If you're building something that you can't control, then maybe you should stop building it. If the feds really thought that there was someone in downtown San Francisco building a technology that had a 10% chance of blowing up the world in the next 10 years, they would move in with a SWAT team, kill everyone in the place and close it down. So this week, number one, pacing the frontier. We discuss what it means for infrastructure, what it means for energy, and what it means for the biggest frontier model providers. Next up, we've got Town, we've got Instinct, and we've got Zuck and Muse, what happens here?
Next up, Bending Spoons, baby. They are on an acquisition spree, having bought Miro for 1.35 billion. And then finally, Mistral raises 3 billion euros, Europe's largest ever tech funding round. This and so much more in what is always quite a colorful discussion with Rory and Jason. Market moves 0.1% on news of 10% probability of extinction. Capitalism took on board the risk and said it'll be fine. $2 billion is just a start around adventure today. The real problem is that 10 or 15% of founders are sociopaths. They genuinely are.
In fact, if you're saying Mistral is now competing with OpenAI and Anthropic in the frontier model race, you and I know that would be bullshit. I think what you're really saying is— Ready to go? Boys, we are back. Now, I was thinking about where we should start. And in all honesty, I just thought it'd be egregious to not start with the most important thing I thought, which was Dario coming out and saying that we need to pace the frontier, to which Sam Altman then agreed with him. And then Elon too agreed that it is important now to put in place some form of external regulatory body to slow down, regulate the capabilities moving forward of model providers.
How do we think about this? I mean, it's been fairly universally panned. I tend to be on the side of the people who are saying that the hostile reception is deserved. I mean, what is the problem you're trying to solve? If you read the note, Dario's definition of the problem was fairly well-defined. It was cyber attacks, it was economics, and then it was we lose control of the AI. So even though that sounds like a lot, it's fairly controlled.
The guy who quit and started this crazy thing as a Coxton or whatever his name is, and then the employee within Anthropic chiming in saying I think there's a 10% chance of human extinction in 10 years. That's a very different thing, right? So the problem, let's deal with that first of all, because I'm just going to call such bullshit. If you, and to be fair, and this is why I'm saying it's complex, because every time Dario makes a comment, a lot of the tweets back are, hey, if you're going to blow up the world, you should stop. And they're right. The truth is he didn't actually say they were. To be fair, he didn't talk about P-Doom.
But I'm going to do the same thing as everyone else. I'm just going to throw some rocks first, right? If you really think, if the Feds really thought that there was someone in downtown San Francisco building a technology that was going to blow up the world, had a 10% chance of blowing up the world in the next 10 years, they would move in with a SWAT team, kill everyone in the place, and close it down. I mean, replace the word AI with we're building a nuclear reactor. It's totally safe right now, but there's a 10% chance it goes wrong in the next five years and blows up the world. Issued that statement.
How many seconds after that before the entire weight of the US military is shutting you down? And what it says is, what it says is, is this kind of 10% P-Doom people, the truth is either the US government is asleep, which I doubt, or B, it's looking at this going this is a bunch of excited teenagers. We'll step in later if it gets crazy. So my first point is the, to be fair to Dario, not Dario, but the, oh my God, the world's going to end. We're going to destroy the world, but we're going to keep doing it people. They've, I mean, I cling to the hope that the US government, if it was a real issue, we'd do something, right? So I think all that's overwrought bullshit, right?
Which is different than saying what Dario said is overwrought bullshit. It's just not realistic. Dario's stuff, it's, on the other hand, it's hard not to disagree that the cyber risk is real, right? So when Dario says that, of the three risks he raised, the cyber risk, real, the economic risk, I will all be unemployed, I think it's a little bit bullshit. And then the third one, we lose control of the agents hard to assess. So okay, that's the problem he's trying to solve. And then the solutions range from the unlikely to the impossible.
You know, the unlikely is yeah, we're going to install third-party monitoring agents voluntarily, but then the ask is that it be made a requirement. That's the first thing. Then the second thing is all the democratic governments have to agree, and that'll be easy because we get on so well with Canada and Europe right now. And then the third thing is we have to agree with the Chinese and that's going to go super great. Though it might go greater than the Canadians because we like the Chinese more than the Canadians. We should put in the Russians. We get on great with them, right?
So the whole thing, so stepping back from the bullshit side two and side three, right? Just side one, right? So that's proposal one, you know, which is we're going to introduce these kind of third-party monitors. And if it's voluntary, knock yourself out. You do whatever you want, Daria, right? If the government decides that they should do something, which is different than Daria thinking they should do something, then it's not going to be your friends regulating. You're not going to get to choose that. It's going to be a law and there's going to be regulators, just like bank regulators.
And I'm not sure that's a great idea. I'm not sure it'll work really well for innovation. But if it does happen, I mean, a lot of the comments were either this is silly, we don't need it. Or if we do need it, who the fuck are you to tell us what we need? We're a government. I'm kind of sympathetic to Boda's response. Sorry, that was a vent. But I just think it's so overwrought. Sorry, Jason. I just launched it. No, no, no. My very tactical view, and then I'll give you my very tactical view was this was just a risk factor in an S1 done live.
My tactical view is Anthropic's going public. And he is just, you know, in part because of the employee that worked there four weeks or eight weeks that said there's a 10% risk of destroying humanity, which many agreed with. But he's just getting ahead of a risk factor so that when the $2 trillion IPO happens, it's a non-issue. I honestly think he's enunciating a risk factor and we're ahead of it. We're going to debate it as a society. And so when we go on the roadshow to New York and everywhere else, no one cares. That was my, it's not even cynical. I think it's your job as CEO. That was less discussed.
Words have meaning. If you, and again, I'm going to be fair to Dario, he didn't say 10% chance of blowing up the world, right? He responded to it. It was, yes, you're right. He responded to it. I feel like if government was doing its job, we convened a congressional committee, we'd subpoena Dario and say, you're head of safety, not the guy who quit, Jason. This is an important point. Not the guy who quit, but your head of safety said me and many of my people, there's a 10% thing. There's a 10% chance of blowing up the world.
Get a congressional committee, subpoena the guy and say, Mr. Dario, as the head of this organization, do you believe that your safety commissioner is correct? And there's a 10% chance that you're going to blow up the world in the next five years. Yes or no. Right. But it's going to happen. This just started. You're acting like the feds aren't going to raid Anthropic. I don't think it's literally going to happen. The feds are going to raid Anthropic conception. This just happened last. How many texts did you guys get from folks outside of tech asking if AI is going to kill ourselves in the last week?
I got texts from people, relatives I haven't heard from in years. Is AI going to kill us, Jason? There will be— There's a 10% thing. There's a 10% chance of blowing up the world. Get a fucking congressional committee, subpoena the guy and say, Mr. Dario, as the head of this organization, do you believe that your safety commissioner is correct? And there's a 10% chance that you're going to blow up the world in the next five years. Yes or no. Right. But it's going to happen. This just started. You're acting like the feds aren't going to raid Anthropic. I don't think it's literally going to happen. The feds are going to raid Anthropic.
This just happened last. How many texts did you guys get from folks outside of tech asking if AI is going to kill us in the last week? I got texts from people, relatives I haven't heard from in years. Is AI going to kill us, Jason?
There will be congressional committee and hearing after, ad nauseum, for the next 24 months. We have just awoken the sleeping giant here that AI isn't about a bunch of folks in SF becoming centimillionaires. The public is going to believe it's going to kill us. And I think that's why Trump, I don't want to go too much. I think that's why Trump cut it off so quickly. I actually think he said it's not an issue. We're going full bore. I don't think that was out of nowhere. I think this is because there's going to be two years of every, this is all they're going to talk about.
To be clear, I think you are right. Is that so maybe I should have said the future tense. If this statement, you're right, is that we've kicked off a boulder cascade here now whereby, you're right, if I'm an ambitious politician, I would do this, right? And maybe you are right. There's two risk factors in the S1, what you're saying, it's a really good point. The first risk factor is, by the way, there's a 10% chance we're going to blow up the world. We can discuss that one. That's a fun one. But the other risk factor is because I employ people who believe we have a 10% chance of blowing up the world. And I do this because they're actually very motivated to build great AI. And for whatever reason, that motivates them. We can talk about that with our therapists, right? Because I'm running this company where these people say these crazy things, as Jason's just pointed out, I'm probably going to spend the next two years being investigated. And there's a series of bad things that could happen for that, up until including the government shutting me down.
You're right, Jason. That's the risk factor. I agree with you. Yes. It's going to be the weirdest risk factor ever. We say dumb things so we may get shut down.
Look, there's so much going on here. It's hard to track, right? I would just add two things that I thought were the best things said. One may be a little political, one I think nonpolitical. I think the best thing actually was David Sachs this week who said, if it's that bad, Dario, it's your job. Whether it's 10% or if there's any material risk, if your company is going to exterminate even a subset of humanity, right? That is your job. Your job is to fix it. Shut down the company if you can't, right? And if you're unable to see, bring in a new CEO. This is your job, right? If there's any company that had these sort of odds, it is your job, right? This is product liability 101. You can't kill, you're only so many people you're allowed to kill with your product.
Jason, it has been, first of all, you're exactly right. I got a hand at the deal. I think it was spot on, 100%. And I think it was really odd to see Lena Khan, who is probably the antitrust regulator most of Silicon Valley hits the most, come out on exactly the same point, right? When you get David Sachs and Lena Khan both on the same side and both making excellent points, it's a really fun issue.
I agree with you. I think you nailed it. I'm sorry, I'm naive. If you build recursive self-improvement in the way that people talk about it, is what it becomes not relatively unknown? Like I could have good intentions for it, but it could become something else or used by malicious actors could be weaponized to be something else. And I think, okay, and I'm being really clear here. I agree. That is actually the only one of the three risks itemized in the Dario thing that I think is interesting, right? Because the other two, economics, I think it was a foolish thing to say for a whole bunch of reasons. I think you can't say, I'm not going to invent technology because it puts people unemployed. We'd still be back on the farm, 73% of work in the farm. That was a dumb point, just trying to be nice and suck up. The whole cyber thing is real, but that cat's out of the barn. The commies have the cyber, so we're done. The only thing that was a fair point, and then on the other hand, the P. Doom thing, he didn't talk about. So the only thing in his letter that was actually simultaneously, yeah, that's a fair point, and I don't have the answer, is exact. That we could, quote, lose control of the things, recursive self-improvement, that kind of stuff.
You're right. That is a fair point.
Of the three issues he raised as a thing from the three responses he gave, that was the one that you go, hmm, okay, I can't. Jason's point, I think Jason and David's point spot on at that point. What you're saying is, forget the other two, which is about other people will do shit with our technology and come back. What you're saying is you're building something you can't control. If you're building something that you can't control, then maybe you should stop building it, right? Because you're the CEO, and as Jason, I'm going to greet Jason and David. Do you, I mean, the third parties can keep an eye on you, but if there's people cleverer than you who can figure out the problem that you can't figure, you'd have hired them years ago. We should probably assume you're the cleverest people doing this. So either you think this is a manageable problem, in which case keep building, or you think it's not a manageable problem, in which case you probably should stop. But stop wringing your hands and saying, if only the rest of the world could stop me killing humanity, you're the CEO.
I actually think the cacophony of anti was really good there. But you've also taken it to a level where you've weaponized a Chinese economy to have an open source ecosystem that's incredibly strong, and now to go, mea culpa, let's put the brakes on. You've weaponized them enough to be a serious cyber threat to all of our institutions, and now you want to put the brakes on, and if you expect us to... First of all, I'm going to push back on the weaponizers. You're basically saying, oh, they wouldn't have had these models without us doing...
I'm not sure that's the case. I mean, you can get into how much of open weight has been distilled, and I can't assess that. So there's some of it, but they've got smart people too. I think there's too much attribution of godlike status to individuals. The truth is, independent of probably what Anthropic did, there's probably going to be a bunch of LLM alternatives in China. This technology, the cat's out of the bag, it exists, and you're right. So your main point is correct. It's out of the bag, so you can't... I mean, but it's out of the bag because you let it out of the bag. Sorry to be blunt.
Well, I don't know if you just did. You were the best at it. You are. It's done.
I mean, again, I hate the atom bomb metaphors because they're like Nazi metaphors. They're just so crude and simplistic, and it actually, in this case, feeds the ego of all involved. But it's a really good metaphor here, Harry, unfortunately, because you can say, if these folks are all the Oppenheimers and the US invented the bomb, there's no doubt that the Russians had the bomb by like four or five years later, three or four years later, and in part because they stole our shit, right? They had spies in Los Alamos from the UK. Let me remind you, Hans Fuchs. And then they stole our secrets and they built the bomb too. But, you know, what are you going to do, right? They probably would have got there anywhere. Elon's been clear on that for three years. He said he wished that AI hadn't happened. He said, but since it did, I'm going to do it anyway because it's too late.
because they're Nazi metaphors. They're just so crude and simplistic, and it actually, in this case, feeds the ego of all involved. But it's a really good metaphor here, Harry, unfortunately, because you can say, if these folks are all the Oppenheimers and the US invented the bomb, there's no doubt that the Russians had the bomb by like four or five years later, three or four years later, and in part because they stole our shit. Right? They had spies in Los Alamos from the UK. Let me remind you, Hans Fuchs. And then they stole our secrets and they built the bomb too. But what are you going to do? Right? They probably would have got there anyway. Elon's been clear on that for three years. He said he wished that AI hadn't happened. He said, but since it did, I'm going to do it anyway because it's too late. He didn't just say this last week. He's been saying this for three years that it's gotten too strong. Right? Before XAI even got anywhere, he was consistent. We should, I wish, I don't want to be doing this, but it's already been done. It's too late. I don't think we should have this much progress. And in fairness to the CEO of Anthropic, some of the most hyperbolic stuff he's not saying, but you have that pacing letter that a bunch of scientists signed. There's a lot of hyperbole that's not coming from him and he's a little more nuanced than what he is worried about where the only one that's really meaningful is this kind of losing control of it. Right? But I think this is where his prime messaging has come back to bite him on the ass.
Yeah, of course. Because to Jason's point previously in episodes where he's so dogmatic about what it's going to do to jobs and employment, now when things do come out, it's tied to him, sometimes unfairly, just because he's had that stance because of his labeling before. Yes. And to Jason's point, we're doing a spot on. My God, is this unpopular in the rest of the world? I mean, because, yeah, it turns out, I mean, you know, we're building a technology. It's going to definitely cause 20 to 30% white collar unemployment. And my VP of safety, whom I haven't fired, has said on Twitter, there's a 10% chance it blows up the world. Right? Hmm, I wonder why we're not popular.
Well, let me give you a few quick clues. Can I just say what I thought the best thing I read on all of it was on Twitter or anywhere? I know it's simplistic, it may be simplistic. It was Jay Kreps, who was the founder of Confluent, acquired by IBM for, I don't know, 12 billion, just stepped down. This is the best thing I thought was written on all of it. Said a lot of people have fake and stupid takes. It's a lot of marketing. He said, here's the captain obvious point. Most positive use cases for AI have a corresponding dark version. If you're superhuman at coding, you're superhuman at hacking. If you're superhuman at structural engineering, you're likely superhuman at finding structural flaws that knock buildings down. Right? If you're superhuman at designing drugs, you're superhuman at designing novel undetectable poisons. If you cure viruses, you can create them. Some of these are not that bad. They're manageable. Others are scary. It is a fact. Every, every, every positive, if you don't get guardrails right, and there are no guardrails in open weights models for all intents and purposes, dark versions can be created. Your AI will be just as good, all things being equal, at the dark version as the light version. It's a fact, right? We need to solve these issues, but it is a fact and there's so many opinions and anthropomorphizing and temper tantrums, but the dark versions will escape into Hugging Face. I do agree with what you said, Jason. Absolutely right. When people invented books, when Gutenberg invented printed books, the Catholic Church were pissed because they really liked to have control on all knowledge, and they just didn't like information dissemination. Ditto the internet. There's a reason every totalitarian regime hates it, right? Every, I think it's great framing. Every technology has a positive side and a negative side. We're going to do what we do every time. We're going to roll out the positive and find a way to manage the negatives, but in the interim, we're not going to sell chips to China, which of course, produced a Jensen response like you've never seen, the usual Jensen response.
