Canva Slahes Growth | Talent Exodus at Google | Revolut's $50B CEO Package | Musk's $55B Terrafab

Transcript

There's going to be a lot of people paying the bill in 26 and 27 for a certain amount of hesitancy in 23 and 24. The only way you prove that you're not dying is by growing. So what happened this week that we discussed? Tanva cuts 2026 growth by a third? Ouch. As AI serving costs blow up. Next, Jeff Dean leaves Google after 27 years. Demis Hassabis, the OG of AI, then steps back from Google DeepMind also. God, poor Sundar. That is one bad day at the office. And then Elon Musk, as always, comes out with one of the most ambitious projects with TerraFab, where we unpack the jobs that come from it. The first real installment of $16.8 billion and just what it would mean for him in terms of structurally not having to beg at the tower of TSMC. This is such an entitled podcast. Oh, poor Anthropic engineer only made $35 million. Go out to the goddamn panhandle. No one's making 50 grand. It must be extraordinarily validating if you're Jeff Dean to leave as a non-CEO of a $2 or $3 trillion market cap public company and have the stock go down by a couple of hundred billion dollars. Google's efforts so far are B plus, A minus. They're not A plus. Any investment I've made that is not run by a founder, it's going to be a zero in this age. Ready to go? Okay, boys, we're going to start with something other than OpenAI or Anthropic today. We're going to start with Canva, baby. We had Cliff on the show before. Now, Canva cuts 2026 growth by a third as AI serving costs blow up. So, Roy, for those that maybe missed this story on Canva, what should they know that they need to know here? Sure, yeah. Let's start with the facts and then come to the question. The facts are that Canva, a large privately held company in the creative suite space, discloses its revenue even though they're private. They were at $3 billion in GAAP revenue last year. Going into this year, they're going at 30%. And the CEO, Melanie Perkins, disclosed mid-year that they're probably going to be growing 20% by the end of this year. So, as you say, a one-third slowdown in growth rate, but still a healthy 20%. And then the other half of what she said was interesting, which was that they're obviously adding a ton of AI features. Those features cost real money. And part of the reason that she claimed for the slowdown in growth was it was just too expensive to effectively be subsidizing users with cheap AI when, in fact, they're incurring significant costs. So, there was an implication there, which I'm actually going to tease out later. I'm not sure I fully buy it, which was my growth rate slowed, but if I was willing to lose more money, it mightn't have slowed by as much. So, there's an implied statement on elasticity there. But the big picture, and this is where I want to zoom out and ask Jason a question. The big picture on this, and all three, there's three massive creative software companies. There's Adobe, which does 23 billion, growing at 12%, trading at like three or four times revenue. There's Figma, which is also public, doing 1.4 billion, growing at 40%, the fastest. And in the middle, there's Canva, still private, around 3.6 billion, growing at 20%. And the big question for all three of them is, and that's why I want to put it back to Jason, who's much more, I've used them, but not as much as Jason, is AI going to be a feature they can incorporate, or is it a new thing that makes them obsolete? And to me, that's the meta question. It's not about 30% growth versus 20% growth because of a little bit of gross margin compression. If that was the only issue, we could talk about that. That's a second-order business model issue. The real question for all these companies: are you 30% on the way to 20% on the way to 10%? Because there's a whole new set of companies doing this. And I know, Jason, you guys are in Higgsfield. Or is this something you can incorporate and survive and continue to grow? So I think that's the question. And Jason, I'd love to get your thoughts. I don't know, man. I found the Canva stuff depressing, because Canva seemed to me one that obviously AI was maiming. Every ChatGPT release, every Higgsfield release, every else, you can do more and more of its functionality in core AI, right? This is what we fear as investors, is that you can do our investments in ChatGPT or Claude, right? That's the ultimate fear. But yet it seems somehow Canva was defying that gravity. It seemed it was a non-issue, despite me having churned and Amelia having churned. We churned, just not because this is a tough one. Canva and Notion, both we churned, not because they're not great apps. We just no longer had any need for them in the agentic area. Just no need. Canva and Notion did nothing wrong at all. Nothing. And we didn't need them. But until this, it seemed somehow I was wrong. They were defying gravity. But 30 to 20 in one year, I know I love Rory's optimism that they're going to bounce off and get back to 30 or 40 next year when they find a few extra tokens under the covers. I think it's terrifying, and it's a little, I was hoping they were defying gravity, but it doesn't look like it. Defending myself on the optimism charge, because no one ever accused me of optimism, I actually didn't say that. What I said was that's the implication that they're saying. I don't know the answer. Genuine comment here, right? And look, I'm going to advance the bull case to some extent, just articulate it more. Because, again, what the CEO is saying is, look, we can't envelop it in AI because we were using frontier models and they're just costing us a shit ton. And so the first shoe that's clearly going to drop is they're not going to continue to spend a whole bunch of money with Anthropic or OpenAI, probably OpenAI given its images, of course, Rory. But they now bought their own model and are building their own in-house image-focused model, which makes absolute sense. So let's assume they do that. But why didn't they do that last quarter? I agree. And agreed. Let's say they were even a year or two late, because I think I want to push back to the big question. The interesting question. Yeah. The interesting question is, let's just say they get it done and in six months, their in-house model, which is 90%, 80% cheaper, is just as good at images as the frontier models. Then the question still remains, to your point, Jason, do you think they can quarter, and I hate being fake, stuff enough AI functionality into that product that you would have retained, or do you as a pretty active user say, no, I just prefer to go out at AI native day one? Because that's the big question. You know what's scary is something that sounds nerdy is becoming mainstream. Our agents never even suggest these products. That's the danger. And it's not just agents. It could, you know, we talk about AO and GEO. What does Claude and ChatGPT say? But it's worse than that. As we become agentic, our agents, we can't choose everything ourselves. And we generate, we have our own, we built our own ad server and ad-generating network that built our own creative and own collateral and serves it to the SaaStr community. It's all built on our agent. The agent never, it never occurred to the agent to use Canva for this. It never, it never once occurred to it. And so even some sort of open weight parity, I think it, listen, at a meta level, I think what's scary is that the most exposed part of the market is the prosumer market. Everyone is ChatGPT fluent. And if it works in ChatGPT, right, or Claude, you're just going to use it. And if you believe these Gartner numbers, and I'm out at a big Salesforce event, they have all the data, it may be that less than 10% of the enterprise has even deployed an agentic application successfully. I will actually believe that, okay, despite what we're seeing in the, because all the hot enterprise AI companies are still serving early adopters and outliers to a large extent. On the prosumer side, everyone's used ChatGPT. And so there's no going back. And then my related concern is if you compare it to Figma, well, Figma missed the quarter in a sense. what's scary is that the most exposed part of the market is the prosumer market. Everyone is ChatGPT fluent. And if it works in ChatGPT, right, or Klaudah, you're just going to use it. And if you believe these Gartner numbers, and I'm out at a big sales source event, they have all the data. It may be that less than 10% of the enterprise has even deployed an agentic application successfully. I will actually believe that, okay, despite what we're seeing, because all the hot enterprise AI companies are still serving early adopters and outliers to a large extent. On the prosumer side, everyone's used ChatGPT. And so there's no going back. And then my related concern is if you compare it to Figma, well, Figma missed the quarter in a sense. Figma traded down 20%, but they burned the tokens. Dylan was clear, our gross margins are going to be significantly impaired going forward because our agentic products are being used. It's not identical, but they took the hit, right? And they're public. It's more painful to take the hit when you're public than when you're private. I really don't think Blackbird and friends are going to beat Canva up if the bottom line is missed slightly. That's an internal decision, right? I think you're right. And there's a lot buried there. I just want to unpack it again for folks. One is you made a distinction. Let's talk about the enterprise versus consumer distinction because you're exactly right. Figma is much more an enterprise product. It's large groups of people building software, coordinating. So even if you automate creativity, you've still got bureaucracy and corporate processes that you make money off in terms of managing workflow. But you're exactly right. Canva is the prosumer. Shit, I want to generate a flyer. I want to generate a cheap website. I want to generate some kind of content. And that's exactly where AI is the most accessible because you can just go on and type in, generate me a flyer that says this, and there it is. So you're right. They are more exposed in that sense. That's one. So I think you're... It goes to the fortnightification that Jason often talks about in terms of the shrink and can when you have a dinner invite that you can do on ChatGPT and bundle it into your consumer subscription versus an additional tool. And the other vert, the nerdier version, Amjad said about Airtable, not about Canva, but he said his quote on the CEO of Replit's quote for Airtable was, no criticism, but the era of no code is over. And no code was a bunch of tools where, without developers or AI, we could build stuff. And Airtable was a no-code database disguised as a spreadsheet, right? It was a wonderful product before AI. Notion is a no-code database disguised as a word processor. And Canva was a no-code way to design stuff. It was a breathtakingly disruptive product. I didn't need a designer anymore. I didn't need to know how to do HTML or anything. But the era of no code, of things that humans can do without engineering resources, it's slowly winding down. And if it's in chat, GBT, man, I'm just worried. I'm just worried. Is it a blessing or a curse that they didn't go public already then? It depends on who you're asking. Blessing and a curse for whom? Right? Because I was thinking about this a lot because I knew this question would come up. Because if you think about it, if you're the founders, right, doing this publicly is just marginally, arguably marginally more painful, right? So maybe you're happy to be doing this in private, right? What you're really saying is this. Let me try and, because we never say this explicitly. When you say, should you have gone public early? What you're really saying is, oh my God, if I'm the venture guy who did this thing at 100 million, like Blackbird or a couple of them, I think Felicis was in early and Matrix was in super early. And then even the guys who came in at a billion, you must be like, oh my God, if we'd access that 50 billion valuation in 2021, I would be so gone now, right? And that's really what you're talking about. And so, which is why, to be clear, some of the CEOs are a little unsympathetic to this line of conversation because this is their life's work. Because really, when you say, should they have gone public early? What you're saying is, boy, I wish that the fast money had gotten out while the CEO and the management team would still be there just in a different forum. Does that make sense? No, I think it's a good point. The getting out early, it's a critical question for VCs, right? How the hell do I take something? We can talk about IPOs and M&A, but man, our shares are illiquid that we buy. We put them in and we hope, we pray, we face east that we'll ever get any cash out. If I'm an employee at Canva or a founder, and the founders already gave away 90% of their shares, right? They've already given it away. They're on the mission of their life. Maybe in Sydney, in Australia, it's easier to retain your talent than in the Bay Area. Maybe they're not going to quit and go to OpenAI the next day if you don't go public and make them a million dollars effective a year in stock. Maybe it is better to hide. You've built an iconic company that isn't going anywhere, right? I mean, I'm just playing the devil's advocate, but Rory's point, if the three of us were the founders, I might want to run this thing like Basecamp, right? 37 Signals. Guys, let's just hunker down. We'll increase profit sharing, right? And I mean, probably the VCs wouldn't let you get away with it. But if I hadn't raised a ton on my cap table, it might not bother me so much. Yes. And I think one of the totally separate threads is public markets have to be more attractive, not just for people exiting like the VCs, but also for founders to be able to reignite and reopen the window. And if it's rational to say, under certain circumstances, it's easy to be private, then that just probably weighs into the calculus when you decide, as Canva could have done, should you have gone public in 2021? Right? Again, to repeat, for the most important people in the company, who are the founders, who own effectively the company from an entrepreneurial oomph perspective, regardless of the cap table, I don't know if that matters. I don't know if public versus private matters nearly as much as this is the platform shift challenge of all times. And assuming you do get almost free AI via your standalone model, you've got to figure out, to Jason's point, a product in the next 12 months that's as easy and as accessible to your user base, because you know the segment of the market you're addressing, that it has to be as easy to that user base as ChatGPT is to generate the products they generate with it. That's your challenge. And it's a product challenge. My point is, I don't even think it's about easy. I just think it's about the bundling of consumer, like real estate of where they spend time. I just interviewed the president of Uber. What is his single biggest fear? It's actually the disaggregation of UI or the removal of UI, where you say, I want a car, and ChatGPT automatically routes you to Lyft, Uber, or another provider based on price. That's what our agents already do. They just routed us around Canva. And so my point being there, Rory, is ease doesn't actually matter. No, no, you're exactly, look, to be very clear, going back to some of the things, if the AI models become the universe, well, in ChatGPT, let's say, who was more consumer focused, if that becomes the universal interface for functionality, then you're exactly right. And all model choices are backend choices, then you never even get the chance. I don't know if it does. I could be wrong. I don't know. And in fact, this is probably an area where I'm still trying to triangulate. I don't know what things that we do separately in the West, because it's interesting. China, obviously, in mobile, has a single super app for everything and you do everything through WeChat, right? But just to pick on two what I'd call high-cognition tasks that are very different, actually the polar opposites. One is creativity, building something creative for a consumer. And the second is doing your taxes. There is a credible argument in both cases that ChatGPT can suck those revenue up, which is why Intuit was down. I'm not sure I fully believe it, but it's why Intuit is down. And it's what Canva's wrestling with. So it's a super interesting time here, right? I don't know if it does. I could be wrong. I don't know. And in fact, this is probably an area where I'm still trying to triangulate. I don't know what things that we do separately in the West, because it's interesting. China, obviously, in mobile, has a single super app for everything, and you do everything through WeChat, right? But just to pick on two what I'd call high cognition tasks that are very different, actually the polar opposites. One is creativity, building something creative for a consumer. And the second is doing your taxes. There is a credible argument in both cases that ChatGPT can suck those revenue up, which is why Intuit was down. I'm not sure I fully believe it, but it's why Intuit is down. And it's what Canva's wrestling with. So it's a super interesting time here, right? As yet, I'm willing to bet, I could be wrong on this, I'm willing to bet, and you guys from Higgsfield can say it, there's still a role for a company like Higgsfield, which is an aggregator across models, which goes against what you're saying, Harry. That's a company that's saying, hey, Mr. Consumer, you could do this directly on one of the video jam companies, but I'll aggregate the models. I'll give you a slightly better UI. I'll help you with billing. And maybe there is a business