20VC: Anthropic Surpasses OpenAI Revenue | OpenAI Acquisition of TBPN: Analysed | OpenAI Management Team Reboot | YC Kicks Delve Out | Mercor Hack and Why Now is the Time for Cyber | Supabase Raising at $10BN & Doug Leone Returns to Sequoia

22:33Harry Stebbings:It is editorially completely impartial. So they have zero benefits. This is the only reason this does not make any sense. If they had the ability to own the media properly, it would make sense. But they have zero impact on it. History is riddled with people who buy media assets to try and change outcomes. Generally, my observation is owning a media asset invariably takes way more time than you think for way less money than you expect. See Jeff Bezos for details. It just is a sinkhole. If you can't control the story, then hire a better storyteller, hire a better comms person, hire a better marketing person.

23:10and think before you speak and before you hit on your bitch about lemonade stands. And look, in turn of it, it's in the noise. And Jason, you are right. They're not going to spend a lot of time managing it in this case, at least in the short term. My comment is more, it's just really silly when you say, we've really got to focus. Nothing else matters but these two or three big things. Oh, but by the way, here's one last plaything project. At a meta level, just to founders, especially if you listen to this, honestly, this is why you should default yes to a good deal. I'm pretty sure this is this deal.

23:41I just read the press. This things, things that opened. There was stress in January, but it's not like today. Fidji comes in. She has an idea. This is not the biggest bet the company is going to make, but they have a team meeting. She's like, I love TBN. What if we brought them in for a little bit of good promotion? And everyone around the corner is like, whatever. Yeah, let's go talk about buying some open clause or something. But but but they say fine and things are good. And they kind of shake hands on a deal. It takes a little while to happen. And it closes last week. There's no way that deal is going to happen today.

24:09Like it's dead because of management change. And I can't tell you how many times I've seen this for portfolio companies. And even it's happened to me twice where it's not just time is the enemy of deals. It's management turnover, right? Priority turnover. So the meta lesson is I just don't think this deal would have happened today. It has nothing to do with the team at TBN. It just, when you say no to an attractive deal, just be sure you're okay if it's no, never. Because the odds that VP that wants to do the deal is there in 12 months and that their priorities have not changed, approaches single digits.

24:42It's back to the liquidity window comment. You're exactly right. Yeah. But my God, I think it's worse for M &A because so many times in M &A, that guy just isn't there next year. But I'll tell you, one of the things about being the big boss is that even when you're a long way down, if you don't think it suits what you're doing now, you should stop it. I remember a fun story. 25 years ago, we were selling a company to GE. I'm not going to name the company, right? And it was a mediocre company and we were darn lucky to get the bid. And it was going all the way through and it went every level at GE.

25:11And then it came to the CEO and he's not perfect, Jack Welch, but he's willing to take a tough decision. We're a long way down. Everyone was about to sign and be all happy, happy. He looked at the numbers and said, no. And I remember thinking, damn, I thought we'd get away with it, but he's right. I should have, you know, right. And at some point, I remember thinking, oh, that's impressive. All these people were in, he was a long way down with the process. And he just said, I'm thinking, no, this is one

25:34Harry Stebbings:where you say, I'm thinking, no, I'm going to give you a hard one before we move to SpaceX. You have the chance to buy Anthropic at 850 or OpenAI at 380. Which would you rather buy? You may have that opportunity in the secondary market as we speak. I wouldn't be surprised. I think I'd buy. I mean, having said I'd do Anthropic last time, I mean, six months ago at the 300 and something thing. I think I'd go the other way this time. Because again, I'll tell you this for certain, if the choices were Entropic at the last OpenAI price of 850 posts or whatever it is, 820 something posts, or OpenAI at the last Entropic price of 370 posts or 380 posts, I would argue that you would buy OpenAI on one proviso.

26:18You could sit down with the board and say, what are you going to do about this? Because it doesn't take a lot to fix this thing, right? To just stop screwing around and focus.

26:26Harry Stebbings:Oh, no, no, no, no, no, because you've got to stop then a machine that is anthropic, that is now picking up more and more pace with every day that goes by and picking up more. First of all, you still have the consumer asset where you are by far the dominant thing. Again, it goes back to what we said last week. You have to do two things. You have to figure out a consumer monetization model, and you just have to get a codex, the codex competitor to Claude out there. Mission clarity is pretty simple. You do have one big advantage we didn't talk about, though it's changing a little bit. and give us that.

26:54He was more aggressive on compute purchases. And I'll admit, I was someone thinking from the peanut gallery, hmm, is that a bit aggressive? But now it looks like compute constraint is a real thing in 26 and early 27. You have that asset. Maybe you figure out how to deploy that aggressively with codex. So there's buttons you can press, there's things you can do if you focus and do them. Jason, you've got that same choice. I'd say buy both if you can invert the valuations. That's what all the growth VCs are doing if they can get away with it anyway. So let's invert both. It's amazing, but you can only buy one.

27:25Yeah, but conflicts aren't important in our firm anymore. They don't matter at pre-seed and they don't matter at growth.

27:31Harry Stebbings:Jason, you only have one check left. Well, look, I mean, I've said the same thing on the show. I'm just not into the tumult at OpenAI. I'm not into the drama. I'm not into a non-deeply technical founder leadership. It's just not my vibe. I wouldn't invest in anything like OpenAI at a high price. It doesn't matter what it is because I just find it so risky that the turnover and not being led by a deeply technical CEO, that's just in my life at investing, I ain't doing those risks anymore. Right. And maybe I'll miss a lot of opportunities. It's just, you know, I want someone Dario or smarter technically running these companies, or I just, it's just too, it's too much change.

28:10You get too lost on the, on the pen and the TBPNs. Although I don't think Sam had anything to do with TBN in all fairness. I think he said fine in a meeting and moved on. No, because it, and related to that, just for folks, I don't know how M &A works at OpenAI. It's not that sophisticated, okay? But I will tell you, when I was at Adobe a long time ago for M &A, basically every senior executive got a big chip and a small chip. The big chip was a big deal. Back then, it was maybe a billion-dollar deal, okay, that would move the needle. If it doesn't work, you get fired. It's that simple, right?

28:40And everyone got a small chip, what could be like 50 to 200 million deal. And you had to justify it, and you didn't get five. As a forcing function, you got one, but you really weren't challenged that much to do the smaller chip. You picked one a year and you didn't get fired if it didn't work out. There was an idea that maybe 20 % of them would work out. And so I bet he spent five, this was a small chip deal and he spent five minutes on it. Is this the one that you really want to do this year, Fiji? Then just do it. Let's move on. We got bigger fish to fry. That's why I don't think it's that big of a deal.

29:10It was a small chip deal and no one loses their job in Adobe over the small chip deal. Otherwise it would never happen. No one would take any risk in buying an emerging company, right? They just wouldn't do it. We've got to move on.

