20VC: Daniel Gross and Nat Friedman: Acquired by Meta | OpenAI's SBC Bombshell: More Stock Comp Than Revenue | Privat Equity is Back: Olo Bought for $2BN | Microsoft Lays Off 9,000 People: Is This Just the Start | Will Sequoia Part with Shaun Maguire

24:23That's a smart slide de-risking. Wow. It's not like the shorting Nvidia stock you're doing, which is the bet you take if you really believe. I mean, there's a whole series of bets you can take depending on how much you think the hyperscalers are going to spend to build these models in the next four or five years. I can all the way from, I'm so leveraged to the upside that I'm going to buy NVIDIA out of the money calls. That's if you really believe. And you can just go in a descending order of risk reduction from there. These guys are very leaning in on data center demand. They're not walking away from that.

24:58But what they're doing is replacing, I mean, because it's effectively a financing company called, they're replacing fixed charges of debt and leases with equity. It's a good move. Yeah, it would help us all if there were like 10 core weaves. There's like, if you have a public company trading at a crazy high, high multiple, right? 20X revenues that has existential losses. You got to use your stock as your currency ASAP. You got to buy everything you can that can address the bottom line or other challenges you have. Right. And these are like fun times. If you're a target, you can get bought in an hour because they're going to, the core weave corp dev team is going to be looking for 20 assets that they can buy.

25:38that can fix some of the structural challenges in their models. And we haven't had an IPO like this in a while. We haven't had someone searching with a high-priced equity. And it's a great deal for everyone to turn high-priced equity into cash. And I don't even say the challenges in the model is much. I mean, you're right. It's not the negative of the model. It's just the nature of the model. I mean, the nature of the business is, you know, you buy, you fix that. They have long-term contracts against them. So they're a lot less exposed than some of these guys that are doing short-term contracts.

26:06but it's just a fixed cost business. You own this great big freaking data center, all these machines, and as long as there's money coming in the top, it's fine, but if not, it's brutal. It makes sense. All I was thinking was, well, Jesus, look at the other meme stock being Circle. Why are they not leveraging their stock appreciation to do the same? Probably because they're still not out of the first 90-day period when it's a pain in the ass to do it. Believe me, because CoreWeave member has been out there a good, I can't remember, a couple of months longer at least. You know, generally there's a period of time where you want to put your first, I remember asking this actually when I was on public board, you probably want to put one or two, at least one earnings release on the board as the asset that you would sell to your investors before you start doing crazy deals.

26:48I am sure that stock is burning a hole in their pockets too. Yeah, they'll do something. But one, you know, Circle had net income of 156 million last year. So CoreWeave, they both have inflated stocks. They both should use it to enhance their business models and they will, but it is different if you You have net positive. When you're profitable, you think about these deals differently, right? If you're burning cash, no one sweats the dilution from an existential deal. You just do it. It's like, let's get going, guys, right? When you're profitable, it just, it confuses a lot of things, right? It impacts your earnings.

27:19It impacts, you care more about dilution. There's a lot of things going on when you're profitable. I think if Circle does something, it will be about buying distribution, because obviously their biggest cost is the money they have Coinbase. So finding other ways to get their coin in the hands of users will be their thing. Whereas obviously for CoreWeave, it's just addressing their cost structure over time. It's a weird thing. It's like SBC. If you're losing money as a public company for real, you don't care so much about dilution. It's just more dilution to achieve your goal. You only really start to care when you cross the curve to profitability, right?

27:50You're exactly right. And I would just wonder, it's not that you don't care. It's the Maslow's hierarchy of caring, right? If you don't make profits, then it doesn't matter because you're screwed. And that's why early on, VCs are right to keep an eye on dilution, but not get all antsy about the economics of it. Just keep an eye on dilution. Because the way I think of it is we're all in this together. If we create something of value, everyone gets a share. Once you've created something of value, then a decision to allocate some of that is a much more meaningful economic term. I could not agree more.

28:20The way to think about SBC as a venture firm or a pre-profit company, and we're going to take about any kind of dilution, it's just very different than when you have a cashflow positive asset. It's a different thing. Speaking of kind of different things, a different kind of asset, but one that I found very encouraging was actually Toma Bravo going shopping with Olo. 320 million of ARR, Gap profitable, business that is decent and is bought for$2 billion by Toma Bravo. Is this PE coming in to save the day as we've heard time and time again? Remember, it was public as well. So they're taking it private.

