20VC: Anthropic Unveils Mythos | SpaceX's Financials Leaked: Is it Worth $2TRN | Meta Debuts Muse Spark: Are They Back in the AI Race | Jason's Critique of Dario Amodei & How OpenAI Could Win the Enterprise Game

24:16Even if they don't build a base 44 lovable replet, they might just go halfway there and that might be enough. Like it might be, it might be something that developers use who just want to get something going, right? It might be something that, that more technical product teams use, which is like the number one highest ROI category for replet and lovable, these, these product teams. And they may only target the nerdier, the more technical part of the market. And that might be sufficient to again, maim, maim, maim the folks. It doesn't have to be a hundred percent. They don't have to replace shopping sites and stuff like that to have a material presence.

24:49So, but you know that Anton and Amjad and everyone thinks about this 26 hours a day. How do we stay ahead, right? How do we stay ahead? But Jason, those product teams could just use Figma Make, right? I mean, same thing, right? They can't use Make. Don't feed. Now you're just fucking poking the bear, Harry. Please leave the bear alone. Well, I'll tell you. What? We could talk about Make. And he's off. And he's off. no i just well let's stay on this topic it actually ties to if we talk about software stocks why i've become more pessimistic since the last show on them but oh no why have you become more pessimistic because we are kind of ahead in this agentic thing right at least in the real world i do talk to lots of teams lots of senior product teams lots of co's more than i ever done in the last 10 years combined okay every week multiple zooms multiple calls and there are exceptions for sure.

25:41But I would say here's why I'm pessimistic and why I think that the drawdown is accurate, even though I don't understand the public markets. I think almost everybody's building a 60 % solution and make as an example, you look and you look what Claude did or prompting did last November. And you've spent the last four to six months building something that's kind of similar to what, what these products were like five to six months ago, but you can't really afford the tokens. You're worried about the cost. You can't build all the features. You're trying to use cheap models to bring costs down. You're trying to limit it and you end up with make, but everyone has a make.

26:17Why is make so crappy? It's because you didn't care enough to spend the money or put the team and make is a good copy of Replit or Lovable from last summer. That's what happens. And by the time make catches up to Replit and Lovable today, and then, and then they decide it's too expensive. And then they decide they have to lock it down because they can't afford the agents and tokens. Now you're nine months behind and 12 months behind. And so what I mean is, and so it's not just that you're have a 60 % competitive solution. Here's the meta problem for the incumbents. You can't charge for a 60 % solution.

26:46Here's the problem. If you could charge 60 % of what Claude charges or Lagora charged or Repla charged, that'd be great. That's enough to charge 60%. But a 60 % product has to be free. It has to be included with your base charge. And while we're recording this, for example, today HubSpot's launching its next group of AI agents, right? And I'm excited to try them and I will be supportive. If they're only 60 % as good as the standalone solutions, HubSpot cannot really charge for these things. You can't get away with charging another 20, 40,$60 ,000 to a HubSpot customer. If your agent is fine, it works like in isolation.

27:21When I meet with internal product teams at large companies at scale, they are so effing proud of themselves. They show me their agent that they built. They show me their vibe coding thing. And if I didn't use any other products, I think they were great too. Or if this was 51 weeks ago, I would think these products were great. And they're so insular at their 2000 person company in their, in their, in their fancy campus, wherever they are with their mugs at bringing their mugs to the meetings because, because at their pace and they're failing, even as they're proud of themselves with their 60 % solution, because the market will not, they will use it.

27:54Like they'll use your, your, your 60 % solution, but they're not going to pay for it. You're stuck in this doom loop of, yes, I have an AI product as a public B2B company, but no one is willing to pay for it for a 60 % solution. They're not willing to pay 60%. And so we can say all these companies have moats and service now has the biggest moat of all. So it shouldn't be sold off and this and that. But if your agents are only 60 % as good, you're in a slow death spiral. And that's what I see. I can't think of maybe one or two exceptions of everyone at scale where their agents are as good as either a standalone company or just what I can do in Claude.

28:28Now, I can't maintain Claude. There's a whole bunch of issues. But if it's only 60 % as good, there's no way I'm going to pay this AE that just called me up 100 grand for it. I'm not going to do it. It's not good enough. Checking the box does not work with agents. The check the box feature cannot be monetized in the AI era. And this is why I think they're all properly sold down because none of them, they all have 60 % solutions. All of them. It's do or die, guys, because you can't sell these things. There's two counterexamples. We could argue over AgentForce. The base 44 Wix one may not save Wix, right?

28:59Which has repurchased like 30 or 40 % of its company. But at least they made a bet that got them beyond a 60 % solution, right? To nine figures in revenue. I think there's a lot to unpack on what's happening in SaaS. But I think I've internalized that Jason has articulated one of the big truths, which is unless you have a product that's good enough to charge for independently, you won't have revenue reacceleration of any meaningful scale. And if you don't have revenue reacceleration, then you're in a different valuation metric. And I'll talk about how to value mature companies with probably persistent users, but stock-based comp issues and no growth issues.

29:35And you can do that. And one of my rules is price clears all market. There's a price at which ServiceNow and Salesforce are all, quote unquote, worth something. So zoom out a million miles. Jason is right. If you can charge for your shit, you won't reaccelerate. And if you won't reaccelerate, you instantly move to another valuation bucket. I've listened to you a few times, and I think there's a clarity of simplicity there because you can talk a lot about, hey, we're doing this or the other, but the gut level test is can you charge for it? So I really think it's a big freaking comment because I've been wrestling with what do you use to sort out all these public SaaS companies and how do you think about it, right?

30:10And if you're in a very workflow-centric market for the last decade, you are definitionally in an agentic-centric market now. There might be other things that are more payments related or stuff like that where I think there's different dynamics. But if you were in a workflow-centric world for the last two decades, like Salesforce and service now, you are in an agentic world now. And if you're in an agentic world now, you better have exactly what Jason says, agents that are worth the money, which means they do the work. It's actually a very brilliant test. And I think if I'm literally looking at the horizontal software applications list for Morgan Stanley, and Jason, you're right.

30:41That was probably the first. If I'm thinking about how to value this bucket of$1.6 trillion, that is the first test. If yes, then you're on the increasing value scale and you can make it out. And it's still going to be hard. See Wix for details. If no, then you're in the how do you value a company with mid single to high single digits growth rate at best? Probably, I think, an example of Salesforce very sticky. And that's a separate valuation question, right? I think that at nine times, these things are trading now at eight to nine times cash flow. You might be hitting a point where just the money allows you to be a deep value play.

31:15The PEs of something like Salesforce, excluding stock-based comp, it's 11 or 12 times forward PE when the market's 20, right? This is unparalleled. So if you want to make yourself a value play, money can still be made, but it's a grim way to make money. The only way to still be a growth play is to pass the JSON test. So that's my zoom out comment here. You said it in financial terms a few weeks ago, which is reacceleration, but today you're actually articulating the predecessor test. If you have agentic workflows, then you will have reacceleration. Then you'll be in the JSON value bucket and you will have to do hard things that would make Darion Sam cry.