29:21Harry Stebbings:SpaceX finally, finally, confidentially files for IPO, targeting a$2 trillion valuation. It would be the largest IPO in history, surpassing Saudi Aramco. They could raise up to$75 billion. This obviously includes XAI, otherwise known as Twitter, which they obviously incorporated earlier this year. 2025 revenue, 15 to 16 billion, 8 billion of EBIT at 2 trillion it's 125x revenue so coming in punchy to say the least feels like a series a these days rory uh how do we feel when we hear this well i'll just tell you one one one insight i i think to say that at least venture is different or remade as an understatement the big three spacex plus open ai plus anthropic assuming they all ipo i mean certainly spacex will in the next 12 months, their value at IPO will exceed every other IPO for the last 20 years combined.

30:18All of them, all of the last 25 years, these, the big three, every other little deal. I mean, Rory's had some great IPOs. There's been tons of them out there, but this exceeds all of them combined. Right. So, so I, I found it almost depressing in a way when I thought about this way, because it was like, what's the guy we had earlier in the show

30:36Harry Stebbings:from Slow Ventures who kind of bothered me a little bit? Sam Lesson. Yeah. And he kept saying box doesn't matter. And then he said, open AI doesn't even matter. It's not that important. And he was very triggering. I try not to get triggered directly, but he kind of rattled in my head. I was like, maybe the guy's right. Maybe nothing we're doing matters because the big three dwarf, the last 25 years combined, like, what are we doing guys? What are we, what are we doing here? First of all, I think that is a real phenomenon. And what you're simply saying is, especially in SpaceX's case, the longer the holding period, the more dispersion which sets in, which is more the big become bigger and the little ones fade out.

31:13And you're exactly right. At the tail end of a power law, it does mess with your head because the combined value of the top three privately held companies are larger than everything else in much of the same way. It's even more concentrated than the public markets, which are more concentrated than they've ever been, where the market cap of the top four or five, Nvidia, Apple, Microsoft, Alphabet, and I think Meta is approximately 30 % of the total S &P, which is everything for the last X hundred years. Psychologically, the thing about a power law they don't tell you is you can have the third best outcome in venture history and be only one-tenth as large as the largest outcome in venture history.

31:54And if you're going to let that into your head, it's just going to be a very tough business psychologically for you because you can have a life-changing event that's down in the noise of 10 or 20 billion dollar outcomes, which can be enormously great for you and your family and for your co-investors and for everyone involved. And if you're going to let it in your head that it's not two trillion dollars, then you're doomed and you're just going to need therapy. I wrestle with these things all the time. I mean, it is the thing that your mama told you, right? It's like you just have to not let other people define you.

32:24I mean, you said it really, it is a psychologically weird thing. You're going to have these three deals go public. They're going to be worth literally everything else that's happened in the last 20 years if they trade anything like their current prices. Will SpaceX rip and hit the$2 trillion when it does go out? I try and not spend time talking down an amazing company. Not least because I'm going to be a buyer of SpaceX. 15 days from the IPO, I surprised you, because 15 days from the IPO, it's coming in QQQ. I have a big QQ holding, right? If you're an index fund, you're getting this thing in 15 days.

32:57And I don't know when it'll be for the S &P, but it'll be fairly soon thereafter. So we're all going to be buyers of this thing. So in terms of the valuation, you do any kind of meaningful analysis of some of the parts and you come up with a lot lower number. And then as we've discussed this before, and then the gap between what you think the assets are worth on any kind of normal basis and$2 trillion is huge. And it's all Elon premium. And what you're really asking, therefore, is how big is the Elon premium sometime in June? And I don't know. You're definitely seeing the Elon premium come off on Tesla, which has been worth pointing out.

33:29It's down significantly year to date. And I was interested to see JP Morgan put an actual sell on Tesla with a prediction of a 60 % price decline. So really what you're asking me, Harry, is what is the Elon premium in June?

33:44Harry Stebbings:And hell, I don't know. Well, I'm asking actually, do you think it will materialize in public markets? And they hit that two trillion. Well, right. Here's what your thought. Obviously, I don't think either of us have worked on an IPO quite of the scale, right? But - But by definition, no one has in the fucking universe because it's the first time it's ever happened. Right. So the process is going to be different. But here's my point. At some level, there is a tough negotiation sometimes between the company and the underwriters on valuation. And oftentimes some CEOs are like whatever the Lord brings and some are extremely aggressive on the number they want.

34:14Right. And depending on the situation, sometimes the CEO wins those debates, gets out with the valuation the underwriters are very uncomfortable with. And sometimes it works and sometimes they stumble because of it. I think what Elon said publicly on X, it ain't going to be$2 trillion. Now, maybe he'll change his mind. He said$2 trillion was too high. So whatever his number is, I think he's going to get it on IPO day. He's going to will it into existence. The underwriters are not going to be able to argue with him for more than five minutes. And there'll be enough demand between retail, 30 % of the IPO.

34:43It's a lot, right? There'll be enough whipped up demand, I think, to support it for one day. He will will it into existence. Whether that evaluation is there in 30 days or possibly even in one day, I don't know. But I do think the sheer force of will, the lack of power of underwriters and the 30 % retail will will his 1.75 into existence for one day, at least one day. I think that's quite correct. It's worth pointing out, I think less than 12 months ago, there was a meaningful transaction in SpaceX at 400 billion. Then there was this much smaller, I don't know if it even happened in the end, secondary at 800 billion.

35:16Then in conjunction with the merger with X slash, yeah, X slash Twitter, SpaceX was valued at a billion to value the other asset with its negative$12 billion in cash flow at$250 billion. So they added that in to get to$1.25. And now you're talking about$1718. And it's all been walked up in a very interesting way. It is worth remembering that the last time the useful asset was valued on a standalone basis, it was worth$400 billion. So if the deal went public at 1.5, 1.6, less than the whisper number, I still think they'd have done a magnificent job of walking the value of the asset up. Because it's not clear to me that the XAI asset has a positive NPV in anything like the near term.

36:00We just had a long conversation on Entropic versus OpenAI, and they're kind of number one and two in this space. And Gemini, Google is almost certainly number three. So X.ai is number four in the kind of model LLM space at best, burning$12 billion a year. So I don't know what that's worth. But I would argue that they won't be talking about that on page one, two, or three of the slide deck at the IPO. They'll be talking about SpaceX, which means the entire edition of that probably was net negative. So I go back to my comment. I think you're right, Jason. They'll will something amazing into existence for a short period of time because this has all the leverage and the drive.

36:40And I think only in the long term are markets weighing machines. In the short term, they're voting machines. And we'll see over time how it settles as people just look at the dynamics of a 20 billion plus or minus business. EBITDA positive, CapEx not clear, excluding X.ai, and then add an X.ai and see how that trade, it'll settle into a long-term value over time. What happens on the day, I think you're right, It'll be much more a function of the will. And it's a small float. So people will push.

37:08Harry Stebbings:I'm switching it up here. We're going to go to private markets. We had big news from Sequoia this week for context. Always like to context set. Doug Leone had taken a step back from the firm, back from day to day, back from investing. Pat and Alfred had recently taken over the leadership from Roloff. And now Doug is back in an investing capacity, not in a leadership capacity. That's still very much with Pat and with Alfred. but Doug's back in the firm investing, which is very big news given he is one of the OGs. How do we read Doug back and back in the trenches? From a distance, it feels like something to calm the LPs.