28:53I have talked about how personally I've been concerned. I haven't seen the PE deals I'd hoped, right, with these funds raised. It's a good sign, right? It's a vertical SaaS player. If you want to compare it to Toast, I know a tough comp, but it's$2 billion versus$25 billion. But you could see the upside. Like there's positives and negatives in that, right? Defensible. It is defensible, right? Sticky. If you squint, maybe there'll be more of these vertical SaaS deals. 6X ARR, though, for us as investors, this doesn't buy the biggest house in Atherton. This is not going to buy a fourth house, right?

29:25This is like Yellowstone Club. We're just going to get a condo. We're not even get something on the hill at 6X ARR. You're right. It's a meat and potatoes deal. That was my aha. It's a 20 % grower, profitable, 6.5X, all's right with the world, sensible kind of deal. It's exactly the kind of deal issue. I think it went for 10 bucks a share. I think the damn thing went public for 25. So just as a reminder, what's happened here, went public in 21. Hopefully the VCs made money. I can't remember who did the deal. Trades back way down. And obviously it gets to a point where after three years, four years, people are willing to transact and the buyers will to pay six and a half times.

30:03So total solid meat and potatoes deal. And if you've got any more 21 % growers that are profitable, that have, as Jason said, good defendable vertical niches, I'm sure they'll be glad to give you six and a half times for that too. It's a start, but it's not going to save 500 to 700 unicorns single-handedly. I think that 20 % number, we talk about it a lot in venture at scale, right? But it's an example of how important it is, right? You got to be above that number to be of interest, right? Probably, right? And profitable. Yeah, and profitable, right? Yeah. It's still probably a rule of 25. We should look it up, right?

30:35But you got to be above 20 and profitable. And there's too many unicorns that are profitable, but not above 20 or 25. That's your 6X outcome. What are they underwriting this to you? Is this like a 3X? I think that business is inherently a 2 to 5x kind of business most of the time. So I'm sure that they're looking at this going, you know, the five other pieces of technology you can bolt on here, sell to the same customers, do the kind of thing that, frankly, PE does well, to some extent, I would say better than us, which is just figure out what your top customers want. Go buy the other little things, bundle it all through, get more share of wallet from top 500 restaurant chains and just build a business here.

31:14Jason, does this make you more or less excited to be an owner seeing this happen? Neutral. Owner is even smaller than toast, right? So it's core customer today. There's a lot of overlap, right? But it's smaller. So it just reinforces the non-obvious thing that when you're selling to end consumers, the long tail is sometimes where the biggest dollars are not. I've been on too many boards with SaaS VCs who are always like, go more enterprise. Why aren't you going more enterprise when they don't understand certain end vertical markets, right? And sometimes Service Titan, it is very enterprise, right?

31:46It's not obvious. Like Service Titan is not a bunch of plumbers paying 20 bucks a month out of their own pocket. But more of this B2B2C that hits consumers, the long tail's where the money is. Even today, Shopify is very enterprise. Only 25 % of their revenue is an enterprise. So going to Rory's point, I don't know. I'm sure the game is one way or another to combine this with two or three players and build something that's three times the size. So I assume that's the playbook. Guys, when I listen to this and I'm a founder, okay? I hear crazy payments being made for venture funds. I hear PE come in.

32:18I hear massive meme stock price rises. And then I look at Carter's data. VC deals at eight year low. And it's hard to raise money for a lot of founders. What world are we living in? And how do you think about these two kind of paradoxical statements of everything we've discussed combined with VC deals at eight year low? I think they go together and it's tough. I think what's happened is there's a whole bunch of things all pushing, some of these are really nice, a flight to consensus or a flight to quality. The truth is there's a small number of things that are working really well and everything else looks dull in comparison and is struggling to get attention.

32:59It's become a very consensus bet. There's a whole bunch of reasons for that. We've talked about this before. The whole staying private for longer means a much smaller number of companies are going to get all the way and they tend to get all the attention. Second, entirely separate comment. I think the early AI market, the running in the early AI markets has been very much attention begets more attention begets more attention. So if you start to pull ahead, provided you continue to execute, it's very hard to catch up. I mean, coding, for example, you know, I mean, just cursor pulled ahead. It is better, but there was 20 people trying to do it.

33:35You get that early lead and it builds on itself. And then the other people are just left in the dust. And it doesn't matter that they're nearly as good because the sad truth is no one wants nearly as good. So it's a very steep fall away from the small number of things that everyone wants to a much wider number of things that might just be okay, but they're not amazing. Frankly, it's very hard to have as an investor. If you're not in one of the amazings, you kind of have your sad face on. You're working hard, you're doing your job, but something, nothing's exploding. That's when you got to keep your head, keep the companies moving forward, converging on, you know, acceptable growth, acceptable profitability.

