OpenAI Buys TBPN & Their Management Team Reboot | Mercor Hack & Why Now is the Time for Cyber

Transcript

I'm gonna call bullshit start to finish on this whole discussion. So what do we have on the agenda this week? OpenAI reboots management team. OpenAI buys TBPN. I thought the acquisition was just insane. Owning a media asset invariably takes way more time than you think for way less money than you expect. See Jeff Bezos for details. [SPEAKER_00] There's no way that deal is going to happen today. It's dead because of management change. [SPEAKER_01] Anthropic hits a whopping $30 billion in revenue, surpassing OpenAI. Their training costs are a quarter of OpenAI. [SPEAKER_00] It really feels like the investors in OpenAI got a much worse deal in the last round than the Anthropic ones did. [SPEAKER_01] And then SpaceX finally confidentially files for IPO targeting a $2 trillion valuation. The big three, SpaceX plus OpenAI plus Anthropic, their value at IPO will exceed every other IPO for the last 20 years combined. [SPEAKER_00] Ready to go? [SPEAKER_01] Boys, welcome back. [SPEAKER_01] I've been looking forward to this one. [SPEAKER_01] I was doing this schedule over the weekend and last night, and I was thinking, wow, this week we really have a lot of meat to get into. So I want to start with OpenAI and Anthropic. So Anthropic now have $30 billion in revenue, obviously surpassing OpenAI. It's all intertwined with the subsequent things that we all discuss with OpenAI. But as Jason put in an email to us all, holy cow. Jason, holy cow indeed. What did you think? [SPEAKER_00] Even in an era where we're getting inured and anesthetized to crazy numbers, this one I did fall out of my chair, right? [SPEAKER_00] Getting to $30 billion up from $9 billion at the start of the year. [SPEAKER_00] I mean, I think it took Salesforce, which is the largest software company, or at least cloud one, 25 years to get there. [SPEAKER_00] Anthropic got there in five, but maybe they really got there in three, depending on how you count. [SPEAKER_00] But you just, it was incredible to see where they were in February. We couldn't believe it. And then essentially adding 10 million of net ARR. Let's not debate whether it's how many ARRs there are and whether it's recurring. At this level of growth, it really doesn't matter. It doesn't matter. So, and that there's still capacity constrained. And that Claude still shows us when we're in there that it can't finish chats. And that every engineer in tech has been told to consume more tokens and move faster, right? The crazy thing is, what will it be at this rate at the end of next year, right? It's crazy, right? If it grew 3.3X in four months, we need Rory's math help to figure out what Anthropics run rate will be at the end of 27. [SPEAKER_02] The estimates that we were just looking at two months ago just look incredibly wrong at this stage. [SPEAKER_02] Yeah. [SPEAKER_02] So, yeah, no, these are amazing numbers, right? [SPEAKER_02] Yeah. [SPEAKER_02] And I think a bunch of other interesting things start to happen here. [SPEAKER_02] One is their announcement on OpenClaw and not allowing that to be in the base plan. [SPEAKER_02] I think it gets back to, they're in a massively interesting situation. [SPEAKER_02] Now, their revenue is exploding. [SPEAKER_02] Despite the revenue explosion, they're still compute constrained. [SPEAKER_02] In other words, they could sell more if they had more, right? [SPEAKER_02] And what do you do when you can sell more if you had more, but you can't make more, right? You can't magically make data centers, though obviously they have that big announcement to do that. What you start doing is allocating capacity based on money, right? And one of the first things they've figured out is these folks using these OpenClaw type agents are consuming vast amounts of tokens on fixed price plans. And they probably want to stop that, which is what they've done. So you're going to see them do exactly what anyone in economics would say do, which is try and find a way to maximize and extract even more revenue. And we saw it even with OpenAI last week where you de-emphasize things like video, which consumes huge amounts of compute for small amounts of revenue. In Anthropic's case, obviously, they have much less of that pure slop, but you de-emphasize things like OpenClaw access, where it consumes a lot of your compute and doesn't make you a ton of money. And I think you're just going to see a continued trend to pricing tokens, pricing closer to the value, right? Not a huge trend because you want to get people addicted on the product. Because the truth is the thing you have in your favor with any digital good is the complete certainty that prices per token go down over time. But you do at least want to start allocating it a little more sensibly while you're constrained. So that's the trend here. [SPEAKER_00] You know, we could talk a little bit about the OpenClaw stuff. [SPEAKER_00] Just before we get there on the growth in Anthropic, the other interesting thing was the Wall Street Journal today had a bunch of things. [SPEAKER_00] There was a bunch of leaks on the financials for Anthropic and OpenAI. [SPEAKER_00] And the one that jumped out at me when I contrast it with the fact that Anthropic has caught OpenAI, right, in half the time, is that their training costs are a quarter of OpenAI. [SPEAKER_00] Their training costs for models are a quarter of the OpenAI. [SPEAKER_00] Now, maybe that's because they're focused. [SPEAKER_00] They don't have to do video. [SPEAKER_00] They don't have to do images. [SPEAKER_00] They don't have to do a lot of consumer stuff. [SPEAKER_00] But if you just think about it for a moment, the compounding effects of catching OpenAI in half the time, right, at roughly the same revenue or more, 30 billion in five years, and having training costs that for now are a quarter of it, you know, that's a double code red. [SPEAKER_00] It's one thing if you have two classic startups where one bleeds money and it's artificial, there's other things. [SPEAKER_00] But if you have a dramatic cost benefit and you're out accelerating your competitors and there's management team turmoil at your competitor, it really feels like the investors in OpenAI got a much worse deal in the last round than the Anthropic ones did. [SPEAKER_00] Just crazy. Just having both. You usually don't have both together with your competitor. You're out accelerating your competitor and your training costs are a fraction of your competitor. Good God, that just compounds. [SPEAKER_02] That's actually a good point because take the Uber-Lyft struggle, right? It's one thing if you have two classic startups where one is bleeding money and it's artificial, there's other things. But if you have a dramatic cost benefit and you're outpacing your competitors and there's management team turmoil at your competitor, it really feels like the investors in OpenAI got a much worse deal in the last round than the Anthropic ones did. Just crazy. You usually don't have both together with your competitor. You're outpacing your competitor and your training costs are a fraction of your competitor. Good God, that compounds. [SPEAKER_02] That's actually a good point because take the Uber-Lyft struggle, right? [SPEAKER_02] Uber had the, oh my God, we're outpacing. [SPEAKER_02] Oh, but we're spending every dollar we have to do it and we show no fear, right? [SPEAKER_02] In this case, you're outpacing the opposition while being more efficient on a bunch of interesting measures. [SPEAKER_02] You're right, Jason. [SPEAKER_02] That's a scary fact pattern. If you're running the game theory and you're the other guy, it's like, hmm, that's not good, right? They're growing faster than us. The gross margin economics are roughly the same or slightly better. And their costs below the line are compute and scientists to run the compute for training, which are better. And that's a bad fact pattern. [SPEAKER_01] Have we ever seen a bigger seeming chasm between where they're at? [SPEAKER_01] And with the greatest of respects, it seems like Anthropic is accelerating faster than ever. [SPEAKER_01] And OpenAI is having more challenges than ever all at once. [SPEAKER_00] I'll tell you the one I think about. I didn't realize when we did this show last because the press is always focused on the headline stuff, right? [SPEAKER_00] The OpenAI money was barely real. [SPEAKER_00] You said that. [SPEAKER_00] Barely real. [SPEAKER_00] And Breyer's money appears to be real. [SPEAKER_00] It came in up front, right? The 13, 14 billion, whatever they put in, that's real. 11 billion. All I have to do is get 20% carry and double that. And it's a nice side bet in an SPV. But that was real. The SoftBank money comes in tranches. They have to borrow money to pay it. The Amazon money is tranched in part on IPO or AGI, right? And the NVIDIA money is almost all not money. It's almost all offsets and compute. So I thought about it. But then in context of Anthropic's growth, I think OpenAI would have rather have all the cash. It's not a sign of strength where the majority of the round is not cash up front. That's not a sign of strength. That's a sign of classically barely getting the round done. Barely getting the round done versus getting cash. Why wouldn't you want all cash up front? Why wouldn't you want 140 billion up front? [SPEAKER_02] A bit harsh on the barely because I thought they tacked on another 10 billion. [SPEAKER_02] I can't believe I said that sentence. [SPEAKER_02] They tacked on another 10 billion. [SPEAKER_02] Think about that sentence. I think that was called hard cash. [SPEAKER_02] So I think I agree. [SPEAKER_02] Your comment is correct, Jason. [SPEAKER_02] The vast bulk of the dollars weren't cash. But enough money changed hands that it represented a bona fide price at the time. But you are right. And again, Anthropic does some of the same stuff in the sense that given your biggest expenses are compute and then distribution, from Microsoft on with OpenAI to all the recent Anthropic deals, there's a lot of this roundtrip business. But in both cases, I'd say make two comments. In both cases, there was enough hard dollars changed hands to represent price estimates for both. But to your point, based on what you know now, given the revenue equivalents, rough revenue equivalents, shouldn't assume until OpenAI releases their numbers, maybe they've exploded too. But definitely, Anthropic at $370 billion feels a little more comfortable, let's just say, than OpenAI at $820 or $840 or whatever the final closing was. Right? [SPEAKER_00] Well, OpenAI did say $2 billion last month. [SPEAKER_00] I think that's why Anthropic rushed out the $30. Right. [SPEAKER_00] They're at a $2 billion run rate. Right. And we have the whole gross and net thing. But the bottom line is this. When you look at those two graphs, you definitely don't say to yourself, I think what you'd say is, if this was a public stock, let me go to this one. [SPEAKER_02] If both of these companies were public, there would be a bunch of New York hedge funds shorting OpenAI, longing Anthropic and saying they have the perfect AI bet. [SPEAKER_02] Right? Would you short OpenAI at $870 and go long Anthropic at $372? [SPEAKER_02] I'm not a risky guy, but even I would contemplate doing that. It feels like a no-brainer bet. You have roughly the same revenue, a better trajectory, and a management team for half the price. [SPEAKER_01] Hmm. And if you short the one and long the other, you're diversifying away the AI overall risk and you're just making a relative performance bet. That's probably an interesting one. [SPEAKER_01] What would you say to an OpenAI employee who is now looking at their incredible stock price appreciation with tens of millions of dollars in equity that they now have at the $820 price? [SPEAKER_01] Sell it all at $820 the minute a tender comes. [SPEAKER_01] What would you say to them? I think I wouldn't pile on. In general, look, I have some things in OpenAI I want to pile on this time. [SPEAKER_02] And if you recall in the last couple of weeks, I've tried to avoid the pile on when someone's down. I think you always want to be more tempered. But I always say to everyone in any private company, in any private company, I say, when the liquidity window opens, take it seriously because it might not open again for a while. [SPEAKER_02] Right. [SPEAKER_02] So when your liquidity window opens at $800 billion, the alert reader should say, if you're planning to buy that house in San Francisco, you might need an extra few million just based on what I'm seeing in the market now in terms of house prices. [SPEAKER_02] So take advantage of this thing because all your brethren have. [SPEAKER_02] Right? I think you always want to be more tempered. But I always say to everyone in any private look, in any private company, I say, when the liquidity window opens, take it seriously because it might open again for a while. Right. So, yeah, when your liquidity window opens at $0.8 trillion, the alert reader should say, if you're planning to buy that house in San Francisco, you might need an extra few million just based on what I'm seeing in the market now in terms of house prices. So take advantage of this thing because all your brethren have. Right. I wouldn't. Yeah. I think the people that I don't want to pile on the individual. Remember, the company is still doing a lot of great stuff. You got a lot of turmoil. We got a lot of drama at the top. We'll talk about that. But I think you take advantage of liquidity just because you should always take some advantage of liquidity. [SPEAKER_01] Let's knock it on the head. [SPEAKER_01] Let's talk about the drama at the top. [SPEAKER_01] I mean, talk about a management team turnover. [SPEAKER_01] You have Brad, the COO, who's been moved to special projects. My dream job. Never a good sign being moved to special projects. [SPEAKER_00] I'm going to be the SVP of special projects for 20VC in my next phase of life. Jason, I would love you to be the SVP of special projects. [SPEAKER_00] Your special projects. Your special projects. [SPEAKER_01] We have the CMO stepping down due to health reasons. We have the CRO out. [SPEAKER_01] We have Fiji, who is head of apps, taking a short leave of absence with health problems. How do we read this very significant multitude of changes at the management layer? [SPEAKER_00] If we step back a minute, it ties to Anthropic passing them. [SPEAKER_00] You don't just sit there and make no changes on the team when your competitor over the last six months has radically changed the competitive posture. [SPEAKER_00] So, look, I don't think any of us like that amount of change in any management team, right? [SPEAKER_00] It feels almost a wholesale change at some level. But it's risky. But you got to call Code Red three months ago didn't magically change the trajectory here. So it ties you got to try to mix things up in some fashion. Hopefully you can do it with the team you have. But in the context of Anthropic now out accelerating OpenAI, it just makes sense to reboot the team. It just makes sense. [SPEAKER_02] Yeah. [SPEAKER_02] There's some rebooting. [SPEAKER_02] I mean, to use your phrase. [SPEAKER_02] I mean, who's been hired? Who's the what's the additive reboot? [SPEAKER_00] Well, the dramatic one, which is always risky for any startup, is you take Denise Dresser, who was CEO of Slack, who came from Salesforce just a couple of months ago, and you put her in charge of basically everything go to market and related. [SPEAKER_00] Right. [SPEAKER_00] That's a good bet on a seasoned executive. [SPEAKER_00] But that's the type of change that we've all seen as investors is super risky. Right. You bring in the person with the perfect LinkedIn. Right. And the perfect background that's still getting to know the product. They're still on a get to know you tour. They haven't quite been to the New York office yet. They're getting to know the product. And all of a sudden you give them this massive portfolio because they're a proven executive. In my experience, I don't know what you guys think. In my experience, that is about a 30 percent chance of success. Just roughly that bringing in the big, that perfect LinkedIn, giving them a massive