37:45I mean, everyone is raising so much capital, so much change there. I mean, you guys have even more experience than I do. LPs are uncomfortable with change. LPs say that they're looking at the new generation and the Vanguard, but they are comfortable when the old leadership is still actively involved in the fund. It does make LPs more comfortable, whether they're investing half the fund or a few deals. So it struck me as that simple is you bring back someone that makes the LPs comfortable and you get through this crazy amount of fundraising everybody's doing. But I don't think it's just to get somebody on your slack and get a little wisdom.

38:19You don't need to bring them back to just to get an hour or two of insights on deals. That you already have. I think it was a sensible move. I don't think it's an earth-shaking move. I mean, they've made the changes they've made already as a firm, and it all made sense. I think at the margin, you're right. It helps on a bunch of different things. It just provides some continuity, which is important, I think, for LPs, for the firm even, for entrepreneurs. Also, let's not lose sight of the fact he's a damn good investor. I mean, one of the questions we always ask when we're hiring someone and thinking about it, and in this case, you are effectively hiring someone, is do you think the next check that they'll write will be better than a check that one of us will write.

38:55And I think Doug Leone's proven that he can write pretty good checks. So I think even at the margin, from a check writing perspective, kind of makes sense. And having made one transition to Roloff and having had to make another transition abruptly means the first transition wasn't that successful. I'm sure there's an element of scratching the itch for Doug. You want to come back and make it work. You know, they've put a lot of his life into this firm. They've done an amazing job. And it just felt a little janky late last year when that transition happened. So if a couple more years can help manage that transition and send a continuity message.

39:26Why not do it?

39:27Harry Stebbings:With the greatest, I spend a lot of time with LPs. The insatiable appetite from LPs for Sequoia has never been more prominent still. And so I respectfully, I don't think it's LPs. I think it's actually just like in the face of increasing competition from a founder's fund who've got an Andruil and a SpaceX at their tailwinds for founder brand and Andreessen, which are more attractive than ever for founders. You asked the question, how can we be more competitive? And Doug is the ultimate winner of deals. You're telling me the kids at YC have heard of Doug Leone or even know how to spell his last name?

39:59Harry Stebbings:I doubt it. I'm telling you when Doug Leone goes to that meeting with them, whether it's Christian Hecker at Trade Republic in Germany, or whether it's the team at Wiz, he fucking closes the deal. Yeah, because maybe not the YC founder who's But you're right. Look, let's get real here. Across the venture and tech ecosystem, this is someone who's had wild success. And even in a meeting can bring knowledge to bear that would move the needle on a close. I agree. Well, let's call it gravitas. Whether it's the founders or the LPs, it is adding gravitas back into Sequoia in a time of a lot of change, right?

40:35Agreed. It says they needed more gravitas. We need a little more gravitas, guys. Who can we bring in? Yeah. Yeah. One of the things I admire about Sequoia, to be fair, I've always said this is like literally, even if they're winning on every round but one, they'd be like, well, how do we win on that round as well? And as you say, Harry, it's never been more competitive. There are widely talented, similar sized firms. Even if you have 10 great players, one will get an 11th.

40:59Harry Stebbings:Jason, you mentioned the youngest founders from YC. Some very young founders from YC obviously founded Delve, a SOC2 compliance business. Sorry, Rory, don't look pissed at me. No, not best. No. Okay, good. Very young, 21-year-olds. And as everyone knows, Delve has been in the news for not providing a product in the SOC 2 compliance space. They said they were a lot of problems around that. YC have since kicked them out of the YC community, which was announced this week or leaked this week from Bookface, YC's internal product, which obviously wasn't meant to be leaked. Is this the ultimate sign of their guilt?

41:37Harry Stebbings:Insight invested 32 million bucks into the company within the last year. Should there have been more diligence from an investor perspective? How do we think about this? My guess is, listen, obviously a lot of things went wrong, right? One was making up a lot of audits with AI. We're going to find more portfolio companies did that. The second one was stealing from a fellow company, stealing IP, forking a fellow company. And I think, Listen, I don't know how you manage it with YC with thousands of companies, but there's a limit where you cross the bro code or the girl code or the founder code with other folks at Weeason portfolio companies.

42:13And there's a line you just can't cross. And whether they see it as open code theft or what happened, whether you're manipulating, you can't allow that within the core portfolio. And I think they were rejected for the combination. And it wasn't just some young kids misusing AI. I think it was the second. I think it was breaking the code. and that's why they were just, there was no need to comment more. You broke the code, you're out. You're out of the team. I totally agree, Jason. I mean, look, these things are gonna happen. I mean, I was just running the math in my head. You know, YC, 200 companies a quarter.

42:45So that's eight, 900 a year. Step back, United States, we have 300 million people here. We have approximately 3 million people incarcerated at any one point in time. So we run rough 1%, you know, between felons and misdemeanors, right? Across the whole population. So if you just index to that, that means out of the 800 YC founders a year, statistically, if they're just no better or no worse than the rest of the country, there's eight of them that will, in the course of their life, commit some kind of crime. It's going to happen. You're going to have fraud. And at the end of it, when you have a portfolio of 30 companies or 40 companies, as we do, then most VCs avoid it.

43:23And every once in a while, one VC gets unlucky. If you have 200 companies a year, it's going to happen to you a lot. So first of all, no drama there. I saw all this, oh, YC is bad because this guy's a fraud. Dude, when you have this number of companies, statistically, it's just going to happen. So that's the first comment. And then the second comment, Jason, I love what you said. You're exactly right. What do you do if you're running YC? You can't stop this shit up front. And especially when a lot of your value add to entrepreneurs is - The community. The community, right? That is what you're selling.

43:54And you do business with each other. Anyone who did business with these guys was at the very least discombobulated and embarrassed because you rely on this for SOC 2 compliance, and then it wasn't true. And then on top of that, you stole from another YC bro. You're exactly right. It's like in the old West when there wasn't much law. You have to take the law into your own hangs and hang the cattle thieves. This is the same thing, right, dude? You broke the code of the West, you're out. And I think from an enforcement perspective, I can totally see why they did it. You know, now you can talk about should other people have known?

44:26Should you really buy compliant software from 21 year olds? That's an interesting comment. But fundamentally, I think you're exactly right, Jason. You're going to have this thing. And the only way you can deal with is not a priori policing, but especially when you break the bro and whatever the non sex loaded term of bro is, when you break that code, you just got to be pretty ruthless about it. Yeah, I really think it was the part two that did it. You know, taking a customer, SimStudio, that is also a YC company, maybe even a batchmate, taking their open source software, not attributing it back and claiming it's your own software to like your own batchmate or your own customer.

45:05That's, you know, we've all thrown a few things in the cloth and pretended we did the work. Like all three of us have done that. But this one breaks the code. You took the open source code from your batchmate and said it was your own software. I mean, and they were your customer. That's, you can't hand wave that one away.

