big, right? Because you got scale. But it's tougher today to find the gems that want to sell with product market fit cheap. I don't think you're saying it's tougher to find them. I think you're saying it's tougher to manage them and preserve the urgency and the speed.

SPEAKER_02

Yeah, it's hard. Which I think is a different comment. [SPEAKER_00] Yeah. I mean, even Open Claw, that dude's just on the Ted circuit now, right? Open Claw may be obsolete in a couple more weeks. [SPEAKER_01] Listen, the two more for me is Snap and Cerebrus. I think you have to do Cerebrus first. I just have a predilection for good over bad.

SPEAKER_02

[SPEAKER_01] Good. Okay, let's do good over bad. Cerebrus files for IPO. It's the second time. Some of the concerns that were brought up last time in terms of a dependence on G42's revenue and the revenue concentration they had have been resolved. How do we feel about this? Is this going to go out well? They're now at, where are they? 510 million revenue in 2025, up 76% from 290 in 24. They've done a great job.

SPEAKER_02

Absolutely. That's what I wanted to cover. I think it's a great classic venture deal. Credit to Benchmark Eric, credit to Steve at Foundation. Credit, obviously, more than anything to the team. This is a 10-year journey. I think in a way that wasn't true a year ago, they got the elements of success in place. I mean, you look at the P&L, it's a little noisier then at first glance because you at one point said, Harry, it's profitable. It's not. It had some weird reversal of liabilities. At the operational level, it's still losing money. But the big aha is they've... I mean, in fact that they've done exactly what it takes. They've proven the product. And stepping back, this is a semiconductor company, potentially one of the very few startup semiconductor companies in the last decade and a half. The product they make is a

SPEAKER_02

True a year ago, they got the elements of success in place. You look at the P&L, it's a little noisier than at first glance because you at one point said, Harry, it's profitable. It's not. It had some weird reversal of liabilities. At the operational level, it's still losing money. But the big aha is they've done exactly what it takes. They've proven the product. And stepping back, this is a semiconductor company, potentially one of the very few startup semiconductor companies in the last decade and a half. The product they make is a big ass wafer scale chip that's really good for inference because it's really fast.

SPEAKER_02

And obviously, it's very optimized for AI. And if you read the founder letter, it's been optimized for ACES. They founded in 2016. What they've done really well is, because this is a very hard market to enter no matter how good your chip is because there's only a small number of big buyers, obviously the hyperscalers. And some of them have their own chip, some of them might want to trust you. These guys have done a couple of things to parlay their way in.

SPEAKER_02

They've done some big deals in the Middle East with folks who've been willing to use the product. They started to offer a cloud offering and one of my companies has used it, whereby they are effectively saying, our chip is so good and so fast that we'll offer inference services on a cloud basis. And when you use it, it'll be, oh my God, this is really fast. And as I said, one of my companies had that experience. It's really fast, low latency. It's a great product. And those things allowed it to prove that the product worked. And in the last three months, they've signed a deal with OpenAI and a deal with AWS. Sorry, I should be precise. And the OpenAI deal is for the usual $20 billion of commitments. Who the hell knows what that means? But the point is they've gone from niche to mainstream, and they've clawed their way into the mix. So I just give them huge credit because that's a long journey. It's a hard journey. And a year ago, it was easy to sneer and say, yeah, you got a bunch of investor contracts in the Middle East. It's all bullshit. Now you've got the inference business, you've got the service business, you've got the incipient contracts with two of the largest players in AI. It's a credible play. So I think it gets done and it gets done well, and it deserves to get done well. And this is just great. It is just great that venture does this kind of thing, a 10-year journey to finance a new chip for a new use case that's complex technically, complex business, and they pull it off. I hope they make a ton of money.

SPEAKER_02

[SPEAKER_01] I agree. I really like Andrew Feldman too, the CEO. He's a really good dude. So I like him a lot. Where does this go out at? Grok sold for $20 billion. Does the benchmarking of Grok enable this to be a $25 billion IPO?

SPEAKER_02

Grok sold for $25 billion. When things are valued on a PE or an earnings basis, you can have an opinion, a meaningful opinion on where they should trade. In this case, it's going to be so much narrative based, it could go well above that. Again, we talked about this a while ago. If the leading player is worth $5 trillion, right? And then the next two leading players after that are kind of in, well, you've got AMD and then you've got in-house silicon from Google and Amazon. This is the only other standalone play you can make, right?

SPEAKER_00

I mean, do the math here. 1% of Nvidia is $50 billion, right? If you just think of it as a call option on some percentage of a $5 billion market, you can see a very big outcome here, right? No, you can squint the other way and go, oh my God, they're never going to. It's a high beta rate. Again, it's back to what we said. In these kinds of huge markets, you're way out there in the risk continuum, but when risk appetite is on and risk appetite is on today, high risk, high return stories go at a premium. And this is a high risk, high return story with a big market. So in today's market, in today's environment, that could price extremely well.

SPEAKER_00

It'll create an interesting case story with Grok, who has the better outcome risk and time adjusted, right? Both took huge risks to start their companies. Both started ahead of the curve, right? Cerebris, even more, right? Would you rather take $20 billion in whatever combination of cash and stock with weird taxes you got from Nvidia or ride the up and down and emotional roller coaster of running a public company for a decade and trying to get liquidity and seed of Morgan Stanley will give you a loan against your stock. We're all on different journeys. I don't know.

SPEAKER_02

[SPEAKER_01] I can tell you, I'd rather sell to PE like sales lofted for $2 billion and peace out. [SPEAKER_01] Well, that's a different journey altogether, right? [SPEAKER_01] That sounds better. You guys, you're doing the heights. I mean, yeah, look, Equally say, you know, I think they're pretty glad they didn't sell Google to Yahoo for, you know, billion dollars or whatever it was. Look, when it works, you're glad you ran.

SPEAKER_00

But what about Figma Adobe that didn't happen? That one I'd be pulling. If Dylan's better than I'm me, but I'd be like, farts. Farts, farts, farts. Maybe.

SPEAKER_01

[SPEAKER_00] I don't mean to be political, but man, that was a rough stretch there. [SPEAKER_02] Yeah, but maybe they like what they're doing. I mean, maybe, you know, lots of folks do. [SPEAKER_00] Maybe they just couldn't. You do, but it's just, it's tough when the teams RSUs are not worth what they were and the options are struggling and people are leaving to go to Anthropic. It's just, it's not a fun experience. No matter how great, it's just not fun to run those companies, right?

SPEAKER_02

It's not fun. But my point is exactly right. When the momentum turns against you, you wish you'd sold. And I mean, you know, Jensen's glad he didn't sell Nvidia anytime along the way. When it works, you're glad you didn't sell. And when it doesn't work, you wish you had. It's as simple as that. It's a derivative of Elad Gil's point. [SPEAKER_00] Which one are you? Right? Yeah. Be honest once a year at the board meeting. Be honest. Who are we? Are we Nvidia?

SPEAKER_02

those companies, right? It's not fun. But my point is exactly right. When the momentum turns against you, you wish you'd sold. And when Jensen's glad he didn't sell Nvidia anytime along the way. When it works, you're glad you didn't sell. Yeah. And when it doesn't work, you wish you had. It's as simple as that. It's a derivative of Elad Gil's point.

SPEAKER_02

[SPEAKER_00] Which one are you? Right? Yeah. Be honest once a year at the board meeting. Be honest. Who are we? Are we Nvidia? Or are we, which one are we? And then it's easy on Twitter to think that you're Jensen. Yeah. Right. We used to think we were Zuck, right? I'm the CEO, B, right? Now we all pull on our leather jackets and think we're Jensen, right? If you're going to be Jensen, I hate to tell you, we just got to be willing to eat a podcaster for breakfast once a week. [SPEAKER_01] Okay. So I was going to bring this up, but what did you guys say? I'm sure we both watched. Yeah. What did you think?

SPEAKER_02

Where I thought he was excellent is his comments on we don't have this preferential status. We're here to sell chips. If you wish it was a PO, we'll sell you chips. His relationship with TSMC, all that stuff I think was super grounded. And you just go, wow, that's a world-class executive who shipped gazillions of chips, right? What you're really talking about is the argument about China with Dorsey and he and Dorsey got into it. And it was a little bit—

SPEAKER_02

[SPEAKER_01] Yes. And when he was saying bluntly, when you look at two of the largest frontier model providers, neither of them trained on your chips. And he bluntly provided a pretty cagey response at best and admitted we should have invested in them.

SPEAKER_02

Well, I think there's a lot of things lumped into that, right? I don't think it's clear that OpenAI does train. And I think OpenAI definitely trains in part on Nvidia chips and Tropic, I'm not as clear on what they train on. I've had mixed comments on that, but whatever. And I don't think he said, I think his comment on not investing in Tropic was he couldn't do it at the time because he didn't have the capital. In 22, 23, he weren't in the business of writing $30 billion venture checks. I thought he was very rational there. He said, made a mistake, didn't have the capital at the time, wish I had, right? So I didn't think that was bad. I think the problem with the China discussion is there were two priors that neither party agreed. Neither party agreed. And when you have a discussion and they're talking past each other, and you don't agree on the ground truth, it's just a waste of time. And two things are: one is how big an enemy do you think China is? Is it just a competitive trading partner, competitor in the way that Microsoft and Apple compete? All the way from there to is it the new Russia and we got to not give them a single thing because we're scared they're going to nuke us. And then the other thing that I think is Dorsey clearly thinks that frontier models are as dangerous as uranium and Jensen clearly thinks that's bullshit. And if you don't agree on those two things, if the question is should we make it easy for China to build frontier models by selling them Nvidia chips, which was the question—if you don't agree on what you think about China and you don't agree on what you think about frontier models, you simply don't have a useful discussion because neither of the nouns in the sentence have been defined. So once you internalize that, you're like, oh, that's two people talking past each other, and one of which just doesn't give. And it turns out, yeah. And that's why that part wasn't that useful, but it was funny. It was a reminder of what semiconductor executives were like. When I started investing in business with semiconductors, just hardheaded guys who just say no and enjoy it. Right. It was fun. It was a little bit of a culture clash of generations and it was fun, but I thought he did well.

SPEAKER_02

[SPEAKER_01] You can't argue with the guy. For the first time ever, it wasn't an easy interview.

SPEAKER_02

No, it wasn't easy. And give Dorsey credit. He tried to punch, right. And it's really hard to punch someone who A, talks his book and B, has 30 years of knowledge when you were a 25-year-old podcaster. And I think one of the things I like about where you come from, the takes, how you approach it—we're doing this in a spirit of inquiry because to some extent we're all trying to figure out what we think and talking things through often helps. So I often find I revise my priors based on the discussion. But I'm not here as a CEO of a $5 trillion company. He's here to talk his book. And let's be clear, he wants to sell—30% of the entire market is in China. He wants to sell those guys Nvidia chips. And there's simply no argument on God's green earth that's going to convince him that he shouldn't get that $40 billion of revenue from shipping chips to China. So look, he spent time with the president lobbying to be allowed to sell Nvidia chips. If he's had to do whatever it takes—and I shudder to think in terms of sucking up—to be allowed to sell chips to China, he's not going to roll over and play dead because some 25-year-old said maybe you shouldn't. He'd do the same to you, Harry. Be the straight hand off, right in the face. It's like, thank you, but no, big guy. And did I think he won the argument? No. But he knows how to fold his corner. So it was fun. I worked out and listened to it. I was like, whoa. It literally was a meeting of non-minds. It was just fun.

SPEAKER_02

[SPEAKER_01] Boys, is there any other topics that we haven't discussed that we should discuss? We ran out of time to cover Snap, but I just don't care. [SPEAKER_01] And for anyone listening, Snap cut 1,000 jobs, 16% of the workforce, and the stock popped 11%. Wow. I mean, yeah. They just need to figure out a converging business model. And they haven't. Amazing company at the start, and now it's just drifting around and needs to figure it out. No. But he knows how to fold his corner. So, it was fun. I worked out and listened to it. I was whoa. It literally was a meeting of non-minds. It was just fun.