31:55If you're going to make this thing cash flow, it's going to involve SBC reduction. It's going to involve headcount reduction. It's going to involve a bunch of grim shit and you can probably still make money, but you're also top stopped. Nothing magical will ever happen to a high single digit growth rate tech companies kicking off cash. At best, you build a mini version of IBM, CA and the top five executives make money. It's not going to be fun. Jason, would you buy service now now? No, I wouldn't buy any of them. I'm looking for products that are more than a 60 % solution. The world's moving too fast.

32:24When we started this pod, I wasn't sure if I believed it or not. I was probably on the fence, but there was definitely a sense that the models might plateau, right? That there'd be parity, that they're all pretty good. They all basically could do a chatbot. It's clearly not the case today. If we tie it to the beginning of this conversation, the models have radically accelerated their power since December, right? Since Opus 4, five and more and we haven't used mythos or whatever it's going to be even more powerful and so i'm not optimistic that that anybody building to last year's spec slowly can compete it's too furious it's too furious and and i also think that the problem with moats is they keep your customers in but they don't lure any new ones in no one's excited to cross the moat except the folks that want to breach the castle walls this whole moat discussion i think is at the edge of moronic it's at the edge of more hooray you have a moat and your customer i signed a five-year You know, the average service now deals between three and five years.

33:19So what? That doesn't bring in anybody new. It doesn't bring in agentic revenue. It just means I'm trapped. Prisoners don't create growth other than at the margin, right? Other than with the margins. First of all, I love the mode analogy. That's great. And what you're basically saying is, Jason is not a buyer of any stock that's not a growth story. I've come to the conclusion you were right on that. And one of the reasons I enjoy doing this part is when we argue, sometimes I change my mind, right? Because I want to play out the value track just for another few minutes. I think the problem with the value play, I think at this price, I think you make money on Salesforce, but unless they get regrowth, you're going to make single digits returns and the overall limits and small cap is 11.

33:56So are you going to underperform? I actually think the other thing you're wrestling with in terms of these stocks is the following. The weird thing right now is the public markets don't have access to the growth side of software. So right now the trade is sell Sell SaaS, buy semis, which effectively means sell SaaS, buy AI, making AI. What you don't have yet in the public markets is AI native companies starting with Entropic and OpenAI. And therefore, mythos is a wonderful word because, in fact, you're comparing the practical values of owning Salesforce with the mythical values of owning this company that's growing 10x where you've never seen the actual financials.

34:37No one's seen Gap financials, but oh my God, it's amazing. and everyone's always going to want the myth. Pick your girlfriend, boyfriend analogy, the practical realities of the person you're with now versus the mythical example of something that could be. So my other aha is these stocks aren't going to trade in the same fashion until five or six public of these two of the foundation models and four or five other AI native companies are public. And then you can finally, as a public market investor, say, OK, now I can choose, do I want? Antropic growing at that one, probably 5x at 30 times revenues with huge losses and big stock-based comp.

35:13Otherwise, I want boring-ass Salesforce growing at 10 % with 30 % operating margins. And at that point, no stock-based comp loss. At least now you can have a choice. Then what will happen is then we'll find out how to evaluate those two things. And it's probably going to take six, 12 months after the IPOs. My point is until then, what you're dealing with is the mythical desire for the Asiat unrealized relationship. So these stocks are going to trade for shit until then, is my big aha, because no one's going to be able to value them. The only people that get out of that mess now are what Jason said.

35:44If you manage to claw your way to growth as a public SaaS company, then you do actually have some kind of chance of trading up. But if you've got to trade on fundamental value, you're always going to be chasing this kind of fear that the model companies can do everything you can. I don't think they can. I think when the model companies go public, people are going to realize, oh yeah, Salesforce in its current form is probably going to be there for the next couple of decades. It's worth its cash flow. But Jason is still right. Unless it gets its shit together and makes great agents, it's another IBM.

36:13And I don't even know the price of IBM because why would you? I believe someone's probably made money, but it's not my problem. You just become a boring ass old thing. So you're right, Jason. And Wix is interesting because they've done what you suggested, Jason. They're trying to get growth and they're getting growth. And as yet, you're right, they did a buyback and the stock's down 20 % since then. So my aha from that is - They spent 1.6 to buy back nearly 30 % as they bought it at$92 and the stock fell 23 % on the week. Whenever that happens, you got to say to yourself, that wasn't a good week.

36:42That's kind of like an inverse Bill Gurley. Instead of selling stock and then it goes up, you buy stock and then it goes down. That's like the IPO premium, but the other way. It's like, oh my God, that hurts even more. Let's talk about leaving money on the table. And I think the aha is, to Jason's point, they did one thing brilliantly, which is figure out they got to get product out the door. Maybe they should have sat on their capital for another six or 12 months, kept it in reserve to maybe buy another AI product or invest behind their AI product. I think the stocks are going to bounce around in value trap land for a long time.

37:12So we may be wrong if they really nail their growth on the new product and the kind of vibe coding product really accelerates. And you look back six months from now and growth's at 15 % and the stock's way up. You'll go, oh, yeah, that was fine. It was just a next day reaction thing. But the point is fix the JSON problem, which is core growth, before you try and do financial engineering. Financial engineering is useful, but it's not the solution. In the end, if all you can do is grow at 8%, you can screw with your balance sheet to your little heart's content. You're never going to matter a damn.

37:46As I said, you'll be IBM. They've screwed around with that stock forever, but nobody cares. You got to do the Jason thing first and put all your effort on that. It is tough that, you know, Salesforce did a big buyback too, right? I think they bought 25, they did 25 billion of debt to buy its stock. On a spreadsheet, this looks brilliant, right? We can support it. Yeah, we wish the debt was a little bit cheaper, right? But this is the simplest thing we can do. retire a significant amount of our shares, right? Drive up our EPS and keep going our agentic transition. But arguably, the market at best shrugged it off.

38:18At best, it already priced it before it happened. But in the short term, no benefit. All this financial engineering that looks great on a spreadsheet amounted to nothing in the short term, but$25 billion of debt. I totally agree, Jeff. And not only that, but I think one of the big advantages you have as a public company with cash flow positive is your financial flexibility. I wouldn't trade that for anything. Because look, one of the two things that happens, if the AI wave rolls on without a blip, and you don't have a growth story as a public sales company, then your sales is going to be cheap two years from now, there's no hurry to buy it.

38:50Second thing is, if there's a blip, then the guy in the market with a public currency and$25 billion in cold, hard cash, maybe you buy five big things in private land that allows you to compete. Maybe you buy not not a Tropic, but a second tier financial model. Maybe you buy one of the big apps companies. But if you can afford it. Salesforce is one of the few people that can make a big bet here. It's one of the few, right? But my point is this. That's why I would have kept my 25 billion in my back pocket. It's what you said. Fucking around short term with your stock and the number of shares. The only people who care about that don't matter.