34:10But it's a weird time because you're reading about all this amazing stuff and then you're going back to your day-to-day job, which most of the time is a grind. Is it really a sad face though? Because before I've said it's the end of triple, triple, double, double. And you, I remember said to me, oh, I'd take triple, triple, double, double all day long. But triple, triple, double, double, bluntly is boring today. That's not zero to 100 million in a year. That's not lovable, Rapplet, Entmacor, any of them. But you know what it is? It was funny. This weekend, I was talking with an entrepreneur that was on the triple, triple, double, double path in a space I know well, part of GTM that I know well.

34:42And the deal size was right. If this was even early 2023, I would have done this deal probably. But today it's just, there's so much competition. The differentiation's less clear. Great founder, but is he generational? I hate this term. I mean, I put Hayden quotes, Harry, use it a lot. It's a fair criticism, but are they really a generational founder? I hate this term. I just, I said to the founder, I got nothing to criticize. You have the numbers, you have a great approach. It's interesting. In 2025, my brain, I only have so many shots on goal, I don't want to take this shot today. I think it ties to the Carta data, right?

35:15People want to swing more for the fences. Either it's there, it's off to the races, or they got to believe it. And it's just people have just got to swing harder. Nothing negative to say about this triple, triple, double, double, do nothing. Nobody stays down on the farm when you can play in the gold rush. the attraction of that kind of upside, the truth is it draws everyone's head. If there's two games and one of them has that embedded 10 % chance of amazing, 20 billion, a cursor outcome, and one of them just doesn't, it's actually a very interesting math question to say, how much cheaper does that other non-cursor embedded upside deal have to be to cover for the fact that it doesn't have that kind of outsized tail outcome on it.

35:59And I fear the answer is either it has to be a lot cheaper or even worse, there's no price at which you'll do it. But like the triple, triple, double, double, less AI centric are not realizing that they will have a discounted price because they are not this new wave of company. And it's hard and I'm sorry for them, but it's just the truth. Agreed. There's a price at which you can make your target return. I remember looking at a deal that was strong founder, good economics, good growth, mid-sized market, no amazing. There's a price at which you'd say that has, you know, you want your base case return to work there, right?

36:35But it's quite a big disconnect. It's interesting though, Rory, if me and you were partners at scale, and I hope I'm not overstepping here, but I would be like 1000%, let's stick with triple, triple, double, double, because we have a much higher certainty of winning there versus going for the AI halo moonshots competing against Thrive and Founders and Andreessen, where the scale enterprise brand doesn't carry the same weight that their glossy brands do. And you have a tiny chance of winning versus massive chance of winning in the triple, triple, double, double where most people have left. I mean, and I will absolutely look at deals where you have that profile, but it has to have that profile, that valuation.

37:12It has to have that upside and that pricing such that you can pencil out the return. One of the problems with the private for longer dynamic is you can do those deals when they're already at scale. If they're at 50 or 60 million and they're on that trajectory, right? The problem is when you go super early and you predicate it on follow on rounds, some of your destiny is outside your control. And if people aren't willing to fund it, you have to have existing small S scale or you have to have sufficient traction that does, you know, I have to have comfort and profitability because it's not just enough that you have to like it.

37:47Enough people have to like it along the way to be able to raise the money and get there. I'm more intimidated by the deceleration at scale of folks. I did not expect to decelerate. So I want to know earlier that you are clearly differentiated in a way that can win, which we gave up on in 2020, 2021, 2022. We didn't care what the difference was between a lot of B2B players. I'll do the triple, triple, double, double, but it's got to be durable for real. Like I have to believe that that is just going to keep going. You got to dominate some segment of your market for real reason that is enduring.

38:19Everyone who's been in the business five or seven years did a whole bunch of deals that were growing like crazy man in 17, 18, 19, 20, 21. They've all decelerated at scale. And they now have a bunch of deals at 100 to 200 million dollars with 10 to 20 to 30 percent growth rate. And most of their waking hours is spent thinking out what the frick should they do with those deals? It's human nature. The one thing you don't say to yourself is this is so much fun. Let me add to that collection. The other comment I'll make is this. The industry as a whole is probably making the same mistake with AI deals that it made in 2021 with a range of other SaaS deals, which is the extrapolation of the current growth rate to the sky.

39:00And you have to have some theory of the case and how it all shapes out. Now, you know, across the lovables, across the... And that's why I deliberately mentioned data center spend slowing down. You at least have to contemplate that and say to yourself, in the 20 % chance where that happens, am I done? The scar tissue from those 2020-21 deals may be a small part of this car to slow down. Speaking of riding momentum, we saw Vanguard adding PE exposure to a Jason point here. Is this the top? I think it's a terrible sign. I mean, it always... Look, it's definitely a sign. I mean, look, we discussed it before.