portfolio and attaching them to something in tumult. If it's executing to perfection, it always seems to work. Bringing in Mr. LinkedIn is oh, but when you're in tumult, there's not a lot of time to learn everything. Right. There's not a lot of time for the get to know you tour. So it's risky, but it's a play. It is a play. [SPEAKER_01] I get where you're going there, Rory, which is for the replacements to be additive, there needs to be great talent added. [SPEAKER_01] And there seems to be a lack of people coming on the field when they're coming up. [SPEAKER_01] Agreed. [SPEAKER_02] And I'm all, as I say, I have a couple of comments. [SPEAKER_02] One of them always loathe the comment on. [SPEAKER_02] Yeah, because the illness related is because you just don't know what's going on in people's lives. [SPEAKER_02] And that's tough. [SPEAKER_02] And people have challenges. [SPEAKER_02] And you wish people all the best, especially in these kind of chronic diseases and hope they can get back to full health. Right. Let's just start with that because that sucks. Right. At the same time, you have a lot going on here. Well, you have a lot going on. And to me, even all these people change, I'm tempted to make that famous Oscar Wilde quote in The Importance of Being Earnest, you know, to lose one parent might be an accident when he was talking to this woman was talking to the orphan. But to lose both parents smacks of carelessness. Right. Well, you are getting to the stage of carelessness here. Right. But I actually don't think that's the real issue. It's fun to say. I think, too, I'll tell you, we haven't mentioned the two most surprising things in the last week on OpenAI. One is, I'm just going to say it, I thought the acquisition of TPBN was insane. Not in particular, it doesn't matter, but you don't launch a Code Red edict and a Focus edict and no more side projects edict, and then within the space of a week do something that's so obviously a side project. To me, no matter what you get, I mean, we can discuss whether it's stupid on its face and whether buying media assets is the way to go. And I acknowledge the Andreessen articulated thesis that you have to control the media story, though it doesn't seem to be Anthropic has any need to do that. But stepping back one level, you're running a $25 billion company, the most exciting company on the planet. If the number and you just told your entire internal team that you need to focus and then buying. And then within the space of a week do something that's so obviously a side project. To me, no matter what you get, we can discuss whether it's stupid on its face and whether buying media assets is the way to go. And I acknowledge the Andreessen articulated thesis that you have to control the media story, though it doesn't seem to be Anthropic has any need to do that. But stepping back one level, you're running a $25 billion company, the most exciting company on the planet. If the number and you just told your entire internal team that you need to focus and then buying. There's nothing that's more of a vanity project than buying a media company. Right. I mean, look. [SPEAKER_00] Just one thing. [SPEAKER_00] We could talk about it more or less. [SPEAKER_00] The one thing just to add when you look at the press, this is interesting. [SPEAKER_00] That deal, the hands, the outreach was in January. That's a lot of time in OpenAI and AI time. Right. Vigi was new, thought this would be a great thing to elevate OpenAI in January. Now, now it's April and maybe the deal seems a lot different. But in January, it was a different world. Right. [SPEAKER_02] Well, at some point, I mean, I remember. Yes. I don't think it didn't happen last week is my only point. It happened in January. [SPEAKER_00] It took some time to close. Right. And I will say one thing. I'm 90% sure it wouldn't happen today. To your point. If nothing else, priorities change. Right. It probably wouldn't happen today. [SPEAKER_02] You know, if you only noticed in the last week that you need to focus, then yes, I'll give you that. [SPEAKER_02] Right. [SPEAKER_02] But you didn't just notice in the last week you need to focus. [SPEAKER_02] Right. And if you did, maybe you need to focus. See prior comments coming. Right. If you haven't realized you're in code red for the last two or three months, and if you have realized this is the kind of thing you don't do when you're in code red, then you're just not paying attention. So I challenge that. I think it's a vanity project and absurd. And then the other kind of weird. [SPEAKER_01] Can we just pause on that? I know you want to because you want, where's your 200 million, Harry? But yes, let's pause on your lack of 200 million. [SPEAKER_01] No, no. I just want to actually articulate a bull and a bear case rationally for an audience for how this acquisition could be seen from both sides because it is very confusing. [SPEAKER_01] So if we were to start with a bull case, Rory, and Jason, please chime in too because you're the master of media and venture as well. [SPEAKER_01] What is the bull case? [SPEAKER_00] I'll give you the bull case. [SPEAKER_00] There's two. [SPEAKER_00] The strategic one's more interesting. [SPEAKER_00] But let me hit the tactical one because Rory made a good point. If you look, this is not going to make or break the company. Right. There are certain acquisitions that can. Right. There are certain acquisitions that stipulate that. But there are some things you acquire where they run almost on autopilot. They are not massive distractions. And if the price is small relative to what you hope to get out of it, that does factor into the equation. If you have to rebuild your whole team, it's a total distraction. You're going to rip out your guts. That's a big deal. Once in a while, it's pretty rare you can acquire something that isn't massively distracting to some management team level. So even if it's not the perfect acquisition, I don't think it's a huge distraction. It's not going to require a huge amount of senior executive time. So it's just important general to the calculation. The one point I'll make, and I wrote a post that every profitable public company should do a deal this. Of which OpenAI is neither. Right. It is clearly not profitable. It is clearly not public. But. But other than that. Let me tell you why, Rory. And you might end up agreeing with me on this because, and this is why the Barstool deal almost worked but failed. Right. If you are a profitable B2B company, especially. You are under insane pressure to get more profitable. I actually can't overstate how intense the pressure is. They're looking at every headcount, every sales efficiency, everything. Now it is brutal. Right. And your cash is trapped on your balance sheet. And so it is very difficult to increase marketing spend. It is very difficult to spend another hundred million this year on marketing. But at least in the short term, if you can buy a marketing asset that is at scale, you can turn your balance sheet into marketing, which is hard to do. It's hard to do. And I think maybe TBN is not the most successful way to get OpenAI's brand out there. We could debate that. But it is a way to turn a balance sheet into a marketing asset. [SPEAKER_02] I'm going to call bullshit on start to finish on this whole discussion. [SPEAKER_02] This is OpenAI is the most known company on the planet, other than Apple. [SPEAKER_02] Right. [SPEAKER_02] Within the last two years, the CEO of OpenAI has been able to meet every world leader he wants. He's gone on world tours. He's met Macron. He's met the president. He's met every single Prime Minister of India. Right. They get constant attention. The AI story has been the entire zeitgeist for the last three years, and they're the leader of the AI story. Right. So in terms of media minutes, there's nothing left to get. Right. Now, if what you're saying is, I don't like what they're saying about me, they were mean to me, then yes, maybe you can pay these guys to say nicer things about you than on average. But you don't need more. It's not like you're making widgets in the heartland here. Right. You are the most exciting tech story on the planet. They get constant attention, constant. The AI story has been the entire zeitgeist for the last three years, and they're the leader of the AI story. Right. So in terms of media minutes, there's nothing left to get. Right. Now, if what you're saying is, I don't like what they're saying about me, they were mean to me, then yeah, maybe you can pay these guys to say nicer things about you than on average. But you don't need more. It's not like you're making fucking widgets in the heartland here. Right. You are the most exciting tech story on the planet. You don't need a little bit of help to just get out and get covered. [SPEAKER_02] Literally everything Sam does gets covered. [SPEAKER_02] Right. [SPEAKER_02] So I hear you, Jason, most of the time, but not for these guys. [SPEAKER_02] If you were to pick the one company who doesn't need media attention and does need to focus, it would be OpenAI. [SPEAKER_02] And this is non-focused and getting media attention. [SPEAKER_02] So I'm just from a signaling perspective. We're 100% aligned. The only thing I would come back to you with saying is they have consistently shown an inability with how to respond on social to negative moments, whether it's lemonade stand, whether it's anthropic adverts. They've consistently messed up crisis PR and crisis communications and made themselves not look great. The only way I could justify this is by saying they are vibe maintenance for those shit times to make us better, cooler, better responders to bad things because they have no editorial control. This is the most important thing. Andreessen are right. The importance of owning media. [SPEAKER_01] But they have no ability to own the content, to influence it, to impact it in any way. [SPEAKER_01] It is editorially completely impartial. [SPEAKER_01] So they have zero benefits. [SPEAKER_01] This is the only reason this does not make any sense. [SPEAKER_01] If they had the ability to own the media properly, it would make sense. [SPEAKER_01] But they have zero impact on it. History is riddled with people who buy media assets to try and change outcomes. And it generally results. It generally, my observation is owning a media asset invariably takes way more time than you think for way less money than you expect. Right. See Jeff Bezos for details. Right. And you end up getting a beauty. Yeah. It just is a sinkhole. Right. And, Harry, if you can't control the story, then hire a better storyteller. You know, hire a better comms person. Hire a better marketing person. Think before you speak and before you hit on your bitch about lemonade stands. But in terms of it, it's in the noise. It does. And, Jason, you are right. [SPEAKER_02] They're not going to spend a lot of time managing it in this case, at least in the short term. [SPEAKER_02] My comment is more. [SPEAKER_02] It's just really silly when you say we've really got to focus. [SPEAKER_02] Nothing else matters but these two or three big things. [SPEAKER_02] Oh, but by the way, here's one last plaything project. The one thing I will, at a meta level, just to founders, especially if you listen to this, honestly, this is why you should default yes to a good deal. Let me be clear. I'm pretty sure this deal, I just read the press. Things that opened, there was stress in January, but it's not like today. Okay? It was not like today. Fiji comes in. She has an idea. This is not the biggest bet the company is going to make, but they have a team meeting. She's, I love TBN. What if we brought them in for a little bit of good promotion? And everyone around the corner is, whatever. Yeah, let's go talk about buying some open clause or something. But they say fine and things are good and they kind of shake hands on a deal. It takes a while to happen and it closes last week. There's no way that deal is going to happen today. It's dead because of management change. And I can't tell you how many times I've seen this for portfolio companies. And even it's happened to me twice where it's not just time is the enemy of deals. It's management turnover, right? Priority turnover. [SPEAKER_00] So the meta lesson is I just don't think this deal would have happened today. [SPEAKER_00] It has nothing to do with the team at TBN. So when you say no to an attractive deal, just be sure you're okay if it's no never. [SPEAKER_00] Because the odds that VP that wants to do the deal is there in 12 months and that their priorities have not changed, you know, approaches single digits. Yeah, it's back to the liquidity window comment. You're exactly right, Chase. [SPEAKER_00] Yeah, but my God, I think it's worse for M&A because so many times in M&A that guy just isn't there next year. But I'll tell you, one of the things about being the big boss is that even when you're a long way down, if you don't think it suits what you're doing now, you should stop it. I remember a fun story. 25 years ago, we were selling a company to GE. I'm not going to name the company, right? And it was a mediocre company and we were darn lucky to get the bid, right? And it was going all the way through and it went every level at GE, right? And then it came to the CEO and he's not perfect, Jack Welch, but he's willing to take a tough decision. We were a long way down. Everyone was about to sign and be all happy. He looked at the numbers and said no. And I remember thinking, damn, I thought we'd get away with it, but he's right. I should have, you know, right? And at some point, I remember thinking, oh, that's impressive. [SPEAKER_02] All these people were in, it was a long way down with the process. [SPEAKER_02] And he just said, I'm thinking no, right? [SPEAKER_02] And if you could, this is one where you say, I'm thinking no. I'm going to give you a hard one before we move to SpaceX. [SPEAKER_01] You have the chance to buy Anthropic at 850 or OpenAI at 380. [SPEAKER_01] Which would you rather buy? [SPEAKER_01] You may have that opportunity in the secondary market. [SPEAKER_00] As we speak. I wouldn't be surprised. I think I'd buy. And at some point, I remember thinking, oh, that's impressive. All these people were in it was a long way down with the process. And he just said, I'm thinking no, right? And if you could, this is one where you say, I'm thinking no. [SPEAKER_01] I'm going to give you a hard one before we move to SpaceX. You have the chance to buy Anthropic at 850 or OpenAI at 380. Which would you rather buy? You may have that opportunity in the secondary market. [SPEAKER_00] As we speak. I wouldn't be surprised. I think I'd buy. Having said I'd do Anthropic last time, I mean, six months ago at the 300 and something thing. I think I'd go the other way this time. Because again, if the choices were Anthropic at the last OpenAI price of 850 posts or whatever it is, 820 something posts, or OpenAI at the last Anthropic price of 370 posts or 380 posts, I would argue that you would buy OpenAI on one proviso. You could sit down with the board and say, what are you going to do about this? Because it doesn't take a lot to fix this thing, right? To just stop screwing around and focus, right? And you know, I know. [SPEAKER_01] No, no, no, no, no. Because you've got to stop then a machine that is Anthropic, that is now picking up more and more pace with every day that goes by and being that one. Could be. First of all, you still have the consumer asset where you are by far the dominant thing. Again, this goes back to what we said last week. You have to do two things. You have to figure out a consumer monetization model and you just have to get a codex, the codex competitor to Claude out there. Mission clarity is pretty simple. You do have one big advantage we didn't talk about though, it's changing a little bit. He was more aggressive on compute purchases. And I'll admit, I was someone thinking from the peanut gallery, hmm, is that a bit aggressive? But now it looks compute constraint is a real thing in 26 and early 27. You have that asset. Maybe you figure out how to deploy that aggressively with codex. So there's buttons you can press, there's things you can do if you focus and do them. [SPEAKER_01] Jason, you've