SPEAKER_02

[SPEAKER_01] Boys, is there any other topics that we haven't discussed that we should discuss? We ran out of time to cover Snap, but I just don't care. [SPEAKER_01] And for anyone listening, Snap cut 1,000 jobs, 16% of the workforce, and the stock popped 11%. Wow.

SPEAKER_02

Yeah. They just need to figure out a converging business model. And they haven't. Amazing company at the start, and now it's just drifting around and needs to figure it out. Master of stock-based compensation. Yeah. Look, it's going to be an advert for the dangers to some extent of dual-class votes. I used to agonize about this, and now I don't. Now my perspective would be, look, you had a chance to buy two social media companies with dual-class votes. If you bought Snap, and if you bought Facebook, you're 50% down on Snap, and you're 10x up on Facebook from the IPO, shut up, take the check, move on. Turns out, untrammeled power has good outcomes and bad outcomes. There you go.

SPEAKER_02

[SPEAKER_01] Get married a supermodel though. It's not all downside. That's a positive note to end on, Rory. I hope everyone has happy marriages. There.

SPEAKER_02

[SPEAKER_00] Rory, okay. I have one last one if we're out of time, but I want to get Harry's thoughts. There you go. Jason, go for it. Elon had retweeted something that went around many times. 91% of all AI unicorns are now in the Bay Area. Thoughts from London on this? Thoughts from London? Oh, nice one. Yeah. And I want to know in particular how many are in Marleybone, but 91% of the Bay Area. Project Europe. How are you thinking about that from London, this increasing concentration of AI unicorns in the Bay Area? This is from this week.

SPEAKER_00

[SPEAKER_01] I think some of the best AI minds or the majority of the best AI minds want to be in Silicon Valley. Quite rightly, you're seeing the re-centralizing of power back to Silicon Valley. More so than I think any of us ever expected post-COVID. That said, I think you can still build unbelievably great AI companies as we have done in London with Demis and DeepMind and with Matty at 11 Labs. And I think it's easier to be in Europe because with your 91%, you also have 91% of the capital and every other person on the street being a venture capitalist. And so I think you see this gluttony of cash combined with the gluttony of companies, which makes detection harder and makes winning harder. And so I agree with that. Sure, the majority of great AI companies are there, but I also think it's harder. And I think for me being one of the top three brands in Europe, I would rather be here with much less supply side than there fighting against Benchmark and Founders Fund and Andreessen and everyone in between.

SPEAKER_00

[SPEAKER_02] I have two comments on that. One, yes, it's the old Caesar quote. I'd rather be first in a village than second in Rome. That's really what you're saying. Though, of course, I would add he was a killer psychopath and really not a good man. But the more important point is the evil that would do is that we can let it, we can go back to Shakespeare, but we won't. I think the real point, what you're saying, it's fair, it's interesting. It's 91% in the Bay Area. What this says is companies are in the Bay Area to the point where the marginal advantage of being in the Bay Area is less than the marginal advantage of being in Europe and having access to a talent pool. What it says is the equilibrium point for indifference is now roughly at 90%, which is another way of saying, to a rounding error, Bay Area wins, but there's still some wins in Europe.

SPEAKER_00

[SPEAKER_01] A hundred percent. And I think actually trying to be a startup today, recruiting and maintaining that team in the Bay is next to impossible unless you have an egregious amount of money. No doubt, right? And I wasn't, I was just curious as the last point, what you thought of this from the week, right? I don't have an opinion on this. Certainly you can't argue with the talent question, right? But it's just, there's a lot of complexity here as everything concentrates, right? As everything's concentrating in everything.

SPEAKER_00

[SPEAKER_01] And also Jason, just like the competitive funding landscape. And I do not mean this arrogantly, but there is one tenth of the competitive elements in Europe that there is. I have so much respect for Silicon Valley early stage investors. It's competitive. It is.

SPEAKER_00

[SPEAKER_02] And again, back to, the equilibrium will be reestablished when the costs of being here are equivalent to the advantages. And you know, what happened is for a couple of years, and it gets back to a topic, is that in that period when they just first cracked the code at OpenAI of what could be done, the closer you were to knowing what was happening, the bigger the advantage you had, right? And it was intrinsically a local thing. So, you'll look back and go, yes, 10 years after 22, knowledge will be widely dispersed. But there was a period of two or three years where the knowledge was available tribally in hacker houses in San Francisco and wasn't available widely across the West of the world. And that's why you had this Cambrian explosion here. It's a point in time, just like the start of the internet. But yes, great companies in London.

SPEAKER_00

[SPEAKER_01] And just to be clear, I'm not a psychopathic serial killer? Was that? [SPEAKER_02] Yeah, I know you're not. [SPEAKER_01] Slightly mediocre moderator, but not a killer. [SPEAKER_02] Yeah. I mean, remember, Caesar killed a million goals. Let's just keep score, gratuitously. Not quite as good as Pol Pot, but you know, up there. Up there in the baddie category. [SPEAKER_02] Awesome, boys. Well done. That's my prediction. And I may be wrong and I may be wrong, but there's, there's seven folks that can

SPEAKER_02

do it, do a hundred billion dollar startup. I think this will stand as the high water mark of private M&A for a decade. There, I'll take the other side. This one, this clip is, it's going to embarrass you, Rory. That's okay. I used to be embarrassable, but now, but. Or me, or me. Because I just think it's anomalous in the sense of, yeah, it's a combination of the absolute amount and the revenue multiple. The number of, you know, I just think the number of people who can write, the number of people who can, let's do it here. The number of people who can write a check for less

SPEAKER_02

than 10% of their market cap where that's greater than 60 billion is by definition people above 600 billion. There's only eight or 10 companies above a trillion, right? So it's a very finite group of people who can do those kinds of deals. Everyone but Elon trades at under 10 times revenues, plus or minus. Yeah, it's pretty much minus. So they're not going to do a 60 times. So if you're going to be worked, I might actually contradict myself in a second. Watch this. If you're going to, for the, with the exception of Elon, because he can overpay because he's trading at a hundred times,

SPEAKER_02

or at least plans to be trading at a hundred times. I want to spend a little time on that in a second. Everyone else trades sub 10. So you're not going to buy anything greater than 10x, which means to pay a hundred billion, you have to buy something worth 10 billion, right? So I mean rounding down. As I did that, I realized, hmm. And at that point, a privately held company has to be done. Let's say, let's round down again, five to 10 billion a year to be worth 50 to 100 billion a year to meet the Jason criteria of bigger than this. If JP Morgan wanted to buy Stripe, you actually would be right. So I can imagine a few circumstances. That could happen tomorrow.

SPEAKER_02

Yeah. And then you also have the, what do you call it, the DOJ stuff, which is obviously suspended for a while, but there you go. So you're not impossibly wrong, Jason, but I just think, I think this is such a special circumstance. It's a combination of a couple things. One is, it's a company trading at an amazing price, it's feeling the imperative to execute a transaction in an amazing space where there's a company willing to transact like that, right? Because the other, the other thing I was thinking about is one of the, the big ahas on this is Elon is so risk on. I mean, and, you know, and it's what point,

SPEAKER_02

I like, how do you put this? He is, I would use the unique expression in poker when you're on tilt, when you're just, you know, maybe you've, it's not going well and your response is to double down and double down, right? If you look at the whole Twitter X transaction, unlike, you know, SpaceX, which has been a worker genius from day one, you know, it's been, I bought Twitter, I didn't want to do it, shit, now I have to do it, that's 44 billion. Well, if I'm going to do that, then I'm going to want to do the AI thing and I'm going to spend 20 billion on CapEx there, got no revenue,

SPEAKER_02

let's put them together. Ooh, that's not working. Let's flip them into SpaceX for 250 billion. It feels notional, but whatever. That's not great. So let's buy Cursor for another 60 billion. This is a guy, he's basically going to keep doubling down until he wins an AI. It's astonishing. It's terrifying if you're a stakeholder, but that's the game he's playing and it's his company.

SPEAKER_00

Let me just tell you why you're, why you're wrong about the hundred billion dollar deal, Rory, just to just process wise. Okay. And I think your math suggests I might be like, I hadn't even thought about JP Morgan stripe that literally could happen tomorrow. Like we could open up our, our, our, our accounts. It would make some sense. Right. Um, so that's what I, even I missed, but here's what's happens in time when, when times are good, but of stress, which is what's happening with all the leaders. Okay. Microsoft, Google. Yeah. Yeah. I agree. I've been the one thing I have been that

SPEAKER_00

I don't think you guys have been, I know Harry, I've been a senior VP on the other side at a big tech company during moments of change. And what we talked about all the time is who the hell can we buy to get ahead. And so I will tell you in all of these boardrooms, especially Zuck, you can already imagine in your head, they are saying, I'm willing to pay up to, I can, I want to buy something that is going to actually F and move the needle for us. We'll do some tuck ins. You guys can all have a chip. You can go buy a little thing for 50 million, 500 million, maybe even a billion, like leave me

SPEAKER_00

alone. The scale, you know, uh, what's his name from scale can go buy something from a billion. I don't care, but I want something that will move the needle in AI now bring me your candidates and they will be debated. But if it is above the line, those deals will get done for 5% or less of your market cap. I guarantee you the discussion is that because I was there. It happens every week.

SPEAKER_02

Yeah. First of all, even though I disagree on the number, I 100% agree on the description. That is exactly what happens. You, you wake up as the leader of this big company, you've got your $2 trillion market cap to defend. There's a technical thing that could make you obsolete. If you can spend 5% and de-risk that you do it. So I totally agree. And a large part of why venture makes money is every once in a while you find yourself with companies that are kind of in the to-do list for corporate America and they just write huge checks. So I do agree with you. I was pushing back on the hundred, but do I think it's kind of like the Overton window, a 10 or $20 billion

SPEAKER_02

acquisition from Zuck tomorrow morning, people wouldn't even blink. They'd be like, yeah, of course he's going to do that. So you, I mean, so I do agree. I was just being, as you know, me annoyingly precise about a hundred billion, but I agree with you. Every other CEO is looking at going, what do we do now in coding? What do we do now? Yeah. I mean,

SPEAKER_00

And the other crazy thing that happens, I know it sounds crazy, but it is true. On the other side, on the acquirer side, big company, right? Once certain numbers are breached, it doesn't mean you also get 60 billion. It does not like you can't walk into the meeting and say, I'm better than cursor, but it does psychologically change the breakpoint for what it, because when people go into deal mode in big companies, as long as they can afford it, they want, and if they, if they identified the perfect target, like, remember it's minor, but remember when, when Benioff was willing to give his next firstborn to buy LinkedIn,

SPEAKER_00

he tried everything they could, every share, every piece of debt. He couldn't get 30 billion to buy LinkedIn. That's a hundred billion dollar deal today. You're exactly right. Benioff would, if Benioff could get a hundred billion to buy something, to change the face of sales source, the LinkedIn of AI, he would do it tonight. I guarantee you, because he already tried to do it with LinkedIn, right? He will do a hundred billion if he had it. All these guys have a hundred billion. So it literally, you go in a meeting and I saw it at Adobe as cloud took off, like the people's views of price changed in my tenure as a VP. As soon as you see a cursor deal, every, we don't give a

SPEAKER_00

shit. It's, it's, we're not the founders. It's not our money. It's not even our dilution. We don't care. What does it take to buy the next cursor? 68 million done. Like boys on the Corp dev team, Stebbins and Lemkin on the Corp dev team, close the deal.