So on these implementations, I'm not realistic. Do we see ripple effects across the infrastructure layer, in publics, in privates? There was a one-day minor hit on kind of the semi-stocks on that first day. Separately, pleasingly, CrowdStrike, and all the cyber stocks jumped 10%. So it's actually interesting. I looked at Monday, and we're recording this on Tuesday. It'll appear on Thursday, which is a whole lifetime away in the world we live now. But the instant response was slight markdown on semis and the AI CapEx, but not a lot, right? So no discern, I mean, maybe, which implied some level of slowdown. Significant mark up on the cyber stocks because it looks like that's where the actual reality of the problem exists. And overall, I always look at WorldCloud, which is the software index, versus SOX, which is the semiconductor index, and it was a great day for WorldCloud relative to SOX. Software up, semis slightly down, but not big. I mean, I loved, I saw a tweet, you know, which was basically market moves 0.1% on news of 10% probability of extinction. In other words, capitalism took on board the risk and said, it'll be fine. This may be a much faster version of the 20s. There's no regulation. Everyone just wants to get rich in the 20s, right? And what our version of 1929 will be for AI, you know, we don't know yet, but everyone just wants to get rich. The amount of wealth, you know, $2 billion is just a start-up round today, right? I was literally thinking that today when I saw Shield raise at 20 or 30 billion and they had a little chart, I'm like, wow, $2 billion is a start-up round now in today's world. It's just so much money and AI is so much money that it's just too easy to take advantage of the dark version if that's how you make money. It's too easy for you to be, because every LLM has a dark version, it's too easy to cut that corner if that's how you can get raise at a billion after demo day. It's too easy.
A different version of the same thing is that everyone's saying, oh my God, this is evil and bad and could be dangerous. And as it were, they're purging their conscience by worrying. But Jason, you're exactly right. No one's saying, I'm going to push away from the table. And I don't think the people running some of these companies, especially Anthropic and nobody, oddly enough, they're not profit. I mean, you've got to defend them a little. They're not profit maximizers. If they were profit maximizers, they would own more than 2% in the case of Dario and 0% in the case of Sam, right? No, they're not profit maximizers. It's kind of weird. It's the other folks that we should be worried about, not the three of them.
Agreed. We actually have half-decent stewards at the top. Sam, Dario, and Elon are about as good as, they're maybe better in theory, but in practice, we can't get three better stewards. They have the right reasons to do what they're doing. They genuinely do. The real problem is that 10% or 15% of founders are sociopaths. They genuinely are. In fact, especially the successful ones, it lets you drive will something out of nothing into existence. The ability to manipulate people, the ability to have that look and do it. And that's where the bad people using AI will come from, the sociopaths. If you don't think that's true, you guys have, you really don't think 10% of the founders you've ever invested in are sociopaths? Of course they are.
We're going to move on. Next, we have the AI assistant race that we touched on last week, but I was really annoyed because we actually missed Matter releasing Muse, which is Matter's product that is an AI assistant in many ways. What did you say, Harry? We didn't miss it. Did you say we missed it? Well, it came out after we recorded the show. Correct. I mean, I'm actually going to give us an A. I'm going to give us an A. We recorded on Tuesday because you used that clip of me.
will something out of nothing into existence. The ability to manipulate people, the ability to have that look and do it. And that's where the bad people using AI will come from, the sociopaths. If you don't think that's true, you guys have, you really don't think 10% of the founders you've ever invested in are sociopaths? Of course they are. We're going to move on. Next, we have the AI assistant race that we touched on last week, but I was really annoyed because we actually missed Matter releasing Muse, which is Matter's product that is an AI assistant in many ways. What did you say, Harry? We didn't miss it. Did you say we missed it? Well, it came out after we recorded the show. Correct. I mean, I'm actually going to give us an A. I'm going to give us an A. We recorded on Tuesday because you used that clip of me. On Tuesday, I was like, somewhere, there were 20 meta engineers locked in a room being told to ship something. We said that on Tuesday. On Wednesday, Muse shipped, and on Thursday, the pod shipped. So I think we nailed it, man. You just didn't know it was 500, not 20. That's the only slight thing that was missed. It's 500. You didn't realize that the minute OpenClaw took off, Zuck took a huge chunk of his AI team and said, we're building OpenClaw for consumers. And from that night out, they people work days and nights. I mean, I was logging bugs over the Muse weekend on Twitter for fun. The engineering team was responding in real time Saturday night, Saturday morning, Sunday morning. I mean, they're working 996 on this thing. This is not 20 people. This is a top priority since OpenClaw launched, right? It's interesting. It came out, seemingly oddly after some of the other agents, but this has been a P1 since OpenClaw, right? Let's take, because people were lining in the streets with their Mac minis trying to get figured out how to run an agent. Now I can do it on Facebook. Well, let's actually just start with this, Rory, and I think you'll be as interested in as I am by Jason's analysis. Yes. I'm not able to use it being in the UK, so we'd love to. Oh, I am. Jason. Jason. Yeah. Jason. I'll get you a VPN. Yeah, thanks, dude. What did you think? How good is it? How good a response is it to instincts? What do we think? Well, first of all, as software, it's very, very, very good. It instantly works. This is the definition of great software. You just can't believe how well it works because all the hard work was done that you can't see, right? Because it's in. And so most of the things you want it to do, create a reservation, send an email to. I asked Muse to send us a bunch of stories for this show, right? It sent it to me and Harry and I forwarded to Rory. It did it at the right time. It sent it to us, right? I had it rebuild the entire saster.com website for me, log into WordPress, redo it. It did a pretty good job of it. A lot of the things you wanted to do, it just works. I'll add one more thought and then the meta question. The really interesting thing is, we didn't talk about, but it is something I know a little about. It's not cheap, okay? You're giving everybody up to a certain point a free VM, right? Which I think two CPUs, two GPUs, eight gigabytes or 100 gigs of storage or something. I do know that the replets, lovables, Vercels and others, it costs about three to four bucks per person to deliver that, okay? And Muse is at the edge of it. It gives you more than they do, okay? And those guys are working on it every week because it's such a huge part of their cogs, right? Because every time you spool up a website, not a free one, but a paid one, they've got a three to four dollar nut. You know, Wix before Base44 has a two cent nut to serve that website. Now it's three to four. So they're very incented every day to work that down, right? Meta is lucky. Not only does it already have the infrastructure, right? So we could argue whether it's free, but it has tons of infrastructure. This is running on its own LLM, Muse LLM. So it has a massive infrastructure and LLM benefit that no one else has. And that's why it's fast. That's why it works well. That's why you get more VPUs, more GPUs, more everything. So I think from an infrastructure perspective, it's almost no one can compete. You get all the VM, all the infrastructure, all the storage, and they have their own LLM. And my learning is for these lay usages, like what we're talking about, not frontier drug discovery. Muse LLM. What do you mean, does it matter? Sorry. What's the killer app? Another reservation at Cheesecake Factory or TGI Fridays? We need to see the VisiCalc of Muse. We need to see what is the killer app. Every horizontal platform traditionally needs some sort of killer app, right? I'm just skeptical. I'm just wondering, right? I don't think in this whole thing, I don't think there was a killer app for OpenClaw. You know, I don't know if there is a killer app for Muse because or Instinct because there wasn't one for OpenClaw. Is it not being your discovery mechanism to shopping like a WeChat, a super app? You know, Zuck has spoken about taking portions of transactions as being the business model as well. Do you not buy effort? The model's good, but what are his examples? Scheduling his daughter's carpool? Is that really what a trillionaire needs to do with a general? He can't even come up with a good use case of Muse for himself. He's making up consumery things. I had to schedule ballet lessons for my daughter. I mean, great, great, but you need to run this thing eight hours a day, I think, like Claude Code or Codex or to really matter. And so if we're in it eight hours a day, like a super app, it's cool. If it's a random task, I just don't, I'm just waiting to see what the killer app is. And Muse is really fun. It's so beautiful. The beauty is it gives you all the ideas. It has an idea tab and it tells you all the things to do. I've done most of them and they're great. I just don't know if it's killer. I don't know if it needs to be. And I know that sounds stupid, but I use Instinct in a similar power user way. I think latency is a real problem with Instinct, by the way, which might not be with Matter. I wait minutes for responses. Minutes. It's like the first days of ChatGPT. It's a real problem. But I don't know if it needs to be. It does all of my bookings, travel, restaurants. It does all of my shopping. It's very good. It does all of my calendar invites. I know there's no killer app, but it's just incrementally better than everything else. I don't know, but it's lots of little bits not good enough. I don't know. I have a feeling it might be. Right. Look, I think, well, I'm skeptical of the category on a standalone basis, but, you know, I always go back to, I always have my three venture questions. Is this a category? Who's the winner? And are we getting paid for the risk? Right? And is this a category? Question is, do people want, is there a role for AI in a kind of personal assistant messenger type thing? And I will say, having used board instinct and news, I can see it. Right? I don't, I don't know if I love the word killer app because Visical, a single thing that does everything, you know, that just ignites a platform like Visical, let's leave, let's leave the killer app concept out there. Right? At the margin, you kind of go, yeah, I'd use this. Right? I mean, if you look, we do have the, I mean, if you step back, you do have the example from long ago of WeChat, you know, Chinese messaging systems having very much all a super app. Facebook tried to do that with the messenger. It didn't take off because the truth is the UI, pre-AI, the UI of trying to book things on a chat bot is a pain in the butt. Right? It's actually a lot easier just to go to the United website and see all the flights at the same time and book it. Right? It is possible that with intelligence at the back end does this thing from, you know, non-intelligence, you actually have an interaction on a mobile device where enough
that just ignites a platform like Visical, let's leave the killer app concept out there. Right? At the margin, you go, yeah, I'd use this. Right? If you look, we do have the example from long ago of WeChat, Chinese messaging systems having a super app. Facebook tried to do that with the messenger. It didn't take off because the truth is the UI, pre-AI, the UI of trying to book things on a chat bot is a pain in the butt. Right? It's actually a lot easier just to go to the United website and see all the flights at the same time and book it. Right? It is possible that with intelligence at the back end, from non-intelligence, you actually have an interaction on a mobile device where enough of the intelligence is in the cloud that it can do a lot more for you. It knows a lot more about you and it just becomes an easy place to get things done. Right? And therefore, to your point, Harry, at the margin, you can imagine people using this. Right? So if you're a Facebook user, you get Muse, you're a happy camper, you chug along. Right? So do I think there's more that's going to happen? Yes. To me, the interesting question is, do you think it's a standalone company that wins here or do you think it's going to be Facebook with Muse and OpenAI with whatever product they come up with? In other words, do you think that the instincts of this world can build a standalone business here? Given that they raised at something like 50 pre, less than five months ago, then 400 pre, then a couple billion pre, then now rumor has it raising at 10 billion. Do you think they are raising 1 billion at 10 billion? And the most popular segment of the show that we got was Jason's IC. So Jason, ding, we have a billion dollar round for Instinct. Welcome to the partnership meeting. And it's a 10 billion dollar valuation. Will we be putting in 200 million dollars into this billion dollar round at 10 billion? Well, we will. And I'll be honest to the team. This is a risky one. I am impressed with what Muse has done. And if we had to compete head on with Meta and that was the only thing, we'd be in trouble. I would not recommend this investment because we can't compete with their balance. We can't compete with their servers. We can't compete with their GM. They can't compete with the LLM. However, after having done several reference calls and over a dozen synthetic ones on Claude, I've learned a couple of things. First of all, Meta cannot go cross-platform. It does own WhatsApp, which is a real threat. It won't work with all carriers. It won't work across all services. It's highly focused on its own platforms. And so that is only a subset of how we communicate. How many folks between the ages of 18 and 55 are on Facebook all day? Very few, right? It's really your grandmother's application. Now, WhatsApp is popular on Instagram, but the fact that it is not going to be interoperable across all these different services means it's got a fairly limited reach. Two, how long will Meta maintain the energy here, right, when this produces essentially trivial to no revenue? Anyone remember Workplace? Workplace in its own way was probably better than Slack for folks that lived in Facebook. It was probably better. It had a lot of neat use cases. It worked well. It was architected. And it was actually the highest NPS of any product in the entire Facebook Meta platform, but they couldn't maintain the energy. My reference checks say when Alex leaves scale, this product will fall apart. If this was the only thing that Meta had to do, I wouldn't bet against him, but we're just not going to see the commitment to do the kind of things the Instinct team is going to do. And let me tell you, this is one of the greatest teams I've seen in my history of investing, right? They're great. These kids come and they play World of Warcraft in real time during the pitch. They're top 10, each, they're both top 15 on league. I recommend leading the round, but being cautious with reserves because the next round valuation may hit into realistic IPO limits. So you would do this round?
I wouldn't. You asked me to do it. There's no way I would do this round. Okay, good. Okay, we've got to use the whole clip. What?
I believe, here's why I wouldn't do the round, okay? I believe most of that for the pitch. I just believe the infra costs here are so high and the incumbents. This is like if Claude, if Anthropic and OpenAI actually built apps, okay? And in the history of the show, they've only built, outside of Codex and Claude Code, they've really only built half an app, Claude Design, which isn't even really a full app, okay? Here's Meta building the app. They have the LLM. They have the cost advantages. They have the speed advantages. They have more available compute and GPU than anybody else in the world and they're building the app. This is the threat that every VC worried about and we all got a hall pass since the start of AI because the LLMs didn't build any apps. This is the one that they're building and that's why I would not compete against this because I do think for the next 24 months, it's a big priority. And it's just, if it's caught, Harry already said, Instinct is slow. That's a sign. That's a sign of compute costs. That's why they have to raise a billion. And can they subsidize with venture capital five to ten dollars per user per month? Sure, but if they have to over monetize it, what if they become Poolside? They could become the next Poolside. Like it's great, but literally I've got 10 million users at 10 bucks a month. Now I've got a $1.2 billion nut a year to pay off and I'm struggling to raise the next round. I'm not Databricks. So I worry when the incumbent has infinite capabilities here and wants to build the app. That's why I would say no, but I might be wrong, right? I might be wrong. I wouldn't bang my fist on the table. I'm trying to remember, was it Socrates or who was it? One of the ancient Greek philosophers where you could literally say, take one side of the argument and then halfway through you could say, now take the other side of the argument. And Jason clearly can do that here, right? That was a perfect. This is why you should write 200 million. Harry put me on the spot. I don't want to do this deal. He did put you on the spot, but I'm just impressed with the mental facility with which you can do both sides. It's terrifying. It's a human LLM. You can be convincing on whatever you want me to be. It was pulling the boat together. I actually think, and I want to take the pulse out of that. What you basically said is this is core to Meta and it feels like something that they would want to do. And despite your comments on cross-platform, today Muse is a standalone app, so it's not a cross-platform issue, but to the extent that they fold it into, I've just got to assume they're going to make it accessible in Messenger, make it accessible on iMessage, etc. But it seems to me if there was one thing that Meta should do within the world of AI, it would be this. It's hard to imagine spending 100 billion plus on AI saying that we're going to build the personal AI and then not putting all your effort on this. So I agree with you, Jason. And I think this has to be an all-in Meta bet in a way that, frankly, I reject the comparison with Slack. The Facebook for work product was a toy. It was not a core issue to them. This is a core issue. So I think you're right. They go for it, hook, line, and sinker. Now, the interesting thing about the Poolside analogy and Instinct is you could have the same outcome here, which is Poolside said we ran out of capital to keep playing, but we had an excellent outcome because there was a company with an even bigger market cap who wanted the assets that Poolside has assembled. NVIDIA wanted access to the model, access to the talent. I mean, let's put it out here. The same thing could happen here, which is that Instinct executes, build a huge user base,
and then not putting all your effort on this. So I agree with you, Jason. And I think this has to be an all-in meta bet in a way that, frankly, I reject the comparison with Slack. The Facebook for work product was a toy. It was not a core issue to them. This is a core issue. So I think you're right. They go for it, hook, line, and sinker.
Now, the interesting thing about the Poolside analogy and Instinct is you could have the same outcome here, which is Poolside said we ran out of capital to keep playing, but we had an excellent outcome because there was a company with an even bigger market cap who wanted the assets that Poolside has assembled. NVIDIA wanted access to the model, access to the talent.
I mean, let's put it out here. The same thing could happen here, which is that Instinct executes, builds a huge user base, and OpenAI steps up. And it's interesting. I think that the founder of Instinct either worked at Sierra or Brett Taylor is a big fan of. So you can fast, and Brett Taylor is obviously among the many other things that man does is the chairman of OpenAI.
It may well be that Instinct builds a lot of traction, doesn't have a cash flow positive IPO potential, but has a very attractive upside exit. I don't discount that. Maybe 10 billion is a little lofty, but you've got to believe if it got meaningful, differentiated traction, that it would be interesting to someone who wants to build a business in this place.