39:22You got to win the war. And there's some chance that in the next two years, there's a blip in the market. All these AI companies are burning money. And if you're sitting there with$25 billion, you could have been saying, come to daddy. I got money. Let's talk about how I'm going to be an AI behemoth. And I think that would be a better use of your time. Come to daddy. I got money on that topic. Alex Wang, founder of Scale, obviously now at Facebook following the acquisition of Scale. Meta debuts Muse Spark, first model from Meta Super Intelligence Labs, which obviously Alex runs. I mean, the candid truth is I did okay.

39:56It was decent. My question to you on the back of this, it was decent, not quite as good as the others, but good enough. Is this Facebook back in the game? And is this an encouraging sign for Facebook where you feel more optimistic posted or less given it didn't blow anything out of the water? I think it's a win. If you're not in the game and then you get back in the game, that's a win. So if you're fifth, you're in the game. I mean, you read all the reviews. You know, I haven't got hands on the model. I don't have the level of sophistication to evaluate, but I did read a lot of the reviews of people who did.

40:31And you're right, the summary is good in some of the things that they were working on at Scale AI a year ago, not so good at some of the newer things that the advanced labs have been developing for the last 12 months, which totally makes sense. You took your knowledge from a year ago and you implemented it, right? But leaving aside the question of, does it make sense to be in this game at this level, leaving that aside, if you decide as Mr. Zuckerberg that you want to be in this game, then you achieved your mission. You spent$14 billion and you're back in the game. Now you got to move up the league table.

41:00But yeah, I felt this was a few because, you know, had you done all this and you did a Lama 4, which was disappointing where people are like, it's not even, you know, credible, then you'd have felt like a moron and you don't. So I think it was a win. Also worth noting that they're talking about being much more closed source, which is a significant thing because at some point someone's going to need the American version of open source and Lama was that. And now they're pivoting more to be more closed source, which has implications across the ecosystem and is a bit of a bummer. But yeah, no, I think it was like a few exhale.

41:32Not sure why we're playing this game, but if we're going to play it, I'm glad we're not losing anymore. Stepping back, though, to where we're going toward the back half of 2026. I don't think if I'm Zuck and I'm looking that Google owns its own models, which have become extremely competitive. Right. That's one of my big direct and adjacent competitors. If I want to be in the big leagues, maybe I just have to own this. Like I don't, I don't, I'm not Apple. I don't want to be stuck buying tokens from Anthropoc or OpenAI. I'm meta. I have one of the dominant consumer advertising and other platforms on the internet.

42:03I have the dominant social networks and I sure better own this. It turns out it is not a commodity and maybe it's way too much money down the drain, but this is, this is core to our existential existence, just like it is for Google. And I don't, I don't want to wither. That may not have been where this all started, right? But the goal of Facebook is not to provide API tokens like Anthropic. This is not the direct goal, right? Or it certainly isn't to encourage the open source community to rise up and use meta products. This is to stay in the top echelon of consumer software companies. And it's worth$14 billion.

42:36It's worth$14 billion, right? If you just don't want to become Apple and depend on everyone else's models, you just don't want to be that, right? You know, if you can just do better than the Kimi open source, et cetera, stuff Cursor's doing, it might be worth it just for that. Just to be in that zone between what I can just rework purely from open source into what I can buy from Anthropic, if I'm close enough and this is my core, it might be worth owning. Ruthless, this is as competitive a company as exists on planet Earth, right? This might be the most competitive company on planet Earth is meta, right?

43:05Ruthless. Yeah. I mean, if you look at the big play scoreboard for that, it's like bet a billion on Instagram, win a hundred billion plus, maybe 400 billion. Bet 70 billion on meta and VRA, They are lose it all. Bet$14 billion on this and clearly have a win. And somewhere in the middle between those two outcomes. And you feel good. I agree. The other thing just, and again, it's not totally my expertise, but when I look back when we started this show, a lot of folks thought AI would kill Google search and maim Facebook. That Facebook was dying as a platform. And that while Google search was, of course, dead, chat GPT was going to destroy Google, right?

43:40Fast forward today, these are record growth businesses now. Google search, we started the show talking about AI overviews and other things. Google search is a better business than it has ever been, as is Facebook and Instagram. So it makes sense to triple down there. This is not a time to retreat for either of them. It is not a time to retreat. It is a time to get that lance out, go straight into battle, just knock those other guys off. Meta surpassed Google. I'm sure you both saw it as the largest ads engine in the world. I think Meta now at$243 billion. AI didn't kill it yet. I hope that stock price comes back.

44:09Speaking of ads engine, OpenAI projects$2.5 billion in ad revenue for 2026. The ads pilot was 100 million annualized in just six weeks. There were 600 advertisers. We touched on it before, but they're guiding to 11 billion in 2027, 25 billion in 28, 53 billion in 29. Is ads the great comeback for OpenAI in H2 2026? Is this the shining light that we should be directed towards? It's both obvious and inevitable that a consumer product like OpenAI, ChatGPT, is going to have to be ad-supported. So yes, they're making the moves, exactly the moves you'd expect. And the little chatter of, oh my God, that's a bad idea, or it's not doing enough, that we saw from before a few weeks ago, it's all silly.

44:58This is just going to happen. Three people have done it at super scale already. Google has done it in 2004 on. Meta themselves have done it in 2000, probably seven and eight on in 2012 in mobile. And then we always forget Amazon, I think, got to about 100 billion plus on ad revenue in the last, you know, kind of half a decade or probably seven or eight years at this point. Right. So the movie is clear. Right. And they're talking about getting to 100 billion dollars in four years. It all makes sense. The funny thing is, and I looked at all that and I thought, yep, that's funny. I'm mentally giving them 100 percent credit for getting that.

45:32OpenAI is typically not unaggressive in its projections. So let's assume this progression is aggressive. That's going to sound really awful, and I hate even saying it. Oh, my God,$100 billion is amazing, but it's not enough relative to the market cap. So the big aha for me is you can build a$100 billion ad business in ChatGPT, which makes sense. And in the context of a total trillion dollars of total ads with Meta already having 300 of that, Google already having 200 of that, Amazon already having 100 of that, and TV's got to eat too, you know, right? That's probably a realistic high-end estimate.

46:04What it means is you need another$100 billion plus from your enterprise business. That was the big aha for me is consumer alone ain't going to be enough to feed this beast because your competitor who's all in on enterprise is already at 30. I almost feel like a jerk saying it's like, hey, congratulations on your$100 billion ad business. Probably one of the three or four best ad businesses ever, one of the best launches ever. But it may be that corporations want to buy more intelligence than consumers do. and that 100 billion consumer ads won't support your burn. You need more. The 100 billion is what?