on top of the models. I don't know if Jason would agree with me. I'd say they're serving two different markets. I think the ChatGPT cannibalization of Canva is me and my partner doing a dinner invite with ChatGPT that we've done in Canva. And then Higgsfield is actually a business that uses video as a more primary method of delivering their message. And so it's a slightly more prosumer professional, I would argue. Jason, I don't know if you agree with me. But both easy and cool. I think it is. I think you could argue it for sure. And almost all that growth, $700 million in revenue over today, is from this video creation, complex video creation, where you're creating functionality out of the models that alone is very complicated to harness, right? It's a harness that allows you to do something that's very complicated with the models. Their original model, which was just to aggregate models to make short videos, it is cash flow positive to Rory's point, but it's not an exciting business, right? They stumbled into the bigger one. The tough one is that whole business, which will shortly be a billion in revenue, a lot of it could have been Canva's if they aggressively got into it, just like I firmly believe a big chunk of Replit and Lovable could have been Figma's if they'd done it. It's easy to take shots when it's so hard to run your core business. But I think we're starting to see the outcomes of it being so hard to run your core business in the age of AI. And you've added all the AI stuff. Figma's added great agentic features. Canva's a little slow, but they've added it. Even thus, it's just not enough. And you're seeing gravity weigh you down. And it's a tough job today, right? It's a tough job. Yeah. I think that's actually a super interesting meta point, Jason. You're right. Because I tend to be an incrementalist. But there are times when the world opens up and there's a crevice between the before and the after. And if you make that jump, you've got to make it quickly. And there comes a time when the gap is too big, right? And that's what you're saying here, right? I've come to the conclusion that this could be one of those times. And to some extent, there's going to be a lot of people. We saw it there. There's going to be a lot of people paying the bill in 26 and 27 for a certain amount of hesitancy in 23 and 24. Can you give me an example of a Figma or a Canva generation company that has gone, hell, I see this coming, I'm going to move fast. And to hell with it, they've done it and done it well. I mean, look, the boring one is obviously Intercom. We've talked about it a lot, and we were investors, so I don't know. But they succeeded and did it. And I think, I'm sure when after the deal to his own, we'll be the first to say that was a journey and a wild journey and a hard journey. And he earned every dime. Let's put it that way. So I give him credit for that. But I'm just trying to think here. It's a hard one, isn't it? I mean, the thing is, because the interesting thing is, to some extent, and we'll talk about, for example, Atlassian in a second, one of the big questions is how much of your business is going to change. And there are some businesses that just by virtue of the software process they automate, there's not going to be as much change. I think accounting, we're looking, we have real interest in the next generation of accounting companies, but it's a fairly slower-moving market than, say, individual prosumer creative tools. So to some extent, the speed at which you have to move is in part a function of the kind of business you have, right? And what AI's impact will be. And I'm just thinking aloud, actually, I will give you some because they're right on the head. Some of the coding tools, I think even they didn't have a big business, but I think Windsurf and even, come on, Cursor were doing something else right at the start. But because they were super small, they pivoted in 22 really fast. I don't have a good, to your point, I take coding as the best apps market, right? The biggest. I don't have a good example of a 2020, 2017, 2018 coding company making that pivot. Well, I have the example, but I think Replit's an example. It was frigging in the wilderness for six years until it added the models, right? It was a super nerdy web IDE. I think to answer Harry's question, it's a tough question to address as investors and employees, which is the ones that have accelerated, right? The pre-agentic ones are the ones that could catch the wave. The Datadogs, Cloudflare, Palo Alto Networks from last week. These were guys that were already, even, I didn't think Twilio would benefit from this. Jeff Lawson saw it when he was on this pod, right? He's like, agents are going to need more. They're going to need more voice and more text. So Twilio, which was the hipster's API for voice and data when we all met Jeff, became your granddad's tool, but it was still well positioned for the wave. He was holding the boogie board just right, and the wave came in, and he's flying, and ChatGPT is just tumbling, poor Canva, side over side. And I think in the enterprise, it's happening. It's just slow. It's just quarter by quarter. It's slowly happening. Well, I want to make a distinction here because I think the Datadog example is an interesting one. I think you have to distinguish between it's easier to survive if you're well positioned and don't require a business model change versus if you're not well positioned. And I think the challenge, the toughness of the task facing the CEO of Datadog versus, say, the CEO of Canva are very different. Because if you think about Datadog, they sell observability. They sell it to infrastructure vendors. Nothing in their model has changed except there is now an infrastructure vendor who needs to buy 100 times more Datadog than anyone else has ever bought, right? Well, it's true for all those guys. We were lucky enough to be in JFrog. You can see that Cloudflare, Datadog, all the infra providers. It's not like they're inventing a new thing. They're just saying, this is the greatest infrastructure boom in history. I sell infrastructure time to make out like a bandit. There's some tweaks at the margin on the products. I agree. But fundamentally, that's it. There is one, there is one, Captain, obviously, just so I don't get flamed in the comments too much, that did it. I think there's, I don't know all the reasons, but I can think there's two important reasons. Obviously, Palantir did it. Palantir went from 18% growth to 98% growth, right? Unprecedented in our lifetimes, right? It may be the one of N or the N equals one. Maybe it was well positioned, but the thing was, it really leveraged a combination of outcome-based deals and pricing and true FDs that no one else. We talk about FDs all the time with our portfolio companies. It is fair to say they're really solution architects or SEs with an FD t-shirt. Palantir had people who for a decade and a half were out there deploying massive change in the field for their customers. I agree. But fundamentally, that's it. There is one, there is one, Captain, obviously, just so I don't get flamed in the comments too much, that did it. I think there are, I don't know all the reasons, but I can think there are two important reasons. Obviously, Palantir did it. Palantir went from 18% growth to 98% growth, right? Unprecedented in our lifetimes, right? It may be the one of N or the N equals one. Maybe it was well positioned, but the thing was, it really leveraged a combination of outcome-based deals and pricing and true FDs that no one else. We talk about FDs all the time with our portfolio companies. It is fair to say they're really solution architects or SEs with an FD T-shirt. Palantir had people who, for a decade and a half, were out there deploying massive change in the field for their customers. So when their customers needed AI, they had the guys to do it, right? And then Alex Karp did the crazy thing, which the VCs talk about, but it's hard for all the companies. He did outcome-based deals. Give me $2 billion. I want a $2 billion contract, but I'm going to save you $8 billion, or I'm going to give you $6 billion more of revenue. No one does that outcome-based. They talk about it, but they just pretend that they do it. No one puts a $2 billion deal on the line for an outcome-based resolution. And they had both these things that Canva does on the prosumer side, but in the enterprise, it's very hard to change to true outcome-based pricing and to have a suite of FDs that can deploy AI. I really wonder if the average SAP SE is as literate in the models as they are at Palantir. No one does. No one does. And I think, again, first of all, I totally agree, because remember, we talked to Infra, and now we moved on to apps. And in the apps, I think Palantir is an excellent and possibly unique example of someone who's... It's very interesting because their existing model wasn't that threatened, but it was growing slowly, very government-centric. And if you read the book, the Palantir, the Karp biography, huge credit to them in 22, 23. They saw the LLMs and they grokked it immediately. And they said, going back to the thing about making your bets in 23 that come good in 26, they basically said, we're going to put all our wood behind this. We're going to build the enterprise version of the product. I can't remember the code name for it now, but we're going to make this bet. And you're right, and it turned out that the combination of AI knowledge and FTEs was exactly what enterprises needed. So, I agree. That's an example of someone who... I wouldn't say they had to... If I think of it, someone like a Replit had to rethink everything and pull it off. Someone like a Canva still has to rethink everything and has a lot of pressure on it. Palantir could have chugged along at 20% and been roughly fine with the government, but instead, they grabbed the moment. I'd give them the positive grab-the-moment award. Are you with me? They... And it's one where I would argue, unlike a Datadog or someone where all you had to do is do the same thing, that's one where you have to give the CEO and team credit. They said, if we turn the crank even slightly on our offering, it will work for a whole suite more customers than we've had. So, I agree. I think that's a good example of grab the moment. And I think Replit's a good example of doing the even harder thing, which is, shit, I got to do something else, but if I do it, I'll win. But there's not many. Ding, ding, ding. If I just do a quick fire, I don't want to take it back too much, but a lot of LPs listen to the show and they have Canva in their books and they're going, what do I do with that? How should they think about that, given what we've just said? What do you think it's worth? I'd say it's probably worth $12 billion right now. 20% growth at $4 billion ARR in the current public markets and not decelerating. There's some sort of rule-of-40 number that's better, but I'd say it's worth about $12 billion. The odd thing... Oh, I held at $50. I understand. I'm just going to... You might be right, but I'm going to push it. What's interesting is I can find companies that are in 20%, 25% GAAP revenue growth, free-cash-flow positive, are trading significantly above that because there's no existential question. One of the big things that's happening is a Datadog or, I think, a Cloudflare or JFrog or all those guys, their mid-20s growth, 20%-plus operating margins, trading at 15 to 17 times NTM, right? But I think the difference is there's no existential question here, right? Which is why maybe I'd answer the question in the following way. If it's 20% and the existential risk is there, then Jason's right. It could be 12 or less. If they can transcend that risk, then you're still top-stopped by... You're going to be grounded by reality now because you're not selling Brave New World, but it's kind of 12 and up, right? And a good get-up. But just, listen, I hope you're right. Again, I don't want to be negative. I want Canva to defy gravity. But why do you... When every single person on Wall Street uses ChatGPT, why do you think people won't... And I think existential risk is both reality and perception. Why do you think it won't be perceived as having existential risk? If Monday and HubSpot do, I don't see why they won't see the exact same thing for Canva. I'll tell you exactly why. Yeah. Because you're right. In the short term, they will. But if you look at... In the short term, they will... You can't control that. You can't control what the 27-year-old on Wall Street thinks. But let's take the example of Atlassian. We had Mike on as well, right? They killed it last quarter. The only way you prove that you're not dying is by growing, to Jason's point, right? The thing that's pleasing about life is if you pull off the important thing, the hard thing itself, then the markets will follow. You're right. Right now, it's a very tough time because when the existential risk is posed, the only way out is to prove it, right? Right now, I think there would be a wide variety of perceptions on valuation for something like a prosumer company like Canva. And it'd be hard to peg value and hard to get liquidity at scale, by the way, right? Which is one of the other things about, at the margin, a difference between a private company and a public company is when the window shuts in private and the appetite dies, it's very hard to get anything done. So the real answer to your LP is it doesn't matter what you think, big guy, you're in this journey for the next 12 months. Buckle up, right? Because liquidity will only come at the end of the journey. It's also important, potentially. I don't want to overkibitz. I'm not exactly a public company PR expert, but I do think it's important to get ahead of the narrative we're always describing. I do think that once everyone starts saying that ChatGPT is killing Canva because you can make poster-sized images for free with your subscription, it's just the dumbest... I think the three of us can probably agree one of the dumbest AI memes was that everyone would vibe-code their own CRM, even though Harry's had guests that do it. This makes no sense for 99.9% of the world, okay? You can't maintain it. You can't build the integrations. It's more complicated. Most of the folks that say that have never used a CRM, but it's so visceral, the idea that everyone... And that damn 20VC show has been part of it. Bringing in all these guests who are trying to hide slowing growth by talking about how they built their own CRM. But it has taken hold, right? And the shorts have jumped on it, and the haters have jumped on it, and so be it, right? But if I were Canva, I'd be worried that this would become a meme. I think there's a quote, something like, the worst thing in the world to fight is a bad idea whose time has come. And you're right. Everything's... Yes. And you're seeing that in the SaaS-pocalypse now. And the only way out is true, right? Which is the companies that have produced the revenue growth have seen uptakes. It's more complicated. Most of the folks that say that have never used a CRM, but it's so visceral, the idea that everyone, and that damn 20VC show has been part of it, bringing in all these guests who are trying to hide slowing growth by talking about how they built their own CRM. But it has taken hold, right? And the shorts have jumped on it, and the haters have jumped on it, and so be it, right? But if I ever can, I'd be worried that this would become a meme. I think there's a quote, something like, the worst thing in the world to fight is a bad idea whose time has come. And you're right. Everything's, yes. And you're seeing that in the SaaS-pocalypse now. And the only way out is truth, right? Which is, the companies that have produced the revenue growth have seen uptakes. And overall, world cloud's up 50% since the bottom of the SaaS-pocalypse. But the people who've struggled are still struggling. So you're right. You will have to prove it. What do you think the answer to LPs is? Obviously, I think after Airtable and this Canva quarter, it's probably time to be a little extra skeptical of marks, just being realistic. We've had some, we've had, these are two events that I think have quietly hit old marks. You should have marked them down last year. But these are events that are difficult to hide. They're difficult to say, my guy's going to turn it around, okay? After these events, I think they do kind of shake the ground a little bit. They definitely do. And it's funny, because just taking Airtable and Canva, I used to mentally say to myself, I'm sure you did, Airtable and Notion, you had them in the bucket of being the same. And then, I don't know if the sacronomas are correct, but Notion is apparently 800 million, growing at 70%, 80%, right? It gets back to the same comment. When I think about valuation, stepping back, at a minimum, you have to look very objectively at the actual growth rates and be brutally honest as you think about valuation relative to that growth and that projected forward growth. You've got to ground yourself in those facts as step one. And then the second-order question is, do you grade up or down for existential versus lift, right? But at a minimum, yeah, it's no longer acceptable to say, once upon a time, we raised at 42, therefore we're holding for 42 billion, right? It's, we're doing a billion, we're growing at 30%. That is this multiple. We're doing a billion, we're growing at 10. That justifies that multiple. I totally agree, Jason. For me, I thought actually one of the tweets of the week was Dave Samuels, I think his name, from Freestyle, who mentioned that their blended exit price from our table is actually 6 billion, and the importance of selling along the way, and being very thoughtful about selling in the good times. It's always true