The only thing I will say is Noah Shin, the founder of Instinct, from every single person I've spoken to, they cite him as one of the most generational talents. And in a world where generational talents in strategically attractive segments are very acquisitive to multi-trillion dollar companies, you can see that being a very legitimate upside scenario case for 50 to 60 billion, as crazy as it sounds. It's possible.
It's just, I just think as a listen, we all have different experiences. The way I was raised to invest in venture was don't take bets that 100% require an M&A outcome to be successful, right? They're just too unpredictable. I've been on the other side and know how capricious it is. You could be Clem's best friend. He brings you in to meet with Jensen and then he quits the next day, right? I mean, you literally just can't predict it. So you need something real to stake to make a bet where an arbitrary, super high value outcome is the only plausible exit. I'm not saying it's not a bet. Like it is definitely a bet, right? It's just a big one.
And just to come back on that, because I've been thinking about it, you're right. It's not what I do either, but I look at this and I do question myself, is there anything you can learn? There is an argument. I'm not yet making it, but I'm just acknowledging that the expected value of a number of those bets could be strongly positive. Admittedly, the variance is high.
In other words, it's a risky way to make money. You should ask yourself, as you're building a portfolio of 30 bets, is it okay to have three of those bets in your portfolio? Probably not at 10 billion, but you're right. It wasn't reckless. I think Kleiner did around at 500. Moon's over shrewd. It's not reckless to do around at 500, even if you believe the payout profile is a two in 10 chance of a 20x positive multiple, right? And if you don't get the positive multiple, you're going to build a company that just can't cash flow and doesn't make it.
You know, it has a positive expected value for sure if you've got the right portfolio and you can take the risk. It's not the way I run my business, but I actually, in a bull market, or as Harry said, there's a whole bunch of upside acquirers with frankly free market caps that are fairly untethered themselves and have a massive need to move quickly. It's actually not a crazy way to make money. Now, when it turns—And you don't even need much. You've got a billion and a half pref to reach. So your downside is relatively capped on an incredible team that everyone acknowledges is tier industry leading.
If you look at that risk return profile at 50 pre, which is as far back as April, I think, that's a wonderful profile. At 500 pre, which I think was the May or June round, that's interesting. Yeah, that's a good bet because it's a little further along.
The interesting thing is in the space of two or three more months, you've had another round. Was the other round two billion, Harry, from memory? 2.5 billion. 2.5 billion. Now you're getting into the—it's a 4x if you get out at a billion, and now you're raising at 10. Now you really need that 50. You need a reminder. The largest M&A outcome ever was Cursor doing 4 billion, got 60 billion, right? I don't know if you get a 40 billion outcome without a shit ton of revenue. My point is the risk return profile was wildly attractive in April and decreasingly unattractive fairly quickly, right, by the time you come to September. So that is the problem with those kinds of bets.
You know one interesting thing that is just wild—the consumer product market fit for this product is so wild. I did an Instagram reel on it. I had over a thousand DMs asking for invite codes. I mean, I had a thousand DMs on the back of a reel. That's pretty wild. It's awesome. No. And I gotta say, I've been using it. Can I just add one interesting thing? Yeah. Just on your thing. You know, Alex Curlin just left to go to Menlo Ventures, right? Yeah. He was on the board of Owner with me. Known him since the very beginning. OG Sastra when he started the industry.
And he wrote a little presentation about how Menlo thought about this. And not that this is so profound, but he said they're targeting 25 billion plus tech exits. They're targeting 100 of them. That's how Menlo's modeling the world. And that's what he went to join to find, some of these 100. Not all 100, they don't have to be in all 100 of the 25 billion plus exits, right? That's the model.
We can say, wow, Cursor was at 60, but Cognition just raised at 48, right? So if this is your world model that there are a total of 100, 25 billion tech companies now, but that's up from 23 ten years ago, and that trend is going to continue in the age of AI, you know, I wrote that the new Decacorn is 25 billion. These instant rounds make sense. Like if the good exits are all north of 25 billion, then at least I can make three acts on Instinct, right? It was just interesting to see that's their model, right? Is that we're targeting 25 billion plus exits in any investment that we do, and we see there to be another hundred of these.
Now, how that all math works out with GDP and the market caps of trillion dollar companies, I need to defer to Dr. Rory O'Driscoll next to me because I can't make it work in my head without an LLM. But I assume there was some thought behind the Menlo math there of 100 25 billion exits. We're going to go a layer up and just a little excursion out of generative AI, which is Miro. One of the hailed names from 2021 that raised 17 and a half billion dollars. Interactive whiteboards for teams, for people that don't know, sold to Bending Spoons, the Italian juggernaut that buys everything, for 1.3 billion dollars.
As I said, it's a long way down from the 17 and a half. We didn't—well, Paul, my partner, who is very intelligent, did an analysis of it. Excel made money. Founders and employees made money. Later stage investors, eh, not really. Well, not at all actually, 1x. How did we see this exit, guys, for a darling of the SaaS ecosystem? Inevitable and not bad, right? Inevitable because, you know, funny, I have a little report on our Salesforce that literally lists every unicorn, right? And I can do it a bunch of different ways. One of them being literally by post money, right? So you, and I just eyeball down and you see what's going on and it jumped out at you.
As I said, it's a long way down from the 17 and a half. We didn't, well, Paul, my partner, who is very intelligent, did an analysis of it. Excel made money. Founders and employees made money. Later stage investors, not really. Well, not at all actually, 1x. How did we see this exit, guys, for a darling of the SaaS ecosystem? Inevitable and not bad. Right? Inevitable because funny, I have a little report on our Salesforce that literally lists every unicorn, right? And I can do it a bunch of different ways. One of them being literally by post money, right? So you and I'm, I just eyeball down and you see what's going on and it and you just rank them and it jumped out of you like a sore thumb. The last round was in 21 at 17 billion. And when you eyeball, you start to see the liqueur, you start to see the level, you start to see all the cognitions just above them and just below them, new rounds at, 10, 20 billion dollars. You see, we track headcount growth at the same time. Oh my God, headcount's exploding. And then you have the thing stuck at 17 billion. And it was really the largest, utterly stale valuation from that period, right? So you look and you go, almost inevitably you're high and dry because you're a personal productivity, a productivity tool in a world that just doesn't work that way and it's obviously way ahead on valuation of where its actual market size or traction can be. So this is just an, it was inevitable that at some point it would get done. I mean, Andrew Reid from Sequoia had a really cute tweet. It's like a little graphic of that picture of death with the sickle knocking on every door and it knocks on the Evernote door and then it knocks on the Airtable door and then in this case it's knocking on the Miro door and instead of a sickle it has a bending spoon, right? Death comes for us all in Sassland, right? And it was exactly right. It was just an inevitable cleanup operation because it was just so far wrong in terms of pricing and it was a good outcome for everyone. And I snidely said something about the late stage guys, but I'm going to say something. The great thing about the late stage business is this, if your losers give you a 1X, then you'll die rich, right? So Iconic, I think I had a ton of money in that deal, right? So that's a bad deal. A bad deal is when they get a 1X. You know, if you're playing the venture game and because you're playing late and your preference gives you 1X and everything on the worst case outcome by definition, just using simple math, the overall distribution is net positive. So it was a good outcome for everybody. It needed to happen. It's now part of a liquid asset. I think, I didn't know this until today, so I'm winging it a little. I did see some portion of the consideration rolled. In other words, some people said, I'll take stock in bending spoons for that, which is an interesting choice. Yeah, I don't know whether it was required or whether it was a way to juice the outcome, right, by rolling it over. You could see it being either way, right? Bending Spoons needed the cash. You know, they don't have an unlimited balance sheet. There's only so many murals they can do, right? But it could have also been to roll into a company on a positive run, right? The cynic in me says, it's interesting if you do roll. It's like basically saying, we couldn't do what it takes to turn this company into a cash flow positive machine. So I'm selling it at 2.7 times to guys who are trading at 14 times because they are tough enough to do what it takes, right? Because that's really what's happening. And to some extent, even though that sounds bullshit, it's true. Venture syndicates, I've been in boards where the company just flattens out and it needs to get ruthlessly efficient. It's just not our DNA. It's not how we roll. It's a syndicate of five different people. Oftentimes, these assets are better owned by a single owner who says, look, this is the way it's going to be. This is what we're going to do. I mean, I don't know if you saw the CEO of Bending Spoons. He made a wonderfully controversial take where he said something to the tune of, we don't really get all excited about the title founder. We don't want to know what you did. His basic comment is, we don't want to know what you did 10 years ago when you founded this. We want to know what you're doing now. And what it's basically saying is, we can't do what it takes to fix this thing at 3x revenues, so we'll sell it to you for 12 times revenues and we'll take your stock at 12 times revenue because you'll be hard-nosed enough to cut extraneous costs, raise prices, accept a fair amount of churn, and plow through. Just interesting, but also not great. It's an interesting comment on how institutions can determine outcomes. It's not all rational economics and it probably makes sense. Bending Spoons will probably do a better job than a venture syndicate at making that thing cash flow positive. And if you're a customer of any of these companies, just be ready for the 40% price increase. Well, that's for sure. I mean, they're clear on that. The churn on their acquisitions is brutal. When you actually study the graphs on usage, the churn is absolutely brutal. They are not revitalizing these. They're increasing prices and cutting costs to the extreme. I would say, you're right, but let me describe it differently. What they're really finding out is the marginal propensity to pay versus how much. The VC, we probably almost certainly as an industry overinvested in sales and marketing and sold people who had to be sold into the product. What they're saying is, I don't want the customers who had to be sold into the product. I want customers who hate us so much for doubling our prices but still need this product and won't go away. Right? It's a different worldview. Actually, because yeah, you're going to get initial churn when they put through those price increases, but the perspective is the people who stay really need the product. You know, this is what happens when you have to pay full bulk. You triple the prices and you have 30 to 40% churn and that's pretty straightforward, right? Absolutely. I'll tell you, my thought on the Miro one, it was, I almost want to move on. What's the game Duck, Duck, Goose with kids? And don't you take out a chair each time you go around? Yeah, yeah, yeah, yeah. I felt like there's only one or two chairs left from the pre-AI era and Miro took one. Bending Spoons looks, they said in one of the interviews this week, they look at a thousand targets seriously and do five to ten a year, right? And even there, do not have an unlimited balance sheet. Everyone, PE is sitting out. Tom Abrava is mostly sitting out, these folks. So I feel like there's one or two seats left for a thousand unicorns and we can talk about why Iconic got one X back and if there were a lot of options, I felt like it's different. There's two chairs left at the end of Duck Duck Goose. Miro grabbed one, okay? They, and they got, just like Airtable, they only got one offer. When you sell for two point something X, you know for sure there was no other offer because anyone can pay 2.4 X or 2.5 X. It's not much more for Salesforce or Tomo Bravo or Francisco Partners to outbid. So you have two and for what it's worth, I almost want to move on because I can tell you personally, I've ended the game for me of Duck Duck Goose. I'm not running around the chairs anymore, whatever, it's fine. Final one, Jason. Who's next then? No one, I don't think, look, of course there will be more deals, but I think we've entered the era of capitulation and if there is a seat left in Duck Duck Goose, grab it, but otherwise the game's just ended and these companies are going to go into
you, they only got one offer. When you sell for two point something X, you know for sure there was no other offer because anyone can pay 2.4 X or 2.5 X. It's not much more for Salesforce or Tomo Bravo or Francisco Partners to outbid. So you have two, and for what it's worth, I almost want to move on because I can tell you personally, I've ended the game for me of DuckDuckGoose. I'm not running around the chairs anymore, whatever, it's fine. Final one, Jason. Who's next then? No one, I don't think. Look, of course there will be more deals, but I think we've entered the era of capitulation and if there is a seat left in DuckDuckGoose, grab it, grab it, but otherwise the game's just ended and these companies are going to go into zero percenter mode. They're going to go into zero to five percent growth mode and no one may buy them, because if bending, this is like, this is the best Miro and Airtable can do. What if you're not Miro? These are not bad companies. Miro's 600 million in ARR still growing high single digits and cashflow positive. It's a pretty good asset, right? So anyone worse than Miro or Airtable is not going to get one of the last one or two chairs. They're just, they're not even going to, just no one wants to buy these things and I don't mean to be grouchy. I just mean, I've just given, kids, go do whatever you want. Here's the keys to the house. I've moved to another city, have parties, crash the cars, do whatever you want because, boys, moving swiftly on. What would we like to do next? Jeff Dean's company hitting 50 billion dollars after just raising 10. We've got Citrini selling his company to Dylan Patel and sent me analysis for a hundred. We've got OpenAI pausing pro signups. I mean, I think you could just, is SBF getting out? Well, I mean, he's got to accept his Midas list, doesn't he? What's that? Doesn't he have to accept the Midas list award? He might have even been on the under 30, under 30 or something when he got it too, when he did the Anthropic deal. I think it was under 30. I'm going to be the voice of humanity. I mean, yeah, he, you know, he is doing significant time, which really sucks. And that's a life waste. It's, I'm not going to pile on the guy. Right? I think the Supreme Court's going to take the case and overturn it narrowly. Say it as a non-lawyer. I don't think you, no, because I watched his lawyer on YouTube. He was pretty good. He's done 50 cases from court. He's like a badass, like Supreme Court lawyer. And listen, I'm not the total argument. His point was, this is an eighth amendment issue. You can't find somebody $12 billion. This is unconstitutional. That can't repay it. When at least, according to the terms of the bankruptcy court, everyone was repaid in whole with interest. We could argue whether they would have made much more money. Right? But there are some constitutionality issues. I think he's going to get his day. I think the Supreme Court's going to take it. They don't have to take any case. I think he's going to get it. And you know, whatever he's in jail for 30 years and 11 billion, I think it's, you know, Sam may be freed. Eventually this gets the Supreme Court here in the case is a far cry from being freed, but I think he should be freed. I mean, he seemed like the biggest scammer of all mankind when, what was this all way back in 2023? Yeah. Right. It is weird. He didn't enrich himself. As far as we know materially. Right. It is weird that argue, this is very arguably. Of course, it's terrible that he's, he moved assets between Alameda and he did the research and after it's terrible, but the argument that was allowed by terms of use is an interesting argument, right? It is an interesting argument. He did not self enrich. The reality is if you use a generous version of made whole, folks were made whole, should he go to jail for most of the rest of his life and have to pay 11 billion when he get out? It seems like a lot in the era of sentient AI that could kill us all. It does seem like a lot today, but at the time, you know, Silicon Valley bank failed. I lost 10 million over the weekend. I don't know about you guys. It seemed like just desserts at the time. Right? Yeah. For what it's what one, I hadn't prepped on this cause it wasn't on the list and I don't like a pot. My wife who is a lawyer gets mad when I practice law without a license, but I will say it was so low down, Harry. I didn't think we'd get to it. You never do. Oh, that we get it. It wasn't on the list. Genuine common here. I look, the separating the fine, which there might be issues of doesn't matter, but there was misallocation of funds. It was white collar crime. It should be punished. I actually think 30 years was probably disproportionate. I mean, I think, what was it? I'm trying to remember the ex Goldman Sachs guy who misallocated brokerage funds and MG brokerage about 10 or 15 years ago. I mean, I think he walked entirely. I can't from memory think. I think white collar crime should be punished. And it's a shitty world where someone steals 20 bucks and they go to prison and someone else steals $10 billion and they don't because they're white and up a middle class. But I'm also not sure 30 years is the commensurate thing. Now, the interesting thing is that's not the issue at hand in the Supreme Court. I don't think they're appealing the sentencing on the sentencing guidelines issue. They're appealing the facts and circumstances of the case. So, we'll see. Right? Yeah. And I don't think it matters that he, the fact that he took the money and was a brilliant investor doesn't excuse him for taking the money. Because by definition, if it worked, then anyone could take money provided it worked. Hey, I stole your money, Harry, but I bought put call options and the stock went up. So, we made money. Here's your money back. You shouldn't mind. Well, of course, you're going to freaking mind because when you took the money from you, you didn't know what the outcome would be. And there was a 50% chance it would go down. So, you're going to want that guy punished because you're going to want that behavior stopped because you're not going to want the next guy to think they can do it. So, it doesn't matter that he was the most brilliant, genuinely, the most brilliant equity investor of our generation between Entropic and Cursor. It just matters if he took money and if that was against the rules, and I haven't heard the terms of service argument, Jason, that will be interesting. If he took money, it was against the rules, then he should be punished. If he took money, it wasn't against the rules, then he probably should walk and the process will take place. Not my problem. So related to that, what happened to Matt Mullenweg? He was out for a day and back. What happened to poor Matt? Did someone not read the bylaws, Rory? What happened? Did someone forget to pull the certificate of incorporation from Delaware? So, Matt Mullenweg is the founder and CEO of WordPress. And he was ousted by the board. And then he came back and overrode them, it would seem. And now he is back as the CEO. And the power to the founder has reigned true here. And he is back as CEO. Correct. And this is a company, Automa, that has been the steward of the open source project, WordPress, which is one of the most commonly used blogging and website platforms out there. Right? Very successful product. Matt's the CEO of the company that manages the product. I think it's fair to say that the stewardship in the last few years have been troubled. He's been in a big argument with WP engines about which where the argument is WP engine is a hosting company that is hosting WordPress sites. And I think Automatic wants some of that revenue. So they've been pushing WP engines, but the way in which he's behaved has been unhelpful to the open source project, because it's kind of like, I will use my leverage to exert.