46:3515 % of ad spend, right? Yeah, 10 at the trillion worldwide. 10 something, 15. I like this as a goal for 2030 because it's clear what people should be doing. We can't just dilly dally. We can't just add 100 million of ads to ChatGP how it goes. We have to build something that is essentially as big as several of our competitors. It's well understood why it works. We're not directly in commerce. We don't have the advantages that Amazon does, right? But can we achieve the scale of Facebook and others? Yes, this is our job. This is our job, guys. And every week we're going to iterate on it. We're going to improve it.

47:06We're going to make it better. It is mathematically possible. This is not as aspirational as the enterprise stuff, right? It's mathematically possible. This is our effing job. We're going to review it every week. We're going to put some of our best team on it. And it's doable. And if it comes up short a year or two, like Elon, I mean, it would suck for the IPO, but it's doable. It is achievable, right? And so I think because it is achievable, it will be achieved. You're exactly right, James. And it's clarity, a whole bunch of things they've been lacking. On the enterprise side, I will say one thing.

47:33You know, there was this memo from this week that leaked from Denise Dresser, right, who's the CRO president, saying, wow, well, first of all, Anthropics overstating their revenue, we're still ahead, and saying, hey, we have all, you know, we have the capacity, they're out of capacity, and blah, blah, blah. Okay. At first blush, this memo to me, it seemed like a flashback to something that Mark Benioff might write, who I love, but more appropriate for Salesforce than for OpenAI when I first read it, right? And her last gig was CEO of Slack, right? So at first blush, I thought it seemed out of place at an AI leader.

48:01But then I thought about it and I'm like, this is the exact type of messaging you want to win traditional enterprise customers. So I'm pretty bullish actually on OpenAI and the enterprise because all this enterprise DNA they have, which probably didn't help a snail's inch the last 12 months, in the future when all the models are so powerful and big enterprises are trying to make decisions between a couple of top brands, the ability to sell this directly to enterprise versus coming in from the bottom, coming in through the CTO, coming through the other, coming in from functional groups is gonna be very powerful.

48:34So I think it may be, OpenAI said they're gonna double in size, right? And a lot of it's around selling motions to the enterprise. I think it's gonna work. I think they're gonna run a lot of the traditional playbook, which is gonna work better and better in 2027 than when it did when the last year was ask your developer. That was the land. And that's why Anthropic won, ask your developer. I want, I don't want Copilot. I want Opus. And your developer picked everything. Developer picked it for your app. And I'm using the old Twilio mantra because it worked for years until it didn't. And I think it's going to work for LMs until it doesn't, until you go deep into traditional enterprises.

49:09And if OpenAI, which is, you know, it's going to be the number one or number two brand for as long as we do this show, I think they may be able to outsell it versus, hey, the world's going to end from Dario. Thanks for letting me in the lobby. See, everyone's going to be unemployed next week. That one may cast a chill in the CIO's office. Thanks, guys, for having me. Most of you won't have a job next week. I would have two comments, because I'm not quite in that place. Maybe three comments, right? One aha I had from this is that the comment on compute is the ballgame, is whatever about the long-term overinvestment, and I still angst about that, there's no doubt in my mind that right now everyone is compute scarce and there's going to be no restraint.

49:53No one's going to blink on their investments for 2026. You actually know the next four quarters of NVIDIA announcement. You know the next four quarters of every one of the infrastructure environment, which is every single thing we can make. If you can count the wafer starts at TSMC, you can predict NVIDIA's revenues. Everything is going to be sold out for now and for the next 12 months because if the rate limiting constraint is compute, then everyone's just going to buy compute. So that was the first big thing. And yeah, they've got some interesting position relative to Anthropic in that they were more aggressive, so they have more compute.

50:24So yeah, that's one thing. The second consequence is people are going to start allocating tokens to effectively the highest bidder. You're going to see a lot of throttling. You're going to see these plans. That's why they shot Sora. You're going to see some of the Claude plans get throttled down. That's what money is for. It's to allocate scarce resources. It's actually the definition of economics. It's the study of the allocation of scarce resources. and they're going to start allocating those scarce resources of compute via price. So that's one big trend. The second one, I don't know if you're going to see that level of flip from, oh my God, it's all Entropic to, oh my God, it's OpenAI.

50:54I think it's a two-way fight. Entropic has the advantage of clarity and focus. OpenAI has the advantage of the consumer business and they're going to have to slug it out. I think Entropic has the little, just the way they've played the last 12 months, have a slightly better lead right now, both in terms of perception and in terms of developer friendliness. but OpenAI is not going to roll away and die. I think I want to come back to the point I made earlier, which I've only processed through now, but sometimes it's important to say the big shit very clearly, right? If you do consumer versus enterprise, typically the biggest things have been a consumer.

51:26I mean, if you look at Google, Google's consumer business and ads is two thirds of the value. And maybe the cloud is maybe one third, roughly. And the big money has been in consumer. Bear with me when I say the obvious, but consumers actually don't want to, they want really great chat GPT, there might be some models like friends and companion models. But fundamentally, when I go home, I want to buy Netflix. When I go to work, I want to buy intelligence. The zoom out comment from all this shit is enterprise is two thirds of the ball game in AI and consumer is one third or less, which is the flip of the last time.

51:59Because you would have thought two years, three years ago when chat GPT exploded, that that was a really great launching point. But if in fact enterprise is the better place, then yeah, you're going to have a good consumer business, but the ballgame may be compute, but the ballgame from a customer's perspective may be two-thirds enterprise, one-third consumer, which is the mirror opposite of the internet. And that's just one of those, huh, big picture comment. Because I realized I don't go home and want to do cognition. I go home and I want Netflix. I go to work and I want thinking. And they're selling thinking.

52:26It's an enterprise business. And by the way, you get into a really fun and interesting discussion, which is above my pay grade, but I started to see comments about it is do the things you do to make the model consumer friendly, you know, the happy, like, does the same model continue to work really amazingly well for both? You know, if the enterprise wants clarity and concision, if the consumer wants a little more friendly answers, do you find the tone and the persona of the consumer model and the enterprise model start to become different? I don't know if that has implications. It's above my pay grade, but it's in a category of something to think about.

52:55I think very much so. And I think you've seen it on consumer research studies. So they've seen actually younger people like OpenAI because it's much more supportive of their emotional challenges. And in business, I don't want support. I want to be told, these five things are good and these three things are bad. When we're doing investing, we don't want supportive. We want decision. It's almost the exact opposite. I want harsh critique. I want the AI to say, this is a stupid deal, Robert. You looked at this three years ago. It was done then. It's done now. Stop, you idiot. Here are five fact-based reasons why this is wrong.