when it goes down, and it's never true when it goes up. One of my great friends is a multi-billionaire, and he told me, you know what, Harry, I never regret making millions of dollars. And I'll say this from my G650. And actually, I've sold stuff now, and yeah, I've lost on upside. But you know what, I'm happy that I locked in some wins. No. Yeah, but here's the thing. We can move on. I get all that, the Freestyle argument. It sounds great on Twitter, and it's mathematically true, right? But if you want to have an outlier fund, I don't know, man. That math really only works if you've got six or eight of them in the fund. Listen, maybe at the scale size or bigger, the math's different. But for a smaller fund, I'm lucky to have three fund returners, okay? That's hard. That's hard. And if I start taking early exits on those, and I don't have a 10x fund returner, okay, and my LPs want these frigging five, six, eight, 10x funds, the math gets kind of tricky if you sell too much early. I don't care what X says. You got to keep doubling down. And I literally just did this analysis across my whole lifetime of all the things I've been involved with, personal, angel, venture, who should have sold, and who should have sold earlier, taken the secondary. And for me, it broke roughly 50-50. Surprising. I would have guessed it would. I mean, statistics would say it probably breaks 70% you should have sold. I can tell you what the facts are. 70% plus you should have sold, 30% or less you should have held. But the next sentence is the key. The holders compound forever, and the ones you sell don't compound at all from then on. So it's the, I'm going to pronounce his name wrong, the guy from Arizona State, the bookbinder research, that sub-1% of all the companies ever give 90% of the cap gains in the public markets. It's the same in the private. It's the nature of power laws. Most of the time you won't regret trimming, but on the few that you regret trimming, it turns out to be most of the value. I'll never forget having Jake Saper on from Emergence, who I like a lot. I like Emergence a lot. Brilliant firm. But they sold Salesforce reasonably early in the arc of the Salesforce value accumulation journey. And if everything else didn't matter and there was just a hold on that decision, it would dwarf all the other outcomes. We can choose to continue in this vein and discuss Atlassian and HubSpot, or should we talk about Jeff Dean, Google, talent changes? I mean, I'm not an expert on the Jeff Dean talent change, but clearly, this is the time to go off and build, man. Okay, Jesus, let me leave the comfy coop where I'm making nine figures a year to just talk about AI in a comfortable conference room with a mug, and go out and do it, man. So let me provide some context. Google had some talent loss. Jeff Dean, one of the godfathers of much of AI, has left after 27 years, taking three legends with him. I'm going to pronounce their names wrong, so I'm going to leave it there. And then Demis also is stepping back, or whatever elegant marketing message we want to put around it. It's like moving into chairman role, power centralizing back really to Silicon Valley as well with that. That was the big news from Google. And obviously, shares tanked as a result. Jeff Dean, I actually think Jason made the best point. Right. So first of all, in passing, it must be extraordinarily validating if you're Jeff Dean to leave as a non-CEO of a two- or $3 trillion market cap public company and have the stock go down by a couple of hundred billion dollars. If you want to increase your sense of self-importance and self-worth, that was a good moment. That was what the therapist called validation at a high level, right? So let's move on from that. I actually think, Jason, Jenny, one comment here. Jason's take is the correct one. We can analyze what it means for Google, but think about it. If you're Jeff Dean, you've done 27 years of Google, you've made kazillions of dollars, right? The mission at Google, to a rounding out, like it or not, is allocate a lot of the compute to the Google Cloud business to just be a hyperscaler, boring as shit to you. Allocate more of that, the remaining compute, to build a competitive frontier model, mainly focused on the big things of consumer, because that's what they care about, and coding, because that's what they care about. At this point, after 27 years, fairly boring to you. And get some time to do a little bit of medical discovery and scientific discovery that's really exciting to you. So, because of the relative size of those businesses, that's always going to be in third place. That's option A. Option B, you can go raise all the money you want. It was really sweet that they even built a PowerPoint. I doubt they needed to, right? I think, hi, Jeff Dean, I'm raising money, would have sufficed. And go away and do exactly what he says, which is, use AI to, quote, investigate advanced scientific questions, right? What are you going to do with your late 50s in life? It's totally natural. I didn't buy that. I'm not being rude. Sorry. If you look at the resources he had available to him at Google, with the data that he had of medical discovery and scientific discovery that's really exciting to you. So, because of the relative size of those businesses, that's always going to be in third place. That's option A. Option B, you can go raise all the money you want. It was really sweet that they even built a PowerPoint. I doubt they needed to. Right. I think, hi, Jeff Dean, I'm raising money would have sufficed. And go away and do exactly what he says, which is, use AI to, quote, investigate advanced scientific questions. Right. What are you going to do with your late 50s in life? It's totally natural. I didn't buy that. I'm not being rude. Sorry. If you look at the resources he had available to him at Google, with the data that he had available to him at Google, he could go into Sergey and Larry's office and say, hey, I want X. And they would say, Jeff, you have whatever you want. I don't think that's what's happening. With all due respect, I don't think that's what's happening. Right. I think what's happening is every dollar of every piece of compute that you give to Google Cloud turns into 30 percent operating margins in a day because they can sell it to Entropic. Every bit of compute that you give to building Gemini might turn into a decent coding model if they get their shit together. And maybe you can get some Entropic-like revenues or some ChatGPT-like consumer revenues. Right. Every bit of compute that you give to drug discovery, materials discovery, or physics discovery turns into a long-shot five- or seven-year moonshot that maybe will indulge at the 10 percent level, but it's not going to be the core thing they do. So, if you're a senior executive in those companies, you're probably expected to do your job. What was the old thing? 20 percent fun time. 80 percent of the time you're meant to deal with boring shit. Right. So I think, at some level, there's a desire to focus full time on that. I think it's hard for you to understand when you're younger. As you get older, you start saying to yourself, is this it? I optimized ads. This is all I want in life. Maybe I want to be my own boss. Maybe I want to just focus on scientific discovery. If Rory's right, and it makes sense to me, I just don't know. If, in a sense, they have access to all the resources, but the team's somewhat deprioritized, because of where the cash flow is. I can just tell you, not to go back in time, but when I was an SVP at Adobe at the number three business unit, it sucked. It sucked. I'd be with the other 50 VPs, and we wouldn't even get to talk about what we were working on. We were only doing 800 million at the time, but the number three BU is invisible, right? It was just, and so if that's the vibe today, and maybe for the first time ever, I could take my team, my whole team, and get all the capital I really need to do what I want to do, I would leave if I was number three. Listen, I'm not quite smart enough to know, but if Rory's right, that may completely explain it. If you're the number one priority at Google, you're going to stay, right? Because it's easy, and it's a pretty bucolic environment there, right? Or at least it used to be before. I used to sell to Google all the time. I was there every three or four weeks, the most bucolic campus ever. But maybe today it's a little more stressful. But if you've been deprioritized, as important as you are, right, your team has, and you can raise a billion or so, I'd check out, man. I'd go do it, right? And the VCs aren't going to put the traditional annoying pressure on you the first 24 months. Totally. I agree. That's actually another interesting point. It's worth saying that the appetite from venture to finance moonshot-type AI-will-solve-science bets has never been higher. The proof is not yet in, as a reminder, and a lot has to happen to make these bets work. But if you're a scientist at your core, and if you're a believer in knowledge and discovery, this is a once-in-a-lifetime chance to make that unhedged bet with no corporate BS to deal with. And it's a once, I mean, even two or three years ago, you would not have got that kind of money to make that, right? These kinds of science-based neolabs are really a phenomenon of the last two years. And maybe just two small things. We can move on. But one, I think Vinod's leading the round, right, or co-leading the round or something. So he's just redoing. Granted, OpenAI hasn't gone public, but he's already had a little bit of a win here, right? That guy Vinod, right? So he's just doing the playbook again. And then two, going back to Harry's question on LPs, I think this week, it's a little murky. I'm trying to read the news from Hawaii. I'm not quite in the SF Bay. But if Anthropic really is going to IPO now for real in the next 60 days, it's just going to tangibilize all this once again, right? Hopefully for the better. Maybe slightly for the worse. But it will make these bets seem more and more like the present, right? And the Canvas and Friends more and more like a distant memory. A distant memory of a bygone era of software. Two questions for you. How significant is it losing this many high-caliber people this quickly? We haven't mentioned Demis. Obviously, Demis, founder of DeepMind, led London AI efforts, visionary genius, been fortunate to interview him. How significant is it, honestly, to Google? On one sense, obviously. Look, early on, this business had been very individual-centric. So, losing these two talented people in terms of full-time thing, and the three people who left with Dean, is obviously really significant, right? On the other hand, just to put it out there, whatever Google was doing wasn't quite working. And we've gone through the Google is dead phase 12 months ago. Then we went through the Google is amazing phase six months ago. And now we're kind of going to the middle, which is Google's doing a good job in cloud selling compute to Entropic. They're doing a good job selling the picks and shovels of TPUs to Entropic. They've kind of got a model out there, but they haven't made any impact whatsoever in coding, which is the mother lode that's feeding the Entropic beast right now. So, you could look at it and say Google's efforts so far are B plus, A minus. They're not A plus, right? So, I don't think anyone wanted anyone to leave, to be really clear, but it's probably been unsatisfactory to go. Because you can imagine, you're the CEO, you're coming in and saying to your two most talented human beings, one of whom has a Nobel Prize for medicine, just to remind you, why aren't we building a better coding model? And they're sitting there thinking, why haven't we cured Alzheimer's? At the end of the day, that's a really boring e-staff meeting, because we're just talking past each other, right? Actually, in a perfect world, a year, I mean, this is oddly what they got rid of two years ago. In a perfect world, if everyone had been self-actualized, they'd have put someone like the guy who's running it, a tactical executive, in charge of grinding out this and maybe giving these guys more running room earlier to do fun things. Because I think that's been a dynamic all along. If you read the Maltby book about the DeepMind acquisition, all along it's been, how much corporate shit do I have to do? Because what I really want to do is get a Nobel Prize. And who am I to argue? We'll remember the Nobel Prize long after we forget the Google Q2 earnings, right? So he's entirely right to want to do it. But unfortunately, Google has to make Q2 earnings. And if you're the CEO there, you need an executive who's willing to drive what it takes to get a comparable chat model out there to compete with ChatGPT and a comparable coding model out there to compete with Entropic, neither of which you've done now. So if someone comes in and says, I've launched this initiative, and I think in five years' time we'll bring out a simply amazing drug and it will cure cancer, cure Alzheimer's, whatever. Your brutal comment is the correct response: if we do that at the expense of a coding model and a chat competitor, that's a mistake and our stock will go down by 50%. Because what I really want to do is get a Nobel Prize. And who am I to argue? We'll remember the Nobel Prize long after we forget the Google Q2 earnings, right? So he's entirely right to want to do it. But unfortunately, Google has to make Q2 earnings. And if you're the CEO there, you need an executive who's willing to drive what it takes to get a comparable chat model out there to compete with ChatGPT and a comparable coding model out there to compete with Entropic, neither of which you've done now. So if someone comes in and says, I've launched this initiative, and I think in five years' time we'll bring out a simply amazing drug and it will cure cancer, cure Alzheimer's, whatever. Your brutal comment is the correct response is, if we do that at the expense of a coding model and a Chat competitor, that's a mistake and our stock will go down by 50%. Because the largest drug company in the world is valued at a trillion, and Google is valued at three. So the corporate imperative is to get someone who wants to do those things, not someone who wants to save the world. It's super difficult today. Totally. The best AI engineers, the best AI researchers, really want to work on what they want to work on. Nothing stupid. And they don't want to work on stupid things, and they don't want to work on obvious things. They really only want to work on stuff at the absolute cutting edge that is extremely intellectually interesting to them. They don't want to work on anything else. They just don't want to do it. They don't have to. They don't have to anymore. Which is why you've got to admire the brilliance of the team at Anthropic, that they have simultaneously managed to not convince themselves, because that sounds judgy. They feel they're on this mission, public benefit cooperation, a mission to bring AGI to the world, all that good stuff, while simultaneously making every single correct rational financial move over the last two years, including, to your point, going public first, which I think they will as soon as possible because they'd be insane not to. And the one thing we can stipulate is those guys are not insane. They are right on it. They will go public because this is peak brass ring moment. And you could argue the trends in 27 are tougher. You've pulled ahead of ChatGPT. So just put a nail in the Anthropic pit, right? You've pulled ahead of ChatGPT comfortably, OpenAI, to a point where it's embarrassing. It's never going to be better. There's just been a trillion-dollar IPO that all in all went okay. It's back to its offering price. You should go. You should go now. You should go fast. You should be done. Right? If I'm the founder of a company, an early-stage company, do I just accept that I'm going to have B-tier or C-tier AI talent? And I don't mean that denigratively or rudely or horribly, but they're at Anthropocan OpenAI. I mean, Google can't freaking keep them. I think it's the wrong framing. Because if you think about it, look, when you were building a software company in the age of the PC, you had four-tier chip talent because you weren't building a chip. The point is, if you're an AI company and you feel the need to build a frontier model, then yes, you've put yourself in direct competition with someone, and if you don't have the good people, you're toast. So what you got to do is make the model a compliment and have A-tier talent at UI, A-tier talent at AI implementation, A-tier talent at the things that you have your competitive advantage in. So you can do that. But yeah, you're probably not going to... Even the very best companies that are taking open-source models, open-weight models, and fine-tuning them, right? They should be experts at fine-tuning. They should be experts on their data domain. But they're probably not going to be as good at building an LLM from scratch as the guys who have been doing it for the last two years. But that's okay. One tough thing, though, that is happening for sure is that I think when we started this show, there started to be two tracks on compensation, right? Which is, I have to break my salary bands for my AI guys because they're worth so much to Anthropica and Open House. That's true. Now we're seeing three bands of compensation. We're seeing the regular human beings, then we're seeing the AI guys, and then we're seeing the one to five superstars that we're talking about, right? That I have to find a seven-figure package for as an early-stage startup because they're going to get it, right? And we have to provide them everything, the outsized equity, the outsized cash. And there are, especially when you talk for folks