20VC: $1BN ARR in 18 Months; The Untold Story of Higgsfield | Spending $4M Per Month on Models | Why Moats in AI are BS | Scaling a Content Team to 150 People with Alex Mashrabov

23:33Alex Mashrabov:I was part of the large organization, so I know what happens. What happens is that everyone just thinks like we need to show some progress. So we need to have some benchmark. But then when I talk to the top researchers from these labs, labs, especially larger companies, what happens is that they start to put test data into the training. They start to kind of use leverage test data to use LLM as a judge for training of the models, use all the various tricks to basically gain benchmarks, get like quarterly bonuses and so on. That's like, who cares, right? So if I make my couple million dollars a year in one of these labs, I can move to another lab easily.

24:11Alex Mashrabov:So that's unfortunately what's happening in larger organizations and then can i just stay on that yeah what do you mean you're saying that they are incentivized by benchmarks and so because of that they are doing artificial things to improve their scoring and benchmarks which actually don't increase output efficiently look i think let's just look at the outcomes which we have today out of all the incumbents in the united states when i look at open router data the only company which is relevant is Google out of all the incumbents. When I look in China, where probably obsession with benchmarks probably is less, we have Tencent, Xiaomi, Alibaba, three incumbents being completely relevant, and obviously like Bydance, obviously trying to catch up as well.

24:57What's your takeaway from that?

24:58Alex Mashrabov:I just do believe that there is just obviously in the tech bubble, there is a strong obsession over the benchmarks, which do not necessarily represent the reality. But I can talk specifically specifically in the for video, a lot of benchmarks today for videos really text to video, which does not represent actual workflows at all. The way to think about video models today, it's just modern rendering engine. Think about this as like Unreal Engine or Unity, but just different types of inputs. And it's virtually impossible to really define a visual output and indirect the execution just through text.

25:35Alex Mashrabov:If you just go into our open source projects like this movie, which I mentioned, average prompt length is over 3000 words. That's the first thing. And like, look, all these benchmarks, which we're talking about, they're not like as comprehensive in terms of the details of prompts. And people who are labeling, they obviously don't cannot read like 3000 word long prompts. But also on average, there are at least 10 image references for every scene. The reason why it's important because it's important to define how the characters look like, how the background looks like, like how actually characters are located to each other in the scene and so on.

26:11Alex Mashrabov:And so that's why like prompting and like just the workflow is so complex. Benchmarks just don't don't represent that. Going back to the model selection, why did we decide we're going to do our own and then why walk it back? So it's true that like with VFX and camera control, we got very, very quickly from like maybe 1 million to 20 million in ARR within maybe the first three months. Then we released our image model, which is really good at aesthetic photo shoots and product consistency. This is what allowed us to scale then from 20 to 100 million. So help me understand, Alex, why did you decide that you were going to do your own models?

26:55and why did you abandon them?

26:57Alex Mashrabov:We still do them whenever we see like specific use case like these photo shoots. But as soon as this is what our customers want. So it's all driven based on the customer feedback, not just by ambition to conquer the world and build the best model in the world. Do you think every company will have their own models? Like we're seeing Harvey, we're seeing Cognition, we're seeing McCaw, Ramp build their own models. and we'll see every company have their own models with their own data, or we actually all use a series of providers? So first of all, whenever, to be honest, whenever someone says we build our own models, very likely what they mean is something what's happened with Coursor.

27:38Alex Mashrabov:We do remember, right? A lot of companies, they actually take OpenWeights model and just post-training on data. And post-training can happen in two ways. Most important is whenever you have customer data around decisions they make, like sequence of decisions, and you can teach the model to actually take like learn how to compress these 10 steps into one step, like this type of reinforcement learning is the most valuable. So and I think like increasingly more and more companies will have to do that. We see this in the market as well. So most of the companies in the world today, most of the businesses, they don't necessarily need Astra specifically, they don't necessarily need the newest Fable model.

28:20Alex Mashrabov:That's why Open Router reports that share of open source models went from below 30 to over 60 within this year. What do you think share of open models will be in two years' time? Look, I do believe that just because the capitalism works, I mean, open and philanthropic still are going to have more than 50 % of the markets. In terms of the dollars generally. In terms of the dollars, right. And especially because for coding still remains to be a very very prolific use case where coders are always jumping to the recent model. But for our markets, we're seeing completely different dynamics. What's actually happening in social media marketing as companies start to print hundreds of ad creatives a week, they want to have maybe cheapest, more steerable models because like PhD level intelligence is not necessarily needed to make viral social media video.

