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22:06Like, of course it will. It will be instantly better. Right. And so that's, but I don't know that the problem is in the short term, I don't, Oracle doesn't have the cash to keep up going to Harry's point. It just doesn't have the cash, but meta does. One of my bigger ha's on this whole, is it all going to go wrong question is the zoom out comment is the people who say it's not talk technology and the people who say it is talk economics, and we kind of just don't quite overlap. And that's the core of the challenge in this discussion. There's a million things you could envisage doing with quote-unquote AI.

22:37The question is, are they worth doing at what price? I mean, I was just doing the math in my head. There's$600 billion being spent on CapEx. There's 150 million people working in the United States of America, 150 million, that's 600. That's roughly four grand per head. I don't know if an employer wants to spend four grand per head on automating with AI. I mean, if you went through all the people, there's a bunch of people serving coffee. They probably don't need four grand's worth of AI. You start doing that math and you say to yourself, is the return there? So I stand by my comment. I think we probably are over-investing.

23:15And at some point, those chickens come home to roost. And I it's a controversial statement, Harry, pushing back, because Zuckerberg, who I think is wildly smart, has even said it. This is probably going to go wrong, but I'd prefer to ante up and be in the game and have a chance of winning than not ante up like Apple and know I'm going to lose, right? By definition, if six or seven people articulate that that's the game they're playing and only six or seven people matter in this discussion, then it is almost tautological to say we're going to overinvest because that's what Game Theory says. Until such time as someone realizes, oh, I'm in the poker game, but I don't have the right hand.

23:53I got a fault. Until that happens, we're going to overinvest. And I don't think it's happening in 2026. The only person that's even struggling slightly to cover their nut is Oracle because they had the weakest balance sheet and the least compelling use case, which is why at some point they're going to throw 20 ,000 people over the side to make the P &L work. Meta can borrow. Google actually has a business. And Microsoft is quietly stepping back from the table. So this game goes on for another year or two. But I do stand by my comment. There's a level of overinvestment going on.

24:23Harry Stebbings:I thought it was interesting. It was rumored. And this is rumors. So Rory does not like rumors. But that Alex Wang is being sidelined and that his position is no longer as superior as it once was with the creation of a new lab and him not being in charge of it, that lab director reporting directly to Boz, and it appearing like the scale acquisition was bluntly hastily done and a mistake. To your point, Jason, on Meta being behind, that is the kind of consensus that's being shared. That would be overinvestment. I paid$15 billion for an asset that 12 months later, I put on the bench. That is the very definition of overinvestment.

25:01So I actually think you made my case for me, right? And the fact that the response of meta would be, oh, well, we'll do something else shows that we're not yet at the overinvestment being terrifying stage. We're simply at the, I got to win, try something. If it doesn't work, try something else. I just want to bring up one thing that happened this week, which I think people misunderstood and is so important to my point of we're not even like the amount of AI we want to use when we're running 24 that we're we're we need massively more compute than we have which is anthropic launched a true cloud code review okay great hooray to find bugs to find issues and they said it's 15 to 25 dollars and the internet blew up oh my god this is so expensive like i only spend 200 a month for max i spent 20 and now you want 20 bucks to a code review to check for bugs and issues but the response back from the head of Cloud Code or at least whoever built the feature was my god we're spooling up 10 plus agents in parallel to run for 20 minutes to find every single bug in your product like you could do this manually and I've been doing it manually in Replit for months but to do this in one click it's profoundly like humans can't even do this find every single bug in 20 minutes and so the amount of compute now they need 20 even Claude, Cloud Code needs an extra 20 bucks of compute to do this.

26:23And you know what you'd really like to do? Run this after every commit, not episodically, not when not getting up your nerve to spend$20 worth of tokens, which is a lot because this isn't subsidized, right? This is Anthropics. You'd love to run this 10 times a day after every commit you make. This is that is orders of magnitude more compute being used for this code review than we used before. And so we're just between that everything running 24 seven, we've just scratched the code. Because if you've built anything in Cloud Code or Replit or Lovable or whatever, what you realize is it's just the beginning.

26:59Like who's doing all the QA? Who's doing all the code review? Like we've only scratched the surface. We do need data centers in space so that I can keep coding. But I think the point is interesting from the news. I think people miss this point of this code review thinking is$20 a lot to review your entire code base and find all your top bugs? Is that a lot of money? It's 20 bucks. And of course it's not. You know, we're happy investors in CodeRabbit, standalone company doing it across multiple tools. And yes, now we have exciting and interesting competition from Glawd that's bad. On the other hand, validates the space and says, you need to do this.

27:31I think your description of the product of the need is exactly right. If you're generating infinite amounts of code, right, using all these agents, the idea that you're not going to kind of do code review is absurd. So you're going to have automated code review. You're exactly right. your comment about spinning up all those agents was exactly the you illustrated my point from a technology perspective there's infinite need for large amounts of agents to do large amount of code review from an economics perspective you have people complaining about the fact that they're being asked to pay 20 bucks and you're exactly right jesse the correct answer which claude was too nice to give because we know they're nice people despite what pete hegson thinks was for jesus's sake i'm giving you you're automating an entire developer we're letting you generate infinite code for 200 bucks a month and you won't even pay 20 bucks to check it before you put into production?