that are mature, the 100 million and up, ARR guys, 200 million and up, they all have this god tier now of compensation. And if you have the revenue, it's fine, right? You can afford, if you're doing 200 million in revenue, you can have four god-tier employees. It's not going to break your model, but it is something that folks have had to accept. There's a bunch of CEOs I work with informally that I'm not an investor with, that I work with at that scale, and they've all created god tiers. They're like, I got four guys. They are the core of my next-generation product, okay? They're all making seven figures. They all have equity stakes 10 times what an employee at this late stage would have, and the best investment I've made, this god tier. But it's tough on the rest of the team, right? Because it's not the way we used to do this kumbaya style when you've got this god tier. It's tough. But you're not going to pull off a Palantir or an Intercom without a god tier. You need a Skunk Works and you need a god tier, or it ain't going to work. It's just the siren call of the Anthropic comp is too high. OpenAI just did a secondary of $7 billion, didn't it, this week? Something like that? Yeah. I mean, that sounds pretty good to me, guys. Markets and prices are all about incentives and signaling, right? It's a way of sending real information. And there's no doubt that I saw the analysis that someone who got a million in stock in Anthropic in 23, it's worth $51 million now, right? That's a signal that just ripples through the hiring environment across the entire ecosystem. Now, I would remind everyone that that's what's known as a one-in-a-lifetime change. I don't think the person today will be getting 50 times their return. But whatever, it does have an impact of just distorting what everyone thinks is possible. And we are naturally attracted to narrative around the outliers. That's not the norm. But yes, that is the California Gold Rush part of the story. And you're going to see it even more written when the pricing happens. The only other thing I would add, if you're not, how do you compete with them, right? How do you compete with that? There is, I do think, you might have to have a God Mode compensation package. The only thing is, a lot of the jobs that you're offered for those jobs, they do go into Roy's earlier point, they do suck. They're not all Jeff Dean and buddies sitting around in a whiteboard designing the future of Fable 7.2. A lot of these jobs, for folks that aren't quite at that tier, are not that great. And so that's always been the job of a founder, is to find those pirates and romantics at the edge that could get it. Back when I was a founder, our test was always, did you get an offer at Google? If someone got an offer at Google back in the day, you knew that they were top 5%, right? You could do the same test today. Did you get an offer at Anthropic or OpenAI? And what was the offer? Well, that flashing thing in Claude they want me to work on, or I'm colorblind, the red or orange thing, I'm going to make a million dollars a year, get that pulse just right. Or I got to work on watermarking my first 18 months. And so you can find the folks that say, yeah, accounting software would be more fun than that. I like to do LLMs for account. You got to interview everyone on planet Earth, and you will find someone that doesn't want that job, right? That's the job. But you might have to pay them a lot more than you had to 24 months ago. Talent is one bottleneck. Another bottleneck that I did think was a really interesting news story that came out this week was the backlash going federal when it comes to new data center creation. Rep. Ro Khanna said he will introduce a data center bill of rights that will give local communities the right to say no to AI data centers. Yes, you go, Rep. Ro Khanna. the red or orange thing, I'm going to make a million dollars a year, get that pulse just right. Or I got to work on watermarking my first 18 months. And so you can find the folks that say, yeah, accounting software would be more fun than that. I like to do LLMs for account. If you got to interview everyone on planet Earth, you will find someone that doesn't want that, that job, right? That's the job. But you might have to pay them a lot more than you had to 24 months ago. Talent is one bottleneck. Another bottleneck that I did think was a really interesting news story that came out this week was the backlash going federal when it comes to new data center creation. Rep Ro Khanna said he will introduce a data center bill of rights that will give local communities the right to say no to AI data centers. Yes, you go, Rep Ro Khanna. That's exactly what Xi Jinping is going to say. Hero of Silicon Valley. Yeah. Xi Jinping is going to say, stop you deep-seeking moonshot. We don't want that in this rural community. What a freaking joke, eh? I have talked with some folks who truly are experts at this, right? Including very recently. Most folks think that this is pretty lame. This is pretty dumb. This NIMBYism, right? It's bad for the, it's even crazy that Texas is in on it, right? Is in on the NIMBYism. And I think Elon pointed out that the TerraFab has already created 3,000 jobs, but it's only 10% capacity. It could be 30,000 to get folks to see the other side of it. But I think folks that are close to it think that there will be enough counties and jurisdictions that want these data centers that, as we push through this and as government gets on the other side, it will ultimately work itself out. This will not be one of the great issues of our time, even though it seems ridiculous today that you don't want these, but there's only so many people working at these data centers. But this one may work itself out. At least that's what folks I've talked to that know it more closely than me. Do you not think this will be a material blocker in our speed of deployment? Well, we have 50 states, and I don't know how many counties we have. It's a lot of counties. I'm pretty sure there will be some with water and power that want this business, is the meta point. And that also this backlash isn't going to last, right? These are not all destroying our water tables. These are real jobs, 300, 3,000 jobs for a lot of poor communities. Let's not mock it when they, this is such an entitled podcast. Oh, poor Anthropic engineer only made 35 million. Go out to the goddamn panhandle. No one's making 50 grand, right? So these are not enough jobs, right? To make up for the, but these are real jobs with real money, and they're going to last years and years and years. And they bring a limited amount of economic, real economic benefit. There's enough, but it is a bummer for places where we should be building these data centers for sure. It's not a net positive. It's just a question of, will it work itself out in the U.S., where we do have competition. One thing we do have is a nice set of competition here, regulatory competition between states and counties. Yeah. I think the irony of Ro Khanna, the Silicon Valley congressman turning into the Marxist wolf in sheep's clothing, is pleasing to me, as I would not tend to be on that side of the voting aisle. Just watching all the Dems get suckered into thinking he's a moderate has been worth the price of admission as he starts advocating the billionaire's tax. So there you go. But who am I to judge? You mean millionaire's tax, where I think you missed out. Yeah, that's exactly right. So that's funny in and of itself. But once you're elected congressman, your next step is up. And the truth is, the way to electoral success probably lies in a fair amount of populism for the next period of time. So on the data science, I think, I saw a good piece, I think in Atlantic or something, really just talking to people in the areas wrestling with these issues. And it was a very interesting point. It was much less even AI is awful and much more, I don't know what I'm getting here. It's all very opaque. What's the deal? And I think if tech wants to get this stuff done, there's two risks here. And they're almost opposite each other because if you want to get local support, you got to figure out what's the package that moves it for them. And it definitely isn't, oh, by the way, you're going to get a 25% increase in electricity costs. And you're seeing that now. People are really, and I think the smart people are saying, at a bare minimum, if you want to get a data center in here, you got to find a way of making sure people aren't going to pay more for electricity, and there's probably going to be some kind of dividend. If you tell people that you're going to get this job, business, there's not going to be an increase in electricity, and there's going to be a five, 10 grand distribution per people in the township, you probably go, yeah, we should look at this, right? The other thing is, do some of these statewide laws just make that impossible to do? Because the truth is, at the moment, there is a fair amount of we hate tech bros out there. And as we said a million times, it turns out if you spend three years saying AI is going to kill you all, you shouldn't be surprised to be hated. So I think there is some wood to chop technically. But I do agree, Jason, it's a great point. One of the best things we have over here, unlike, dare I say it, the UK, which is one of the most centralized states in Europe in terms of central authority, and Andy Burnham is trying to change that. But we got 50 states. If North Dakota hates this shit, but South Dakota likes it, then South Dakota can put something in place and it can happen. Right? Dude, the UK is like the size of South Dakota. But yes, my point is that we've got diversity here in terms of, so hopefully it won't be a huge block. Right now, the practical point is, it's actually the availability of power rather than pure data center blocks. But there's definitely a whole series of things slowing things down between power availability, compute availability, and then political willingness to turn the stuff on. Now, the main man himself, always lacking in ambition, Mr. Elon Musk, unveiling TerraFab, which we touched on there, $16.8 billion. I think it's going to be the most expensive buildout of a real estate project, I think I read. It's, as we said, in terms of jobs, extraordinary in terms of how many jobs will be delivered, different numbers, but between two to 3,000. Really, it's him saying that he wants to sidestep TSMC's queue and obviously build out his own fab capabilities. How did we think about this news, both in terms of the strategic decision and the scale of it? David Morgan This is someone with boundless ambition, David Morgan plus success at delivering on this boundless ambition, David Morgan plus access to capital at a non-precedented rate. David Morgan So he's probably going to try and do all these things. It feels wildly ambitious to, you know, you have to build the gas turbines, David Morgan to build the fab, to build the robots, to build, you know, it's vertically integrated on every level, but he has a piece of vertical integration that's been superb, which is satellite launching integrated into Starlink has been superb vertically integrated, right? So you can join the dots in the past and say it all makes sense. I continue to think the scale of ambition, if there's any slowdown in the AI spend, then the all-in bet is the one that slows down the most, the fastest, and this is the all-in bet. So, you know, watch this space. But right now, he's got the capital and he wants to do it. David Morgan I just think at the end of the day, he's beyond all that, he's just saying, listen, there's a decade of supply chain limitations that's going to damage my ambitions. I got to do it, right? I have to do it. It's just, this is also unprecedented, right? it's vertically integrated on every level, but he has a piece of vertical integration that's been superb, which is satellite launching integrated into Starlink has been superb vertically integrated, right? So you can join the dots in the past and say it all makes sense. I continue to think the scale of ambition, if there's any slowdown in the AI spend, then the all-in bet is the one that slows down the most, the fastest, and this is the all-in bet. So watch this space. But right now, he's got the capital and he wants to do it. David Morgan I just think at the end of the day, he's beyond all that. He's just saying, listen, there's a decade of supply chain limitations that's going to damage my ambitions. I got to do it, right? I have to do it. It's just, this is also unprecedented, right? It's not just the investment that is unprecedented. It is this, you can't get RAM, you can't get chips, you can't get what you want, right? We've had limited issues in the past, but I don't think we've ever looked forward and said for a decade, I'm not going to be able to get what I need on a cost-effective basis. I can't even get TSMC on the phone because Jensen's out there all the time. I just don't, I could be wrong, but in my career, I have a limited amount of experience here in the old days. I don't think it's ever been like this, where it almost feels like infinite time before I can get the capacity I need at any tolerable price. Which is why it's super interesting to tie in something. Intel has come into the consortium. Intel is part of the TerraFab consortium in such a way. And I just saw it today. I did not know this. Intel completed an equity round, which I read somewhere. I haven't verified it. It was the first time they raised equity since they went public in '79. In other words, they've been profitable from cash flow and returning capital like a real company is meant to for the '80s, the '90s, the 2000s, the 2010s, right? And now the AI CapEx boom, plus obviously their deteriorating performance, has said it's time to access the capital markets again. While we're on Elon Musk, Elon Musk did have a very unusual incentive package where his obviously expanded with the expansion of company valuation. Revolut announced an incentive package to the CEO, or it was leaked, whereby it basically ratcheted up with different prices of the company. He'd get another, I think, 5 to 7 percent at 200 billion, and then he ultimately, at 500 billion, would have circa 39 to 40 percent. Is this the new norm? And should every CEO be asking for rated incentive packages alongside valuation bumps? David It's not going to be the new norm. And if it is, logically, stock prices should go down by 10 or 15 percent. Because what you're basically saying, I read what's available about the package. And the first question is multi-year packages with incentives around market cap. In other words, significantly beyond the normal CEO comp. That's been a thing. It obviously worked for Elon in the 2018 Tesla package. And obviously, after a lot of to-ing and fro-ing, he got another package just recently finally approved after they moved to Texas. So they're not, quote, the norm, but they are put in place for reasons we'll come back to for a small number, typically of founders who are fully vested in all their shares and who want to be incented again by boards who feel that they have to be incented again. By definition, that's not, quote, the norm. 90 percent of public companies aren't run by the founder. And frankly, the number of people willing to run a public company for 10 or $20 million a year turns out to be remarkably high. So, no, they're not the norm, Harry, right? Are they the norm for founders? We're seeing some of them. I mean, most of the time, I think, especially if they're badly designed and focused on market stock price only, they typically, they often fail. We saw a whole bunch of them in '21 that got unwound in '23, '24 because they weren't based on operating performance. They were based just on, hey, if the stock is at $200, we'll give you more shares. And then what happens is the CEO executes brilliantly, but the market is down. So he doesn't get his shares, and he comes back and he says, look, I've done my job, right? Forgetting that he would not have made the same argument on the other side, he or she, right? So, the record is fairly mixed. But at the same time, I'm going to acknowledge something for that special thoroughbred CEO who thrives on challenge. You can put them in place if the incentives are right, and maybe you do get extraordinary performance in return for extraordinary comp. So it's not utterly crazy. They're a very high-cost focused instrument, and I think boards have to be fairly careful when doing it. I'm not, for example, a fan of the purely stock price-based ones. And to be fair to Elon's package, we went over this before. It was a great package because it had, you have to do Mars, you have to do Optimus, you have to do lots of cars. At that point, give him the damn money, people, right? So, there can be a way to... Now, interesting comment. So, I think in the journal today, there is a clause that says if there's an M&A above a certain value, you might see some acceleration of that package. I haven't read the detail, but it will be interesting if SpaceX and Tesla merge, does he hit the big ka-ching on Tesla as well? That's what it implied, that he might hit it just by merging the companies, right? Totally. Before the details, just one question to you, or to you and Harry. I don't mean to interrupt, but when I read this, I thought it was more about control than just money. I also just read a story that the CEO of Revolut just tried to get out of paying a $20 million broker fee and a $400 million yacht he bought. So clearly, he enjoys the good life, right? As well as working hard, right? This is not a CEO that does not care about money. But to me, and I think that Elon was very clear on this, I need to control these companies or I'm walking, is what he said when the first one failed, right? So if Nick owns 