29:11Alex Mashrabov:And that's where we actually have seen that we get 80 % plus margin whenever we run open source models, like post-trained open source models, but it can be way more cost efficient for our end customer compared to the proprietary models. What's the comparison on margins between open versus closed for you? The margin on own models and open weights models is over 80%. And then it almost doesn't matter. And for closed source models, it's probably between 20 and 30%. And then what becomes important is, can we actually steer the traffic? What makes me excited about Hicksfield is that Igentic grows so quickly.

29:51Alex Mashrabov:And actually for us, as companies start to actually create those Igentic workflows to make more ads, we choose which model we can use. So we choose what model to use in over than 40 % cases. In a way, model routing becomes a core feature of the business, no? Yeah, we call it tokenomics essentially, right? As like there is certain amounts of work customers want to do, how can we optimize number of tokens which is required and how we can pick the most efficient tokens for them? There are actually two incumbents in the United States who figured out models. It's not just Google, it's also NVIDIA. Why do you think that is?

30:31Alex Mashrabov:What I'm constantly seeing is that there is divergence of models. So there are these state-of-the-art models which have to be really good in computer use, like Astra or encoding, but they can be prohibitively expensive. And we're chatting about that. Like on average at Hicksfield, a person on the team spends over$10 ,000 a month on various models. And remember, we're split across United States and Asia. So how much do you spend on models per month? So internal usage of models a month is over 4 million. Wow. How many people do you have? We have close to 400 people. And just want to make sure that the math adds up.

31:13Alex Mashrabov:Yes, it's definitely over$10 ,000 per person. How has that changed over time? That's the best question of the whole show, by the way. That's the best question. What actually started to happen is the creative team started to do vibe coding. Like this month, I just caught a guy who spent over 30K in a week on Astra model. Because he was frankly frustrated that some like asset organization workflow. And as you said, like basically auto editing is still not very good in production. And he said, oh, I'm just going to do this myself. And just went like five nights straight on Astra. And it works? We learned a lot.

31:54Alex Mashrabov:I wouldn't say it was production ready, but we learned a lot. 30 ,000 in a week. Yeah, yeah. Many people spend over 10 ,000 in a week. Do you mind? Yeah, my finance team will probably say, I don't know if you asked any of them, but they will probably say that I'm being too stubborn, too relentless to control this spend because sometimes I feel it really goes out of control. Like 30K in a week is quite a lot. But we learned. So this was actually a net passive experience. Okay, so the internal spend, 4 million, about 10 ,000 per head. What will that be in 12 months time, do you reckon? So across the top engineers and across top creatives, it's going to keep growing.

32:35Alex Mashrabov:And I do believe we are going to get to spend close to 50K and 100K a month for those who can call 10X engineers, 10X creatives. Unfortunately, I also expect that these people will ask for comparable salary raise as well. So I think that's just going to correlate at some points. but also for a lot of other jobs, let's say we take legal, finance, and so on, it really stabilizes around$500 ,000 a month very, very quickly. With those 10x engineers, the idea is they have thousands of agents running below them doing a lot of the difficult execution work that took time. Do we just have dramatically smaller teams with those 10x engineers, 10x designers, 10x finance leaders?

33:20Alex Mashrabov:I can definitely say that I had sort of a feeling that legal customer support is going to be mostly replaced. And that's obviously one of the main mistakes operationally, which we have done in the company, that we didn't ramp these teams quickly. What we're seeing today is that, let's say our legal team is over 10 people. Our customer success team is over 40 people. All of them use AI heavily. At these professions where I stay quite close today, I definitely can say that I don't see any elimination. It's true that probably over 60 % of customer support requests, especially the first line of defense, can be handled with AI.

33:59Alex Mashrabov:But when it especially comes to B2B, AI just doesn't work. Revolut has now over 92 % resolution rate on customer support for consumers. Pretty good. It's pretty good, but obviously they did invest a lot into that. A shit ton. But also very important, the way how Nick thinks about that is in terms of the playbooks. We launch products, new products, pretty much every week. We have to keep up the agents with all the information and so on. And just due to the high velocity, having extremely smart coordinated team is very important. That's really interesting how product velocity increases leads to harder customer support for agents.

