20VC: Figma's IPO: The Full Breakdown | Index Returns $3.5BN on Two Deals | Why Melio's $2.5BN Acquisition is "Discouraging" | Asana's New CEO and the Great Founder Exodus | Oracle's $30BN AI Deal and What it Means for Incumbents

24:54I'd love to hear. How did you guys think about this? How did you break that one down? I thought it was discouraging. Melio gets acquired for 2 .5 billion. Look, that's a lot of money by, you know, hopefully folks will watch this and mock me for like not thinking that's a lot of money. It's a lot of money. But guys, they're at 153 million in air, are growing 127%, 127 % at 153 million. Like why, if you knew nothing, would you advise your portfolio company to sell growing 127 % at 153 million for $2 .5 billion? I just got pitching, hey, I start up at $2 million, you know, it's only growing that fast worth the same amount.

25:31Like I could imagine what happened if you guys know the story, but this is not a deceleration story. This is crazy. I'm not convinced that the growth rate was that high on a sustainable basis. I'd be surprised. I mean, maybe it is. Might not be sustainable, but I'm literally reading zero slides where they're selling their own shareholders on it. That's what they claimed, right? 153 million a revenue, whether it's going to 127 % or 100%, this is not the greatest multiple of all time. Is it that that intimidates me that it's not a great multiple? I find it intimidating as an investor, actually, because I have plenty of deals that are great and not as good as Melia.

26:06Yes, it's like 13 or 14 to and depending on NTM revenue. I thought it made a ton of sense. I had it pegged for a lower sustainable growth rate. We were investors in build .com. Very happy investors in build .com. It's public. It's much bigger. The market's been tough to it recently. It's a tough comp today. It's tough comp today, right? And I think that kind of build payment accounts payable space is fairly crowded. There's a number of plays and consolidation and being acquired by the ERP adjacent competitor kind of made industrial sense to me. So I was like, yeah, that's about the right price and that all makes sense.

26:44Again, I'm disconnecting from the growth rate comment. And then you have the advantage over me because I haven't read the press release. And no one I'm sure would ever lie in a press release. So, I think that I don't think zero can lie in what they're saying, but they're not showing the forward growth. So your point I'm sure is correct. But on trailing velocities of force in nature. Right? I think they had some interesting strategic deals that are always challenging at scale. But yes, I think the other interesting comment about it just worries me for M &A. We all throw around, oh, they'll buy my portfolio company for a 900 million or 2.

27:15Billion. But I sure you're better than Millio. I think the interesting thing also about that one was that they raised a couple around significantly above that in value. And I think that raised in 21, two rounds, the last of which was four and a half billion. So, you know, you look back on that and you go, Look, on the one hand, it just shows what a lovely rigged game the late -stage business is. If you always get a 1X on your losers and you have enough winners by definition, you have a positive IOR. It's a nice thing. On the other hand, it just shows how long you can be. You set there in 2021, thinking, I should buy it for 1 .5 billion in the expectation of making it 2 or 3X, which implies 13 billion plus.

27:55and you know, you fast forward three or four years and you're happily taking two billion. I mean, the prep stack here was 650. So 650 total prep stack, and then the last round was four billion by GC. And so, to your point on like, prep stack to outcome size, being the risks that you're taking, 100 % here. Like, you have pretty minimal risk when going in and out. Now, you're still getting a 0 % IRR, but yeah, yeah, yeah, yeah. I guess it's a little bit less. But you're getting a 0 % IRR on your loses again. The interesting to me, I guess this is Captain Obvious. I'm a little slower than the two of you, but this is actually a little bit good for founders.

28:29Last round at Melio, four billion. Okay, 500 times revenue or something like that, right? And then there was a corporate round at $2 .5 billion. But like, if you're getting your preference back, and it's below your four billion, you don't really care what the price is. I almost killed myself as a founder of fretting. I had to at least quintiple my investor's money, but as long as if they're only getting one accident I don't really care what the headline number is, do they? In a way, the price is off a little bit. Well, they don't. I mean, but I thought you're going to say something different, which is it's earlier guys care.

28:57The other guys care. I'm one point of the founder cares. Yeah, but they're going to just going to get they're going to make their own decision. It's binary, right? I think it's liberating for a founder to say goodness, I can sell my company for two and a half billion and they these bozos with the blazers aren't going to say no, right? That was the fear when I grew up as a kid, right? I was terrified. My VCs would say no to everything. I was terrified every day. I can tell you, if you're a founder stuck in that situation right now, no one who will to check in 2021 at $4 billion if the company's underperforming is going to stop at $1 .00 right now.

29:25They'll be like, they'll be grateful this could be, give me my money back and move on. And it doesn't matter if they did it at $4 .00 or $4, they're going to get the same outcome in Melio, right? They're going to get the same $1 .00 back. Which separate common creates a large amount of weird dynamics on various boards as people wrestle with these prices. But you're right, you in the room considering this price at $2 billion and you've got some people who are blankly indifferent and just want to sell because nothing's going to impact them either way. And then you've got people like the early investors and the founders for whom the difference between one and a half billion and two billion is just a huge amount of money, all of which is going to them.