40% of Revolut, he controls, especially with, I'm sure, a supermajority board and all that, it's his company. That's what he wants. The money, I'm sure, is part of it, but this is not going from 2% to 6%. This is going to 40% ownership. That's a lot. If he made that argument to me, it's about control, and I was a chair of the comp committee, I'd say, you're exactly right, Nick. So I'll tell you what, we'll give you three votes on each of your existing shares. Now you don't need control and you don't need any more shares. And he would come back an hour later and say, I also want the money, right? No, you're right. But I will say, I think we all learned that, yeah, we've all learned that there are limits to supermajority shares. We all have learned that there are other sources of pressure, whether they're VCs, shareholder activists, or other issues, that there are levels here of control. And you can control 99 out of 100 board seats, but if you own 6%, you may get pushed out of your company. It is entirely possible unless you'll go to the mat on it. I could talk for hours on that, but I do think Zuckerberg would be an example of someone who's controlled this. You can write ironclad control as a public company if you want to. And as I said before- No, but you can be pushed so hard. Yeah, but you get the push and you walk. With 40%, goodbye, guys. I would just end the Zoom with Wall Street if they didn't like what I was doing at Revolut. I would just push the button and say goodbye, guys. Go short me. I'll see you later. You say that, but actually it turns out your problem, yeah, you can ignore people, but they can choose also not to buy your stock. A super interesting thing happened today on the control thing. This is going to sound unrelated, but humor me. Zuckerberg's philosophy on AI, right, if you read it. One of the things, remember, this is a person who controls his board absolutely. You can show up, you can tell me what you think, but in the end, No, but you can be pushed so hard. Yeah, but you get the push-and- You walk. With 40%, goodbye, guys. I would just end the Zoom with Wall Street if they didn't like what I was doing at Revolut. I would just push the button and say, goodbye, guys. Go short me, I'll see you later. You say that, but actually it turns out your problem, yeah, you can ignore people, but they can choose also not to buy your stock. A super interesting thing happened today on the control thing. This is going to sound unrelated, but humor me. Zuckerberg's philosophy on AI, right, if you read it. One of the things, remember, this is a person who controls his board absolutely. You are just literally, you can show up, you can tell me what you think, but in the end, that control, right? It was super interesting. And he's pretty much had that sole control. He said as part of AI, how they think about governance, he didn't want personal control over the decision to release new models. It should be a board-level decision. I will admit, I'm like, hmm. And that to me was an example of, yes, Jason, you can have control over everything, but then you own everything. And at some point, even if you say you want 20% of your company, but you have 10x voting control, you can't make them buy the other 80%, so you can't keep your stock up, and you own every problem. And this might be a very smart man saying, I'm not sure I want to be the sole person releasing this shit. So it was super interesting. It was the first piece on control that Zuckerberg's done in 20 years. So I did note that in passing, right? Because control is interesting, because even when you have it, and I actually have changed my opinion. Because being public is so shitty because of all the problems going public, I've actually come to the conclusion that giving founders more control over their life's work, which is what it is, is an acceptable price to pay to incent them to go public, right? So I've actually changed my opinion on that. I actually think, even though some of these control things are weird, and I do think they probably shouldn't be in passive indexes as much, there should be some discount for that. I've come to the conclusion that weird control terms are an acceptable part, because otherwise everyone just does what the Collisons are doing, says it's private. They're like, I don't need your shit. In the words of, I think, Senator Dale Bumpers in the Clinton impeachment trial, when they say it's not about the money, it's about the money. I think it's about the incentive. I don't think it's about the money. I think your point was so good, Rory. I don't think I've heard it expressed enough that way. Going public sucks so bad. Look at the public company CEOs we've had on this show, or Harry has. It sucks to be public today. Yeah, it was fun during lockdown when you could grow 90% without a new feature. It's not fun. And I can't imagine, having been a founder twice, I can't imagine a helpless feeling as a public company CEO. I'd want to quit. I would just hate it, right? Having control, and equity has to somewhat tie to it, or it's a partial fiction, would make it worth it, right? I might leave the keys on the table. If I had no control of the company I founded, I'd already made plenty of money, I was diluted to nothing, I had a board that didn't understand my product telling me how I run my company, I might just leave the keys for you guys. You take them. Agreed. And I say that not because I like it, to be clear. I say that because I'm just looking at people saying private. I think the real solution will be when the private capital markets evaporate, deteriorate, and then they will go public because they have to, but that's by the by. So, I agree with you on that. But on the other hand, let me take the other side of it now. On these kinds of deals, the thing you look at is the participation rate, which is how much of the total creation and value is going to the CEO, right? In other words, and the way this deal was announced, and to be clear, it's not been put in the Revolut deal, going back to that, it's not been put in place yet. It was something like, for his existing thing, he gets it to 200 and he gets to 30%, and then if he gets from 200 to 500 in value, which is 300 billion in delta cap, he gets an extra 10% of the company, which would be 50 billion, right? Which would mean that for 300 billion in value creation, he's getting 16% of that, right? Which would be abnormally high, to be clear, right? I think 16%, abnormally high, right? That's less than our carry checks. Those are 20. This sounds low. But I can tell, yes, but if you're getting it on- You think I deserve 20% of what my portfolio does after a certain point? Poor Nick's only getting 16%. I disagree. I think that the market, I mean, I just- You think you're working harder for your portfolio than Nick is working for Revolut? No, I don't think it's about working harder. I think the nurses in the fucking emergency room are working harder than both of us, Jason, right? I could not agree with you more. I could not agree with you more. Okay, let's go for it, right? The question is, 2.5x, taking something from 200 to 500 billion gives you $50 billion, right? Yeah. Do you think you could get a Jamie Dimon-level CEO for 10 billion? I mean, he's only made a billion taking- It's too- I think it's too hard. Let me tie it back to a different point, and you can challenge me on this all you want, right? Yeah. I've already asked what should LPs do looking at this, right? I'll tell you what I'm doing. Any investment I've made that is not run by a founder is a zero. It's going to be a zero in this age. It's going to be a zero. I look across- Now, we have different portfolios, but the ones I have that are not run by founders, whether they're at 20 million or 200 million, they're all going to be zeros. And so if the price of me not having a zero is getting Nick to 40% in my bet- I wish I was a shareholder. If I'm Balderton, whoever, this is my best name, and that's the price, I'm going to pay it in a heartbeat because all my- I do not believe Jamie Dimon's lieutenant with his starched shirt and his blue-and-white collars and his cufflinks can run Revolut. It's not that mature. The space is not that stable. I don't buy it, and I'm not a banking expert, but I don't buy it's possible. I believe he will run that company into the ground just like every non-founder has run my portfolio companies. Let me ask another hard-nosed comment. Yeah, probably, but running into the ground. Yeah. When you're running- Yeah. You see, by the way- I'm going to get killed if I don't say one thing here, which is our former guest, Nick Ash. Yeah. Yeah, but when did he join? Two years ago? Oh, I just know my portfolio will be zeros without the founders. I'm not saying there aren't examples out there you can find. I just know for me, to the LPs, they're all going to be zeros, no matter how much ARR they have. They're going to be zeros. And this is the question, and that's totally true at one million, 10 million, 100 million, maybe a billion. The question is, I think Revolut's doing five billion, I used to know it, five billion in revenue and a billion or two in profit. It's an extraordinarily big and very impressive company. At some point, it becomes not true. Or maybe the better statement is this, and this is the interesting one. And I know this sounds really negative, but when you're on, remember, going back to interest, it's a corporate governance question. And having just come out in favor of founder control, all the things I said earlier, and I stand by them, right? You still need a dynamic to protect the other shareholders, right? Because if you take the logic to extreme, I saw Nick at Revolut made a comment. It's a very interesting comment that I think is bullshit. He said, and it doesn't sound bullshit, but it is when you think about it. He said, quote, I deserve more because the investors, after they give capital, they do nothing else. And that statement, the second half of that statement is true. After investors give you capital, big and very impressive company. At some point, it becomes not true. Or maybe the better statement is this, and this is the interesting one. And I know this sounds really negative, but when you're on, remember, going back to interest, it's a corporate governance question. And having just come out in favor of founder control, all the things I said earlier, and I stand by them, right? You still need a dynamic to protect the other shareholders, right? Because if you take the logic to extreme, I saw Nick at Revolut made a comment. It's a very interesting comment that I think is bullshit. He said, quote, I deserve more because the investors, after they give capital, they do nothing else. And that statement is the first, the second half of that statement is true. After investors give you capital, they do nothing else. That's the world of capital, right? But just because that's true doesn't mean the founder can, what's the limit then, right? Or, to put it another way, fast forward 30 years. What? What's the limit? I think the world has changed. I don't think most founders care anymore. And so I think you got to adjust. I think Nick is what he's saying. I think half the class at most accelerators agrees. I'm just going to raise at 50, and if it doesn't work, I'll just do whatever. But you're not addressing the issue. What you're saying there is the cost to run a company from 200 billion to 500 billion is 10% dilution. Is the cost from 500 billion to a trillion another 10%? Is the cost from a trillion to two trillion another? I'm just trying to get a sense of it. I think your point's a really good one. If it is, then two things are true. One is you should pay less for that stock because you're going to get way more dilution, right? PitchBook had an article this week saying how much returns are being massively compressed. It's not going to be compressed on outcomes north of 500 million to a billion. The outcomes are being massively compressed by unprecedented dilution and high entry prices. So this is just the world we have to live in. As a seed investor, I've only been doing this so long, but I've been doing it for a while. When I started, my model was, I'm actually paying twice my entry price, okay? That's how I model. Now it's 4x. Now I'm paying, I'm going to suffer 75% dilution. And that really means my entry price is 4x what it looks like on that 50 post you want. It's really effectively 200 if we hit it, right? And I could complain about it just like the Nick thing, right? But Nick is going to do it. The baby Elons are going to get these packages, and it doesn't really matter what I think or any of us think, because enough investors are going to go along with it that they're going to get these packages. But to your, I think, Rory, the more important point you made is, how elite will this be? Will this be reserved for? We could debate whether Nick deserves this, but this is a generational company, right? The question is, do subgenerational companies get these packages, and how does it impact things? But, yeah, with our dilution, I think all PitchBook said this week, all of our dilution is under-modeled. It's all under-modeled, right? So, and look, as I hate the role I've adopted in the last 10 minutes because I'm generally, I tell people I'm generally the softie in the comp committee. I love writing big comp checks for successful equity packages, but at some point, you do have to have some kind of linkage, and someone has to sit there and say, okay, what are we getting for this? And you're right. And for what it's worth, on this particular one, I'd probably do it, but I'd insist on non-market comp, non-market stock performance metrics. If you build the biggest bank in Europe operationally, not just on stock price value, then I would totally say you're worth the $50 billion. That's why I'm saying a lot of it's in the, it's really boring, but a lot of it's in the details. So if you go to pay, let me be very clear here. If you're going to give someone $50 billion, you ought to spend more time thinking about what you're getting for your $50 billion than, hey, I'll give you 50 billion if it's valued at 500 billion in a few years. You probably need to think about it a little more carefully. I think you're right. For what it's worth, really going on forever, I think that's what you should do. In my limited experience with my portfolio, these mini Elon packages, they're basically all focused on 10x what the last guy paid. Yes. That's what all the late-stage investors do. I paid $20, and I just want $200 for you to get it. I don't care whether there's a little deal like that. I want to make 10x post-dilution, and then you get your piece. So it's what you hate, but I think it's what a lot of late-stage investors want. Yes. Again, I actually think you're right. In which case, given the last round is at 100 or 200, that's my comment here, is that 10x, that would be a trillion. In other words, the participation rate is just a little high. I think these are fine packages. This one looked a little, if the numbers reported about are real, it's probably, ooh, that's a lot for, maybe you could pay a little less and get a little more. But yeah, it's a thing. The one thing I will say is I've interviewed a thousand founders. I know you love them, Sam Altman, Demis included. I've never interviewed anyone like Nick. Look, remember last week you asked which stock I like? Well, I think it's an amazing stock and amazing potential and market cap. I just want to be sure I got an operational performance before I pointed up the 50 bill. I know it's an obvious point, but Revolut's all green, right? Everything seems, at least externally. I'm sure there's stuff under the surface that's struggling. You got it. You got it. You do these packages too late, it's too late. I think that's right. And that also means you have to overpay and pay up because you have to do these packages at the right time, right? You try to do this when the company's growing 4%. I mean, sure, but you've missed your window there. Yes. I actually think that this is the second package that that particular CEO got, but yes, I agree. Team, where do we want to go from here? We have Whatnot, which obviously raised a very large round, 545 million at 20 billion. I'm sorry, 545 million at 20 billion. We've got DeepSeek raising an 8 billion at reported $74 billion. ByteDance bans distillation of US models, which I thought was interesting. I think we should talk about Whatnot, if for no other reason than it's such a relief that there's more to life than AI. There's shopping. So there's more to life than AI shopping, really? Yeah. I mean, I think it's a great story. Background for people: Whatnot raised about half a billion at 20 billion in valuation, right? And it's a live shopping company and the internet equivalent of QVC. The minute I heard that story, my response is that'll work. You know why? I mean, if you look at QVC, if you look at the Home Shopping Network, these were the equivalent in pre-internet days on TV, live sales, right? People enjoy that shit, right? And someone explained to me what Whatnot did a couple of years back, and I'm like, oh my God, it's a great idea, right? Not my space, not what I do, but that's going to work. You're going to have people live-selling shit. It's going to be a little bit of retail, a little bit of commerce. Look, it's going to work. I mean, if you think about it, the big three of this space have been QVC. Interesting enough, by the way, that's now bankrupt, probably because all those people died and now they're replaced by Whatnot people, right? And then eBay. We forget it, but eBay is the other quirky way to sell shit from the 1990s. QVC, if you look at the home shopping network, these were the equivalent in pre-internet days on TV: live sales, right? People enjoy