39:37The industry keeps looking for new sources of capital, in part because some of their standard sources of capital have issues to deal with. Most obviously endowments, so that's probably not as true for PE. They're just bigger. But pension funds. So yeah, people continue to look at other stuff. It's high fee bearing, which breaks your heart as a Vanguard ETS and mutual fund investor. What does it actually mean for venture? For me sitting in my venture seat, Vanguard adding PE exposure, how much more money is going to come into the industry? All the PE shops have been doing some version of this. We talked about Cotu doing it in that crossover.

40:11Blackstones and all those guys have been doing it. This is a category. This is a trend that's going to happen. I don't think it's going to be the same wall of money as sovereigns or pension funds. It's just another source of capital, another pick a number, 20 % more. What the heck? And, you know, I think structuring it for venture will be harder because you have to make all these kind of partial liquidity assumptions, which will get tricky for venture. I don't know if you saw it, but I can never pronounce the name. Elsie Stefanik, who continues her crusade to make Harvard's life misery, is indirectly going to make P.E.'s life a misery because she's been saying, hey, Harvard, your accounting is incorrect because half your assets are P.E.

40:52and other private assets and they're not marked correctly. So that's kind of process is ongoing. So the whole process of private marks is challenging. And the less sophisticated the investor or the less able that investor is to take the long view, the more challenging it becomes. And my guess is the retail investor is least in a position to do that. Listen, here's a bad sign. They're partnering with Blackstone on this, right? And they want to offer PE access into target date funds. I mean, listen, we can talk about the pros and cons of target date funds. They have their place in a non-taxable account.

41:29What's a target date fund? Harry, you don't even know anything about investing. When do you want to retire, Harry? I mean, I know your starter. What year would you like to retire? 80 years old, so 2074. At that point, we have a 2075 fund for you, and it will start off today at 95 % equity, 5 % bonds, and each year it evolves. And so when you hit 78, you'll be, I mean, Rory, you can connect me if I'm wrong, but you'll be 95 % bonds and liquid and 5 % equity, right? Clearly seeing that you're not spending any time thinking about retirement, Harry, which entirely sensible at your age. But yes, Jason's exactly right.

42:05These are the structured products for the mainstream market. If it wasn't for the fees, they're a broadly good idea, which is you don't know, Mr. or Mrs., whatever, how to think about equity versus things. So we'll just make one big decision and we'll land the plane for you. The returns, sometimes part of the issue is the fees are high relative to what you get, but it totally makes sense. But Jason, to your point, you're putting these in there. And one thing we know about venture is you can't target your return date, right? If you could, it would be easier. So it's a hard asset to fit into a liquid individual portfolio.

42:40I think they'll try. I think it'll be hard. To Terry's point, if Vanguard has 10 trillion, putting 10 % of that into venture would move the needle. but I just don't think ordinary investors should be doing this stuff. I mean, it's chasing return and that's always the nature of it. So, but yeah. The hunt for alpha continues. The hunt for alpha always continues because that's what we're all paid to do. You mentioned Harvard there and life being hard for them. There was a billion dollar funding gap and Stanford are doing layoffs. It wasn't huge layoffs, but layoffs still the same. How do we feel about the health of where they're at?

43:11How concerned one should be for them and how we should think about it? There's three levels of question here. If you're asking the impact on venture investing as a venture, as a source of capital, that's an easy question to answer. They're obviously going to be a lot less active. Next level down, are you asking the impact on the institution, the kind of the wider societal things? But it looks tough. I mean, it's a terribly unfortunate way of making policy because a whole bunch of humanities kids yelled in the close about political issues. You're firing the poor guy who's been in his lab for 10 years trying to cure cancer.

43:45it's a very awkward way to make public policy and punish the wrong people to punish the institution but I don't envy anyone running one of those institutions and I hope they can figure it out because there a lot of what they do is really good not all and not some of the most visible things it's quite annoying but when you look at the things that are being cut as distinct from the things where you kind of go oh that's a waste of money the administrators ain't getting whacked at scale. These programs are getting whacked that are cutting science, that are cutting small grants to graduate students to do amazing freaking things just when they're most productive and useful.

44:21So I think it kind of sucks as an outcome. I just thought it was interesting. I mean, not in a good way, but Stanford blamed its 140 million budget cuts on federal research funding, which is the issue that you're talking about. But they also said a potential increase in endowment taxes. They had to lay off people and cut the budget due to endowment taxes. There is a cost to these endowment taxes, right? Taxing venture, in a sense, by taxing endowment, it isn't free. It will lead to a decline in investment and a decline in humans. We did get a QSBS break in the new tax bill. I do like that. You did.