29:58And that's great because the founders created the value here, right? You say, give me the cash back, the anything else that is, give me the cash back, or even a discount as the cash back, but don't give me, you know, X billion dollar company stock at some ridiculous price. I think I have more air table than anyone at $11 billion because they've acquired about four of my companies. It just shows that a couple of companies want to private to private to a hard, right? And you always have this like, am I getting shafted feeling? Which again, going back to first principles is one of the beauties of being public.

30:29When you get bought by a public company, you don't have to have this existential debate or in your case, how this existential whine about how much or how little you value the stock. You read the Wall Street Journal and you know exactly what your damn thing has worked. But it's another beauty from a speed of acquisitions perspective. We have to do publics. Roy, I'm sitting here in Frenton, On C in Essex. Chimath is in Portofino, okay? I have a reason to wind when my stock is given a $15 million price. Yes, you do. Jason, I really appreciate that because it totally made me think differently about the media outcome there in a way that I wasn't before, which I love.

31:05I know. $17 million in March, actually. So they could have been at over, well, over 200 when the deal got signed, right? 187 in March. I can't get my head around where you do that then. You can also look it up in that $500 at that $4 billion round, which was $500 times revenue. I think it was $500 million. Listen, I know what the zero side says. My understanding is a lot of the early guys sold very quickly. Like it was two years to getting out of $5 billion for the small guys. Not for best. I think best of them I'd have found it. I mean, that guy finds all the good Israeli ones, right? Yeah, out of the fishe.

31:34Yeah. But I my understanding is maybe nine figures of that quick 2021 round was out at $14 million right good for them. I mean, it's no hop in but it's pretty good So I can dairy Jason I was on a sales call this week when a kid was yelling at me Harry I was trying to explain to him something that I knew more about AI than him and he's like well That's not how I did it. Hop in I'm like we what did you learn the three months? You guys have been there market existed exactly when that you went from infinite to man to zero demand, right? I mean the easiest job in the world is hoppin' May 2020, right?

32:09Easiest job in the world, hardest job in the world, May 2021. I'm just going to say one thing and I get in trouble for this and then we can put a pin in this one. The founder always gets chastised for founder's secondaries. I remember when he was being forced to take cash off the table by hungry growth investors who were forgraging the shit out of him and he was going from 49 to 42 % or whatever it was and it was a completely rational decision. I think it's okay if the investors got to sell too. You're not the founder, but my point is if he's being flawgrod, okay? And that does happen. Like it's happening again today.

32:42People are getting flawgrod, right? Even though the investors want you to be conservative, they want to put so much money in the hot company that they, the only way they can get it is by giving it to the founders, right? By and their stock. But it sure would be nice if the investors had the same option. I had this happen to me just once, Harry, where there was a flawgrod. And I said, listen, if you're out, I'm out. This is what I said to him. whatever I just want proportionally, whatever you're going to, if you're going to sell more than 10 million bucks, you're making the right decision. I just want to sell too.

33:08That makes sense to me. That was by only ask me to reversing my comment earlier. I would point out to you both that we do have, you do have that right. It's a co -sale right, right? Read your dog. That's not enough. Like you can't always get as much as you might think from a co -sale, but you're right. But you have a co -sale right. And the reason it's there is for exactly this purpose where if I think in your stream we have any rights Roy I think the challenge you 21 is that we didn't have any rights but typically there would have been a call I mean look it comes up because you know can't they be waived by the majority investors?

33:40Yes you can if you get waived by some guy bigger on the cap table than me I guarantee the last deal I had like they didn't even tell me when my rights were waived you both sounding a little punchy and a little bitter remember no one's gonna cry for either but good good good criticism actually you're lucky to be able to would vast right? Right. Some stuff works, some stuff doesn't move on. I would like a super co -sale in that situation. That's all. If you're selling more than like 20 million, I would just ask for a super co -sale. It's a genuine comment. It's funny. You used the expression before, growing them, which I love, but it's odd.

34:11This is a four -grout process where frequently the person doing the feeding ends up dying. My point is, in the case of Hoppin, you four -grout the people, and yes, the company died, but you died too, because you lost all your money. But you're right. The thing that blows it up, Jason, you're right, is I love that expression for you. some late -stage investor who just has a hundred million to put to work and is just going to do it no matter what. The question that I have is actually, do AI researchers have the same challenges that FWARGROD startups have, which is when you stuff them with $100 million to they become less efficient and less focused?

34:42That's my question for Zuck. That no one seems to know. We're going to find out about 12 months from now. Seriously, you give these guys a hundred million bucks and they go by a massive pat in Affiton? Like, I don't know. I'm worried. And we all have the guys the founders that bought the massive patent afterton. It's a real issue the massive patent afterton is like almost a hundred percent correlation to decline in revenue It's like it's almost a wonder one I can't prove causation, but I can't prove correlation almost one to one Rory's just like I can't believe I'm with these two degenerates I mean because my look I don't think large amounts of money necessarily demotivates people across the board.