got that same choice. I'd say buy both if you can invert, if you can invert the valuations. [SPEAKER_01] Yeah, that's actually good. [SPEAKER_00] That's what all the growth VCs are doing if they can get away with it anyway. So let's invert both. That's amazing, but you can only buy one. [SPEAKER_00] Yeah, but conflicts aren't important in our firm anymore. They don't matter at pre-seed and they don't matter at growth. Jason, you only have one check left. [SPEAKER_00] Well, look, I mean, I've said the same thing on the show. I'm just not into the tumult at OpenAI. I'm not into the drama. I'm not into a non-tech, non-deeply technical founder leadership. It's just not my vibe. I wouldn't invest in anything at OpenAI at a high price. It doesn't matter what it is because it's just, I just find it so risky that the turnover and not being led by a deeply technical CEO. That's just in my life at investing, I ain't doing those risks anymore, right? And maybe I'll miss a lot of opportunities. It's just, you know, I want someone Dario or smarter technically running these companies or I just, it's too much change. You get too lost on the pen and the TBPNs. Although I don't think Sam had anything to do with TBN in all fairness. I think he said fine in a meeting and moved on. [SPEAKER_00] No, because related to that, just for folks, I don't know how M&A works at OpenAI. It's not that sophisticated, okay? But I will tell you when I was at Adobe a long time ago for M&A, basically every senior executive got a big chip and a small chip, okay? The big chip was a big deal. Back then it was maybe a billion dollar deal, okay? That would move the needle. If it doesn't work, you get fired. It's that simple, right? And everyone got a small chip. What could be like 50 to 200 million deal. And you had to justify it and you didn't get five as a forcing function. You got one, but you really weren't challenged that much to do the smaller chip. You picked one a year and you didn't get fired. If it didn't work out, there was an idea that maybe 20% of them would work out. And so I bet he spent five. This was a small chip deal and he spent five minutes on it. This is the one, is this the one that you really want to do this year? Then just do it. Let's move on. We got bigger fish to fry. That's why I don't think it's that big of a deal. It was a small chip deal, right? And no one loses their job in Adobe over the small chip deal. Otherwise it would never happen. No one would take any risk in buying an emerging company, right? They just wouldn't do it. [SPEAKER_01] Okay. We've got to move on. Other things did happen. SpaceX finally, finally, confidentially files for IPO targeting a $2 trillion valuation. It would be the largest IPO in history, surpassing Saudi Aramco. They could raise up to $75 billion. This obviously includes XAI, otherwise known as Twitter, which they obviously incorporated earlier this year. 2025 revenue, 15 to 16 billion, 8 billion of EBIT. At $2 trillion, it's 125x revenue. So coming in punchy, to say the least, feels like a series A these days, Roy. How do we feel when we hear this? [SPEAKER_00] Well, I'll just tell you one insight. I think to say that at least venture is different or remade as an understatement. [SPEAKER_01] It would be the largest IPO in history, surpassing Saudi Aramco. [SPEAKER_01] They could raise up to $75 billion. [SPEAKER_01] This obviously includes XAI, otherwise known as Twitter, which they obviously incorporated earlier this year. [SPEAKER_01] 2025 revenue, 15 to 16 billion, 8 billion of EBIT. [SPEAKER_01] At $2 trillion, it's 125x revenue. [SPEAKER_01] So coming in punchy, to say the least, feels like a series A these days, Roy. [SPEAKER_01] How do we feel when we hear this? [SPEAKER_00] Well, I'll just tell you one insight. [SPEAKER_00] I think to say that at least venture is different or remade is an understatement. [SPEAKER_00] The big three, SpaceX plus OpenAI plus Anthropic, assuming they all IPO. [SPEAKER_00] And certainly SpaceX will in the next 12 months. [SPEAKER_00] Their value at IPO will exceed every other IPO for the last 20 years combined. [SPEAKER_00] All of them. [SPEAKER_00] All of the last 25 years. These the big three. Every other little deal. I mean, there's had some great IPOs. There's been tons of them out there, but this exceeds all of them combined. Right. [SPEAKER_00] So it almost makes I found it almost depressing in a way when I thought about this way, because it was, what's the guy we had earlier in the show from Slow Ventures who kind of bothered me a little bit. [SPEAKER_01] Sam Lesson. Yeah. And he kept saying Box doesn't matter. And then he said, OpenAI doesn't even matter. It's not that important. He was very triggering. I try not to get triggered directly, but he kind of rattled in my head. I was, maybe the guy's right. Maybe nothing we're doing matters because the big three dwarf the last 25 years combined. What are we doing, guys? What are we doing here? [SPEAKER_02] First of all, I think that is a real phenomenon. [SPEAKER_02] And what you're simply saying is, especially in SpaceX's case, the longer the holding period, the more dispersion which sets in, which is more the big become bigger and the little ones fade out. [SPEAKER_02] And you're exactly right. [SPEAKER_02] So, at the tail end of a power law, it does mess with your head because the combined value of the top three privately held companies are larger than everything else. [SPEAKER_02] In much the same way, it's even more concentrated than the public markets, which are more concentrated than they've ever been, where the market cap of the top four or five, Nvidia, Apple, Microsoft, Alphabet, and I think Meta, is approximately 30% of the total S&P, right? [SPEAKER_02] Which is everything for the last X hundred years, right? [SPEAKER_02] And you're right. [SPEAKER_02] Psychologically, the thing about a power law they don't tell you is you can have the third best outcome in venture history and be only one-tenth as large as the largest outcome in venture history. [SPEAKER_02] And if you're going to let that into your head, it's going to be a very tough business psychologically for you because you can have a life-changing event that's down in the noise of 10 or $20 billion outcomes, which can be enormously great for you and your family and for your co-investors and for everyone involved. [SPEAKER_02] And if you're going to let it in your head that it's not $2 trillion, then you're doomed and you're just going to need therapy. [SPEAKER_02] I wrestle with these things all the time. [SPEAKER_02] It is the thing that your mama told you, right? [SPEAKER_02] It's, you just have to not let other people define you. [SPEAKER_02] I mean, you said it really, it is a psychologically weird thing, right? [SPEAKER_02] You're going to have these three deals go public and they're going to be worth literally everything else that's happened in the last 20 years if they trade anything like their current prices. [SPEAKER_01] Will SpaceX rip and hit the $2 trillion when it does go out? [SPEAKER_02] I try and not spend time talking down an amazing company, right? [SPEAKER_02] Not least because I'm going to be a buyer of SpaceX 15 days from the IPO. [SPEAKER_02] I surprised you because 15 days from the IPO, it's coming in QQQ. [SPEAKER_02] I have a big QQ holding, right? [SPEAKER_02] If you're an index fund, you're getting this thing in 15 days, right? [SPEAKER_02] And I don't know when it'll be for the S&P, but it'll be fairly soon thereafter, right? [SPEAKER_02] So we're all going to be buyers of this thing, right? [SPEAKER_02] So in terms of the valuation, you don't know. [SPEAKER_02] Look, you do any kind of meaningful analysis of some of the parts and you come up with a lot lower number. [SPEAKER_02] And then as we've discussed this before, the gap between what you think the assets are worth on any kind of normal basis and $2 trillion is huge. [SPEAKER_02] And it's all Elon Premium. [SPEAKER_02] And what you're really asking, therefore, is how big is the Elon Premium sometime in June? [SPEAKER_02] And I don't know. [SPEAKER_02] I think that you're definitely seeing the Elon Premium come off on Tesla, which has been worth pointing out. [SPEAKER_02] And it's down significantly year to date. [SPEAKER_02] And there's definite... [SPEAKER_02] And I was interested to see JP Morgan put an actual sell on Tesla with a prediction of a 60% price decline. [SPEAKER_02] So really what you're asking me, Harry, is what is the Elon Premium in June? [SPEAKER_01] And hell, I don't know. Well, I'm asking actually, do you think it will materialize in public markets and they hit that $2 trillion? [SPEAKER_00] Well, here's what your thought. [SPEAKER_00] Well, obviously, I don't think either of us have worked on an IPO quite of this scale, right? [SPEAKER_00] But... [SPEAKER_02] No, by definition, no one has in the fucking universe because it's the first time it's ever happened. [SPEAKER_00] Right. So the process is going to be different. But here's my point. At some level, if the company... [SPEAKER_00] There is a tough negotiation sometimes between the company and the underwriters on valuation, right? [SPEAKER_00] And oftentimes, some CEOs are whatever the Lord brings and some are extremely aggressive on the number they want, right? [SPEAKER_00] And depending on the situation, sometimes the CEO wins those debates, gets out with the valuation the underwriters are very uncomfortable with. [SPEAKER_00] And sometimes it works and sometimes they stumble because of it. [SPEAKER_00] I think what Elon said publicly on X, it ain't going to be $2 trillion. Maybe he'll change his mind. He said $2 trillion was too high. So whatever his number is, I think he's going to get it on IPO day. He's going to will it into existence. The underwriters are not going to be able to argue with him for more than five minutes. And there'll be enough demand between retail, 30% of the IPO. It's a lot, right? There'll be enough whipped up demand, I think, to support it for one day. He will will it into existence. Whether that valuation is there in 30 days or possibly even in one day, I don't know. I think what Elon said publicly on X, it ain't going to be $2 trillion. Maybe he'll change his mind. He said $2 trillion was too high. So whatever his number is, I think he's going to get it on IPO day. He's going to will it into existence. The underwriters are not going to be able to argue with him for more than five minutes. And there'll be enough demand between retail, 30% of the IPO. It's a lot, right? There'll be enough whipped up demand, I think, to support it for one day. He will will it into existence. Whether that evaluation is there in 30 days or possibly even in one day, I don't know. But I do think the sheer force of will, the lack of power of underwriters and the 30% retail will his 1.75 into existence for one day, at least one day. I think that's quite correct. [SPEAKER_00] It's worth pointing out, I think, less than 12 months ago, there was a meaningful transaction in SpaceX at $400 billion. Then there was this much smaller, I don't know if it even happened in the end, secondary at $800 billion. Then in conjunction with the merger with X slash Twitter, SpaceX was valued at $1 billion to value the other asset with its negative $12 billion in cash flow at $250 billion. So they added that in to get to $1.25 billion. And now you're talking about $1.718. And it's all been walked up in a very interesting way. It is worth remembering that the last time the useful asset was valued on a standalone basis, it was worth $400 billion. [SPEAKER_02] So I think if the deal went public at $1.5, $1.6, less than the whisper number, I still think they'd have done a magnificent job of walking the value of the asset up. [SPEAKER_02] Because it's not clear to me that the X AI asset has a positive NPV in anything like the near term. [SPEAKER_02] We just had a long conversation on Entropic versus OpenAI, and they're number one and two in this space. [SPEAKER_02] And Gemini, Google is almost certainly number three. So X.AI is number four in the model LLM space at best, burning $12 billion a year. So I don't know what that's worth, but I would argue that they won't be talking about that in page one, two, or three of the slide deck at the IPO. They'll be talking about SpaceX, which means the entire edition of that probably was net negative. So I go back to my comment is, I think you're right, Jason, they'll will something amazing into existence for a short period of time, because Elon just has all the leverage and the drive. And I think only in the long term are markets weighing machines, in the short term they're voting machines. And we'll see over time how it settles as people just look at the dynamics of a $20 billion plus or minus business. Cash flow positive, apparently, well, EBITDA positive, CapEx not clear, excluding X.AI, and then add an X.AI, and it'll settle into a long term value over time. What happens on the day, I think you're right, it'll be much more a function of the will, and it's a small float, so people will push. I'm switching it up here. We're going to go to private market. I love it. We had big news from Sequoia this week for context, always appreciate the context set. Doug Leone had taken a step back from the firm, back from day to day, back from investing. And Pat and Alfred had recently taken over the leadership from Roloff. And now Doug is back in an investing capacity, not in a leadership capacity. That's still very much with Pat and with Alfred. [SPEAKER_01] But Doug's back in the firm investing, which is very big news given he is one of the OGs. [SPEAKER_01] How do we read Doug back and back in the trenches? Well, look, I don't know. [SPEAKER_01] Rory may have more thoughts. [SPEAKER_01] I don't know. [SPEAKER_01] But from a distance, it feels like something to calm the LPs. [SPEAKER_01] I mean, everyone is raising so much capital, so much change there that I think LPs are uncomfortable with change. [SPEAKER_01] LPs say that they're looking at the new generation and the vanguard, but they are comfortable when the old leadership is still actively involved in the fund. [SPEAKER_01] It does make LPs more comfortable, whether they're writing investing half the fund or a few deals. [SPEAKER_00] So it struck me as that simple as you bring back someone that makes the LPs comfortable and you get through this crazy amount of fundraising everybody's doing. [SPEAKER_00] But I could be wrong. [SPEAKER_00] I could be wrong. [SPEAKER_00] But I don't think it's just to get somebody on your Slack and get a little wisdom. [SPEAKER_00] You don't need to bring them back to just to get an hour or two of insights on deals. [SPEAKER_00] That you already have. [SPEAKER_00] I think it was a sensible move. [SPEAKER_00] I don't think it's an earth-shaking move. [SPEAKER_00] I mean, they've made the changes they've made already as a firm and it all made sense. [SPEAKER_00] I think at the margin, you're right. [SPEAKER_00] It helps on a bunch of different things. It just provides some continuity, which is important, I think, for LPs, for the firm even, for entrepreneurs. Also, let's not lose sight of the fact he's a damn good investor. Right? I mean, one of the questions we always ask when we're hiring someone and thinking about it, and in this case you are effectively hiring someone, is do you think the next check that they'll write will be better than a check that one of us will write? [SPEAKER_02] And I think Doug Leone has proven that he can write pretty good checks. [SPEAKER_02] So I think even at the margin, from a check-writing perspective, it makes sense. [SPEAKER_02] The transition, having made one transition to Roloff and having had to make another transition abruptly means the first transition wasn't that successful. [SPEAKER_02] I'm sure there's an element of scratching the itch. [SPEAKER_02] You want to come back and make it work. [SPEAKER_02] You know, they've put a lot of his life into this firm. [SPEAKER_02] They've done an amazing job. [SPEAKER_02] And it just felt a little janky late last year when that transition happened. [SPEAKER_02] So if a couple more years can help manage that transition and send a continuity message, why not do it? [SPEAKER_02] With the