SPEAKER_02

When you're fighting for relevance and defending an existing business, to some extent you do what you have to do. I don't think that I, as you say, and even if I don't think they get to a hundred, the fact that someone's done something at 60 means something at 10 or 15 will seem like, yeah, that seems like a good idea. Let's get it done. Right. So yeah, I think it's expanded the Overton window of doable in M&A. Your last thing to say is this, great outcome for the VCs. Great outcome for, I mean, OpenAI, I'm just, as a reminder, everyone, Sam Bankman-Fried did the seed, poor Sam, and they liquidate did his

SPEAKER_02

job and sold it for a 1X, that it could have been a couple of hundred X. OpenAI did the A, I think. Actually, OpenAI did another seed. Andresen and Thrive did the A, then Thrive led the B and doubled down the whole way through. I don't know what the returns are on the A, but on the rest of it, I think they put in a billion and got 800 million and got roughly a 4X. You know, great outcome for everyone. It's a great venture story. And, you know, all credit to the founders. I mean, this is pretty good three year run. The two best deals at Thrive that are amazing are this one and OpenAI. And, you know, the aggregate return on OpenAI, I think they're at a 4X,

SPEAKER_02

maybe 5.2X, I can't remember which. And on this, excluding the A, I saw the announcement, but it excludes the A, which is bullshit because the A is going to be at 50X. On the rest of the money, it's a 4X. What it says is there are small numbers of growth funds that can deploy masses of capital, hundreds of millions of dollars, and get a high-end, you know, kind of venture return of a 4X, which is a good return, which is a, if you're doing an A or a B, that would be, yeah, that's a high-end of good outcome, not yet great. You want a 10X plus on your best stuff. But the fact that you can do it on a billion dollars is what makes this special. It's not

SPEAKER_02

that you're going to outperform some little seed like NIO. If you only, again, it's the classic thing, Harry. It's actually why even though you think it's simple to one-dimensionally measure venture return, it's actually not. Because if you have only one dollar to invest, right, and you can give it to NIO and get a 16X, or you can give it to Thrive Growth and get a 5X, you give it to NIO, right? And that's why, from that perspective, you just rank on pure return. But if you're sitting there with $2 billion to invest, it doesn't matter what you do with NIO, and Thrive has proven they can

SPEAKER_02

take $2 billion and turn it into $6 billion, and you're like, give me that net to the limit, and give me that product all day, every day, right? From a personal net worth perspective, if you run the math as being the lead GP on Thrive, it turns out to be a remarkably good business.

SPEAKER_00

Well, probably fine. Maybe thinking through Rory's point, and again, you guys are better experts than me. We'll probably find that these products aren't even the same products even more. No, absolutely. Okay. Because they were never the same product. But if I can put 5 million, 8, 10 million into an emerging GP, okay, and they don't expand into a multi-billion dollar fund, it is irrelevant to a large endowment, unless you've got a little chunk of guys that are just doing emerging managers, and they'll put in the work, or they'll put in the time, or you're a smaller LP, and as the numbers get bigger, it just doesn't matter making 10x on your NIO if it's irrelevant to

SPEAKER_00

your portfolio, right? It's irrelevant.

SPEAKER_02

Different products for different folks. But I just got to call it to the last comment on making Thrive is, if, quote, all they'd done was the late-state stuff and gotten that 4 or 5x blended, that would be wildly impressive. But the fact that on top of that, they were in the A alongside Andreessen, is almost proof. The typical rap on only doing late is you'd only doing late, you can't get the early round. It's very impressive to have shown up for the A and doing, then stuffing the money in like a foie gras from the B and beyond. I mean, that's really, that's the best way to play that growth stage. If you have enough ground game to get

SPEAKER_02

in even under the tent for the A, and then you can stuff a billion dollars in from there on in, that's the way you get the best of both worlds. You got some action on the table with a 40x or a 50x, is my guess. And then you got a lot, you know, on 10 million, yay you, maybe 20 million, yay you, right? And then you got all the action in the world on the table of 800 million at an aggregate of a 4 or 5x, and that feels great. Don't mind you, you will be sweating that SpaceX lockup. You will know the day and the hour when it expires.

SPEAKER_01

All right, boys, on to the next bit of news. Tim Cook announces he's stepping down from Apple after one of the greatest runs, 350 billion to 4 trillion. John Terminus will take over as new CEO. 24 years in Apple for him. He's been in hardware before. How did we read this news, boys? Is this what we expected in terms of replacement? How do we feel?

SPEAKER_00

Well, look, Rory probably has better thoughts than me. I think there's, on the one hand, he's 65, right? So it's obviously the board has been talking about this for years, right? They found their successor inside. They didn't go through the chaos of Chanteneau resigning from Adobe when they still don't have a CEO, right? They did it all the right way. They did it at the perfect age optically. But the big question, along with Reed Hastings and Chanteneau and others, is like folks turn over every year and I'm sure Rory's going to say that. But are they all leaving because they don't have

SPEAKER_00

an AI strategy? I think they are. I don't think Netflix has one. I don't think Apple has one. I don't think Adobe has a great one, even though they have AI. Like actually, I learned this week, AI and Illustrator is great. Like AI and Adobe Illustrator is a 10. It's like, it's great. But it hasn't changed the trajectory of the company, right? So what would you do if you take an Apple from whatever, you know, 12 exits market cap successfully chaperone the jobs agenda to epic heights and AI is changing the this show gets stale like in less than a week. We got to do like four of these a

SPEAKER_00

week. Like I would I would think about. So I just don't know if this is normal retirement or deep down folks are like, Jesus, I'm not up for this because I think most CEOs I work with are not up for it, is the truth. Most pre AI CEOs are not they're not up. You guys know this too from your portfolio, not all but most are not actually up for for the massive amount of what's more than 996 12, 12, 8. I don't know what it is, but most humans aren't up for it.

SPEAKER_02

I think as a general comment on kind of AI terror, for lack of a better word, and the feeling that you need to be on top of this or get out, I think you're right. I think on the specifics of cook, I think he's been operationally excellent the whole way through. He was operationally excellent taking over the job. He's run an excellency for 15 years. I think he's operationally excellent on exit. And the proof of that is the stock barely budged. I always think the stock is not always right. There's some fun examples of people thinking positive things in the short term and then totally wrong. But the fact is that resigns not unexpectedly in the aggregate, given it's 65,

SPEAKER_02

but unexpected in terms of immediate timing, the stock moves less than 0.5%. Basically, that says organized, well-managed transition. And I think he was smart. I think you get out in the high, recent quarter is great. As you say, you can't argue with it. It's 3 or 4x the revenue, 3 or 4x in 15 years, 3 or 4x the operating income. It's 12x the market cap. And just as a reminder, because they buy back shares, it's 20x the stock price. As a holder of the stock throughout that entire period, God bless you. So just a great run. And handing over internal successor, which as you say, is proof

SPEAKER_02

that you had your shit together and you had a couple of options and they went with this option. One of the other guys have pulled back recently. I think getting out in a high is not to be underestimated at 65. I think it's a home run the whole way through. And so just give credit where credit grew. It's one of the most likely likely. And the most likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely likely 7% down, which is you're quite outside the norm. And in this case, perfectly fine. So,

SPEAKER_02

competent execution the whole way through, delivering to plan. And I think, yeah, second comment, you're right. There is still some pending, do you have an AI strategy? But honestly, Jason, I'm going to commit heresy now. If you look at the three companies you named, Netflix, Apple, Adobe, I would argue that Adobe has to have an AI strategy, it's existential. Apple is somewhere in the middle. Yes, it's pathetic that Siri is not good, but you can continue to build the hardware platform that everyone gets AI on, I think, for a long time to come. I don't think they're going to be replaced by the open AI mobile phone anytime soon. And Netflix, I think it's the

SPEAKER_02

least AI-centric problem out there. I mean, they have interesting challenges, didn't get that big acquisition done. They're a media company, they have media challenges, as Benedict Evans says so well. So, big picture, I don't think, I mean, as I say, it's in the middle in terms of AI terror.

SPEAKER_00

On Netflix, Harry, not that we want to be Yahoo's on Apple and Netflix, let's stick to the code, but Blockbuster, I don't mean to use the old analogy, Blockbuster peaked in 2004 with 994 stores, six years later was bankrupt. I think what's happening when it happened with Netflix, and I'll tie this together to a macro theme that Harry brought up on Twitter and others, I think all that has to happen is for these leaders to be maimed or for there to be stealth churn. I'll give you an example. I've paid for Netflix. I'm embarrassed to say how many years I've paid for Netflix, right? I think since it came on

SPEAKER_00

flash drives or CD-ROMs, I've been paying for infinity. And its price has gone up, but it's not worth my life to churn, right? But I watch so much YouTube, and on YouTube, it's becoming more and more AI-generated content. I've stealth churned off Netflix. I'm still paying. I may pay for another year, but as more and more folks stealth churn off Canva, because they're using AI tools, as we stealth churn, you know, Amelia was looking, now that we've moved to cloud, she hasn't used open AI in four months. So we're paying for open AI because it's a hundred bucks a month, but she's stealth churn. So my caution is, and I think this is why so many

SPEAKER_00

so many leaders at risk is stealth churn is everywhere. If you're like, and not to ramble, but I used to think as a B2B guy, mouths and wows and dows were the dumbest metric. I'd get an investor update with, hooray, our wows are up. And I'd be like, you know, I grew, I know my moon used to cheer that at Slack, but, but that's a sign of a struggling startup. I guess I want, show me the revenue, right? Show me the money. Now I want to see the mouths and wows. I want to see your usage of your illustrator of, of, of Figma make of Netflix of Canva. I want to see those going up faster than revenue. This I think is the ultimate B2B test or anything is your mouths, wows and dows

SPEAKER_00

growing faster than revenue. If so, things are probably working for you in the AI age. If they're, if they're declining, just like net new customer count, right? If it's declining, you're hiding. And I think, uh, Netflix just bought Ben Affleck startup for like 300 million bucks, right? Or something like that, Harry. Like they're not, they're well aware that folks are watching AI generated Star Wars content on YouTube and not watching Netflix. So, uh, I don't know. I would step down too. I just might. I just might.

SPEAKER_01

Speaker 1 Speaking of Amelia hasn't used open AI in four months. Speaker 1 Yeah. Speaker 1 So deeply entrenched in her workflows with, with Claude. Anthropic turns down $800 billion funding offers. I just came back from an LP literally 10 minutes ago. I said, what's your biggest challenge? They managed the money for some of the largest families in Europe. And they said, all of our families just want one thing, Anthropic. And the challenge we have is they don't want anything else, but they all want Anthropic. And that's the only thing they want. Every dollar wants that's home in Anthropic right now. And it's caused secondary market prices to surge to a trillion

SPEAKER_01

dollars for Anthropic. The implications are, or the suggestions are there is a clear market belief that they have won the enterprise race and they've surpassed open AI now with 850 with their latest. How do we read that? How do we reflect on that?

SPEAKER_00

Speaker 1 Well, look, just two others. I mean, the fun thing in all of this, and I put fun in air quotes is, um, it's so fluid. So Sam just said codex usage is up 50% in one month. Okay. As we're taping, this open AI is going to launch autonomous agents, open claw and steroids 24 seven. Okay. Um, three, I've run my, I've done an experiment over the last week. I've run my own workflows through both APIs. I don't care. Right? So our ability to predict what we thought two weeks ago when there was turmoil, executive turmoil, everyone was using the Anthropic API. It's just better. Claude, when we started the show, I was

SPEAKER_00

the only guy that used Claude. You guys probably thought Claude was ridiculous. Like, why is this weird guy? It's less than 1% of the market. Now everyone's using Claude, right? I don't know what 90 days is going to bring, but, um, the fact, but I, you know, everything could change in our developing environments in a week and open AI could win an agents and autonomous agents. We're just starting like agents are just getting autonomous. All these goofballs on X with their, with their Mac minis and Mac macros and 11 of them stacked in their closet. Look, what have they shipped?

