20VC: Navan IPO: Winners, Losers and is a $4.5BN Exit Enough in VC Today | Harvey Raises $150M at $8BN Price | Why Google is a Buy and Amazon is a Sell | Meta Down 10%, Is Zuck Struggling?

25:18I think that's the damn question. No, you exactly right. Because selling software to lawyers is a particularly shitty business. It's a more constrained business. You've got to do more. You've got to help more. You've got to speed them up. And it's not all or nothing, by the way. I've been seeing a lot of good literature on it. It's not about automating people. It's about automating tasks. You've got to make them a lot more efficient, and they've got to be able to track that. And if that happens, then it all makes sense. We mentioned liking these rounds for their low dilutive characteristic or nature.

25:45There was a good piece from the information this week about benchmark lowering their ownership requirements and McCall being the example. They only have 10 % where they always normally needed 20%. We always knew this was benchmark. Has AI seen a reduction in ownership across the board for this generation of venture? Every deal I've been in, my God, ownership is attacked at a level I've never seen. That's my conceit investing today is giving up on that, right? Is for me, I feel like I can only make money if I own double digits of two winners per fund. I feel like that mathematically, that's the only way I can make money.

26:24And the last three investments I've done are in the six to 8 % range, even though that's my rule. But what am I going to do? Not do the deal. We also know that's the dumbest thing of all time, right? I'm literally going to write my LP report up in a couple of weeks. I'm going to say my resolution for 2026 is to get my ownership up. We'll see how I do against my resolution. But that's my main resolution. It's like, yeah, you can do it a few times. but if you do it every time, it's tough. But I don't know what you do in this world. If the companies are capital efficient, they don't need you. In a hot company, you don't really control the die to use kind of like lame VC terminology.

27:00You don't control the die. Jason, why didn't you raise 125 and then you can have more ownership? Maybe that, well, that's a different mistake, but this is really just, this is all there is. Agreed. Like if there's a co-investor, I guess you could be a total jerk and say, it's me or nothing. I've tried that once in my whole career and just not my vibe, it backfired on me. Of course, that company wasn't that successful. But if you want to be somewhat founder centric, the best thing I know how to do is say, listen, I just need to be the largest investor and let me invest the maximum I can in the round.

27:31And that's as far as I go. If you're not willing to put the extra dollar into the deal, don't do it for sure. But if they're selling 10%, it's hard to buy more than 8%. Yeah, multi-causation. So breaking apart your question, Harry, the one question is, are VCs getting less on average in these deals? And then the second part of your question was, quote, because of AI, which we're going to agree is a meaningless phrase and try and fix it later. On the first, I think there probably are. There's no doubt in my mind. I think it is harder to get 20 % ownership for the super early stage funds. It's harder at our stage.

28:05Our target would be 10 % to 11 % on average, probably late A or B, some earlier, some later than that. It's harder across the board. There's no doubt that that's the case, right? and take Merkur as a benchmark as a premier firm. I will be validated again. As I said, reports of their death were greatly exaggerated. That sounds like an amazing 21 fund they've reported. But yeah, that's an amazing firm courting a great company and only able to get 10%. As Jason said, what are you going to do? If they only need to sell 10 % of the company to fund their needs, then you're only going to get maximum 10.

28:38And you can either decide not to play, which would have been a very dumb decision, or you can decide, take 10 % and keep going. Now, it's interesting. Why is this happening? There's a bunch of different reasons, because you can't say because they're capital efficient, because let's be frank, some of these AI companies are the least capital efficient companies in the history of humanity. Merkur, pretty capital efficient, open AI, planning to spend more money than we thought existed in most entire continents. And they're not stopping yet. So it's not capital efficiency, not capital efficiency, right?

29:08On the capital efficient ones, if you're so capital efficient that you don't need to raise a lot and you become hot very quickly, then you've got leverage as a founder. On the other extreme, if you're so capital inefficient that you need to raise$13 billion, then it turns out that no matter how much you put in, if you put in$100 million, you still only have a couple of points. Both of those, interestingly enough, will be pretty good deals, which actually, and I'm doing this in real time, makes you realize that your mental rules of thumb have been smashed to pieces. There's a situation where you're going to get 10 % because it's capital efficient.

29:42And there's a situation where you only get 1 % because it's capital inefficient. And both of them have amazing returns. So that's just the way it be. Maybe that's the aha. There's a companion. I mean, logically, you'd say to yourself, if it's a continuum, there must be some sweet spot in the middle where they needed to get 20%. But then they were capital efficient enough. So you make out like a bandit. And I'm sure those companies exist too. But I think that's the aha. It's a continuum here. It's a wider continuum than we've seen, perhaps, maybe not in the early internet, as I think about it a little loud, but then we've seen definitely in the SaaS era in the last 10 years, right?

30:14Companies, as you say, being able to get to hundreds of millions of dollars on 10 or 20 million bucks, and then other companies needing, you know, two or three billion just to get a model out the door. Neither of them results in a standard venture ownership position. But I do think when I was reading Iconic's latest report, what they said is when you look at all the top quartile companies in their extended portfolio or all that they surveyed, yes, they burn a lot of cash, but the burn multiples of their top companies are much lower because they're generating, they're growing so quickly. Even if you ultimately raise a lot, if your burn ratio, if it burn multiples, you're able to sequence capital differently.