It would seem. And now he is back as the CEO. And the power to the founder has reigned true here. And he is back as CEO. Correct. And this is a company, Automattic, that has been the steward of the open source project, WordPress, which is one of the most commonly used blogging and website platforms out there. Right? Very successful product. Matt's the CEO of the company that manages the product. I think it's fair to say that the stewardship in the last few years has been troubled. He's been in a big argument with WP Engine about which the argument is WP Engine is a hosting company that is hosting WordPress sites. And I think Automattic wants some of that revenue. So they've been pushing WP Engine, but the way in which he's behaved has been unhelpful to the open source project, because it's kind of like, I will use my leverage to exert. I will use the leverage of my company to try and frankly, prevent other people from benefiting from the open source ecosystem, which seems to be antithetical to the idea of it. So I think it's been a troubled situation for a while. I think the truth is the real issue is the world is passing that product. It's a sad little thing because the world is passing that product by. And Jason will be able to tell you that you can build most of what you have in Lovable, in WordPress with Lovable or Replit or any one of ten things. And increasingly they are. As I've quoted before, the Henry Kissinger thing about academic problems, academic arguments—the fights are so vicious because the prize is so small. The truth is Automattic doesn't matter anymore. It should try and build something new, but it's on the tail end. To Jason's point about it being on the tail end of the tech trends. They should be doing things totally differently to try and survive in the brave new world. Instead, they're arguing internally. So that's the zoom out comment within that context. That's the big picture. And the funny thing is, like all litigations, when you get caught up in the detail of the day to day, you forget the big picture. The big picture is this company needs to point WordPress in a forward direction to think about how you take advantage of what's going on in AI and become a relevant player in the next five years. Otherwise you won't be. That's the corporate imperative. Instead, the corporate imperative has turned into a pissing match between the board and the CEO, and now it looks like the CEO has won. Congratulations. You've won the poison chalice. You get to keep your diminishing empire. And it's worth pointing out, this is not a board full of evil VCs, right? And I've been on boards as an evil VC where you've had to replace a founder. It sucks to the end. This is actually a board of, I think Salesforce is an investor. You have some really good independent board members. They don't need this grief. I'm well aware of what happened. Down in the tactical weeds, I think Jason probably nailed it. You probably have a board. They probably have a majority. They probably said to the CEO, we're a majority of the board. We're independent directors. We think he should replace you. And my guess is the founder CEO went deep into the bylaws and says, you are the board and you can vote to replace me, but I can actually also vote to replace the board. I'm hereby voting. I've seen this once. I'm hereby voting to replace the board. You're all off the board. Oh look, the new board is me, my pet dog and my ventriloquist dummy. And after due consideration, we've decided I would be a great CEO. There you go. And all the independent board members at that point promptly resigned because there's no point wasting your life and getting into a whole bunch of litigation about an ever... Remember Jason, your island was the Fortnite island that's continually getting smaller. You are fighting to maintain control of an island that's getting smaller and smaller. So congratulations, Matt, you're in charge. I feel like going, if you are in charge, well, how about you turn this thing around? So that's my takeaway of this. It's sad in a way. These things happen. People behave how they're going to behave. I think a lot of other people were involved in that company and put a lot of effort in. One of the guys, Tony, who was a true venture, who did a lot on it early on. It's a bleh situation. And yes, it's been pending for a long time and you kind of just go, gosh, I wish there surely should be more of a win-win here.
Well, Automattic would have been a great company if it hadn't rated venture capital because Matt could do what he cared about, right? Which is having a commercial arm of an open source product he created, right? Very young, right? Imagine it's doing 500 million a year, spinning off 200 million. It's like a bigger Basecamp. Yeah. You know, those guys, they aren't venture backable and they don't give a rat's ass with their 22 Lamborghinis and Paganis and villas in Italy and they're fine growing 30% at 60 million, spinning off 30 million or 40 million cashier. It doesn't bother them at all, does it? This I don't know the full funding history, but one could imagine it didn't really need to raise all this money, right? A version of it might have done just fine. It's easy to say, but that might be the one. And that might be why Matt's frustrated. It would haunt me as well if I got, you know, companies do get overfunded boys. Yeah. And I might be sitting here. I'm like, I could, this could have been 37. I could be like 37 Signals. I could be running this. I didn't need this. 800 million and a bunch of people running around doing nothing all day long. I could have run WordPress and Automattic both side by side with 80 people like DHH and be making a hundred million a year. And who the fuck cares if I'm growing? If this is my mission in life, if you're making nine figures a year out of your company and your growth is 5% and you're happy and you're doing a good deal for the world, who screw you VCs. I mean, first of all, I do agree that you shouldn't take VC if you're not signed up for that program. I'm also not sure that that's one dimension VC versus lifestyle business. I do think there is another dimension here of the open source business. I mean, so on the first dimension VC versus lifestyle business, it's pretty clear. You should do the lifestyle if you want lifestyle. There is another dimension, which is open source community project versus managing just for the company that controls the open source product. And I'm not sure that on that dimension, the company has been an amazing steward of the project. Right? So I hear you. I think that, and that's just an initial dynamic, but you could also say to your point, Jason, if you didn't take any venture money, if you initiated the project, if you have whatever source code, whatever open source rights you have under the copyright or whatever leverage you have in terms of the licensing and the copyright, then it's your company. You do what you like. I'm actually, I do agree with you is that this is America. If you built the thing and you want to mismanage, mismanage and you want 100% of it, you're allowed to mismanage. Go, go team. That's what ownership means. It's tough to, I know you want to wrap it up. I'm just learning. I'm learning later in my investing career. You got to be ruthless to do a venture backed open source company. Ruthless. You really do because look what Matt did. Matt said, listen, I'm focused on the platform. This is what I'm passionate about. I'm not so into the hosting. Yeah. Okay. That's a commodity business. I'm going to let WP Engine do 500, a hundred million, 80 million, a hundred million, 300 of these other folks too. And there's, I'm kind of into this e-commerce thing like WooCommerce, but I don't want to do what Shopify and Toby did. That's too extreme. And so you end up not owning that much of the revenue in your ecosystem. And I don't think he's mad about the WooCommerce thing, not being huge from revenue, because WooCommerce actually used to be massive in terms of scale versus Shopify. But I think he's looking at WP Engine. It's like, not only did these guys treat my community worse after the PE buyout, which I do think is objectively true, but fair too. I kind of want that 500 million now guys.
This is what I'm passionate about. I'm not so into the hosting. Yeah. Okay. That's a commodity business. I'm going to let WP engine do 500, a hundred million, 80 million, a hundred million, 300 of these other folks too. And there's I'm into this e-commerce thing like WooCommerce, but I don't want to do what Shopify and Toby did like that's too extreme. And so you end up not owning that much of the revenue in your ecosystem. And I don't think he's mad about the WooCommerce thing, not being huge from revenue. Cause WooCommerce actually is, used to be massive in terms of scale versus Shopify. But I think he's looking at WP engine. It's not only did these guys treat my community worse after the PE buyout, which I do think is objectively true, but fair too. I want that 500 million now guys. I wouldn't have minded having that extra 500 million for this crappy commodity hosting that I could do a better job. And in fact, we're on their own product. It's a great product. Right. But my guess is it's doing a fraction of what it has to be mathematically. Right. It's I want that, you know? And so if you're too kind and open source, I think you lose. If you're too kind, you lose, you have to be ruthless. If you think about a couple of different agenda items that we've talked about here, on the one hand at the edge of tech trends, you have Miro getting bought for 2.7 times and you have a nasty little spat over a decline of a flat to declining asset in open source land in Automatic. And then on the front edge of the thing, you have companies like Instruct raising literally four weeks ago at two and a half billion. Now raising at 10. You mentioned Jeff Dean kind of spending a raising at 10 billion. Few weeks ago. 10 billion. Now raising at 50 billion. The big picture point. It's really obvious here, but it just shows venture, unlike PE, is not about valuation and there's not any safe assets. It's just you're either in the head of the train in the new, new thing and you know, everything is possible. Or you're in the tail end of the train and life is shitty. Right? You just need to, you know. I was with one of the biggest CIOs the other day and I said, you've been doing this for 30 years. And he said, have you ever seen a time like this? I'm cognizant that I'm on the younger spectrum. I'm not that young anymore, but I haven't seen all cycles. And he said, I've never seen a time like this. This is more crazy than it's ever been. Yeah, for sure. This is unprecedented. I think that's true because I look, and I was investing only since 93 or 94. So I did live through the dot com investing thing. And it was pretty crazy because you also had the whole millennium thing about Y2K and the world was going to end, just like now. We always have to have a world ending thing. And you know, let's be honest, New Year's Eve, December 99 was a pretty wild party in San Francisco, right? Half the people were getting drunk because they were rich. And the other half of the people were staying up, making sure that the Y2K thing didn't bring down the world, which was the actual worry at the time, bizarrely enough. Right? But it's nothing compared to this. I think the ability of AI to just excite the imagination is just way higher. And the internet was awesome. But AI, you know, you can start talking about the AI, the software is human. You can get carried away. And then the second thing is, instead of existentially worrying about the computers won't work because of Y2K, we now get to worry about the whole world ending. It's the same thing on a way more magnified scale. And the money is 10X bigger. Because of the money being 10X bigger, I sit in Europe, as you know, Rory, and remind me frequently. Well, actually, Harry, you don't. You actually sit in England, which deliberately chose not to be part of Europe. But I know what you mean. It's okay. Sorry, that was mean. Listen, I wasn't pro-Brexit, but you're technically right. I agree. Very sad. Mistral raises 3 billion euros. It's Europe's largest ever tech round. They're going to hit a billion in revenue by the end of the year. Yeah. For a company that's had a lot of criticism, definitely in Europe, this was a very meaningful sign of progression and hope that actually we do have a horse still, so to speak, in the race. What should we take from this round? It's less about being a competitive frontier lab and more about AI sovereignty. I don't think you should take the fact you have a horse into it. If you're saying Mistral is now competing with OpenAI and Anthropic in the frontier model race, you and I know that would be nonsense. I think what you're really saying is Europe has decided based on the antics they see from the companies at the frontier in the US, coupled with the dynamics of the political interaction between the United States of America and Europe, that a technology as important as this has to have a sovereign European component. Even though it's obviously ludicrously inefficient from any kind of rational perspective, they've decided we just have to make this thing happen and give Mistral enough business to make sure that it's a viable European AI competitor. There's a long tradition of Europe doing this. Airbus is an example of that. They said, we can't just be relying on the Americans to make planes because otherwise we're a vassal state. They said, we're going to make it happen. France and Germany are going to make planes. We're just going to do it. It took 10 or 15 years, but they built a viable competitor. It's probably the same thing here. They're simply saying, we can't afford to have... I mean, we've seen instances where I think recently, I'm doing it for a member here. I think the US government said to Anthropic, thou shalt cut off all other countries from a model. I think it was one of the most recent models. Cut them off because it's a security risk. And we didn't say cut off Russia, but leave the United Kingdom and France and Germany. I mean, we said cut off everybody. If you're in Europe, the day that happened, you said to yourself, we can't rely on these guys anymore. And the day that happened, you made Mistral a viable European competitor. Is it going to be as big as the US? No. I don't think it's going to be... I mean, Airbus has actually overtaken Boeing. It took 30 years, right? But in the short term, it's not going to be anywhere near as big a market cap as OpenAI or Anthropic. But it's going to be a winner. And it's going to be the European winner. So thank you very much, politics. If you're a Mistral shareholder, you should be very grateful for the current political tactics. It's just made you a couple billion bucks. Also, to be clear, the round is led by Samsung, right? So they're generating, I think, 200 billion of free cash flow a year right now. So 3 billion, I don't know if I take the markup. I mean, I guess I would take the markup, but you could argue it should have an asterisk and a dagger next to it. Because is it really real if it's led by Samsung, right? And the last round was led by ASML. Yeah, I don't know if those count. The money counts. I agree. Look, the valuation... Yeah, yeah. The money counts, but I don't know if the valuation is connected to any... We should... That it's the same as an objective valuation done by financial parties. It's just not, right? But there is some intrinsic value to being... If the American winners are worth a trillion, and the European GDP is roughly 70, 80% of the American... I don't think that implies, to be clear, 800 billion. But you might get to 30, 40, 50. It's not a crazy end state. But I agree, Jason. It feels like your problem... I don't think they did it on the basis of market comps and comps.
Yeah, I don't know if those count. The money counts. I agree. Look, the valuation... Yeah, yeah. The money counts, but I don't know if the valuation is connected to any objective valuation done by financial parties. I just... It's just not, right? But there is some intrinsic value to being... If the American winners are worth a trillion, and the European GDP is roughly 70, 80% of the American... I don't think that implies, to be clear, 800 billion. But you might get to 30, 40, 50. It's not a crazy end state. But I agree, Jason. It feels like your problem... I don't think they did it on the basis of market comps. I think they did it on the basis of state strategically.
Boyce, is there any others that I've missed that you think we should do? Jason, any comment on Adobe linking on? New CEO taking over. I saw the results. Any thoughts? Because you're the Adobe expert here. I think it's great. You take two non-founder folks slowly leading different business units into no growth, and you pick from the lesser of two okay leaders. I mean, I think it's just Miro at scale. But with so much scale that it survives, right? You know what it is? It's a reminder that Miro didn't... In today's... You know, it's funny. If when the three of us met, I told you about this $600 million company in collaboration, we would think that was scale, right?
In the old days. It's not scale. Adobe has scale. So even if Adobe isn't really making the right moves in AI and it can't really afford it, and it's just moving the deck chairs around for its CEO team, where the CEO said a year ago, Shantanu said he's going to retire and it took him a year to decide which of the two internal candidates to promote. I mean, it's pretty bad. I think it's a nothing burger. It's a sign that nothing's going to change. You know what it is, Rory? I mean, I can add one less. It's a sign just nothing's going to change. It's a sign of capitulation. It's a sign that we're going to just keep bulldozing our way through the world the same way, right?
Versus really changing super high margin bleed our core products, add some imaging from the AI and call it a day, right? I broadly agree with you. And it's interesting. They did the, you know, we're not leaning into ARR growth. We're leaning into getting free usage. And that was the play they did in the 90s. That's their fake AI metric of the week. And that's where it's going. I think, you know, because this is where I reason I asked you is that's a playbook that might have worked two or three years ago. But to your point now, what you're basically saying because our net new ARR went down significantly. In other words, the growth of new ARR didn't happen.
So they have the ARR AI, AI, ARR metric went up, but overall ARR went down. And you know what that means is you're just channeling some into the good thing. But yes, at least with the program that you need to win, which is a start, but you're not winning because the Jason rule, which I go back to, if it ain't growing, you ain't winning. If people ain't paying for it, you ain't winning. Right? And yeah, they have scale. They're not going away. You know, 25 billion in revenue, whatever. But yes, there was no news here, which is interesting because overall, it's been a pretty good few weeks for software in general. I mean, you've seen big jumps.
I think I'd say huge jumps in the cyber stocks, big jumps overall in world class. And the entire SaaS apocalypse has been unwound. But I think, Jason, to your point, what's been happening is there's been a real distillation of, oh, these kinds of businesses aren't going to be winners. They should stay low. And then these kinds of businesses are doing super well. And, you know, Adobe is in the first, more in the first category than the second. So, Boyce, their market cap today is 105 billion. Yeah, about 100 billion, 25 billion. Yeah, exactly. Kicking off cash. Jeff Dean should buy them just for some extra revenue on the side. In three years time, what is their market cap?