SPEAKER_00

Nothing. Okay. It's performative art. We're, but, but autonomous agents are what we all are going to live with. We built some and they could win. I mean, literally they're shipping it today. It could be the best thing in autonomous agents. Claude has a few now too. I mean, Anthropic, but that war's just started. It's just started. So I can't honestly predict 30 days out. So does this, does a trillion feel like Anthropic? Did that feel like a good deal on our last show? Yes. Am I sure it will three shows from now? I don't know. Maybe they'll, maybe they'll invert. And if Jason is correct, look,

SPEAKER_02

I believe both of you are correct. You're correct in the sense of, you know, AI is the biggest story out there and Anthropic has, you know, in the last six, nine months being credited as the new winner in that space. So by definition, you're going to have huge form all for that stock. So you're, you're accurately representing the facts, right? You know, whether or not that will prove to have a, overall holding period return from here that outpaces the S&P 500 adjusted for the risk is something entirely different, right? You know, I think, look, it's hard to do in venture. I mean, I think the trajectory from here is actually pretty straightforward, which is,

SPEAKER_02

you know, when you've got this level of white heat, you go public, right? Because up until now, as I think I said on a tweet recently, there's just been no way if we've had an entire life cycle of a technology explosion with very little access to it in the public market. And it's hard to imagine going through the entire cycle of a boom and bust without letting the retail investors lose their money as part of the show, right? So that's clearly the part that's coming up. So my assumption is Anthropic will go public and it will be a fabulously successful IPO, which is different than saying at a trillion dollars, you'll feel really great about holding

SPEAKER_02

it six months later. It can be an amazing company. It cannot be worth a trillion dollars, and it can trade at a trillion dollars for a period of time. All those things can be true. What price does it go out at, Rory, if you were to make a guess? Your job as an investor is to tell you what something's going to be worth four years from now, right? Your job as a banker is to tell you what it's worth today. And those are different skills. One is about projecting the future. The other is about valuing the now, right? I'm not going to try and project the future on this now. My guess is I come with a lower number, but ULP is right

SPEAKER_02

about the present. Today, if it went public today, right? You would be fighting them off at a stick at a trillion dollars. You would have a fabulously successful IPO. And because those guys are wildly smart, really nice profile of the CFO recently, and because the other thing that's happened is the big counterattack on behalf of OpenAI has been compute is the ball game. These guys don't have enough compute, right? My guess is the Anthropic guys are saying, hey, we've got the better software. How do we get as much compute as possible? It takes money. This is America. Jensen will take a role to provide a given cash and therefore go public. So my assumption is

SPEAKER_02

these guys are going to go public, as we said, October Q4 time period if they can, as soon as it's humanly possible, which is, of course, why they're not taking the $800 billion valuation. I mean, why even pause for breath? I mean, especially if it gives any kind of rights, which actually, at this point, I doubt it does. They are, I assume, heads down, preparing to go public because as long as this mood lasts, you will probably raise money in the public markets for that stock at a price you mightn't see three years from now with three years of execution. They should go.

SPEAKER_00

After the IPO, if what are they going to do? Are they going to do massive secondaries? Are they going to do pipes? Are they going to do weird debt hybrid equity preferred deals? Because this isn't the last chance they're going to need epic amounts of capital, right? And so maybe it's minor, but we're talking about an IPO like it's an event, which of course it is. But the ultimate, I think the meta question is, where is it easier to raise ongoing capital, like perpetual capital? Is it really easier public than private for these guys? Not traditionally, the answer is, of course, but for these guys, is it?

SPEAKER_02

Yes, I think I'm going to say again, being opinionated on this one. Yes, I think it will be, even though so far it hasn't been. I mean, so far, the most stunning fact so far is the biggest IPO in history is talking about raising $75 billion and the biggest private round in history raised $122 billion. What that says is the biggest private round is bigger than the biggest IPO. That is bizarre. And we've kind of grown accustomed to it to the point where we don't even focus on that fact, but it is, of course, absurd, right? Given that logic, you would say, oh, stay private, you can raise more. But I absolutely don't buy that, as you know, I said. I mean, yes,

SPEAKER_02

and Tropic could get one more round done. But the truth is the big liquid markets are public. And Jason, to your point, I think they go public. You raise a big slug of equity out of the gate. You raise more. You obviously expand the capital base over time. And then you have access to a whole bunch of other things. You have access to convertible preferreds. You probably can do more compelling debt structures. You become a viable player for more people to lend against. So if your business model is, as they think, perhaps insanely, but whatever, I need to raise $200 billion, $300 billion. And at some point, you have to go public. Why don't you go public

SPEAKER_02

when the FOMO is at its peak, when your relative kind of desirability is at a peak? It would be hard for me to imagine a better moment to go public if you're on Tropic than like this minute.

SPEAKER_00

But I'll give you this counter argument that I might be wrong on, that admittedly I might be wrong on, which is Figma and the need for capital. So if Anthropic does not need any more capital, go public tomorrow to your point, right? Or Q4 when you're at it, go public. Go public at a trillion. A trade up like Figma did to 2 trillion, right? And ride it out. But Figma is down 87% from its trough. Imagine for some reason something like this happens to Anthropic. It still grows. I mean, what's Figma is still growing at top 5% rates, right? But the market has fallen out of love with Figma.

SPEAKER_00

What happens if Anthropic IPO is at the perfect time for a company that does not need capital, but the markets fall out of love with it? They get worried like the construction costs go up. Those space centers we're arguing over don't work as well. Rory was right about the space centers and

SPEAKER_02

it falls 87% like just what happens to capital raising? Yeah. Okay. Respectfully, no. Right. Because if everything that you articulated happens, right? Then the person who's public wins and the people who are still private are existentially screwed. The Figma example is driven... The Figma soundbite, which I hate, of the 83% decline is more accurately represented as follows. Figma priced at 35 with sensible people. Idiots drove it up to naught of 100 bucks a share. Then the same idiot sold it down. And so that's one factor, right? But then second factor, at the same time, Figma was at the tail

SPEAKER_02

end of a 20-year cloud software boom where the zeitgeist switched to the AI boom and the world fell out of love. So that took it from 35 down to where it is now, which is 20, right? That explains Figma. I don't imagine... Look, if there is a world where the AI zeitgeist goes out in the... I think we're at the start, I mean, at the start, but where the AI zeitgeist, we're not going to hit a stage in the next year or two where people are saying, oh my God, the story is dead. We've moved on to the next thing. You're closer to the start than the finish of the zeitgeist. So I don't think you have... I don't think

SPEAKER_02

even... I think there could be a hit to the stock, and I'll come back to that in a second, but I don't think it's the same as Figma where literally it's like... I mean, what's happening at Figma is everyone's saying, your operational results are amazing, but we're in love with someone else, so we're just not even going to talk to you, right? I think if Antropic were to go out and if the stock were to go down, it would be because, oh my God, it's overvalued and this revolution is going to take 20 years, not five, so maybe you're overpriced. And in that case, you'll sit there,

SPEAKER_02

and I've been in much smaller scale on this, when you go, it's really bad our stock is down. On the other hand, we've got 50 billion in cash and our head to head competitors still losing money in private, we win. So no, there's no argument. There is no argument for overstaying your welcome

SPEAKER_01

in the private markets at this point. Jason, you brought up Figma and you brought them into the conversation. Tying that to what we were talking about, Antropic launches Claude Design. For those that don't know, it's kind of their competitive product to Figma, very bluntly. Obviously, Figma as a result were hit and price was hit significantly, as was Adobe's. Jason, you actually did a like for like and you've tried Claude Design extensively. I'd love to hear your thoughts. What were your reflections? Does it compete with Figma in a very meaningful way? And

SPEAKER_00

how do you leave feeling? Well, look, I leave with a lot of anxiety over Figma and others, but not for the reason the Yahoo's on Twitter said. If you use here, let's be clear what two things about Claude Design, if you haven't used it. One, it is definitely better than the design tools that were in Claude the day before. You've always been able to design a website that looks exactly like every other website built with Claude artifacts and purple gradients and they all look the same. OK, half of Demo Day looks like it was built in Claude artifact at most. OK, you can smell them in 60

SPEAKER_00

seconds, but design was always there. It just wasn't what a lot of designers would call design, but you could always design a website. Now, well, Anthropic did something which is important. We'll see where it goes. They didn't just improve it. They built an application. Claude Design is an application. There are only so many Anthropic and OpenAI applications. There are skills, there are workflows, there are prompts, there are little things you can do. They went to the trouble to build a design application that works. It is whether it's 50 percent better or 200 percent better than the day before.

SPEAKER_00

You can design better websites, better properties in Claude than you could before. Does that mean you can build what you can build in Figma, let alone Illustrator? No. So a lot of the Yahoo's are like, on the other thing that you said on Twitter is, of course, this isn't a threat to perfect design, to taste, because we're all about taste now in AI. Taste, we have no threats because of taste. The combination of taste and moats means we're unassailable. So will your typical, you know, hoping to afford tickets to Coachella designer that takes two weeks to respond to a ticket to

SPEAKER_00

develop an asset, are they going to switch? Maybe not, right? They're not going to switch from these things. But it means normal people can design stuff and get into production much faster. So I think it is an existential threat. It is, it will maim and nibble at Figma more, more, more, because like if the three of us wanted to build an app together and we don't want to wait for a designer to turn it around in 30 days and give us a Figma file or a still, what the hell do I even do with the Figma file? I can stick it and repl it. Now I can just do it myself. So we will bypass designers more and more.

SPEAKER_00

That's the risk. Not that, but I do not believe Anthropic will ever build a direct Figma or Illustrator or Adobe competitor. They don't have to, to maim them. And so yeah, is it a design tool? Maybe it's designed to production like the, like, like some folks call it, who cares if it maims you, it maims you, right? And I think people are missing the point. The meta question is, and then I'll just say one last thing that no, I saw no one talk about it. It is an application. It comes up as a full application. It has sharing, it has users, it has hierarchy, it has, it can save assets. Maybe there are, I do not believe there are many other applications that

SPEAKER_00

Anthropic or OpenAI built. And this, if you look at what the public markets are, they're scared about a lot of things, but we make fun of vibe coding. Oh, we're going to vibe code our Salesforce. But what if they start building A tier applications, not just prompts, not just outputs? Like it is something to reflect on. It is, it is something to reflect on. And I'll just, sorry to ramble, but I'll give you one last story to compare. So the oldest piece of software we use is Marketo. Okay. Terrible email marketing service. About two weeks ago, it started to violate the CanSpam Act.

SPEAKER_00

We started, I started to see things on tweets. Jason, how come I can't unsubscribe to your goddamn Saster newsletter? And they ping me again, again, I don't know. And then you get more of them, right? So that's when a bug's been introduced into the system two weeks ago. We flagged it for Adobe Marketo. They said it was unfixable. CanSpam violation. Okay. This was a week ago. Then they said they would only help us if we got on the phone with their engineering yesterday. We did. They did nothing but blame Salesforce and said they could not commit to a fix. So my point is, this is what old

SPEAKER_00

software looks like. Okay. And as if Anthropic and open air are going to build applications, sell them all as a bucket, like keep the gems. Don't get me wrong, but they're coming for old software. They're coming for old software. This is an application. This is not a prompt. And, but nor is it going to maim Figma next quarter. Like there's just, but those don't, those both can be true. Those both can be true that we won't see it in Figma's numbers next quarter. And that over four, six, eight quarters, it will maim its growth. We won't want to use grandpa's software anymore.

SPEAKER_02

But that's just, honestly, I want to ask a lot of questions because, you know, one, that's what we do here. Two, you've used both products and I just, and I tried to look at some demos today, but I just had a ton of questions. So, yeah. Because I think this, this, it's like the Emerson quote. If you understand one thing, one man, well, you understand every man. If you understand one competitive market, well, you want this, you have a kind of a framework for all these markets. So I just want to drill down on this because it's the same question in every market. So a couple of things. One is how do you think it impacts? I mean, I believe the Canva design engine

SPEAKER_02

is at the heart of what they've done on Claude. How do you think this impacts Claude, Canva versus Figma?