35:20I think what large amounts of money do it reveals what you really want to do. That's why you see some people make large money in venture and decide what they really want to do is double down and keep doing this and you see other people say, I made large amounts of money all along. I really wanted to be, you know, I really wanted to tour the world and play golf. It just, it liberates you to do whatever it is you choose to do and thus, by definition, your real person comes out. I think the risk you're here is you exactly right, it would be absurd to suggest that no one who gets a hundred million dollars won't be a little bit de -incentivized.

35:50So yes, there'll definitely be some hit from that. I don't think it's a little a lot of nature is what I'm trying to say. I think it's more kind of a, it doesn't change people as much it reveals what they really are. Maybe some people have been doing this coding for the last five years going, God, I fucking hate AI. I wish I could get out of this and give my hundred and I'm done. This is tough stuff to get. The incentives are so hard, right? Anything and send them to hard. But I mean, Zach made it work with Brett Taylor, right? He made it work with Kevin's system. Eventually they flamed out, but those worked for a long time.

36:21He got his money's worth out of those deals. Zach doesn't need 10 years out of this team, right? He has a history. Maybe sometimes we look too much in the past, but he's made it work before. I think if it doesn't work, frankly, it won't be because XYZ engineer got a hundred million and went weird. I think at some point it'll be because some other engineers got really pissed off, it'll be a internal disruption, the weirdness of different people and vastly different comp. But be the wider comment of, will it be a great ROI anyway? It's not clear to me that this money will yield. And this is almost going to be heresy here, right?

36:54The amount of money we're investing in AI right now at $300 to $400 billion a year in CapEx and then lump in a bunch more salaries on top. Sometimes I do wonder, will in the end it will be magnificent, but will you get the near in ROI? Will it be an economically rational decision when you look back two, three years from now. I don't know. I think it has to be an economic irrational decision when you put it in proportion to market cap. I know all those arguments. The proportion to market cap argument, which I've made recently this last week, I get it. What you're saying is, but you're redefining economically rational.

37:25What you're not saying is there's two definitions of economically rational. One is it will yield the positive NPV. That's kind of a very boring, accountant, logical thing and I'm questioning whether it will. What you're saying is some grand theoretic game theory version of economically rational and it was I got a show up at the party with AGI otherwise I won't get invited to the party so fuck it I'm gonna spend 60 billion to make sure I'm there. It doesn't say it really feels like heresy even to say it but at some point in the process we will become over -invested because that's just what humans do when faced with this kind of opportunity right?

38:00Is it now? Is it two years from now? Was it last I don't know. But if you look at what this CapEx is doing to the balance sheets, after most, the largest companies on the planet, what it's doing to the free cash flow, it's just astonishing the amount of investment is going on here. Totally. I mean, you said it turns the Warren Buffett's idea of a dream business into a cash incineration machine. Absolutely. The poor man would be like, people, have you lost the plot? I only left six weeks ago. God damn you all. What are you doing? I think an interesting one on that perspective is it manly raised another billion and a half of record -replatforming adventure.

38:34And when I looked at that, I was like, amazing for Manlo, fantastic. And my question to you is, one, sure, how do you think about that just generally? But two, do you think LPs are more excited by incredible returns driven by chime and some other historical grade investments or by anthropic and a forward -looking AI glance that Manlo, I think, have pioneered well? I think it's good to have both. I think they've done a great job and deserve the money. And of, I think time is a big ask return. All credits for that. It's a hard dollar money on the table. And then on top of that, I agree. I men know has done an amazing job, glumming onto our ontropic, doubling down an ontropic, and you know, telling a strong AI story, it totally makes sense.

39:17All credit to them, there's, you know, you win, you get the prize. That's how America works. Jason, anything about that? No, the only thing I would say, unless you guys have a broader LP based on I do, I think the LPs that I talked to are a cute Maybe certainly even more than me, acutely aware of the math we discuss here. They're acutely aware of what it takes to return these size funds. They're acutely aware that their managers, what their managers ask is and what the commitments are in terms of the size of returns they need to do. I've certainly heard skeptics that these outcomes are there, but they get where the market has to go to what the outcomes, they know the math on the back of their hand.

39:50And so they're participating. It's the game on the field. You want to set out index and Kleiner and Sequoia after Figma, probably, you probably don't, you're not allowed to sit it out. Very great. And the only proof you can have that someone will be in the deals in the future, because only two proofs, either you have some kind of story for a new fund, or you can say they've been in the deals in the past. And you know, you can look at Manlo and you can say Uber, you can say chime, and you can say on traffic, you can join the data and those three sentences and say they probably will show up in the right place.

40:22We mentioned like the numbers needed to make it great. It's an unsexy discussion topic, but it did actually again give me hope. And Jason, I hope you don't dash my hopes on this one like you did in a milieu. But couch -based, most people actually haven't heard of, acquired for a billion five, again, not massive, not huge, but still very important and meaningful. And the question there is, hey, will we see a plethora of these PE by -outs or PE -led by -outs at similar scale, which will actually drive a meaningful amount of liquidity, or is this a relatively one of few. I'm hoping. Yeah, I mean, I don't think it's indicative of a trend.