120, 130. Oh, wow. Same as today. It'll be the same as today. Yeah, plus a month. It's not going away. Again, from memory, you get to that. It's a sub 10 times cash flow multiple, Harry. So unless the ARR evaporates, not just doesn't grow, but evaporates, you can get there on a cash flow multiple. But it won't be, but you'll have lost relative. If Jason's view of the world is correct. If there are 10 or $125 billion plus outcomes, which by the way, I don't think, the point of your relative significance will go down. I mean, you know, I couldn't tell you HP's market cap now to save my life, right? Because it doesn't matter, right? And that's the same thing.
You just, you'll do fine. You'll cash flow positive. Maybe if you find the right leader in the right product, you'll reignite growth. You know, your trajectory is not to blow up, but your trajectory is to trade eight or nine times cash flow. Well, that's the way it was for decades. Adobe stock didn't move for a decade. It was traded on cash flow. Shantanu was amazing at that. Then cloud worked better than anyone expected. And either they're going to run that playbook for another decade or they'll have some magical AI thing that even Canva hasn't figured out. I'm not betting on it today, but they, you know, I was there when cloud happened. They didn't expect it.
They could have a killer AI app that just were early in the AI thing. So would you rather invest in Canva or Adobe today? I'll tell you why you just can't invest in Canva. I want Canva to win very badly. Right? I love them. You just can't be not growing. ServiceTitan got destroyed for lowering guidance, fell 30% last week. Okay. I think Canva fell 30 or 40% this year when they had to lower guidance. Right? Maybe more. They are growing at 20. I mean, they're not fair. Defending them. But you got to grow, but you, but you got to, you got, at least Adobe is going to get to this stable plane to Rory's prior point. It's going to get to a stable plane.
It's not impressive, but it's going to grow six or eight or 9% a year with lots of free cash flow. Right? I'm going to give you the numbers, Canva's numbers, right? They are growing. They're growing 20%. They were growing 30%. They're growing at 20% now. And I know that because in Australia, you have to file your revenue with the watch McCollums. So watch. But it's not, but that's a big deceleration. Agreed. So they're not, it's not that they're not going, they're decelerating. So I actually, so are they, are they entering a DCF world or are they, or are they still a growth stock? Are they growth or value? Okay. I'm going to agree with you now.
And the only reason I interrupt you, Jason, I didn't agree. You just said they're not growing. I want to be precise. I missed the book. They're decelerating. Their growth is decelerating. What you said now is really the insightful point. Seriously. I want to pause on this because actually this comes to a lot of different things. Going from a growth story to a value story is really tough, right? You go from a revenue multiple to an EBITDA multiple. I think it's a Gockel. I've heard a really good post on Twitter. We're basically above 30% growth. You can use a revenue multiple below 30% growth. You have to use an EBITDA multiple. It was very insightful comment.
It basically said, if you're going fast, everything is forgiven and you'll be valued on a revenue multiple. If you're growing slow, nothing is forgiven and you'll be valued on an EBITDA multiple or something or a low revenue multiple. Right? I remember I did a post way back that your box when I was a public company, it went through that transition and came out the other side, but it takes three or four years because when I want to pause on this because it actually comes to a lot of different things. Going from a growth story to a value story is really tough, right? You go from a revenue multiple to an EBITDA multiple.
I think it's a gokel. I don't pronounce guys. I've heard a really good points post on Twitter. We're basically above 30% growth. You can use a revenue multiple below 30% growth. You have to use an EBITDA multiple. It was very insightful comment. It basically said, if you're going fast, everything is forgiven and you'll be valued on a revenue multiple. If you're growing slow, nothing is forgiven and you'll be valued on an EBITDA multiple or something or a low revenue multiple, right?
I remember I did a post way back that your box when I was a public company, it went through that transition and came out the other side, but it takes three or four years because when you go from six or seven times revenues to 20 times cash flow, you got to get that cash flow to 30% just to hold the stock flat. It's brutal. It takes forever. This is going back to the point is I think Canva is still growing very nicely, but it is accelerating. Even though I like them and I want them to win, they're founder led, whereas Adobe as you say is at this point exploiting me every time I buy their product. I load their licensing system so much.
The hard truth is if I had to go through that transition, when you're going through that transition, it's hard to get to a public offering. So when you ask about the two stocks, Harry, what you're basically saying is would you like to own something at eight times cash flow with 13% growth or at least you're liquid or would you prefer to own something at 20% growth, admittedly deaccelerating?
The question is can they get through the liquidity window? Price clears all markets and there's a relative. I think the interesting question is how you think about relative valuation. But I just think having to go from the growth valuation world to the value-based world sucks. Doing it while private is hard because it takes a long time to just get through that nut. During that time, you're standing still. It sucks doing it as public too. It just sucks doing it in general because you get a different investor base. You have different dynamics, but it's just a hard role to hold. It's the risk of being private for a long time.
Stripe avoided that risk because they reaccelerate. I really hope Canva can find a way to reaccelerate too because I want the founders to win. I want good guys to win. But if you look at it, if instead of Stripe reaccelerating to 40%, they'd accelerate down to 20% and 15% then they'd—I mean, they still have huge cash flows. So they, no matter what, they're fine. But it's just interesting. Slowing growth, getting to ca- and being valued on a cash flow basis is a profound adjustment in the valuation metric. Oddly enough, as I think about Stripe is the only guys who could weather that storm because apparently it kicks off so much cash. Good job there.
I'm sorry. We got to go let Jason be a superstar at Dreamforce. Oh you are. I'm sorry, Jason. You're off to be a superstar. He's off to be a superstar with Mr. Mark Benioff. Yeah. He's the star attraction. for the next 24 months. We have just awoken the sleeping giant here that AI isn't about a bunch of folks in SF becoming, you know, centimillionaires. The public is going to believe it's going to kill us. And I think that's why Trump, I don't want to go too much. I think that's why Trump cut it off so quickly. I actually think he said it's not issue. We're going full bore. I don't think that was out of nowhere. I think this is because there's going to be two years
of every, this is all they're going to talk about. To be clear, I think you are right. Is that, so maybe I should have said the future tense. If this statement, you're right, is that we've kicked off a boulder cascade here now whereby, you're right, if I'm an ambitious politician, I would do this, right? And maybe you are right. There's two risk factors in the S1, what you're saying, it's a really good point. The first risk factor is, by the way, there's a 10% chance we're going to blow up the world. We can discuss that one. That's a fun one. But the other risk factor is because I employ people who believe we have a 10% chance of blowing up the world. And I do this
because they're actually very motivated to build great AI. And for whatever reason, that motivates them. We can talk about that with our therapists, right? Because I'm running this company where these people say these crazy shit, as Jason's just pointed out, I'm probably going to spend the next two years being investigated. And there's a series of bad things could happen for that up until including the government shutting me down. You're right, Jason. That's the risk factor. I agree with you. Yes. It's going to be the weirdest risk factor ever. We say dumb shit so we may get shut down. Look, there's so much going on here. It's hard to track, right?
I would just add two things that I thought were the best things said. One may be a little political, one I think nonpolitical. I think the best thing actually was David Sachs this week who said, if it's that bad, Dario, it's your effing job. Whether it's 10% or if there's any material risk, your company is going to exterminate even a subset of humanity, right? That is your job. Your job is to fix it. Shut down the company if you can't, right? And if you're unable to see, bring in a new CEO. This is your, if there's any company that had these sort of odds, it is your job, right? This is product liability 1,0001. You can't kill, you're only so many people
you're allowed to kill with your product. Jason, it has been, first of all, you're exactly, I got a hand at the deal. I think it was spot on, 100%. And I think it was really odd to see Lena Kahn, who is probably the antitrust regulator, most of the Silicon Valley hits the most, come out on exactly the same point, right? You know, when you get David Sachs and Lena Kahn both on the same side and both making excellent points, it's a really fun issue. I agree with you. I think you nailed it. I'm sorry, I'm naive. If you build recursive self-improvement in the way that people talk about it, is what it becomes not relatively unknown? Like I could have good intentions for it,
but it could become something else or used by malicious actors could be weaponized to be something else. And I think, okay, and I'm being really clear here. I agree. That is actually the only one of the three risks itemized in the Dario thing that I think is interesting, right? Because the other two, economics, I think it was a foolish thing to say for a whole bunch of reasons. I think you can't say, I'm not going to invent technology because it puts people unemployed. We'd still be back on all on our farm, 73% of work in the farm. That was a dumb point, just trying to be nice and sucky up. The whole cyber thing is real, but that cat's out of the barn.
The commies have the cyber, so we're done. The only thing that was a fair point, and then on the other hand, the P. Doom thing, he didn't talk about. So the only thing in his letter that was actually simultaneously, yeah, that's a fair point, and I don't have the answer, is exact. That we could, quote, lose control of the things, recursive self-improvement, that kind of stuff. You're right. That is a fair. Of the three issues he raised as a thing from the three responses he gave, that was the one that you go, hmm, okay, I can't, Jason's point, I think Jason and David's point spot on at that point. What you're saying is, forget the other two, which about other people
will do shit with our technology and come back. What you're saying is you're building something you can't control. If you're building something that you can't control, then maybe you should stop building it, right? Because you're the CEO, and as Jason, I'm going to greet Jason and David. Do you, I mean, the third parties can keep an eye on you, but if there's people cleverer than you who can figure out the problem that you can't figure, you'd have hired them years ago. We should probably assume you're the cleverest people doing this. So either you think this is a manageable problem, in which case keep building, or you think it's not a manageable problem, in which case
you probably should stop. But stop wringing your hands and saying, if only the rest of the world could stop me killing humanity, you're the CEO. I actually think the cacophony of anti was really good there. But you've also taken it to a level where you've weaponized a Chinese economy to have an open source ecosystem that's incredibly strong, and now to go, mea culpa, let's put the brakes on. You've weaponized them enough to be a serious cyber threat to all of our institutions, and now you want to put the brakes on, and if you expect us to... First of all, I'm going to push back on the weaponers. You're basically saying, oh, they wouldn't have had these models
without us doing... I'm not sure that's the case. I mean, you can get into how much of open weight has been distilled, and I can't assess that. So there's some of it, but they've got smart people too. I think there's too much attribution of godlike status to individuals. The truth is, independent of probably what Anthropic did, there's probably going to be a bunch of LLM alternatives in China. This technology, the cat's out of the bag, it exists, and you're right. So your main point is correct. It's out of the bag, so you can't... I mean, but it's out of the bag because you let it out of the fucking bag. Sorry to be blunt. Well, I don't know if you just did.
You were the best at it. You are. It's like... It's done. I mean, again, I hate the atom bomb metaphors because they're like Nazi metaphors. They're just so crude and simplistic, and it actually, in this case, feeds the ego of all involved. But it's a really good metaphor here, Harry, unfortunately, because you can say, if these folks are all the Oppenheimers and the US invented the bomb, there's no doubt that the Russians had the bomb by like four or five years later, three or four years later, and in part because they stole our shit. Right? They had spies in Los Alamos from the UK. Let me remind you, Hans Fuchs. And then they stole our secrets
and they built the bomb too. But, you know, what are you going to do? Right? They probably would have got there anywhere. Elon's been clear on that for three years. He said he wished that AI hadn't happened. He said, but since it did, I'm going to do it anyway because it's too late. He didn't just say this last week. He's been saying this for three years that it's gotten too strong. Right? Before XAI even got anywhere, he was consistent. We should, I wish, I don't want to be doing this, but it's already been done. It's too late. I don't think we should have this much progress. And in fairness to the CEO of Anthropic, some of the most kind of hyperbolic stuff
he's not saying, but you have that pacing letter that a bunch of scientists signed. There's a lot of hyperbole that's not coming from him and he's a little more nuanced than what he is worried about where the only one that's really meaningful is this kind of losing control of it. Right? But I think this is where his prime messaging has come back to bite him on the ass. Yeah, of course. Because to Jason's point previously in episodes where he's so dogmatic about what it's going to do to jobs and employment, now when things do come out, it's tied to him, sometimes unfairly, just because he's had that stance because of his labeling before. Yes. And to Jason's point,
we're doing a spot on. My God, is this unpopular in the rest of the world? I mean, because, yeah, it turns out, I mean, you know, we're building a technology. It's going to definitely cause 20 to 30% wide collar unemployment. And my VP of safety, whom I haven't fired, has said on Twitter, there's a 10% chance it blows up the world. Right? Hmm, I wonder why we're not popular. Well, let me give you a few quick clues. Can I just say what I thought the best thing I read on all of it was on Twitter or anywhere? Like, I know it's simplistic, it may be simplistic. It was Jay Craps, who was the founder of Confluent, acquired by IBM for, I don't know, 12 billion,
just stepped down. This is the best thing I thought was written on all of it. Said a lot of people have fake and stupid takes. It's a lot of marketing. He said, here's the captain obvious point. Most positive use cases for AI have a corresponding dark version. If you're superhuman at coding, you're superhuman at hacking. If you're superhuman at structural engineering, you're likely superhuman at finding structural flaws that knock buildings down. Right? If you're even superhuman at designing drugs, you're superhuman at designing novel undetectable poisons. If you cure viruses, you can create them. Some of these are not that bad. They're manageable. Others are scary.
It is a fact. Like every, every, every positive, if you don't get guardrails right, and there are no guardrails in open weights models for all intents and purposes, dark versions can be created. Your AI will be just as good, all things be equal, at the dark version as the light version. It's a fact, right? We need to solve these issues, but it is a fact and it is not even, there's so many opinions and anthropomorphizing and tempers centers, but the dark versions will escape into hugging face. I do agree with what you said, Jason. Absolutely right. When people invented books, when Gutenberg invented printed books, the Catholic Church were pissed because they really liked
to have a control on all knowledge, and they just didn't like information dissemination. Ditto the internet. There's a reason every totalitarian regime hates it, right? Every, I think it's great framing. Every technology has a positive side and a negative side. We're going to do what we do every time. We're going to roll out the positive and find a way to manage the negatives, but in the interim, we're not going to sell chips to China, which of course, produce a Jensen response like you've never seen, the usual Jensen response. So, on these implementations, I'm not realistic. Do we see ripple effects across the infrastructure layer, in publics, in privates?
There was a one-day minor hit on kind of the semi-stocks on that first day. Separately, pleasingly, crowd strike, and all the cyber stocks jumped 10%. So, it's actually interesting. I looked at Monday, and we're recording this on Tuesday. It'll appear on Thursday, which is a whole lifetime away in the world we live now. But the instant response was slight markdown on semis and the AI CapEx, but not a lot, right? So, no discern, I mean, maybe, which implied some level of slowdown. Significant mark up on the cyber stocks because it looks like that's where the actual reality of the problem exists. And overall, I always look at WorldCloud, which is the software index,
versus SOX, which is the semiconductor index, and it was a great day for WorldCloud relative to SOX. Software up, semis slightly down, but not big. I mean, I loved, I saw a tweet, you know, which was basically market moves 0.1% on news of 10% probability of extinction. In other words, capitalism took on board the risk and said, it'll be fine. This may be like a much faster version of the 20s. There's no regulation. Everyone just wants to get rich as F in the 20s, right? And what our version of 1929 will be for AI, you know, we don't know yet, but everyone just wants to get rich. The amount of wealth, you know, $2 billion is just a start around adventure today, right?
I was literally thinking that today when I saw Shield raise at 20 or 30 billion and they had a little chart, I'm like, wow, $2 billion is a start around now in today's world. It's just so much money and AI is so much money that it's just too easy to take advantage of the dark version if that's how you make money. It's too easy for you to be, because every LLM has a dark version, it's too easy to cut that corner if that's how you can get raise at a billion after demo day. It's too easy. A different version of the same thing is that everyone's saying, oh my God, this is evil and bad and could be dangerous. And as it were, they're purging their conscience by worrying.