28:20For God's sake, man, pony up. That's the correct response. That's what technology is meeting economics. The idea that you can just have all this shit for free is at some point going to stop because someone's going to have to cover their nut. And then we'll discover the really interesting question is how many of those users are prepared to pay 20 bucks per code review or 200 bucks per big code review or whatever, right? So I do agree with you. The demand is infinite, the number of things you can do is just freaking amazing. The question is, what are the things that people are prepared to pay full boat for?

28:50And it was interesting, by the way, and kind of validated a little something we're thinking. I would love to be the pricing person for Claude. And you've done pricing, Jason. How do you decide what things do you kind of, because they've got some really interesting things going on. The API is expensive and metered. On the other hand, Claude called the subscription, as you point out, you can get a whole ton more than you should be at 200 bucks. So they're kind of not metering that. And then they decided, and in my view wisely, hey, maybe code review is something that's kind of feels managerial and maybe there is budget for that.

29:20And you and I both did deals where they were low in SaaS land, which were PLG for individual users. And people were like, oh, how are you ever going to make money on small low end signatures? But the more you go to management of signatures in the enterprise, the more there is a propensity to pay. And I think this is the beginning of the same thing. You, Mr. Hacker, you could have all the free code gen you like for 200 bucks. But if you're going to be rolling this out into Bank of America systems, you're going to want a deluxe, not the$25 code review. You're going to want the $250 security proof code review.

29:58And you're going to see that kind of push to make money here. But I think that's the whole dynamic. The whole shit ton of stuff you can do. And then at some point, someone's going to have to pay for those data centers. Yep. And it ain't going to be peace at the Department of War. I think related to that, the thing that there's certain things we've talked about in the past that are true, but we're also willing into existence. The enterprise is willing its desire for AI to replace humans. So it's going to accelerate because they want it to accelerate. I mean, my God, the one that is being accelerated is hire no junior developers, hire no juniors.

30:30This is being willed into existence. No one wants to train anybody. It ties to this code review because listen, if you're going to hire no juniors, of course you can spend 200 bucks or an extra$500 a month to do code review for your senior developers. They're already insanely productive, right? And I think the death of the junior, it worries me. And I had dinner last night with my son who's off the chart smart, but he's at Penn State, which is not a top 10 Ivy League school. And he said there are just zero jobs for anyone in CS or math. There's just zero. There's no one even coming by to hire them for C tier.

31:08He has job offers because he's like publishing things on Jensen fine string theory that I don't understand. So great, six people in his class at his large state college have tech offers, but it has become not only in our world, but in his world that has become, we just don't want juniors. We don't want to train them for three months or six months. They don't know the tools cold. They don't know it. And that's where the budget comes from when you hire no juniors, when we're just a world of the middle of the bell curve in terms of experience. We don't want folks that don't want to pick up the tools and we don't want to folks that aren't experts.

31:43And this is my big worry for 2027 is it happens. It's going to be true in sales. It's already true in support. Like you want humans in support, but you don't want juniors. My God, I don't want to do like, I want a human that knows code rabbit cold that can handle the escalations. I don't need junior marketers. I don't need junior your nothings and harried not to get us off track but i ties i think getting rid of juniors is where we get budget for these data centers in part we're just getting they're just dying faster than we ever thought it's happening in front of us the death of the junior i think it ties to two fundraisers

32:15Harry Stebbings:that we saw rory you may disagree as an investor in one of them i i would agree as an investor in another but we saw intercom raising 250 million dollars and we saw lagora raising 500 million dollars and i think both tie to your point there of the replacement of juniors and lower ranking of the juniors. Why would I want, why would I mean, I know I'm not a Legora or Harvey expert, but I do know this, the dated space. I mean, who the hell wants to wait for an associate to scale up for two years? Like that was the classic legal hiring. You hire someone real from a top school, ideally that was top 10 % of their class.

32:49They have the IQ and you basically subsidize them for two years until they cross the line and become senior enough that they can work with the top client or take a case. God, who wants to do those two years now? Unless you have to, unless you have to. This has been one of our long running discussions. And it's good that I'm evolving my position, Jace. I said this, I've kind of come more to your perspective that there clearly is something going on here. And even though I don't believe in the catastrophic, you know, mass unemployment scenario, I think you're exactly right for a couple of very targeted demographics, one of which is entry-level commsci type jobs.

33:26Other would be actual customer support jobs, actual legal associate jobs. There is a meaningful impact on unemployment right now. So I just want to acknowledge you right out of hand. It is interesting because, and I think that's true. On the other hand, yeah, part of you says typically when there's new technology, the best adopters are young people because they come in with less priors. And there's a part of minute says, are these schools doing their job, especially now that it's, what, 2026? If you're graduating commsci graduates who aren't AI first and totally awash in using these tools, you're just not doing your job.

33:59And I think there's an element of not...

34:01Harry Stebbings:You're unable to alter curriculum fast enough to update Sinclaut. Curriculums take time to change. They need to change that because Because if you're looking at investing, you know, 100 grand a year for four years at a four year college education to get a computer science degree that turns into unemployment and a barista job, you should be pissed. But when you look at Andre Capathy's journey in six months time from bluntly using it for 20 percent to 80 percent, and this is Andre Capathy, that I think it's unreasonable to expect an educational institution like university to alter the entire curriculum on Claude's ability to progress throughout the kind of skill journey.