53:25And if you give that in a consumer app, you're not going to have great lifetime value or retention. Yeah, it was interesting. You know, Aaron Levy had a tweet this week about his latest roadshow meeting with CIOs from Vox. And he talked about how so many of the CIOs meeting with now are token maxing. And what he meant was they are creating ideally fixed token budgets. Really, you know, they're dollar budgets rather than numerically tokens for the coming year. And they're making the departments fight it out per project. Now, this is where I think the game is going to change again with the leaders because when most of the budget is essentially rogue, when it's developer teams picking Anthropic almost universally last year, when you're giving them the budget because the throughput is so intelligent, you're finding budget for that team or you're using discretionary budget to bring in little agents, it's one thing.

54:13When the CIO takes control again of how many tokens across a large enterprise, that's a very different calculus of which vendor I choose from. And if the CIO prefers to buy OpenAI because it's got a more traditional sales motion, it's packaged better, it's better used, and there will be exceptions. There will be exceptions in departments. They will get exceptions. But overall for the enterprise, I'm standardizing on OpenAI for 2028. It is the right choice for our Fortune 2000 company. It's just a different world when whatever, the 60 billion in OpenAI and chat should be revenue, all the enterprise stuff is still in some sense rogue today.

54:47So much of it is rogue. It is out of budget. It is out of band. And as that changes, it will change which vendor we buy from. If you are correct, and I'm not sure you are, what it says is the people who should go into guidance counseling are Microsoft and OpenAI because they need to get their relationship back together again. Because who is the dominant path to every single enterprise in the world? It's Microsoft. They need to get some couples therapy. They need to accept that they have differences, but they can reconcile because otherwise they're going to get the clock cleaned. And frankly, as I think, that's an indulgence that OpenAI can no longer afford.

55:23because you're right, is that the other guys have stolen the march, have stolen a march on the kind of developer love. Microsoft can go top down. I don't care about your long-term competitive dynamics. You need to kiss and make up here, people. And if we agree that enterprise is two-thirds of the game, Microsoft is the key. And so, you know, figure it out, go to therapy, talk to your issues and get this thing back together again. And then the other comment to make is, I just want to give an advert for Aaron is that, I read his tweet last week about his, you know, comments from the Roadshow. And like I said this before, we were lucky enough to back Aaron 16 years ago and many years ago.

55:58In fact, last year we had him back at our annual meeting just to talk. Aaron is a walking investment insight. I mean, I read his tweets and I'm like, literally, I send it out to the group and say, this is the latest thinking on what you should be thinking about, about what CIOs are thinking about. Just read this and then you'll know. It's just so, that was such an insightful tweet about agents. He's not a doomer on employment at all. He's like, people are going to be rolling this thing out. And if you understand what they're doing, you will have a role here. And he has a really good feeling that he talked about token maxing.

56:25It's like beyond Silicon Valley, there are going to be meaningful budgets. There are going to be constraints. And this thing, it's just a real sense of how CIOs on the front line are rolling out AI. I just think it's excellent. So I follow him all the time. I thought it was so excellent. I actually messaged him and said, do you want to come on the show this week and do it? And he said, I would love to. Let's do it tomorrow. And that was this morning. So I'm actually doing a show with him tomorrow about this tweet thread. He's in that rare combination of, frankly, grounded enough in terms of 15 years calling on CIOs, 15 years calling on CIOs to really know what they think.

56:58And at the same time, frankly, young enough and flexible enough to really understand what AI is doing. It's literally like an investment insight. It's like one of my colleagues even said it when he spoke last. It was like he said literally it was just like an investment memo spewed out on enterprise AI. Yeah, but here's the thing. Now, just the one tough thing, and I almost don't want to say it because I love their - You can say it. If he can't re-accelerate Box with his incredible depth of like 10 out of 10, right? What hope is there for so many other leaders, so many other unicorns and others?

57:27If he can't get Box to 20 to 30 % growth, I'm giving up on the rest of the world. It's a totally fair comment. Giving up. And I hope he is. Look, I admire them so enormously and I really hope they can re-accelerate. Because he knows everything that's happening and he's not pretending. He's not like so many folks are pretending. He's as engaged he's ever been, right? as stressed as he's ever been, he can't work any harder. If he can't get this re-accelerated, good God, who the hell can't? Who the hell can't? We had the financials for SpaceX leaked, a$5 billion loss on$18.5 billion in revenue. The reason it's so, I think, important for the audience is there are so many endowment funds and managers who hold SpaceX in some way who are awaiting the IPO later this year.

58:12The loss is driven by the XAI acquisition, not by operations, is important to add, but the$2 trillion potential IPO is a big number and the math needs to be worked out. So$18.5 billion in revenue at$2 trillion is 108x. Did these numbers change your perspective? Did they confirm an opinion? Didn't change, confirmed, but let's break it apart a little bit. The first is, okay, I've got all technical accounting on you now, right? When did XAI close? Because pooled accounting is gone. Pooled accounting doesn't exist anymore where you retroactively recast the financials as if the companies were together.

58:47So that's only the loss from when XAI was acquired. And I think it was late last year, early this year. So we actually don't know the actual run rate. Do you understand me? In other words, if the deal closed in October 1st, then that would only reflect one quarter of loss. So anyone hypothesizing on it's profit or it's profit excluding that, or it's only, quote unquote, only a$5 billion loss, until I see the actual gap financials, I don't know shit. It could be 20. Right, exactly. $20 billion loss. But I think the rough trajectory of it will be something like the following. We have an amazing launch business with a near monopoly on cost-effective launch, and that price could come down with the next generation rocket.

59:24We have an amazing business on Starlink. I think the whole XAI, in retrospect, I think you'll look back and go, I'm not sure I would have paid$250 billion for XAI. And then the question, as you say, is how do you value that relative to 100 times revenues? And we've talked about this before. I'm not going to say it's right or wrong, because I think what I would say is, obviously, very few things traded 100 times revenues for any extended period of time. Let's just say that. So it's clearly underwriting a level of growth. It's underwriting a reacceleration of growth, even with the Starlink business, which is plausible based on the future things they're doing, but feels like a lot.

59:58He said gently. It appears to be the most expensive IPO at scale of all time, based on revenue multiple. Yeah, it appears to have no one at scale that has ever IPO'd at a revenue multiple approaching this, right? And the case will obviously be all the future things. What is space? And you read the bull case. And as I say, I'm trying to avoid the I don't believe it. And I try to express my concern rather than saying, oh, I think that's crazy. I just say you have the existing business and then you have a series of new initiatives around direct to cellular and all of which. And then obviously data centers in space.

1:00:30You can articulate a massive market. The question, as I've said before, is, so you take these adjacent TAMs. If you give them 100 % probability of happening and 100 % probability of them happening right now, in other words, no NPV because it takes five years to make it happen, then you probably get to$2 trillion. If, on the other hand, you apply a probability of it not happening and a time value of money, you get to a lower number. And maybe that's a good way to reduce it. I mean, the Elon believers are saying, these are the future things. And I ascribe 100 % probability of success. and it's like, I'm going to give them credit for today, even though it's going to take three or four more years.