45:20Harry Stebbings:Okay. Moving on. Open Router, very well-known company for those that don't know, a marketplace for LLM, so to speak, at 1.3 billion price at 50 million of ARR, up from 10 million in October. So obviously 10 to 50 in whatever that's been, six to seven months. Feels quite cheap for an AI leader. Jason, I'm intrigued to hear your thoughts specifically on this one. I love Open Router. I mean, I use it and it's just very interesting. You know, it's a very simple way to dynamically pick which LLM to use, right? And going to our conversation from last week, sometimes it doesn't matter if you're not price sensitive for certain workloads.

45:54Sometimes not only does it matter, but it's incredibly helpful to not have to do all this work yourself. Oh my God, which model should I pick? How should I do it? An open router lets you do it dynamically, or you can pick different LLMs for different use cases. And it just makes it elegant. And what I love, and it's also really cheap. It's quite cheap. I suspect the cheapness is why it's not worth 10 billion, right? When you have such a low take rate from such high GMV, you do naturally get a little nervous about the address, the true TAM, even though we've given up on TAM. That would be my guess.

46:28They've become the market leader in this space. It's cheap and it works and adds a lot of value. You got to love it, right? It's just when the flip side is, you know, one of the reasons Anthropic, I mean, got 20 billion, right? Is a really good Anthropic call at the API level is a buck. Okay. Here's my simplification. You can do so much on your$20 a month, cloud subscription or$200. But I can tell you on all the apps I've built, the complex stuff, it's a dollar. So that scales massively. If you're taking one to 5 % of a subset of that, there is in theory a ceiling if you don't expand it. What I like is if you get market leadership in this kind of thing and you're not that expensive, there's no reason to switch.

47:06It's not worth switching for a tiny amount more basis points. It ain't worth it, right? And just for a listener's context, What the company does is, if you're building an application, this product, OpenRouter, acts as an interface between you, the builder of whatever software product you're building, and 50 to 60 different LLMs such that it can dynamically pick in real time which LLM is the right one for whichever call you're making. And it charges around 5%, 5.5 % of the money you pay the ultimate model provider. So if you're building this app and you're spending$100 ,000 a year on LLM calls, using these guys, you pay 5 % to them.

47:47But in return, instead of having to access each LLM separately, you get access to them all in one kind of API call. And so it kind of just totally makes sense. To me, it's kind of in that Stripe Twilio business model of an interface. Twilio is an interface between an app builder and all the complexities of telco. And these guys are an interface between an app builder and all the complexities of LLMs. And Twilio's gross margins, because they account of revenue growth, were 30%, 40 % plus. They were pretty darn good. Whereas in this case, they're only booking the net revenue at 5%. So maybe there is actually room for margin expansion there over time.

48:24So it's an interesting business. Kind of the world needs it. The other thing that's interesting about it, which gets to the wider question, is a number of folks have backed into figuring out what are the most common models. And you see a lot of the Chinese open source models now. So I always think I'd love to spend time thinking about it. I just haven't. They must have, Open Router must have a pretty good sense of what things do you need state of the art models and what things can you do easily on, you know, much cheaper open source models. Well, they can even turn it on for you. That's one of the reasons I think Open Router is so clever.

48:53If you want, they will just decide which model to use for a workflow. You don't even have to figure it out. Yeah. At some point, the people spending$30 billion a year on Anthropic, corporate IT is going to wake up and say, do I have to spend all this money on Anthropic or can I pass some of these calls to a cheaper model? Just given the size of spend that OpenAI and Anthropic are getting, there is at least the opportunity for corporate purchasing to think about, is any of this doable on a cheaper model? I'm a super fan, right? Like great software, super easy to deploy everything. It's like 11 labs, just like super easy to use, super easy to deploy.

49:28I give it a 10 out of 10. What I've learned from another investment we can chat about is, okay, so they're at 50 million ARR, they said. And the nominal take rate's 5%, but some folks probably pay less, right? And in some cases, you don't have to pay anything. So they might be needing to manage 2 billion in inference just to get to 50 million in revenue. So easy to see how you get to a couple hundred million in revenue, right? In today's world, what I worry about companies like OpenRouter is how do you get to a billion in revenue, right? And do you just wave your hands and say, these are great founders?

49:59They're at the heart of AI. do you say, oh my God, like even if Anthropik keeps growing and some folks won't use it because they'll get big enough, they'll do their own things. How the hell does this get 20X bigger when it's already managing 2 billion of inference? I'm going to give you the argument, which I'm not sure I believe, but look, if you just look at the open AI and Anthropik projections, which cumulatively add up to in 2029 on the CO2 estimates,$400,$500 billion plus. Let's call it$500 billion in API across both companies, right? As you take out chat GPT consumer business, maybe three, 400 billion of enterprise API calls across open AI and Entropic.

50:36I don't know if 10 or 20 % of that went open source, that's 40 to 80 billion and 40 billion to 5 % is pleasing to 2 billion. And now that's 100 % of the market. So you're right. 100 % of the market. That's fair. That's fair. You got to get 100%. Maybe there's 40 to 80 billion of kind of value going to open source LLMs and maybe you can get 5 % of that. Now, the other question to your point, Jason, is right now, amazingly, all these open source models are primarily Chinese open source models. And if Meta reintroduces an up-to-date open source model or someone like Reflection Ships one, there'll be a US equivalent.

51:13But right now, ironically, the Chinese Communist Party is effectively subsidizing the American small independent software vendor by providing cheap open source models, God bless them. Because if you look at the kind of winner list on Open Router, it's all Quen, Kimmy, and all the other open source products. What I think about Open Router just for investing, right, where this news is, I do really think about small takes of large TAMs is intellectually confusing. So Harry and I are both investors in a company called Revenue Cat. I was the first investor, and they have about 50 % market share in managing mobile subscriptions.

51:48If you have a mobile app that is paid, 50 % chance they have Revenue Cat deployed, okay? It is, it's competitive and their net take rate is like half a percent up to 1%, right? Even with all of that, they're only so much bigger than OpenRouter. Now they grew 40 % last month because of AI, like it's great, but like, and I love the company. I love it. They have a clear path to a billion in revenue now, but my learning from that is sometimes it's hard to do the math intuitively. If your product is very cheap in a large-ish market, but you don't get all of it, OpenRouter could be one of the greatest 200 million ARR companies, right?

52:25It's just a risk that I think about more than I used to. That's fair, but I will give you the counterpoint, which is the two best financial businesses on the planet are Visa and MasterCard. I sit literally 30 yards away from the Visa headquarters. They don't even get two and a half percent because most of that goes to the banks. They get, you know, 15, 20 bips, but on every dollar every human spends on the planet, It turns out to be a remarkable thing. No, no, I'm with you. I guess my personal intellectual limitation is that the notional BIPs map doesn't always translate to the real world BIPs map, right?

52:56That's the thing. The Revolut and Visa sound great, but niche, sometimes products that seem mass scale are more niche in practice. And if your product is$200 ,000 a year or$100 ,000 a year, who cares, right? You'll figure it out later. If your product is dirt cheap, you really, really got to like own everything. Own everything when it's dirt cheap. And I think we're all making a lot of AI mistakes here. And our investments are being flattered by high ACVs right now. Like the ones that have high ACVs all seem to be doing great because they're 50 to 100K per check. Getting to where 11 Labs got from the early days is much harder than a lot of Lagoras and Harveys are.