34:39Harry Stebbings:It certainly doesn't appear to be happening. Rory's point, should we be expecting it from these institutions? Yeah, they're becoming just babysitting, expensive babysitting for four years. And they shouldn't be. And give him credit. I think 15 years ago, Peter Thiel articulated the perspective that the ROI on higher education is going down. And at the time, it was still high. And it's worth pointing out, even to this day, unemployment among college graduates is lower than unemployment among high school graduates, which is lower than unemployment among high school dropouts. So you're still, quote unquote, better off going to college.

35:16But the point is, now you're taking into account the net present value of that 400 grand, you're not getting your money back on anything other than the best degrees. These are not the most deserving people on the planet. They still have a lower 3 point something percent versus 4.4 average. But there definitely is a trend here that would be troubling if you're a recent graduate. So I'm kind of with you on the track.

35:36Harry Stebbings:When you say you don't see the mass unemployment case, where you don't quite think that or think it's an overreach, when you look at legal, computer science, customer support, bookkeeping, those alone, if it had no impact anywhere else, would be mass unemployment. I don't know if it would be. Again, look at the numbers. I actually was looking at it today. Entire tech industry, excluding tech people employed in non-tech companies. Technology, The NAIC classification, 51 tech companies, 3.1, 3.2 million people in the United States, of whom roughly 800 ,000 are software developers. If you go down by half, that's 400 ,000 software developers, right?

36:15It's a lot of people, but it's 0.2 % unemployment. How many are in customer support? Much bigger number, right? You're exactly right. But also way more fungible in the sense of a lot of the low-end customer support. There's lots of other service-type jobs folks can do. I'm just a believer, Harry, that over the, again, I want to be over the medium term, the technology takes longer to diffuse than we in Silicon Valley allow, and people are more adaptable. So over the medium, I don't see any kind of 10 % plus tech of unemployment, which is, and I know you're going to disagree. And the point is, we don't have to argue about this, because in the end, we'll know, right?

36:51I just think I have 200 years of facts on my side, and you have shit, but maybe you're right. That said, I do believe you are right in the short term. in isolated pockets of very vocal people are really struggling. And look, I have three recent college graduates too over the last five or six years. So I'm totally aware of how hard it is to get a job as a college graduate. And I think it's a real issue and we better get on top of it. Because one of the other things the French Revolution teaches you is because I'm really cold, you can have dispossessed urban poor forever and nothing happens. But if you piss off the 20-something-year-old middle class, the overeducated elites, they tend to cause trouble.

37:28And I actually think the continued production of masses of college graduates are fused with their sociology and English degrees, facing into and come science degrees, where they've played it by the rules for 20 years, and then given them mass unemployment for that cohort is going to be problematic. I want to be clear, just because I think the macro trend is not there doesn't mean I don't think the macro trend is a real issue. And I predict in 26, it's going to be a political issue. I mean, it's so funny to watch the NPS survey. AI polls really negative. And as someone tweeted, you've been telling us you're going to blow up the world and make us all unemployment and you're surprised to discover we don't like you.

38:04Yeah, but at the same time, if you look, I'm sure Intercom data says this, everyone's data that works in a heterogeneous human AI agent environment, the CSAT is always top 10 % for the agents. It's never number one. They never say that the number one most popular person is always a human, but the agent's always in the top. That is more telling than most people realize because it's early, but it's accelerating, is we just rather work with agents. We'd rather hire agents. We'd rather buy an agent. We don't want to. I mean, Harry's got 3 ,000 applicants for his EA position because he needs a human.

38:41But I tell you, he'd rather have an agent if it worked. He don't want to interview 3 ,000 people. If he could have an agent, he'd pick an agent. And we're all going through that. And it doesn't even matter if it's cost effective. We just would rather have an agent. I've been thinking a lot, but my God, why do some of the AI B2B startups grow so quickly? The simple answer is product market fit, product led growth, agent led growth. But as you dig deeper and as the year goes on and as we roll into late 26 and 27, people just want to buy an agent. They don't want a human. And if you can deliver perceived massive ROI, that is so appealing.

39:21It is not layoffs. It is not this. It is, oh my God, I can get customers. I could run campaigns. I could do support without humans. My God, I want that. And when I look at so many of the mediocre products the public B2B companies have launched, they do not service that demand. I don't want humans at Atlassian or HubSpot or other folks. I don't want them. I don't want to make my humans 8 % more efficient with your AI. I don't want these humans. I want an agent to do this work. And when you do that, whether the Legora, Harvey, whatever, a million on the show, whether they fully can realize that potential, that people will line up at your door when you can give them an AI instead of a human, an agent.

40:02That's what they want. These are the companies we want to build and run. As is so often the case, I agree with the broad direction and might disagree with not so much the sequencing as the narrative. I think a lot of the B2B adoption to date, with the exception of customer support and in the last year, with the exception of coding, I think folks like Harvey Ligora and GCAI, they're all about, they're not actually about human replacement, except very much at the margin. At some vague level, maybe I don't need the 17th associate at Linklater's, right? Because so far it hasn't been agentic. So far it's been primarily, yeah, let me help you, Mr.

40:38Lawyer, be smarter, work more efficiently. Yeah, at some level, not ask an intern to do something, but it hasn't been a wholesale replacement story. I think you're right. It's been at the task level. I've been able to increase the number of tasks that I can do, and therefore decrease the number of tasks I have to pull in an associate to do. I think you're right, Jason. Now with agents, and I think we've seen it first in software, it's stunning what's happened in the last six, nine months in terms of the ability of these things to just code start to finish. And therefore, this is where I think you are right.