1:01:03So it's basically the Elon discount rate. The Elon discount rate is zero and the Elon probability of failure rate is zero to get to 2 trillion. If you put a more conservative number in both of those, you probably end up in a different place. You still have the upside. You still have the long-term story, but are you getting paid for the risk? And that's a way of framing it that's not, oh, I think it's silly because a hundred times revenues is just too much. I think that's a reductionist argument. What you're really saying is, I'm looking at all the future time and perhaps being more sober about the probability of it happening.

1:01:30I'm revising my priors from, oh, 100 is crazy, which is just too simplistic, Rory, to what are you saying about these other markets when you feel that it should be at 30 times revenue? You're effectively saying maybe it takes four years for the data centers to happen and the direct to sell you to happen. And maybe the discount rate for that is 15%. And maybe the probability of success is 70, but not 100. And you multiply all that, you got to get paid for the risk. Jason, what topic do you think we should discuss that we have left? Some private stuff. There's some private stuff. No, some private market stuff.

1:02:07Simple, humble venture shit. For what it's worth, the topic I put, but I actually don't think it's as interesting as a larger topic. Apple have an 898 employees. This is not a brand new AI company last week. 4.5 million revenue per head. I've been thinking a lot about this. You have the block memo and what Jack Dorsey wants to do. You know, every Andreessen chart of the week is showing how efficient the next generation is, right? How 11 Labs and everyone's so efficient. Just the meta thing. My captain obvious learning from all the conversation I have is it's a choice. Everyone wants to be small by choice.

1:02:40And this is what I think is going to be disruptive for the next year and a half. As VCs, you get really excited when you see an efficient company because all things being equal, hey, they don't need to fundraise as much. I'm going to be deluded less. It's less risky, right? Everyone loves, everyone wants to invest in the next version of Viva. We raised three, 3 million and got to 30 billion. That's the, no matter what anybody says, that's the venture dream. We, we raised 3 million and we're worth 30 billion. I don't care what you do. Yeah. Whether it's bagels or healthcare software. And so we see hints of this in this employee thing.

1:03:12It's not quite that simple when the gross margins are lower, but I think what I'm seeing everywhere is everyone just wants to be smaller by choice. And AI is an enabler because it lets my best engineers do more. AI is an enabler because I can get rid of those SDRs. But I actually tweeted last night. The core test when evaluating a team is knowing what I know now about the person having worked with them. Would I hire them again? And you said that's not the question. What did you say was the question? Would I replace them with an agent? Would I rather work with them or replace them with an agent?

1:03:45It's the same thing. I'd rather I'd rather have an agent than a mediocre person. Right. Everyone thinks that. Not everyone says it out loud. But provided it wasn't a mediocre agent, as you've articulated earlier. Yeah, but I know how to build a good agent now. Will everyone in 18 months? They don't know how to today. Everyone in 18 months will figure out how to build an AA because they'll get easier and easier to train. And we touched on this briefly, but you don't need prompt engineers anymore, right? For fun, yesterday on Replit, I built a fully functional website in about six minutes that has video, audio, and everything.

1:04:16And my prompt was create a whole website around my theme of the recycled mediocre in this post. Recycled mediocre are when you keep hiring the same mediocre folks again and again. And it did the whole thing from that prompt. It created the whole site, pulled up, which make can't do, pulled up all the context, created an incredible horror image, then created the video out of it, then created the connection, then pulled up all the context. And so my point there is you don't need to, the most mediocre prompts in the world do magic now. You don't need to be a prompt engineer. Right now, getting an agent to work, you need an FDE and it takes weeks or sometimes even months and lots of trading.

1:04:51It shouldn't be true in 18 months, right? It should be as magical as prom star today. So I think we're all going to be good at agents in 18 months. And so we're all going to say, to Harry's point, do I want to work with that person again or would I rather replace them with an agent? It's not about the money. We're just going to choose to be leaner. We're going to choose to be leaner for many reasons. I think you are right on the directionality. I just want to make kind of a business point, which is the simplistic revenue per employee is just not a useful metric because you can't compare the efficiency.

1:05:22Like someone like a cursor has very low employee count, but very massive gross margin count, right? Gross margin cost of sales, right? I mean, watch this. Cursor does$4 million per employee. Salesforce does$700 ,000 per employee. Oh, cursor must be more efficient. Well, it turns out Salesforce has 30 % operating margins and Cursor's losing a lot of money. Why? Because they spend a whole ton on tokens. I mean, you can compare companies in the same business on an efficiency metric, but the one shot fits all revenue per employee doesn't really cut it. That said, two comments. One is Applovin's amazing business because they actually have fairly high gross margins and low employee count.

1:06:02It's one of those businesses, you just have to go away and understand how it fits at that interstitial moment in mobile ad networks. And it just, it's the only, at this point, given Trade Desk's downturn, it's the most successful ad network business by far. And we could digress onto why that is. But it's a one of a kind business. It's a four and a half million per, whatever it is, per employee business, where unlike Atropic, our open ad, no CapEx, unlike Cursor, no token costs, it's just a money printing machine. I'm jealous. But Jason, the second comment, you're still exactly right, is that the trend everywhere is grind down the headcount.

1:06:39Do you need them? What can be automated? So maybe reflecting in my own mind, maybe the way to say it is, it's not fair to say to a SaaS company, hey, AppLovin does$4.5 million, Cursor does$4.5 million, you know$500 ,000. But what is fair to say is last year you were at 500 ,000. This year you better be at 600 ,000 per employee because Jason's telling you, and next year maybe you've got to be at 800. If you're not making progress on that metric as a software company, you are not with the program. So on that basis, I think you're right. Obviously, I'm just sapping off the knowledge of smarter people than me.

1:07:15Would you buy AppLovin today? I don't know now. I mean, you always worry ad network businesses over the medium term get ground down, but it's been able to survive for the longest time. It's gotten rid of its game business. It's purely focused on this. And for some reason, it's found a way to exist in the Apple ecosystem with all the privacy issues as being the only way to do some of this targeting. So I need to know, I need to spend a lot more time thinking about it, but it's been an astonishing run for it. It's probably the standalone, the biggest beneficiary of mobile networks, clearly mobile ads, you know, after maybe Meta and that.

1:07:47Yeah, amazing win. There's two that I just wanted to touch on. One was Tomo Bravo shutting down the growth equity business. Is this foreshadowing of a load of other growth equity businesses shuttering, or is this just Tomo Bravo independent? Well, first, before you guys answer, can you educate me because I'm ignorant? I don't understand the whole Tomo Bravo empire and what it truly means they're shutting down growth equity versus the other vehicles. I don't understand it. I think it's pretty straightforward. the core business that puts 90 % of the money on the table is buying control positions in software companies with some leverage and running them, doing build and add-on other companies to them and ultimately selling them to another PE buyer.