40:59I mean, I think that I took a look at it and, you know, couch space was bought by Halleilly. I think it's the firm in Austin, which is the former co -founder of Vista, Brian Shade, who is an extraordinarily good investor at Vista, and then spun out in 2020 after a split with Robert Smith. And, you know, talented guy, looks like he's willing to concentrate a thematic portfolio. I get the impression went out to find that asset because he has a perspective on what can be done in this space with that particular product. I don't think it's a hey every 200 million dollars so -so infrastructure company with 16 % growth is going to get hoovered up at 5 .7 times.

41:40I think it's much more a thematic. I think this can be relevant in AI. They have a newer product that's going much more quickly. So I right along. We'll see. But I don't think it's indicative. If you have 10 other $200 million database companies, don't hold your breath waiting for PE to come along. I remember we, for example, we were in data stacks, which is similar size, fiber, metal company, sold to IBM, great outcome for concern, very happy to get it done. But yeah, the one the platter of PE buyers, it's not typically a PE asset because the complex technical products The thing that encouraged me here was it was 215 million revenue growing at 12 % So not stellar growth and love how the firms will do those bets with the medium of growth and not yeah and not profitable which I'm not dissing them at all I'm encouraged that this is P.

42:31What? No I agree and that's why I said I don't think it's typical I think it was much more a hey there's a perception that disaster that they have as a value We'll see I mean like every every venture firm you know including us including everyone has lots of one, two, three hundred million dollar revenue companies, sub -scale for the new world of IPOs, and you know, sub -scale in terms of growth, and trying to figure out where they go. I'm not expecting PE to save all of us. Put it that way. This is such a small number. It's barely useful than anecdotally. But I have two portfolio companies that are kind of in that intersection where a tech company and a PE buyer might buy them.

43:07And they both got mediocre M &A offers recently, mediocre, right? Not bad, not great. And the first thing asked the founders, what are the P firms said to you and no one's contacted them? Like, ever. Even two years ago, it was like every week, you're getting a call, right? Who's Driscoll's stepings and limited, right? Neither of them had gotten any calls from P firms, nuts, zero, right? That worries me like Rory said. Like these are ones that, like, you could go either way, right? They're cashflow neutral, they have good growth, they have strategic and non -strategic value. You can mash them into somebody else, point that you can mash them into somebody else, right?

43:41You'd think you'd at least be getting the VP or the analyst, Colinum, right? I'm surprised we haven't seen more bending spoons like models in SAS. Bending spoons obviously don't consume the subscription roll -ups for sub -scale outcomes, for venture firms, but also for two small outcomes for P. I'm surprised we haven't seen that more in venture. I think you're gonna see a lot of it. You had mentioned Isad -Visma, which is a company that's going public in the UK and will come back to that. But the ahaha prior to that is it's a roll up of you know hundreds, literally hundreds of sub -scale software companies and it's a constellation out of Canada does the same thing.

44:18It's gonna have to happen once the sellers are willing to take price because all these assets can't go on forever sub -scale. And you know the interesting thing about something like this is our constellation is at scale they're interesting. A hundred million dollar revenue business in Werdell, London has nowhere to go but if If you assemble 20 of them and you add 2 billion and you have 10 % EBITDA, it might be the sexiest business alive, but the market will price it will value it and you'll be able to get an liquidity. The consolation wants to pay 2x is the slight hitch. That's their model, 2x, right?

44:49I know that. Yes. I hadn't even presented Saster Annual this year at Team Game and then that was a title of their presentation, 2x. Who wants 2x? Show up 2PM on the West lawn. I mean, quite a few people came, which is maybe telling, right? But it's like, they'll do some deals at 3x, but 2x is just a model, right? Is 2x revenue? Great. Because they've been able to build a model whereby they can take all the rest out of the deal on their side. And the question is, you're going back to even the car -based acquisition where it's 5 .7x. Is there something more sensible, you know, a little more groty that you can do with these assets combined together, maybe with a more thematic approach than just constellation?

45:30and such that the clearing price can be three or four. I don't know, but you might have, someone's gonna have to figure this out because these 300, 400 companies aren't going anywhere until somebody does. I think someone who's really well placed to it is actually Grammily. They've gone. Just keep going. I mean, seriously, if you can build a next generation productivity suite and do a number of great acquisitions, hopefully superhuman beings start of them, then maybe you can piece together something exciting. My Grammily stock is going to the moon. Good for you. Well, I do listen, we can talk about it forever.

46:01I just, I want to believe in Rory, but for as long as I've been in tech, I've heard this story, like it's going to happen. Like more of these companies are going to get rolled up and mashed up. And VCs say it's going to happen over lunch and cocktails. I don't see anybody stepping up. Just because it makes sense on paper doesn't mean it happens in the rural world, right? I don't know if it's stepping up. I mean, there's two people that have to step up the buyer and the seller. So from the buyer side, look, throughout tech, people have made money doing this. computer associates way back in the day in kind of mainframe land made money doing this.