41:08We might be at the start of some of this agentification, and the next 12 months will be B2B companies saying, now I finally can automate this task entirely. And then we'll find out what the demand is.

41:19Harry Stebbings:I like to think through a frame of what will my children look at me and how I used to live and go, God, I can't believe you used to do that. And I think one of the things they will say that to is, I can't believe you spent years training people and then they left. All those years wasted and then they left. That's so nuts. I think that will seem incredibly archaic. An agentic world which compounds education and learning and they never leave you. Jason, would I prefer it? Yes. Yeah, that's what I just think if you're founders in B2B, this is what you should be building. It's something where folks will line up the door because they'd rather work with your agent than a human.

41:59And most of the public companies are not even thinking this way, but the ones, the startups that do blow up, well, they line out the door. Give me an example of the agentic ones, please. As this thing from the automated task ones, give me a, what level of agent are you talking about? There's a bunch, but I've done so much in these GTM agents, these go-to-market agents. Okay. So this last one that we deployed, this Monaco one that Sam Blond did, I mean, they closed seven figures in their first five days and they have 60 days of people lined up. And look, I'm not hyping it. They're all good, but why are they lined up out the door?

42:35Okay. This is the more interesting question. Why are they lined up out the door? Whether they're fully successful on all their journey or not, it's worked for us as a tool. It talks to the prospect. It texts them. it pitches your product and it sets up the meeting and the meeting is fully ready to go and close. If you can deliver that, if you can deliver that, okay, and it's a high bar and I don't even think it was possible 60 days ago, okay, and all the other tools we use, people will line up out the fucking door for this stuff. And so that's what you, whatever category you're in, you want to build this agent that is sufficiently better than 90 % of humans that everyone will pick it.

43:09and the budget magically comes out of nowhere. Like the TAMs for some of these products don't even make sense to us. Like they're not consistent with the past, but people will line up the door if you can do this without humans. I mean, we built our own VP of marketing literally. Yesterday, this week was the first time it led our human staff meeting. Our AI VP of marketing led the team meeting. It led the meeting. It summarized every single metric, every single thing, every single thing the humans on our team had to do. 10K, our A of it led the meeting. I mean, as great as Clay is for enrichment, it's great.

43:42If it could do that, I'll give you$50 ,000 tomorrow.

43:46Harry Stebbings:You're doing the intercom deal. Are you betting that they beat Sierra? I'll tell you what I am betting on. I'm betting on that they can carve out a significant space in that market for that product and that they've had explosive growth in it. And I'm betting that that team coming from the SaaS background, but being grounded in what it takes in AI can take a significant portion of market share. They tend on average to be slightly smaller in terms of customer size at the high end of Sierra and they compete more with Decagon. But one thing that I think in a lot of these categories that have traction, but if you if you want to say I'm only a partial expert, but if you want to say Intercom versus Decagon versus Sierra versus others, right?

44:22Zendesk, Salesforce. One thing that people miss a little bit in terms of the winner, which you kind of asked Rory, right, is FDs, forward to put engineers for the moment are a limiting factor. And let me explain what I mean. What it means is no one has enough fully trained FDs that can get a customer up and running fast enough. No one has enough of these resources. OK. And what it means is that almost every vendor has to pick lanes. They have to. You can't do as much as you'd like to do it. If it was all software, you've got to pick where you're strong. Right. And if you're best at digital transformation for enterprises, maybe that's what Brett Taylor is.

44:59you got to pick that right and you got and so not that these folks i know it the sales team and folks think they're direct competitors but everyone has more demand than s tier fds to service that so they're all picking lanes today and that is a frontier we haven't crossed yet and so in that sense they're all services businesses in a sense that this vc meme is true they're not long-term services businesses but if you need humans to train it if you need humans to manage it, if you need humans to iterate it, you are, you have the same constraints that services businesses have. This FDE thing is a limiter.

45:32This it's exciting because I think the losers, a lot of the losers out there can't even get at good FDs. If you look at folks that are, a lot of folks that are struggling in AI B2B, if you, if you peel the layer block, sometimes their agent isn't, isn't competitive. Sometimes it's too slow, right? A lot of issues. But if you really dig down, how many, how many great FDs do you have? How many folks do you have that can spool up a customer in 30 days. Well, I've got three. Well, you're going to lose.

45:58Harry Stebbings:Just staying on venture and private and just covering like the news items so people are up to it. As I said, Legora raises$500 at$5.5 billion. Excel lead that round. Obviously, Harvey are better funded at I think$11 billion in the latest round. Decagon did a tender at$4.5 billion. Intercom raised$250 million at, I don't know the price, Roy, you might know it, but they didn't announce it. founders fund are closing in on six billion dollars of new funds they invested the last 3.3 in 11 months in amazing businesses like spacex and stripe and anduril i'd be very happy if i was an lp base 44 hit 100 million in arr don't know if you have anything to say about that jason given replet does it save wix well we had on the agenda crowd strike crushes the quarter trades down right yeah i was going to move on to that with our predictions no but it's related to the wix thing And then I was looking at Cloudflare, which is on my top four, right?