greatest, as I spend a lot of time with LPs, a lot, the insatiable appetite from LPs for Sequoia has never been more prominent still. [SPEAKER_02] And so I don't, respectfully, I don't think it's LPs. [SPEAKER_02] I think it's actually just in the face of increasing competition from Founders Fund who've got an Andreal and a SpaceX at their tailwinds for founder brand and Andreessen, which are more attractive than ever for founders. [SPEAKER_02] You ask the question, how can we be more competitive? [SPEAKER_02] And Doug is the ultimate winner of deals. [SPEAKER_01] He is the... [SPEAKER_02] Why not do it? [SPEAKER_02] With the greatest, as I spend a lot of time with LPs, the insatiable appetite from LPs for Sequoia has never been more prominent still. [SPEAKER_02] And so I don't, respectfully, I don't think it's LPs. [SPEAKER_02] I think it's actually in the face of increasing competition from Founders Fund who've got Andreessen and SpaceX at their tailwinds for founder brand and Andreessen, which are more attractive than ever for founders. [SPEAKER_02] You ask the question, how can we be more competitive? And Doug is the ultimate winner of deals. [SPEAKER_01] He is the... [SPEAKER_01] You telling me the kids at YC have heard of Doug Leone or even know how to spell his last name? [SPEAKER_01] I doubt it. [SPEAKER_01] I'm telling you when Doug Leone goes to that meeting with them, whether it's Christian Hecker at Trade Republic in Germany, or whether it's the team at Wiz, he closes the deal. [SPEAKER_01] Yeah, because maybe not the YC founder who's doing it, but you're right. [SPEAKER_01] Across, look, let's get real here, across the venture and tech ecosystem, this is someone who's had wild success and even in a meeting can bring knowledge to bear that would move the needle on a close. [SPEAKER_00] I agree. [SPEAKER_01] I mean, look, as I say, don't make it... [SPEAKER_01] Well, let's call it gravitas. [SPEAKER_01] Whether it's the founders or the LPs, it is adding gravitas back into Sequoia in a time of change, right? Agreed. That's exactly right. And he says they needed more gravitas. That's just what... We need a little more gravitas, guys. [SPEAKER_00] Who can we bring in? [SPEAKER_00] Yeah. [SPEAKER_00] One of the things I admire about Sequoia, to be fair, I've always said this is that even if they're winning on every round but one, they'd be like, well, how do we win on that round as well? [SPEAKER_00] Right? [SPEAKER_00] And as you say, Harry, it's never been more competitive. [SPEAKER_00] There are wildly talented, similar sized firms. [SPEAKER_00] Why not? Even if you have 10 great players, why not get an 11th? [SPEAKER_02] Jason, you mentioned the youngest founders from YC. [SPEAKER_02] YC, some very young founders from YC obviously founded Delve, a SOC 2 compliance business. [SPEAKER_02] Sorry, Rory, don't look pissed at me. [SPEAKER_02] No, I'm not pissed. [SPEAKER_02] No. [SPEAKER_02] Okay, good. [SPEAKER_02] Very young, 21 year olds. [SPEAKER_02] And as everyone knows, Delve has been in the news for not providing a product in the SOC 2 compliance space. [SPEAKER_01] They said there were a lot of problems around that. [SPEAKER_01] YC have since kicked them out of the YC community, which was announced this week or leaked this week from Bookface, YC's internal product, which obviously wasn't meant to be leaked. [SPEAKER_01] Is this the ultimate sign of their guilt? [SPEAKER_01] Insight invested 32 million bucks into the company within the last year. [SPEAKER_01] Should there have been more diligence from an investor perspective? [SPEAKER_01] How do we think about this? [SPEAKER_01] My guess is, they listen, obviously a lot of things went wrong, right? [SPEAKER_01] One was making up a lot of audits with AI. [SPEAKER_01] We're going to find more portfolio companies did that. [SPEAKER_01] The second one was stealing from a fellow company, stealing IP, forking a fellow company. [SPEAKER_01] And I think, listen, I don't know how you manage it with YC, with thousands of companies, but there's a limit where you cross the bro code or the girl code or the founder code with other folks at recent portfolio companies. [SPEAKER_01] And there's a line you just can't cross. And whether they see it as open code theft or what happened, whether you're manipulating, you can't allow that within the core portfolio. [SPEAKER_00] And I think they were rejected for the combination. [SPEAKER_00] And it wasn't just some young kids misusing AI. [SPEAKER_00] I think it was the second. [SPEAKER_00] I think it was breaking the code. [SPEAKER_00] And that's why they were just there was no need to comment more. [SPEAKER_00] You broke the code. You're out. [SPEAKER_00] You're out. You're out of the team. [SPEAKER_00] I totally agree, Jason. [SPEAKER_00] I mean, look, these things are going to happen. [SPEAKER_00] I mean, I was just running the math in my head. [SPEAKER_00] I said, YC, 200 companies a quarter, so that's 800, 900 a year. [SPEAKER_00] Right? [SPEAKER_00] Step back. [SPEAKER_00] United States, we have 300 million people here. [SPEAKER_00] We have approximately 3 million people incarcerated at any one point in time. [SPEAKER_00] So we run roughly 1% between felons and misdemeanors across the whole population. [SPEAKER_00] So if you just index to that, that means out of the 800 YC founders a year, statistically, if they're just no better or no worse than the rest of the country, there's eight of them that are willing to cause their life to commit some kind of crime. It's going to happen. You're going to have fraud. And at the end of it, when you have a portfolio of 30 companies or 40 companies as we do, then most VCs avoid it. And every once in a while, one VC gets unlucky. If you have 200 companies a year, it's going to happen to you a lot. [SPEAKER_02] Right? [SPEAKER_02] So first of all, no drama there. [SPEAKER_02] No, I mean, I saw all this, oh, YC is bad because this guy's a fraud. [SPEAKER_02] Dude, when you have this number of companies, statistically, it's just going to happen. [SPEAKER_02] So that's the first comment. [SPEAKER_02] And then the second comment, Jason, I love what you said. [SPEAKER_02] You're exactly right. [SPEAKER_02] What do you do if you're running YC? [SPEAKER_02] You can't stop this up front. [SPEAKER_02] Right? [SPEAKER_02] And especially when a lot of your value add to entrepreneurs is the community. [SPEAKER_02] Right? [SPEAKER_02] That is what you're selling and you do business with each other. [SPEAKER_02] Anyone who did business with these guys was at the very least embarrassed because you rely on this for SOC 2 compliance and then it wasn't true. And then on top of that, you stole from another YC bro. You're exactly right. It's like in the old West when there wasn't much law, you have to take the law on your own hands and hang the cattle thieves. Right? This is the same thing. Right? [SPEAKER_02] And especially when a lot of your value add to entrepreneurs is the community. [SPEAKER_02] Right? [SPEAKER_02] That is what you're selling and you do business with each other. [SPEAKER_02] Anyone who did business with these guys was at the very least discombobulated and embarrassed because you rely on this for SOC 2 compliance and then it wasn't true. [SPEAKER_02] And then on top of that, you stole from another YC bro. [SPEAKER_02] You're exactly right. [SPEAKER_02] It's like in the old West when there wasn't much law, you have to take the law into your own hands and hang the cattle thieves. [SPEAKER_02] Right? [SPEAKER_02] This is the same thing. Right? Dude, you broke the code of the West, you're out. And I think from an enforcement perspective, I can totally see why they did it. Now you can talk about should other people have known, should you really buy compliance software from 21-year-olds? That's an interesting comment. But fundamentally, I think you're exactly right, Jason. You're going to have this thing. And the only way you can deal with it is not a priori policing, but especially when you break the bro code, or whatever the non sex loaded term of bro is. When you break that code, you just have to be pretty ruthless about it. [SPEAKER_02] So yeah, I really think it was the part two that did it. [SPEAKER_02] I know there was stealing, taking a customer, SimStudio, that is also a YC company, maybe even a batch mate, taking their open source software, not attributing it back and claiming it's your own software to your own batch mate or your own customer. [SPEAKER_02] That's something we've all thrown a few things in the cloud and pretended we did the work. [SPEAKER_02] All three of us have done that. [SPEAKER_02] But this one breaks the code. [SPEAKER_02] You took the open source code from your batch mate and said it was your own software. [SPEAKER_02] And they were your customer. [SPEAKER_02] That's something you can't hand wave that one away. [SPEAKER_00] Move on. [SPEAKER_00] Exactly. [SPEAKER_00] You can't hand wave that one away. [SPEAKER_00] Moving on. [SPEAKER_00] Open Router. [SPEAKER_00] Very well known company for those that don't know, a marketplace for LLMs, so to speak, at 1.3 billion valuation at 50 million ARR, up from 10 million in October. [SPEAKER_00] So obviously 10 to 50 and whatever that's been six to seven months feels quite cheap for an AI leader. [SPEAKER_00] Jason, I'm intrigued to hear your thoughts specifically on this one. [SPEAKER_02] I love Open Router. [SPEAKER_02] I mean, I use it and it's just very interesting. [SPEAKER_01] You know, it's a very simple way to dynamically pick which LLM to use. [SPEAKER_01] Right. [SPEAKER_01] And going to our conversation from last week, sometimes it doesn't matter if you're not price sensitive for certain workloads. [SPEAKER_01] Sometimes not only does it matter, but it's incredibly helpful to not have to do all this work yourself. [SPEAKER_01] Which model should I pick? How should I do it? Open Router lets you do it dynamically or you can pick different LLMs for different use cases and it just makes it elegant. And what I love about it, it's also really cheap, right? It's quite cheap. I suspect the cheapness is why it's not worth 10 billion, right? When you have such a low take rate from such high GMV, you naturally get a little nervous about the addressable TAM, even though we've given up on TAM. That would be my guess. But you know, they've become the market leader in this space. It's cheap and it works and adds a lot of value. You've got to love it, right? It's just on the flip side, you know, one of the reasons Anthropic got 20 billion, right, is a really good Anthropic call at the API level is a buck. It's a buck. [SPEAKER_00] Okay, here's my simplification. [SPEAKER_00] You can do so much on your $20 a month cloud subscription or $200. [SPEAKER_00] But I can tell you on all the apps I've built, the complex stuff, it's a dollar. [SPEAKER_00] So that scales massively. [SPEAKER_00] If you're taking 1% to 5% of a subset of that, you know, there is in theory a ceiling if you don't expand it. [SPEAKER_00] What I like is if you get market leadership in this kind of thing and you're not that expensive, there's no reason to switch. [SPEAKER_00] It's not worth switching for a tiny amount more basis points. [SPEAKER_00] It's not worth it, right? [SPEAKER_00] And just for a listener's context, what the company does is act as an interface between you, the builder of whatever software product you're building, and 50 to 60 different LLMs such that it can dynamically pick in real time which LLM is the right one for whichever call you're making. [SPEAKER_00] And it charges around 5%, 5.5% of the money you pay the ultimate model provider. [SPEAKER_00] So if you're building this app and you're spending, you know, $100,000 a year on LLM calls, using these guys, you pay 5% to them. [SPEAKER_00] But in return, instead of having to access each LLM separately, you get access to them all in one kind of API call. [SPEAKER_00] And so it just totally makes sense. To me, it's in that Stripe Twilio business model of an interface. Twilio was an interface between an app builder and all the complexities of telco. And these guys are an interface between an app builder and all the complexities of LLMs. And Twilio's gross margins, because of revenue growth, were 30%, 40% plus. They were pretty good. Whereas in this case, they're only booking the net revenue at 5%. So maybe there is actually room for margin expansion there over time. So it's an interesting business. The world needs it. The other thing that's interesting about it, which gets to the wider question, is a number of folks have backed into figuring out what are the most common models. And you see a lot of the Chinese open source models now, right? Which gets to something I'd love to spend time thinking about, and I just haven't, is they must have a pretty good sense of what things do you need state-of-the-art models, and what things can you do easily on much cheaper open source models, right? So it's an interesting business. The world needs it. The other thing that's interesting about it, which gets to the wider question, is a number of folks have backed into figuring out what are the most common models. And you see a lot of the Chinese open source models now, right? Which gets to... So I always think I'd love to spend time thinking about it, and I just haven't, is they must have... Open Router must have a pretty good sense of what things do you need state-of-the-art models, and what things can you do easily on much cheaper open source models, right? Well, they can even turn it on for you. That's one of the reasons I think Open Router is so clever. If you want, they will just decide which router, which model to use for a workflow. And my point is... You don't even have to figure it out. Yeah. At some point, the people spending $30 billion a year on Anthropic, corporate IT is going to wake up and say, do I have to spend all this money on Anthropic, or can I pass some of these calls to a cheaper model? [SPEAKER_00] And something given the size of spend that OpenAI and Anthropic are getting, there is at least the opportunity for corporate purchasing to think about, is any of this doable on a cheaper model? [SPEAKER_00] I'm a super fan, right? [SPEAKER_00] Super fan of open, great software, super easy to deploy everything. [SPEAKER_00] It's 11 labs, just super easy to use, super easy to deploy. I give it a 10 out of 10. What I've learned from another investment we can chat about is, okay, so they're at 50 million ARR, they said. And the nominal take rates 5%, but some folks probably pay less, right? And in some cases, you don't have to pay anything. So they might be needing to manage 2 billion in inference just to get to 50 million in revenue. So how do you build, easy to see how you get to a couple hundred million in revenue, right? [SPEAKER_00] In today's world, what I worry about companies like OpenRouter is how do you get to a billion in revenue, right? And do you just wave your hands and say, these are great founders? They're at the heart of AI. Or do you say, oh my God, even if Anthropic keeps growing and some folks won't use it because they'll get big enough, they'll do their own things. How the hell does this get 20x bigger when it's already managing 2 billion of inference? I'm going to give you the argument, which I'm not sure I believe. But look, if you believe in a world where, look, you just look at the OpenAI and Anthropic projections, which cumulatively add up to, in 2029 on the CO2 estimates, $400 billion, $500 billion plus. Let's call it $500 billion in API across both companies, right? As you take out ChatGPT consumer business, maybe $300, $400 billion of enterprise API calls across OpenAI and Anthropic. I don't know. If 10% or 20% of that went open source, that's $40 to $80 billion. [SPEAKER_00] And $40 billion to 5% is pleasingly $2 billion. Right? [SPEAKER_02] Now that's 100% of the market. [SPEAKER_02] So you're right. [SPEAKER_02] 100% of the market, right? [SPEAKER_02] Yeah, that's fair. [SPEAKER_02] That's fair. [SPEAKER_02] You got to get 100%. [SPEAKER_02] I mean, maybe there's $40 to $80 billion of value going to open source LLMs, and maybe you can get 5% of that. [SPEAKER_02] Now, the other question to your point, Jason, is right now, amazingly, all these open