44:52I do like that. I do like that. I do want to ask that question. Everyone got a little—the deficits may ruin us, as Elon said. We all have to move to Mars, but I got my piece. I got my QSBS to$15 million, and I'm excited for it. I got my piece. I got bribed in the tax deal. What I'd really love to know, and I just don't, is I have this vision of this crazy sausage-making machine. And there's a whole bunch of agendas to pound it to the solar guys, to pound it to the universities. I mean, this is an administration that has its hate list and works down through it pretty methodically. And then somewhere, someone crops up in a meeting.

45:29I can see it. But despite all this, guys, let's cut a deal for the QSBS guys. And whoever that person is - Who knew that was coming? Whoever that person is, next time he's running through San Francisco, all he has to do is email me and I got him dinner. Because you're sitting there and the way it works is they have a target to make in terms of money. And every time they stick it to someone and charge them money, endowments, another 20 bill. Getting rid of the EV subsidy, another 20 bill. And then someone had to say, let's go backwards, 15 bill to give it to these guys on QSPS. So whoever had the juice to push that true.

46:04Maybe it's your Peter Thiel and the Bilderberg, you know, whatever conspiracy. I love it. I'm in. Listen, we can explain it to it for folks, but Rui, I'm curious at your fun stage, when you write checks, if you had to spit ball or ballpark it, how much QSBS benefit do you get in the end at the GP and LP level? Like, cause some of it isn't going to qualify, right? Some of it's going to be too big. It's not as big a thing for us. 50 %? It's that, less than that. For folks that don't know, and Harry, you might not even know in the In the US, I mean, my taxes in California are 50%. I know all you Brits are complaining about taxes.

46:36I think Rory and I pay more than you. But we get one weird, quirky tax break, which is if you invest in startups or small companies below, it was 50 million in assets. Now I think it's 75. You don't pay any federal taxes on the first 10 million in gains. Now it's 15. And every LP, to the extent they're taxable, every LP gets 15 million on their distribution too. No federal taxes. and California taxes it, which is pretty annoying, but most states, a lot of states don't tax it at all. So you could have no taxes at all on startup gains. And, um, for whatever goofy reason, it got increased 50 % in this tax bill.

47:12So we all, we all got our little taste. So basically you have no cap gains on angel investing. If you're not on angel investing, yeah, up to 10 million, now 15. And, and frankly, you can stack it with trusts. Like for me, it's probably 40 to 50 million per, because I have five trusts on this. So that means for each exit I get, 50 million has no taxes. It's possible to do it to 500 million, but it's really complex. Now 750 million, but it's complicated. But he has a big condo in Yellowstone just to - He clearly has a big condo in Yellowstone. Yeah, with his trusts. Yeah, I have five trusts. It's the only tax break.

47:46I mean, Rory makes the point is you'll take the nickels and you might as well pay 50 % tax in California because it's the best place. But for me, this is my quiet motivator to do early stage investing, at least I can avoid, you know, 15 million of taxes per deal. Okay, we're going to do a final one, which is Microsoft. Microsoft laid off 9 ,000. I know in the grand scheme of their workforce, it's not huge. It's still 9 ,000 people replacing general salespeople with solutions engineers. I was walking with a Clay founder the other day. They don't have salespeople either. They have pretty much the same.

48:19Is this the future for everyone. How did you see this? This bothers a lot of generalist sales folks. We could have a longer discussion about thoughts on how much of sales will be replaced with AI. My rough sense is it's 30 to 40 % of like one to two call sales reps are going to be replaced by AI. It won't be the same as with support, but it'll approach it. It'll be relatively small in the enterprise. Okay. Everyone's like, oh, well, you can't go, you know, you can't go to Pepsi and AI is not going to show up, but you know what's going to happen? It's what Clay talked or forward deployed engineers or what's Microsoft doing?

48:51We're not gonna have a guy that doesn't know our product in the age of AI show up to big deals. I would rather have a solution engineer that knows this cold, that partners with somebody or is less good in sales. And so I think you better be worried if you're a generalist sales guy that thinks being a relationship guy wins today. That's Microsoft's point. We don't need relationship people. Like AI has raised the bar for customer expectations. Here's the important point. It has raised the bar. Microsoft's doing what everybody wants to do. replace folks that don't know my product with folks that do.

49:22What's interesting is it wasn't couched as a replace with AI story. It was couched as a replace with better people story. And it's hard to argue with that. I mean, it's always impressed as a random comment. It's always impressive to me that these companies with 40 % operating margins are still willing to grind another point out of it. You know, it's just so capitalistic. It's just great to see. Just related to it. I thought this, I could tie it back, but I thought it was super interesting. I didn't see many folks talk about it, but Canva's doing an AI discovery week this week. All 5 ,000 folks are released from their normal jobs to learn about AI because a lot of employees were saying they're too busy to learn AI.