34:38Alex Mashrabov:Of course, because the agents are as good as context and rules which they have. And if context and rules change pretty much twice a week, it gets a little difficult. When you look at your engineering team today, what are they on? Are they on Cursor? Are they on Codex? Are they on CoreCode? So from a period from March to June, everyone really moved to Claude, including the creative team. And that's where we actually started to see creative team vibe coding functionality, which we don't have in production. But then we started to see that all the coders quickly moved from Claude to Codex as of mid-June.

35:18Alex Mashrabov:Over the time, creative, especially 10x creatives, moves to Codex as well. But look, I do believe that it's cyclical. It's so cyclical. My question to you is, will we continue to see the velocity of model release that we're seeing now? In three years' time, will it be like, oh, Gemini this week, oh, Anthropik this week, oh, OpenAI this week? Or will we see a reduction in model release rate? I don't think that's going to happen anytime soon. I believe, like, for example, recently OpenAI announced that they basically built OpenAI for law. but that's only V0. So over the time, they also are going to try to print smaller specialized models for, like, not like exactly smaller, but really specialized model for certain use cases.

36:05Alex Mashrabov:Clearly, like Astra excels in long-term horizon. Do you buy that? I look at that GPT for law from Astra and I'm like, I'm sorry, I think it's complete bullshit. With the greatest of respects, it is a very deep functionality required to serve some of the biggest law firms in the world. like very, very deep and specific functionality. It's very specific according to the different types of law as well. Plus, if you want to sell into these law firms, it's a multi-year sales cycle with some of the stodgy old lawyers and partnerships. You can't just say I'm open AI, yep, we've just hacked into the Australian government, by the way, but we're here to serve your law firm.

36:44Okay.

36:46Alex Mashrabov:First of all, I think definitely the ability to switch internal use just for internal teams outside of law firms. I think that's definitely happening. Oh, I think we both invest in a company called Solve Intelligence. Love it. Yeah. Very specific. Very specific. And let me try to maybe bring a couple examples why Solve Intelligence is so special and where, for example, how we learn from this. What can happen very often is that a company want to just control the patent workflow, even if they outsource the work. And that's very valuable just to have one system of records. So whoever can create AI native system of records is going to win.

37:27Alex Mashrabov:But going back to Higgs, why it's so important for Higgs field? There are so many systems today which are used for just to store assets. Like some people use Dropbox, some people use Google Drive, some people are going to try to use Miro, some people are going to try to use frame.io. Like there are many solutions. But let's think about what people need. What people need, they want to be able to search contents and marketers especially want to make sure that content is on brands in terms of the visual identity, but also like if that sort of adheres to certain brand guidelines. And that's where like semantic understanding and semantic controls become finally possible.

38:05Alex Mashrabov:It never existed before. So in our space, there are definitely other companies like Adobe and Canva, who builds the best software for the pixel first era, where everything was defined with pixels. But that's clearly not how the world is going to work in the future. What we're envisioning, and that's what everyone wants, they want to just be able to search and really work through the library of assets and all the knowledge through natural interfaces. So being able to own this interface and build the analytics, like this system of records is important. That's why at Higgsfield, we invest so much in harness so that it improves over the time.

38:45Alex Mashrabov:And this harness also allows, it basically learns visual style over the time, which let's say Claude and OpenAI cannot necessarily do. Do you believe in moats anymore? You've been around startups for a long time. We always talk about moats and defensibility. I largely think they're bullshit. We saw lovable. When I invested everyone was like oh it's a wrapper it's a wrapper you idiot Harry and actually it was a wrapper but it's about speed of decision making product execution and building value over time very very fast instinct is a wrapper of course it is it's not that difficult to an AI assistant today which is why there's so many but they're building incredibly quickly very valuable features and you build it over time.

39:31Do you believe that most actually exist really?

39:35Alex Mashrabov:I think it's very difficult to figure out where the value accrues in the supply chain. We do believe that there are only two ways of modern value creation or mods today. First is when you deliver the outcome. And for us, it's allowing businesses to sell more through AI ads. So that's the first thing. And the second thing is network effects. Unfortunately, AI does not replace network effects. And when people talk about swarm of AI agents talking to each other, I'm not sure this is happening in the next five years. That's why it's so exciting that within Hicksfield, like we really wanted to empower community to create more projects, open source, open source them to really build a snowball where people can capitalize on each other output.