30:53You could, listen, hold off. I'm going to do just 10 % now, and then I'll do five. And then at 8 billion, I'll do 1.2. You may raise a lot, but a high, you know, if your burn multiples is low, even if it takes a significant amount of cash, it lets you optimize how you sequence fundraising. Agreed. And remember, the words optimize how you sequence fundraising as an entrepreneur, the inverse of that is thou shalt not be optimized as a VC. A founder's optimized fundraising is a VC's below ownership target. You're exactly right. I think that's right. If Merkur had needed$40 million to get rolling, then Regirock would own 20%.

31:32If they only need$20 million, then there you are. And you're right, they can increment, raise another two rounds. And even the extraordinarily ambitious, the other extreme, the extraordinarily ambitious foundation models, not the new ones today, but early Entropic and early OpenAI were able to do incremental fundraisings in a way that, as you say, avoided significant dilution. And I say it with huge respect, even Y Combinator is structured this way, right? Y Combinator's advice for most companies is to raise a maximum of 10 % before, during, and after demo day. It's very thoughtful advice. It's very structured.

32:08Yeah, it's biased to helping YC. But it's also saying, listen, we've run the numbers. Most of you will do better selling 10 % at Demo Day and another 10 % at three to five times the valuation, not just in terms of overall capital raise. It's not just valuation. It's effectiveness. And so they've institutionalized this low ownership, right? It's always been true, but I think it's been productized the last couple of years. 10 % at Demo Day, right? And if you want to do 4 % from angels and friends, that's 6 % left for a VC. Maybe you get 5 % or 6 % unless you weigh overbid and basically do two rounds at once.

32:42That's how you get more ownership in YC. You do two rounds at once. I absolutely agree with you. I see three on 30 instituted so well by YC as the de facto round. And again, huge respect to them. It's good for them and it can be good for founders, but it's a challenge for us to navigate. Yeah, I'm not even criticizing. It's just institute. You asked about low ownership. This is institutionalizing. Look, YC has always been a lot low ownership with VCs and I get it. Like no, but now it's been institutionalized very effectively. Three on 30, four on 40, two and a half on 25. That's just, you got to get single digits.

33:14This is where I just think like, just do a world of Roger Ehrenberg though. We had him on the show. The world of like high ownerships, go where others aren't, get 20 % in actually reasonably priced assets. Let's not do AI dictation tools from YC and get 4%. If you like, Kerry, did you see that Anthropic is now projecting 70 billion in revenue in 2028? I'd rather have a piece of that. Pretty good. I'd rather have a little piece of that. Did you guys see Sam Altman's response to Brad Gerstner? What did you think of that? I was intrigued because it was quite a retort publicly. It's a totally legitimate, entirely obvious question.

33:52Hey, you're doing 12 billion in revenue. How are you going to fund a trillion dollars in CapEx over the next five years? And, you know, I'm sure there's an articulate answer you could have made. You're right. The answer, if you want to sell your shares, sell your shares. It was a little snarky, probably because you're tired. You're one hour, you know, you're halfway through a one hour interview. You do a million of these all the time. I believe you just have a baby in the house. You're tired. You're grumpy. And you just make a snarky answer. The question is substantively important. What did you, you didn't learn anything about the plan to fund the trillion dollars from the answer.

34:24You learned a little bit about the persona of the person in a bad moment, but everyone has bad moments, right? If you want to know more about Sam Altman, there's 53 pages of testimony now on the internet. You can all come to your own judgment on that. I think the question itself is totally legitimate. It's going to be asked in increasing. There's a story that can justify it. It's all about revenue traction. If you get to$100 billion, you can support$60 billion,$70 billion in CapEx. But it's a totally legitimate question. Didn't he say to Sam, if you want to sell your shares, I'll find someone for you in 60?

34:56Founders only said that to me once in my career. I never said a critical word ever again. But I always said to me, that was a teaching moment for me. I'm like, okay, I crossed the line. I didn't realize I did. I never said a critical word ever, ever again when I was told there's a market for you. Just let me know how much you want to sell, Lemkin. And it's again, I'm not kind of doing the, oh, damn you for saying that we all have bad moments, right? But it is kind of a bullshit answer. If that happened to me in a board meeting, if I was a board member and CEO, you might say to yourself, oh, I want to find, And if it's a legitimate company ending question, you have to have an answer to this question because I'll step back to it because not just the health of your company, but bizarrely enough, the health of the entire US economy depends on the answer to this question.

35:41It turns out fuck off and sell your shares is not an acceptable answer. And if I'd been a board member at this, you said to yourself, OK, maybe I shouldn't ambush them in public. Maybe I should have said, hey, look, I just want to spend some time. You know, you give your CEO the courtesy of not feeling ambushed. You maybe don't do it in a visible place, but you do have it. If you are on the board of a company that's planning to spend a trillion dollars, whatever it is, I can never keep up now. And you only have 12 billion in revenue. It's a totally appropriate board level question to say, how are we going to do this?

36:12Maybe I don't know anymore. I don't know if that's true. As silly as it sounds. It is beyond silly. i think i think there is so much fear among vcs of getting out of step with the most successful founders there's so much fear and you guys are going to disagree with me but i i see it all across my portfolio the better the company is doing the more everyone's a grin fracker that just just never a critical word said now you've poked the bear i have a company that's going shit and it's going to shit, the board members will not intervene in any way to protect the shareholders because of the bad NPS that will come from damaging that founder relationship.