SPEAKER_00

Well, first of all, kudos to Canva. If you use Anthropic, I mean, Claude design, it exports to Canva. So you can import from Figma and you can export to Canva, right? Should you choose to? Yeah. But what's happening is product teams and engineering teams are already like, okay, if we go back 12 months ago, you had design. Okay. Back in the day when I worked at Adobe, there was a design group. We weren't allowed to design anything that was public facing. You'd face a ticket and 60, 90 days later, you'd get a PDF of what your website had to be look like. Okay. Then your product team would have to figure out what to do with that PDF, argue with your engineering team.

SPEAKER_00

And months later, you could, that's the way software used to work until not too long ago. Then as everyone started working in Claude code toward the end of last year, product and engineering teams just started to work in the code together. Product teams first would vibe stuff and replant and lovable on their own, right? Now a bigger and bigger deal is they're committing to the code base. Product teams are able to do this. And so these PRD teams are becoming more cohesive. And then design still way out over there in their own hipster land. As these combine, everyone's going to want to work

SPEAKER_00

directly onto Claudex and Claude code. It's not going to be this designer enforces a collaborative hierarchy on Figma. Because the designers hold the PRD organization hostage. They hold them hostage before AI. It's the worst. Yeah. It's worth just pointing out a high level comment here.

SPEAKER_02

Yeah. When you're saying this, implicitly what you're saying here is it's the Figma digital design websites and apps world, the software part of design, not the part of Canva that is printing out real world pictures, posters, and the physical design where it's decoupled from software.

SPEAKER_00

You're right. Design is such a confusing term, right? It's a bigger threat in the short term to things like Gamma. It already makes slides like Gamma. Yes. Okay. It's not a threat to Canva today. But every single thing you do in Claude designer that you don't do in Canva or Figma or Gamma is a threat to them. Even if it doesn't kill them. Every single thing you do. I think the smartest thing

SPEAKER_01

Jason always says, Rory, which always sticks with me, is just the element of maiming, which is quite hard to deny, which is just like, if it takes 20 to 30% away because you're already there and it's easy,

SPEAKER_02

that's very meaningful. It is meaningful. And again, I'm not diminishing that. I always thought one of Google's interesting strategies for a decade and a half was the strategy with G Suite. It was email and effectively a docs and a spreadsheet, which just gnawed away at the bottom end of the Microsoft Office Suite. And if you fast forward a decade and a half, you get both sides of it though. Basically, they could spend a billion dollars yanking Microsoft's chain on a $40 billion business. It's exactly what Jason says. I'm messing with your head. I'm maiming you and it's not core to me, so I don't have to win here. You just have to lose. On the other hand, 15 years later,

SPEAKER_02

your office is still a plus or minus $40 billion business, lower growth rate. So my point is simply this. There is a range of outcomes from it gnaws away at the low end, takes away a lot of users, but only 5% of the revenue too. It bites 30% of the users, 25% of the revenue, and it really impacts. And those are big differences in terms of value creation. You understand me? So the-

SPEAKER_00

How much- we'll have a maim meter in board meetings. How much have we been maimed this quarter? And it'll go from 1% all the way to 50%. And our agents will decide. We don't let the founders decide because they're always at 1% or they're the overreactive one. 50.

SPEAKER_02

Yeah. There's this cue for the Monty Python, it's only a flesh wound sketch.

SPEAKER_00

It is. It is like that. That's where you're going to go. It's only a flesh wound. I lost my arm and my leg this week to Claude.

SPEAKER_02

But you are right, Jay. I mean, you look, anything. I mean, I remember thinking that any time they come at you, any time- there's two things you said that resonate. One is any time someone can give away something at the margin for free that takes away some of your load, there's just an impact to that. Right? Bundling is a bitch, and they're effectively bundling here. The other thing that I think is more important that you said is, and I hadn't internalized this, but if the design flow is a preamble to a technology build workflow, and the technology build part of that workflow is already automated using code,

SPEAKER_02

cloud code, then you're right. The incentives. Where you get scary as a standalone company is if the other guys have a better together story. And you're right. To the extent that design, product, and engineering can all be in the same tool, there's probably a whole bunch of embedded efficiencies there. And from the perspective of the company building that product, it makes sense to... Because the thing that often happens in these deals is... I mean, OpenAI did a ton of these days. If you look back on the... It's just fun to do it now. The GPT store, the GPT plugins. Every single time, Twitter goes all

SPEAKER_02

excited. This is the end of everything. XYZ company is screwed. Right? And it turns out, you know, two years later, no one even remembers that. The thing's been deprecated. But you're right. In this case, if you think of design as simple, not as a standalone category like Canva, but as the front end window into product and the end, and if you think that software is the mother load and software coding is the mother load of enterprise adoption, then you probably get enough effort behind it to build a credible product. I mean, that's what you're saying. And I mean, put bluntly, at some point,

SPEAKER_02

even when Anthropic has to start allocating resources at the margin, implicitly you're saying there'll be a big enough team here to build, as you say, all the app features to make it a viable competitor.

SPEAKER_00

Yeah. And not only does it export to Canva, you can just you can just you can just it exports to cloud code. They're integrated. Hmm. So if we're moving quickly, we're not going to wait. Listen, I still want my human designer to deliver my amazing homepage of my app, my amazing splash screen, my amazing assets. But we're launching. We're shipping features every day, guys. I don't have time to wait anymore. We're going to do it in design to go straight into cloud code, which we already run our company on. We already ship on. Right. It's fully integrated. And if the humans have time to

SPEAKER_00

redesign it later and make it better, great. No one's saying it's pixel perfect. Don't have time. I don't have time. I don't have time. So we'll see. But they could have been the only reason I think they want it. They won't entirely abandon it is it's it's part of the core. It's part of the cloud code core. And it is something you can already do in in cloud code or even just clod just crappily. So they're improving the closer it is to the core, the higher the chance they'll they'll maintain it. And it's not a dalliance. Right. Not only are the decliners stressed, not only are, you know, Dylan and Mike

SPEAKER_00

Kendall Brick stressed, they're stressed at lovable and replant and versell and gamma too, because you know, the rated competition is like we've never seen before. Right. And they're and they're and I will say one thing I know from all these founders. I mean, they're brutally aware of it. The older CEOs are hiding from it. Oh, our next agent will catch up. Oh, we'll catch up later in the year. Oh, you haven't seen our next. This is what I hear from pre AI founders. We'll catch up in the next release. They say so confidently. Right. As they go off to complete their triathlon, the AI

SPEAKER_00

native CEOs are they're friggin all over this. OK, in 60 seconds, you get a slack back. They actually know what's coming a month later that all their competitors are launching. They're already all over it. They're already. I hate the 40 chess game, but if you don't play 40 chess, if you're at the core of AI, you're going to lose. So they're all playing this game. But it's it just gets harder every week.

SPEAKER_01

Excel adds four billion leaders fund to follow into hot AI growth rounds. Sequoia four days ago raises seven billion dollar growth growth fund. Is this just further compounding what we said, which is that is the game today and the leaders see it? It's definitely the game today. It's

SPEAKER_02

definitely the leaders see it. Obviously, the question is, is it correct? But yes, I mean, totally. Yes. As long as it gets correct. I think it's I mean, directionally, yes. People are saying private longer. Outcomes are bigger. So capitalism is doing what capitalism should do. It's raising money to put into these companies. Right. Do I mean, do I think the return? I mean, the thing about growth is this. When growth is sexy and attractive from a fundraising perspective, it tends to be hard to make money at. And when growth, you know, whenever it has the way growth makes money is either overall valuations are

SPEAKER_02

down like 2022 or there's some insight that the growth investor has that the wider market hasn't figured out yet. Like chat GPT really matters and you should buy open AI. Right. It's a lot. So both of those conditions were two and 22 and 23, which is why those funds are going to be awesome. Right. So if you have a situation where capital is plentiful for those rounds and everyone understands AI is amazing, then by definition, you've eroded the two things that gave you excess returns. I'm not saying you still won't make great returns. It won't be as clear or as compelling as it was when

SPEAKER_00

it was unpopular. The other thing is there's room for the capital. And what I mean is, if you look back at 20 VC fund one, $10 million fund, right, I'm speaking for history for Harry. Back then, the strategy was to get into hot seed or a rounds where he could write a 50K check, 100K check. There was always room. There was always room. And that to some extent, it's still today. It's just those hotter checks are at much higher valuations. Fast forward to today. If you're a relationship builder, if you drop by and meet with Dario, if you schmooze with Sam, there's room in the round like you get cut out.

SPEAKER_00

Don't get me wrong. People are getting cut out of these rounds. But if you're Sequoia or Excel and you're a good schmoozer and a people person and you show up to poker night and you do all the right things, most of these rounds, you're going to get an allocation. You may be the fourth name on the press release, but you're going to get an allocation. And so, you know, in a way, the funds don't even, sizes don't even sound that large. If you get 20 or 30 checks, they're not even that big.

SPEAKER_02

And that's totally fair for five or six. You're exactly right, Jason, is that there was room. When you're raising $122 billion, right, it turns out there's room for everybody. Even when you're raising a miserly $30 billion in the last Antropic round, you're right. There's room for everybody.

SPEAKER_00

Well, people get cut out there to start. They're desperate to get into Antropic. But if you have the relationship, you're going to you and you're really and you really build it over a period of time when they look at the spreadsheet for the round, they're going to put you above the fold because we like Rory. He's great on the 20 pot. He came by the office. He loves us. We're going to fine. We'll give 20 million to Rory. It's no. Do you disagree, Harry?

SPEAKER_02

No, he doesn't. Because his first sentence, his comment was, if you're going back to Harry's LP, who's Montsatropic and nothing else, I mean, what I like about Sequoia, they know how to make money, right? They're like, let me get this straight. I have a good relationship with these mega companies. I'm a name that they'll want even at this stage. And I got a bunch of LPs saying, the only thing I want is this. And I'm in the middle. Hmm. Let me think about this. I should take their money and give it to these guys and charge my percentage and call it a day. As long as that works, the marquee names who can do that are going to do it.

SPEAKER_01

Right. Some of the package pricing on these SPVs for Anthropoc has just been the most egregious face ripping I've ever seen. I mean, it's like, it's just, oh, I mean, like 8% up front. I mean, like, crazy. One that I thought was fascinating was Rippling Crossing a billion, growing 78% year on year.

SPEAKER_01

Is this the new bar for a great B2B IPO?

SPEAKER_02

Well, first comment, is this the new bar? Well, it's not going public right now. But I think, let's step back even one level beyond the IPO. I think what this sentence is true, and you never know, but I believe it to be true, exposes the whole SaaS is dead meme is bullshit, right? Low growth SaaS is bad, and high growth SaaS is good, right? This is a market where we can talk about the reasons why. If you're doing a billion dollars growing at 78%, then collapse of the entire discussion about, you know, SaaS is going away, SaaS is bad, what's it worth, right? What it really points out is the

SPEAKER_02

real objection to these public companies, these public SaaS companies is not, oh my God, you're SaaS. It's that your market is now top stop, then your growth rate is 10%. If Rippling is growing at that rate, that's amazing. It's compelling and they'll get an excellent IPO.

SPEAKER_00

And they're accelerating. The crazy thing is they're accelerating. So if they were at less than 500 11 months ago, which I do know, right, and they're at a billion growing 70 something percent, do the math with me, Rory, they're accelerating. It's not just 70, which is enough. They're they're accelerating, right? And you can say that's great for SaaS and it is right. As Parker said to me, not bad for a SaaS company, right? Kudos. But, you know, and we can talk about what that means. I'm not even sure what it means, but not that many are accelerating like this, right? So this is not good news for anybody

SPEAKER_00

not accelerating at scale, right? Let's not it's not even 70%. It's accelerating from like under 50 to 70 in a year. I mean, you know, candidate for CEO of the year, right? Not to not not to not to disparage deal, but candidate for to drive that level of acceleration. I don't even know how to do that. Unless it's people buying unless there's people buying tokens. I don't even know how to do that in

SPEAKER_01

today's world. I mean, bold candidate for CEO of the year. I mean, yeah, respectfully, he's got a bit

SPEAKER_00

of competition. Yeah, but that driving accelerate like they've just launched their agent driving that level of acceleration without a massive AI tailwind, like just just blowing your blowing your phones up, right? I mean, I'll bring them on. We'll talk about it. I don't know. I don't know how to do that

SPEAKER_02

without AI, right? I think it's what they refer to in sporting terms as a win against the run of play. Against the odds, you're playing the SaaS game where everyone's walking around saying the world is dead. Yes, Anthropic's putting up six, 700% growth, but you put that 78% growth and acceleration up in a category where most ill-informed people were saying you can't do that. So maybe a better a clear expression is highest outperformance relative to quote unquote market expectations.