50:00They're too busy. They're too busy at their daily work at Canva to learn AI. So there's teach-ins and the CPO was very clear, Cameron. You've had free chat GPT for a year. You've had free cloud. You've had access. You can pick from a bevy of tools for a year, but you're still too busy to learn AI. So here's your week, guys. We're going to have classes, teach-ins, sit-ins. We're going to have a hackathon. And it sounded great. The angst I hear from folks that have been around Rory for a while in B2B, the angst, and you see it on LinkedIn in person. Rory, I need to be re-skilled. I'm frustrated.

50:30I need to be re-skilled. I think re-skilling doesn't work. And I think Canva is basically saying, shit or get off the can, guys. Here's your week. I'm really sorry. They're twofold. I think one, if you need a discovery week for AI, you have people who aren't curious enough to want to progress in learning that job. No, I'm being serious. It's a kind way to say a lot of things. I'm really sorry. I'm on the board of a public company. And I got asked the other day, well, Harry, what do we do with employees who are not embracing it because they are fearful of it and don't want it? And I said, you fire them.

50:59Yeah. I'm sorry. It's super unfortunate. I do not say that happily. But if you don't want to embrace it, you are going to make this ship sink. if you need a week for rediscovery week, I promise you, you're not going to work and you're going to go and take the kids to the playground and go eat chocolate in the cinema. And you know what? You've got to be curious yourself. This is not the way to do it. Well, it might be in that it is, I think a lot of leaders are trying to do gentle messaging, right, and stage it. And I think this may work for Canva or it may just be their warmer way of doing it, right?

51:32Here's your week. It's also notice, right? It's notice to those folks too, isn't it? In many respects, you're both correct. To me, this was the performative, we're letting you all know expectations. That way, two months from now, to Harry's point, when, you know, if you're deciding as managers that some people are surplus to void, we're all humans. You can sit down with them in HR and say, look, you had your opportunity. You didn't take advantage of it. You know, we're going in, as they say, we're moving in a different direction and here's your package. Big picture. So there's lots of different ways to do it.

52:04You can, let's just say, we're not talking about the new curse of startups where it's all people who are AI native, but all these large tech companies who have 10, 20 years of employees and you know, you got to get on the AI journey. One of my bigger haws is it doesn't matter how you do it. Don't over agonize it. Some people might just fire the people out of the gate. Some people might do a training week. Some people might do a training month. We know the direction of travel. Two, three, four years from now, you know, you're not going to have people who say, I'm too busy to use AI. They're going to be long since gone.

52:36You're going to have people who've been automated the way. And then you're going to have people who are using the products and are doing the automation. How you do it, maybe Harry's just meaner than the nice people who are on Canva, who seem to have done very well, by the way, by being nice. So let's not have any complaints about that. And Cliff is amazing. He's the co-founder of CEO. He's super nice. Lovely dude. Always been great to me. So that wasn't a shit on him. it was uh how much time do we all get to get with the program one thing one thing that we did here at 20 bc is every friday everyone has an hour from four to five where they get to try new tools every friday it's much more nice to do it in a continuous way where it becomes a habit it kind of becomes fun we also do in the office together and then we do a show and tell from five to six on what we've learned and what's cool really cool way to do it agree that's nice it doesn't matter how as long as you just keep moving forward okay so we're gonna do a calci quick fire as you know this is like a speculative marketplace there's bets you always want me to say the exact odds rory quite rightly so i will exactly for you this time and number one this one's a good one i love sean and so i'm gonna get in the firing line here sean mcguire tweeted some controversial things recently again about your new york mayor thing sorry about that and everyone's really quite upset about it the question is will sean mcguire leave sequoia this year yes 348 no 115 in other words highly and the market is saying highly unlikely not exactly i'll take the bet then that he will and i'll take this actual bet with you whatever the money is i'll do the bet for real i'll a thousand percent do that am i understanding this that there's almost no chance he's going to leave based on this bet right pretty much yeah i can tell you why i'll take the bet that he leaves this year.

54:21I don't know him. I don't know him. I'll take the bet. Do you know his investments? Because if you knew his investments, you would never take that back. I know that. And there's different ways to leave. I just don't think, listen, we're in the age, one great thing about X is we see the grouchy billionaires. We see just how unhappy so many billionaires and mid-centimillionaires are. The happy ones go off and leave their multi-billion dollar venture fund and join meta, right? The unhappy ones just, just use this as an endless megaphone, right? And listen, I get his points and they're just so amplified, right?