53:35Just because the large ACV flatters the inputs and the outputs to achieve that scale. Agreed. Not sure I could trace it back to open router, but I agree. Well, I'm just nervous. I'm personally as an investor, and this may be one of my many flaws, it's a long list. I'm nervous about exciting AI investors that have very low ACVs right now. I think their actual TAMs may end up being smaller than I look, despite the epic numbers when we started this conversation, despite Anthropa getting to 30 billion in five years, the little tiny crumbs we get out of this 30 billion may not make a whole loaf of bread sometimes.

54:09Like a bad analogy, but some truth to that. But that's just, so rather than shoot from the hip when it's a 7 million post back in the old days, if I've got to shoot from the hip at 100 million post in the pre-seed, maybe I got to really believe that that small ACV will scale up.

54:26Harry Stebbings:Do you think OpenR2 will be a$10 billion company? It's always a weird question because if I knew for certain I'd go do the deal and not sit here and talk to you, right? Because that's what they're paying me to do. Look, I think we're in a world right now where everyone is just doing the build out as quickly as possible. What that means is everyone on that journey can attract some capital and get some revenue. Because if you're solving a problem that's a rate-limiting step in terms of getting the AR build-out done, you can get revenue, you can grow quickly. And I think OpenRoute is an example of that.

54:53And you can put on your intellectual MBA hat and say, in the end, when things settle out, maybe a lot of these businesses get commoditized. And you can worry about that. And a certain amount of that worry is legitimate. And there's a whole bunch of markets. There's the labeling marketplace. There's the inference marketplace. There's products like this open router where you say, oh, when things settle down and people starting getting more efficient, then all these businesses will get scrunched a little bit. And that's true intellectually. But my advice, and I say it internally, is please don't overthink it.

55:24Because while that is true, at the same time, in the short term, this explosive lift in demand gives you a chance to be relevant. And it's your job to add products on top of that, such that when the great crunch does come, and it will come in a couple of years, you've just delivered enough value. Do I think OpenRouter will get to$10 billion in value on just what they do today? No. And if they just keep doing what they're doing today, no more than the inference guys, no more than the labeling guys, when things slow down, all these businesses will get crunched when people start optimizing. But you have a chance to parlay.

55:55You're building relationships with a whole bunch of apps developers in OpenRouter's case. Your job is to find the add-on products on top of this that over the next two or three years, you know, give you value or do the adjacent acquisitions that give you value. Maybe you start doing inference. Maybe you start hosting stuff on top that allows you to extract more value from those customers such that when the thing slows down, you're the survivor. Yeah. I think that's the challenge with these investments. I mean, no wonder if I'm running it, it's a dream. I'm 50 people, right? At 50 million in revenue at the center of this.

56:23Like if I was a founder, I'd be, there's a dream job. But I think by learning is Rory's point, the reality is you have to go truly multi-product earlier in this type of situation. Not just a little feature, right? Not just a little enhancement, but you literally probably have to build five distinct products to get to that billion. You know, not all founders are actually up for that. They say they are, but you need a very distinctive founder to run the AI rippling playbook and say, Hey, I want to break something up in some ways that's crushing it with 50 people. If they have it, I mean, again, my dream job and say, we're going to do five of these and we're not going to wait two years.

56:57We're not going to like just focus, focus, focus, focus. And I think if they're up for it, I would hold my stock, Harry. You probably have no choice. If you see this sort of Stuart Butterfield-esque reluctance to go multi-product, which was very rational at that time and place, then I would be less excited to hold stock. Yeah. You've got to run these businesses right now. You're in this insane period of time when money is just raining down on everyone and all the time you should be saying to yourself, at some point, the music will stop and two thirds of the people will have to go, how do I make sure I'm the one third that make it?

57:32And that's what the smart inference providers are doing. That's what the smart up and down the stack should be doing. How do I lock in? Because look, the truth, even when the crunch comes, the foundation model companies make it because they're on top of the heap. They have the high intellectual property asset. They're going to make it. Everyone else one level down has got to be saying to themselves, when people sober up, they're going to say, oh my God, this is a commodity. There's a bunch of But Jason says, how do I make sure I win in that world?

57:55Harry Stebbings:Speaking of will this become a commodity in a future world? We've seen the need and the explosion of databases. We've seen some people like your lovables and your replets incorporate them, build it themselves. Some people outsource to Superbase. Superbase at$10 billion. Jason, you're the man for this. The man who's used more replet instances than anyone else. Is Superbase at$10 billion a good buy? I think I like it. I mean, I do think it's an interesting buy. First of all, you know, huge credit to the team. I mean, this is one I call an AI tailwind to the maximum. Superbase founded, I think, in 2020, right?

58:31This is pre-AI. And they're like, oh, well, we'll do another fork of Postgres, which is open source and free. And we'll make it easier to use and easier to deploy. I mean, who the hell? I mean, I know it was a hot YC company, which kind of, you know, a lot of folks want to say it's the unhot ones that take off. But, you know, sometimes it is the hot ones. But I don't know that that certainly wouldn't have been obvious to me in 2020 that we needed another forked version of an open source database process. I mean, everyone was having issues with Postgres at the low end and the high end. Folks were having to shard it and it got complicated for big and it was reasonably difficult to deploy at the low end.

59:05But then that just worked with agents like they built a product that could basically self deploy a Postgres database. And it's what every agentic product needed. Right. They needed to spool up a database without humans and they leaned the hell into it. Right. They didn't get Replit. Replit went with Neon, which Databricks bought, but everyone else standardized on Supabase, right? They supported them. And then they let everyone lovable and emergent and all these other ones white label it a couple months ago. And now I don't have the exact numbers, but I know more databases are being created by agents and humans.

59:35So that is the trend you're betting on. Database is a fundamental category of software. It always has been, right? Now the number of databases we're creating is an order of magnitude more than it's been 12 months ago. So why the hell wouldn't you want to bet on the leader in that trend, right? Every app needs a database. Like every, and what's interesting now, I'm not sure if this is true of Lovable vZero, but Replit changed it a little while ago where every single app has a database, whether you use it or not. They found that enough of them are using databases, no matter what they build, right?

1:00:03That it's not worth adding a database later. So whether you even realize you have a database, all the millions and millions and millions of Vibe Coded apps have a database in the background. So, and with Supabase, they get to monetize them all. Like they're charging these guys for every single database. So I do like this one. This is one where the agents are so far ahead of humans now. There are categories where the agents are doing like the node and everyone's talking about what the world will be like in four years, right? Database is a world where already the agents are creating more databases than humans.

1:00:33We've already crossed that line. And so why wouldn't you want to invest in the leader? And I think it is literally an excellent example of two things we've talked about. One is that kind of thing I just mentioned, which is you start with something and you have to parlay. And then the other thing is, Jason, that you've talked about a lot is being a pre-AI company that brilliantly finds your way to co-attach. These guys co-attached to the trend, as you say, did the deals with many of the vibe coding things. And now their job in the next two years is before the music stops, be perceived just as MongoDB was the right database for the kind of SaaS era and for cloud.