SPEAKER_00

I think that's a clear example. It's better than Figma by the numbers, right? It's better than Figma

SPEAKER_02

by the numbers by far. I think what it says is, serious comment, what it just says is there's markets where the entire agentic AI drive coding discussion is rubbish. One of them is financially related stuff and payroll. I've run a business and you guys both run businesses. You can screw up on a lot of things. You screw up an employee payroll and you pay them at three o'clock, they'll be in your office at 3.01, right? You can't get this wrong. You're not interested in vibe coding. You're interested in having it right. You've got legal and statutory obligations that carry criminal penalties if you

SPEAKER_02

don't pay your taxes. You're like, I want to outsource this to someone wildly competent, have them take the responsibility. And no, I don't want non-deterministic processes, you moron, right? These are entire businesses that might have some impact at the margin in terms of agentic efficiency. But this core business will be there in five, 10 years' time. It'll compound because payroll is not us. We're actually talking about this a lot internally. What gets eaten by AI? What doesn't get eaten by AI? What's defensible? Payroll is one of the best examples of this is just something

SPEAKER_02

you do. You might build a software better using AI, but the core value proposition is something that it's just orthogonal to AI and it has to be done right. So big category, it'll go public, it'll be a

SPEAKER_01

great outcome. Good for him. I think the same with a lot of the fintech players that we see today. You know, your ramps or your stripes or air wallets of the world are not all the time.

SPEAKER_00

Yeah, exactly. And you know what, though? I know it's not to harp on the MAME episode. The mode is stronger. It is less impacted by AI. But I will tell you everything, and I know I'm a few months, not ahead of everybody, but a few months ahead of many. Everything I view now in terms of it's how well it works with our agents, how well its API and workflow works with our agents. And so, for example, like after Sastrianule in May, we're going to build our own AI VP of Finance, our own. OK, and the number one thing we're going to do is automate collections. OK, so we've been on Brax for

SPEAKER_00

six years. You know what the first thing we're going to look at? Which which API works best with our agents? I don't care what ramps dashboard looks like. I don't care what what it's what its office of the of the of the you know, the GDP. And now I don't care. I care how our agents work with its API and it's and we're going to pick the best one. And that that is just starting. But it is a BFD. And it also means that folks that seem to have a huge moat, it may weaken when and I'm not just I'm not just being a Yahoo on X. We're going to build an AI VP of Finance and he don't care what the UX is.

SPEAKER_02

Yeah, Jason, you don't care. First of all, you're right. You're absolutely right. And you're going to build a beef and and therefore the payroll and and kind of AP collectibles that has the best API will win. But I'll tell you something, you're not going to build an entire fintech stack. So someone will get those dollars. You're right. There are I'm going to someone, but it could be a new vendor. It could be a different or it could be a different vendor. I mean, this gets to the cell phone. There are three or four vendors of, you know, AP related stuff. You've got ramp, you've got bill,

SPEAKER_02

where we're involved. You've got, remember, Brex, whatever, right? Whichever of those doesn't have an API forward product will lose market share, which everyone does will gain market share. And if all of them are dumb enough not to do it, then a new vendor who says I'm an API first product will get your business and all the people like you. Right. But in every case, but so I think you're correct in that, which is a platform shift, which is what we're dealing with at this level, is what we're dealing with at this level has implications for everyone in the tech stack. But if you are doing something like what, you know, RAM, Brex, Bill, all these people are doing,

SPEAKER_02

the core thing you do itself won't be replaced in a way, for example, Figma might be. Right. My point is those degrees of change here. Right. And your point is what-

SPEAKER_00

But the degree of just the comfort that we're protected, like, you know, RAMP has asked us to switch from Brex for, for, for seven years. I bet we finally switch over the summer and it's only because of the agent. If it wins the bake off, we will switch in one week, we will switch and we will never go back to Brex. Which gets us to, you know, we have,

SPEAKER_02

we're winging it now, but I'd love to be the thought- Same with Marketo and HubSpot,

SPEAKER_00

by the way. Like we're leaving Marketo because of this drama, the crappy API that can spam. We will leave Marketo this summer for whoever has the best API and it probably won't be HubSpot. Which is why we should- Probably won't be HubSpot.

SPEAKER_02

Hang on, Jason. And say, look, I mean, to your point, Salesforce just announced the whole, an entire headless API strategy. What are your thoughts? Because I thought that was smart.

SPEAKER_00

Well, we debate where to move our Marketo data. We're already using Headless Salesforce to move all of our Marketo data agentically over to Salesforce. It'll be done in a couple of days.

SPEAKER_02

See, that's a great story because give him credit, give Benny off credit. He's like, if you can't beat him, join him. As they say, you know, right. I mean, remember it's, it's less than a year ago there was talk about, we're going to charge your, you know, not going to let you have your data. And now we've gone to getting a headless spot out the door. So yeah. So they've, you're an example of where he's taking share from the adjacent companies like Marketo just because you're doing that. And that's your point.

SPEAKER_00

Well, starting the other, the only thing I will say, listen, we are already living the headless vision, right? We, we, we don't log into Salesforce. It's our hub, but it's also, this is a lot of stuff that's going to run on MuleSoft in a couple of months or six months. This is also with love. This is also a classic B2B, you know, Anthropix drops a design tool and we can use it in an hour, right? This is something that will be dribbled out in classic B2B fashion over here. It's just like,

SPEAKER_01

it's different worlds. Can we provide some context also for those that haven't heard in terms of just Benny off the move with headless that he announced just so we set the scene there? Cause I want to ask

SPEAKER_02

some questions. Sure. I mean, I, I think that traditionally, the Salesforce app, it really had two parts of value. There is the, the user interface that every sales rep or everyone in the organization uses to input and output information and effectively record the work they're doing. And then at the backend, you have effectively this massive database and workflow that records all the information and allows you to track customers, leads, pipeline, all that relevant stuff. So there's two components of value. And by going, offering a headless offering, what he's basically saying is if,

SPEAKER_02

if those people who are doing the work are replaced by agents doing the work, then they don't need my UI anymore, right? Because the people aren't there anymore. They need a totally different agent-based UI. But what I'm going to do as the leader of Salesforce is I'm still going to allow them to access the database side of my product, which means I keep, I keep my value even in a world where most of the selling or the customer support is not done by humans typing into the Salesforce UI, but it's done by agents proactively going against the Salesforce backend. So he's preserved, he's given up some,

SPEAKER_02

he's given up trying to drive proceed pricing to preserve long-term value because I think he correctly has identified the real long, to Jason's point, he said it as a negative, but it's also a positive. The real long-term value that Salesforce has is it's taking you five, I mean, it's taken us 10, 15 years to get all those integrations in place, all that data in place. If you make it easy for Jason's agents to work with Salesforce, then he mightn't get around to killing you for the longest time. So that's the big move they made in the last few weeks, right? I think it was a week or two ago.

SPEAKER_00

I think like the, like, like, like, like Claude designed though, everyone completely misunderstood what headless Salesforce is. Um, so Salesforce is already headless. Salesforce is made, and this is actually pretty crazy. Mark, really Mark and Parker to their credit, JFC in 2006, they launched an enterprise API when this was seen as not, not possible. You could not build, allow third parties to integrate into enterprise software is too risky, too problematic. They opened this platform up and they have 20 years of it getting better. And I will tell you all the APIs that our agents use, our AI,

SPEAKER_00

VPA marketing, VPA customers, Salesforce is the best. It is the best API out there. It crushes everybody. Okay. This includes all the new guys, everybody, but it's because they built this for 20 years and because it's the APIs are so good. Um, the agents can work with it. Like it's not a problem. What, what headless is. And that's what Mark's out there. I mean, the greatest marketer in B2B, right. But it's already done this since, since agents started what he's really pitching, which is the bigger threat to these leaders and the bigger opportunity is an agent fabric is the layer that manages all your agents. This is what it's really, if you really

SPEAKER_00

look at what this is, it's about sales source says we are going to be the fabric to manage all of your agents, your 20 agents, your 50 agents, a hundred agents. So some of them will be built on sales source. A lot of them are going to be built on your soft as a crazy, it sounds their, their, their platform, which has been renamed. It will be in their data platform, but we will be the layer to provide the context, the guardrail, the management, the security, the everything. And this is the biggest issue for 2027 is agent fabric. People are under discussing this. They're all talking about evals and this crap. This is what really matters in the enterprise is agent fabric.

SPEAKER_01

You can't let these crazy agents run amok. I'm sorry. I'm just going back. When you say agent fabric, you're saying agent orchestration management training. It manages everything, all the governance,

SPEAKER_00

all the security. It knows, here's the key part. It knows what every single agent is doing in real time. That's the fabric that is more than orchestration. Okay. It literally knows every data, every operation, everything that's happening through 200 agents running 24, seven in parallel with multiple sub agents in them. Who's going to go to poor, to poor, uh, Jacob O'Driscoll at CIO of wherever that, that if there's any security breach, he loses his job. It's his worst job. He wants a trusted agent fabric to manage these crazy agents his team is deploying. And he, they can't be done on

SPEAKER_00

at a chat GBT. They can't be done out of base 44. Jesus, JFC, this is a security nightmare, right? I mean, even this week, and I don't want to get into it, two leading vibe code platforms arguably had massive security issues this week. I don't want to talk about them, but this is only going to compound. And as mythos comes out and finds every security breach in nanoseconds, I need an agent fabric. I could trust not someone that came out of YC and claims they have an orchestration platform, but I don't know if Salesforce can deliver it because it's so effing complicated. But if you,

SPEAKER_00

but if you're in their ecosystem, if you commit to everything, all of it, when most folks hear about Salesforce, they think it's CRM it's 14% of the revenue. Okay. If you commit to everything, e-commerce marketing, data analytics, Slack, and you run it, your whole business on Salesforce, this is the old SAP push. We will give you the agent fabric so you can accomplish everything you want. It can be trusted and safe. You'll add, and you, this is an agentic platform you can trust. This is the big bet coming. And this is all the warmup phase for agents. Enterprises need an agent fabric

SPEAKER_02

they can trust. Agreed. Because you know, you're empowering these software agents to do things, to change things in your systems, to upgrade things, to change, you know, to approve orders, to make commitments. How do you audit what's going on? How do you know, how do you keep control of it? Yeah. That's exactly right. That's going to be the issue.

SPEAKER_00

Yeah. I've got 300 agents doing accounts receivable. I've got 200 updating our documents. I've got all of these interacting autonomous customer success agents, our economist data analytics agents. Who's going to manage all of this? It's much, orchestration is the nerdy term, but most folks talk about orchestration. It's just a limited dashboard on top of a couple easy APIs to connect with. It's fine for a startup or for a team that has human resources, but how's an ordinary company going to manage these agents? How the hell is an ordinary company without a team of agent deployment experts going to manage

SPEAKER_00

these agents, these rogue agents? They'll go rogue if you don't manage them.

