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25:21If they're not any damn good, they're on their own, but it's at least a vaguely upside -the -approach, Harry, versus, you know, Armageddon here. You can go to our website and see who are hiring and also this narrative around that we're not going to hire any more kids out of college. This is also bullshit. I'm aware that you're going to have to run. I do want to ask one final thing, which is just in terms of unfair questions. Brodie loves me for this. You have open AI at 300. And you have a throttpick at 170, which would you prefer to buy? Well, I think both are actually great companies. Salesforce owns 1 % of Anthropics.

26:00So I'll just, you know, it's obviously a great company very focused on the enterprise open AI also is, you know, a great company. I'm a big fan of, you know, their leadership and what they've done. I don't know what you're paying, your media training person, but you should pay them more. That was a masterclass in how to handle how you being annoying. Basically, Harry, thank you for your question. I've complimented, I love it. He just wants, you should just fold, Harry. Now, I'll be practicing that next time. It's the nice, nice about everyone and shut up, Abby. Good job. Mark, you are a hero. Thank you so much for this and thank you for putting up with my pressing questions.

26:37Jason's free to present at Dreamforce about how he's changed. I'll be there. I'm even going to Metallica this time. Mark, thank you so much. You're a star. Nice. Great to see you. Bye bye, now. Well, all right. We're ready. And now I'm excited because these are one of divinity. Nat Friedman reporting to Alex Wang, after not a huge amount of time. How did we analyze, interpret this news of the new structure that's come to be in Master's AI division? I thought the consensus when we talked about this deal at least 10 days ago, 14 days ago was it was, it's fine to give up billions of potential carry and funds to be in the game, to be a player, rather than to be on the sidelines.

27:21I don't wanna be critical, but man, and then essentially getting undermoded in a reorg. Like maybe it doesn't feel that way, but hiring frees in a total reorg within 30 days, it's a lot to process. I might rather be running my own fund. At least it seems like a vaguely sensible org structure where you have one person in charge and then the four divisions, you have pure science, you have LLM Foundation models, you have AI applications, which I think is where it's running, and you have infrastructure. You know, you read the org structure and go, Yeah, that's probably how you should run it. You got one guy in charge.

27:53It's the same thing, stupid examples. When you get these soccer teams, where they just have so much money, you hire all these people in on the transfer market, and then you got a bunch of drama, and then someone's got to be the manager and figure out who's going to play what position. I don't know what promises are made. I don't know who's bent out of shape, but it seemed like a sensible thing to do. You spent $20 billion on talent. You now need to tell them what position to play and who's going to play forward, who's going to play striker, and who's going to play fullback. I just don't get it.

28:20I feel naive here. I don't understand if you're not why you're doing. I understand you want to be in the room I get that but then reporting to someone else who's not zark for anyone that knew not a new Microsoft he was really in the grooming position to be the next year of Microsoft many understood and now it's like to then report to someone who's not zark in This structure you got you know Jan Lecune also reporting to Alex Wang as well Daniel is reportedly not really their day -to -day I'm just confused by the whole structure and it just feels like wow you gave up on probably one of the best funds.

28:55I gotta push just be logical how it you're not confused and the structure you actually the structures pretty well understood you're confused and why he do it which is a different thing. You're confused and why someone who was highly autonomous would sign up to report to someone who reports to the CEO that's what you confused. And the rationale around that for me would be like well actually you know guess what Elon goes to Zuck when he wants to buy open AI and Sam Altman. It's pretty cool being in that room, which that would be without it's to have that discussion and you're not if you're just another fund That would be the reason why you did I think being in the room for that a couple times is fun And then then I'd rather run my own shop You know there's only so many rooms.

29:32I need to be in like it's pretty fun It's like the first IPO you're part of like it's great But I'm not sure what it's like as a VC to have 20 IPOs I might rather have more carry than show up to ringing the bell. I don't know honest common is I totally get That was someone who's a great operator, which is not to be a VC, because I think if you're a good operator, I always tell great operators who talk about coming into venture. Don't be crazy. Your highest and best use is operating. If you had the ability to be the next CEO of Microsoft, or be a VC, my strong advice is go to the next CEO of Microsoft.

30:04I get the transition from venture to operator. The question you're raising is the level at which you make the transition. It's giving up autonomy. But again, as I say, I don't know what was promised. How did you think about Matt and more broadly being hit hard? I mean, they were down 6%, and they've had a pretty meteoric continuous rise. This was a blip. The big picture here is, the core business is doing extraordinary well. They have a very tenuous link between their core business and their AI initiative. They talk about how AI is optimizing their core business. But even I think from the discussions they said, that's much more old school AI than any DLLM stuff.