46:33You know, you're right, you've constillation, you've you've goals, platinum, you've a bunch of others. So there is willingness to do it on the buy side of the wide price. The question to your point Jason is what is that price and is that price one at which sellers are prepared to transact? Do anything roughly everyone that hasn't raised around since 2021 that's still doing okay that's north of nine figures is cool with selling for five They've already rationalized the 2021 valuation away just like the Melio example, okay? Listen, I don't want to move off that mark, right? But everyone, like, it's growing 18%.

47:05Like, it's a 5x. Like, let's just sort the public companies. It's a 5x deal. I think they'll take that deal. I don't think anyone's saying no after four years of this money sitting there making no interest in the bank, are they? On average, you're probably right at 5, 6x. I don't know. But yes. But no one's buying all these 109 -figure B2B companies for 5x. No one's rolling them up, right? Yes, and what you're saying is the owners thought they were 10x to 20x plus. Now they think they were 5x, but the buyer still thinks they're only were 2x, so there's still a gap. That worries me. I think a lot of them would sell for 5x right now without arguing.

47:38I think they would sell for 5x. Well, as I always say, price clears all market. We will find out. As you get into these older and older funds, and as the growth rate becomes more locked in, then you're willing to get realistic as to just go up. As I mentally run through even my portfolio and stuff I'm involved with, the stuff that's going mid -teens to I know why it's going mid -teens and there's a credible story of re -acceleration. Then the stuff that's going mid -teens and it's never going to re -acceleration. You don't know at 100 % fidelity, but you should know, you should have some sense of what that is.

48:12For that latter category, you're right. You should just seek an exit. Yeah, I just worry that AI changes so many markets that a lot of these candidates are just as hopeless now. It was one thing in 2021 when the software hadn't changed in seven or eight years, right? But my, I'm like, it's a second half of 2025. My rules, if you haven't grown because of AI, you failed. It's not just you have a copile. You have to have grown. You have to have done an intercom. You have to have re -accelerated your business. You had 18 months since chat GPD launched or whatever it was to do this, right? And if you didn't get it done in these 18 or 20 months, you ain't ever getting it, it ain't going to happen.

48:45I like your line, J .S. Not just really. If you're not accelerating, you're losing because someone else is accelerating. something, so by definition, that's a good point. On a relative market share basis. If you don't have A, that story, and B, some of those facts, you know where. Iconic just put out this set of metrics of how everybody's growing across like 300 B2B companies, right? This isn't causation, it may not have any correlation, but roughly three or 400, including all the AI leaders, all the hot AI startups, all the hard views and schmarvies, and all the other ones, growth is exactly the same as it was 12 months ago, just about when you throw them in.

49:16So I know we're not, like, we are stealing budget from each other. And yes, sure, our CIOs adding an AI budget or this and that, but it's net zero. We've learned it's net zero at this point, right? If you haven't pulled yourself out of now, you know, man, I mean, I don't mean to agree with Sam Lesson, but you might be utterly irrelevant. It's probably too late. I think it consistently goes back to one of our worst, most pressing statements, which is, are we able to transition labor budget into technology budget in a nice way, the AI? And if we are, let's make a market's a huge, and if not, then it's net zero.

49:47I think the thing that I just think about is like being AI native is such an advantage. We are in a company that is similar to Superhuman that will be more than their revenue in nine months for what it took them eight years to go to. And that's no discredit to Superhuman, just the benefits and the tailwinds that come from being AI first versus layering on is massive. And the other, you know, a fun one, Cleo, which just raised a three billion, right? 20 -year -old company, great CEO, Jack Newton. They just bought a 25 year old company VLX out of Rockenbar, Solona for $1 billion because it aified its legal libraries.

50:25It did aify it by June 30th of this year. It did get the message for chat GPT, right? It became this data source, right? I mean, I'm not a total expert, but in some minor ways, it became a scale for legal, right? And all of a sudden, it's worth a billion dollars. It's an AI leader, but they got it done, right? And Cleo gave up a third of its market cap. That's a big deal to do, isn't it? For a Barcelona company founded in 2000. Oh my God, 25 years ago. But they got it. They made the transition, right? Just curious, Jason, because you're not being clear. Are you saying I totally get that that's magnificent world and clear?

50:57Or are you saying? I'm saying they in VLACs, a 25 year old Spanish company made the AI jump. They became AI relevant. They had the time. Got it. They got it done. And now there were something again, right? Harvey tried to buy them, Cleo then bottom. They became a hot prop, right? But if your other, if you're playing Vanilla B to be company hasn't done it by June 30th I don't think June 30th, 2026 or right in that bridge note or that series C7s is going to make it. I probably would vote Harry and Harry down at the at the reserves meeting on that one. But to be clear what you're saying, which I think is is what you're saying is there are examples of pre -Genei companies being able to move quickly enough to become relevant in the Genei world.