But Jason, you're exactly right. No one's saying, I'm going to push away from the table. And I don't think the people running some of these companies, especially on Tropic and nobody, oddly enough, they're not profit. I mean, you've got to defend them a little. They're not profit maximizers. If they were profit maximizers, they would own more than 2% in the case of Dario and 0% in the case of Sam, right? No, they're not profit maximizers. It's kind of weird. It's the other folks that we should be worried about, not the three of them. Agreed. We actually have half-decent stewards at the top. Sam, Dario, and Elon are about as good as, they're maybe better in theory,
but in practice, we can't get three better stewards. They have the right reasons to do what they're doing. They genuinely do. The real problem is that 10% or 15% of founders are sociopaths. They genuinely are. In fact, especially the successful ones, it lets you drive, will something out of nothing into existence. The ability to manipulate people, the ability to have that look and do it. And that's where the bad people using AI will come from, the sociopaths. If you don't think that's true, you guys have, you really don't think 10% of the founders you've ever invested in are sociopaths? Of course they are. We're going to move on. Next, we have the AI assistant race
that we touched on last week, but I was really annoyed because we actually missed Matter releasing Muse, which is Matter's product that is an AI assistant in many ways. What did you say, Harry? We didn't miss it. Did you say we missed it? Well, it came out after we recorded the show. Correct. I mean, I'm actually going to give us an A. I'm going to give us an A. We recorded on Tuesday because you used that clip of me. On Tuesday, I was like, somewhere, there were 20 meta engineers locked in a room being told to ship something. We said that on Tuesday. On Wednesday, Muse shipped, and on Thursday, the pod shipped. So I think we nailed it, man. You just didn't know
it was 500, not 20. That's the only slight thing that was missed. It's 500. You didn't realize that the minute OpenClaw took off, Zuck took a huge chunk of his AI team and said, we're building OpenClaw for consumers. And from that night out, they people work days and nights. I mean, I was logging bugs over the Muse weekend on Twitter for fun. The engineering team was responding in real time Saturday night, Saturday morning, Sunday morning. I mean, they're working 996 on this thing. This is not 20 people. This is a top priority since OpenClaw launched, right? It's interesting. It came out, you know, seemingly oddly after some of the other agents, but this has been a P1
since OpenClaw, right? Let's take, because, you know, people were like lining in the streets with their Mac minis trying to get figured out how to run an agent. Now I can do it on Facebook. Well, let's actually just start with this, Rory, and I think you'll be as interested in I am by Jason's analysis. Yes. I'm not able to use it being in the UK, so we'd love to. Oh, I am. Jason. Jason. Ha ha. Yeah. Jason. I'll get you a VPN. Yeah, thanks, dude. What did you think? How good is it? How good a response is it to instincts? What do we think? Well, first of all, as software, it's very, very, very good. It instantly works. This is the definition of great software.
Like, you just can't believe how well it works because all the hard work was done that you can't see, right? Because it's in. And so most of the things you want it to do, create a reservation, send an email to. I asked Muse to send us a bunch of stories for this show, right? It sent it to me and Harry and I forwarded to Rory. It did it at the right time. It sent it to us, right? I had it rebuild the entire saster.com website for me, log into WordPress, redo it. It did a pretty good job of it. A lot of the things you wanted to do, it just works. I'll add one more thought and then the meta question. The really interesting thing is, you know, we didn't talk about,
but it is something I know a little about. It's not cheap. Okay? You're giving everybody up to a certain point a free VM, right? Which I think two CPUs, two GPUs, eight gigabytes or 100 gigs of storage or something. I do know that like the replets, lovables, Vercels and others, it costs about three to four bucks per person to deliver that. Okay? And Muse is at the edge of it. It gives you more than they do. Okay? And those guys are working on it every week because it's such a huge part of their cogs, right? Because every time you spool up a website, not a free one, but a paid one, they've got a three to $4 nut. You know, Wix before Base44 has a two cent nut
to serve that website. Now it's three to four. So they're very incented every day to work that down, right? Meta is lucky. Not only does it already have the infrastructure, right? So we could argue whether it's free, but it has tons of infrastructure. This is running on its own LLM, Muse LLM. So it has a massive infrastructure and LL benefit that no one else has. And that's why it's fast. That's why it works well. That's why you get more VPUs, more GPUs, more everything. So I think from an infrastructure perspective, it's almost no one can compete. You get all the VM, all the infrastructure, all the storage, and they have their own LLM, And my learning is
for these lay usages, like what we're talking about, not frontier drug discovery.
Muse LLM What do you mean, does it matter? Sorry. What's the killer app? Another reservation at Cheesecake Factory or TGI Fridays? We need to see the VisiCalc of Muse. We need to see what is the killer app. Every horizontal platform traditionally needs some sort of killer app, right? I'm just skeptical. I'm just wondering, right? I don't think in this whole thing, I don't think there was a killer app for OpenClaw. You know, I don't know if there is a killer app for Muse because or Instinct because there wasn't one for OpenClaw. Is it not being your discovery mechanism to shopping like a WeChat, a super app? You know, Zuck has spoken about taking portions of transactions
as being the business model as well. Do you not buy effort? The model's good, but what are his examples? Scheduling his daughter's carpool? Is that really what a trillionaire needs to do with a general? He can't even come up with a good use case of Muse for himself. He's making up consumery things. I had to schedule ballet lessons for my daughter. I mean, great, great, but you need to run this thing eight hours a day, I think, like Claude Code or Codex or to really matter. And so if we're in it eight hours a day, like a super app, it's cool. If it's a random task, I just don't, I'm just waiting to see what the killer app is. And Muse is really fun. It's so beautiful.
The beauty is it gives you all the ideas. It has an idea tab and it tells you all the things to do. I've done most of them and they're great. I just don't know if it's killer. I don't know if it needs to be. And I know that sounds stupid, but I use Instinct in a similar power user way. I think latency is a real problem with Instinct, by the way, which might not be with Matter. I wait minutes for responses. Minutes. It's like the first days of ChatGPT. It's a real problem. But I don't know if it needs to be. Like, it does all of my bookings, travel, restaurants. It does all of my shopping. It's very good. It does all of my calendar invites. I know there's no killer app,
but it's just incrementally better than everything else. I don't know, but it's lots of little bits not good enough. I don't know. I have a feeling it might be. Right. Look, I think, well, I'm skeptical of the category on a standalone basis, but, you know, I always go back to, I always have my three venture questions. Is this a category? Who's the winner? And are we getting paid for the risk? Right? And is this a category? Question is, do people want, is there a role for AI in a kind of personal assistant messenger type thing? And I will say, having used board instinct and news, I can see it. Right? I don't, I don't know if I love the word killer app because Visical,
a single thing that does everything, you know, that just ignites a platform like Visical, let's leave, let's leave the killer app concept out there. Right? At the margin, you kind of go, yeah, I'd use this. Right? I mean, if you look, we do have the, I mean, if you step back, you do have the example from long ago of WeChat, you know, Chinese messaging systems having very much all a super app. Facebook tried to do that with the messenger. It didn't take off because the truth is the UI, pre-AI, the UI of trying to book things on a chat bot is a pain in the butt. Right? It's actually a lot easier just to go to the United website and see all the flights at the same time
and book it. Right? It is possible that with intelligence at the back end does this thing from, you know, non-intelligence, you actually have an interaction on a mobile device where enough of the intelligence is in the cloud that it can do a lot more for you. It knows a lot more about you and it just becomes an easy place to get shit done. Right? And therefore, to your point, Harry, at the margin, you can imagine people using this. Right? So it just, you know, if you're a Facebook user, you get Muse, you're a happy little camper, you chug along. Right? So do I think there's more that's going to happen? Yes. To me, the interesting question is, the second one is,
do you think it's a standalone company that wins here or do you think it's going to be Facebook with Muse and Open AI with whatever product they come up with? In other words, do you think that the instincts of this world can build a standalone business here? Giving that, to put it out there, having raised at something like 50 pre less than five months ago, then 400 pre, then a couple of billion pre, then now rumor has it raising at naught to 10 billion. Do you think they are raising 1 billion at 10 billion? And the most popular segment of the show that we got was Jason's IC. So Jason, ding, we have a billion dollar round for Instinct. Welcome to the partnership meeting.
And it's a 10 billion dollar valuation. Will we be putting in 200 million dollars into this billion dollar round at 10 billion? Well, we will. And I'll be honest to the team. This is a risky one. I am impressed with what Muse has done. And if we had to compete head on with Meta and that was the only thing, we'd be in trouble. I would not recommend this investment because we can't compete with their balance. We can't compete with their servers. We can't compete with their GM. They can't compete with the LLM. However, after having done several reference calls and over a dozen synthetic ones on Claude, I've learned a couple of things. First of all, Meta cannot go
cross-platform. It cannot go in. It does own WhatsApp, which is a real threat. It won't be work with all carriers. It won't work across all services. It won't work across. It's highly focused on its own platforms. And so that is only a subset of how we communicate. How many folks between the ages of 18 and 55 are on Facebook all day? Very few, right? It's really your grandmother's application. Now, WhatsApp is popular on Instagram, but the fact that it is not going to be interoperable across all these different services means it's got a fairly limited reach. Two, how long will Meta maintain the energy here, right, when this produces essentially trivial to no revenue?
Anyone remember Workplace? Workplace in its own way was probably better than Slack for folks that lived in Facebook. It was probably better. It had a lot of neat use cases. It worked well. It was architected. And it was actually the highest NPS of any product in the entire Facebook Meta platform, but they couldn't maintain the energy. My reference checks say when Alex leaves scale, this product will fall apart. If this was the only thing that Meta had to do, I wouldn't bet against him, but we're just not going to see the commitment to do the kind of things the Instinct team is going to do. And let me tell you, this is one of the greatest teams I've seen
in my history of investing, right? They're great. These kids come and they play World of Warcraft in real time during the pitch. They're top 10, each, they're both top 15 on league. I recommend leading the round, but being cautious with reserves because the next round valuation may hit into realistic IPO limits. So you would do this round? I wouldn't. You asked me to do it. There's no effing way I would do this round. Okay, good. Okay, we've got to use the whole clip. What the fuck? I believe, here's why I wouldn't do the round, okay? And you can call me a fuddy-duddy for it, okay? I believe most of that, okay, for the pitch. I just believe the infra costs here
are so high and the incumbents, this is like if, we've been talking since this show started, what if Claude, what if Anthropic and OpenAI actually built apps, okay? And in the higher history of the show, they've only built, outside of Codex and Claude Code, they've really only built half an app, Claude Design, which isn't even really a fully an app, okay? Here's Meta building the app. They have the LLM. They have the cost advantages. They have the speed advantages. They have more available compute and GPU and all of it than anybody else in the world and they're building the app. This is the threat that every VC worried about and we all got a hall pass
since the start of AI because the LLM's didn't build any apps. This is the one that they're building and that's why I would not, I just don't want to compete against this because I do think for the next 24 months, it's a big priority. And it's just, it's just, if it's caught, Harry already said, instinct is slow. That's a sign. That's a sign of compute costs of other, that's why they have to raise a billion. And can they subsidize with venture capital five to $10 per user per month? Sure, but if they have to over monetize it, what if they become poolside? They could become the next poolside. Like it's great, but literally I've got 10 million users at 10 bucks a month.
Now I've got a $1.2 billion nut a year to pay off and I'm struggling to raise the next round. I'm not Databricks. So just, I worry when the incumbent has infinite, all the capabilities here and wants to build the app. That's why I would say, no, but I might be wrong, right? I might be wrong. I wouldn't bang my fist on the table. I'm trying to remember, was it Socrates or who was it? One of the ancient Greek philosophers where you could literally say, take one side of the argument and then halfway through you could say, now take the other side of the argument. And Jason clearly can do that here, right? That was a perfect, this is why you should write 200 million.
Harry put me on the spot. I don't want to do this deal. He did put you on the spot, but I'm just impressed with the mental facility with which you can do both sides. It's terrifying. It's like a human LLM. You can be convincing on whatever you want me to be. It was pulling the boat together. I actually think, and I want to take the pulse out of that. What you basically said is this is core to meta and it feels like something that they would want to do. And despite your comments on cross-platform, you know, today Muse is a standalone app, so it's not a cross-platform issue, but to the extent that they fold it into, I've just got to assume they're going to make it
accessible in Messenger, make it accessible on, you know, iMessage, etc. But it seems to me if there was one thing that meta should do within the world of AI, it would be this. It's hard to imagine spending, you know, 100 billion plus on AI saying that we're going to build the personal AI and then not putting all your effort on this. So I agree with you, Jason. And I think this has to be an all-in meta bet in a way that, frankly, I reject the comparison with Slack. You know, the Facebook for work product was like a toy. It was not a core issue to them. This is a core issue. So I think you're right. They go for it, hook, line, and sinker. Now, the interesting thing
about the poolside analogy and instinct is you could have the same outcome here, which is poolside said we ran out of capital to keep playing, but we had an excellent outcome because there was a company with an even bigger market cap who wanted the assets that poolside has assembled. NVIDIA wanted access to the model, access to the talent. I mean, let's put it out here. The same thing could happen here, which is that instinct executes, build a huge user base, and an open AI steps up. And it's interesting. I think that the founder of instinct either worked at Sierra or Brett Taylor is a big fan of. So you can fast, and Brett Taylor is obviously among the many other things
that man does is the chairman of open AI. It may well be that instinct builds a lot of traction, doesn't have a cash flow positive IPO potential, but has a very attractive upside exit. I don't discount that. Maybe 10 billion is a little lofty, but you've got to believe if it got meaningful, differentiated traction, that it would be interesting to someone who wants to build a business in this place. The only thing I will say is Noah Shin, the founder of instinct, from every single person I've spoken to, they cite him as one of the most generational talents. And in a world where generational talents in strategically attractive segments are very acquisitive
to multi-trillion dollar, you can see that being a very legitimate upside scenario case for 50 to 60 billion, as crazy as it sounds. It's possible. It just, I just think as a, listen, we all have different experiences. The way I was raised to invest in venture was don't take bets that 100% require an M&A outcome to be successful, right? They're just too, they're just too unpredictable. I've been on the other side and know how capricious it like, you know, you could be Clem's best friend. He brings you in to meet with Jensen and then he quits the next day, right? I mean, you just, you literally, you literally just can't predict it. So it's just, you need some real
something to steal to make a bet where an arbitrary, super high value outcome is the only plausible exit. I'm not saying it's not a bet. Like it is definitely a bet, right? It's just, I agree. It's a big one. And just to come back on that, because I've been thinking about it, you're right. It's not what I do either, but I look at this and I do, you know, you always question yourself, is there anything you can learn? There is an argument. I'm not yet making it, but I'm just acknowledging that the expected value of a number of those bets could be strongly positive. Admittedly, the variance is high. In other words, it's a risky way to make money. You should ask yourself,
as you're building a portfolio of 30 bets, is it okay to have three of those bets in your portfolio? Probably not at 10 billion, but you're right. It wasn't reckless. I think Kleiner did around at 500. Moon's over shrewd. It's not reckless to do around at 500, even if you believe the profile, the payout profile is, you know, two in 10 chance of a 20x positive multiple, right? And if you don't get the positive multiple, you're going to build a company that just can't cash flow and doesn't make it. You know, it has a positive expected value. For sure. If you've got the right portfolio and you can take the risk. It's not the way I run my business, but I actually,
in a bull market, or as Harry said, there's a whole bunch of upside acquirers with frankly free market caps that are fairly untethered themselves and have a massive need to move quickly. It's actually not a crazy way to make money. Now, when it turns- And you don't even need much. You've got a billion and a half pref to reach. So like your downside is relatively capped on an incredible team that everyone acknowledges is tier industry leading. If you look at, I mean, this is the classic Silicon Valley thing is that if you look, examine that risk return profile at 50 pre, which is as far ago back as April, I think. That's a wonderful profile. At 500 pre,
which I think was the May or June round, that's interesting. Yeah, that's a good bet because a little further along. The interesting thing is in the space of two or three more months, you've had around, was the other round the two billion, Harry, from memory? 2.5 billion. 2.5 billion. Now you're getting into the, it's a 4x if you get out of the billion and now you're raising a 10. Now you really need that 50. You need a reminder. The largest M&A outcome ever was cursor. Doing 4 billion got 60 billion. Right? I don't know if you get a $40 billion outcome without a shit ton of revenue. My point is the risk return profile was wildly attractive in April
and decreasingly unattractive fairly quickly, right? by the time you come to September. So, that is the problem with those kind of bets. You know one interesting thing that is just like the consumer product market fit for this product is so wild. I did an Instagram reel on it. I had over a thousand DMs asking for invite codes. I mean, I had a thousand DMs on the back of a reel. That's pretty wild. It's awesome. No. And I gotta say, I've been using it. Can I just add one interesting thing? Yeah. Just on your thing. You know, Alex Curlin just left to go to Menlo Ventures, right? Yeah. He was on the board of Owner with me. Known him since the very beginning. OG Sastra
when he started the industry. And he wrote a little presentation about how Menlo thought about this. And not that this is so profound, but he said kind of that they're targeting 25 billion plus tech exits. They're targeting 100 of them. That's how Menlo's modeling the world. And that's what he went to join to find, you know, some of these 100, not all 100, they don't have to be in all 100 of the 25 billion plus exits, right? That's the model. We can say, wow, Cursor was at 60, but Cognition just raised at 48, right? So if this is your world model that there are a total of 81 billion, 81, 25 billion tech companies now, but that's up from 23, 10 years ago,
and that that trend is going to continue in the age of AI, you know, I wrote that the new Decacorn's 25 billion. These instant rounds make sense. Like if the, if the, if the, if the good exits are all north of 25 billion, then at least I can make three acts on instinct, right? It was just interesting to see that's their model, right? Is that we're targeting 25 billion plus exits in any investment that we do. And we see there to be another hundred of these. Now, how that all math works out with GDP and the market caps of trillion dollar companies. I need to defer to, to Dr. Rory O'Driscoll next to me because I can't make it work in my head without an LLM.