30:39So you've got this core business that's kicking off cash and then you've got the CEO when on Tramble power decided to invest all this cash in this new business So if you're trying to value the stock your entire day is spent thinking WTF is this new business work And isn't gonna eat all the cash flow. It's like crem the logic You know when you're looking at who lines up in red square and trying to figure out who's in charge You just looked at this announcement and said I don't know what this means, but maybe it means bad So maybe I should start off. There's just no data and there's no way of knowing.

31:09At some point, someone's gonna have to explain what they're doing with their 60, 70 billion dollars and how it's gonna change their business and if Zuckerberg is right, like he was on Instagram and WhatsApp, everyone will go yay. And if he's wrong, like he was about the metaverse, everyone will go, oh my God, what are we thinking? So you don't think this is the beginning of a cooling of the excitement of the AI market and a damn thing of market caps and a damn thing of public markets in a way that some people have worried about. How the hell would I know? I mean, I don't think implies I'm a no.

31:38Like, it's just not knowable. Let me tell you, you'll know when it's happened because it'll hurt. All you know now is things are pretty lofty. When things are trading at 15 times earnings, you don't have to agonize all that much because you know, if earnings blip 10%, the stock blip's 5 % and no one cares. When things are trading at a very pricey level, then everything that goes wrong, no matter how tiny gets magnified through the stock price, things are trading in a high price now. You don't know is that going to change in a week, come on to year. It's going to be an angsty time. And either the growth comes to fill the earnings gap, all the stocks go down to reflect that.

32:12And when that happens, who the hell knows? Listen, I'm not an expert, but meta has a 1 .59 beta. It's a volatile stock. Yeah. So like I don't think we can read anything into these ups and downs because the beta is so high. I mean, Nvidia 2 .3, these are insane numbers, right? And so abstract way for that, But when you look at the amount of volatility figmas had since the IPO, it hasn't even had a quarter hasn't even gone out. These high beta stocks, I don't know. You got me smarter than me to figure out what even a 7 % -8 % movement means. The beta's too high. Aligned to what I just said, which is like the cooling or the lack of cooling, anthropic goes from a 5 to a 10 billion dollar raise.

32:52Is demand just completely uneasinessable for this? I heard it was 4x over subscribed. How did you guys react to that five to 10 and the four X over subscribed reportedly? Good for them. Demand appears to be pretty damn high. You know, it looks like you can raise 10 billion plus and a single financing in the private markets. You open AIS 40. Yeah. I mean, as you say, appetite for the story, the AI story is extraordinarily strong. And most of the public's cups aren't a pure AI story. They've got kind of AI blended into something else. Facebook, Google, Microsoft, Havetaly, something Apple, there's nothing there, Amazon is little there.

33:29So, there's got to be if you're a fidelity type manager, you're like, how do I get me some AI action? There's two obvious at -scale candidates. And yeah, you probably can sell a lot of that stock right now. And they're gonna sell it. And the good news is they know what to do with the money. They can buy GPUs. But is this then Harry, you would know this better than me. Maybe Rory knows it. Iconic is a lead for this round and light speed led the last round? I mean, maybe the underlying LPs and money is from sovereign wealth funds or other. These are the standard cast of characters who can tap into vast amount of money, right, and charge, keep a vast amount of economics on top of it.

34:03Of course they're going to go from five to ten. If I can deploy, why don't I deploy another five if I'm light speed or iconic, right? Why wouldn't you? Instead of light speed putting two billion in, if it's LPs, we'll give them six. Why not? At a GP level, it's the same amount of risk, isn't it? I lose two billion, six billion. What's the difference? but I mean I can make so much more money. And they could also be writing that call that it is going to work from here. You know, it was it's an interesting exercise to try and take the entropic numbers and say what do you have to believe to believe in a three X from here?

34:32And it's frankly not impossible. The lot has to go right, but a lot is going right. I kind of did the thought experiment a while back. The growth rate over the last year or two is so fast that one of two unprecedented things is going to happen in the next year. Either a, deaccelerates that quite normal rate relative to its current growth rate. It's going to hit $50 billion in revenue plus because things that go from one to nine or ten probably go next year. I don't know, that's a 10x growth. Did they go 5x? Did they go 3x? Yeah, it could end next year at 40 billion. In revenue, it's possible. It could end this year at nine.

35:07Yeah. I'm one to nine. So you're much better than me, Roy. What if you just do your trailing velocity? What is that end up? That's exactly what you want to put in the enormous number and you go, wow, that's not crazy. And then so either that happens, which would be unprecedented because the amount of revenue would just be so big, are they slow down faster than anything slowed down ever? If you go from 10x growth to 2x growth, and once there's 2x growth, it's amazing at that scale, but it would be such a de -acceleration. So when you look at the stock and you look at the price they're paying, as I say, it's not crazy to say, if the growth only slows even 50%, it's still got a kind of a trajectory and a throw path to tens of billions of dollars in revenue and that gets you into the valuation.