36:53That to me is one of the most egregious escapes from fiduciary duty. And this is some of the most reputable investors. Harry - But you're agreeing with me, right? I'm agreeing with you 100%. Yeah, you're seeing the same behavior, right? Listen, OpenAIR has had an interesting history. But if it were a normal startup with the VCs we work with, they had to come up with 1.2 trillion. I think everyone would be saying, sounds good, Sam. Sounds good, Sam. Keep going. Good month. Fortunately, and again, I don't know the man, but I've just been very impressed with you. I don't get the impression that Brett Taylor is a yes-man.

37:28At one point, I'm not sure if he's still on the board. I should know Larry Summers was on the board and Larry Summers is many things, but not a yes man. He might be off now, which would be a shame because he would be working on a board just to hear him speak. I think he's a very smart man. But stepping back a level, and I'm going to say, I've been thinking about this. There's a little part of me that's kind of a bit sorry for Sam Altman because of where he's put himself. Basically, every public analyst will say he did what he had to do to raise this kind of money. But everyone covering the public markets will say the only thing between us and a 30 % promote is the AI CapEx boom.

38:03And he is the poster child to the AI CapEx boom. And if the AI CapEx boom unravels and the world and media is looking for a villain to throw rocks at, it ain't going to be a big search. Actually, genuine comment here. If this thing starts to slow down, it'll just get real hard, real fast. And I think if you're on a board member in that, you actually owe it to your CEO to say, hey, dude, how are we thinking about this? Do we have good answers? We can't just be glib. I hope that in the boardroom, Brett Taylor and those guys are sitting down and saying, okay, what's the cash flow numbers that says we can honor all our commitments?

38:37What are the cash flow numbers that say maybe we can't honor 20, 29, and 30, but we can do the others? How are we going to do all this? Because when someone invents numbers at the$5,$10 million level and they're wrong, they disappear without a trace. When you invent numbers that are wildly over-optimistic at the trillion-dollar level, and if it unravels, you just become the poster child in every economic history for the next 200 years of the great AI crash of 2026. It's a pretty shitty place to be. And one of the things we've talked about on the past is the job of the board, to your point, guys, is not to be a well right, actually to help the CEO avoid things.

39:15I often look back on some of these young founders, and we talked about this. Yeah, they were wrong, but all the board members who should have had more experience, even in one sense, they are less legally culpable, but morally they're culpable by not saying, hey, dude, are you thinking this true? Do we really have an audit, Sam Bankman? Do we really know what the money is? Do we really know what the customers are, Charlie, whatever, Javis, or whatever her name is? You're as a board member meant to provide the guardrails. So I think when I look at this one, I go, hmm, I hope someone's providing really good guardrails.

39:43If it hits, it'll hit hard. A lot of founders feel like VCs should just be their allies, period. And period, that's your job is to support me. That's your effing job. Some like the critical feedback, but I think it's far fewer today than you might think your job. And, and if you're not supportive, you're not, you're, you're a problem for me. You're not, you're making my job harder. I think that's how founders feel. And I think that's how Sam felt was my, my guess. The second thing that's just interesting to watch, because I do think Sam's pretty transparent is I think it did show there's, there is some stress around raising 1.1 trillion.

40:13I mean, I mean, not around raising it. He's raised, he's committed to it about generating it. There's, if there was no stress, it wouldn't have been, it wouldn't have poked the bear, right? So I don't think it's actually a big deal. I do think they'll work around it, scale it back, but it did show there's some stress around hitting the 1.1 trillion in, it's not even revenue, right? It's got to be gross profit at 50 % margin. So they got to do 2.2 trillion or more to pay for it. Maybe I'm getting it wrong, but they've got to certainly do more than 1.1 trillion to pay off their capital commits. Yeah.

40:43I can't believe I'm saying this. It's only cumulative, so it might be a little less, Yes, it's in the many hundreds of billions of dollars a year in a world where today, you know, there's a couple of companies. Google, there's 100 billion and a quarter. So does Amazon. You've got to be at that scale. Three, 400 billion a year. Yeah, you're somebody. You can pay for these things. It's a real number. You mentioned Amazon. Amazon crushed this quarter. Plus 20%. AI shopping assistant Rufus. Additional 10 billion in sales. Things looking up. They obviously have their ownership in Anthropic, which I think is at seven and a half percent.

41:18How do we feel about the state of Amazon today, where they sit considering last quarter? How do we feel? The overall growth rate was, I think, 11 or something. But the real point is Amazon Web Services, their cloud business grew at 20 percent. You know, the story had been they were the dominant provider pre-AI. They felt they'd slipped versus Google and Microsoft in the AI world. And in fact, in terms of growth rate, they still have Google and Microsoft were both in the mid high 30s. But AWS kind of came back from, I want to say, 13 % to 20%. So the story was, oh, we're doing, we're relevant too.

41:52We're not irrelevant in the land of AI. And the stock popped. And I think the real takeaway from here is, and this is the counter argument to all the cynical, it's a bubble people. It would appear, and Microsoft said the same thing, that demand for these products is still exploding. If you have it, you can sell it. At some point, maybe that won't be the case. I have my concerns. But right now, the objective facts on the ground are Microsoft was saying, my biggest problem is I can't build data centers, so I'm capacity constrained. Amazon was saying, my growth rate is up. Interestingly, they just signed a deal with OpenAI because everybody signs a deal with OpenAI to sell them more compute.

42:33So they clearly found some capacity for that. But overall, the story was continue high demand for compute. And if you're selling compute, stocks go up. That was the takeaway. The compute story was strong and the compute story was strong across the board. That was the aha, right? It was the people who want to articulate that it's all going to go wrong story. Right now, you have to still make that story prospectively and say it'll go wrong in the future. What you can say is it's going wrong now because the demand was still there. But to me, making a press release that says you're now the number five or number six partner to open AI for NVIDIA GPUs is not that impressive.