46:55Cloudflare, 27 % growth a year ago, 34 % growth last quarter. I mean, that's pretty good acceleration. That's pretty damn good acceleration. 40 % year over year increase in net new customers. The public markets, you know, we're wondering what's happened this year. And you had her on from Monday on a week ago on 20 BC, and he said it. We've got to accelerate to get back credibility with the public markets. Accelerate. Not manage a genteel deceleration, which was 22 to late 2025. Not manage a gentle deceleration with higher net margins, which everyone thought was the job at scale. Now, the truth is you've got to be cloud.

47:37It's not just Pounder. You've got to be Cloudflare or better. And so I wouldn't want to be running Wix because 100 million from Base44, it's great. And it shows you can cross sell, right? and it shows a lot of new things, but their larger customer count is flat to down. So they've got the gravity of the decline of the core business. Like they've got to get back to so much growth that a hundred million, just it's not enough. Rory could help trail out the math, but I think base 44 and there's some cannibalization there. It's got to be doing five, 600 million to move the needle for Wix with this core growth decelerating.

48:12It's just so hard. and you know for and for startups you know you got to start wondering this year when you should just give up on your portfolio if they're not accelerating at what point do you just give up because if the public markets won't tolerate gentle deceleration how will the private markets tolerate it the era of gentle deceleration has ended it's dead we didn't think it was such a great period 22 to 25 but it was pretty nice that gentle deceleration was tolerable again so much to unpick. First of all, to be clear, gentle deacceleration is like entropy. It is the end state of the universe because everything deaccelerates to GDP growth.

48:50Well, yeah, but like the universe will be dead before some of it happens. Agree. So I just want to be precise because you know me, I'm that guy, right? What you're really saying is at 10x growth year on year, Antropic can afford to deaccelerate. At 40 % growth, like Figma had a couple of calls ago, yeah, you deaccelerate to 30, you're going to take a little hit. But you're exactly right, Jason, what you're really saying is at 10 % growth, you're now so close to GDP that you've got to reaccelerate. So that's really what it's just being precise. I don't even know if the public markets think it's okay that Figma might decelerate.

49:21Again, stop. I got to push on that because let's take CrowdStrike, right? Slight deacceleration, 27 % revenue growth, guidance at 23. They'll probably beat that by two. It's okay to grow 25 % when you have scale. I mean, you know, Microsoft and Google are all going at 13, right? So you just have to be objective. When you have enough scale, 25 % is enough to matter. Not everything's going to accelerate all the time, Jason. No, but the markets have been brutal this year. And I think it's not that you're wrong analytically or empirically, but the markets have given up on folks not accelerating. They've just entirely abandoned them.

49:54Well, yes. Again, agreed. I'm being precise. What they've done is they've said for three years, I thought it was temporary. And now I recognize it's permanent. And now I'm going to value based on this growth rate, take a hit off you for technical obsolescence and the terminal value, take another hit off you for free cash flow, and I'm going to give you eight or nine times EBITDA revenues. That was sweet that I said that, wasn't it? Those are the good. No, you're exactly right. So they've corrected to fundamentally what they're worth with no pixie dust. And that's just a tough place to be long-term.

50:24I agree. Those guys, the negative spin is they have to re-accelerate. The positive spin is even a small amount of re-acceleration will get you some lift from here, but you got to do it. And Wix is a good example of that. It's funny. Let's try and take apart Wix. I hadn't prepared on this one, but - They're at$2 billion growing 13%. If that$100 million business grew at the same trajectory as lovable or replet, I'm going to do some ahead and you guys know the numbers, but let's just play it out. They went from 100 to 300 plus or minus in a year, fair? And 300 to 600 plus or minus in another year, at least.

50:58If base 10, which is inside Wix at 2 billion, went from 100 to 300 this year, that would mean it's small today. The problem is this. From 10 to 100, it gets lost in the noise. From 100 to 300, it's 10 % lift to Wix's growth rate. So if it's 10 before now, it's 20. And from 300 to, say, 600, it's 15 % lift. So you can't just say it's not big enough because the nature of a small thing is it's small and then it exponentially compounds.

51:28Harry Stebbings:So I would push back and say if I would also just say the proportions also just to say lovable is at 300 and it projects it will be at a billion by the end of this year. I agree. That's where it's going to go. It's not that zero to 100 is bad, Jason, but where you are correct is this. If you're an old school SaaS company and you have this bright, shiny thing inside you that's growing from zero to 100 in one year, right? You have to run it in such a way that it can keep up with the lovable and the replets. And it has to go 100 to 300 and 300, maybe a billion, maybe 600. And what you're saying, and it is correct, is if it ends up hobbled by the wider company or the bureaucracy or the SaaS or the blah, blah, then you're not going to get the needle.

52:10Well, the challenge is their core customer base, their core paid customers declined 1.2 % last year. So they're at a terminal state where a lot of B2B companies are. And it's not just AI, it is life where they have reached a terminal state for their core customer base, right? And what they've done better than most public companies is hell with a great acquisition. They got a hundred million of AI revenue on top of it. That's like better than most, but it is not enough yet. Not only your math, but the core is declining one to 2 % a year, which doesn't sound like a lot, but man, that's rough, right?

52:44But Jason, just doing, I think we're actually ending on saying the same thing. So you're declining$20 million a year. Whoop-de-doo. Well, you're not adding new customers is the problem, right? Yeah. It doesn't matter. Stop. It doesn't matter. If Base24 could grow like Lovable or Replicit, then within two years, they'd be out of the woods, and they'd be a 30 % growth company. So you're exactly right. They made the right move, but what you're effectively saying is inside that other company, they mightn't be able to. So I think as an investor, you should be saying to yourself, if we think base 44 has the same trajectory, then great.