40:22Alex Mashrabov:This the reason why software grows so quickly because it's so easy just to go and fork someone's project on github we were able to scale from basically like i don't know 10 seeded projects open source projects like eight weeks ago to over 10 000 today like seeing these type of network effects i believe can become emote over the time when we look at your growth fundraising is a big part of it it costs a lot of money to be able to spend 4 million on different aspects of inference band And what was the best VC meeting you've ever had? Obviously, Yuri Milner gets it. How was that meeting? Was it in person?

40:59Alex Mashrabov:Yeah, definitely in person. And definitely Yuri stays on top of all the trends. Where was it? Were you nervous? I wouldn't say nervous. It was just more to see how much of the, if we see the market the same way. And I was truly surprised that Yuri deeply understands this transformation of content, first and foremost. Obviously, it starts with this direct-to-consumer AI ads. It starts with short-form dramas. All these trends come from Asia to the West. Also, fundamentally, we believe that most of contents on social and in the world is going to be AI-assisted or AI-generated. and like this multi-trillion advertisement industry and you know like contextual advertisement is the main business model of the internet.

41:46Alex Mashrabov:It's all gonna be substantially disrupted with video AI. This industry still gonna be very valuable but it's never gonna be the same. Did you know when you left the meeting with Yuri that he was gonna write the check? You know, sophisticated investors, they can play games. I had like so many scars. Like people really shook hands, said we do at this price. and next day what I learned is that they called other investors and they pulled the syndicates to invest in 30 % lower valuation compared to what we discussed. So like, look, these things just happen, so you never can be sure. But it didn't happen with URI.

42:19I think there's a discount placed on Higgs field because you're not Silicon Valley insider. Do you think that's fair? Let's be clear, you're at a billion in revenue now. If you were a Silicon Valley company, that would easily be a$25 billion company. growing at the rate that you're growing in 18 months.

42:37Alex Mashrabov:Yeah, you could also argue that's what cognition was well, it had 50, right? So there is definitely an upside. Okay, up a band even more, yeah, 100%. So a couple of things which I believe are very important. So first, we build for long-term. We have seen that direct-to-consumer space, like e-commerce can be disrupted, like Shopify is a great example, how they have become infrastructure to build direct-to-consumer businesses. And we become infrastructure to essentially build distribution for direct-to-consumer businesses. That's one aspiration. And second aspiration is obviously Apple VIN. The company is worth over$200 billion.

43:11Alex Mashrabov:It's insane. So look, and as we think long term, just these, these multiples don't matter that much. As we know, we're building long term, we're going to be over 100 billion. It's true that most of the people don't get the opportunity that we are going after the biggest industry in the world. But I wanted to drop another, another number. So when I, and I asked the team to double check. So it's at least four people on the team who proved, So it's not like random fact. So I asked, when we look at public companies, and we exclude pharma and big tech, spend on sales and marketing is higher than spend on R &D.

43:47Alex Mashrabov:When it comes to sales and marketing, the goal is to deliver personalized offering, which converts the best. A lot of that is human work, of course, but a lot of that is going to be personalized videos in some shape or form. So that's why I'm saying that many people just, and that's good for us, that many people don't understand the opportunity, this large market, which we go after. You've mentioned Asia short form dramas a lot. What percent of revenue is from Asia versus the West? So the West makes well over 70 % of revenue. Well over. But just important to say that we learn a lot from trends coming from Asia.

44:25Alex Mashrabov:Hicksville does not exist in China, for example, which is massive market for AI. The largest city by usage is Seoul in South Korea, while the largest country is obviously the United States. What's the biggest lesson from Asia that you've learned? There is so much IP, so many products coming from Asia, and they all try to figure out distribution direct to consumer. That's why they lean into the new tooling like VideoAI, which actually helps to achieve that. That's just a very different mindset. They feel that they could do way better if they could establish direct relationship with customer instead of having like some other layer.

45:03Alex Mashrabov:That's why they go so much direct to consumer rather than using some resale platforms and so on. I sacrifice a lot of life for the life that I have and the career that I have, and I love it. Do you think you will one day regret spending a day with your son in three and a half months? Look, this is goals even beyond that because from the age of 7 to 12, my mother had to work three jobs, so I didn't see her. My father was spending all the time with me, going to all, and I was basically minor, so he had to go to all these camps with me. I also played checkers. I was top three in the world, so we traveled throughout the world.