51:37Yeah, I spoke too quickly. This one's amazing that DLACs founded in 2000 in Barcelona could become AI relevant today, right? I mean, it's impressive, right? At least it's superficially. It's very impressive. I mean, stepping back rather than pretending certainty, you know, you're wrestling all the time with, can the company that has scale become relevant, in some cases it can? And then the other hand, oh, are you better off with the brand new company? It's less than two years old that started off the day after chat GPT was invented and doesn't know any other world. And implicitly, Harry, you're implying the latter.

52:11You're saying it's just easier to start at ground zero, November 22, and crank. And Jason's example is the former, which is someone who was around before, and then just successfully inserted themselves into relevance. And I don't have a Droneo answer here. We've seen boat work, but it is probably one of the big investing questions. I'm mind pretty simple. It's like for the vast majority, I want the AI native accepts for the exceptional product builder, the genuine needs like a dad's trainer. Like I've interviewed the best product builders in the world. Just got, dad's is the one of the best, the fricking best him and oh, and I think is so phenomenal at this transition.

52:48But they got it done by June 30. They got it done, whether it's Intercom from 2000 and whatever eight or or VLX from 2000, they got they had until June 30. They got it done, right? But the ones in our portfolio that haven't really, they're still talking about it. I've given up on them. They had their time. Yes, if you're still going to the board meeting, arguing about you need to do something in AI, just stop going to the board meetings. You deserve credit as well. There's like how we at AirTable, TBD on whether it works, but like what he's done in terms like the unbelievable shift in product strategy very, very quickly is impressive.

53:19Again, TBD it works, but to the Owen and Daz really burning the boats to make it happen? Bravo, howie. Yeah, you got to do it. It's balls. It's bold. I will freely admit to bias as cognitive biases. And I just know that's the board meeting where you get up with a sinking feeling. And you're like, you know, for three, four years, you thought you had a home run on the existing thing. You could smell the money. And now you're coming in and saying, oh my god, I'm in a 14 - billion -prease startup. And I just want to throw up. Yeah, there's a lot of cognitive of dissonance for about a day there where you just go home and go, wow, that hurts.

53:54Oracle just closed a $30 billion a year deal with open AI, right? Extra 30 billion. I mean, if Oracle can get AI native by June 30th and you're powerful, you're a startup can't. I mean, I'll smile, but I give up. If Oracle can do it, founded in 1972, make it become AI native -ish and you can't, you're still working on it. Like you're still, your team's still arguing. You're not sure about hallucinations, like you're making fun of fixer. That's not real, that's stupid, those emails don't really work. Oracle went and closed 30 billion with OpenAI, 30 billion a year. Larry got it, Larry got the message, didn't he?

54:30Yes, he did. One version of the messages, he stopped brilliantly by, as I said, he stopped brilliantly buying his stock bag with his free cash flow and instead spent it on Nvidia GPUs. But it seems to have worked because it's converted into cloud business from Oracle. But he did it as early as Intercom and earlier than Air Table. Like he did, he went all in, right? He did go all in and it's so funny if you look at the P &L. I mean, in the P &L it barely shows because you know cloud and pause is only a small percent of the total revenues and within that AI is an even smaller percentage. It totally shows up in the CapEx budget because all the money is going out.

55:04It's amazing. It's got this wonderful upside down AI business inside a wildly profitable old -school business. But you write Jason, A, the market loves it because the market thinks it's leaning ending in. And B, if he can get this kind of revenue on the end, I'm going to say the sentence here in Debbie Downer fashion. And the investment boom in AI continues for three or four more years, then it'll be a great deal. I mean, look at Oracle's stock price. This is like the best stock I've ever seen. Just try watching. Looking at Yahoo Finance or Google Finance here. This is a dream stock. Do you know what I also found interesting?

55:35I was actually reading this morning before this Surge AI, which is a scale competitor, is now raising first -time money at a billion dollars at a 15 billion dollar valuation. We had Gareth on from handshake who said literally he's staying up night and day. You know, I'm in McCore, which is absolutely crushing, reportedly raised a new round, who knows. And there's a tailwind who's picking up the business of scale. Does the scale acquisition create an unbelievable net new economy for these businesses and influx of cash, do you think? setting a banish bar. Short answer, yes. I mean, Jason said it last time, which is, you know, which is literally the thereafter, the deal was announced.

56:14It's the remaining asset is an empty husk. Two weeks ago, you could maybe have said, maybe perhaps the new CEO of Scale AI will be able to figure out what to do with the business and build it back and get relationships with the other LLM companies and continue to sell training data. Blah blah blah. Since then, the 49 % owner of Scale AI has spent their time I'm stealing your best people and often them casillion dollar packages. No one from any of the other kind of cloud providers are going to give scale AI the time of the day. Why would they? They're not going to give them confidential information.

56:48Why would they? So no, there's no business there, which by definition means all the business that was there has just gone to someone else. So I assume a billion dollars in revenue has been allocated out between touring, surge, Merkor, and Hunchek, and whoever else got that. Now again, once that's reallocated, then you're back to kind of equilibrium again as a world, you know, then the bet remains the continued growth of CapEx spend on the AI boom. And that's what all these companies are writing. And if Serge did a billion dollars last year, bootstrapped, right, or pseudo -bootsstrapped, did everybody know about them except me?