43:11like it's just you're behind Microsoft you're behind Oracle Oracle you're behind Google you're behind and and so it's interesting that they found some GPUs in a closet I'm not speaking literally but I don't actually think it means much to be late to the party to sell it may mean a lot over time don't get me wrong but I think today there is a lot of AI performance theater today there's real incredible growth there's growth in our retirement funds across the country but there's still a lot of theater. There's a lot of folks who are doing a lot of work in AI and not seeing huge benefits. So this felt partly theatrical to me, but it's okay.

43:47I'm in favor of keeping the ball moving when you don't have all the answers. That's very cynical, Jason. It doesn't rank them. I mean, literally, they're like, okay, we called the CoreWeave guys. We called Nibius. We called Microsoft, Google, and Oracle. We even called Benioff in case he had some GPUs or TPUs hanging around. Oh, Amazon found some. Yeah. I think the stock popped more because of the objective fact that the actual revenue growth grew, then you're right, then the open AI deal. But while you are right that it's not huge compared to the 250 billion for Microsoft or the 300 billion from Oracle or the 400 billion for Broadcom, it is still better than not having one because now at least we can say they don't have one.

44:28So tick, done. It is, but it's tough from AWS having really created the category, right, of cloud providers and being what we all grew up on. It's a major come down to be not even to be above the fold on the leaderboard. I think that's a different statement and totally correct. You're exactly right. Five years ago, AWS dominated cloud compute. Now they don't because cloud compute evolved from being simple compute to being AI-centric computing, and they didn't evolve fast enough with it. And they led a whole bunch of people into their little oligopoly. So zoom out a million miles, that's a bummer.

44:59If they knew then what they knew now, I think in 2019, they would have bought a lot more GPUs and been a lot more aggressive. And yeah, 20 % growth also is a lot right at this scale. Absolutely. But Shopify, which is a competitor right on the other side of the house, it blew it out. 32 % revenue growth this quarter, 32 % GMV growth, which is a close analog to Amazon. I mean, Shopify is re-accelerating at eight digits of revenue, which is pretty crazy. So kudos to Amazon, but it's also lucky that both of its core product lines are getting just a general boost, right? There's a lot of tailwinds going on here.

45:33Jason, I know Rory won't answer this one. Given what you just said there about their not being above the fold and their losing market share in one of their core markets, which they used to own, and then considering the 20 % pop, how do they sit in terms of being underpriced versus overpriced? For the moment, Google is underappreciated and Amazon is overappreciated. Google was slow to AI. Google had to bring Sergey Brin out of jet skiing and windsurfing and retirement to whip the troops into shape. But Google's really good now at all levels, right? It's really good at consumer AI. It's really good in searches back.

46:05Search is growing for Google again. The TPUs are good. It's a good partner. And it's, you know, it's the only one other than NVIDIA making real money. So I feel like Google is underappreciated. And it has the application layer. It has all the applications, so many that we use. Amazon has none of the application layer. It has very little at the hardware layer. It has a niche search, which is incredibly powerful, but only used for e-commerce. In a way, it just doesn't have as much going for it. To be fair to Google, I mean, you used the word underappreciate. I think the stock has appreciated very nicely.

46:37I mean, the catastrophists at the start of the year were, oh my God, it's awful. And I think it's up 53 % from there. In Q1, we talked a little bit about the companies and I was positive on Google. And I admit it, Harry knows this. I was retrospect. I thought about it felt so contrarian that I even said, please don't lead with that on the highlights because I felt a little stupid. And you fast forward two quarters, it's turned out to be broadly correct that they have the key ingredients and a place to put them and the ability to monetize them. And Facebook's missing that last key element. Right.

47:07I still think, to your point, Jason, what did you do? I still think at some macro zoom out level, if you had a monopoly in search and now you've gone to having ChatGP as a de facto competitor, you'd still better off if it hadn't happened. It was a really good gig when you had this monopoly. You wish it hadn't happened. But once it has happened, what you've got to give them credit for is getting almost everything done to be able to play in the new world. They had the key ingredients. It took them a while to put it together. But now they have all the boxes. You'd still prefer not to have to do any of this shit and just, you know, optimize your 10 links from now until the end of human time versus having to compete.

47:42But they're competing well. In terms of playing in the new world, it was a bad week for Meta. I'm one big ass Meta shareholder. Don't doubt Zuck. But wow, a$15 billion fine and then the reaction to their commitment to CapEx moving into 2026 and the enormous spend that they continue to do and will continue to do. I mean, down double digits. How do we think about how they fare in the new world? I think it's easy because the core business performed really well. Let's start with that. The core business, I think, grew 20%. You know, despite some usage being down, it's kicking off cash. Yeah, it's a great business, right?

48:17The market is just entirely, and we said this six months ago, entirely correctly saying, dude, you have this wonderful business, and then you're taking the entire cash flow, and you're building this AI stuff. And unlike Google, Microsoft, or Amazon, you don't have an enterprise business to sell this shit to. and unlike ChatGPT, you don't yet have an obvious AI forward app that gives you a lot more consumer engagement. So you're basically spending 70 billion a year, but with no revenue attached. What the hell? And you know that Mr. Zuckerberg's answer appears to be, I think it's relevant to be in this space.