54:57They're just so amplified, but you could leave as an investing partner. You could become a venture partner. You could transition. I'm giving myself credit for all of this bet, Harry, that it's, that the answer is nuanced. It's most favorable to me that I'm not saying he's like, is, is like expunged from, from the website. I'm just saying if this keeps going week after week after week, I just think it's a sign his head is not into the investing. I think a lot of his returns have come from working with Elon and Elon loves his shit. So he's actually giving his client what he wants. He might get promoted for this.

55:30Congratulations, you pissed off 2 million people and the owner of X, SpaceX and Tesla loves you. You win. So I actually think on the merits, quote unquote, of whether or not what he said is going to result in that, I don't see it. I'm on the no side. I mean, the only argument for taking the yes, Jason, is more, look, statistically, X percentage of people seem to leave every year. So at some point, the bet's not priced in. That's what I'm saying. I think this is a tell. There's a higher than otherwise chance he leaves this year. That's all. I'm not saying anything more clever than that, right? I'm just looking for the tells.

56:07And as we've learned, we know a lot of folks in B2B that have quietly retired over the last year or two. It's not clear on Twitter they have. We know folks that have, right? State of the economy at the end of 2025. Soft landing, 76%. High unemployment, 16%. There's no actual dollars tied to this one for some reason. This is easy. Roughly one year and seven, the economy is in recession. So you should say, if someone asks you, is it going to be a recession? The default probability is about 16 % to 20%. What this is saying is the economy is no more likely than not. Is it a normal probability of being in recession?

56:42And I'd say that's about price right. I don't know what would cause it. Things in the short term. So my perspective on that, it's a roughly correctly priced bet. You should wake up every day and say, with no new information, the Bayesian prior is there's a one in six, one in seven chance that 12 months from now, things will go to shit. And when you start seeing the VIX climb, and that's why you saw it when the tariffs come in. When the VIX starts to climb, that one in seven chance goes to one in four, one in three. And then when things come down, it goes back to normal. What this bet is saying is we think things are, quote, roughly normal now.

57:17End of 2025, are you saying soft landing or high unemployment then? I think it's quite about right. I'm actually indifferent on the bet. I would pass on putting money in that bet because I think it's priced. I don't have differential information other than... Maybe a better way to say it. If it had been - Forget the bat. Just tell me which one you think it's going to be, wise one. I'm not going to tell you because the whole point - Actually, that's why you're asking a dumb question, Harry. Kalshi's worth two billion. There are no dumb questions. There are no dumb questions on Kalshi. There's no evidence anyone can call it.

57:48Actually, I think Kalshi - By the way, this is the real insight here. Kalshi is calling it correctly. And I agree with Kalshi. Kalshi is saying that the probability of risk - There's no more information about the probability of a recession at the end of next year than it's just a normal year. And I'm with them on that. But if it is one in seven, the odds have to increase as you haven't been in a recession for multiple years. So how does that pack into the bed? It's a very interesting question. I'm going to answer that. What the fuck? He has an interesting question and I get a stupid question. No, no, no.

58:20What? Okay. Well, you said it, Howie. It's like flipping coins. This is the opposite of a flipping coin. It doesn't make the higher the heads are here, but this is the opposite. There's an expression, booms don't die of old age. In other words, what you're saying is just because it's been great for six or seven years doesn't mean that it has to die in the eighth. Australia had this run of 17 years without a recession. Logically, my mind says it should mean that unless what really happens is we said booms can go on quite a long time unless people do dumb shit now because we're humans we invariably do dumb shit but if that didn't happen it you know it could go on for a while yeah that was a smart question jason thanks for that one dude that was that was smart dude oh you're good i can't say oh there's no chance we have a recession at the end of the year there's just no chance so no chance six chance that's the one in seven chance i'll take that i'll take that i'll take that i'll put a credit on that he's putting bats down all day long i'll tell you why i would do actually i would probably do like 50 grand instead of a grand if you want to do it rory because the technical definition of a recession is pretty tough to meet true right so i'll put 50 grand on this one if you want to do it because i think even if we are i don't think there's any chance we'll be at a recession in the end of the year but i think even if we are it's not going to be called a recession yet right it's already july thinking maybe 75 grand i'm going in on this bet now i'll pass thanks but that's a good point you're right it's always the highlight of my day i have the most fun on these calls like honestly i love doing this with you both uh even if it's incredibly humbling being informed after 10 years of asking questions i still ask shit questions i think you're pretty good i didn't say thanks jason i love you too dude i miss you okay what else come on okay final one linda yaccarino does she leave x this year jason this is a tough one right as an outsider i don't see any merits in her right?