source models are primarily Chinese open source models. [SPEAKER_02] And until either LLAMA, if Meta reintroduces an up-to-date open source model or someone like Reflection ships one, there'll be a US equivalent. But right now, ironically, the Chinese Communist Party is effectively subsidizing the American small independent software vendor by providing cheap open source models. [SPEAKER_02] God bless them. [SPEAKER_02] Right? [SPEAKER_02] Because if you look at the kind of winner list on OpenRouter, it's all Qwen, Chimmy, and all the other open source products. [SPEAKER_02] What I think about OpenRouter just for investing, right, where this news is, I do really think about small takes of large TAMs is intellectually confusing. [SPEAKER_02] So Harry and I are both investors in a company called RevenueCat. [SPEAKER_02] I was the first investor, and they have about 50% market share in managing mobile subscriptions. [SPEAKER_02] If you have a mobile app that is paid, 50% chance they have RevenueCat deployed. [SPEAKER_02] Okay? [SPEAKER_02] It is competitive and their net take rate is half a percent up to 1%, right? [SPEAKER_02] Even with all of that, they're only so much bigger than OpenRouter. [SPEAKER_02] Now, they grew 40% last month because of AI. It's great. But I love the company. I love it. They have a clear path to a billion in revenue now. But my learning from that is sometimes it's hard to do the math intuitively. If your product is very cheap in a large market, but you don't get all of it, OpenRouter could be one of the greatest 200 million ARR companies, right? It's just a risk that I think about more than I used to. That's fair. But I will give you the counterpoint, which is the two best financial businesses on the planet are Visa and MasterCard. I sit literally 30 yards away from the Visa headquarters. They don't even get 2.5% because most of that goes to the banks. They get, you know, 15, 20 bps, but on every dollar every human spends on the planet, it turns out to be a remarkable. No, I'm with you. I'm just, I guess my personal intellectual limitation is that the notional bps map doesn't always translate to the real world bps map, right? [SPEAKER_02] That's the thing. [SPEAKER_02] The Revolut and Visa sound great, but niche, sometimes products that seem mass scale are more niche in practice. [SPEAKER_02] And if your product is $200,000 a year or $100,000 a year, who cares, right? [SPEAKER_02] You'll figure it out later. [SPEAKER_02] If your product is dirt cheap, you really got to own everything. [SPEAKER_02] Own everything when it's dirt cheap. No, no, I'm with you. I'm just, I guess my personal intellectual limitation is that the notional bps map doesn't always translate to the real world bps map, right? [SPEAKER_02] That's the thing. The Revolut and Visa sound great, but niche, sometimes products that seem mass scale are more niche in practice. And if your product, if your product is $200,000 a year or $100,000 a year, who cares, right? You'll figure it out later. If your product is dirt cheap, you really, really got to own everything. Own everything when it's dirt cheap. [SPEAKER_00] And I think we're all making a lot of AI mistakes here and our investments are being flattered by high ACVs right now. The ones that will have high ACVs all seem to be doing great because they're 50 to 100K per check. Getting to where 11 Labs got from the early days is much harder than a lot of Lagorra's and Harvey's are just because the large ACV flatters the inputs and the outputs to achieve that scale. [SPEAKER_00] Agreed. Not sure I could trace it back to Open Router, but I agree with what you're saying. I'm personally as an investor and this may be one of my many flaws—it's a long list. I'm nervous about exciting AI investors that have very low ACVs right now. I think their actual TAMs may end up being smaller than they look despite the epic numbers. When we started this conversation, despite Anthropic getting to 30 billion in five years, the little tiny crumbs we get out of this 30 billion may not make a whole loaf of bread sometimes. A bad analogy, but some truth to that. That's just, so rather than shoot from the hip when it's a 7 million post back in the old days, if I've got to shoot from the hip at a hundred million post in the pre-seed, maybe I got to really believe that that small, that small ACV will scale up. [SPEAKER_00] Do you think Open Router will be a $10 billion company? [SPEAKER_00] It's always a weird question because if I knew for certain I'd go through the deal and not sit here and talk to you, right? I mean, because that's what they're paying me to do. I think we're in a world right now where everyone is just doing the buildout as quickly as possible. What that means is everyone on that journey can attract some capital, right? And get some revenue because if you're solving a problem that's in the rate, that's a rate limiting step in terms of getting the AR buildout done, you can get revenue, you can grow quickly. [SPEAKER_01] And I think Open Router is an example of that, right? And you know, you can put on your intellectual MBA hat and say, in the end, when things settle out, maybe a lot of these businesses get commoditized and you can worry about the market. And there's a certain amount of that worry is legitimate. And there's a whole bunch of markets. There's the labeling marketplace. There's the inference marketplace. There's products like this Open Router where you say, oh, when things settle down and people start getting more efficient, then all these businesses will get scrunched a little bit. And that's true intellectually. But my advice, and I say it internally, is please don't overthink it. Because while that is true, at the same time, in the short term, this explosive lift in demand gives you a chance to be relevant. It's your job to add products on top of that, such that when the great crunch does come, and it will come in a couple of years, you've just delivered enough value. You understand me? In other words, do I think Open Router will get to $10 billion in value on just what they do today? No. And if they just keep doing what they're doing today, no more than the inference guys, no more than the labeling guys—when things slow down, all these businesses will get crunched when people start to optimize. But you have a chance to parlay. You're building relationships with a whole bunch of app developers in Open Router's case. Your job is to find the add-on products on top of this that, over the next two or three years, give you value or do the adjacent acquisitions that give you value. Maybe you start doing inference. Maybe you start hosting stuff on top that allows you to extract more value from those customers, such that when the thing slows down, you're the survivor. I mean, we saw it. Yeah, I think that's the challenge with these investments. I mean, no wonder if I'm running it, it's a dream. I'm 50 people, right? 50 million in revenue at the center of this. If I was a founder, there's a dream job, right? But I think my learning is Rory's point. The reality is you have to go truly multi-product earlier in this type of situation. Not just a little feature, right? Not just a little enhancement. [SPEAKER_00] But you literally probably have to build five distinct products to get to that billion. And not all founders are actually up for that. They say they are, but you need a very distinctive founder to run the AI rippling playbook and say, "Hey, I want to break something up in some ways that's crushing it with 50 people if they have it." I mean, again, my dream job and say, "We're going to do five of these and we're not going to wait two years. We're not going to just focus, focus, focus, focus." And I think if they're up for it, I would hold my stock. [SPEAKER_00] Harry, you probably have no choice. If you see this sort of Stewart Butterfield-ask reluctance to go multi-product, which was very rational at that time and place, then I would be less excited to hold stock. I think you've got to run these businesses right now like you're in this insane kind of period of time when money is just raining down on everyone. And all the time, you should be saying to yourself, at some point, the music will stop and two-thirds of the people will have to go. How do I make sure I'm the one-third that make it? Right. And that's what the smart inference providers are doing. That's what the smart, up and down the stack should be doing. How do I lock in? Because look, the truth, even when the crunch comes, the foundation model companies make it because they're on top of the heap. They have the high intellectual property asset. [SPEAKER_00] And all the time, you should be saying to yourself, at some point, the music will stop and two thirds of the people will have to go, how do I make sure I'm the one third that make it? [SPEAKER_00] Right. [SPEAKER_00] And that's what the smart inference providers are doing. [SPEAKER_00] That's what the smart, up and down the stack should be doing. How do I lock in? [SPEAKER_00] Because look, the truth, even when the crunch comes, the foundation model companies make it because they're on top of the heap. They have the high intellectual property asset. [SPEAKER_00] Right. [SPEAKER_00] They're going to make it. Everyone else one level down has got to be saying to themselves, when people sober up, they're going to say, oh my God, this is a commodity. There's a bunch of adjacencies. How do I make sure I win in that world? Speaking of will this become a commodity in a future world? We've seen the need and the explosion of databases. We've seen some people like your Lovables and your Replets incorporate them, build it themselves. Some people outsource to Supabase. Supabase at $10 billion. Jason, you're the man for this. The man who's used more Replit instances than anyone else. Is Supabase at $10 billion a good buy? How do we feel? I think I like it. [SPEAKER_01] I do think it's an interesting buy. First of all, huge credit to the team. This is one I call an AI tailwind to the maximum. Supabase found, I think, in 2020. Right. This is pre-AI. And they're like, oh well, we'll do another fork of Postgres, which is open source and free. And we'll make it easier to use and easier to deploy. [SPEAKER_00] I know it was a hot YC company, which a lot of folks want to say it's the unhot ones that take off. But sometimes it is the hot ones. But I don't know that certainly wouldn't have been obvious to me in 2020 that we needed a big deal. And they needed another forked version of an open source database Postgres. I mean, everyone was having issues with Postgres at the low end and the high end folks were having to shard it and it got complicated for big. And it was reasonably difficult to deploy at the low end. So their idea. But then that just worked with agents like they built a product that could basically self deploy a Postgres database. And it's what every agentic product needed. [SPEAKER_00] Right. [SPEAKER_00] They needed to spool up a database without humans and they leaned the hell into it. Right. They didn't get Replit. Replit went with Neon, which Databricks bought, but everyone else standardized on Supabase. Right. They supported them and then they let everyone Lovable and Emergent and all these other ones white label it a couple of months ago. And now I don't have the exact numbers, but I know more databases are being created by agents and humans. So that is the trend you're betting on. [SPEAKER_00] All right. Database is a fundamental category of software. It always has been. Right now the number of databases we're creating. I mean, it's an order of magnitude more than it's been 12 months ago. So why the hell wouldn't you want to bet on the leader in that trend? [SPEAKER_00] Right. [SPEAKER_00] Every app needs a database. And even the ones. And what's interesting now is I'm not sure if this is true of Lovable v zero, but Replit changed it a little while ago where every single app has a database whether you use it or not. They found that enough of them are using databases no matter what they build. Right. That it's not worth adding a database later. So whether you even realize you have a database, all the millions and millions and millions of built apps have a database in the background. So with Supabase, they get to monetize them all. They're charging these guys for every single database. So I do like this one. I do like it. This is one where the agents are so far ahead of humans. Now there are categories where the agents are doing. But no, and everyone's talking about what the world will be like in four years. Right. Database is a world where already the agents are creating more databases than humans. We've already crossed that line. And so why wouldn't you want to invest in the leader? [SPEAKER_00] I agree. And I think it is literally an excellent example of two things we've talked about. One is that kind of thing I just mentioned, which is you start with something and you have to parlay. And then the other thing is, Jason, that you've talked about a lot is being a pre-AI company that brilliantly finds your way to co-attach. These guys co-attached to the trend. As you say, did the deals with many of the vibe coding things. And now their job in the next two years is before the music stops, be perceived just as MongoDB was the right database for the kind of SaaS era and for cloud. You want to be the right database for vibe coded and agent apps in 2026, 27 or 28. And at some point when things slow down enough for the Lovables and the Replets and the other folks to say, hey, maybe we should just back in and do this ourselves. You want Supabase being in a position to say, no, every developer on the planet uses us. Every agent framework supports us. [SPEAKER_02] Why would you do this? Your users will rebel. But the playbook is super clear. As I say, it's literally just like the SaaS and cloud Spade book playbook, but on super fast speed. You know, this is all going to happen in two or three years and make sure that, you know, before things slow down, you are a lot more than you are today in the eyes of your users. [SPEAKER_02] Think about how hard it classically has been to deploy a database. I mean, Oracle is still massive, right? I mean, I have never deployed Oracle, but I can only imagine how difficult it is to deploy Oracle database. Right. Mongo is work. These products and that was disruptive. These things are work. I even Mongo has a vector database product and I deployed it for one of our apps and it only took a few hours, but it took head scratching and headaches and not everyone could do it. This is all going to happen in two or three years and make sure that before things slow down, you are a lot more than you are today in the eyes of your users. Think about how hard it classically has been to deploy a database. Oracle is still massive, right? I have never deployed Oracle, but I can only imagine how difficult it is to deploy Oracle database. Mongo is work. These products and that was disruptive. These things are work. [SPEAKER_02] Mongo has a vector database product and I deployed it for one of our apps and it only took a few hours, but it took head scratching and headaches and not everyone could do it. [SPEAKER_02] Superbase you could do in five seconds. It's so disruptive. [SPEAKER_02] All these databases start being easier than the prior alternative. [SPEAKER_02] I don't remember when relational started because it was in the seventies, but I remember even in the early nineties. Arthur Rock used to talk about it, though. I remember relational database days. And then I do remember when MongoDB started and it was just the drop dead simple cloud-based alternative to a lot of these, to some of the other alternatives at the time. Not so much directly competitive relational databases, but for some of the newer use cases and then they get more complex. A DBA for someone that could spend a month configuring it and getting it going is disruptive, right? Yeah, because it didn't take a month. It took a few hours. It was easy. It was JSON. It was whatever. And you're right, now it's five minutes. So it's just now I've no doubt. Or it actually it's invisible. You don't even know. Here's what's interesting. You don't even know you have a database until you need