35:50So processing through that, you said yourself, at some point it's a market size question. If there's enough revenue out there, these two guys are going to get it. And thus, at the end, as highly priced stocks do that are really leaning into growth, it down to your assessment of is there $50 billion of demand for foundation model APIs, or $500 billion of demand for foundation model APIs. And if it's the latter, they're probably going to get 40 % of it and they got some $200 million. And if it's the formula, they're going to get 20 million and a lot of these people are going to be sad. What do you think it is, Roy?

36:26Because it's a really hard question. I mean, I think it slows down more than people are, I mean, it's something Jason said three or four shows ago where, you know, if you start running out the numbers on what, I mean, let's talk about 200 billion of revenue. Salesforce is doing 40 billion. So at 100 billion, you're saying it's kind of two and a half times the size of Salesforce, which effectively has dominant market share in the CRM space. Coal does have to get what Jason said a couple of weeks ago. These agents have to work 10 or 20 grand ahead for that market size to get to that scale. If all this is $2 ,000 in an engineer, I don't know if you get there.

37:01But that was my big aha when I did the math you actually need these things to take vast chunks out of the labor budget and be worth 20 30 40 thousand dollars Almost ahead to the enterprise for the math to work and you know Jason said in some cases it will there will be some use cases Where an enterprise will part with 20 grand but there'll be lots where it don't so you can tell my lack of certainty here I don't know if I get to that 100 million plus 100 billion plus in revenue because I just run the math and I can't find the time, but I could be wrong and underestimating it. My guess is no, and it slows more than you think, but it's not a crazy call.

37:38I can't shoot from the hip and do the math, right? Because it's so much money. It is so much money. I mean, listen, we just had Mark Benioff here, who's saying in Dreamforce they're going to launch an AISGR that I guarantee you it's going to take like six to nine months to scale up, but it's going to be bonkers. Everyone's going to turn it on. that will tap into a vast amount of budget, a vast amount of cycles, a vast amount. Now, maybe some of it will be their own LOMs, but it doesn't really matter for purposes of this. We were just starting this cycle, right? And it's hard to predict how much human replacement, how much new applications.

38:10But let's do that exercise. You would say, let's say Salesforce is doing 40 billion a year. I think 12 billion of that is sales cloud. Let's say they turn this on and it's a 30 % uplift, AISDR on top of the core sales cloud, which is 12 billion. So it's 3 .6 billion of extra revenue, which as you point out only gives the poor man another year of 10 percent growth, but 3 .6 billion in revenue. Let's just say LLM costs as a percent of revenue are expensive, 20 percent. So that's 720 million dollars. So you've just had the second largest software company on the planet turn on the most labor -saving device for their core marquee product and when it filters down to LLM revenue with $720 million, we're on it up to a billion.

38:54That's when you kind of go, you have to sell a lot of labor replacement to get to a hundred billion. Now, maybe I'm on the rest of it and maybe the 30 % is wrong. Could you see yourself, Jason, paying four times what you pay for Salesforce for an AI, SDR on top of that Salesforce? Listen, we're a tiny group, right? But we have four seats a sales force. So what do we pay? 300 bucks a month. 12th down a year for sales force. Namely, we're paying $500 ,000 for 11 AI agents. So what's the ratio? I don't know whether that makes sense long term. I don't know if it scales. If a portion of that ratio were to hold, then it's a pretty cheap round.

39:31Well, again, again, push it up. But it's a crazy ratio, isn't it? Let's just even do two to one. Let's just say for every dollar you spend and sell for us, you spend another dollar on top, that's 12 billion. Let's assume 20 % to the LLM, that's 2 .4 billion. It's real money, but it's only 2 .4 billion. I just, yeah, but I'm spending 500 K versus 20 K is 24, the 20 X more, right? To be true, if 20 X is the ratio, then you're right. I think the problem, and Harry was teasing at this, but we have to go gently with the C of a $40 billion run rate company. The tough part just is that, I mean, you're doing the right thing, Rory.

40:07Sales source may not capture that incremental 120 billion. That's the challenge. Workday may not capture it. Palantir appears to be capturing it. That was why Mark was impressed with him. If the big guys mostly don't seem to be capturing this agent dollar, if they do, great. But today, when we're recording this, it hasn't happened yet, right? They're not capturing much. And I'm saying, and even if they do, and I think they will, I think they're well -posed to capture some of it, I think, as I say, when you apply to 20 % ratio and you get back down to how much revenue it is for the LLM. You struggle out of the LL.

40:39And then I'm going to make the argument against myself. And then you look at the explosion in revenue in the last year. I've never seen something grow 10 at nine acts from a billion in one year. I always joke that Newton's law of motion applies to companies. Things in motion stay in motion. I can never remember anything going one bill, even one million to nine million and then flattening out to 12. Let alone one billion to nine billion just to trajectory alone and implies 30 something the following year which would be a significant slowdown. You'd have gone from a 9x year to a 3x year. I'm just worried that the Mag 7's day have so much concentration of value in the public markets driven by AI hypernext excitement.