48:47Thank you for your opinion. I refer you to the artists from Corporation. I control this company. Have a nice day. So the market's just saying, hey, you're doing the thing you did in 21, 22, putting a whole bunch of capex into something that might not work. And that's why the shares are slightly down, despite objectively pretty good performance. It's entirely rational. They're saying, I don't know why you're making this bet. And he's saying, that's why I'm a founder. I personally don't get it either. But, you know, I didn't build Facebook. He's if he's got a plan for it, we'll see. Doesn't appear to be the most efficient way to spend 70 billion dollars as judged from the amount of infighting.

49:18But we'll see. One that made me happy was Twilio. Twilio bounced 20 percent after beating expectations. question being when you look at that and you look at that generation of companies your drop boxes your boxes maybe your under loved underappreciated companies are we going to see a series of bounce backs on better than expected results do we think if you're undervalued and you perform reasonably well i mean what happened here 20 let's start by 20 billion dollar company doing four or five billion a year valued at four or five times revenues as you say had a decent quarter revenue you grow up 15%, had a nice stock bounce.

49:55It's still in a bounded universe. The zoom out point is this. They're in a much more bounded world now. They might grow 15%. They might grow 5%. They might trade at six times revenues. They might trade at four times revenues. If you look at the stock chart, the area of magic is gone. And now they're just perfectly good. $20 billion market cap companies kicking off cash, really strong cash performance. That's what successful, mature companies look like. They'll be valued accordingly. That's the good news. And yeah, the bad news is, as you look at the AI-first universe that exists, they're not really playing in that to any degree of significance.

50:30In a world where you're cash flow positive and trading at four or five times, you can feel really good about yourself. And then you look up and realize, oh my God, Palantir is trading at 123 times revenues and is cash flow positive. You know, they're not in that ballpark. They're not in that game. So that's what a mature business with mid-level growth prospects look like. My take was a little bit different. So Twilio goes from single digit growth to 15%. That's still significant re-acceleration. We talked about devs stepping down at Mongo. He went from 13 % growth five quarters ago to 24%, 13 to 24, right?

51:06That's almost doubling your growth rate. And here's my point from both of these. Heading into 2026, you better have gotten a few nickels out of the AI expenditures, all the AI dollars. This is not new, guys. This is what 60 % of the growth of our GDP. You can't miss AI. And so Twilio said it's voice AI customers are a huge part of that reacceleration. It says voice AI is up 60%. We all know a million companies using voice AI, right? It said it's top 10 voice AI startups are up 10x. AI is fueling the number of databases we use. Now, sometimes we use Supabase or Neon if we're vibing, but a lot of folks use Mongo.

51:45So not to be the only guy in the board meeting that says something, but going into next year, you sure better have seen reacceleration because of AI, because there's so much money there. You got none of it, guys. You had 18 months to not launch a single feature, tap into a single trend to reaccelerate. Now, I'm not expecting you went from 30 % to 300 % this quarter, but if you're not growing faster at the end of 2025 and the start, as a founder, I give you an F minus. There's so much money and you don't have to be Harvey to get a little piece of it. Twilio and Mongo and Cloudflare and tons of folks have a little piece of it, a little piece of that massive pie.

52:23I think that's totally fair. And I was well put because I would almost amend what I said as you exactly. They're not the AI native exploding 2x year on year. But what you're saying is great. There's a big point spread between having no AI magic pixie dust and getting taken private for three times runaway revenues to be destroyed by their PE machine and getting just enough AI pixie dust and lift to get that growth rate in the mid-20s plus like Mongo, see some reacceleration. And we just agreed from the Navan come, you're still only going to trade at seven times revenues, but it's a damn sight better.

52:56You have six or seven times revenues and some kind of forward story is a big point spread from three times revenues and being sold to PE. And that's the story we're actually articulating to a lot of our private companies. You can't go from the$100 million revenue to just be being Harvey. You're not. But you better find a way to be relevant. And I like your expression, Jason, the age of AI. You better find a way to matter in this world and co-attach to the spend. And even if it only takes you 10 basis points up from 15 to 25, that's a night and day difference in terms of your relevance and viability.

53:29I always like to come back from the publics where I think we have opinions, but maybe it's not our day job, to the deals we all work with where it is our day job. And I think you're exactly right, Jason. That is the message for any of your companies that were pre-2021, that are pre-GPT companies. Maybe you can't make yourself into the next Harvey or the next OpenAI, but by God, you better co-attach to that spend because it's the only game in town. I think you're totally right. And you should be preaching that to all your guys as we come into the end of the year and looking at 26. And look, sometimes it's luck, like the CEO of WorkOS, Michael Grinick, he was posting, I think they went from, I'm going to get these numbers wrong, but something like 20 to 40 in five months.

54:06Okay. And he's been working hard for years on WorkOS to be an OAuth and authentication layer, but all the AI guys used them. So seeing insane growth, we've all seen portfolio companies and sometimes you got to make your own luck, but we've had 18 months, like get a little bit of the Harvey. You got to find it. And it's like it's at the edge of too late. Not because there's not time. I actually think there's plenty of time for startups. It's because your team isn't good enough. If you haven't gotten a boost this year from AI, fire half your team right before the holidays, give them a turkey and three months of severance, but they failed.

54:42You have a, your team is not good enough. They had 18 months to ship a product that mattered in this world. Where's your agent? Where's your re-acceleration? F, F, no more excuses after Thanksgiving. But the irony is it's early. At the same time, What we're all learning now, we feel like it's late with all the stuff we talked about, the cursors and replets and levels, Sierras, but it's actually so early in so many categories, right? It's just three years since Chachi BT shipped. Yeah, but you got nothing. You did not re-accelerate this year. Fire yourself or half your team. Take your choice. Fire yourself or half your team at the end of this year.