it. It's lurking in the background. Now you build an app without a developer, and you didn't even know you needed a database because you're not a developer and it's already there and configured and has all your data. It's pretty cool. [SPEAKER_02] That's true. But the odd point I was trying to make is the tragedy is that's great. [SPEAKER_02] But over the medium term, a white label business to five or six vibe coders won't be enough. So they're going to have to expand beyond that. And ironically, over the next five years, that will mean adding complexity, adding functionality. And in ten years time, someone, and it won't be me at that point, will be saying, oh my God, those legacy Superbase products. They're almost as bad as MongoDB. And there'll be a new alternative at that point. But that's just the movie. And this is Superbase's time to crank. Good for them. [SPEAKER_00] I think it's also a reminder just that we've given up on worrying too much about intellectual durability in these investments. Right. It's a winner. The growth is exciting. The NPS is high. We're not. The fact that everyone else may build their own Postgres databases or other things may change. We're not. We don't even care anymore. I mean, I'd say differently, by the way, just to be clear, it's not that we don't care. It's that you just don't have the luxury of there are very few things where you can say, oh, this is something that is highly different. It has that level of defensibility. Arguably, LLMs themselves did because there was only a small number of people who knew how to make the magic. But you're right. Most of the time right now, I mean, I can regret the fact that there's not a lot of barriers to entry. [SPEAKER_00] Or I can just accept that that's just a reality that exists today. And the barrier to entry is, as Brian from Andreessen said, is speed. [SPEAKER_00] And if you execute well, you create these barriers to entry over time. [SPEAKER_00] But you're right, Jason. Right now, most of the deals you look at, in the short term, the barriers to entry are low. And what that means is if you stumble, you lose. Right. [SPEAKER_00] Because if there's five of you going out of the gates, one of them won't stumble and they'll win. [SPEAKER_00] Right. And over time, by winning, they'll be able to create. [SPEAKER_00] I believe downstream there will be barriers and moats created, second-order moats. [SPEAKER_00] But out of the gate, you're exactly right. It's a race. [SPEAKER_00] And I don't know who the super best competitor was, but they didn't get the two or three key white label deals. And there you are. I think also this is why I view a lot of VCs today as enablers. It really bothers me because Rory's point is accurate. If you stumble today, you may lose forever. Right. And I see way too many. The classic VC thing is, guys, keep pushing. You've got time. Keep at it. A bad quarter or two, falling behind the competition, everyone. It's not that I don't think you should be supportive of your portfolio companies. Of course, you have to be right. And what choice do you have? I just see too many VCs running a pre-AI enabler playbook. Where when folks do fall behind a tick or two, you see kumbaya activity instead of code red activity. I think it goes to your point of what you said before, which is there's no point in being difficult with founders or being opinionated in the way that you've been before, because they don't listen. You say it yourself. They don't. And so why? But I'm making a slightly different point. For example, I'm an investor in a company that's crossed nine figures in revenue, but it is hitting massive AI competition and issues. OK, it happens. Right. And they have a new investor on the board that doesn't really know the space that well and doesn't really want to learn and frankly isn't as close to some of the AI changes as we are. And every email and conversation is great job, guys. Keep at it. Don't you understand the disruption in the space? Don't you understand the issues? And he's become an enabler and inadvertent enabler by being a cheerleader. Right. I just worry about it because so many folks are still hiding. [SPEAKER_02] And I don't think having enablers around the table, even if it feels good on a given month, is helpful today. [SPEAKER_02] I think enablers can enable a death spiral that you feel good about as you approach the event horizon and your startup implodes. [SPEAKER_02] I was thinking about what you said and frankly, just checking myself, have I at times? [SPEAKER_02] Because what? One man's description of enabler can be another person's description of being supportive. Right. [SPEAKER_02] And at times when things are tough, you want to be supportive. [SPEAKER_02] So I was thinking actually, Jason, because I actually think it's a very important comment. [SPEAKER_02] And I think what makes the difference is this. [SPEAKER_02] And I don't think having enablers around the table, even if it feels good on a given month, is helpful today. [SPEAKER_02] I think enablers can enable a death spiral that you feel good about as you approach the event horizon and your startup implodes. [SPEAKER_02] I was thinking about what you said and frankly, just checking myself, have I at times? One man's description of enabler can be another person's description of being supportive. Right. And at times when things are tough, you want to be supportive. So I was thinking actually, Jason, because I actually think it's a very important comment. And I think what makes the difference is this. You have to be very clear eyed with your companies on where the competition is and understand exactly what the old guys are doing and therefore how well and how far behind you stack up. Right. And that takes it away from enabling. It's a judgmental term. [SPEAKER_02] Because also being a jerk is also a judgmental term. Right. [SPEAKER_02] I think what you're saying that is correct is you're not a useful board member unless a you understand what the company does and how it compares to the direct competitors, ideally with hands on experience of the products. [SPEAKER_02] And then B, you find a way without being a jerk to keep the company honest about where they are relative to the competition. [SPEAKER_02] What are they seeing? [SPEAKER_02] What do our products do? [SPEAKER_02] What do our competitors' products do? What do the adjacent products do? How do we think about that? Not in a defeatist way, but how do you distinguish between these guys leapfrogged us for a month and we need to get our act together versus we are a year, year and a half behind in a market and we may never catch up and we should sell while we can. Right. And I think that's actually threading the needle between you don't want to be an enabler, but you don't want to be a detractor. You want to be supportive. It's kind of a slogan we have internally. It's not so much founder friendly, it's founder honest. Right. But also, I think actually, as I think about it, it has to be founder fact based. The number one thing, and I'm even thinking on a couple of my deals where I have to do some work this week: Do you really understand where your two direct competitors are and the strengths and weaknesses of your product and what the last three win losses say about how you're really doing in the field? Because if you don't, you're just cosplaying a board member. [SPEAKER_02] And are you being honest about what has to change? [SPEAKER_01] Yeah, agreed. Right. [SPEAKER_00] Champs, there are many other topics that we can discuss. [SPEAKER_00] I often get chastised for my selection. So I'm going to have you make the selection. You make the selection, Harry. I'm too tired to decide. I think we will have to at some point address McCaw. I think someone in a comment put oh, Harry, you often shill them and so you can't not talk about them when there's trouble. I don't like to do that. So for context, McCaw, obviously a data provider to some of the largest companies in the world, most notably Meta, and they have since reportedly lost part or all of them being a customer of their data. It was also unfortunately at the same time that Forbes released their billionaires list of young billionaires where the founders of McCaw are on that list. Very unfortunate timing there for them. Jason, I'm sure you've got an opinion on this in terms of the McCaw hack and then losing Facebook as a customer. Well, just two thoughts. One, not that long ago, I was with part of the management team of one of the leading hyperscalers and what he said was when there was a minor security issue with a third party vendor, relatively minor. [SPEAKER_02] Right. Not but not like this, not like all of the private data of all of McCaw being exposed. And what he said was there's not much higher on our list with partners and when this happens, there's not much higher. We have no tolerance. It's not worth it. There is no tolerance. And in this case, they got a pass because it was a relatively minor issue with the vendor that was honest and they fixed it and it did not lead to actually any internal data issues. It was just an external issue. But it was crystal clear: there is no talk, there is no it is not worth it for us. So that is troubling. And the other thing, and I'm not an expert in the data labeling or more career space. What I don't know is how fungible the products are at some level. The more fungible it is, right, the more freedom you have to route that to what's left at scale or whatever the guys at Handshake want to do or whatever they want to do. If it's not fungible, you can bang your chest but you're still stuck using them. But that moment, like when I was with that, the number one criticism of the space is that all the largest customers are customers of all of them. And so they are generally heavily fungible. And so I would be very worried because this comment was chilling from this executive: this is the highest thing on our list with third party partners, security. We're exposing our applications to folks we'd rather not expose it to because in our ecosystem we'd rather have no partners because there is so much confidential stuff flowing through what we do at all levels. So we just have no tolerance for anything that's material. I just don't see how you would come back from this if you've crossed that line. There's just no unless you have to. I think it's potentially death. And the reason I bring it up is in the old days, through 2023, in our lifetimes, you always got a pass once as a vendor. Even for the worst breaches, the worst issues, unless your app was down for weeks, you get called into the CISO's office, you get yelled at. It was brutal, but you always got at least one because it was just the reality of working with emerging vendors. But then I just don't know that you get a second one here. I just don't know. A lot of the margin depends on how you handle it. I don't know at this point. [SPEAKER_00] Do we have any sense of whether it was a state actor, was it a malicious employee, was it just a stupid configuration breach? I don't have any sense of the forensics here. Even for the worst breaches, the worst issues, unless your app was down for weeks, you get called into the CISO's office, you get yelled at. It was brutal, but you always got at least one because it was just the reality of working with emerging vendors. But then I don't know that you get a second one here. I just don't know. A lot of the margin depends on how you handle it. I don't know at this point. [SPEAKER_00] Do we have any sense of whether it was a state actor? Was it a malicious employee? Was it just a stupid configuration breach? So I don't have any sense of the forensic here. [SPEAKER_01] It was an organization I think they called Latipus. [SPEAKER_01] Basically they hold you for ransom and you have to pay for it back. [SPEAKER_01] It's a commercial activity. [SPEAKER_01] Gotcha. [SPEAKER_01] It's commercial, decent, honest criminals. [SPEAKER_01] Right. [SPEAKER_01] Got it. [SPEAKER_01] That's very successful. [SPEAKER_01] I asked the team if we could invest in them. [SPEAKER_01] This is one of many very successful operations. [SPEAKER_01] Actually, you'll find they don't need much outside capital. [SPEAKER_01] No, they're very good. They're very good. Yeah, they don't need much outside capital. Right. That in one sense sucks. On the other hand, the good news is at least they're going to be rational and you can buy them off. I think is it fatal? Hopefully not. [SPEAKER_00] I think in these things, you generally pay a pretty significant penalty. [SPEAKER_00] How you handle it is a key part of it where you're straightforward and honest with your suppliers and with your customers and let them know what's happened. [SPEAKER_00] Was it entirely your fault? [SPEAKER_00] Were you crassly stupid? [SPEAKER_00] Was it bad luck? [SPEAKER_00] Was it somewhere in that continuum? [SPEAKER_00] Yeah, so you can manage through it. [SPEAKER_00] I think it is hard when you have four or five vendors of roughly the same thing. [SPEAKER_00] On the other hand, I don't mean this cynically, but there also appears to be right now an insatiable demand for labeling data. [SPEAKER_00] So it may be that I think the Meta statement didn't say they can't. [SPEAKER_00] They said they've paused, which makes sense. [SPEAKER_00] Everyone's going to pause. [SPEAKER_00] Right. [SPEAKER_00] And my guess is the likely outcome is you lose a fair amount of revenue. [SPEAKER_00] You lose a fair amount of time. You're going to have to spend a ton of money to bolster your defenses. But if you do the right thing, you'll be able to earn your way back slowly and over time. [SPEAKER_00] Right. [SPEAKER_00] That's the likely outcome here. [SPEAKER_00] Hopefully not fatal. [SPEAKER_00] But my guess is that and I think Sam Altman, maybe to tie it back to the start, I think Sam Altman said something this week that massive cybersecurity attacks will come from AI. [SPEAKER_00] I genuinely think that most B2B companies are going to get hit worse than Mercur. OK, this LLM was one of the weaknesses that they had, like tons of B2B folks have. How strong and state of the art are their security teams? They're not. They're relying on a hodgepodge of open source and other products that are barely monitored. In many cases, they're busy. [SPEAKER_02] They're under pressure for profitability. [SPEAKER_02] They're managing their teams. [SPEAKER_02] And maybe Mercur. [SPEAKER_02] I mean, it's probably a small company. [SPEAKER_02] They probably don't have a huge team. [SPEAKER_02] But my point is, I think it's going to be really tough on a lot of startups and scale ups because they just don't have the teams to deal with the levels of threats that are coming from AI. [SPEAKER_01] This is a start. It's going to get worse. This LLM incident is going to happen to everybody. [SPEAKER_01] And as soon as you figure out you can hold all these B2B companies and others hostage, they and their network of thousands of affiliates are going to do it. [SPEAKER_01] I don't know that the average pretty good to mediocre or actually don't even really have a security team. [SPEAKER_01] How the hell are they going to keep up? They don't even have a team. [SPEAKER_01] Remember when Gainsight was offline for a month, Drift was permanently destroyed. [SPEAKER_02] And this was pre all this craziness. There was an old saying my CTO told me back in the day: the only reason we've been hacked is no one cares about us. [SPEAKER_02] And that has resonated in my ears for years. [SPEAKER_02] You haven't been hacked. [SPEAKER_02] With AI, you can hack anybody you want. [SPEAKER_01] I think, Jason, you're exactly right. [SPEAKER_01] Because in general, security purchases tend to happen after new stuff gets deployed. [SPEAKER_01] People should think about security upfront. [SPEAKER_02] They tend not to. [SPEAKER_02] They deploy. [SPEAKER_02] Bad stuff happens and then they panic and think about security. [SPEAKER_02] That's the way it's always been in every cycle. [SPEAKER_02] And I think we're just about to hit that stage of it now. [SPEAKER_02] And I think there are two separate vectors. [SPEAKER_02] First of all, the AI apps themselves have security needs that are different than pre-AI apps. [SPEAKER_02] You know, the whole prompt