45:42Alex Mashrabov:Then I did programming. He spent all the time with me, like really dedicated his life to me. Like he did sacrifice. And since 21st, he has Parkinson's disease. So even like having some ability to capital and exits cannot fully change things. And this is something which is deeply personal, obviously. But you don't need to do what you're doing now, Alex. I didn't need to anymore either. I still am. I still miss family birthdays. I still miss weddings. Because like mine's about a deep insecurity rooted in me being a fat kid. Why are you doing it? So I think Marc Andreessen actually described it really well.

46:18Alex Mashrabov:There are like five archetypes. So obviously for me, it's just huge conviction about the technology, about the markets, about the opportunity, and just huge fear of missing that. Huge fear of missing that. But remember that my parents really taught me that there is a place in the world where technology, like good technology products matter. I remember like when I was six, there was like this, I guess, magazine about Bill Gates, like building Microsoft and not being like very like socially accepted everywhere back then. And like my mother just told me, oh, like these examples basically happen in the world.

46:53Alex Mashrabov:I think she didn't fully understand like San Francisco and Seattle are different cities, but still that's still deeply rooted in me. Childhood shaped us a lot. What did your parents teach you? For them, what was important is to just be in merit-based environments, sort of. And that's why getting to California felt so important. What's your biggest lesson on hiring? Speaking of a merit-based environment, we see a lot of focus on your cognitions of the world who hire, mass Olympiads. Yeah. What's your biggest lessons on hiring effectively? I think one of the things why Europe thrives so much, like I know that you typically say otherwise, but let me just challenge you, like who are the most relevant NeoClouds today?

47:40Alex Mashrabov:It's Nscale, IRAN, and Nobius, and Crusoe. Crusoe, okay, is Silicon Valley story. IRAN from Australia, and scale from the UK. And Nobius is UK and Netherlands. Let's talk about the companies on application layer that matter. I know that you mentioned Mercure and you mentioned Harvey, but Legora, 11 Labs, Lovable, they all deeply matter. So if we just go outside of the model layer, because then I don't want to go into the mistral topic, right? Because I think like by usage, the numbers are very strong, but people for some reason don't believe in that. I don't know why, but public data shows that the usage is there.

48:21Alex Mashrabov:But on every other layer, Europe is extremely competitive. Like ASML, like without ASML, this whole thing just wouldn't happen. So I think fundamentally what matters is if like Europe is gonna figure out energy, but that goes outside of, that's above my pay grade, right? So very important to say here is that now there are more opportunities to create company from different kind of cities, from different parts of the world, while before it all felt extremely centralized. And we are obviously excited about that. Another thing about hiring is that in Silicon Valley, unfortunately, what I'm seeing is that people just jump between jobs every two years.

48:59Alex Mashrabov:That's why I think Europe can be so competitive because the sense of loyalty matters a lot. And that goes sort of a little bit to the childhood. We just discussed that. Let's say if you're a Fuham fan, you are not going to root for Arsenal just because they won or played in the Champions League final. But in the United States, if Lakers are on the top, people are going to say, yeah, I'm fan of Lakers because it just makes it easier to start conversation. When you think about your own CEO style, what's changed most? In AI, it's so important to look at actual signals and actual adoption and having access to raw information.

49:42Alex Mashrabov:I was obviously taught the corporate school of management in the United States. And when I look at the CEOs whom I'm learning from is obviously Jensen, Elon, and Nick. Those three, they completely abandon all the management principles. They don't necessarily are like fans of like one-on-one and like soft feedback. All of them, I think, are encouraged like being down to the points, knowing the details, while it would be called in like corporate America, something like micromanagement. What management principle do you disregard that many people think is important? I do believe that it's as simple as hire the best people to do the best work and figure out how to retain them.

50:22Alex Mashrabov:Everything else is frankly secondary. And people just create so much theory around that. And essentially there is just so many like fake rules which are disconnected from reality. It's really as simple as hire the best people, empower them to do the best work, and just figure out how to establish relationship and retain them. A lot of them do see dollar signs and secondaries are a part of that. How do you think about doing annual tenders to retain people? Across our team, roughly 50 are in California. We're going to get to roughly 50 remotes and over 300 in Kazakhstan. So look, I just hope we're going to print more dollar millionaires in Kazakhstan, in Central Asia, in this part of the world than any other company.