1:01:09You want to be the right database for vibe coding and agent apps in 2026, 27 or 28. And at some point, when things slow down enough for the Loverols and the Replets and the other folks to say, hey, maybe we should just back in and do this ourselves. You want a super base being a position to say, no, every developer on the planet uses us. Every agent framework supports us. Why would you do this? Your users will rebel. But the playbook is super clear. It is just like the Sass and Clouds playbook, but on super fast speed. You know, this is all going to happen in two or three years. and make sure that before things slow down, you are a lot more than you are today in the eyes of your users.

1:01:48Think about how hard it classically has been to deploy a database. I mean, Oracle is still massive, right? I mean, I've never deployed Oracle, but I can only imagine how difficult it is to deploy Oracle database, right? Mongo is work. And that was disruptive. These things are work. Mongo has a vector database product and I deployed it for one of our apps. and it only took a few hours, but it took head scratching and headaches and not everyone could do it. Superbase you could do in five seconds. I mean, it's so disruptive. All these databases start being easier than the prior alternative. I mean, I don't, shocker or how I don't remember when relational started because it was in the seventies, but I remember even in the early nineties.

1:02:29Arthur Rock used to talk about it though. I remember the relational database days. And then I, but I do remember when MongoDB started And it was just the drop dead simple cloud-based alternative to a lot of these, to some of the other alternatives at the time. Not so much directly competitive relational databases, but for some of the newer use cases. And then they get more context. For a DBA, for someone that could spend a month configuring it and getting it going is disruptive, right? Yeah, because it didn't take a month. It took a few hours. It was easy. It was JSON. It was whatever. And you're right, now it's five minutes.

1:02:59Or it actually, it's invisible. You don't even know. Here's what's interesting. You don't even know you have a database until you need it. It's lurking in the background now. You build an app without a developer, and you didn't even know you needed a database because you're not a developer. And it's already there and configured and has all your data. It's pretty cool. That's true. But the odd point I was trying to make is the tragedy is that's great. But over the medium term, a white label business to five or six vibe coders won't be enough. So they're going to have to expand beyond that. And ironically, over the next five years, that will mean adding complexity, adding functionality.

1:03:30And in 10 years time, someone, and it won't be me at that point, will be saying, oh my God, those legacy Superbase products, they're almost as bad as MongoDB and there'll be a new alternative at that point. But that's just the movie. And this is Superbase's time to crank. Good for them. I think it's also a reminder just that we've given up on worrying too much about intellectual durability in these investments, right? It's a winner. The growth is exciting. The NPS is high. The fact that everyone else may build their own Postgres databases or other things may change. We don't even care anymore.

1:04:03I mean, I'd say differently, by the way, just to be clear. It's not that we don't care. It's that you just don't have the luxury. There are very few things where you can say, oh, this is something that is highly different. It has that level of defensibility. Arguably, LLMs themselves did because there was only a small number of people who knew how to make the magic. But you're right. Most of the time right now, I mean, I can regret the fact that there's not a lot of barriers to entry, or I can just accept that that's just a reality that exists today. and the barrier to entry is, as Brian from Andreessen said, is speed.

1:04:34And if you execute well, you create these barriers to entry over time. But you're right, Jason. Right now, most of the deals you look at is in the short term, the barriers to entry are low. And what that means is if you stumble, you lose, right? Because if there's five of you going out of the gates, one of them won't stumble and they'll win. And over time, by winning, they'll be able to create. I believe downstream, there will be barriers and moats created, second order moats. But out of the gate, you're exactly right. It's a race. And I don't know who the super base competitor was, but they didn't get the two or three key white label deals.

1:05:04And there you are. I think also, this is why I view a lot of VCs today as enablers. It really bothers me because Rory's point is accurate. If you stumble today, you may lose forever, right? And the classic VC thing is guys keep pushing. You've got time, keep at it. You know, a bad quarter or two falling behind the competition. Like everyone, it's not that I don't think you should be supportive of your portfolio companies, of course you have to be, right? And what choice do you have? I just see too many VCs running a pre-AI enabler playbook where when folks do fall behind a tick or two, you see kumbaya activity instead of code red activity.

1:05:42For example, I'm an investor in a company that's crossed nine figures in revenue, but it is hitting massive AI competition and issues. Okay. It happens. And they have a new investor on the board that doesn't really know the space that well and doesn't really want to learn. And frankly, isn't as close to some of the AI changes as we are. And every email and conversation is great job, guys. Keep at it. You're like, you know, don't you understand the disruption in this space? Don't you understand the issues? And he's become an enabler and an inadvertent enabler by being a cheerleader, right? I just worry about it because so many folks are still hiding.

1:06:13And I don't think having enablers around the table, even if it feels good on a given month is helpful today. I think enablers can enable a death spiral that you feel good about as you approach the event horizon and your startup implodes. I was thinking about what you said, and frankly, just checking myself, have I at times, I mean, because one man's description of enabler can be another person's description of being supportive, right? And at times when things are tough, you want to be supportive. So I was thinking actually, Jason, because I actually think it's a very important comment. What makes the difference is this.

1:06:44You have to be very clear-eyed with your companies on where the competition is and understand exactly what the old guys are doing and therefore how well and are far behind you stack up, right? And that takes it away from enabling, it's kind of a judgmental term, because also being a jerk is also a judgmental term, right? I think what you're saying that is correct is you're not a useful board member unless A, you understand what the company does and how it compares to the direct competitors, ideally with hands-on experience of the products. And then B, you find a way without being a jerk to keep the company honest about where they are relative to the competition.

1:07:21You know, what are they seeing? What do our competitors' products do? What do the adjacent products do? How do we think about that? Not in a kind of defeatist kind of way, but, you know, how do you distinguish between, oh, these guys leapfrogged us for a month and we need to get our act together versus we are a year, year and a half behind in a market. We may never catch up. We should sell while we can. And I think that's kind of threading the needle between you don't want to be an enabler, but you don't want to be a debut. You want to be supportive. It's kind of a slogan we have internally. it's not so much founder friendly, it's founder honest.

1:07:52But also, I think actually, as I think about it, it has to be founder fact-based. The number one thing, and I'm even thinking on a couple of my deals where I have to do some work this week, do you really understand where your two direct competitors are and the strengths and weaknesses of your product and what the last three win-losses say about how you're really doing in the field? Because if you don't, you're just cosplaying a board member. And are you being honest about what has to change? Yeah, agreed.

1:08:14Harry Stebbings:Champs, there are many other topics that we can discuss. I often get chastised for my selection. So I'm going to... No, I won't make the selection. You make the selection, Harry. I'm too tired to decide. Okay. I think we will have to, at some point, address McCaw. I think someone in a comment put like, oh, Harry, you often shill them. And so you can't not talk about them when there's trouble. I don't like to do that. So for context, McCaw, obviously a data provider to some of the largest companies in the world, most notably Meta, who they have since reportedly lost part or all of them being a customer of their data.