41:23It's very valid as we see with anthropic revenue growth like you're talking about there. But I don't feel like we've ever had the concentration of value tied to AI in seven companies as we have today. And I am looking at it now going like, oh, I really hope there's not a blip here. Dear Lord. So basically, you've done all you analysis just like everyone else. And then the last sentence says it all, I don't have the stomach to sell, crystallize my gains, and move it all to value stocks. Instead, I'm just going to let it ride and pray a little. Nice, Harry. I'm not going to argue with it. It's what I'm doing too.

41:55But yeah, And I'm asking, I'm asking you. Where the rubber hits the road is when you do that analysis, and you have to say to yourself, it's unprecedented to do you wanna make a trade. Do you wanna sell down? Do you believe that it's gonna revert to the norm? And you don't now. I do, I do believe it's gonna revert to norm. I'm more pessimistic than some, right? I do believe it's going to revert to the norm. So you're crystallizing your gains now. I'm actually looking at it right now. In fact, I had a long conversation with someone about just giving all the other dynamics about what's the best ETF for core commodities, which are the only things that survive the 70s.

42:30But it's a 5 % play, not, I mean, you know, I'm not gonna go down that route at all. But I think something can be amazing and still overpriced. That's perhaps the sentiment. So I'm looking at this, going, all these companies and these opportunities are amazing. I don't wanna down on them, because any growth from here will be just astonishing. I mean, I didn't plan to come here and talk about stock prices, but you asked about the Mag 7. Eventually you get reversion to the mean and we're at the highest point, we've ever been in terms of concentration. I mean, it hit us hard in 2022, right? We're very into the mean, hit everyone hard.

43:00Yeah. Hit everyone hard, right? 2023 was worse, but the precipitous drop in 2022, we've already had forgot, I mean, not everyone's, I mean, it was brutal. And 2022 was even worse because the revenue growth was still there. Like, the cloud companies were still growing at a decent percent of 2021, but the valuations fell 66 percent. It was brutal. Okay, so we have this realization. We understand that actually, good times sometimes end. And then when you look at Mongo up 27 cents day on amazing numbers we have box up, we have octa up. Jason, can you tell me up the volume where the party is going?

43:35Like this is I'm ready to put on my DJ set here. I need a little time to process it, but I think thank God because we were just talking you were just asking Mark Binyoff why they weren't getting the lift right from AI. I'm glad to see that just literally this week we're seeing Mongo go even octave, which had been struggling box the other day zoom, which is not exactly a rocket ship anywhere, but seen growth, re -accelerate because of AI. It's like, thank God, like the cavalry's coming just in time to help the public guys need it. So I think it's heartening, but to your point, this is not anthropocroth.

44:07It is re -acceleration. Like re -acceleration, it's scale to Rory's point is always epic. Like we owe everyone a hell of kudos when they re -accelerate at scale because it's so rare. Now we're seeing it a multiple, it's just not like palanterior acceleration. Exactly right. And maybe actually the thing that two things have in common, it's just to remind yourself, changes in stock prices are when you get a difference between the expectation of what actually happens. And what you're seeing in some of these like mango bounces, when people have these sass is dead story, and the markets buy into it, and these things start trading at, you know, five and a half times, whatever.

44:41And suddenly, it's not like you grow 9x, but you beat expectations by a couple of percentage points. And suddenly you can get a nice bounce in your stock because you're trading at a value where once the upside shift it's stocks only going to one way. And it's almost like the mirror opposite of what happens to these super high price things. When all the good news is priced in, when even one piece of good news goes out of the deal, you fall fast. If Salesforce had a 13 % Q1Q gap revenue quarter, you would see that stock bounce like you haven't seen it. Because it would be, Oh, we priced in 10, we're suddenly getting 13, we're getting 13 at scale, oh my God.

45:17I'm not a total mango expert, but when you look at companies like Levelable Replet that we over discuss, right? But this, let's call it 300 or 400 million of AR already this year, plus everybody else, right? But the level of repables, every time someone uses app, they're spilling up multiple neon or super based databases, okay? The load on both of them is massive. They've never seen demand like this, like it's massive. That's great for them. I mean, neon got bought by Databricks for billion, right? I didn't even understand why at the time. Now I get it, right? Sue, they's probably worth much more, right?

45:45It's kind of a bummer and air quotes, if Mongo doesn't benefit from that. Like if it's all the Harvey's and the super bassist and like, I guess it's good for VC, but it's also a terrible stability point of none of the incumbents benefit, right? Where is it Lassie in benefiting from this AI wave, right? Where is Monday benefiting? So it's heartening at a meta level to see Mongo benefiting from AI deployments. It's heartening because it means maybe the revenue is a little more durable. Maybe Harry's Repplet and investment lovable will go 10X rather than crash and burn next year because all the stuff's enduring.