injection kind of issues. [SPEAKER_02] But I think the bigger issue is Jason's point, which is everything else. [SPEAKER_02] AI can now, using AI, the bad guys can just automate attacks, automate phishing, automate duplication of voice, all that kind of stuff. [SPEAKER_02] I think Anthropic referenced this. [SPEAKER_02] And there's the Red Army quote that I often use: quantity has a quality all its own. [SPEAKER_02] And with AI, you can make quantity of fake people. [SPEAKER_02] You can make quantity of attacks. [SPEAKER_02] You can do this. [SPEAKER_02] And so I think it's not so much going to be you getting attacked because of your AI apps. [SPEAKER_02] It's much more going to be AI apps are going to attack you. [SPEAKER_02] A lot of the AI doomerism I discard, but this is a legitimate and big issue, I think, right? [SPEAKER_02] The ability of AI to escalate the velocity and ferocity of attacks, right? [SPEAKER_02] Which is why, by the way, I think the whole response of security stocks going down to the Anthropic announcement was absurd. [SPEAKER_02] I think anyone who's cutting back on the security budget in 2026 is missing the point, right? [SPEAKER_02] Because not only are the attacks more ferocious, but thinking again, Harry, to your point, again, the second statement is really obvious, but it's worth saying. [SPEAKER_02] This stuff gets more important every year because more and more of our stuff's online. [SPEAKER_02] The percentage of things that we do that are done online just continues to escalate. [SPEAKER_02] The ability of AI to escalate the velocity and ferocity of attacks, right? [SPEAKER_02] Which is why, by the way, I think the whole response of security stocks going down to the Entropic announcement was absurd. [SPEAKER_02] I think anyone who's cutting back on the security budget in 2026 is missing the point, right? [SPEAKER_02] Because not only are the attacks more ferocious, but thinking again, Harry, to your point, again, the second statement is really obvious, but it's worth saying. [SPEAKER_02] These things get more important every year because more and more of our stuff's online. The percentage of things that we do that are done online just continues to escalate. It's all the stuff in your house, all the stuff in your financial life. There's nothing that matters that isn't done online at this point, right? Which means that attacks can attack more and more of our accounts. So, I think absolutely you're going to see, you should be seeing a real acceleration of investment in a different class of security to cope with a different class of threat. Because look, it's a fatal error if you don't. [SPEAKER_00] There's only really two things that can destroy one of these companies. [SPEAKER_00] The app goes down for a long period of time or the app gets hacked grievously. [SPEAKER_00] Those are the two kind of red card fatal errors, right? [SPEAKER_00] And that's where you're going to have to put the money. [SPEAKER_00] There's a wave of the second tier that's coming. [SPEAKER_00] It's just massive, right? [SPEAKER_00] Even to tie it, I know we got to wrap it, even Supabase, which I'm a super fan of, right? [SPEAKER_00] A lot of times folks turn off the default security, right? [SPEAKER_00] And we've seen these issues. And in the old days, no one would find it because they didn't care about our little Rory and Harry and Jason's app. Now AI will find it in seconds, right, on the internet. And it will use every possible way to penetrate that, to steal the data, to create malicious acts. Everything that is possible on the face of the earth that can be delivered with software. Maybe there's nothing we can do, but I don't think we've all under-invested in the attacks to come. It used to be hacker farms of people in the Philippines, Russia. Now it's going to be hacker farms of AI agents cranking 24-7. It's going to be miserable. Guys, you can choose one more, okay? Jason, Rory doesn't feel choosing, so he's delegated it to you. [SPEAKER_00] Absolutely. [SPEAKER_00] Okay. There's the GLP-1, two company. Again, for people who use this as their news on tech. [SPEAKER_00] A two-person company who uses AI intelligently scaled to $1.8 billion in revenue selling GLP-1s. [SPEAKER_00] Interesting. A lot to unpack there. Wix buying back 31.6% of its shares given its low stock price. Oracle getting rid of 20,000 to 30,000 employees via a 6 a.m. email. Jason, any that stand out? Obviously, at some level, people are so excited about the one or two-person billion-dollar company. Facts were glossed over, points were missed, and all that, right? Oversimplified. And they used deep fakes. [SPEAKER_02] They made representations about doctors they shouldn't. [SPEAKER_02] They did all the wrong things. [SPEAKER_02] They did all the crappy affiliate marketing stuff people have been doing for 20 years, and they did it at scale with AI and built a big business on it, right? [SPEAKER_02] I get it. [SPEAKER_02] But what is interesting about it is if you... [SPEAKER_02] Let's not over-glamorize this company that maybe is at the edge of fraud in many ways in its marketing tactics. [SPEAKER_02] The fact that they could use AI to scale this with two people and maybe some consultants and stuff on the side, it is... [SPEAKER_02] We are seeing the future. [SPEAKER_02] Why? And AI is completely changing marketing. Marketing has not gone away. Dario and Sam... To Rory's point, Dario and Sam are everywhere because marketing matters as much now as ever. And this is a different version of how marketing is changing. And if you don't adapt, right? Maybe buying TBM is a bad idea, but you've got to adapt to the new world of marketing when... And there's a number of startups that have tried to automate all this marketing at scale with AI. Most of them are terrible, right? They don't quite work. [SPEAKER_02] They create boring assets. [SPEAKER_02] They look awful. [SPEAKER_02] They look at make. [SPEAKER_02] They're that bad, a lot of the assets. [SPEAKER_02] They don't have context. [SPEAKER_02] They use too much stock art. [SPEAKER_02] But no reason in a year, everyone shouldn't have the AI power to blanket the entire internet with the best hyper-personalized marketing in the world. [SPEAKER_02] We will... Hopefully in a year, we will all have the power to do some of what Medvi have done. [SPEAKER_00] And I think it's... [SPEAKER_00] I think it's a chance to see 12 months into the future that when we will... [SPEAKER_00] All of us will have more of this power. [SPEAKER_00] In other words, just because they're illegally selling weight loss reduction drugs that are off-label to people without the appropriate FDA safeguards doesn't mean they're not great marketers. [SPEAKER_00] I just... [SPEAKER_00] I talked to so many CMOs who are still struggling to run the 2023 playbook and falling further and further behind. [SPEAKER_00] You have to adapt. [SPEAKER_00] And I think crappy automation doesn't work anymore, right? But these guys that were able to do that at mass scale and target everybody, this is the future that we all should know. And marketing... [SPEAKER_01] I guess the code is marketing appears to be more powerful than ever in the age of AI. [SPEAKER_01] And humans have to control it. [SPEAKER_01] But if you don't leverage how marketing needs to be done in the future, you're going to be stuck in the past. [SPEAKER_01] You're going to be killed by folks running the old playbook. [SPEAKER_01] So... [SPEAKER_01] But yes, anyone that achieves some sort of scale through marketing, as dodgy as some of these consumer guys are, there's something to learn, right? [SPEAKER_01] Whether it's multivariant testing, whether it's AI, whether it's personalization at scale, I think it's a waste as a marketer if you don't learn from that, right? [SPEAKER_01] And this is what I think is going to happen. [SPEAKER_01] We are... [SPEAKER_01] This is... [SPEAKER_01] You're going to be killed by folks running the old playbook. But yes, anyone that achieves scale through marketing, as dodgy as some of these consumer guys are, there's something to learn, right? Whether it's multivariant testing, whether it's AI, whether it's personalization at scale, I think it's a waste as a marketer if you don't learn from that, right? And this is what I think is going to happen. Just like it is inexcusable to send a dated sales loft outreach cadence from 2021 today, the way we're doing advertising and marketing will seem incredibly dated in two years. Only the creakiest companies will be doing marketing and advertising the way they do it today in two years. It makes no sense. I should be getting the GLP One ad specifically targeted to you. Jason, you don't technically need it, but I noticed your jawline on 20VC could be a little bit tighter. What if we just microdosed you today so you could get some of that t-shirt look that Harry has? I'd click on that in two seconds. You would, you know? I shouldn't get that versus stock art of some grandpa running with his golden retriever on a beach, right? So I both think this is fraud and over-headlined and the future. We're watching the future. I think you're right. I mean, I would argue that a huge percentage of it is on the fraud side, but on the hairy edge of regulation side. But I actually agree upon reflection, what you're saying is correct. It's a little like the last comment. What we're basically saying is the most entrepreneurial people on the planet right now are the hackers and the dodgy marketers that are on the front line of pushing things. But the tactics that they're using and the way they're leveraging AI, everyone's going to be doing within a year or two. They're going to be left behind. Yeah, there was an era in the old days when the best affiliate marketers knew things nobody else did and built billion-dollar companies out of it, right? Then there was an era which is now faded when some of the best companies used SEO in a way nobody had used before. Millions of pages, right? DigitalOcean was built entirely on an SEO farm. So was Zapier and others. And there was a group of folks that knew how to do this and it worked. The next group of folks will know how to do mass personalization at scale that really works to millions and millions of people. And they will win like the prior affiliate market. They will crush folks and the rest of the world just won't get it. They'll think it's dark arts. They need to become agentic marketing experts. But in the same way, the great affiliate marketers actually largely originated from porn and Viagra. If you want the dark... [SPEAKER_02] Agreed. And here I think probably some of the best next-gen AI marketers will spawn from GLP-1s or anything at the borderlines of next generation e-commerce in some ways. I agree with that, by the way. Yeah, I mean, there's no doubt that criminals... I mean, many of these new technologies are adopted by crime or by porn or dodgy marketers. But I think Jason's insight is a profound one, which is the marketing tactics that are used by and look very dark arty over the next 10 years tend to be adopted by everyone. And now, as you say, everyone in corporate America is an SEO expert, whereas 20 years ago, it was a dark art. And I think you're right, Jason. In the next two or three years, if you're not adopting agentic marketing as a digital marketer, you're just going to be left way behind. And personalized marketing and leveraging the technology, I think... Yeah. I mean, I knew it already intellectually, but actually, I will say you crystallized it in my mind because I've lived the last... I remember when SEO marketing was literally something that only the lead gen companies did, and there was a two or three-year period where they had hyper-growth, $100 million businesses kicking off 30% cash. And then those businesses went away as normies adopted the technology, and the correct play was to be the software provider helping the normies tool up. And I think the same is true here in agentic marketing. So that's my stolen insight from you for the day, Jason, as I go look for those companies. Well, it's just interesting. All Medvi has to do to make $400 is drive a GLP lead to someone that buys a product that tokens the world can't consume enough of. And most of these folks are selling the exact same product and they're fungible, right? And so you're getting three... There's a moment in time where it's a great marketing arbitrage if you're excellent at this. You get $300 to $400 for delivering a customer that already wants to buy your product, right? That's how the math works. It ties back to our open route or another conversation. If you only made $10, this wouldn't be such an exciting business. But these... They're so profitable, but also so competitive. When you get $400 for just delivering a customer from a Facebook ad, you want to run this. You do what it takes. Boys, a lot to discuss this week. Thank you for being so good. [SPEAKER_02] It's so good to see you. Thank you for being so good. I'm ready to clean the transcript. However, I don't see any transcript content provided yet. Please share the transcript text you'd like me to clean, and I'll apply the rules you've outlined: - Remove filler words (um, uh, like, you know, I mean, basically, sort of, kind of) - Fix obvious grammar and punctuation errors - Preserve speaker labels exactly - Not change meaning, rephrase, or add content - Not remove technical terms, proper nouns, or intentional repetition Please paste the transcript and I'll process it for you. So for context, McCaw, obviously a data provider to some of the largest companies in the world, most notably matter who they have since reportedly lost part or all of them being a customer of their data. It was also unfortunately at the same time that Forbes released their billionaires list of young billionaires where the founders of McCaw are on that list. Very unfortunate timing there for them. Jason, I'm sure you've got an opinion on this in terms of the McCaw hack and then losing Facebook as a customer. Well, just two thoughts. One, not that long ago, I was with part of the management team of one of the leading hyperscalers or and what what what he said and I was with him when there was a minor security issue with the third party vendor relatively minor. Right. Not but not like this, not like all of the private data of all of McCaw being exposed. And what he said was there's not much higher on our list with partners. And when this happens, there's not much higher. Like we have no tolerance. It's not worth it. There is no tolerance. And in this case, they got a pass because it was a relatively minor issue with the vendor that was honest and they fixed it and it did not lead to actually any internal data issues. It was just an external issue. But it was crystal clear. There is no talk. There is no it is not worth it for us. So that is troubling. And the other thing and I'm not an expert in the data labeling or more career space. What I don't know is how fungible the products are at some level. The more fungible it is. Right. The more freedom you have to route that to what's left at scale or whatever the guys at Handshake want to do or whatever they want to do. If it's if it's not fungible, you can you can you can bang your chest. But you're still you're still you're still stuck using them. But but that moment like that when I was with that number one criticism of the space is that all the largest customers are customers of all of them. And so they are generally heavily fungible. And so I would be very worried because this comment was chilling from this executive is like this is the highest thing on our list with third party partners is security. We're exposing our our applications to folks we'd rather not expose it to because our ecosystem we'd rather have no partners because there is so much confidential stuff flowing through what we do at all levels. So we have no we just have no tolerance for anything that's material. I just don't see how you would come back from this if you've crossed. There's just no unless you have to. I think it's I think it's it's potentially death. And the reason I bring it up is in the old days like through 2023 in our lifetimes, you always got to pass once as a vendor. Even for the worst breaches, the worst issues, unless