53:15Then you have a diamond in the rough here. You get the existing business for free, and you get the new business. But I think implicitly, you're both saying that it's not going to grow at that trajectory. It's probably going to grow 100 to 200. So it's probably going to get the growth rate back up to the mid-teens, but it's not going to be enough to dramatically change the future. Actually, I'm not saying, I actually think there is a time will tell. Here's what, and if we're using Wix as a case study, here's why every B2B company at scale should hope that Base44 works, which is, look, I love Repo, Lovable, they're great, okay?

53:46But Wix has 6.11 million customers. I'm sure the founder who's been on Harry's show will challenge me, but I know half the reason it's working, it's a good product, right? Is they have 6.11 million customers to sell it to. Yeah. And that's okay. No, it is okay. So they should be able to pull it off. It's not a hundred million ain't enough. Like all the tweets about how great it's just the scale is so intimidating. It's tough. You got to like do what Mark did and buy an Informatica too, to bridge the gap. If you're in a game as an existing SaaS company, where what you're, what Jason's effectively saying is even when you make the right strategic moves, it's quote unquote, not enough because you can't pull it off for whatever institutional reasons.

54:25then that points to a, it's a grim conclusion for most of those companies. The case study will be Base44 is a good product. I will stip, I'm not going to argue where it stands on the hierarchy of VibeCoding. I have used it. It is a good product. It's a lean team, but it's a good product. If Wix can't frack and cross sell that to 6.1 million people, what hope is there for you? This is a rhetorical question to many founders. It's a bleak question because I can tell you, anyone would rather VibeCode a website than deal with the crappy templates it comes with. So it's a great use case, right? 6.11 million, it's got, if it doesn't work.

55:00Jason, see what's coming. I think you're exactly right. I think Wix, I think it's a perfect Bethelman use case. If you can't cross-sell the new AI product to existing customers who are trying to do the same thing just with an older technology, then the cross-sell acquisition and cross-sell story doesn't work. This is as good as it's going to get if you're an old school SaaS company, other than managing the client. So UI, it's a total lab experiment. As you're watching Salesforce, in my view, wisely, buying a few next-generation AI-first companies, they got to do the same dance, just with an extra zero everywhere.

55:36They got to take that$40 billion behemoth and find a way to upsell another$20 billion worth of stuff.

55:42Harry Stebbings:At least they have something in this market to play with. I look at your web flows of the world in your Squarespace, and I go, ouch. Yeah, it's a mystery why they're not trying. One thing that happened to me this week is I tried Figma Make for real for the first time. I know Harry saw it on Twitter and for my use case, it was terrible. It was much worse than Base 44, much worse than any Vibe Coding product I've ever used Figma Make. It was terrible. It was undesigned and even worse, all these products have advanced. So I do this test and a lot of people make fun of me. They're like, oh, you're an idiot.

56:15You don't know how to do a prompt. I've done a few prompts. Okay. My AI apps have been used a million times, but I also know how these tools work. So when I want to test a new vibe coding site, I do something very simple, which didn't work six months ago and works well today. Go to saster.ai and make me a better version. People make fun of you. There's not enough context. There's not enough data. Of course there is. I have massive amounts of context and data on my website. Scrape it, use your AI and come up with a better idea. And I'll tell you, Replit and Lovable and even V0 can do a pretty good job of it.

56:45They come up with ideas. This is what the AIs are supposed to do. Make didn't even know it was on my website. It didn't even try. It was the worst thing I'd ever seen, nor was it designed. And so if Figma Make can't do that, and then I can tell you how folks criticize me. That's the wrong use case. It's not supposed to do that. But if Figma Make can't even pick up the context from a website to redesign it, what hope is there for Squarespace and all the other guys, right? They can't even Figma can't do it. Worst Vibe Coding experience I've had in six months is Figma Make. And I'm not a designer.

57:17Okay, but. And I'm sure what the comments said is some version of the use case here is take a design and implement it as code. Yeah. Not. That and res ipsa loquitur is fine in 2026. Your website doesn't have to say anything coherent because it doesn't matter for design. That was the other feedback, which I thought was rather dated. Because your comment was you were criticizing the work in terms of its written content. Well, it was all terrible. First of all, it didn't design the website. It just used dated Claude artifacts from six months ago. So giving me little sparkly icons that are on every tier three demo days is not impressive for Figma that there's no design.

57:53But it didn't pick up. My point is they chose not to pick up any context from the asset.

57:56Harry Stebbings:Jason, did this change your opinion on your optimism as a shareholder or potential shareholder of Figma moving forwards? Yeah, it shows that the team's not. I think it's worse than base 44. It's rough. It's rough. You're not going to win today if you're doing quarterly release, best effort releases. And I would say most public software companies are also, and many struggling unicorns, I would say almost all struggling unicorns are doing best efforts quarterly releases. That's death today. That world does not exist any longer. Best efforts quarterly. Let's get around the table and decide what we're going to ship this quarter, guys.

58:31OK, that's the way I built software. It don't work today. I think what's interesting about this discussion is how generalizable it is to the challenges that, you know, a huge amount of the portfolio faces. Is that this challenge of taking an existing business, like, you know, because one thing I think you can stipulate is the people at Figma are extraordinarily talented.