51:07What's the labor arbitrage on cost between Kazakhstan and the US?

51:12Alex Mashrabov:I know that a lot of people, when they look at Higgs, they think about the arbitrage. Is that not true? Look, Kazakhstan is top five in the world in physics. You look at the recent International Physics Olympiad for high schoolers, they're top five in the world, on pair with the United States, China, India. And this is also the core of our team, are people who won international competitions in math and physics. That's the first part. The second part is that about Kazakhstan is that they actually took the Soviet school of math, but really upgraded with Singaporean principles. And Singaporean system of education is considered to be probably the best in the world.

51:48Alex Mashrabov:At least many people in Silicon Valley believe that. And the government basically subsidizes 4 ,000 of high schoolers to study abroad. And many of these people come back. And so just the density of talents definitely got there. It's like top 10 largest countries in the world. It's over 20 million population. And we are also actively hiring, bringing their talents from Europe, from other countries in Asia. And people just enjoy like some benefits, like 15 % personal income tax. Yeah, man, it's like... Don't even get me started. Fucking UK will tax you to breathe. Seriously, in the UK, you get your paycheck and then it's like, I don't know, 100 ,000.

52:29And then you get the end and it's kind of like 3 ,500. But it's also English common law. So it's not like that bad as people think. You move it.

52:38Alex Mashrabov:Let's swap places. Do you have a mega pad in Kazakhstan? No, I don't. I don't own any property. What? Why? Remember that I come from Asian family. Whenever we sold the company, I made over a million dollars and I spent all this money buying apartments for my parents, relatives, my wife, parents, because it's just part of the culture. Wow. And the extended family is not small by any means. But look, it's just part of the culture to give back. And then when it comes to the family, especially to my parents, they obviously sacrificed a lot. So I felt like I had to give back at least like things, like monetary things, which I could do.

53:19Alex Mashrabov:But I drive like Tesla Model 3 and I sleep. So like, I'm not like a guy who's going to just show up with Lamborghini or Porsche. Do you invest? We mentioned Solve Intelligence. Before I did that, but now I spend roughly 90 hours a week, 80, 90 hours a week on Hicksfield. I try to spend ideally at least three hours a week with my wife, at least five hours a week with my son. Sometimes I do the catch up because when I travel for a week, for two weeks, for three weeks, Then I tried to take Sunday off to spend the whole day with my son. And over the last three months, yes, I was able to find one day when I spent like end to end with my son without emails, without talking to the team members.

54:08I get in trouble for this, but I think there's no shortcut to hard work. The harder I work, the luckier I get. I meet more founders. I find more great companies. I do more shows. I have more success. Do you buy the bullshit of the balance and the, oh, it's okay. hey, you can leave at five and be home for bath time and crush it?

54:27Alex Mashrabov:This is a good question. So look, obviously, being an immigrant, I always have to prove that I belong, right? So I feel like now people accept, people recognize that Hicksfield is probably a top 10 application AI companies by revenue, probably number one. But I think when it comes to hard work, like the people whom we know in common, like we We talked about, let's say, Peter Salis, legend in the consumer space, obviously, Jack. I spent a decent amount of time with them and other product leaders at Stamp. The density of product talent at Stamp was unprecedented. All of them work really hard. All of them are smart.

55:07Alex Mashrabov:Like none of them just checks emails for five hours a day and calls it work. Each of them is deeply rooted into the recent trends in product, product design, activation. they know data really well so yeah i don't believe that there is any shortcuts or hard work three hours a week with your wife i don't know about you do mine would dump me for three hours a week how do you make marriage work on three hours a week yeah look i'm i'm i'm very grateful for my wife for being patient you know it's also very different if that's like asian culture it's just kind of more natural to try to do sacrifices for each other, sort of.

55:48Alex Mashrabov:And I'm deeply, obviously deeply grateful for her for supporting me. But like sometimes at this scale, I get invited to parties. I always send her and don't show up myself. I don't know if I piss people off, but this happens very frequently. So wait, you say yes, and then she goes. Yeah, I say maybe we both can come together. Then there is always some urgent fire last minute, and my wife just goes. what fire was most urgent what was the oh fuck yeah look i think obviously for all the things which we touched base earlier whenever we are not very good in communicating the features or we felt like i mean now it's like team of 40 so now the life is way better but early days obviously i was involved in all the fires i think recently all the types of like attacks on ai companies it's crazy It's like LLMs are being used to hack companies.