46:17Right now it still feels so fragile, doesn't it? All this revenue feels fragile. No, it feels very durable. Thank you very much. You're dead. I wasn't even able to go from zero to 106. I mean, did you see what Wix said with what do they buy? Base 44? What's it called? The one they bought? Yeah, I have the 80 -minute box. Yeah. Yeah, now they did 1 .2 million last week. Probably a good deal then. Oh my, deal this entry. And I tried it. I tried it. I actually took my site and had it rebuild it. it looks like cloud but not as good. I get it, but they're working on all the issues. But it's just interesting.

46:44If Wix can buy a eight person startup and then achieve that revenue velocity, it's impressive. But it also makes you think about durability. Totally does. Or you said if Salesforce Group, 13 % not 10 % it bounced like never before. We had Clarner file saved to go public between a $13 and a $15 billion range. There was lower than people thought. It was lower, I think largely because of the 20 % year on year growth, which isn't great. It's good, but it's not great. Jason, how did you interpret Clona finally going out? Will we know that it had a $45 billion price around before soft bank lead, then a repricing to six and a half, and now going public at 13 to 15?

47:23If they were growing 24 % last year, and now they're filing and they're growing 20, what's the inverse of the Mendoza line, Rory, the opposite? When you fall below, you can't file. Did the Mendoza line of triple, triple, double, double, or better about, there's also this hard, it's the hard deck. You can't fall below the hard deck for IPO and it's 20 % growth. And I could be wrong, like I don't know, it might be the clarinus filing just in time in the midst of this IPO way because 24 to 40 is not the re -acceleration that we're seeing in some of the folks. I mean, even, you know, net scope just filed, modest re -acceleration from 30 to 33%, 33 to 30 % may sound modest, but it's a lot of work.

48:0024 to 20, you know, maps hitting the hard deck again. like you pull up, pull up, pull up, pull up, pull up. I imagine I'd say, I think, I'll file, I'll file, pull up, pull up. There is a level of growth below which it's hard to file, but just to be clear, the bigger you are, the lower that growth threshold. It simply does a transaction level below which the Wall Street math doesn't work. So you know, it's silly example. If you're doing 10 billion in revenue, they'll happily take you public with a 7 % growth rate because you're just big enough to matter, right? But you're right, for the typical venture deal, somewhere around 20%, you're starting to get to the multiples don't get there.

48:36But clearly at 14 billion, it's a perfectly doable deal. So I don't think it's a question of you're going too low to matter. I think at 14 billion, it's a valid transaction. I mean, just very different business than net scope. It's very much a financial business. If you recollect that, how that whole issue on, interesting. They did a little bit of overstatement on AI and they're going to automate everything and then backed off of that. But that was interesting, but not important. I think the more interesting fact was some of the early comments on lending losses early I think was earlier on this year.

49:05So it's a financial services business and it lives on dies and financial services metrics and you know, and once you start to lend you got to be good at lending. I mean, we talked about new bank last week which is supposed to be bloody good at lending, right? Clown will be just fine. It'll trade. It'll go public. Whatever. It'll be valued like a relatively mature financial services business. I haven't studied the S1 yet. but the guys who priced it at six billion were right and the guys, which is Sequoia, and the guys who priced it at 45 billion were wrong, which is soft back. You'll recognize this, Harry does a saying, you know, Gary Linnaker used to say that soccer is a game played by 22 people in the end, the Germans win.

49:41Well, in the same way, adventure is a game played by 6 ,000 people and in the end, Sequoia wins. You know, they won here again. Still 24 to 20 % growth at less than 4 billion revenue. Still incredible, right? but to acceleration, hyping is going public. They're million in revenue per employee. That's implicitly saying we're finding our rule of 40 in the bottom line, not in the top line, isn't it? I mean, that coded message of a million per employee is growth to sell rates is fairly clear to Wall Street, right? We're making sure. Yeah, we're sure, but also, you're a financial services company. It's not the same metric.

50:13I mean, you know, I shudder to think what Jane Street or Citadel's revenue per employee when they, it's in the tens of millions, right? This is the classic Fintech company trying to make software noises, but let me give you a clue. You're a Fintech company. It's all fine. It's totally worthy thing. Your Fintech company at huge scale, well done. You built the category. You'll get the medium -growed Fintech valuation and everyone with the last round will make money. Does softbinders get washed? First of all, no. And it boils down to the details in the documents. So two comments. One is at the time of the last round, I remember thinking people are going, oh my god, you paid 45 and now you raised your money at 6.

50:53Yeah, you look like an idiot, but you only took 10 % delusion. If you were an investor at 45, yeah, you know, it sucks to take that delusion, but the down -rounded 6 billion didn't kill the economic value of their investment. In fact, it preserved it by keeping the company alive. Now, fast forward to today, you still overpaid. As we've discussed before, it boils down to what's in the docs. My guess is they don't have a block because Sequoia are not done people, and wouldn't have left it in. So yeah, they just overpaid and they're going to get converted and they're going to trade at 30, 40 cents and what they originally paid and they just hope is that it bounces up from there.