1:08:27That's most of what they do. It's 90 % of the money. They started doing non-controlled minority positions in late-stage high-growth companies. It's just a different business. but I just think it's different enough from the control, like in a control position business, you're trying to buy value. Now we may look back and say many of the prices they paid for those control positions in 21 and 22 weren't value, but you're trying to buy value where you have control and you're going to be EBITDA positive and you're trying to pay down the debt and do all those things. You know, classic venture growth, you're still hopefully growing 50 to 100 % minimum per our discussions.

1:09:02You're probably still losing money. You're not in a control position as the PE investor. And in a period like right now where your core business is threatened, the first rule of threatened is you retreat to the core. PE guys regularly come in to growth venture at the top of markets thinking this looks easy. And they regularly retreat from those markets when they discover it's hard. But shouldn't they be going back in in 2026? Is this a time to be re-entering? Possibly, but, and again, but two reasons why not. One is your core business is under threat. The one thing you don't want to be doing what your investors is saying, we have this thing that 90 % of your money is in, but we're futzing around with this other 10%.

1:09:39Even if it's a good business, it doesn't matter, right? We gave you$10 billion to invest in control positions in software companies, and we gave you half a billion dollars to screw around doing something else. You're having problems in your core business. How about you fix that? It doesn't even rise to the level of, is it a good opportunity or not? It's not the opportunity we have. You said retreating to core, Rory. I completely agree with you core is business i'm sorry i'm not i'm never shitting on businesses but challenge businesses like cooper like anna plan like medallia can you help me like this feels like a clusterfuck of pain separate comment yes i mean i think look one of the things is that they're the same type of companies as were hill to four in the public market so the same discussion we had in the public market supplies here in other words these are mature plain vanilla sass companies with single digit growth rates.

1:10:28They're just not traded every day in the public markets, they're traded in the privates. So the question is, what does that mean? The first thing is, these kinds of companies are trading at two to four times revenues. So the same equivalent companies in the private are probably should be quote value today at that. And many of them are bought at 10 times and have leverage, right? So that's a pretty tough place to be. The negative spin is if you apply the same math of three or four times revenues, and then deduct the debt, you have little or no enterprise value. And that's terrifying. And that means you could see big losses in some of these PE funds.

1:11:00Now, the positive spin that they would give, which kind of goes back to Jason's thing, I'm not sure I fully believe it is, if these software marks in the public markets are totally wrong, and then two years from now, they're back to eight times, then it'll be a tree that fell in the forest. No one will know. And in two years' time, they'll be able to go public with Anaplan again at eight times. And maybe that happens and maybe not. But that would be one part of the why it's going to be OK. If I was articulating as Toma Brabant why it's going to be okay, the first comment would be it's way overdone.

1:11:27And these things are really worth eight times revenues because they're profitable. And in the end, things trade at 15 times cash flow, not nine times. We'll all be okay. That's one argument. And then the second argument could be some version of the Jason one, which is sometimes the advantage of private ownership is acute clarity. And if you're going to make the transform to AI bet, I bet you these guys are going to articulate that we will make that happen because we will own these things. We will replace management if they're not capable of doing it. We will hire other people that can do it. Maybe we'll buy assets.

1:11:57I'm not sure I buy that, but that's probably part of the argument, which is PE's argument has always been transformation. Now, to date, the transformation has been about cutting costs and being more efficient. I don't know if they can pull off transformation where transformation is not adding a 60%. If you add a 60 % agent as a privately held company, you haven't passed the Jason test. The question you have to ask these guys is, can they add a 100 % agent that you can charge for? If they can and they rekindle growth to 20, then they'll have earned their massive carry. If they can't and these things don't bounce back, then you're right.

1:12:29You could have a train wreck. And that's the game. That's their ballgame right now, which is why they're all looking for AI experts. It's why on a going forward basis, they're pitching, buying new companies and kind of AI enabling them. But for their existing portfolio, it's all about, you know, what do you add to Cooper or on a plan to make it AI first, AI forward at least, not AI first. On the one hand, I think we're going to look back on this and see it's all a shame. Because if you have 10 ,000 happy customers, 50 ,000, 100, 150 ,000 who are reasonably happy, not thrilled, but reasonably happy, and you've had now 12, 18, 15 months to build them an agentic product, you've had access to the LM's, you've been able to carve out 50 of your best engineers to work on it, and you didn't take advantage of your installed base for real, not in the moat way, not prisoners.

1:13:14But I mean, if you didn't take advantage of the fact that 90 % of your customers are not at the bleeding edge of AI and sell them an agent, this is such a missed opportunity for the leaders. It's tragic. It's tragic because most folks have not made their decisions in agents. And we're gonna look back and we're gonna see these teams were so mediocre and so paralyzed. And I gotta tell you, when I talk with folks, so out of ideas, people should not be asking me what they should do with their agents. They should be showing me their agents and asking me for constructive criticism on them, right? People are paralyzed with fear.

1:13:45They don't want to work twice as hard as they used to, and they don't know what to build. And it's a tragedy because even today, selling to the install base is much easier than finding a new customer. If they're happy, just call them up. They will take the meeting. And this is the great tragedy. And I think a lot of private equity firms are probably pretending their playbook's gonna work. I'm gonna hire this AI expert from Stebbings, Driscoll, and Lemkin. It's 2 million a year. they're coming in with their ties and their checkered shirts and they're going to teach us how to do AI and get us to a 60 % solution by the end of the year.

1:14:15It slips a bit. It's a tragedy. And I'll tell you why it's a triple tragedy. This is something I didn't know. I mean, granted, in my brief tenure at Adobe as a VP. Okay. And that was not a high point for Adobe. It was during the transition to the cloud, but I will tell you, and I never, you know, I never underestimate competitors or big companies. I got to be careful. Right. But I will tell you what I learned at Adobe that folks don't realize. There were a hundred surplus amazing engineers, either by design or accident, either by accident they were working on projects that weren't quite gonna get there, right?

1:14:46Or they were available. They were available more. Now, sometimes they were on the back half of their career. Sometimes they weren't quite as razzed as the top engineers at Replit or Lovable or Cursor. But I mean, great. My CTO is the toughest critic would actually say, let's go steal these five guys. They're actually great. They exist. So it is a crying shame you can't take a Team 6 at Anaplant, at Coupa, at whatever, build the world's best product and ship it to your 10, 20, 50, 100 ,000. We're watching tragedies in the making, and it's sad. It's sad because they're still deep down running the dated playbook of a big release every four to five years and a quarterly release, which changes a few pixels and adds some workflow.

1:15:30deep down all the companies i talked to are still running that playbook and it's a tragedy because they have they have the opportunity but stebbings driscoll lemkin ai consulting is not going to get them there and that's who p firms want to do bring in these guys it's not going to work and everyone is right they have the base they have the opportunity and um you know and they're going to end up in these medallia death spirals where they're defaulting on on debt and defaulting on billions of dollars and and and they can't they can't afford it and they know And it's just, it's not too late to sell to your install base.