55:16Don't keep those folks that don't have the answers around. You're better off just not having them. You had time, right? And if we want to be like, I almost hesitate to say this. If we go back to the publics, because we love this folks, if we want to be critical, HubSpot and Salesforce got to deliver in 2026 because they're in play. They have the AI things. They ship the products, but they haven't seen the bump that Datadog and Twilio and Mongo have. And maybe that's okay. They're not at the infrastructure layer. Maybe it takes longer. But if I were Mark or Yamini, I would fire half my team. If I don't see real growth from that by middle of next year, I just fire half them.

55:51You got the wrong people. There's 2 ,000 people building Agent Force and we've deployed it. It's quite good. It's very competitive with any other agent you're going to buy. Time to monetize it in 2026. It works. It's a good product. It's not just smoke and mirrors. It's really good. Your team, maybe some of those folks that have been hanging around for a decade, maybe they're not the right people going forward. I don't know. Sometimes when Jason is cruel and harsh, I disagree. And then sometimes I listen and I go, he's absolutely right. This is one of the latter ones. I mightn't say it as harshly, but I think you're exactly right, Jason.

56:21If you're not, on this train now, you're just not going to be relevant and you will be sold for three times run rate revenues to a PE firm who will smush you in with something else, never to be seen again. And you have your chance and it's raining money in this space and you need to navigate your product towards it. And I think that's probably pretty common advice across as I think about our portfolio and all those, we talk about them a lot. And that's why the Navan thing was so good. all these companies that are doing 100 to 200 to 300 with sluggish 20 % plus or minus growth rates, they need to figure out how to co-attach and re-expand or eventually you're going to get tired, the VCs are going to get tired, your team's going to get tired and something's going to just not work out.

57:05Yeah. And there's just so much. The other thing I got a little bit, I get a lot of things wrong, right? It took me a while to see the data to believe that software companies could really capture dollars from replacing humans for real. It's not that I didn't believe it. It's just so much of the stuff was VCs talking out of their rears, making stuff up, talking about how every human's going to be replaced with an agent when the software wasn't very good. It just wasn't good. It was hard. It was a great dream. And when Vinod says it, I believe it. But when most of the rest of the VCs say it, I think they're just water cooler talk.

57:37But now we're really seeing it. Agents are better than mediocre humans. So you better be tapping into that revenue too. They're better than mediocre humans. So get going guys. Like if the age of the copilot is behind us, how are you replacing humans? This is your job in B2B software is to genuinely replace humans. I'm not a Harvey expert, but I do believe Harvey is partially replacing associates, right? That's a lot of money there. And whatever Harvey is today, it's going to get better. I guarantee you it's a better piece of software next year than it is at 8 billion, right? And it will replace more mediocre associates that don't want to do it and want to go home at 4 PM and don't want to work on the IPO perspectives.

58:14It will just replace, find that money and you can grow 50 % faster. Harry's with me on this. I am, but the trend I'm finding across shows is that Jason is becoming more and more right with his assertions. Have you seen this in the more recent episodes? Yeah. And you're agreeing more and more with him. Bring one comment here. I think the conviction that he brings from his use of the product is really valuable. I've numbered my colleagues who were engineers and it's just really great when you can say, when you actually touch and use the product, if it's an app, I try and use it. If it's a cursor or something, my colleagues will be using it.

58:49I don't want opinions from people who just saw it on PowerPoint. When you use the product, it all becomes clear. And he's running a business where he's literally had people and now he has machines. That's what this is all about. And it doesn't mean that humans go away entirely. It means they find other uses. It means they find other roles. But when you see it happen, you believe. Because if you want to be a good investor, I have this concept. You can tell when people are saying something that they actually understand. understand. It's a very good habit. And I'm listening to him and sometimes on other shit, I'm like, Jason, you're just talking out your ass.

59:17I don't believe it. When he's talking about this shit, you can tell he has built these products. He has automated this process. He's transitioned out those employees and he's getting a better product. And I'm like, yes, I don't know if I believe in all the claims for AI that the Maximus say, but I totally believe what you have. There are areas where right here, right now, you can replace a$40 ,000 worker with a$10 ,000 a year agent and be better off. And that's why it's not all just hype. I think the million-dollar question is how fast that diffuses into the whole economy. But there are places here and now where you should just be using AI.

59:53And Jason is living that. He probably is right on the pointy edge. But he's right. If he's the most pointy-edge Salesforce customer, in the next two years, they got to get 20 % of their customer base, plus maybe 30%, onto being as pointy-edge as Jason in terms of automation. Otherwise, these guys are going to go somewhere else to get their automation. And that's what it's going to take. This is what I've learned. If they don't buy it from you and you have a market position, they're going to buy it from somebody else. And that's why I think AgentForce is so important because we have this thing on Sastra, sastra.ai.agents, where we share all the agents we use.

1:00:27It came out of nowhere. It now gets like 12 ,000 views a month out of nowhere. It's not even highlighted. So that's a lot of traction. but we have tracked it. We've sent millions in revenue to two vendors, artisan and qualified that we use millions in a couple of months of deals. Like, and we sent it to agent force now too, that we use it. If other folks are building these agents and you're not building them, or they're not on your platform, they're going to find them somewhere else. The demand in some of these categories is insatiable vendors. If you really can replace humans with software for real, not for pretend, not for San Francisco, but for real, and you have even a mini brand, you will find you have more demand today than you can actually service.