your app was down for weeks, you get called into the CISO's office, you get yelled at. It was brutal, but you always got at least one because it was just the reality of working with emerging vendors. But then I just I don't know that you get a second one here. I just don't know. A lot of the margin depends on how you handle it. I don't know at this point. Do we have any sense of, you know, was it a state actor? Was it a malicious employee? Was it just a stupid configuration breach? So I don't have any sense of the forensic here. It was it was it was an organization. I think they called Latipus. All right. Basically hold you hold it for ransom and you have to pay for it back. It's a commercial activity. Gotcha. It's a commercial like decent, decent, honest criminals. And right. Got it. That's very successful. It's I asked the team if we could invest in them. It seems this is one of many very successful. Actually, you'll find how they don't actually. No, they're very good. They're very good. Yeah, they don't need much outside capital. Right. That in one sense sucks. On the other hand, the good news is at least they're going to be rational and you can buy them off. I think is it fatal? Hopefully not. I think in these things, you generally pay a pretty significant penalty. How you handle it is a key part of it where you're straightforward and honest with your suppliers and with your customers and let them know what's happened. Was it entirely was it your fault entirely? Were you crassly stupid? Was it bad luck? Was it you know where in that continuum it was? Yeah, so you can manage through it. I think it is hard when you have four or five vendors of roughly the same thing. On the other hand, I don't mean this cynically, but there also appears to be right now an insatiable demand for labeling data. So it may be I think because I think the meta statement didn't say they've can't. I said they've paused, which makes sense. Everyone's going to pause. Right. And my guess my guess is the likely outcome is you lose a fair amount of revenue. You lose a fair amount of time. You're going to have to spend a ton of money to bolster your defenses. But if you do the right thing, you'll be able to earn your way back slowly and over time. Right. That's the likely outcome here. You know, hopefully not fatal. But my guess is that. And I think Sam Altman, maybe to tie it back to the start, I think Sam Altman said something this week that massive cybersecurity attacks will become from AI right are coming. I genuinely think that most B2B companies are going to get hit worse than Mercur. OK, this light LLM was was one of the weaknesses that they had like tons of B2B folks have. How strong how state of the art and strong are their security teams? They're not. They're relying on a hodgepodge of open source and other products that are barely monitored. In many cases, they're busy. They're under pressure for profitability. They're managing their teams. And I didn't and and maybe Mercur. I mean, it's probably a small company. They probably don't have a huge team. But my point is, I think it's going to be really tough on a lot of startups and scale ups because they just don't have the teams to deal with the levels of threats that are coming from AI. This is a start. It's going to get worse. This light LLM incident is going to happen to everybody. And as soon as you figure out you can hold all these B2B companies and others hostage, they and their network of thousands of affiliates are going to do it. Well, I don't know that the average pretty good to mediocre to actually don't even really have a security team. How the hell are they going to keep up on? I don't even have a team. Remember when Gainsight was offline for a month, Drift permanently was destroyed. And this was pre all this craziness. Like there was an old saying my CTO told me back in the day, the only reason we've been hacked is no one cares about us. And that has resonated in my ears for years. You haven't been hacked. With AI, you can hack anybody you want. I think, Jason, you're exactly right. Because I think, you know, in general, you know, security purchases tend to, you know, new stuff gets deployed. People should think about security upfront. They tend not to. They deploy. Bad stuff happens and then they panic and think about security. That's the way it's always been in every cycle. And I think we're just about to hit that stage of it now. And I think there's kind of two separate vectors. First of all, the AI apps themselves have security needs that are different than pre-AI apps. You know, get the whole prompt injection kind of issues. But I think the bigger issue is Jason's point, which is everything else. AI can now, using AI, the bad guys can just automate attacks, automate phishing, you know, automate duplication of voice, all that kind of stuff. I think Entropic referenced this. And, you know, it's the Red Army quote that I often use, that quantity has a quality all its own. And with AI, you can make quantity of fake people. You can make quantity of attacks. You can do this. And so I think it's not so much going to be you getting attacked because of your AI apps. It's much more going to be AI apps are going to attack you. A lot of the AI doomerism I kind of discard, but this is a legitimate and big issue, I think, right? The ability of AI to escalate the velocity and ferocity of attacks, right? Which is why, by the way, I think the whole response of security stocks going down to the Entropic announcement was absurd. I think anyone who's cutting back on the security budget in 2026 is missing the point, right? Because not only are the attacks more ferocious, but thinking again, Harry, to your point, again, the second statement is really, Captain, obvious, but it's worth saying. These stuff get more important every year because more and more of our stuff's online. The percentage of things that we do that are done online just continues to escalate. It's like stupid stuff. It's like all the stuff in your house, all the stuff in your financial life. There's nothing that matters that isn't done online at this point, right? Which means that attacks there can attack more and more of our accounts. So, I think absolutely you're going to see, you should be seeing a real acceleration of investment in a different class of security to cope with a different class of threat. Because look, it's a fatal error if you don't. There's only really two things that can destroy one of these companies. The app goes down for a long period of time or the app gets hacked grievously. Those are the two kind of red card fatal errors, right? And that's where you're going to have to put the money. There's a wave of the second tier that's coming. It's just massive, right? Even to tie it, I know we got to wrap it, even Supabase, which I'm a super fan of, right? A lot of times folks turn off the default security, right? And we've seen these issues. And in the old days, no one would find it because they didn't care about our little Rory and Harry and Jason's app. Now AI will find it in seconds, right, on the internet. And it will use every possible way to penetrate that, to steal the data, to create malicious acts. Everything that is possible on the face of the earth that can be delivered with software. Maybe there's nothing we can do, but I don't think we've all under-invested in the attacks to come. It used to be hacker farms of people in fill in the blanks, the Philippines, Russia. Now it's going to be hacker farms of AI agents cranking 24-7. It's going to be miserable. Guys, you can choose one more, okay? Jason, Rory doesn't feel like choosing, so he's delegated it to you. Absolutely. Okay. There's the GLP-1, two company. Again, for people who use this as their news on tech. A two-person company who uses AI intelligently scaled to $1.8 billion in revenue selling GLP-1s. Interesting. A lot to unpack there. Wix buying back 31.6% of its shares given its low stock price. Oracle getting rid of 20,000 to 30,000 employees via a 6 a.m. email. Jason, any that stand out, baby? Obviously, at some level, people are so excited about the one or two-person billion-dollar company. Facts were glossed over, points were missed, and all that, right? Oversimplified. And they used deep fakes. They made representations about doctors they shouldn't. They did all the wrong things. They did all the crappy affiliate marketing stuff people have been doing for 20 years, and they did it at scale with AI and built a big business on it, right? I get it. But what is interesting about it is if you... Let's not over-glamorize this company that maybe is at the edge of fraud in many ways in its marketing tactics. The fact that they could use AI to scale this with two people and maybe some consultants and stuff on the side, it is... We are seeing the future. Why? And AI is completely changing marketing. Marketing has not gone away. Dario and Sam... To Rory's point, Dario and Sam are everywhere because marketing matters as much now as ever. And this is a different version of how marketing is changing. And if you don't adapt, right? Maybe buying TBM is a bad idea, but you've got to adapt to the new world of marketing when... And there's a lot of... There's a number of startups that have tried to automate all this marketing at scale with AI. Most of them are terrible, right? They don't quite work. They create boring assets. They look like an awful art. They look kind of like make. They're that bad, a lot of the assets. They don't have context. They use too much stock art. But no reason in a year, everyone shouldn't have the AI power to blanket the entire internet with the best hyper-personalized marketing in the world. Like we will... Hopefully in a year, we will all have the power to do some of what Medvi have done. And I think it's... I think it's a... I think if we step back, it's a chance to see 12 months into the future that when we will... All of us will have more of this power. In other words, just because they're illegally selling weight loss reduction drugs that are off-label to people without the appropriate FDA safeguards doesn't mean they're not great marketers. I just... I talked to so many CMOs who are still struggling to run the 2023 playbook and falling further and further behind. You have to adapt. And I think crappy automation doesn't work anymore, right? But these guys that were able to do that at mass scale and target everybody, this is the future that we all should know. And marketing... I guess the code is marketing appears to be more powerful than ever in the age of AI. And humans have to control it. But if you don't leverage how marketing needs to be done in the future, you're going to be stuck in the past. You're going to... And you're going to be killed. You're going to be killed by folks running the old playbook. So... But yes, I mean, anyone that achieves some sort of scale through marketing, as dodgy as some of these consumer guys are, there's something to learn, right? Whether it's multivariant testing, whether it's AI, whether it's personalization at scale, I think it's a waste as a marketer if you don't learn from that, right? And this is what I think is going to happen. We are... This is... Just like it is inexcusable to send a dated sales loft outreach cadence from 2021 today, the way we're doing advertising and marketing will seem incredibly dated in two years. Like only the creakiest companies will be doing marketing and advertising the way they do it today in two years. It makes no sense. It makes no sense. I should be getting the GLP One ad specifically targeted to you. Jason, you don't technically need it, but I noticed your jawline on 20VC could be a little bit tighter. What if we just microdosed you today and so you could get some of that T-shirt look that Harry has? Like I'd click on that in 60 seconds, two seconds. You would, you know? I shouldn't get that versus stock art of some grandpa running with his golden retriever on a beach, right? So I'm both... I both think this is fraud and over-headlined and the future. We're watching the future. I think you're right. I mean, I would argue that a huge... Just a huge percentage of it is on the fraud side, but none... Not on the fraud side, but the hairy edge of regulation side. But I actually agree upon reflection, what you're saying is correct. It's funny. It's a little like the last comment. What we're basically saying is the most entrepreneurial people on the planet out there right now are the security... Yeah, the hackers and the kind of dodgy marketers that are on the front line of pushing things. But the tactics that they're using and the way they're leveraging AI, everyone's going to be doing within a year or two, they're going to be left behind. I could go along with that. Yeah, there was an era in the old days when the best affiliate marketers knew things nobody else did and built billion-dollar companies out of it, right? Then there was an era which is now faded when some of the best companies used SEO in a way nobody had used before. Millions of pages, right? You know, even things you could... Maybe it's only worth 10 billion. DigitalOcean was built entirely on SEO farm. So was Zapier and others. And there was a group of folks that knew how to do this and it worked. The next group of folks will know how to do this mass personalization at scale that really works to millions and millions of people. And they will win like the prior affiliate market. They will crush folks and the rest of the world just won't get it. They'll think it's dark arts. And they need to become agentic marketing experts. But in the same way, the great affiliate marketers actually largely originated from porn and Viagra. If you want the dark... Yeah, yeah. Agreed. And here I think probably some of the best next-gen AI marketers will spawn from GLP-1s or anything at the borderlines of, you know, next generation e-commerce in some ways. Yeah, but I think that Jason's insight... I agree with that, by the way. Yeah, I mean, there's no doubt that criminals... I mean, many of these new technologies are adopted by crime or by porn or dodgy marketers. But I think Jason's insight is a profound one, which is the marketing tactics that are used by and look very kind of dark arty over the next 10 years tend to be adopted by everyone. And now, as you say, everyone in any corporate America is an SEO expert, whereas 20 years ago, it was a dark art. And I think you're right, Jason. In the next two or three years, if you're not adopting agentic marketing as a digital marketer, you're just going to be left way behind. And personalized marketing and leveraging the technology, I think... Yeah. I mean, I knew it already intellectually, but actually, I will say you kind of crystallized it in my mind because I've lived the last... I remember when SEO marketing was literally something that only the lead gen companies did, and there was a two or three-year period where they had hyper-growth, $100 million businesses kicking off 30% cash. And then those businesses went away as normies adopted the technology, and the correct play was to be the software provider helping the normies tool up. And I think the same is true here in agentic marketing. So that's my stolen insight from you for the day, Jason, as I go look for those companies. Well, it's just interesting. All Medvi has to do to make $400 is drive a GLP lead to someone that buys a product that just like tokens the world can't consume enough of. And most of these folks are selling the exact same product and they're fungible, right? And so you're getting three... There's a moment in time where it's a great marketing arbitrage if you're excellent at this. You get $300 to $400 for delivering a customer that already wants to buy your product, right? That's how the math... It kind of ties back to our open route or another conversation. If you only made $10, this wouldn't be such an exciting business. But these... They're so profitable, but also so competitive. When you get $400 for just delivering a customer from a Facebook ad, man, you want to run this. You do what it takes. Boys, a lot to discuss this week. Thank you for being so good. It's so good to see you. Thank you for being so good. 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