51:27So they don't get washed. They just do what's called losing money. It turns out when you buy a stock at 45 and it trades at 15, you're down. Totally. I love that also in terms of the 6 ,000 players and in the end, Sequoia, when that's the intro for sure. And I mean, they're going to pay you for that one, Rory. I mean, I know they had a marketing that she's gonna be like, Rory, go. Rory. It was amazing. Look, I mean, I started here 31 years ago and they were doing great and you're fast forward, 31 years, they're still doing great. There's something in there. You gotta hand it on them. I remember thinking when the clown around went down and obviously it was a bunch of drama after that what's the choir that we just leave out for now.

52:06I remember thinking that was a shrewd call. You just let them raise money at 45 billion a year and a half ago and now you're stepping in at six. Remember thinking good investment and it's going to turn out to be that not that it helped them soft bank did have a Ratchet and we work this deal was not that far off at a similar valuation They could have a ratchet here like I just don't we I need one more day to find out right you don't think so I don't I mean if they got one another deal at about the same price at about the same time at least it was discussed It was discussed. It's you exactly why it is knowable and when I get off here and we will feed the S1 into chat GPT and will know in an hour Yeah.

52:42What will that scope go out at? 700 million error growing 33 % loss valuation was it was around 7 .4 billion in 2021 and after that there was some kind of weird convert that's harder to track. It's a good company. It's not making money like figmets losing money but it's got it'll be at our close to it is my guess or maybe even up for me. So yeah, I think the 2021 round connects sale there. Not quite out of the woods yet, but if you got a company at 700 million, growing north to 30 % with a little bit of re -exceleration, it doesn't take more than a squint to see a seven billion dollar flat round to 21 and as being doable.

53:24And good for them, great company. Round since 2012, can all congrats to light speed who want a big chunk of this along with Excel. And yeah, I'm not going to tell you where it's going to trade day one because as we've proven with Figma, that's not knowable. What we were right about on Figma was the step up in the process, the process of these, they'll file at five or six, they'll get the man, they'll walk it up, my gut would be seven, eight -ish, where it trades on the first day, who the hell knows. Do you think it could be a bounce at Figma? The answer, of course, is no, because I believe, as I said earlier, in reverse into the mean, and Figma had the largest bounce of any large cap IPO since, I think, 2000.

54:01So I sincerely doubt they'll copy that. It was funny actually I got an email from one of the many millions of bankers You know those marketing emails next day they all sent out saying you know we priced XYZ IPO and the headline was We successfully priced the Figma IPO and I just so wanted to email back and say you priced it But it's not clear you pressed it right my friend successfully might be a reach here Going to the other end of the spectrum guys. I don't know if you saw this but it was astonishing for me It was a mapping of seed rounds segmented between megathons and boutons. Number one megathond seed investor was Andrewson with 72 seed deals.

54:41Compared to number two was 27, which was a quarter. Exactly. Rory, how did you analyze that? Andrewson just playing a totally different game. I mean, you have to say they're playing a different game. I mean, the words Ipsilf Acto, the words speak for themselves. If everybody else is doing 27 or less, and you're doing 72, then by definition it's a different game. Yeah. I mean, we saw it again in the other interesting analysis that someone did on the series A -Rounds. They are the successful quantity provider at every stage and the thing. They're the largest capital raise or I think other than the insight, but insight obviously it's slightly more later stage.

55:16In their Silicon pure Silicon Valley universe, they're the largest capital raise or at every stage. So by definition, they're doing the most deals and being the most aggressive. Do you think it will work out? When you look at some of them, we've mentioned like the data braces of the world and how much that will return. The truth is this, if it does how it doesn't work out, it will be because of the seed program. And that's the big aha. The seed program could get lost in the noise. It will work out if by virtue of the seed and a program, they get the small number of absolute outliers. And they stated this right back in 2009.

55:49So give them credit for wild, wild consistency. As long as they get those few number of companies that are absolutely outrageous upside performers and they stuff a billion dollars into them like they did a Databricks and they do it at the right price it'll work out fine. Everything else is a loss later. The seed program, it's basically like cheap milk in the supermarket. It brings in the crowds, right? You know, it's the last later. It is for suckers apparently. No, no, we said that Jason said that last time and then we are like, no, I mean, yes, I think it's consistent. I think it's consistent.

56:23I thought a friend who's a complete dipshit and he's gonna make a huge amount of money from a hundred million dollar SPV into open AI at 200 million. Well, he may be a dipshit, but he's got good sales skills because he got in. There's different ways to win in this business and sales is, you know, sales is part of it. There you go. Yeah, sometimes you just gotta sit on their steps to sit outside of open AI's office all day long and grab Sam 11 times a classic Sequoia playbook sit on your steps until you get the meeting. Don't leave without the term sheet. Now guys, do we have any other news items before I do a tweet of the week?