1:01:04You can't even onboard the number of customers that want to replace their sales team with an AI. Now, there were blow up. There's the X11s and the blow ups of last year. But the demand is like something we've never seen. It's just it's insatiable to replace humans with software. I mean, it's kind of tied to this, but it was speaking about the adoption of open evidence. Open Evidence grew to$300 ,000 in one year, which is one-tenth of the amount of time it took Doximity. I thought that was interesting, just in terms of market pull and adoption rate, going to what we said last week, which was just everyone being in market at the same time.

1:01:40It is super interesting. You're exactly right. And the fascinating thing is that Open Evidence got there in a year, what took Doximity 10 years. And it speaks to, yes, this latent demand for kind of AI. You just got to put the negative in, the gnawing worry, which is you just got to say the following fact, though. There aren't any more doctors as a result. And this is something Jason said last time. Everyone's in the market right now. You could have a world whereby you get every doctor on the platform in three years. Have you saturated TAM more quickly, right? And that's why one of the things when you look at these hyper growth rates, and they're so compelling.

1:02:14And I think you've just got to say to yourself, you've got to be sure that once you get all the names, that you have enough follow-on stories for those names. You don't want to be one and done, right? Because DocSim is a really good company. It has a finite time associated with the numbers of doctors and the amount of advertising and kind of stuff you can sell to them. Open evidence plays in roughly the same market. Probably at its current privately held valuation, it will need to expand that market substantively to offer a return from here. Totally doable, but it's not just going to be getting there quickly and then stopping.

1:02:46And one of the things we started to do is for all these tools, you should know for each of the tools how many of that profession exist. How many lawyers, how many doctors, how many bankers, how many wealth advisors, because that's your talent. And tracking that. And so it's really number of people times the amount of their work you can automate. Because in the end, these are finite money piles. And what it means is, that sounds a little more negative, but the positive out there. open evidence sees the moment. And if you come along to Jason's point a year from now with a slightly better version of open evidence to a rounding error, no one will care because you miss the moment when 90 % of the people who are ever going to adopt the tool like this are probably in market now in the last two in the next one year.

1:03:27They're all going to make their initial decision pretty damn quickly. You've shot up the S curve super fast. And if you've missed your moment, you've missed your moment. Having said that, just going to Mark Benioff's point, which think was a good one from before when it's on the show. There are categories where you'll miss your moment. If you are a little slow, maybe find the areas that are slower. I mean, Mark's point was like only a couple percent of his customer base is fully ready for AI today, right? Maybe play to your strengths. If you're a little slow, maybe go into retail or manufacturing or areas.

1:03:57It's not that the AI isn't there, but it hasn't changed overnight, right? Play to your strengths. I agree, Jason. And it's interesting because open evidence, just like ChatGPT, is an individual adoption product. I think the velocity of individual adoption, you see it in Lovable, is explosive. The pace of corporate adoption is much slower. So you're exactly right. I don't think everyone's going to buy age and force are their equivalent in a year. It might be five years, not 10 like SaaS. It might be half the time of SaaS, but it still could be five or six years. I think the fascinating thing is the consumer has shown they're going to adopt in a year, and that's what you saw with the open evidence.

1:04:32I mean, it was interesting if you looked at some of the general AI search and AI science tools, the number one user was doctors using general research tools to look up very specific medical questions, presumably meeting some patient with an odd disease. And open evidence caters directly for that need. It was a perfect product. And the adoption has been enormous and super quick. And I think that's what you're seeing in all the individual users. Like we can talk about the pace of adoption and corporate law of people like Harvey, but I can tell you every individual associate is legally or illegally using chat GPT to help them format the masses of writing.

1:05:09And when you do any kind of market research, you confirm that. Even if they don't have a corporate use case, they just have their laptop open and are cranking along. Okay, fantastic. It has never been harder to do Series A investing than today. Agree or disagree? I completely disagree. Ignore some of the stress around pricing otherwise. This is the the best of times to be a Series A investor because there is just an explosion of seed AI startups. There's so many and they can't all get funded. And I know it's stressful. I know it's hard, but it is a gift that thousands of founders are in San Francisco raising seed funds from multiple accelerators.

1:05:49Now, YC, NEO, South Park Commons, all these folks are creating very smart, good candidates that, yeah, it's hard and you got to hunt and it's competitive, but the funnel is better. The top of funnel is the best it's ever been. So even if it is hard, this should be the best of times to be series A because the funnel is the best. The one layer up on your funnel is the best. And I think it's the worst for seed because everyone each year wants to be a seed investor even more. Jake Paul, Jake Logan, whatever, which are the Jakes? It's not just the chain smokers anymore and Jared Leto. It's everybody is playing at that at the hot seed startup level.

1:06:25That's one for more. Yeah, everyone's in. So it should be a gift to be an A. It should be the best stage, stressors and price aside. And I think the stressors and the price are the issue. But yes, I actually do agree. And the other thing that's actually helpful is the direction of travel is now clear. In that last couple of years before ChatGPT, we were at the end of the SaaS era. It wasn't obvious what was going on. A lot of the deals you did then turned out to be evolutionary dead ends. I do at least feel now since ChanchiP that the direction of architectural direction in enterprise B2B for the next 10 years is pretty much obvious in a given.