that shit, right? And someone explained to me what Not did a couple of years back, and I'm like, oh my God, it's a great idea, right? Not my space, not what I do, but that's going to work. You're going to have people live selling shit. It's going to be a little bit of retail, a little bit of commerce. Look, it's going to work. If you think about it, the big three of this space have been QVC. Interesting enough, by the way, that's now bankrupt, probably because all those people died, and now they're replaced by Whatnot people, right? And then eBay. We forget it, but eBay is the other quirky way to sell shit from the 1990s, and that's got a 40 or 50 billion dollar market cap. So, what's interesting here is something where you look at and go, that's going to work, and fast forward two years and it's 20 billion. Now, it's growing 2X year on year, 8 billion. You have to measure, I think, GMV, which is about 8 billion last year, going to 16 billion this year, and then they get a 12% take. It's a great business. That's all. So I'm just like, yeah, go team. It is useful. Listen, if I'm not an expert on Whatnot, I could speak more to Shopify, which blew out its quarter too, right? It's roughly related. Mr. B2B. But I do think it's worth, I do think everyone should at least study what isn't being destroyed by AI, right? What's going to happen with online shopping, online commerce, what's going to happen with restaurants, what's going to happen with cars. And there will be many good opportunities and spaces that aren't going to be destroyed by folks creating a poster in ChatGBT for free. And we should just study it more, right? There's gold in the things that aren't going to be destroyed by AI, as well as the things that are being decimated by AI. To me, that's the only interesting part, right? I totally agree, Jason. Because look, Revolut's another example. It's just work, trying to ground, I agree. There are two compelling, large businesses catering for real, universal human needs, finance, shopping, that are building huge outcomes. I agree. The AI is most of what's going on, but not all. But if it's an AI story, it could be worth like 50x GMV. That's the only miss. Let's say they could pretend the GMV was rev. So what would it fit? What's 50x times 16 billion, Rory? Help me with the math. This Whatnot LLM would be the next trillion dollar AI startup. Pleasingly enough, 50x times 16 billion is roughly Anthropic's market. Yeah, that's what I'm saying. We need another trillion dollar. This one's a bargain at the iconic investment committee. We're getting this for 20. I do think there's plenty of that out there. I think whether it's literally GMV or not, I think there are plenty of folks getting benefits of revenue that make no sense. It's not even just lying or cynical. I think investors, to some extent, don't care as long as the growth's there. Final one, if I want to shepherd us: Shopify, we mentioned blowing out the quarter, Atlassian blowing out the quarter. Biggest jump since 2015 for Atlassian, crushed it. Any takeaways from some of the big results that came out? Yeah. As I said, if you produce, you'll get rewarded. I was delighted because when you pinned me to the wall a few months back and said, name names, my first bet, what stocks would you buy? And my first answer was the best one, which is just buy WorldCloud and it's up 50%. But then you pushed me and I named some names. And one of them I named was Atlassian. And honestly, two months ago, I felt like an idiot. It was still not, I thought he'd pull it off, but it wasn't there. And then obviously they nailed it. They got the growth and the stock jumped. I think if you look at overall, it was kind of because some people like Datadog were down a little, and you lumped them together on the agenda. But those are different stories. Datadog's story was just everything's amazing, but our biggest customer, and everybody knows it's OpenAI and no one says it, right, suddenly realized they maybe don't need to spend $150 million and they're spending less. So growth was down a little. But that's because Datadog was trading at 18 times forward revenues, and now it's 15, right? That's one phenomenon of the AI-adjacent winners, which is very different than what Atlassian was going through, which was existential shit and we're trading at three times, and suddenly we nail the quarter and it's an easy pop to five times, something like that, right? Those are different movies at the same time. What the Atlassian story says is the Salesforces, the HubSpots, the Canvas if it was public, is if you get it back on track with the fundamentals, the stock will follow, right? But if you don't, and some of the others that you mentioned didn't, then you're stuck in two and three X land forevermore until you get, as Jason said last week, until you get bent spooned. I still think these are hard companies to run, to your earlier point. Yes, Atlassian also did something, which Canva did too, which I always find a bad sign, a sign of stress. Not bad, not, Mike's great, but they got rid of most of the free Loom seats. And this is what you do in times of stress. The other thing that Canva did because the revenue's down is they pushed a lot of features into the higher paid additions. Okay. And it's not the end of the world. Loom is not the breakout success of Atlassian, right? It is not. But getting rid of collaborative free seats, which is how we all grew up using Zoom, right? We could share and work on these together. That's a sign of just how hard, even if you beat the quarter, guys like Shopify or Atlassian, man, they're leaving nothing on the table. These are not easy beats. This is not Anton, lovable turning around and he added a hundred million last week without realizing why. These are, even the beats are hard. And so the Loom one, it sounds minor, but whenever I look at, whenever I see the base getting overly monetized or harvested, if nothing else, it's a sign of stress in the organization because no founder wants to do that. You've said that. I've totally come to the conclusion you're right. And when you talk to people one level in at some of these big software companies and they're doing a seven or eight percent quarter, and then you talk to a director of sales that you know, you suddenly discover we're jamming them on price. We're jamming them on overages, and you realize it's just not sustainable. So I do hear you on that one. Overall, I thought it was a great quarter, but yeah, sorry to lose your preloom suit. I still worry if the agents need all these products, but I hope so. I don't want to be negative unless I'm a super fan of Mike. We all are. I want it to win, but I also worry a little bit. It's a Canva story coming that it seems to be defying some trends. Now you can answer, you can say Atlassian is very enterprise, right? Let's not look at the developer side of things. Let's not look at how, how, how, how we used to use Jira and other tools, but our agents really don't need these seats. And a lot of their revenue is still developer-focused, which is where I think the seat is under assault, a permanent assault. The seat is. I've got a provocative question for you. HubSpot today is sitting at $10 billion. How long will it be until HubSpot is bought by Bending Spoons? I'm not going to dunk on HubSpot. We were lucky enough to be. I'm not. Yeah. Series C investment in HubSpot. It was at four, we did it at 47 million pre. So we're still up. Harry, I will let me. Series C at 47 million. I'm wrong. It was 70. I'm wrong. It was 70. I was taking a box. Box was, yeah. developer side of things. Let's not look at how, how, how, how we used to use Jira and other tools, but our agents really don't need these seats. And it is in a lot of their revenue is still developer-focused, which where I think the seat is under assault, a permanent, permanent assault. The seat is. I've got a provocative question for you. HubSpot today is sitting at $10 billion. How long will it be until HubSpot is bought by Bending Spoons? I'm not going to dunk on HubSpot. We were lucky enough to be. I'm not. Yeah. Series C investment in HubSpot. It was at four, we did it at 47 million pre. So we're still up. Harry, I will let me. Series C at 47 million. I'm wrong. It was 70. I'm wrong. It was 70. I was taking a box. Box was, yeah. It was hard to get done too. It was hard to get done. I'm sure Brian, if he could have got one of the glamour people who turned him down and then did him later, he'd have taken them over us. Well, I wouldn't go that far, but yeah. Oh, I would. But no. You're a podcaster, Rory. You stand up for yourself. I'll tell you why I don't think they're going to get Bending Spooned. For what it's like, I don't know, right? There's so many things in the Airtable story that are scarier than they sounded. But I think one of them is that they only got one offer. And Bending Spoons is going to look at everything, and it's got to be perfect. And maybe they will buy them. First of all, that would be a lot for Bending Spoons to bite off, but they could do it, right? I guess you can always line up the financing. I think the tough, like HubSpot, assuming they would sell, let's just assume they would even sell, right? And there's a lot of fiduciary questions here. There should be offers at 12 if it's at 10 today. There should be, but I don't believe there are. I don't believe there's many. I will tell you at a meta level, if we want to break on it, there is an issue here. And it's a structural issue in the world today, in the AI world. Just like if you're Canva, the prosumer folks are threatened by chat. If it can be done in ChatGBT, even accidentally, you're hyper threatened. The SMBs, the HubSpots and Mondays and others, they're not really threatened by doing it yourself. Okay. That is, that is, that is a short. What they are threatened by is the fact that low-end competitors in SMB are really good. The low-end CRM competitors are exploding. The revenue growth from Monaco, Lightfield, Auracel and others, they're like nothing we've seen before. My first venture investment was Pipedrive. It would have taken 40 years to get competitive with Salesforce, right? It's just slow. And that was the number one simple-to-use CRM, exited for a billion and something, my first investment. The problem across my portfolio is you used to walk into a board meeting and the competition would be the guys bigger than you, right? Here's what the big guys are doing. Now, if you walk into a board meeting and it's SMB, they're all guys that were on the slide 24 months ago, and they're really good, and their agents are good, and their LMs are good. And so the tough hand HubSpot has is it spent the last five years beating Salesforce at the low end, right? It's a CRM company now. It's not a marketing automation company. Now the low end is so good. It's so, so good with AI. The new entrants are so good in SMB. And the amount of founders that want to compete, even in niche categories, they didn't used to want to. And so this is the bare case on everyone at this SMB space because it's just, there's too many good competitors. Exactly right on that. It's very well articulated. I remember the years of we're doing CRM, we're competing on Salesforce, and now you're exactly, there's just myriads of, because you can build really excellent software really quickly with a different twist using AI. It's why I tell, I was telling this to someone who runs a big PE shop in tech, if I owned one of these companies as a PE owner, if I was, I would just be at every Y Combinator demo day. I would be like, you need to hire, you need to buy some of these, you need to infuse some of that DNA quickly while you still have breath, right? And figure out what you can build. Are you fucking kidding me with the loyalty that they have today? You think they're going to stick? Let's give a load of young people from YC a big chunk of money. I just got to push on that, Harry. They have to come market this shit heap. No, no, yeah. And they're going to be like, I should have Chime, and then everything. Obviously, if you think it's a shit heap, no. But all the PE companies respectfully are shit heaps. Do you want to know the serious reason why it won't work? Rory's right, Harry. You know why it won't work? Because all the hot startups have this model. They're all picking off everybody. Yeah, I agree. I think one of my investments, Owner, I think they've acquired like 20 companies. And they get to go work for a reasonably hot company, right? And so how are you going to compete with that when Rippling has Hoovered up 30 and Owner's Hoovered up 20 and Revolut's Hoovered up 10? That strategy worked three years ago. It's too late. Everyone is just sitting there hitting refresh, hoping these smart YC companies fail so they can Hoover them up in an acqui-hire. I'm not kidding. It is a core strategy of many, of many leaders. Boys, thank you so much. That was awesome. I love that. that want these data centers that as we push through this, and as government gets on the other side, it will ultimately going to work itself out. Like this will not be one of the great issues of our time, even though it seems ridiculous today that, that you don't want these, but they are, you know, there's only so many people working at these data centers. But it may, this one may work itself out. At least that's what folks I've talked to that know it more closely than me. Do you not think this will, do you not think this will be a material blocker in our speed of deployment? Well, we have 50 states and I don't know how many counties we have. It's a lot of counties. Like I'm pretty, there will be some with water and power that want, that want this business is, is the meta point. And that also this backlash isn't going to last, right? These are not, these are not all destroying our water tables. These are real jobs, 300, 3000 jobs for a lot of poor communities. Let's not mock it when they, I mean, I mean, this is such an entitled podcast. Oh, poor anthropic engineer only made 35 million. I mean, go out to the goddamn panhandle. No one's making 50 grand, right? So these are, these are not enough jobs, right? To make up for the, but these are real jobs with real money and they're going to last years and years and years. And they bring a limited amount of economic, real economic benefit. You know, there's enough, but it's, it is a bummer for, for places where we should be building these data centers for sure. It's not a net positive. It's just a question of, will it work itself out in, in, in, in the U S where we, we do have competition. One thing we do have a nice set of competition here, regulatory competition between states and counties. Yeah. I mean, I think, you know, the irony of Ruocana, you know, the Silicon Valley congressman turning into the, you know, the Marxist wolf in sheep's clothing is, it is pleasing to me as I would not tend to be on that side of the voting aisle. Just watching all the Dems get suckered into thinking he's a moderate has been worth the price of admission as he starts advocating the billionaire's tax. So there you go. But who am I to judge? You mean, millionaire's tax, where I think you missed out. Yeah, that's exactly right. So that's funny in and of itself. But you know, once you're elected congressman, your next step is up. And the truth is the way to pop, the way to electoral success probably lies to a fair amount of populism for the next period of time. So on the data science, I think, you know, I saw a good piece, I think in Atlantic or something, really just talking to people, you know, in the areas wrestling with these issues. And it was a very interesting point. It was much less even AI is awful and much more, I don't know what I'm getting here. It's all very opaque. What's the deal? And I think if tech wants to get this stuff done, there's two risks here. And they're almost opposite each other because if you want to get local support, you got to figure out what's the package that moves it for them. And it definitely isn't, oh, by the way, you're going to get a 25% increase in electricity costs. And you're seeing that now. People are really, and I think the smart people are saying, at a bare minimum, if you want to get a data center in here, you got to find a way of making sure people aren't going to pay for electricity and there's probably going to be some kind of dividend. If you tell people that, you know, you're going to get this job, business, there's not going to be an increase in electricity, and there's going to be, you know, a five, 10 grand distribution per people in the township, you probably go, yeah, we should look at this, right? The other thing is, do some of these statewide laws just make that impossible to do? Because the truth is, at the moment, there is a fair amount of we hate tech bros out there. And as we said a million times, it turns out if you spend three years saying AI is going to kill you all, you shouldn't be surprised to be hated. So I think there is some wood to chop technically. But I do agree, Jason, it's a great point. One of the best things we have over here, unlike, dare I say it, the UK, which is one of the most centralized states in Europe in terms of central authority, and Andy Burnham is trying to change that. But we got 50 states. If North Dakota hates this shit, but South Dakota likes it, then South Dakota can put something in place and it can happen. Right? Dude, the UK is like the size of South Dakota. But yes, my point is that we've got diversity here in terms of, so hopefully it won't be a huge block. I mean, right now, the practical point is, it's actually the availability of power rather than pure data center blocks. But there's definitely a whole series of things slowing things down between power availability, compute availability, and then political willingness to turn the stuff