1:08:50Harry Stebbings:It was also unfortunately at the same time that Forbes released their billionaires list of young billionaires, where the founders of McCall are on that list. Very unfortunate timing there for them. Jason, I'm sure you've got an opinion on this in terms of, bluntly, the McCall hack and then losing Facebook as a customer. Well, just two thoughts. One, not that long ago, I was with part of the management team of one of the leading hyperscalers or what he said, and I was with him when there was a minor security issue with the third-party vendor, relatively minor, not like this, not like all of the private data of all of McCur being exposed.

1:09:25What he said was there's not much higher on our list with partners. And when this happens, there's not much higher. Like we have no tolerance. It's not worth it. There is no tolerance. And in this case, they got a pass because it was a relatively minor issue with the vendor that was honest and they fixed it and it did not lead to actually any internal data issues. It was just an external issue, but it was crystal clear that it is not worth it for us. So that is troubling. And the other thing, and I'm not an expert in the data labeling or marker space. What I don't know is how fungible the products are at some level.

1:09:54The more fungible it is, right? The more freedom you have to route that to what's left at scale or whatever the guys at Handshake want to do or whatever they want to do. If it's not fungible, you can bang your chest, but you're still stuck using them. But that moment like that -

1:10:10Harry Stebbings:I can tell you the number one criticism of the space is that all the largest customers are customers of all of them. And so they are generally heavily fungible. So I would be very worried because this comment was chilling from this executive. It's like, this is the highest thing on our list with third-party partners is security. We're exposing our applications to folks we'd rather not expose it to because of our ecosystem. We'd rather have no partners because there's so much confidential stuff flowing through what we do at all levels. So we have no, we just have no tolerance for anything that's material.

1:10:39And I just don't see how you would come back from this if you've crossed, there's just no, unless you have to, I think it's, it's potentially death. And the reason I bring it up is in the old days, like through 2023 in our lifetimes, you always got to pass once as a vendor, even for the worst breaches, the worst issues, unless your, your app was down for weeks, You'd get called into the CISO's office. You'd get yelled at. It was brutal. But you always got at least one because it was just the reality of working with emerging vendors. But man, I just, I don't know that you get a second one here.

1:11:12I just don't know. I mean, I think a lot of the margin depends on how you handle it. I don't know at this point, do we have any sense of, you know, was it a state actor? Was it a malicious employee? Was it just a stupid configuration breach? So I don't have any sense of the forensic here.

1:11:26Harry Stebbings:It was an organization. I think they're called Latipus, which basically hold it for ransom and you have to pay for it back. It's a commercial activity. Gotcha. It's a commercial. Decent, honest criminals. Right. Got it. They're very successful. I asked the team if we could invest in them. It seems this is one of many very successful. Actually, you'll find, Harry, they don't have to. No, they're very good. They're very good, right? Yeah, they don't need much outside capital. Right. That, in one sense, sucks. On the other hand, the good news is at least they're going to be rational and you can buy them off.

1:11:57Is it fatal? Hopefully not. I think in these things, you generally pay a pretty significant penalty. How you handle it is a key part of it, where you're straightforward and honest with your suppliers and with your customers and let them know what's happened. Was it your fault entirely? Were you crassly stupid? Was it bad luck? Was it, you know, where in that continuum it was? You know, so you can manage through it. I think it is hard when you have four or five vendors of roughly the same thing. On the other hand, I don't mean to cynically, but there also appears to be right now an insatiable demand for labeling data.

1:12:30So it may be, I think, because I think the meta statement didn't say they've, I said they've paused, which makes sense. Everyone's going to pause. And my guess, my guess is the likely outcome is you lose a fair amount of revenue, you lose a fair amount of time. You're going to have to spend a ton of money to bolster your defenses. But if you do the right thing, you'll be able to earn your way back slowly and over time. That's the likely outcome here, hopefully not fatal, but my guess is that. I do think, and I think Sam Altman maybe to tie it back to the start, I think Sam Altman said something this week that massive cybersecurity attacks will become from AI, right, are coming.

1:13:03I genuinely think that most B2B companies are going to get hit worse than Merkur. This light LLM was one of the weaknesses that they had. Like tons of B2B folks have. How state-of-the-art and strong are their security teams? They're not. They're relying on a hodgepodge of open source and other products that are barely monitored in many cases. They're busy. They're under pressure for profitability. They're managing their teams and maybe Mercury. I mean, it's probably a small company. They probably don't have a huge team. But my point is, it's going to be really tough on a lot of startups and scale-ups because they just don't have the teams to deal with the levels of threats that are coming from AI.

1:13:38This is a start. This is, it's going to get worse, this light elements, and it's going to happen to everybody. And as soon as you figure out you can hold all these B2B companies and others hostage, they and their network of thousands of affiliates are going to do it. I don't know that the average pretty good to mediocre to actually don't even really have a security team. how the hell are they going to keep up when I don't even have a team? Remember when Gainsight was offline for a month, Drift permanently was destroyed. And this was pre all this craziness. Like there was an old saying my CTO told me back in the day, the only reason we've been hacked is no one cares about us.

1:14:09And that has resonated in my ears for years. With AI, you can hack anybody you want. I think Jason, you're exactly right. Because I think in general, you know, new stuff gets deployed. People should think about security up front. They tend not to. They deploy, bad stuff happens, and then they panic and think about security. That's the way it's always been in every cycle. And I think we're just about to hit that stage of it now. And I think there's kind of two separate vectors. First of all, the AI apps themselves have security needs that are different than pre-AI apps. You know, get the whole prompt injection kind of issues.

1:14:44But I think the bigger issue is Jason's point, which is using AI, the bad guys can just automate attacks, automate phishing, automate duplication of voice, all that kind of stuff. I think Entropic referenced this, and it's the Red Army quote that I often use, that quantity has a quality all its own. And with AI, you can make quantity of fake people. You can make quantity of attacks. You can do this. So I think it's not so much going to be you getting attacked because of your AI apps, it's much more going to be AI apps are going to attack you. A lot of the AI doomerism I kind of discard, but this is a legitimate and big issue, I think, right?

1:15:20The ability of AI to escalate the velocity and ferocity of attacks. So, which is why, by the way, I think the response of security stocks going down to the anthropic announcement was absurd. I think anyone who's cutting back on the security budget in 2026 is missing the point. The second statement is really, Captain, and obvious, but it's worth saying, these stuff get more important every year because more and more of our stuff's online. The percentage of things that we do that are done online just continues to escalate. It's like stupid stuff. It's like all the stuff in your house, all the stuff in your financial life.

1:15:56There's nothing that matters that isn't done online at this point, which means that attacks there can attack more and more of what counts. So I think you should be seeing a real acceleration of investment in a different class of security to cope with a different class of threat. Because look, it's a fatal error if you don't. There's only really two things that can destroy one of these companies. The app goes down for a long period of time or the app gets hacked grievously. Those are the two kind of red card fatal errors. And that's where you're going to have to put the money. There's a wave of the second tier that's coming.

1:16:27It's just massive, right? Even to tie it, I know we got to wrap it, even Superbase, which I'm a super fan of, right? A lot of times folks turn off the default security, right? And we've seen these issues. And in the old days, no one would find it because they didn't care about our little Rory and Harry and Jason's app. Now AI will find it in seconds, right, on the internet. And it will use every possible way to penetrate that, to steal the data, to create malicious acts. Everything that is possible on the face of the earth that can be delivered with software. Maybe there's nothing we can do, but I think we've all underinvested in the attacks to come.