58:50Harry Stebbings:I mean, it's not a year or two ago since, oh, my God, these are the best people out there. They built something enormous. And, you know, they clearly have and they clearly did. I think this speaks to the challenge anyone faces in a larger company with an existing product architecture, finding a way to adopt the new technology, the new architecture, and the new way of doing both the way of building and then what you actually have to build in such a way as you can make a big enough impact to change the trajectory of your existing company. And we've talked about two or three examples. We've talked about Figma.

59:20We've talked about Wix. We've talked about Intercom, who seems to have been doing it. And it's just really damn hard. But the funny thing is there are literally one point something trillion dollars worth of public companies and another trillion dollars worth of private companies for whom this is the existential crisis. And it's really interesting. We're seeing it across our portfolio. How do you make sure you matter? And how do you cut through the internal noise? And how do you staff your teams? And how do you create the urgency and how do you create a sense of what's possible? The odd thing is, this is precisely when you should be hiring young people who are coming in replete with the knowledge and unencumbered by priors.

59:57So maybe all those unemployed computer science, but maybe in some of these SaaS companies, genuine common here, you do need some young talent to see what you can do and do some Y Combinator aqua hires of failed teams and say, how do you turn around your R &D development, which takes, as Jason says, three, six, nine months to deliver something when the team down the road are delivering a new version every week. Because if you don't bring this out, you're going to trade at eight times EBITDA, which at best is two or three times revenues. And it's going to be pretty fricking unsatisfactory for the people who pay 30 times.

1:00:30Harry Stebbings:I don't think there's a lack of desire, by the way, for young people. I think there's a lack of desire for one or two years in a role who've been indoctrinated enough to think that the world is a certain way with a certain set of tools. And what you actually want is the 18 year old who's on every subreddit and knows every intro to a TikTok. Totally. We have to make some public market bets. And I wanted to save some time for this. And so we have four companies that we need to choose. Jason, would you like to start with your four? And you can give like a minute as an explanation or you can just say them.

1:01:01Harry Stebbings:Up to you. Okay, hold on. I got a little confused here. Mine haven't really changed. Mine were Palantir, Cloudflare, Farts. What was my third one? Shopify and CrowdStrike. Okay. And the fourth one, I'm not sure about. I'm sticking with my three. I'm going with the same. I'm betting on momentum is the only thing that's going to save us in the age of AI. So I'm betting on overpriced Palantir, Cloudflare, which is reaccelerating and benefiting from AI and Shopify, which is gaining market share. I actually can't find a fourth from my cohort, but because I made up the bet, I'm going to go CrowdStrike because I don't think AI is going to hurt them but i i would almost go igv instead of crowd strike but i'm going to go crowd strike but i can't even though i want to do it last year because i think it's above the fold and a good one it doesn't fit the thesis so i got a pass after using make i cannot do figma i cannot do figma after make this is not a world-class product so i got to stick with crowd strike i'm sharing you on crowd strike oh we have that in common okay i'm adding new bank i think new banks actually dramatically underappreciated they're going to enter the u.s it's a good bet they've still got david at the helm they're growing 28 year on year incredibly solid i am going for the incredibly boring nvidia i think that's a good one i think honestly if we're going to see inference skyrocket nvidia will win acquisition of grok movement inference layer i don't fucking sell jansen and then i'm actually going to go for an out there one of reddit it's down 40%.

1:02:33Harry Stebbings:I think it's a data layer for a lot of the LLMs. And given its pricing, it's a good buy. Rory, what would yours be? I'll tell you. I think of the boring ones that have been savage and are below 10x EBITDA, I think Salesforce 8 or 9x EBITDA and even team at 9x EBITDA with decent growth is okay. I think those are good starts. For the record, I also bought WorldCloud. I put the full 250K we said we'd bet into WorldCloud the day we bet. And we're about up 4 % so far. Nothing major, but nice, right? In a month, in a week. And the interesting thing about those, those are squarely in the strike zone of could be replaced by AI, but I don't think they will be.

1:03:12Then the next bucket is, I actually think the AI fear is overdone. And they're kind of in that mid category of GARP. They're not stupidly priced and they got decent growth. And I put Toast and Intuit in there because they're software, but with a huge slug of transactions that aren't going to be replaced by AI. And then at the very top, I actually thought Jason raised the most interesting category, which was the high-growing companies where I think the AI is going to kill them story was totally overdone. And the best example of that was CrowdStrike. And the proof that it was totally overdone was by the time we're talking about it two weeks later, it's gotten back almost all the hit it took on the day, right?

1:03:50So it's been kind one of those up and down things. So I think with more fear, because I'm more afraid of the current high price rate overall than I am of the SaaS apocalypse, I would with fear pick CrowdStrike because you're paying at mid high teens of NTM revenue. I think the EBITDA multiple is 50. The growth rate's 23%. That's scary, but it's an enduring company. And I wanted to pick two expensive ones, the kind of real, where you're not dealing with like my first two are eight or 9x EBITDA, boring ass value. The other two are early teens EBITDA, which is roughly the same as Microsoft and Google, pretty boring.