56:56Or I just want to talk about one tweet with what was particularly interesting grab the zeitgeist and I want to hear your thoughts on What's the tweet you might think to thada the idea that non -consensus investing is where the alpha is is Actually quite dangerous in the early stage Follow on capital tends to be more and more consensus aligned I thought it was a better tweet than he got credit for in the tweet of in the Twitter verse. I saw that tweet and I'm gonna work in. He also did a really good piece on gross margins and the way people are misunderstanding that that if we had more time we talk about.

57:33And I thought that that tweet wasn't crazy. And I think you know people then cited the cons and yes there were always outliers that are not consensus like in 2016 the non consensus bet would have been to do open AI. true, but it's also probably true that 90 % of non -consensus bets would have failed entirely, and at that stage, SaaS was probably consensus, and only about 50 % of SaaS bets would have failed entirely. When you're on this mega trend of an architectural re -platforming, a goodly amount of the correct investments to do are fairly consensus in terms of the broad macro themes. And I remember, I think with IVP years ago, I mean, let 20 years ago, they had this concept of, you know, 70 % of the bets being very much on track faster, better cheaper.

58:23And then I remember 30 % kind of brave new world bets. I don't think you could build your entire business on waiting for open AI. So I actually think his comment was more spot on than people give credit for. I think if you look honestly about what you're doing, you don't want to be 100 % consensus. You don't want to be called just doing AI. You want to be looking at new stuff. But it's like the explore thing. you are betting the mega trend that's probably gonna last 20 years. It could be AI. It was 20 years ago it was SAS 15 years ago as public cloud and that's a consensus bet that paid off for 15 years.

58:54I'm rambling a little but I think his comment was more correct than the 140 or 280 character comments made out. You don't want to just be consensus but consensus is a bad word for on point where where the industry is going. My reaction, he responded back to my reaction too, which was that, I thought one of the implicit points, and we've talked about this entire series of the show has been putting money into consensus bets, right? I mean, half this AI stuff is. I thought one of the points he was making, and he agreed was that today, 10 deals are consuming 40 % of venture capital. Everyone we knew that used to be B2B deals only does AI.

59:31My point back, which he agreed was like, if you're gonna do bets outside of that, you better not count on much follow on capital. Because they're not interested. They're not interested. And so I've done several B2B plus AI deals in the last 18 months that I love that will do great. And the advice I give to all those founders is don't expect any money. 80 % of the folks I can refer you to are not gonna take your meeting and it's a reality. And so I don't know that what, I mean, he was like, that's exactly part of the issue, right? And so there may be several layers, but if the whole industry is consensus, the capital's concentrated.

1:00:04It's not just your buddy that put 100 million in the SPV. Everything's concentrating here, right? We had nice seats day for a FinTech business and they scaled to 5 million a year and the founder was great and I said, why is this not moving fast? Like, what's wrong with it? I'm one of my team and we're like, oh, it's not AI. And that's an example of where I think Jason, you were spot on. It's not that you shouldn't do non -consensus bets. There's a couple of different things. But that's a classic example, what you should do. You should buy it at the right price because you're not going to get the magic pixie us next round and you should run it cap it efficiently because you're not going to get people drawing for billion dollars at you.

1:00:38So Roy, what you think is the price should reflect that it's not AI. It will and should be valued on fundamentals. And that's different to what it was in the last years. Yeah, if it's non -consensus only because it's doing something different, then by all means do it provide you understand what's different and you understand we're getting into. I think the really true thing, for example, it didn't quite come out. We talk about this, we think about our mega trends. It's one thing to say I'm going to do a deal that's not the ultimate consensus bet, AI. But it's really something kind of you got a question if you're doing something effectively as a bet against the mega -trend knowing what the consensus in has quite a lot of value because Because it also speaks to where the industry is a hole is going technically And the technical let's call it the technical consensus as distinct from the financial valuation consensus going back to what Benio said The technical consensus is that most software is going to be agentic for the next 20 years Do you really want to take a bet against that?

1:01:32I mean, because that's probably what the industry is going. And that's again, where I think Martin was right about that. But valuation aside, I think the bigger issue for venture, when times are good, we take follow -on capital for granted. No one's worried about the follow -on -round friend Thropic that they're throwing $10 billion, and that's not a single investor that's worried about the next round, is there? It's just greed, okay? But most of our careers, we've worried about follow -on capital. I worried as a founder, a capital in B2B was scarce until it's late as 2018. It was very, very scarce.

1:02:01It was very, very scarce. So that's just doing Harry's bet might be great, but not burning $2 million a million a month. Then it's like, who the hell is gonna, I mean, Harry's fund isn't big enough. He doesn't have billions yet, yet. And he doesn't like to carry his investments through three or four rounds. So you got a pass on that one, unless the burn rate zero, then I would do it. When I'm, because I'm having this experience right now, when I look back at my mistakes in the last three or four years in terms of investing, I have actually both kinds. I have a I wish I'd made more consensus bets because it's such a negative But I wish I made more on trend AI bets We made a lot.