57:23And dude, no one knew about it. I didn't know about them. Well, what excuse is there for venture capitalists and technologists to be talking about the 800 million one, just because it raised all the money, not know about the one that did a billion without any outside capital. Shame on everybody for not knowing about a billion dollar competitor. And everyone talking out of their R -Sons Social Media about scale, like they even know what it does. I'm sure you'll find that all the big firms had, I'm well to bet that the guys at Insight had a call placed a surge once a week for the last three years.

57:54I hope so. Their website is badass. Look at it. It's nothing. This is a good company. Go to surge HQ .ai. The quality of your data determines the ceiling of your ambitions. That's it in four paragraphs. We were making so much money We don't need anything on any good and good for them. I mean remember genuine comment I assume what happened here was they had a small profitable business five or six years ago and then only seven customers Turned up and basically say to them we each gonna spend a hundred million bucks for two you don't need to spend anything on marketing You only need seven sales reps.

58:28It's like why make a whole bunch of noise He's just put your head down, hire these people and make some money. I mean, I assume that's what they've been doing. Well, it looks like he's super smart. He was core science at Google, ads at Twitter, research at Facebook, found this in 2020, right? And just quietly gets it to a billion. Dude, that is the most thrive capital, benchmark style website I've ever seen. I mean, look at this web, search is doing a billion. It has a one -page website, which says, what made Hemingway extraordinary? His life experiences, war, love, triumph, and loss. This is the most badass startup.

58:58up. Let's get him on the pod next week. I'm going to try to get down here. I'm going to try him down. I'm going to get it. He only goes by Edwin C, which is badass too, right? He goes by Edwin C founder. He doesn't even say CO. It doesn't say I'm the COB. And this is his website founder story of all time. Twitter, do your magic. When you only have seven customers and they're all desperate to spend money with you, you just don't spend a lot time wasting time doing sales. I'm not gonna. Good for him. Listen, there's so many places where you take it. I want to do one more topic before we do a quick fire.

59:33We've got a long stocky CEO quitting to be CEO of a sauna. We've got a Stanford layoffs with the 2 .9 % endowment tax. We've got Benny off saying about 50 % of work being done by AI. Where do you guys want to take it before we wrap up wrap up with a cowshoe quit fire? I do think this quitting is under disgust. A lot of folks are quitting. A lot of CEO resignations, founder resignations. I mean quitting lunch barically to go to Asana. It's weird, man. But like it's okay today. After two years. For going to test Lone Stock, we see a quiz to be see of Asana. Asana is obviously a public company. Lone Stock is not.

1:00:07Asana is obviously much bigger than Lone Stock, he is. So why do you think it's weird, Jason? Maybe it's not weird. It's just the turnover everywhere is accelerating. If you're not in the elite of the elite, people are just baneling faster and faster. And the the capital is only going to. Crunch -based did an article this week. There's no such thing as unicorns anymore, because forget about AI, only the money goes to $5 billion and up. It's got to be $5 billion. 50 % of all the unicorn money is north of $5 billion. So it's either those, like even bigger than launch, darkly, it's not, am I not even being worth $5 billion today.

1:00:40Let's look it up. But I bet it's probably above the line. $3 billion, okay? So it's just, it's tough. And it is, everyone going to join meta for $100 million is mercenary, and it's just the world we're living in, right? And at the same time, AI's gonna lead to a lot of layoffs. I don't think Mark meant to say 50 % the way it sounded, but that's what every CEO talks about behind closed doors of a public company. They say, I don't know, I need to reskill 20 % to 30 % of my people, but they really think I might not even need half. Look, if you signed up for four to six year journey and it turns into a 12 or 13 year journey, it's not surprising, but you're saying you are saying people say, this is more than I thought, But for a whole bunch of reasons, I can't keep doing this.

1:01:22Life reasons, exhaustion, whatever. So we're definitely saying that as a thing whereby, found as a just saying, you know, maybe I need to get a president, maybe I need to not be the CEO. It's just a lot longer and harder than I think it looked when you, you know, took, you know, desk and mask of it. Yeah. When you took 500K from Y. Combinator and said, this is a fun journey, you know, fast forward 10 years. You're not probably a third of your working life. And if you're still five years away from an exit, that's half your working life. If it's not your passion, it's almost impossible to keep doing.

1:01:52And even if it is your passion, it gets hard. So we're definitely saying that, you know, we're trying to deal with that. Lots of different ways. Sometimes you have to we incense founders. Sometimes you have to accept that the transition is appropriate. And then you have to figure out, do you go to that pain and hassle of finding someone else? Or do you actually just say you should look for liquidity for the company? So, and then separately, Jason, you jacked you right, there's this weird kind of concentration at the top of fact, which is by only the winners seem to matter, or the payouts of the winners are becoming so skewed.