1:16:01To make the math work in the LBO, they don't need to attract a whole bunch of new customers. You know, they already, once you do the PE deal, you've already accepted that you're not trying, you're not a growth story anymore. But to Jason, Jason's exactly right. If you can upsell 20, 30, 40 % more by delivering this, you know, 100 % agent, it might be the next most amazing company, but you'll cash flow positive, you'll pay off your debt, You'll create enterprise value. And 5 ,000, 10 ,000 customers aren't going to have to do a migration in two years when you file for bankruptcy. So I agree. It's a bounded problem.

1:16:32It should be solvable, but it's not going to be in many cases. I'm going to ask you two questions. You've got the binaries on them. Who's going to go out first, OpenAI or Anthropic? Anthropic. SpaceX, Anthropic, OpenAI in that order. Well, look, it appears that SpaceX has already filed and they're on track. So we already know the answer there. The fact that Anthropic just added the Novartis CEO to the board, that's a sign they're getting ready to IPO as soon as they can. I mean, I'm sure he's going to add value in health care, but that means nothing but we're trying to IPO very soon, right? That and finding who the hell will chair the audit committee are clear signs you're going to IPO as soon as possible.

1:17:07So given that they have that and OpenAI is sending out war memos, I'm just voting that they go out first. Yeah, not even a difficult question. Will Sarah Fry, the CFO of OpenAI, be there when they go out? Yes or no? Look, I do know one thing. CEOs and CFOs, A, have to be widely aligned, and B, the CFO should probably report to the CEO. And right now, I believe the CFO, in this case, reports to the president, which seems an anomalous arrangement. And so maybe rather than kind of doing so-and-so's in or out, what I would say is this. If that IPO is going to happen and if this team is going to make it happen, then they need to be in absolute sync, and they probably need to have a more traditional reporting structure so that people don't have one more thing to think about why this company is weird.

1:17:49I mean, I always tell my CEOs up and down on Slack, dude, on the thing where you're unique and different, you know, where you're changing the world, do it as different as you like, but all the boring stuff, just give the market what it wants. It wants the CEO or the CFO reporting to them. They want to be in sync. It makes everyone's head hurt if the CEO and CFO are saying different things about something as fundamental as when we're going to go public. Stop the leaking, stay in sync. You know, that's just not a thing. No one wants to hear that. No Those are going to be the two people on the roadshow.

1:18:19They should be able to finish each other's sentence. You should be able to put them in separate rooms like a police interrogation room. And each of them should say exactly the same thing. And they should stick to their story. The idea that you have separate stories from the two, it's just palpably absurd. So rather than saying who's in and who's out, that's what you got to do. The same therapist that they're using for their relationship with Microsoft could actually do some internal relationships too. Interesting. But I will say two things. One, on the one hand, in isolation, if I'm running something like anything at scale, but especially at open eye, I want no daylight between me and my top lieutenants, no daylight.

1:18:50Okay. Now you could argue a CFO's job is to create a little bit of distance, to be that objective person in the room. And there is some truth to that, right? But there can't be daylight or it's not going to work. So if there is that daylight and it were that simple, you make a change and you make a change before the IPO. So it's least disruptive. Now, having said that, if you are running a company at scale and there is already a ton of transition on the senior team, which there has been ton of turnover. I've seen a lot of times roles like CFO and others where you're like, listen, I just don't want to change one more thing.

1:19:20Yeah, there's some issues here, but Sarah is so experienced that things work like the workday finally works. We finally got all these things to work. This is not, I got 99 problems. This is not one that I want to tackle. So I have often seen something like this where you shouldn't have the daylight, but it's not, it's not it's not poltergeist-esque streaming through and it's just not enough of a problem if your management team is super stable you have time to work on these things but sometimes islands of stability in your management team even if they're not perfect it's just not worth another turnover on the senior team it takes it every time you replace someone it takes its toll on the team especially if they're popular especially if they're liked and respected it just especially if they're if everyone thinks they're terrible you move them out and and there's a there's cake and a party on Friday.

1:20:08But I wouldn't be surprised if she's pretty popular in her own way. And it takes its toll. The raw ingredients of success are there. The raw ingredients of success are there to have OpenAI be an amazing mega IPO. And I say, Lily, you get your therapist to make up at Microsoft, get your therapist to make up, get aligned with CFO, focus on the two big things, which are getting the ads product out and getting the enterprise cranking. Stay the course. You have the compute and get it done. If you have an executive that's truly arguing with the CEO in public, in the media, and or like Dario back in the day at OpenAI going directly to the board with craziness, they got to go.

1:20:45It doesn't matter. They got to go. You cannot be out in the media arguing with the CEO and you cannot be Dario, no matter how smart you are, going to the board and saying, I will only stay at OpenAI if I directly report to the board. Like it doesn't matter how good you are. And this is brutal. Sometimes you have to let some of your best people go because it's too dysfunctional. They got to go in those situations. Whenever you get a phone call as a VP from a board member, from a VP, you're like, okay, there's a problem here. Now, maybe the CEO goes, maybe the VP goes, maybe there's a problem and you can solve it.

1:21:12I'm not going to be as absolute as you got to go, but your antenna go up an entire notch when you get that call. And you're right. And as for briefing, I mean, look, most companies aren't interesting enough to have a media briefing. It's almost like these companies have become a political level drama. And actually, I saw a fun tweet from Martin Quesada, which is basically saying, enjoy all the drama, enjoy all the pity, backstabbing and all that. It's because this is such an exciting moment that the media is focused on. And because they're focused on it, you get all. This is just what happens when you're in the center of the universe in terms of tech.

1:21:44So roll with it. But you are right, Jason. You want to be the tight run ship in this sloppy, sloppy world. And if any VPs get this far in the pod, whatever you do, do not reach out to your VCs to say there's problems with their CEO. you will you're losing your job and not only are you losing your job it doesn't matter if you're right at some level you're probably right if you if you're a passionate vp and you want and you see issues in the company you reach out to rory or harry on the board odds that you're 100 wrong or zero percent like it's not worth it what are they going to do fire the ceo over you zero point unless there's fraud zero point zero percent you're gone you're maybe in three months or it may be that afternoon you're gone just don't do it vp just resign just resign with grace what was What's the Shakespeare quote, Rory?

1:22:28The world is a stage? All the world is a stage and each will play us part. Yes. I had to finish on a Shakespeare quote. Incredibly cultured. Thank you so much, guys. Okay. But before we leave you today, are you a founder working nonstop to raise your next round? Are you an investor doing all you can for your portfolio companies to help them stand out? Funding and scaling a vision is challenging. Banking should not be. HSBC Innovation Banking caters to tech and healthcare founders all over the world who need a really great banking partner that matches their pace, offering fast onboarding, product packages designed for your business, and capital solutions built for high-growth startups and the VCs investing in them.

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