SPEAKER_02

This analogy may be totally useless. It's only because I've been doing it a long time, but I remember in the late 90s when, you know, online commerce took off and people really started getting a meaningful percentage of their revenue from online commerce. You have all these executives who were retailers to core. What do retail executives do when they want to know what's going on? They go walk the floor. They want to know what's going on in the shop. Even if you're running a 500-person chain like Walmart, Sam Walton used to walk around, touch the merchandise, see what's going on, and suddenly the whole thing's

SPEAKER_02

going on online and you just don't know. People are clicking. That's all you got. You saw a whole wave of companies doing analytics around how do you track your website because the big guy just wants to know what's going on. That was the value proposition. We did NetGenesis. We did Omniture. We made a lot of money in that space. The value proposition at its core was you've moved to this new way of doing business. Senior people want to know what's going on. Frankly, AI is way more powerful than that because at least in that, you had very deterministic. I'm selling stuff at a certain price

SPEAKER_02

for a certain thing. Even then you wanted to know you didn't do anything dumb. In this case, you've empowered your agents to make decisions. Now you're the executive in 2026. You're going to know what's going on. What's Gong? Gong is all about listening into calls to understand what people are saying. Once you have AI agents doing all this stuff, you're going to want to know what the AI agents are doing. I think, Jason, you're exactly right. This is going to be the huge thing. How do I think about

SPEAKER_01

what my little automated bots are doing in my business? My question was, are Salesforce best placed to be the agent fabric or is someone else better placed? If that's the whole holy grail?

SPEAKER_00

Of course, they're well placed. Of course, just like, it's a bad analogy, but just like in the end, Google, Microsoft, et al. were well placed for the last generation of AI. If they can get their rears together, the leaders are well placed. They are well placed. Salesforce, Shopify, Datadog, Databricks, if they can execute faster than they've executed the last 20 years or eight years, however they are, of course, CIOs want to buy from Salesforce. Of course they do. But it's much bigger than buying one agent force agent. They want this whole agentic fabric. So, and here's my meta point to folks.

SPEAKER_00

It's an opportunity to worry. You have time. It's just not infinite. It's like, if you're not building up that whole fabric, right? That's why I'm a fan of Mark. This may not get there. It is, it is a bigger vision than it looked. It's not just headless, like all the Yahoo said, okay? This is a complicated vision and maybe they won't get there in time, but at least he's driving the right vision and forcing thousands and thousands of people to deliver against it. Right? I'm, I'm, I'm much more worried about folks that are, that are, it's more performative. Right? You got to work as hard or harder than Mark to do it, but it's just, I don't, I don't mean to

SPEAKER_00

be repetitive, but the saddest thing is when you have an install base and you're not delivering the agentic solutions they want. This is the tragedy of 2026 and 2027. I have the customers, but Logora or Repli or whoever, pick any application you want. What's the, what's the AEO one you invested in, Harry, what's it called? The AEO, the AEO, the AEO startup. Peak. Peak. Yeah. HubSpot launches their thing and it's a dud. It could, should have been, it should have been peak or the other one. Like, it's just a tragedy because HubSpot has 280,000 customers. It's a tragedy. You did not deliver them

SPEAKER_00

the best in class AEO. It is a tragedy. It is not just a test or a miss. And I just, it's, it's a, so, but so that's why I think Salesforce is extremely well positioned and we are right to be stressed. Like, everyone is stressed that they will achieve it on time. We're right to be stressed.

SPEAKER_01

It's, it's really interesting. Yeah. They've had inbound to be bought by, by so many people. And Eli Gil today tweeted a load of predictions. And one of his predictions was that a load of these AI companies should actively sell and try to sell. Do you guys agree? To whom?

SPEAKER_00

So, to HubSpot. To, literally, Harry, I was on the phone last week with the CEO of a 20 or 30 billion dollar market cap public company. Okay. And, uh, doing massive revenue. And he's like, I get, I get these M and we're talking about M and a a little bit. I brought it up. He didn't bring it up. I'm like, well, go buy some of these kids. Right. Uh, you have the base, right? He's like, well, everyone wants a billion on 5 million in revenue after their last round. He's like, it's almost a waste of like, I have a corp dev team, but like, I haven't seen a single one that I'd want to buy that will sell at evaluation. That makes sense. So Google can buy them, but HubSpot,

SPEAKER_00

what's HubSpot's valuation as we record this in the teens of billions. They just can't afford a billion

SPEAKER_02

dollar for every YC startup. They don't have the money. Yeah. I would say try harder, stay close.

SPEAKER_00

There's going to be plenty. Plenty of exits. How many wizards can Google, is Google really going to

SPEAKER_02

buy the Rory? No, I'm not talking about those kind of exits. I, I think to your point, what's that?

SPEAKER_00

12 billion HubSpot. Yeah. So who, so they could afford 50 million, right? To take a risk, right?

SPEAKER_02

Not a billion. I mean, it's a stunning fact. And you know, you know, I like the space, but I, someone told me that, uh, is it G2 crowd said there's like 250 AEO, GEO competitors out there. Maybe you can't afford numbers one to five, but somewhere between 10 and 250, there's going to be one that has a good product. So I think a lot is entirely right.

SPEAKER_00

But isn't a lot saying sell at a billion, I think is implicitly what he said. Oh yeah. Yes. And if you can sell now for an easy billion, right? Uh, I'm optimized for a hundred billion dollar outcomes at my fund, but sell for a billion now while you can. Honestly,

SPEAKER_01

that's what I think you say, right? What? Oh, okay. I'll sell for a billion.

SPEAKER_00

I would agree if the exits were there. I would agree. His other point was you should have an exit discussion every year with your portfolio companies, right? I'm going to have one tomorrow. It's a great tip. I just, he's super smart. I just wonder where the, where the billion at five million AR exits are coming from. I would, I want their number. Give me their WhatsApp or their text because I'm going to send them a couple of deals before this, right after we get off this show.

SPEAKER_02

My point is this in various ways, but you're saying, right, when you listen to what Jason says about the public markets and the dilemma they're going through, they absolutely should be looking to acquire some of these things to get some of this technology. And maybe what we're really saying is the biggest rate limiting factor is not their unwillingness to do it, but the prices at which the venture crowd think we're going to get for them has made it hard to make those transactions. It's been my experience that if that's the case in the end, things true up, right?

SPEAKER_00

But you know what's tough? I picked on this HubSpot AO product. Okay. And I, and I love HubSpot, right? I picked on it, but I didn't know they bought that company for 30 million like months ago. So everything just gets stale so quickly. I'm sure HubSpot sat around and said, listen, we need to be in this place. It makes sense. We need to be in AO. What can we afford? Well, Harry just funded this one. We can't buy that for 30 million. There's the other one in the US. We can't afford them. What is available we can afford? And I think in five years ago, that was a good strategy, right? Because the world moves slowly. Now you buy something that,

SPEAKER_00

let's assume whatever they bought, this company was competitive four months ago. It's just, it's just not competitive at today's pace. Right? I don't mean to pick on them, but it's why M&A is tough, right? Who wants to buy something that's going to get stale? Look at poor TBN. We can't even see it on our feet anymore. Like, like it's disappeared since the acquisition, right? Gone. It's gone. It's gone. You know, why even buy any of these things if they instantly become stale? You do these tuck in acquisitions, which used to be like, if you, you know, go back to corp dev, you had the best strategy

SPEAKER_00

was the barbell just starting to like investment. Buy something small for 50 to 80 million, like for product, a couple million in revenue to prove it works and rebuild it over a year. Rebuild it natively on Salesforce or HubSpot or go big, right? Because you got scale. But it's tougher today to find the gems that want to sell with product market fit cheap. I don't think you're saying it's tougher to find

SPEAKER_02

them. I think you're saying it's tougher to manage them and preserve the urgency and the speed. Yeah, it's hard. Which I think is a different comment.

SPEAKER_00

Yeah. I mean, even Open Claw, that dude's just on the Ted circuit now, right? Open Claw may be obsolete

SPEAKER_01

in a couple more weeks. Listen, the two more for me is Snap and Cerebrus.

SPEAKER_02

I think you have to do Cerebrus first. I just have a predilection for good over bad.

SPEAKER_01

Good. Okay, let's do good over bad. Cerebrus files for IPO. It's the second time. Some of the concerns that were brought up last time in terms of a dependence on G42's revenue and the revenue concentration they had have been resolved. How do we feel about this? Is this going to go out well? They're now at, where are they? 510 million revenue in 2025, up 76% from 290 in 24. They've done a great job.

SPEAKER_02

Absolutely. That's what I wanted to cover. I think it's a great classic venture deal. Credit to Benchmark Eric, credit to Steve at Foundation. Credit, obviously, more than anything to the team. This is a 10-year journey. I think in a way that wasn't true a year ago, they got the elements of success in place. I mean, you look at the P&L, it's a little noisier then at first glance because you at one point said, Harry, it's profitable. It's not. It had some weird reversal of liabilities. At the operational level, it's still losing money. But the big aha is they've... I mean, in fact that they've done exactly what it takes. They've proven

SPEAKER_02

the product. And stepping back, this is a semiconductor company, potentially one of the very few startup semiconductor companies in the last decade and a half. The product they make is a big ass wafer scale chip that's really good for inference because it's really fast. And obviously, it's very optimized for AI. And if you read the founder letter, it's been optimized for ACES. They founded in 2016. What they've done really well is... Because this is a very hard, step back, this is a very hard market to enter no matter how good your chip is because there's only a small number of big buyers, obviously the hyperscalers. And some of them have their own chip,

SPEAKER_02

some of them might want to trust you. These guys have done a couple of things to parlay their way in. They've done some big deals in the Middle East with folks who've been willing to use the product. They started to offer a cloud offering and one of my companies has used it, whereby they are effectively saying, our chip is so good and so fast that we'll offer inference services on a cloud basis. And when you use it, it'll be like, oh my God, this is really fast. And as I said, one of my companies had that experience. It's really fast, low latency. It's a great product. And those things

SPEAKER_02

allowed it to prove that the shit worked. And in the last three months, they've signed a deal with OpenAI and a deal with AWS. Sorry, I should be precise. And the OpenAI deal is for the usual $20 billion of commitments. Who the hell knows what that means? But the point is they've gone from niche to mainstream, and they've clawed their way into the mix. So I just give them huge credit because you know, that's a long journey. It's a hard journey. And you know, a year ago, it was easy to sneer and say, yeah, you got a bunch of investor contracts in the Middle East. It's all bullshit. Now you've got the inference business, you've got the service business, you've got the

SPEAKER_02

incipient contracts with two of the largest players in AI. It's a credible play. So I think it gets done and it gets done well, and it deserves to get done well. I mean, and you know, now I'm on my soapbox. But this is just great. It is just great that venture does this kind of thing, a 10-year journey to finance a new chip for a new use case that's complex technically, complex business, and they pull it off. I hope they make a ton of money.

SPEAKER_01

I agree. I really like Andrew Feldman too, the CEO. He's a really good dude. So I like him a lot. Where does this go out at? Grok sold for $20 billion. Like, does the benchmarking of Grok enable this to be a $25 billion IPO?

SPEAKER_02

Grok sold for $25 billion. When things are valued on a PE or an earnings basis, you can have an opinion, a meaningful opinion on where they should trade. In this case, it's going to be so much narrative based, it could go well above that. I mean, again, we talked about this a while ago. If the leading player is worth $5 trillion, right? And then the next two leading players after that are kind of in... Well, you've got AMD and then you've got in-house silicon from Google and Amazon. This is the only other standalone play you can make, right?

SPEAKER_02

I mean, do the math here. 1% of Nvidia is $50 billion, right? If you just think of it as a call option on some percentage of a $5 billion market, you can see a very big outcome here, right? No, you can squint the other way and go, oh my God, they're never going to... It's a high beta rate. Again, it's back to what we said. In these kinds of huge markets, you're way out there in the risk continuum, but when risk appetite... Maybe that's a summary. When risk appetite is on and risk appetite is on today, high risk, high return stories go at a premium. And this is a high risk, high return story

SPEAKER_02

with a big market. So in today's market, in today's environment, that could price extremely well.