56:42Alex Mashrabov:It's like new types of LLMs to do some frauds, you know, like basically bots using credits and then doing auto refunds, all of that. Like since I have like kind of machine learning background myself, data science background, I still can move a needle substantially when it comes to statistics and data. So yeah, I have to be involved somehow. But like these LLMs, they amplify many types of behaviors, including various types of attacks and fraud but we have to fight against that we're gonna do a quick fire answer i say a short statement you give me your immediate thoughts what have you changed your mind on most in the last 12 months oh i was thinking that hubspot is gonna get obsolete everyone is gonna build their own crm but when especially when we hire and scale b2b go to market seem just having familiar interface matters a lot wow i would still say they're gonna get fucked you think Do you think that just stickiness is there with SMBs?

57:37Alex Mashrabov:Yeah, I do think so. And especially I see that when I hire go-to-market talents. Wow, why? What is it about hiring them that makes you think that? They're so used to it. I mean, people who are very good in understanding customers and talking to customers, they may not just simply accept new interface so quickly. And just having HubSpot as a system of records, being able, if there is any mismatch, going able to just understand where the data flow went wrong, I think that's just still very valuable, like the familiarity. What do you believe today that everyone else thinks is fucking crazy? I mean, look, I think people just still don't fully appreciate that most of the content on social media is going to be AI generated.

58:15Alex Mashrabov:There are going to be some shows like obviously yours where it's like authentic contents. It's going to be 1050x higher CPM, whatever, than AI generated contents. So it's going to be way less in terms of like content created by, but it's going to create way more value than AI generated contents. But even when I look into your content specifically, like you made multiple very successful shorts, millions of views, better than anyone else in this space. And you do a lot of overlay. While the content is authentic, I think we should do better jobs so that you use Hicksfield, at least for the overlay on top of existing videos.

58:56Dude, I would love that. I mean, again, they take three hours. People don't know this. I spend two hours a day just doing Instagram now. We decided that Instagram in short form is going to be a big new push for us. Two hours a day just for me. I write the scripts and then I record them. And then it's two people, six hours per one for those three.

59:15Alex Mashrabov:And that's extremely smart of you. You know, like going back to some of the topics is like clipping is like a huge topic. And that's like has its own upsides and downsides. But obviously everyone sees this opportunity to win, to build massive top of funnel, like hundreds of millions of views with short form contents, as long as you can have downstream monetization like or value creation like you do. Totally agree with you. What job today does not exist that will be big in five years? Okay, so in five years, people, especially in our space, creative directors, they are going to be talking to computers and generating stories real time and video.

59:56Alex Mashrabov:And AI is going to help to create multiple variations Today, there is no word to really describe that because there is also, there are script writers, then screenwriters, like those who are going to break it down shot by shot. Then there are people who do that storyboarding. Then there is like people, person who oversees all of that, like movie director and so on. So there are so many parts of that, but eventually taste is going to matter a lot and just having stories to tell. There is no word to describe it today. Who do you not have on your board that you would most like to have on your board?

1:00:29Alex Mashrabov:Maybe out of like more professional CEOs, I'm definitely Frank Slootman. Because going back to the point, I was just curious all the time. Does no bullshit culture exist in California or not? Can it allow to scale companies so quickly? Is it possible to build successful enterprise go to market motion with no bullshit culture? And when I read his Ampetab book, like book called Ampetab, I realized it's possible. So like, I'm a huge fan. I watched all his interviews. The challenge with him, he's amazing. He's the best leader by far. But the challenge is you can sometimes do it at the sacrifice of product advancement.

1:01:07And so he built a GTM machine at Snowflake, but Databricks wiped the floor because they move product as the priority, not GTM. And that was dangerous. I prefer Chad Peets. Do you know Chad Peets? No. Oh, dude, this guy is no bullshit. I'll introduce you afterwards. He's the best sales leader in the world, and he is no fucking bullshit. Unbelievable. And we probably should have him on board. Oh, my God. I can find any way to have him on board.