1:00:15I just, not from day one, right? It's hard to see. But no, I just, I just, I just don't see it, right? There's so many public COs and the fact that on a social media platform, she's chosen not to be insightful in public, I think is a bad tell, right? Having said that, there's just no way he wants to run this thing, right? Especially the core X. She's not working on AI and Grok, right? She's managing advertisers and the P &L. So I think if it's not broken, he's not going to make a change. So this is a murky one. But I say she's here through the end of 2026. Wow. Through the end of 2026. He just fired his head of Europe.

1:00:54Now he's head of European sales for Tesla too. I mean, you can't. It sounds fun to fire everybody on the team. And there are moments in time when you need to. But man, you got to keep a few pieces going on the board. it's just even if you're on adderall or whatever he's on there's only 24 hours in the day like i think he's going to keep this soldier in place yeah i think the interesting one obviously this week was the market response to the new party and correctly the tesla response to the new party which was shareholder barf and i was just reading is it dan eyes straight away you guys both you both said no to that by the way harry and the definition of a good kind of forecaster and we've talked about super forecasting, I think, before in Philip Tetlock, is you update your priors with new information.

1:01:38The fact that he went on to form, to just go down that route. I think I was still right. Would update your priors on the, would he still be CEO at the end of next year? You kind of say to yourself, increasingly, are you the right person to be running that company? I don't think he formed a real political party the way the bet was. That's why, not to spend too much time. I don't think he's not going to run candidates in all 50 states. He's not, this is a tactical move that is that if it happens is at the edge of what a political party is so as much as i love calcio you got to give me a little credit for definitions here like recession or political party right uh but uh cali was a lawyer can't you jesus yeah yeah come on no what he's apparently doing is cleverer than i thought you're just going to contest a few elections where money matters right and that's it if that's what he does it's very different but it's smart jason you've said very clearly yes you think she will yes rory are you quite as blunt as saying she serves no purpose i i don't know enough to comment so i'll pass on that as i say i'm more willing to be opinionated on the wider ceo issue but i'm not opinionated on that i don't have a clue i mean it's she has a tough job but if you run a social media platform how can you not be out there it's just weird isn't it i really on 20 vc anytime soon let's get her on harry i want to see you you and her just to tell her it's a friendly environment.

1:02:54I want this question answered. Final one, it's not a bad, and let's do a quick thought. Does CoreWeave and Circle sustain the super high stock prices? Does the memification of their stock deflate? Yeah, I mean, if it is a meme, yeah, then it does, of course, deflate. The real question is, did the investors at the time of the IPO significantly underpriced the asset and have now people realized that in fact the correct price is the much higher one? When we looked at the Circle numbers at the price they're trading at, it felt very lofty. relative and traditionally most of these most of these post-ipo pre-lockup stocks drift down significantly if the valuations are way above any kind of near-in fundamental so you've got to believe the downward pressure is there right boys time to wrap this has been so much fun i love doing this and uh again rory thank you for coaching me on questions i'm getting better One day, one day.

1:03:50I'm going to pause. It wasn't that you guys know. I actually thought Jason's is a really interesting one. Seriously, it's the do recessions. Does the probability of recession increase every year that goes by without one? It's the classic in statistics. Are they independent on correlated events? Or is there some kind of buildup? There's no reason that there should be a buildup. But in fact, there is because humans, the reason there is a buildup, the reason is Jason is more right than me, actually, upon reflection, is because when times are good, people pile up the dumb, aggressive shit to make money.

1:04:22And the minute something goes wrong, it blows up in their face. So at the margin, I would actually revise my opinion and say, Jason, the longer it goes on, the more likely it is eventually to blow. Because of, actually, ties to your core, we've come in. Stocks get high, things get expensive, people take on debt, they do aggressive things. You wake up one day, the Charlie Kindleberger thing, manias, panics and crashes, and you're done. Right. Just to wrap Harry to one thing I will say, I don't know in all seriousness, I don't know anyone in tech media that can cross as many domains as successfully as you can.

1:04:54So a lot of, a lot of respect to the client. I mean, you can get really good at a narrow thing, but I don't, I mean, your ability, especially over the last two years to jump every, I mean, the type of guests, the domains, right? I can't think of anyone else that can go that deep and thoughtful. So kudos, kudos to you for that one. It's easy to go deep on one or just be a student, but pretty much S tier. Well, I super appreciate that. I leverage wise friends like you both. So I appreciate you both. This was good. Hasta la pasta. My word, I was almost getting emotional hearing that from Jason. Now, if you enjoyed the show today, you can check it out on YouTube by searching for 20VC.

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