1:02:21You know, I saw a tweet that said something like, It just go from Instacart to OpenAI to big money, right? That's exactly right. You just, that's what happens when you're in extreme wealth and extreme volatility. Even being tent doesn't look nearly as good as being theft, and the differences are so stark at the, you know, out of edge of the curve, that you're just seeing all sorts of weird deal hopping and people hopping. I mean, Cusser are raising more money now and I think it's a reported $28 billion. Just going to your point on like the escape velocity that this 0 .0 .0 .1 % have being so much more than ever before.

1:02:52Yes. I mean, it's said last year, according to Wall Street Journal, record number of CEO departures, record of all time tracked from public companies, and overall 2 ,221 CEOs quit last year up 24%. And it is a little bit, and I saw a tweet about it. It is a little bit like, you know, someone did the really fun thing about, you know, the Ronaldo post besides some dude that just got hired by Facebook and a book and a hundred million. And it definitely is, first of all, it's revenge of the nerds, which on balance I'm good at because no one ever confused me with Ronaldo. But more importantly, they made the point, anything that becomes that high stakes maybe ends up like that.

1:03:29Whereby, you know, are we going to end up like the English circle, you know, any sporting thing, English, like you know, take the PGA, you know, you win the PGA, you get five million bucks. If you're 20 or 30 or 50, then the PGA, you're barely scraping along, covering your expenses. And that's what it is like in this winner -take -most economy. And it's interesting. It does feel like this is a stage where more even than normal, it's a winner -take -most world. And that's just really challenging for, for ventrophones, it's really challenging for, to be an entrepreneur if you're not in one of the winner -take -most deals.

1:03:58I think one's even more challenging about that for us at the earlier stages, when you have that situation arise, the opportunity cost of not being in those winner -take -all deals becomes even higher, and your willingness to pay whatever to get in for your entry price becomes anything. Totally. And so your 10 million for a seed for Andreessen or Insider, any of the others, whatever who gives a shit, because the opportunity cost of not being in those with the outcome size is being so much bigger is so much higher. I agree, and it raises the risk for you and even at our stage, you know, you can be a Perfected conscientious that the seed investor do your 30 deals per fund and just not be in the one that matters And if everything else doesn't matter then you don't matter right which is all sort of downstream implications in terms of how should you think about portfolio How should you think about fund size?

1:04:44We lost a series A actually in last 10 days and it was doing 5 million an hour Started at like two 25 million ended up at 600 Eventually it will overshoot but along the way it's really hard Let's do it. So Cal chic wait fire will Elon Musk create a new political party this year? Yes, you get $230 if correct no you get a hundred and sixty dollars if correct does account if it creates a party and I mean It's like I mean create a party the question is will a poll well or the question is will he create the party so Cal chic wait fire will he create the party? I say no. I think he's just I mean I am privatized in a sense I think he's just too emotional about all this He's just shooting from the hip.

1:05:25He's so upset and I've been there myself. I have the same flaw so I get it But it's not gonna happen because he knows it's not gonna work. He's he's so smart. He knows it's impossible to win in the US Hello from Jason Roy. I'll go with no because there's not an option It says I don't care because that's really what I think I just don't give a damn Okay, no, you just don't care fine. You know this one Roy. I've been looking forward to I found this one And I was like Jason's gonna have a banger will Roy Lee founder of Cluelie become a billionaire there before 2029. Now, yes, guess you $534. No, guess you $109.

1:06:02Now, my question is, how do you value a paper? Paper, we mean just to be clear. We can cut a little slack for $2 billion friends here. Jason, so is it worth $5 billion? Is that the question by 2029? Yeah. Listen, I think that he's bad -ass smart, but everyone's a little full of shit in AI and revenue, right? But if he claimed it was five million run rate before entries to invested, okay, let's put some asterisans and daggers. The thing a billion, it could someone that's so 200 X, that's already a billion, isn't it? Someone might do that deal to billions half. So we've bought half a billion already.

1:06:35Let's assume he owns 25 % and maybe owns that. So this gets more and more plausible the more we work through the math, doesn't it? Wow. If he's really at five growing at this rate and it doesn't, it doesn't crater, 200, 300 XAR, AI deals, you know, we could probably move this to 2028. Wow. I'll see you in ways. On paper. On paper. For me. I'm getting 100 to 109. I'm basically, if I say no, I'm only getting nine bucks for a win. It's barely worth it. But that's a terrible bet if that's the way it works. It's a terrible bet. I just want to be a come on to it. In my heart, I think no. But I suppose as this is proof that the story is, you know, test and test and test and smart and optimist makes money.

1:07:15I'm going to join Jason and the optimist camp. I'm going to go with yes despite myself. I'm going to go with yes too. Boys, this has been fantastic. Rory, thank you so much for joining us from the whole days. Jason, thank you so much for putting up with the late night. Essex coast has never been sunnier. It's raining outside, which is why you don't go to Essex. Enjoy the family, Erie. There's so many reasons why you don't go to Essex Highway. But I'm willing to put weather on the top five. My word, that was fun. As always, my favorite show of the week. If you want to see the full episode you can find on YouTube by searching for 20VC, that's 20VC.

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