1:16:59It used to be hacker farms of people in fill in the blanks, the Philippines, Russia. Now it's going to be hacker farms of AI agents cranking 24-7. It's going to be miserable.

1:17:09Harry Stebbings:Guys, you can choose one more. Jason, Rory doesn't feel like choosing, so he's delegated it to you. Absolutely. There's the GLP-1, two company. Again, for people who use this as their news on tech, a two-person company who uses AI intelligently, scaled to$1.8 billion in revenue selling GLP-1s. Interesting. A lot to unpack there. Wix buying back 31.6 % of its shares, given its low stock price. Oracle getting rid of 20 ,000 to 30 ,000 employees via a 6 a.m. email. Jason, any that stand out, baby? Obviously, at some level, people are so excited about the one or two person billion dollar company. Facts were glossed over, points were missed and all that, right?

1:17:52Oversimplified. And they use deep fakes. They made representations about doctors. They shouldn't. They did all the wrong things. They did all the crappy affiliate marketing stuff. people have been doing for 20 years and they did it at scale with AI and built a big business on it. Right. But what is interesting about it is if you let's not over glamorize this company that maybe is at the edge of fraud in many ways and its marketing tactics. The fact that they could use AI to scale this with two people and maybe some consultants and stuff on the side, we are seeing the future. And AI is completely changing marketing.

1:18:23Marketing has not gone away. To Rory's point, Dario and Sam are everywhere because marketing matters as much now as ever. This is a different version of how marketing is changing. And if you don't adapt, right, maybe buying TBM is a bad idea, but you got to adapt to the new world of marketing when, and, and, you know, there's a number of startups that have tried to automate all this marketing at scale with AI. Most of them are terrible, right? They don't quite work. They create boring assets. They look like an awful art. They look, they look kind of like make they're that bad. A lot of the assets, they don't have context.

1:18:50They use too much stock art, but no reason in a year, everyone shouldn't have the AI power to blanket the entire internet with the best hyper-personalized marketing in the world. Hopefully in a year, we will all have the power to do some of what Medvi have done. And I think if we step back, it's a chance to see 12 months into the future, that when all of us will have more of this power. In other words, just because they're illegally selling weight loss reduction drugs that are off-label to people without the appropriate FDA safeguards doesn't mean they're not great marketers. I just, I talked to so many CMOs who are still struggling to run the 2023 playbook and falling further and further behind.

1:19:31You have to adapt and crappy automation doesn't work anymore, right? But these guys that were able to do that at mass scale and target everybody, this is the future that we all should know. And I guess the code is marketing appears to be more powerful than ever in the age of AI and humans have to control it. But if you don't leverage how marketing is being done in the future, you're going to be stuck in the past. You're going to, and you're going to be killed. You're going to be killed by folks running the old playbook. So, but yes, I mean, anyone that achieves some sort of scale through marketing as dodgy as some of these consumer guys are, there's something to learn, right?

1:20:08Whether it's multivariant testing, whether it's AI, whether it's personalization at scale, it's a waste as a marketer if you don't learn from it, right? And this is what I think is going to happen. We are just like it is inexcusable to send a dated sales opt outreach cadence from 2021 today, the way we're doing advertising and marketing will seem incredibly dated in two years. Like only the creakiest companies will be doing marketing and advertising the way they do it today in two years. It makes no sense. I should be getting the GLP one ad specifically targeted to you. Jason, you don't technically need it, but I noticed your jawline on 20 VC could be a little bit tighter.

1:20:42What if we just microdosed you today? And so you could get some of that t-shirt look that Harry has. Like I'd click on that in 60 seconds, two seconds. I shouldn't get that versus stock art of some grandpa running with his golden retriever on a beach, right? So I'm both, I both think this is fraud and, and, and over headlined and, and the future we're watching the future. Yeah. I think you're right. I mean, I would argue that a huge percentage of it is on the fraud side, but none of the, not on the fraud side, but the hairy edge of regulation side. But I actually agree upon reflection, what you're saying is correct.

1:21:14It's funny. It's a little like the last comment. What we're basically saying is the most entrepreneurial people on the planet out there right now are the hackers and the kind of dodgy marketers that are on the front line of pushing things. But the tactics that they're using and the way they're leveraging AI, everyone's going to be doing within a year or two, they're going to be left behind. I could go along with that. Yeah, there was an era in the old days when the best affiliate marketers knew things nobody else did and built billion dollar companies out of it, right? Then there was an era which is now faded when some of the best companies used SEO in a way nobody had used it for millions of pages, right?

1:21:50You know, even things you could, you know, it's maybe it's only worth 10 billion. DigitalOcean was built entirely on SEO farm. So was Zapier and others. And there was a group of folks that knew how to do this and it worked. The next group of folks will know how to do this mass personalization at scale that really works to millions and millions of people. And they will win like the prior affiliate market. They will crush folks and the rest of the world just won't get it, they'll think it's dark arts and they need to become agentic marketing experts. But in the same way that great affiliate marketers largely originated from porn and Viagra.

1:22:21Harry Stebbings:Agreed. And here, I think probably some of the best next gen AI marketers will spawn from GLP ones or anything at the borderlines of next generation e-commerce in some ways. Yeah. But I think that Jason's insight, I agree with that, by the way. Yeah. I mean, there's no doubt that many of these new technologies are adopted by crime or by porn or dodgy marketers. But I think Jason's insights is a profound one, which is marketing tactics that are used by and look very kind of dark arty over the next 10 years tend to be adopted by everyone. And now, as you say, everyone in any corporate America is an SEO expert, whereas 20 years ago, it was a dark art.

1:22:59And I think you're right, Jason, in the next two or three years, if you're not adopting agentic marketing as a digital marketer, you're just going to be left way behind. And personalized marketing and leveraging the technology, I think, I mean, I knew it already intellectually, but actually, I will say you kind of crystallized it in my mind because I've lived the last year. I remember when SEO marketing was literally something that only the lead gen companies did. And there was two or three year period where they had, you know, hyper growth, $100 million businesses kicking off 30 % cash. And then those businesses went away as normies adopted the technology.

1:23:30And the correct play was to be the software provider, helping the normies tool up. And I think the same is true here in agentic marketing. So that's my stolen insight from you for the day, Jason, as I go look for those companies. Well, it's just interesting. All Medvi has to do to make 400 bucks is drive a GLP lead to someone that buys a product that just like tokens, the world can't consume enough of. And most of these folks are selling the exact same product and they're fungible, right? There's a moment in time where it's a great marketing arbitrage if you're excellent at this. You get three to 400 bucks for delivering a customer that already wants to buy your product, right?

1:24:02It's a moment. That's how the math, it kind of ties back to our open route or another conversation. If you could only make 10 bucks, this wouldn't be such an exciting business, but they're so profitable, but also so competitive. When you get 400 bucks for just delivering a customer from a Facebook ad, man, you want to run this.

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