1:04:29And then you've got the high price ones are at 30 and 40 times EBITDA. In other words, they're not cash flow justified. So you're still story based. And I went CrowdStrike. And then I get drawn to Palantir. And I never thought I'd say that because I've been, no, but the growth rate, they're one more year of growth away from being normalized okay. And maybe you're a year and a half. In other words, you're forward paying two years. And I think this administration is going to spend for two years. So I reluctantly, reluctantly put Palantir into that bucket. Wait, was that seven or four? Who were the four?

1:05:03It's two of each. Two cheap value, two GARP, and two, oh my God. I mean, to your point, and that's why I thought the last category that you put all of them into is the venture category. Effectively, the only category that I listed that's even vaguely venture relevant is the 30 % growth plus people. And that's the crowd strikes the palanteers of this world. The astonishing thing is 95 % of the assets in the public market are utterly venture irrelevant in terms of growth rate and everything like that. Because you just haven't had any public IPOs. By definition, the return profile from this back is probably significantly below what you should be able to get in venture if you've got the right price, which is, of course, the category.

1:05:41As long as you've tracked those four areas, it's good by me.

1:05:44Harry Stebbings:Yeah. Banioff's going to be unhappy with you, Jason. I mean, no, no. It's not that I would, I'll pick value stocks. I'm a deep, deep believer in Salesforce. I guess I could swap it. Jason, if you would choose one value stock today, like I'm not asking you to actually put your money in this one, but like where you're like, I'm having to reach for a gem in value. What would it be? Well, listen, I only believe in reacceleration. This is my only thesis, right? I have no other thesis. And so you have to pick Atlassian because I can't find another downbeat and one that's re-accelerating. It's that simple.

1:06:14And so my fourth one, Palantir, Cloudflare, Shopify, it's just the math. For the fourth candidate, I was CrowdStrike versus Snowflake versus Atlassian. I had Atlassian. I would pick Atlassian. And probably in a year, I'd pick Salesforce because I think it's all going to work. Don't get me wrong, but we need to see it. But the only reason I ding Snowflake is it's not founder-led. And it's just that's my thesis today. Like I can't pick Mongo or I killed Mongo or Snowflake just on not being founder led. That's just, that's just, just have a bright line. But you could argue, if you look at the numbers, you could argue Snowflake's a better bet than CrowdStrike, right?

1:06:47But Atlassian, you know, I don't know why it hasn't gotten any credit for re-accelerating, right? I mean, obviously the answer is they don't believe it will sustain. They don't believe it will last, right? I think the argument there is, which is a scary one, it is that the software development lifecycle itself is changing so dramatically that you're effectively a software product that coordinates the software development lifecycle. And seats are going to change. Workflows are going to change. If you don't stay on top of it, you have a software that coordinates how engineering departments run in 2022.

1:07:18And the risk on team is that in 2027, it's going to run so differently that you're not the thing. Now, I'm willing to bet he can figure it out. But yeah, there's a legitimate risk on that one. But in a way, I don't think, for example, I think on Salesforce, your destiny is a little like SAP. Worst case, if you can't re-accelerate, you just optimize, right? And boring as be damned. Increase free cash flow. I mean, one of the reasons I went with that was all the big pre-SaaS companies that had systems of record, Oracle, PeopleSoft, which rolled up into Oracle and SAP survived and financially thrived, even if they're not exciting in the age of cloud.

1:07:59And my guess is Salesforce does the same in a way that the mid tier point products don't. In a consolidating world in cloud, they can probably be mean and pick up other people. God, that's uninspiring. Well, people, I mean, listen, if you wanted to bet on Salesforce, I'll tell you the simple reason. It's just the numbers don't show reacceleration yet, right? At least the organic ones. The simple reason, and I know this being super deep on agent force and everything is unlike a lot of folks on this list, they have more demand than they can serve. And it's a complicated issue. Like not every customer can get agent force to do what they want and can train it and get an FDE.

1:08:33But what you really want to squint in bet, if you want to bet on turnarounds is who has more demand, AI demand than they can service. And there may be more than Salesforce, but there probably aren't too many more folks who literally are turning away customers because they can't service that. And going earlier in the conversation, those are startups I want to bet on too, right? That have that, how are you going to build something where the demand for your agent is so strong, you can't even service it. And Salesforce does have that. What is the reminders for me on this that I have to revisit in my own head, the eternal venture question of how much for how much?

1:09:08In other words, how much extra on revenue or EBITDA multiple do you pay for 30 % growth versus 20 versus 40? Jason, to your point, because I like your sort algorithm And in a venture business, they're the only things you invest in. But I will say sometimes in the public markets, you just get a little scared at the kind of 30, 40 times EBITDA multiples, 12, 14 times revenue multiples in conjunction with the 20 % growth rate. When you think back to the fact that the average SaaS company used to trade at six times with a growth rate of 30. Essentially, what happened at the low end was everyone woke up and said, these things aren't growing at all.

1:09:45I'm giving you eight times EBITDA. That's it. The question is, what happens if at the high end people go 20 % or 30 % growth? It looks great relative to Salesforce, but it looks shit relative to Entropic. And maybe I shouldn't go back to my, oh, you know, six times revenues, seven times revenues, and you have 50 % capital risk. I mean, I'm not saying it's going to happen. I'm actually saying I'm reminding myself of how, you know, just good growth at a pricey price is always tricky. The great thing about 100 % growth is it covers everything. Growth solves all. Boys, time for a wrap. Game on. Game on.

1:10:18Game on, game over. Game on, game over. Oh my God. I've been talking to you guys for two hours. Yeah, dude, well done.

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