1:02:36I wish we made more because the mega trend was bigger and more dominant But then equally I have three or four utterly non -consensus deals that I looked at was intrigued by and should have pulled a trigger on and regret And I just saw one of them today. I'm like wow. I really missed that one But I'll say it what you don't remember is the 99 consensus bets that you didn't do that just haven't worked out. I mean, both statements are true. It's a lot more forgiving in the consensus marketplace because as you say, you get washed away by you get you get buoyed up by other people's capital. Right. And it's easier in the short term to survive long enough to get the feedback.

1:03:12I'm just going to have done two of my best investments I have today. I'm a seed investor, right? I have the smallest amount of money of these three people, right? Two of my best investments today. I had to create around out of nothing when no one when there was no capital. I had to create around. I didn't have enough money. I had to create it. I don't want to do that too many times. It's like this isn't as hard as creating snowflake from scratch man, but it's hard, okay. It's hard. Going back to the consensus comment, it's okay, I'm trying to formulate it here. Maybe it was, it's okay to do the consensus bet but you don't want to do the consensus bet where the odds and the consensus are lower than the accuracy of the consensus.

1:03:46In other words, you don't want to be, you want to be an AI because that's what, because we've wrestled with this. A lot of these quote, consensus AI bet and we're not doing them, and we can't make the prices work. You still have to be paid for, you have to assess the risk accurately, and all the court consensus statement says is, it's more likely than not that this is the direction the technology is moving. So therefore you probably don't have that. Oh my God, are you totally wrong dimension to your business, which is why you can lean in a little into this AI consensus bet versus some of the others.

1:04:16But you still have to get all the other shit right for your point, and on top of that, If you overpay beyond the dreams of man, then there's nothing you can do to save yourself. So like everything in investing, it ends up being way more nuanced than consensus, non -consensus. The consensus bet risk, you're probably right on direction, you might ludicously overpay. The non -consensus bet, you could be way asked wrong on, is it even going to work? You probably won't have any follow -on capital, but if you get it right, you will have a beautiful thing, you'll have a high ownership low capital, and of one outcome.

1:04:49Again, as always, it turns out investing is hard and you can't just paint the numbers and collect 100 million bucks. Final one, what consensus shit you wish had done more of Roy or do you wish had done? I think I underestimated the impact of either scaling laws in AI and be the ability of primarily Altman and some other folks to inspire belief in those scaling laws and unlock 600 billion of capex spend a year. Anything that was attached to that making AI trend has just had a wall of money for the last five years. It includes the foundation models, it includes Nvidia and the public markets, it includes the inference companies.

1:05:28Literally, my mental model is, we have 600 billion of people, 600 billion dollars been spent making AI. And right now we have 28 or so, whatever it is, the recent service of apps using AI, most of which is open AI and on traffic. I did not think that we would be able to find $600 billion a year to spend in this space. And if you knew that was going to happen, I think you'd have looked at the inference companies. I think you'd have looked at the model companies at prices you thought were super high. I think you'd have broken glass on your financial model to try and get some of the, what is now the scaling law consensus.

1:06:05So I suppose you could argue at the time it wasn't consensus, which maybe is the actual counter -argument as I process in real time. But yeah, that's the trend that you just almost could not have had too much on in the last year boys Jason and they throughout my mind No, we can edit in marks AI and be tougher on them if you like we can build one to together It will build his clone forum and I'll be tougher. Sorry if we weren't tough enough. How we mark? Why are you so brilliant? How did you ever worry my favorite question? How are you so pression to think about this agente change? Listen, let me be clear.

1:06:36I think where it was a suck up. I don't think I was I think you're gonna look back at mine and you're gonna say I had some pretty good stuff I honestly think this I think where he was a suck up, but he doesn't know Mark I barely know him, but he doesn't know him so he and where he was a little tough on the on the growth He was just nice about it, but I think you don't like me better You know if I'm safe on you guys it's like you know who the fuck am I I'm a kid from London He's like me Don't poke hard, you gotta try harder You got it, sir. Most of the companies I've advised at 41 billion in revenue have committed a little earlier to the AI Transmark.

1:07:10I'm probably been bracing your advice. We're not trying to make people feel, you want your guests to come back. And actually, I'm going to say it again. I actually thought he was more on point and balanced than the other AI gurus who are saying it's AI. I mean, he was just like, we're going to sell some of this shit to our customers and and they're gonna buy it and it'll be good. You know what I freaking love about those shows? This is three great mates shooting the shit about tech news. And today we have one of the OGs of Sass Mart -Banny Off -Join. Next week we have Cliff, the co -founder of Canva on the show.

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