on. Now, the main man himself, always lacking in ambition, Mr. Elon Musk, unveiling TerraFab, which we touched on there, $16.8 billion. I think it's going to be the most expensive build out of like a real estate project, I think I read. It's, as we said, in terms of jobs, extraordinary in terms of how many jobs will be delivered, different numbers, but between two to 3,000. Really, it's him saying that he wants to sidestep TSMC's queue and obviously build out his own fab capabilities. How did we think about this news, both in terms of the strategic decision and the scale of it? David Morgan This is someone with boundless ambition, David Morgan Plus success at delivering on this boundless ambition, David Morgan Plus access to capital at a non-precedented rate. David Morgan So he's probably going to try and do all these things. It feels wildly ambitious to, you know, you have to build the gas turbines, David Morgan To build the fab, to build the robots, to build, you know, it's like vertically integrated on every level, but he has a piece of vertical integration that's been superb, which is satellite launching integrated into Starlink has been superb vertically integrated, right? So you can join the dots in the past and say it all makes sense. I continue to think the scale of ambition, if there's any slowdown in the AI spend, then the all-in bet is the one that slows down the most the fastest, and this is the all-in bet. So, you know, watch his space. But right now, he's got the capital and he wants to do it. David Morgan I just think at the end of the day, he's beyond all that, he's just saying, listen, there's a decade of supply chain limitations that's going to damage my ambitions. I got to do it, right? I have to do it. It's just, this is also unprecedented, right? It's not just the investment that is unprecedented. It is this, you can't get RAM, you can't get chip, you can't get what you want, right? We've had limited issues in the past, but I don't think we've ever looked forward and said for a decade, I'm not going to be able to get what I need or on a cost-effective basis. I can't even get TSMC on the phone because Jensen's out there all the time. I just don't, I could be wrong, but in my career, I have a limited amount of experience here in the old days. I don't think it's ever been like this where it's, you could, it almost feels like infinite time before I can get the capacity I need at any tolerable price. Which is why it's super interesting to tie in something. Intel has come into the consortium. Intel is part of the TerraFab consortium in such way. And I just saw it today. I did not know this. Intel completed an equity round, which I read somewhere, I haven't verified it. It was the first time they raised equity since they went public in 79. In other words, they've been profitable from cash flow and returning capital like a real company is meant to for the 80s, the 90s, the 2000s, the 2010s, right? And now the AI CapEx boom, plus obviously their deteriorating performance has said it's time to access the capital markets again. While we're on Elon Musk, Elon Musk did have a very unusual incentive package where his obviously expanded with the expansion of company valuation. Revolut announced an incentive package to the CEO or it was leaked, whereby it basically ratcheted up with different prices of the company. He'd get another, I think five to seven percent at 200 billion. And then he ultimately at 500 billion would have circa 39 to 40 percent. Is this the new norm? And should every CEO be asking for rated incentive packages alongside valuation bumps? David It's not going to be the new norm. And if it is, logically, stock prices should go down by 10 or 15 percent. Because, I mean, what you're basically saying, I mean, I read what's available about the package. And, you know, the first question is multi-year packages with incentives around market cap. And, you know, in other words, significantly beyond the normal CEO comp. That's been a thing. It obviously worked for Elon in the first, the 2018 Tesla package. And obviously, after a lot of two-ing and four-ing, he got another package just recently finally approved after they moved to Texas. So they're not, quote, the norm, but they are put in place for reasons we'll come back to for a small number, typically of founders who are fully vested in all their shares and who want to be incented again by boards who feel that they have to be incented again. By definition, that's not, quote, the norm. 90 percent of public companies aren't run by the founder. And frankly, the number of people willing to run a public company for 10 or $20 million a year turns out to be remarkably high. So, no, they're not the norm, Harry, right? Are they the norm for founders? We're seeing some of them. I mean, common, most of the time, I think, especially if they're badly designed and focused on market stock price only, they typically, they often fail. We saw a whole bunch of them in 21 that gone unwound in 23, 24 because they weren't based on operating performance. They were based just on, hey, if the stock is at $200, we'll give you more shares. And then what happens is the CEO executes brilliantly, but the market is down. So, he doesn't get his shares and he comes back and he says, look, I've done my job, right? Forgetting that he would not have made the same argument on the other side, he or she, right? So, the record is fairly mixed. But at the same time, I'm going to acknowledge something for that special thoroughbred CEO who thrives on challenge. You can put them in place if the incentives are right and maybe you do get extraordinary performance in return for extraordinary comps. So, it's not utterly crazy. They're a very, not blunt, they're a very high cost focused instrument. And I think boards have to be fairly careful when doing it. I'm not, for example, a fan of the purely stock price-based ones. And to be fair to Elon's 25 package, we went over this before, it was a great package because it had, you have to do Mars, you have to do Optimus, you have to do lots of cars. At that point, give them the damn money, people, right? So, there can be a way to... Now, interesting comment. So, I think in the journal today, there is a clause that says, if there's an M&A above a certain value, you might see some acceleration of that package. I haven't read the detail, but it will be interesting if SpaceX and Tesla merge, does he hit the big ka-ching on Tesla as well? That's what it implied, is that he might hit it just merging the companies, right? Totally. Before the details, just one question to you or to you and Harry, I don't mean to interrupt, but this, when I read this, I thought it was more about control than just money. I also just read a story that the CEO of Revolut just tried to get out of paying a $20 million broker fee and a $400 million Yachty bot. So, clearly, he enjoys the good life, right? As well as working hard, right? This is not, this is not a CEO that does not care about money. But to me, and I think that Elon was very clear on this, I need to control these companies or I'm walking, is what he said when the first one failed, right? So, if Nick owns 40% of Revolut, he controls, especially with, I'm sure, a super majority board and all that, it's his company. That's what he wants. He wants. The money, I'm sure, is part of it, but this is not going from 2% to 6%. This is going to 40% ownership. That's a lot. If he made that argument to me, it's about control, and I was a chair of the comp committee, I'd say, you're exactly right, Nick. So, I'll tell you what, we'll give you three votes on each of your existing shares. Now, you don't need control and you don't need any more shares. And he would come back an hour later and say, I also want the money, right? Having- No, you're right. But I will say, I think we both all learned that- Yeah. We've all learned that there are limits to super majority shares. We all have learned that there are other sources of pressure, whether they're VCs, shareholder activists, other issues, that there are levels here of control. And you can control 99 out of 100 board seats, but if you own 6%, you may get pushed out of your company. It is entirely possible unless you'll go to the mat on it. I could talk for hours on that, but I do think Zuckerberg would be an example of someone who's control this. You can write Ironclad control as a public company if you want to. And as I said before- No, but you can be pushed so hard. Yeah, but you get the push-and- You walk. With 40%, goodbye, guys. I would just end the Zoom with Wall Street if they didn't like what I was doing at Revolut. I would just push the button and say goodbye, guys. Go short me, I'll see you later. You say that, but actually it turns out your problem, yeah, you can ignore people, but they can choose also not to buy your stock. It was a super interesting thing happened today on the control thing. This is going to sound unrelated, but humor me. Zuckerberg's philosophy on AI, right, if you read it. One of the things, remember, this is a person who controls his board absolutely. You are just literally, you can show up, you can tell me what you think, but in the end, that control, right? It was super interesting. And he's pretty much had that sole control. He said as part of AI, how they think about governance, he didn't want personal control over the decision to release new models. It should be a board level decision. I will admit, I'm like, hmm. And that to me was an example of, yes, Jason, you can have control over everything, but then you own everything. And at some point, even if you say you want 20% of your company, but you have 10X voting control, you can't make them buy the other 80%, so you can't keep your stock up and you own every problem. And this might be a very smart man saying, I'm not sure I want to be the sole person releasing this shit. So it was super interesting. It was the first piece of on control that Zuckerberg's done in 20 years. So I did note that in passing, right? Because control is interesting, because even when you have it, you know, and I actually have changed my opinion. Because Burn Public is so shitty because of all the problems going public, I've actually come to the conclusion that giving founders more control over their life's work, which is what it is, is an acceptable price to pay to incent them to go public, right? So I've actually changed my opinion on that. I actually think, even though some of these control things are weird, and I do think they probably shouldn't be in passive indexes as much, there should be some discount for that. I've come to the conclusion that weird control terms are an acceptable part, because otherwise everyone just does what the Collison's doing, say it's private. They're like, I don't need your shit. In the words of, I think, Senator Dale Bumpers in the Clinton impeachment trial, when they say it's not about the money, it's about the money. I think it's about the incentive. I don't think it's about the money. I think your point was so good, Rory. I don't think I've heard it expressed enough that way. Going public sucks so bad. Look at look at the public company CEOs we've had on this show, or Harry has. It sucks to be public today. Yeah, it was fun during lockdown when you could grow 90% without a new feature. It's not fun. And I can't imagine having been a founder twice, I can't imagine a helpless feeling as a public company CEO. I'd want to quit. I would just hate it, right? Having control, and equity has to somewhat tie to it, or it's a partial fiction, would make it worth it, right? I might leave the keys on the table. If I had no control of the company I founded, I'd already made plenty of money, I was deluded to nothing, I had a board that didn't understand my product telling me how I run my company, I might just sort of leave the keys for you guys. You take them. Agreed. And I say that not because I like it, to be clear. I say that because I'm just looking at people saying private. I mean, I think the real solution will be when the private capital markets evaporate, deteriorate, and then they will go public because they have to, but that's by the buy. So, I agree with you on that. But on the other hand, let me take the other side of it now. On these kinds of deals, the thing you look at is the participation rate, which is how much of the total creation and value is going to the CEO, right? In other words, and the way this deal was announced, and to be clear, it's not been put in the Revolut deal, going back to that, it's not been put in place yet. It was something like, for his existing thing, he gets it to 200 and he gets to 30%, and then if he gets from 200 to 500 in value, which is 300 million in delta cap, he gets an extra 10% of the company, which would be 50 billion, right? Which would mean that for 300 million in value creation, he's getting 16% of that, right? Which would be abnormally high, to be clear, right? I think 16%, abnormally high, right? That's less than our carry checks. Those are 20. This sounds low. But I can tell, yes, but if you're getting it on- You think I deserve 20% of what my portfolio does after a certain point? Poor Nick's only getting 16%. I disagree. I think that the market, I mean, I just- You think you're working harder for your portfolio than Nick is working for Revolut? No, I don't think it's about working harder. I think the nurses in the fucking emergency room are working harder than both of us, Jason, right? I could not agree with you more. I could not agree with more. Okay, let's go for it, right? The question is, 2.5x, taking something from 200 to 500 billion gives you $50 billion, right? Yeah. Do you think you could get a Jamie Dimon level CEO for 10 billion? I mean, he's only made a billion taking- It's too- I think it's too hard. Let me tie it back to a different point, and you can challenge me on this all you want, right? Yeah. I've already asked what should LPs do looking at this, right? I'll tell you what I'm doing. Any investment I've made that is not run by a founder is a zero. It's going to be a zero in this age. It's going to be a zero. I look across- Now, we have different portfolios, but the ones I have that are not run by founders, whether they're at 20 million or 200 million, they're all going to be zeros. And so if the price of me not having a zero is getting Nick to 40% in my bet- I wish I was a shareholder. If I'm Balderton, whoever, this is my best name, and that's the price, I'm going to pay it in a heartbeat because all my- I do not believe Jamie Dimon's lieutenant with his starched shirt and his blue and white collars and his cufflinks can run Revolut. It's not that mature. The space is not that stable. I don't buy it, and I'm not a banking expert, but I don't buy it's possible. I believe he will run that company into the ground just like every non-founder has run my portfolio companies. Let me ask another hard-nosed comment. Yeah, probably, but running into the ground. Yeah. When you're running- Yeah. You see, by the way- I'm going to get killed if I don't say one thing here, which is our former guest, Nick Ash. Yeah. Yeah, but when did he join? Two years ago? Oh, I just know my portfolio will be zeros without the founders. I'm not saying there aren't examples out there you can find. I just know for me, to the LPs, they're all going to be zeros, no matter how much ARRs they have. They're going to be zeros. And this is the question is, and that's totally true at one million, 10 million, 100 million, maybe a billion. The question is, I think Revolut's doing five billion, I used to know it, five billion in revenue and a billion or two in profit. It's an extraordinarily big and very impressive company. At some point, it becomes not true. Or maybe the better statement is this, and this is the interesting one. And I know this sounds really negative, but when you're on, remember, going back to interest, it's a corporate governance question. And having just come out in favor of founder control, all the things I said earlier, and I stand by them, right? You still need a dynamic to protect the other shareholders, right? Because if you take the logic to extreme, I saw Nick at Revolut made a comment. It's a very interesting comment that I think is bullshit. He said, and it doesn't sound bullshit, but it is when you think about it. He said, quote, I deserve more because the investors, after they give capital, they do nothing else. And that statement is the first, the second half of that statement is true. After investors give you capital, they deserve, they do nothing else. That's the world of capital, right? But just because that's true doesn't mean the founder can, I mean, what's the limit then, right? Or to put it another way, fast forward 30 years. What? What's the limit? I think the world has changed. I don't think most founders care anymore. And so I think you got to adjust. I think Nick is what he's saying. I think half the class at most accelerators agrees. I'm just going to raise it 50. And if it doesn't work, I'll just do whatever. But you're not addressing the issue. What you're saying there is the cost to run a company from 200 billion to 500 billion is 10% dilution. Is the cost from 500 billion to a trillion another 10%? Is the cost from a trillion to two trillion another? I'm just trying to get a sense of it. I think your point's a really good one. If it is, then two things are true. One is you should pay less for that stock because you're going to get way more dilution. Right? You know, pitch book had an article this week saying how much massively returns are being compressed. It's not going to be compressed on outcomes north of 500 million to a billion. That outcomes are being massively compressed by, by unprecedented dilution and high entry prices. So this is just the world we have to live in. Like