But I assume there was some thought behind the memo math there of 125 billion exits. We're going to go a layer up and just a little excursion out of like deliberate AI, which is Miro. One of the, um, hailed names from 2021 that raised it 17 and a half billion dollars. Um, interactive whiteboards for teams, for people that don't know, sold to Bending Spoons, the Italian juggernaut that buys everything, uh, for 1.3 billion dollars. Um, as I said, it's a long way down from the 17 and a half. We didn't, well, Paul, my partner, who is very intelligent, did an analysis of it. Excel made money. Um, founders and employees made money. Later stage investors, eh, not really. Well,
not at all actually, 1x. Um, how did we see this exit, guys, for a darling of the SaaS ecosystem? Inevitable and not bad. Right? Inevitable because, you know, funny, I have a little report on our Salesforce that literally lists every unicorn, right? And I can do it a bunch of different ways. One of them being literally by post money, right? So you, and I'm, I just eyeball down and you see what's going on and, you know, it, you know, and you just rank them and it jumped out of you like a sore thumb. The last round was in 21 at 17 billion. And when you eyeball, you know, you, you, you start to see the Ligure, you start to see the level, you start to see all the cognitions
just above them and just below them, you know, new rounds at, you know, 10, 20 billion dollars. You see, we track headcount growth at the same time. Oh my God, headcount's exploding. And then you have the thing stuck at 17 billion. And it was really the largest, utterly stale valuation from that period, right? So you look and you go, ah, almost inevitably you're high and dry because you're a personal productivity, a productivity tool in a world that just doesn't work that way and can, it's, it's obviously way ahead on valuation, I mean, of where it's actual market size or traction can be. So this is just an, it was inevitable that at some point it would get done. I mean,
Andrew Reid from Sequoia had a really cute tweet. It's like a little graphic of, you know, that picture of the, the death with the, with the, the sickle knocking on every door and it knocks on the, um, Evernote door and then it knocks on the Airtable door and then in this case it's knocking on the mirror door and instead of a sickle it has a bending spoon, right? You know, death comes for us all in Sassland, right? And it was exactly right. It was just an inevitable cleanup operation because it was just so far wrong in terms of pricing and it was a good outcome for everyone. And I, and I, you kind of snidely said something about the late stage guys,
but I'm going to say something. The great thing about the late stage business is this, if your losers give you a 1X, then you'll die rich, right? So Iconic, I think I kind of had a ton of money in that deal, right? So that's a bad deal. A bad deal is when they get a 1X. You know, if you're playing the venture game and because you're playing late and your preference gives you 1X and everything on, on the worst case outcome by definition, I mean, just using simple math, the overall distribution is net positive. So it was a good outcome for everybody. It needed to happen. It's now part of a liquid asset. I think, I didn't know this until today, so I'm winging it a little.
I did see some portion of the consideration rolled. In other words, some people said, I'll take stock in bending spoons for that, which is an interesting choice. Yeah, I don't know whether it was required or whether it was a way to juice the outcome, right, by rolling it over. You could see it being either way, right? Bending spoons needed the cash. You know, they don't have, they don't have an unlimited balance sheet. There's only so many murals they can do, right? But it could have also been to roll, it could have been a rollover into a company on a positive run, right? The cynic in me says, it's interesting if you do roll. It's like basically saying, we couldn't do
what it takes to turn this company into a cash flow positive machine. So I'm selling it at 2.7 times to guys who are trading at 14 times because they are tough enough to do what it takes, right? Because that's really what's happening. And to some extent, even though that sounds bullshit, it's true. Venture syndicates, I've been in boards where the company just flattens out and it needs to get ruthlessly efficient. It's just not our DNA. It's not how we roll. It's a syndicate of five different people. Oftentimes, these assets are better owned by a single owner who says, look, this is the way it's going to be. This is what we're going to do. I mean, I don't know if you saw
the CEO of Bending Spoons. He made a wonderfully controversial take where he said something to the tune of, we don't really like to, we don't basically get all excited about the title founder. We don't want to know what you did. His basic comment is, we don't want you know what you did 10 years ago when you founded this. We want to know what you're doing now. And what it's basically saying is, we can't do what it takes to fix this thing at 3x revenues, so we'll sell it to you for 12 times revenues and we'll sell it to you, take your stock at 12 times revenue because you'll be hard-nosed enough to cut extraneous costs, raise prices, accept a fair amount of churn,
and plow through. Just interesting, but also not great. It's kind of an interesting comment on how institutions can determine outcomes. It's not all rational economics and it probably makes sense. Bending Spoons will probably do a better job than a venture syndicate at making that thing cash flow positive. And if you're a customer of any of these companies, just be ready for the 40% price increase. Well, that's for sure. I mean, they're clear on that. The churn on their acquisitions is brutal. When you actually study the graphs on usage, the churn is absolutely brutal. They are not revitalizing these. They're increasing prices and cutting costs to the extreme.
I would say, you're right, but let me describe it a different, what they're really finding out is the marginal propensity to pay versus how much. The VC, we probably almost certainly as an industry overinvested in sales and marketing and sold people who had to be sold into the product. What they're saying is, I don't want the customers who had to be sold into the product. I want customers who hate us so much for doubling our prices but still need this product and won't go away. Right? It's a different worldview. Actually, because yeah, you're going to get initial churn when they put through those price increases, but the perspective is the people who stay
really need the product. You know, this is like what happens when you have to pay full bulk. you triple the prices and you have 30 to 40% churn and that's pretty straightforward, right? Absolutely. I'll tell you, my thought on the Miro one, it was, I almost want to move on. What's the game Duck, Duck, Goose with kids? And don't you take out a chair each time you go around? Yeah, yeah, yeah, yeah. I felt like there's only like one or two chairs left from the pre-AI era and Miro took, Bending Spoons looks, they said in one of the interviews this week, they do a thousand, they look at a thousand targets seriously and do five to ten a year, right? And even there,
do not have an unlimited balance sheet. Everyone, PE is sitting out. Tom Abrava is mostly sitting out, these folks. So I feel like there's one or two seats left for a thousand unicorns and we can talk about why the, why Icona got one X back and like, like if there were like a lot of options, I felt like it's different. There's like two chairs left at the end of DuckDuckGo. Miro grabbed one, okay? They, they, and they got, just like Airtable, you, they only got one offer. When you sell for two point something X, you know for sure there was, there was no other offer because anyone can pay 2.4 X or 2.5 X. It's not much more for Salesforce or Tomo Bravo
or Francisco Partners outbid. So you have two and like, for what it's worth, I almost want to move on because I can tell you personally, I've, I've ended the game for me of DuckDuckGoose. I'm not running around the chairs anymore, whatever, it's fine. Final one, Jason. Who's next then? No one, I don't think, look, there, of course there will be more deals, but it's, but I think we've entered the era of capitulation and if there is a seat left in DuckDuckGoose, grab it, grab it, but otherwise the game's just ended and these companies are going to go into zero percenter mode. They're going to go into zero to five percent growth mode and no one, no one may buy them like,
because if bending, this is like, this is the best Miro and Airtable can do. What if you're not Miro? These are not bad companies. Miro's 600 million in ARR still growing high single digits and cashflow positive. Like, it's a pretty good asset, right? So anyone worse than Miro or Airtable is not going to get one of the last one or two chairs. They're just, they're not even going to, just no one wants to buy these things and I don't mean to be grouchy. I just mean, I've just given, like, kids, go do whatever you want. Here's the keys to the house. I've moved to another city, have parties, you know, crash the cars, do whatever you want because, uh, boys, moving swiftly on.
What would we like to do next? Jeff Dean's company hitting 50 billion dollars after just raising it 10. We've got, we've got Citrini selling his company to Dylan Patel and sent me analysis for a hundred. We've, we've got open AI pausing pro signups. I mean, I think you could just, is SBF getting out? Well, I mean, he's got to accept his Midas list, doesn't he? Like, what's that? Doesn't he have to accept the Midas list award?
He might have even been on the under 30, under 30 or something when he got it too, when he did the Anthropic deal. I think it was under 30. I'm going to be the voice of humanity. I mean, yeah, he, you know, he is doing significant time, which really sucks. And that's a life waste. It's, I'm not going to pile on the guy yet. Right? I think the Supreme Court's going to take the case and overturn it narrowly. Say it as a non-lawyer. I don't think you, no, because I watched his lawyer on YouTube. He was pretty good. He's done 50 cases from court. He's like a badass, like Supreme Court lawyer. Basically his, and listen, I'm not the, I'm not the total argument. His point was,
this is an eighth amendment issue. You can't find somebody $12 billion. This is unconstitutional. That can't repay it. When at least, at least according to the terms of the bankruptcy court, everyone was repaid in whole with interest. We could argue whether they would have made much more money. Right? But there, there are some constitutionality issues. I think he's going to get his day. I think the Supreme Court's going to take it. They don't have to take any case. I think he's going to get it. Um, and you know, whatever he's in jail for 30 years and 11 billion, I think it's, you know, Sam may be freed. Eventually this is get the Supreme Court
here in the case is a far cry from being freed, but I think he should be freed. I mean, he seemed like the biggest scammer of all mankind when the, what was this all way back in 2023? Yeah. Right. It is weird. He didn't enrich himself. As far as we know materially. Right. It is weird that argue, this is very arguably, very arguably. It's of course, terrible that he's, he, he moved assets between Alameda and he did the research and after it's terrible, but the argument that was allowed by terms of use is an interesting argument, right? It is an interesting argument. He did not self enrich. The reality is if you, if you use a generous version of made whole,
folks were made whole, should he go to jail for most of the rest of his life and have to pay 11 billion when he get out? It's, it, it seems like a lot in the era of sentient AI that could kill us all. It does seem like a lot today, but at the time, you know, Silicon Valley bank failed. I lost 10 million over the weekend. I don't know about you guys. It seemed like it's just desserts at the time. Right? Yeah. For, for what it's what one, I hadn't prepped on this cause it wasn't on the list and I don't like a pot. My wife who is a lawyer gets mad when I practice law without a license, but I will say it was so low down, Harry. I didn't think we'd get to it. You never do. Oh,
that we get it. It wasn't on the list. Genuine common, genuine common here. I look, the separating the fine, which there might be issues of doesn't matter, but there was misallocation of funds. It was white collar crime. It should be punished. I actually think 30 years was probably disproportionate with, I mean, I think, what was it? I'm trying to remember the ex Goldman Sachs guy who misallocated and brokerage funds and MG brokerage and, about 10 or 15 years ago. I mean, I think, I think he walked entirely. I can't from memory think. I think white collar crime should be punished. And it's a shitty world where someone steals 20 bucks and they go to prison
and someone else steals $10 billion and they don't because they're white and up a middle class. But I'm also not sure 30 years is the commensurate thing. Now, the interesting thing is that's not the issue at hand in the Supreme Court. I don't think they're appealing the sentencing on the sentencing guidelines issue. They're appealing the facts and circumstances of the case. So, we'll see. Right? Yeah. And I don't think it matters that he, the fact that he took the money and was a brilliant investor doesn't excuse him for taking the money. Because by definition, if it worked, then anyone could take money provided it worked. Hey, I stole your money, Harry, but I bought,
put call options and the stock went up. So, we made money. Here's your money back. You shouldn't mind. Well, of course, you're going to freaking mind because when you took the money from you, you didn't know what the outcome would be. And there was a 50% chance it would go down. So, you're going to want that guy punished because you're going to want that behavior stopped because you're not going to want the next guy to think they can do it. So, it doesn't matter that he was the most brilliant, genuinely, the most brilliant equity investor of our generation between Entropic and Cursor. It just matters if he took money and if that was against the rules,
and I haven't heard the terms of service argument, Jason, that will be interesting. If he took money, it was against the rules, then he should be punished. If he took money, it wasn't against the rules, then he probably should walk and the process will take place. Not my problem. So related to that, what happened to Matt Mullenweg? He was, he was out for a day and back. What happened to poor Matt? Did someone not read the bylaws, Rory? What happened? Did someone forget to pull the certificate of incorporation from Delaware? So, so Matt Mullenweg is the founder and CEO of WordPress. And he was ousted by the board. And then he came back and overrode them, it would seem.
And now he is back as the CEO. And the power to the founder has reigned true here. And he is back as CEO. Correct. And this is a company, Automa, that has been the steward of the open source project, WordPress, which is, you know, one of the most commonly used blogging and website platforms out there. Right? Very successful product. Matt's the CEO of the company that manages the product. I think it's fair to say that the stewardship in the last few years have been troubled. He's been in a big argument with WP engines about, you know, which where the argument is WP engine is a hosting company that is hosting WordPress sites.
And I think Automatic wants some of that revenue. So they've been pushing WP engines, but the way in which he's behaved has been unhelpful to the open source project, because it's kind of like, I will use my leverage to exert. I will use the leverage of my company to try and frankly, prevent other people from benefiting from the open source ecosystem, which seems to be untithetical to the idea of it. So I think it's been a troubled situation for a while. I think the truth is the real issue is the world is passing that product. It's kind of a sad little thing because the world is passing that product by. And Jason will be able to tell you that, you know,
you can build most of what you have in Lovable, in WordPress with Lovable or Replit or any one of 10 things. And increasingly they are, as I've quoted before, the Henry Kissinger thing about academic problems, academic arguments, the fights are so vicious because the prize is so small. The truth is automatic doesn't matter a damn anymore. It should try and build something new, but it's kind of on the tail end. I mean, to Jason's point about it's on the tail end of the tech trends. They should be doing things totally differently to try and survive in the brave new world. Instead, they're arguing internally. So that's kind of the zoom out comment within that context.
That's kind of that big picture. And the funny thing is like all litigations, when you get caught up in the detail of the day to day, you forget the big picture. The big picture is this company needs to point WordPress in a forward direction to think about how you take advantage of what's going on in AI and become a relevant player in the next five years. Otherwise you won't be. That's the corporate imperative. Instead, the corporate imperative has turned into a pissing match between the board and the CEO, when now it looks like the CEO has won. Congratulations. You've won the poison chalice. You get to keep your diminishing empire. And it's worth pointing out,
this is not a board full of evil VCs, right? And I've been on boards as an evil VC where you've had to take, you know, replace a founder. It sucks to the end. This is actually a board of, I think Salesforce is an investor. You have some really good independent board members. They don't need this grief. I'm well about what happened. Like now down in the tactical weeds. I think Jason probably nailed it. You probably have a board. They probably have a majority. They probably said to the CEO, we're a majority of the board. We're an independent directors. We think he should replace you. And my guess is the founder CEO went deep into the bylaws and says,
you are the board and you can vote to replace me, but I can actually also vote to replace the board. I'm hereby voting. I've seen this once. I'm hereby voting to replace the board. You're all off the board. Oh, look, the new board is me, my pet dog and my ventriloquist dummy. And after due consideration, we've decided I would be a great CEO. There you go. And all the independent board members at that point promptly resigned because there's no point wasting your life and getting into a whole bunch of litigation about an ever... Remember Jason, your island was at the Fortnite island that's continually getting smaller. You are fighting to maintain control of an island
that's getting smaller and smaller. So congratulations, Matt, you're in charge. I feel like going, if you are in charge, well, how about you turn this thing around? So yeah, that's my takeaway of this. It's kind of sad in a way. These things happen.
People behave how they're going to behave. I think a lot of other people were involved in that company and put a lot of effort in. One of the guys, Tony, who was a true venture, who's did a lot on it early on. It's kind of a bleh situation. And yeah, it's been pending for a long time and you kind of just go, gosh, I wish there surely should be more of a win-win here. Well, Automatic would have been a great company if it hadn't rated venture capital because Matt could do what he cared about, right? Which is having a commercial arm of an open source product he created, right? Very young, right? Imagine it's doing 500 million a year, spinning off 200 million.