SPEAKER_00

It'll create an interesting case story with Grok, who has the better... I mean, I know this is such an annoying investor thing, but who has the better outcome risk and time adjusted, right? Both took huge risks to start their companies. Both started ahead of the curve, right? Cerebris, I guess, even more, right? Would you rather take $20 billion in whatever, I don't know, combination of cash and stock with weird taxes you got from Nvidia or ride the up and down and emotional roller coaster of running a public company for a decade and trying to get liquidity and seed of Morgan Stanley will give you a loan against your stock. We're all on different journeys. I don't know.

SPEAKER_01

I can tell you, I'd rather sell to PE like sales lofted for $2 billion and peace out. Well, that's a different journey altogether, right? That sounds better. You guys, you're doing the heights. I mean, yeah, look,

SPEAKER_02

equally say, you know, I think they're pretty glad they didn't sell Google to Yahoo for, you know, billion dollars or whatever it was. Look, when it works, you're glad you ran...

SPEAKER_00

But what about Figment Adobe that didn't happen? That one I'd be, I'd be pulling... If Dylan's better than I'm me, but I'd be like, farts. Farts, farts, farts, farts. Maybe... I don't mean to be political, but man, that was a rough stretch there.

SPEAKER_02

Yeah, but maybe they like what they're doing. I mean, maybe, you know, lots of folks do actually.

SPEAKER_00

Maybe they just couldn't... You do, but it's just, it's tough when the teams RSUs are not worth what they were and the options are struggling and people are leaving to go to Anthropic. It's just, it's not a fun... Like no matter how great, it's just not fun to run

SPEAKER_02

those companies, right? It's not fun. But my point is exactly right. When the momentum turns against you, you wish you'd sold. And when I meant, I mean, you know, Jensen's glad he didn't sell Nvidia anytime along the way. When it works, you're glad you didn't sell. Yeah. And when it doesn't work, you wish you had. It's as simple as that. It's a derivative of Elad's Gil's point.

SPEAKER_00

Which one are you? Right? Yeah. Like be honest once a year at the board meeting. Be honest. Who are we? Are we, are we Nvidia? Or are we, which one are we? And then, you know, it's, it's easy on Twitter to think that you're Jensen. Yeah. Right. We used to think we were Zuck, right? I'm the CEO, B, right? Now we all pull on our leather jackets and think we're Jensen, right? If you're going to be Jensen, I hate to tell you,

SPEAKER_02

we just got to be willing to eat a podcaster for breakfast once a week. Cause oh my God.

SPEAKER_01

Okay. So I was going to bring this up as like, uh, but what did you guys say? I'm sure we both,

SPEAKER_02

we all watched. Yeah. What did you think? Where I thought he was excellent is his comments on, you know, we don't kind of have this preferential status. We're here to sell chips. If you wish it was a PO, we'll sell you chips. You know, his relationship with TSMC, all that stuff I think was super grounded. And you just go, wow, that's a world-class executive who shipped gazillions of chips, right? What you're really talking about is the argument about China, correct? With Dorkish and he and Dorkish got into it. And it

SPEAKER_01

was a little bit- Yes. And when he was saying, bluntly, when you look at two of the largest frontier model providers, neither of them trained on your chips. And he bluntly provided a pretty cagey response at best. And that admitted we should have invested in them.

SPEAKER_02

Well, I think there's a lot of things lumped into that, right? I mean, I think that, I don't think, I think, I think it's clear that OpenAI does train. And I think OpenAI definitely trains in part of NVIDIA chips and whatchamacallam, um, and Tropic, I'm not as clear on what they train on it. I've had mixed comments on that, but whatever. And I don't think he said, I think his comment on, I couldn't do it. It was, his comment on, I wish I could, on not investing in Tropic was he couldn't do it at the time because he didn't have, which makes sense, in 22, 23, he weren't in the business of writing $30 billion venture checks.

SPEAKER_02

I thought he was, I thought he was very rational there. He said, made a mistake, didn't have the capital at the time, wish I had, right? Just bring him closer to it. So I didn't think that was bad. I think the problem with the China discussion is there was two priors that neither party agreed. I've just, neither party agreed. And when you have a discussion and they're talking past each other, right, and you don't agree on the ground truth, it's just a waste of time. And two things are, one is how big an enemy do you think China is? Is it just a competitive trading, you know, partner, competitor in the way that Microsoft and Apple compete? All the way from

SPEAKER_02

there to, is it the new Russia and we got to not give them a single thing because we're scared they're going to nuke us. And then the other thing that I think is, Dwarcus clearly thinks that frontier models are as dangerous as uranium and Janssen clearly thinks that's bullshit. And if you don't agree on those two things, if the question is, should we make it easy for China to build frontier models by selling them Nvidia chips, which was the question. If you don't agree on what you think about China and you don't agree on what you think about frontier models, you simply don't have a useful discussion because neither of the nouns in the sentence have been defined.

SPEAKER_02

So once you internalize that, you're like, oh, that's two people talking past each other, and one of which just doesn't give. And it turns out, yeah. And that's why that part wasn't that useful, but it was kind of funny. It was like, it was a cloud. It reminded you what semiconductor executives were like. When I started investing in a lot of business with semiconductors, just hardheaded guys who just say no, no, and enjoy it. Right. It was just, so I enjoyed it at that level. It was a little bit of a culture clash of generations and it was fun, but I thought he did,

SPEAKER_01

like, you can't argue with the guy. For the first time ever, it wasn't an easy interview.

SPEAKER_02

No, it wasn't easy. And give Dwarcus credit. He tried to punch, right. And it's really hard to punch someone who A, talks his book and B, has 30 years of knowledge. When you were a 25 year old podcaster. And I think one of the things I like about where you come from, the takes, how you approach it. We're doing this in a spirit of inquiry, because to some extent, we're all trying to figure out what we think and talking things through often helps. So, I often find I revise my priors based on the discussion. But I'm not here as a CEO of a $5 trillion company. He's here to talk his book.

SPEAKER_02

And let's be clear, he wants to sell, the 30% of the entire market is in China. He wants to sell those guys Nvidia chips. And there's simply no argument on God's green earth that's going to convince him that he shouldn't get that $40 billion of revenue from shipping chips to China. So, thank you. Look, he spent time with the president lobbying to be allowed to sell Nvidia chips. If he's had to do whatever that takes, and I shudder to think in terms of sucking up, to be allowed to sell chips to China, he's not going to roll over and play dead because some 25 year old said maybe you shouldn't. He'd do the same to you, Harry. Be the straight hand off,

SPEAKER_02

right in the face. It's like, thank you, but no, big guy. And did I think he won the argument? No. No. But he knows how to fold his corner. So, it was fun. I worked out and listened to it. I was like, whoa. It literally was a meeting of non-minds. It was just fun.

SPEAKER_01

Boys, is there any other topics that we haven't discussed that we should discuss?

SPEAKER_02

We ran out of time to cover Snap, but I just don't care.

SPEAKER_01

And for anyone listening, Snap cut 1,000 jobs, 16% of the workforce, and the stock popped 11%. Wow.

SPEAKER_02

I mean, yeah. They just need to figure out a converging business model. And they haven't. Amazing company at the start, and now it's just drifting around and needs to figure it out. Master of stock-based compensation. Yeah. Yeah. No. Look, it's going to be an advert for the dangers to some extent of dual-class votes. I used to agonize about this, and now I don't. Now my perspective would be, look, you had a chance to buy two social media companies with dual-class votes. If you bought Snap, and if you bought Facebook, you're 50% down on Snap, and you're 10x up on Facebook from the IPO, shut up, take the check, move on. Turns out, untrammeled power has good outcomes and

SPEAKER_02

bad outcomes. There you go. Like I said-

SPEAKER_01

Get married a supermodel though. It's not all downside. That's a positive note to end on, Rory.

SPEAKER_02

I hope everyone has happy marriages. There.

SPEAKER_00

Rory, okay. I have one last one if we're out of time, but I want to get Harry's thoughts. There you go. Jason, go for it. Elon had retweeted something that went around many times. 91% of all AI unicorns are now in the Bay Area. Thoughts from London on this? Thoughts from London? Oh, nice one. Yeah. And I want to know in particular how many are in Marleybone, but 91% of the Bay Area. Project Europe. How are you thinking about that from London, this increasing concentration of AI unicorns in the Bay Area? This is from this week. I think some of the best AI minds or the majority

SPEAKER_01

of the best AI minds want to be in Silicon Valley. Quite rightly, you're seeing the re-centralizing of power back to Silicon Valley. More so than I think any of us ever expected post-COVID. That said, I think you can still build unbelievably great AI companies as we have done in London with Demis and DeepMind and with Matty at 11 Labs. And I think it's easier to be in Europe because with your 91%, you also have 91% of the capital and every other person on the street being a venture capitalist. And so I think you see this gluttony of cash combined with the gluttony of companies, which makes detection

SPEAKER_01

harder and makes winning harder. And so I agree with that. Sure, the majority of great AI companies are there, but I also think it's harder. And I think for me being one of the top three brands in Europe, I would rather be here with much less supply side than there fighting against Benchmark and Founders Fund and Andreessen and everyone in between. Got it. It's a combination. Well, I have two comments

SPEAKER_02

on that. One, yeah, it's the old Caesar quote. I'd rather be first in a village than second in Rome. That's really what you're saying. Though, of course, I would add he was a killer psychopath and really, you know, not a good man. But the more important point is, yeah, the evil that would do is that we can let it, we can go back to Shakespeare, but we won't. I think the real point, what you're saying, it's fair, it's interesting. It's 91% in the Bay Area. What this says is companies are in the Bay Area to the point where the marginal advantage of being in the Bay Area is less than the marginal advantage

SPEAKER_02

of being in Europe and having access to a talent pool. What it says is the equilibrium point for indifference is now roughly at 90%, which is another way of saying, yeah, to a rounding error, it's, yeah, Bay Area wins, but there's still some wins in Europe. Exactly.

SPEAKER_01

A hundred percent. And I think actually trying to be a startup today, recruiting and maintaining that team in the Bay is next to impossible unless you have an egregious amount of money.

SPEAKER_00

No, no, no, no doubt, right? And I wasn't, I was just curious as the last point, what you thought of this from the week, right? I don't have an opinion on this. Yeah. Uh, certainly you can't argue with the talent question, right? But it's just, there's just a lot of complexity here as everything concentrates, right? As we're not, everything's concentrating in everything.

SPEAKER_01

And also Jason, just like the competitive funding landscape. And I do not mean this arrogantly, but there is just, you know, one 10th of the competitive elements in Europe that there is. I have so much respect for Silicon Valley early stage investors. God,

SPEAKER_02

it's fucking competitive. It is. And again, back to, and the equilibrium will be reestablished when the price, when the costs of being here kind of are equivalent to the advantages. And you know, what happened is for a couple, I mean, look, I think really what happened is for a couple of years, and it gets back to a topic and everything like that, is that in that period when they just first cracked the code at OpenAI of what could be done, the closer you were to knowing what was happening, the bigger the advantage you had, right? And it was intrinsically a local thing. So, I mean,

SPEAKER_02

you know, you'll look back and go, yeah, 10 years after, you know, 22, knowledge will be widely dispersed. But there was a period of two or three years where the knowledge was available tribally in hacker houses in San Francisco and wasn't available widely across the West of the world. And that's why you had this Cambrian explosion here. I mean, it's a point in time, just like the start of the internet. But yeah, great companies in London. I mean,

SPEAKER_01

And just to be clear, I'm not a, was it a psychopathic serial killer? Was that?

SPEAKER_02

Yeah, I know you're not, I know you're not.

SPEAKER_01

Slightly mediocre moderator, but not a killer.

SPEAKER_02

Yeah, yeah, yeah. I mean, remember, Caesar killed a million goals. I mean, let's just keep score, gratuitously. Not quite as good as Pol Pot, but you know, up there. Up there in the baddie category. Yeah. Okay. Anyway. Awesome, boys. Well done. 민 민 ! 민 ! 민 민 !

! Thank you.