1:01:33Alex Mashrabov:He is terrifyingly good. So what's the biggest lesson from Snap? The momentum doesn't last forever. Like today, Snap market cap is below 15 billion. There are lots of memes on the internet, but this is a great company. It cares so much about trust and safety and experience, and it puts it first. Do you think it is a great company? No offense. It's been mismanaged to shit. It's SBC is through the roof. It's tough to say it's a good company. That's why I say that momentum doesn't last forever. When Snapchat was worth$80 billion and the gap with Meta was less than 10x, then it felt, oh, we just go explore.

1:02:10Alex Mashrabov:We just really must lean in, but momentum doesn't last forever. And that's my core learning. So that's why, while we do have the positive momentum, we do not take this for granted. Clearly, the nature of capitalism is there are ups and downs. And since we're building long-term, We just should capitalize on the opportunity, like with the fundraising and just keep pushing progress every day. What is the reason why the divergence between Meta's market cap and Snap's market cap has increased so significantly? If there was one reason. Just maybe saying this straight, a lot of public companies did not figure out their AI story.

1:02:48Alex Mashrabov:Snap unfortunately is part of that. We have seen other great companies like Figma trying to tell their story. You mentioned Canva. It's not necessarily easy to be successful in private markets and public markets. And Zach is one of the best CEOs of all time because he managed that. Such a fucking beast. He's such a beast. You watch him last night with the event and you're just like, ah, now I get it. That totally makes sense. And you know what? Scale with Alex Wang, I was one who was like, really? He basically acquired a second CEO. Alex is now the CEO of Muse. And he's crushed it. Crushed it.

1:03:31What an effective buy for 0.5 % of your market cap. Do you know what I mean?

1:03:37Alex Mashrabov:Yeah, look, but this happens with Instagram, with WhatsApp. That's why I'm saying that we just maybe should put Meta a little bit in its own league. Yeah, but he got rid of Systrom and Krieger. Here, he's been like, no, no, no, you, Alex Wang, are my guy. Do you see what I mean? Yeah, look, I do believe that it's a little bit early to look at whole meta AI initiatives. We probably need to see like a year of like successful launches and so on. And then we can look back and see what was good, what was not good. But at least the consistency of storytelling and explaining what he is doing to public investors, being able to articulate why Muse is so different is phenomenal.

1:04:18Okay. Revenues there are billion. What are the revenues in 12 months' time?

1:04:24Alex Mashrabov:Our current business model projects 4.5. It is by the end of the next year, but this basically involves substantial deceleration. And that's what just my finance team, there are a couple of strong quant people. They told me that's just how the business works. But look, we are still pushing to grow at least 30 % month over month. What do you think it is? They said 4.5. What do you think it is? This is me to you, not me to your finance team. Over 10. Over 10. Let me tell you why. A lot of adoption and creative AI space is driven by monetization, like all these direct-to-consumer brands making more ads, and also having the aspirational cinematic AI content as this inspires creatives to explore the tooling.

1:05:13Alex Mashrabov:It feels to me that Hollywood starts to embrace AI mostly today as a tool for hybrid production, as a just new form of CGI. But the sentiments really shifted from like strictly negative to neutral to slightly negative. And in private conversations, yes, there are maybe more than half of S-tier talents who is going to say we're anti-AI forever. But increasingly, there are more and more people who are actually asking a question, can we tell more stories with AI? Can we overcome certain budget limitations, which existed before? And maybe AI can help to tell new stories, which we couldn't tell before.

1:05:57Alex Mashrabov:And I do believe this just change in perception, that at least comes from my conversations, is extremely positive. If you are at a billion today, 10 billion in 12 months, why do you peg the next fundraise? If you're at a billion, say, a conservative multiple, you'd be like 15. But if you're hitting 10 next year, you're like paying end of year 80. Look, we are not chasing just the valuation because again, the goal is just to make sure that the company can be sustainable over the time in public markets. So there is a lot of company building to be done beyond just chasing the revenue. But I just do believe - Do you want to be public at some point?

1:06:35Alex Mashrabov:Yeah, I do believe that Hicksfield has great potential to be bigger than Apple, Lavin, and Shopify. Because fundamentally, building is one part of that. Shopify, one layer of infrastructure. Then for coding, there is obviously a cloud. There is codex. But what matters is distribution over the time. Distribution matters. You know that this is better than any other VC, right? Dude, it's my business. That's why we do what we do. Yeah. Exactly. Dude, I cannot thank you enough for being so amazing on the show. You've been fantastic. I love doing it, you can tell. And you've been an amazing guest. So I really appreciate you joining me today.

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