It's like a bigger base camp. Yeah. You know, those guys, those guys aren't venture backable and they don't give a rat's ass with their 22 Lamborghinis and Panganis and villas in Italy and they're fine growing 30% at 60 million, spinning off 30 million or 40 million cashier. It doesn't bother them at all, does it? This is I don't know the full funding history, but one could imagine it didn't really need to raise all this money, right? A version of it and it might have done just fine. It's easy to say, but that might be the one. And that might be why Matt's frustrated. It would haunt me as well if I got like, you know, companies do get overfunded boys. Yeah.
And I might be sitting here. I'm like, I could, this could have been 37. Like I could be like 37 signals. I could be running this. I didn't need this. What the hell did I need this? 800 million and a bunch of people running around doing nothing all day long. I could have run WordPress and automatic both side by side with 80 people like, like DHH and be making a hundred million a year. And, and who the fuck cares if I'm growing? If this is my mission in life, if you're making nine figures a year out of your company and your growth is 5% and you're happy and you're, and you're doing a good deal for the world, who, you know, screw you VCs.
I mean, first of all, I do agree is that you shouldn't take VC if you're not signed up for that program. I'm also not sure that that's one dimension VC versus kind of lifestyle business. I do think there is another dimension here of the, you know, open source business. I mean, so on the first dimension VC versus lifestyle business, it's pretty clear. You should do the lifestyle if you want lifestyle. There is another dimension, which is open source community project versus managing just for, just for the quote unquote company that controls the open source product. And I'm not sure that on that dimension, the company has been an amazing steward of the project. Right?
So I hear you. I think that, and that's just an initial dynamic, but you could also say to your point, Jason, if you didn't take any venture money, if you initiated the project, if you have whatever source code, whatever open source rights you have under the copyright or whatever, whatever, whatever leverage you have in terms of the licensing and the copyright, then it's your company. You do what you like. I'm actually, I do agree with you is that this is America. If you built the thing and you want to miss management, miss managers and you want 100% of it, you're allowed miss management. Go, go team. That's what ownership means.
You know, it's tough to, I know you want to wrap it up. I just, I'm just learning. I'm learning later in my investing career. You got to be F and ruthless to do a venture backed open source company. Ruthless. You really do because look what Matt did. Matt did said, listen, I'm focused on the platform. This is what I'm passionate about. I'm not so into the hosting. Yeah. Okay. That's a commodity business. I'm going to let WP engine do 500, you know, a hundred million, 80 million, a hundred million, 300 of these other folks too. And there's like, I'm kind of into this e-commerce thing like WooCommerce, but I don't want to do
what Shopify and Toby did like that's too extreme. And so you end up not owning that much of the revenue in your ecosystem. And I, and I don't think he's mad about the WooCommerce thing, not being huge from revenue. Cause WooCommerce actually is, used to be massive in terms of scale versus Shopify. But I think he's looking at WP engine. It's like, not only did these guys treat my community worse after the PE buyout, which I do think is objectively true, but fair too. I kind of want that 500 million now guys. I wouldn't have minded having that extra 500 million for this crappy commodity hosting that I could do a better job.
And in fact, we're on their con their, their own product. It's a great product. Right. But my guess is it's doing a fraction of what it has to be mathematically. Right. It's like, I want that, you know? And so if you're too kind and open source, I think you lose. I mean, if you're too kind, you lose, you gotta be ruthless. If you think about a couple of different agenda items that we've talked about here, you know, on the one hand at the, at the trailer, edge of tech trends, you have mirror getting bought for 2.7 times and you have a nasty little spat over a decline of a flat to declining asset in open source land in automatic.
And then on the front edge of the thing, you have companies like instinct, you know, raising literally four weeks ago at two and a half billion. Now raising a 10. You mentioned the Jeff Dean kind of spent our raising at 10 million. Few weeks ago. 10 billion. 10 billion. Now, of course, a million is not even a number anymore. A million is a unit of account for, you know, home design only. 10 billion. Now raising at 50 billion. The big picture point. It's really Captain Obvious here, but it just shows venture. So unlike PE is not about valuation and there's not, there's not any safe assets. It's just, you're either in the head of the train in the new, new thing.
And you know, everything is possible. Or you're in the tail end of the train and life is shitty. Right? You just need to, you know. I was with one of the biggest CIOs the other day and I said, you've been doing this for 30 years. And he said, have you ever seen a time like this? I'm cognizant that I'm on the younger spectrum. I'm not that young anymore, but I haven't seen all cycles. And he said, I've never seen a time like this. This is more nuts than it's ever been. Yeah, for sure. This is unprecedented. I think that's true because I look, and I was, I was investing only since, I love this, only since 93 or 94. So I did live through the dot com investing thing.
And it was pretty crazy because you also had the whole millennial thing about, you know, Y2K and the world was going to end just like now. We always have to have a world ending thing. And you know, let's be honest, New Year's Eve, December 99 was a pretty wild fricking party in San Francisco, right? Half the people were getting toasted drunk because they were rich. And the other half of the people were staying up, making sure that the Y2K thing didn't bring down the world, which was the actual worry at the time, bizarrely enough. Right? But it's nothing compared to this. I think the ability of AI to just excite the imagination is just way higher.
And the internet was awesome. But AI, you know, you can start talking about the AI, the software is human. You can get carried away. And then the second thing is, you know, instead of existentially worrying about the computers won't work because of Y2K, we now get to worry about the whole world ending. It's all, it's the same thing on a way more magnified scale. And the money is 10X bigger. Because being the money being 10X bigger, I sit in Europe, as you know, Rory, and remind me frequently. Well, actually, Harry, you don't. You actually sit in England, which deliberately chose not to be part of Europe. But I know what you mean. It's okay. Sorry, that was mean.
Listen, you know, I wasn't pro-Brexit, but you're technically right. I agree. Very sad. Mr. L raises 3 billion euros. It's Europe's largest ever tech round. They're going to hit a billion in revenue by the end of the year. Yeah. For a company that's had, I think, a lot of criticism, definitely in Europe, this was a very meaningful sign of progression and hope that actually we do have a horse still, so to speak, in the race. What should we take from this round? It's less about being a competitive frontier lab and more about AI sovereignty. I don't think you should take the fact you have a horse into it.
If you're saying, Mr. L is now competing with OpenAI and Anthropic in the frontier model race, you and I know that would be bullshit. I think what you're really saying is Europe has decided based on the antics they see from the companies at the frontier in the US, coupled with the dynamics of the political interaction between the United States of America and Europe, that a technology as important as this has to have a sovereign European component.
Even though it's obviously ludicrously inefficient from any kind of rational perspective, they've decided we just got to make this thing happen and give Mr. L enough business to make sure that it's a viable European AI competitor. It's clearly Mr. L. L. There's a long tradition of Europe doing. Airbus is an example of that. They said, we can't just be relying on the Americans to make planes because otherwise we're a vassal state. They said, we're going to make it happen. France and Germany are going to make planes. We're just going to do it. It took 10 or 15 years, but they built a viable competitor. It's probably the same thing here.
They're simply saying, we can't afford to have... I mean, we've seen instances where I think recently, I'm doing it for a member here. I think the US government said to Anthropic, thou shalt cut off all other countries from Fable. I think it was Fable, one of the most recent models. Cut them off because it's a security risk. And we didn't say cut off Russia, but leave the United Kingdom and France and Germany. I mean, we said cut off everybody. If you're in Europe, the day that happened, you said to yourself, we can't rely on these guys anymore. And the day that happened, you made Mistral a viable European competitor. Is it going to be as big as us? Nah.
It's not going to... I mean, I don't think it's going to be... I mean, Airbus has actually overtaken Boeing. It took 30 years, right? But in the short term, it's not going to be any near as big a market cap as OpenAI or Anthropic. But it's going to be a winner. And it's going to be the European winner. So thank you very much, politics. If you're a Mistral shareholder, you should be very grateful for the current political tactics. It's just made you a couple billion bucks. Also, you know, just to be... I mean, the rounds led by Samsung, right? So they're generating, I think, 200 billion of free cash flow a year right now. So 3 billion, like...
I don't know if I take the markup. I mean, I guess I would take the markup, but you could argue it should have an asterisk and a dagger next to it. Because is it really real if it's led by Samsung, right? And the last round was led by ASML. Yeah, I don't know if those count. The money counts. I agree. Look, the valuation... Yeah, yeah. The money counts, but I don't know if the valuation is connected to any... Like, we should... That it's the same as an objective valuation done by financial parties. I just... It's just not, right? But there is some intrinsic value to being... Like, you know, if... I mean, let's ask what the... I mean, brutal comment.
If the American winners are worth a trillion, and the European GDP is roughly 70, 80% of the American... I don't think that implies, to be clear, 800 billion. But you might get to 30, 40, 50. It's not a crazy end state. But I agree, Jason. It feels like your problem... I don't think they did it on the basis of market comps and comps. I think they did it on the basis of state strategically. Boyce, is there any others that I've missed that you think we should do? Jason, any comment on Adobe linking on? New CEO taking over. I saw the results. Any thoughts? Because you're the Adobe expert here. I think it's great.
You take two non-founder folks slowly leading different business units into no growth, and you pick from the lesser of two okay leaders. I mean, you know, I think it's just Miro at scale. But with so much scale that it survives, right? You know what it is? It's a reminder that Miro didn't... In today's... You know, it's funny. If when the three of us met, I told you about this $600 million company in collaboration, we would think that was scale, right? In the old days. It's not scale. Adobe has scale. So even if Adobe isn't really making the right moves in AI and it can't really afford it, and it's just moving the deck chairs around for its CEO team.
Where the CEO said like a year ago, Shantanu said he's going to retire and it took him a year to decide which of the two internal candidates to promote. I mean, it's pretty bad. I think it's a nothing burger. It's a sign that nothing's going to change. You know what it is, Rory? I mean, I can add one less. It's a sign just nothing's going to change. It's a sign of capitulation. It's a sign that we're going to just keep bull bulldozing our way through the world the same way, right? Versus really changing super high margin bleed our core products, add some imaging from the AI and kind of call it a day, right? I broadly agree with you. And it's interesting.
They did the, you know, we're not leaning into ARR growth. We're leaning into getting free usage. And that was the play they did in the 90s. That's their fake AI metric of the week. And that's where it's going. I think, you know, because this is where I reason I asked you is that's a playbook that might have worked two or three years ago. But to your point now, what you're basically because our net new ARR went down significantly. In other words, the growth of new AR didn't happen. So they have the ARR, AI, AI, ARR metric went up, but overall ARR went down. And you know what that means is you're just channeling some into the good thing.
But yes, you at least with the program that you need to win, which is a start, but you're not winning because the Jason rule, which I go back to, if it ain't growing, you ain't winning. If people ain't paying for it, you ain't winning. Right? And yeah, they have scale. They're not going away. You know, 25 billion in revenue, whatever. But yes, there was no news here, which is interesting because overall, it's been a pretty good few weeks for software in general. I mean, you've seen big jumps. I think I'd say huge jumps in the cyber stocks, big jumps overall in world class. And the entire SaaS apocalypse has been unwound.
But I think, Jason, to your point, what's been happening is there's been a real distillation of, oh, these kinds of businesses aren't going to be winners. They should stay low. And then these kinds of businesses are doing super well. And, you know, Adobe is in the first, more in the first category than the second. So, Boyce, their market cap today is 105 billion. Yeah, about 100 billion, 25 billion. Yeah, exactly. Kicking off cash. Jeff Dean should buy them just for some extra revenue on the side. In three years time, what is their market cap? 120, 130. Oh, wow. Same as today. It'll be the same as today. Yeah, plus a month. It's not going away.
Basically, again, from memory, you get to that. It's a sub 10 times cash flow multiple, Harry. So unless the ARR evaporates, not just doesn't grow, but evaporates, you can get there on a cash flow multiple. But it won't be, you know, but you'll have lost relative. If Jason's view of the world, the mental view of the world is correct. If there are 10 or $125 billion plus outcomes, which by the way, I don't think, the point of your relative significance will go down. I mean, you know, I couldn't tell you HP's market cap now to save my life, right? Because it doesn't matter, right? And that's the same thing. You just, you'll do fine. You'll cash flow positive.
Maybe if you find the right leader in the right product, you'll reignite growth. You know, your trajectory is not to blow up, but your trajectory is to trade eight or nine times cash flow. Well, that's the way it was for decades. Adobe stock didn't move for a decade. It was traded on cash flow. Chanteneau was amazing of that. Then cloud worked better than anyone expected. And either they're going to run that playbook for another decade or they'll have some magical AI thing that even Canva hasn't figured out. I'm not betting. I'm not betting on it today, but they, you know, I, I was there when cloud happened. They didn't expect it.
They could have a killer AI app that just were early in the AI thing. So would you rather invest in Canva or Adobe today? I'll tell you why you just can't invest in Canva. I want Canva to win very badly. Right? I love them. You just can't be not growing. Like service Titan got destroyed for lowering guidance, fell 30% last week. Okay. I think Canva fell 30 or 40% this year when they had to lower guidance. Right? Maybe more. They are growing at 20. I mean, they're not too fair. Defending them. But you got to grow, but you, but, but you got to, you got, at least Adobe is going to get to this stable plane to Rory's prior point. It's going to get to a stable plane.
It's not impressive, but it's going to grow six or eight or 9% a year with lots of free cash flow. Right? I'm going to give you the numbers, Canvas numbers, right? They are growing. They're growing 20%. They were growing 30%. They're growing at 20% now. And I know that because in Australia, you have to file your revenue with the watch McCollum's. So watch. But it's not, but that's a big deceleration. Agreed. So they're not, it's not that they're not going, they're deaccelerating. So I actually, So are they, are they entering, are they entering a DCF world or are they, or are they still a growth stock? Are they growth or value? Okay. I'm going to agree with you now.
And the only reason I interrupt you, Jason, I didn't agree. You just said they're not growing. I want to be precise. I missed book. They're decelerating. Their growth is decelerating. What you said now is really the insightful point. Seriously. I want to pause on this because actually comes to a lot of different things. Going from a growth story to a value story is really tough, right? You go from a revenue multiple to a EBITDA multiple. I think it's a gokel. I don't pronounce guys. I've heard a really good points post on Twitter. We're basically above 30% growth. You can use a revenue multiple below 30% growth. You have to use an EBITDA multiple.
It was very insightful comment. It basically said, if you're going fast, everything is forgiven and you'll be valued on a revenue multiple. If you're growing slow, nothing is forgiven and you'll be valued on an EBITDA multiple or something or a low revenue multiple. Right? I remember I did a post way back that your box when I was a public company, it went through that transition and came out the other side, but it takes three or four years because when you go from six or seven times revenues to 20 times cash flow, you got to get that cash flow to 30% just to hold the stock flat. It's brutal. It takes forever.
This is going back to the point is I think Canva is still growing very nicely, but it is the accelerating. Even though I like them and I want them to win, they're founder led, whereas Adobe as you say is at this point exploiting me every time I buy their product. I load their licensing system so much. The hard truth is if I had to go through that transition, when you're going through that transition, it's hard to get to a public offering. So when you ask about the two stocks, Harry, what you're basically saying is would you like to own something at eight times cash flow with 13% growth or at least you're liquid or would
you prefer to own something at 20% growth, admittedly deaccelerating? The question is can they get through the liquidity window? Price clears all markets and there's a relative. I think the interesting question is how you think about relative valuation. But I just think having to go from the growth valuation world to the value-based world sucks. Doing it while private is hard because it takes a long time to just get through that nut. During that time, you're standing still. It sucks doing it as public too. It just sucks doing it in general because you get a different investor base. You have different dynamics, but it's just a hard role to hold.
It's the risk of being private for a long time. Stripe avoided that risk because they reaccelerate. I really hope Canva can find a way to reaccelerate too because I want the founders to win. I want good guys to win. But if you look at it, if instead of Stripe reaccelerating to 40%, they'd accelerate it down to 20% and 15% then they'd, you know, I mean, they still have, they have huge cash flows. So they, no matter what, they're fine. But it's just interesting. Slowing growth, getting to ca- and being valued on a cash flow basis is a profound adjustment in the valuation metric. Oddly enough, as I think about Stripe is the only guys who could weather that storm
because apparently it kicks off so much cash. Good job there. I'm sorry. We got to go let Jason be a superstar at Dreamforce. Oh you are. I'm sorry, Jason. You're off to be a superstar. He's off to be a superstar with Mr. Mark Benioff. Yeah. He's the star attraction.