as a seed investor, I've only been doing this so long, but I've been doing it for a while. When I started, my model was, um, I'm actually paying twice my entry price. Okay. That's how I model. Now it's 4X. Now I'm playing, now I'm paying, I'm going to suffer 75% dilution. And it's not, and that really means my entry price is 4X what it looks like on that 50, 50 posts you want. It's really effectively 200 if we, if we hit it. Right. And I could complain about it just like the Nick thing. Right. But Nick, Nick going to do it like, like the, the, the, the baby Elons are going to get these packages and it don't really matter what I think or any of us think because enough investors are going to go along with it, um, that they're going to get these packages. But to your, I think Rory, the more important point you made is, is how elite will this be? Will this be reserved for? We could debate whether Nick deserves this, but this is, this is a, this is a generational company, right? The question is, do subgenerational companies get these packages and how does it impact things? Um, but, uh, yeah, with the, our dilution, I think all pitch book said this week, all of our dilutions under modeled. It's all under modeled. Right. So, and look, as I, I, I, I hate the role I've adopted in the last 10 minutes because I'm generally, I all tell people I'm generally the softie in the comp committee. I love writing big comp checks for successful equity packages, but at some, you do have to have some kind of linkage and some, someone has to sit there and say, okay, what are we getting for this? And you're right. And you know, for what it's worth on this particular one, I'd probably do it, but I'd insist on non-market comp, non-market stock performance metrics. If you build the biggest bank in Europe operationally, not just on stock price value, then I would totally say you're worth the $50 billion. That's why I'm saying a lot of it's in the, it's really boring, but a lot of it's in the details. So you could, if you go to pay, let me very clear here. If you're going to give someone $50 billion, $50 billion, you ought to spell to self to spend more time thinking about what you're getting for your $50 billion than, Hey, I'll give you a 50 billion. If it's valued at 500 billion in a few years, you probably need to think about a little more carefully. I think you're right for what it's really going on forever. I think that's what you should do. In my limited experience with my portfolio, these mini, these mini Elon packages, they're basically all focused on 10 X, what the last guy paid. Yes. That's what all the late stage investors do. Whatever I paid $20, $20, and I just want $200 for you to get it. I don't care whether there's a little deal like that. I want to make 10 X post dilution and then you get your piece. So it's what you hate, but I think it's what a lot of late stage investors want. Yes. Again, I actually think you're right. In which case, given the last round is at 100 or 200, that's my comment here is that 10 X, that would be a trillion. In other words, the participation rate is just a little high. I think these are fine packages. This one looked a little, if the numbers brooded about are real, it's probably, ooh, that's a lot for, maybe you could pay a little less and get a little more, but yeah, it's a thing. The one thing I will say is I've interviewed a thousand founders. I know you love them. Sam Altman, Demis included. I've never interviewed anyone like Nick. I look, remember last week you asked which stock I like, well, but I think it's an amazing stock and amazing potential and market cap. I just want to be sure I got an operational performance before I pointed up the 50 bill. I know it's capped an obvious, but the Revolut's all green, right? Everything seems, at least externally, I'm sure there's stuff under the surface that's struggling. You got it. You got it. You do these packages too late. It's too late. I think that's right. And that also means you have to overpay and pay up because you have to do these packages at the right time, right? You try to do this when the company's growing 4%. I mean, sure, but I mean, it's, you know, you've missed your window there. Yes. I actually think that this is the second package that that particular CEO got, but yes, I agree. Team, why do we want to go from here? We have Whatnot, which obviously raised a very large round, 545 million at 20 billion. I'm sorry, 545 million at 20 billion. We've got DeepSeek raising an 8 billion at reported $74 billion. ByteDance bans distillation of US models, which I thought was interesting. I think we should talk about Whatnot if for no other reason that it's such a relief that there's more to life than AI, there's shopping. So there's more to life than AI shopping, really? Yeah. I mean, I think it's a great story. Backgrounds of people, Whatnot raised about half a billion at 20 billion in valuation, right? And it's a live shopping company and in the internet equivalent of QVC. The minute I heard that story, my response is that'll work. You know why? I mean, if you look at QVC, if you look at the home shopping network, these were the equivalent in pre-internet days on TV, you know, live sales, right? People enjoy that shit, right? And someone explained to me what Not did a couple of years back and I'm like, oh my God, it's a great idea, right? Not my space, not what I do, but that's going to work. You're going to have people live selling shit. It's going to be a little bit of retail, a little bit of commerce. Look, it's going to work. I mean, if you think about it, the big three of this space have been QVC. Interesting enough, by the way, that's now bankrupt probably because all those people died and now they're replaced by Whatnot people, right? And then eBay, you know, we forget it, but eBay is the other quirky way to sell shit from the 1990s and that's, you know, got a 40 or 50 billion dollar market cap. So, what's interesting here is something where you look at and go, that's going to work and fast forward two years and it's 20 billion. Now, you know, it's growing 2X year on year, 8 billion. I mean, you know, you have to measure, I think it's, you measure GMV, which is about 8 billion last year, going to 16 billion this year, and then they get a 12% take. It's a great business. That's all. I mean, so I'm just like, yeah, go team. It is useful. Listen, if I'm not an expert on Whatnot, I could speak more to Shopify, which blew out its quarter too, right? It's roughly related. Mr. B2B. But I do think it's worth, I do think everyone should at least study what isn't being destroyed by AI, right? What's going to happen with online shopping, online commerce, what's going to happen with restaurants, what's going to happen with cars. And it's just, there will be many good opportunities and spaces that aren't going to be destroyed by folks creating a poster in ChatGBT for free. And we should just study it more, right? There's gold in the things that aren't going to be destroyed by AI, as well as the things that are being decimated by AI. To me, that's the only interesting part, right? I totally agree, Jason. Because look, Revolut's another example. It's just work, you know, just trying to ground, I agree. There are two compelling, large businesses catering for real, you know, universal human needs, finance, shopping that, you know, are building huge outcomes. I agree. You know, the AI is most of what's going on, but not all. And but if you know, it's an AI story, it could be worth like 50x GMV. That's the only miss. Like, let's say they could pretend the GMV was was rev. So what would it fit? What's 50x times 16 billion, Rory? Help me with the math. This what not LLM would be the next trillion dollar AI startup. Pleasingly enough, 50x times 16 billion is roughly Anthropics market. Yeah, that's what I'm saying. We need another trillion dollar. This one's a bargain at the iconic investment committee. We're getting this for 20. I do think there's plenty of that out there. I think whether it's literally GMV or not, I think there are plenty of folks getting benefits of revenue that make no sense. It's not it's not even just lying or cynical. I think there's a lot of I think investors to some extent don't care as long as the growth's there. Final one, if I want to shepherd us, Shopify, we mentioned blowing out the quarter, Atlassian blowing out the quarter. Biggest jump since 2015 for Atlassian, crushed it. Any takeaways from some of the big results that came out? Yeah. As I said, if you produce, you'll get rewarded. I was delighted because when you pinned me to the wall a few months back and said, name names, my first bet, what stocks would you buy? And my first answer was the best one, which is just by WorldCloud and it's up 50%. But then you kind of pushed me and I named some names. And one of them I named was Atlassian. And honestly, two months ago, I felt like an idiot. It was still not I thought he'd pull it off, but it wasn't there. And then obviously they nailed it. They got the growth and the stock jumped. I think if you look at overall, it was kind of because some people like Datadog were down a little, and you kind of lumped them together on the agenda. But those are different stories. I mean, Datadog story was just everything's amazing, but our biggest customer and everybody knows it's OpenAI and no one says it, right? Suddenly realized they maybe don't need to spend $150 million and they're spending less. So, growth was down a little. But that's because Datadog was trading at 18 times forward revenues and now it's 15, right? That's one phenomenon of the AI adjacent winners, which is very different than what Atlassian was going through, which was existential shit and we're trading it three times and suddenly we nail the quarter and it's an easy pop to five times, something like that, right? Those are different movies at the same time. What the Atlassian story says is the sale forces, the hub spots, the canvas if it was public is if you get it back on track with the fundamentals, the stock will follow, right? But if you don't and some of the others that you mentioned didn't, then you're stuck in two and three X land forever more until you get, as Jason said last week, until you get bent spooned. I still think these are hard companies to run, to your earlier point. I mean, yes, Atlassian, Atlassian also did something, which Canva did too, which I always find a bad sign, a sign of stress. Not a bad, not, Mike's great, but they got rid of most of the free Loom seats. And this is what you do in times of stress. Like the other thing that Canva did because the revenue's down is they pushed a lot of features into the higher paid additions. Okay. And after, and then it's just, it's not the end of the world. Loom is not the breakout success of Atlassian, right? It is not. But getting rid of collaborative free seats, which is how we all grew up using Zoom, right? We could share and work on these together. That's a sign of just how hard, even if you beat the quarter guys like Shopify or Atlassian, man, they're leaving nothing on the table. These are not easy beats. This is not Anton, lovable turning around and he added a hundred million last week without realizing why. These are these, even the beats are hard. And so, and so the Loom one, it sounds minor, but whenever I look at, whenever I see the base getting overly monetized or harvest, if nothing else, it's a sign of stress in the organization because no one really, no founder wants to do that. You've said that, I've totally come to conclusion. You're right. And you know, when you talk to people, one level in at some of these big software companies and you know, they're doing a seven or eight percent quarter, and then you talk to a director of sales that you know, you suddenly discover it's we're jamming them on price. We're jamming them on overages and you realize it's just not sustainable. So I do hear you on that one. I mean, overall, I thought it was a great quarter, but yeah, maybe, yeah, sorry to lose your preloom suit. I still, I still just worry if the agents need all these products, but I hope so. Just like, I don't want to be negative unless I'm a super fan of Mike. We all are. I want it to win, but I also worry a little bit. It's a canvas story coming that it seems to be defined some trends. Now you can answer, you can say Atlassian is very enterprise, right? Let's not look at the developer side of things. Let's not look at how, how, how, how we used to use Jira and other tools, but our agents really don't need these seats. And it is in a lot of their revenue is still developer focused, which where I think the seat is under assault, a permanent, permanent assault. The seat is. I've got a provocative question for you. HubSpot today is sitting at $10 billion. How long will it be until HubSpot is bought by Bending Spoons? I'm not going to dunk on HubSpot. We were lucky enough to be. I'm not. Yeah. Series C investment in HubSpot. It was at four, we did it at 47 million pre. So we're still up. Harry, I will let me. Series C at 47 million. I'm wrong. It was 70. I'm wrong. It was 70. I was taking a box. Box was, yeah. It was hard to get done too. It was hard to get done. I mean, I'm sure Brian, if he could have got one of the glamour people who turned him down and then did him later, he'd have taken them over us. Well, I wouldn't go that far, but yeah. Oh, I would. But no. You're a podcaster, Rory. You stand up for yourself. I'll tell you why I don't think they're going to get Bending Spooned for what it's like. I don't know, right? There's so many things in the Airtable story that are scarier than they sounded. But I think one of them is that they only got one offer. And Bending Spoons is going to look at everything and it's got to be perfect. And maybe they will buy them. First of all, that would be a lot for Bending Spoons to bite off, but they could do it, right? I guess you can always line up the financing. I think the tough, like HubSpot, assuming they would sell, let's just assume they would even sell, right? And there's a lot of fiduciary questions here. There should be offers at 12 if it's at 10 today. There should be, but I don't believe there are. I don't believe there's many. I will tell you at a meta level, if we want to break on it, just there is an issue here. And it's a structural issue in the world today, in the AI world. Just like if you're Canva, the prosumer folks are threatened by chat. If it can be done in chat GBT, even accidentally, you're hyper threatened. The SMBs, the HubSpots and Mondays and others, they're not really threatened by doing it yourself. Okay. That is, that is, that is a short. What they are threatened by is the fact that low end competitors in SMB are really good. The low end CRM competitors are exploding. The revenue growth from Monaco, Lightfield, Auracel and others, they're like nothing we've seen before. You know, my first venture investment was Pipedrive. It would have taken 40 years to get competitive with Salesforce, right? It's just slow. And that was the number one, like simple to use CRM, exited for a billion and something, my first investment. The problem across my portfolio is you used to walk into a board meeting and the competition would be the guys bigger than you, right? Here's what the big guys are doing. Now, if you walk into a board meeting and it's SMB, they're all guys that were on the slide 24 months ago and they're really good and their agents are good and their LMs are good. And so the tough hand HubSpot has is it spent the last five years beating Salesforce at the low end, right? It's a CRM company now. It's not a marketing automation company. Now the low end is so good. It's so, so good with AI. The new entrants are so good in SMB. And the amount of founders that want to compete even in niche categories, they didn't used to want to. And so this is the bare case on everyone at this SMB space because it's just, there's too many good competitors. Exactly right on that. It's very well articulated. I remember the years of we're doing CRM, we're competing on Salesforce, and now you're exactly, there's just myriads of, because you can build really excellent software really quickly with a different twist using AI. It's why I tell, I was telling this to someone who runs a big PE shop in tech. If I owned one of these companies as a PE owner, if I was, I would just be at every Y Combinator demo day. I would be like, you need to hire, you need to buy some of these, you need to infuse some of that DNA quickly while you still have breath, right? And figure out what you can build. Are you fucking kidding me with the loyalty that they have today? You think they're going to stick? Let's give a load of young people from YC a big chunk of money. You know, I just got to push on that Harry. They have to come market this shit heap. No, no, yeah. And they're going to be like, I should have Chime and then everything. Obviously if you think it's a shit heap, no. But all the PE companies respectfully are shit heaps. Do you want to know the serious reason why it won't work? Rory's right, Harry. You know why it won't work? Because all the hot startups have this model. They're all picking off everybody. Yeah, I agree. I mean, I think one of my investments owner, I think they've acquired like 20 companies. And they get to go work for a reasonably hot company, right? And so how are you going to compete with that when Rippling is Hoovered up 30 and owners Hoovered up 20 and Revolut's Hoovered up 10? You just, that strategy worked three years ago. Like it's too late. Like everyone is just sitting there hitting refresh, hoping these smart YC companies fail so they can Hoover them up in an aqua hire. I'm not kidding. It is a core strategy of many, of many leaders. Boys, thank you so much. That was awesome. I love that.