1:07:04You know, it's some form of agentic software. I hate that word. It conveys a lot. But some form of re-architecting the enterprise stack to enable AI to do more of the work. That's the mission. The task has been assigned. And the only question now is which verticals first, which tasks first, who will be an early adopter, who will be late. So the direction of travel is pretty clear. That's the good news. But unfortunately, I think the bad news is there's just a lot of capital doing it. And, you know, we're finding from just a raw competition and need of speed execution, it's a lot. But that's life.

1:07:36It should never be easy to make a lot of money. The most recent person I lost to was Andreessen Horowitz. Who was the most recent person you lost to? I would say earlier on this year, very talented senior investor, Tyler Perkins. Great name, can't argue with it, you know, right? So, yeah, I mean, and I think the relevant point there is I would maybe expand on that versus just having it be a litany of shame. Five years ago, I would have said some firms would be earlier and we'd run into a slightly different peer set. But what's happened now is, you know, we typically do in revenue A's and B's. So it's kind of early product market fit on.

1:08:12Given the fund size, all the large firms that were, you know, typically C to A are doing all those deals. So the competition set has stiffened. You're up against tougher, better firms, and you've got to bring up your A-game, right? There's no doubt. If I was to list things that worry me, it would be that. And in the face of that, you've got to do all the things you've got to do. You've got to work on your relationships with the entrepreneur earlier. You've got to see the deal earlier. You've got to be more decisive. You've got to play to win when you want it, which means you've got to know what you want to win.

1:08:42I showed my LPs that I would say that the talent of the people we are competing against has gone up markedly. And the good news about this is, you know, we're fishing in the same ponds as some of the smartest investors on the planet. And the bad news is you're competing in some of the best investors on the planet. And you just got to find a way to win. Final one. I would rather be in Calci at$5 billion than Polymarket at$9 billion. Agree or disagree? I'm a Calci user, not a Poly user. I actually think the real, my comment would be this. I wish I was in one of them. And I don't mean that just glibly because they're good, right?

1:09:16It's typically consumers, not our focus, but I really like that space. I really like the idea of prediction markets. I think it's a very clever and good idea. I think there's going to be a lot of issues around the sporting. I mean, the sporting gambling side of that, you can get troubled by that. I know in the States, we can be. Coming from Europe, we bet on sports all the time, as Paddy Power is an Irish company. There's a lot of great sports betting goes on. I do think the fascinating thing about Calcium Party is the whole Brian Armstrong training about you have these prediction markets. and then the person can put their finger on the scales of who wins, in this case, Brian Armstrong, by using a certain set of kind of phrases during his earnings call, basically dictated, I think, with a Calci bet one way or the other.

1:09:57There's going to be a lot of weird stuff that happens as a result of this. Some of these policy bets where you just know an insider is making a trade, you know, one hour before the administration announced something, you see it hit on Calci and Polymarket. So there's a lot of fun stuff. But as a deal to be invested in, they would be fun. And at some level, that's worth having. So Calci. I mean, as I'm a customer, yes. Jason? If it is accurate to say that Calci is fully US compliant in all 50 states today, and Polymarket is still in an ambiguous position, even with Nasdaq's investment or DICE investment, if that's true.

1:10:30I don't know if that's true. I think it's changed now. I think under the current administration, pretty much everything is legal. Yeah. So what I was going to say is, listen, politics aside, there is a chance there will be a new administration that will be less sympathetic to this category. So based on my limited knowledge, I'm going Calci because I feel like it is a safer long-term bet than someone that is riding the current political vibes, which are all in favor of everything here. It was a lot different a couple of years ago, and it could be a lot different in a couple of years to come. And so if I could slightly de-risk the regulatory side because it's CFTC approved or DCM approved, I would take that bet just because I don't know who the heck is going to be president next.

1:11:13I don't know. But the first act could be to undo everything, everything that Sacks and buddies have done. That could be January 1st, whatever. These edicts, it's all going. Crypto's out, probably markets out, everything's out, could be the next administration. It's all gone. Just to make a prediction, which is in keeping with the idea here, I predict that any re-regulation won't happen because of any new administration. I think the real challenge to sports betting like this will actually be the leagues themselves wrestling with the fact that when you have sports betting, you have sports cheating.

1:11:49And if it becomes endemic like some of the European soccer leagues, it'll be a problem. So I actually think a fun problem for the next baseball commissioner, basketball commissioner, NFL commissioner will be, what the hell do you do about this thing when you have these very particularized bets? Not will the Cowboys win by seven, but in the third quarter, will the quarterback show us all that misses? The possibility for cheating just becomes high. So I actually think that problem, the next administration will have plenty of other things to deal with. That particular problem will be the purview of, as I say, the sports folks.

1:12:21I hope you Americans don't watch any Pakistani cricket then, because that'll really show you the way to do it. But, uh... Happy, a little American spends a single second watching cricket, you know, it's just torture. But we respect that you guys love it, even though you're not good at it. Do you know, Rory, do you know what, Rory, I would love to take you to Lords. Come to London, we'll sit and watch a five-day game, and we'll watch every day, and then it's going to be a draw at the end. No, absolutely. Yes. A product that was not better by them. The one thing you know about cricket, it was not designed by an American TV executive.

1:12:53Hopefully mobile phones are collected outdoors too. That's my hope. You have to put it in a basket so that nobody can be on their phones. Silence in the stadium. Yeah, absolutely. But before we leave you today, you've heard me mention Guardio before. They protect millions of people from phishing, scams, and online threats. But now something genuinely exciting has happened. Lovable, one of the fastest growing AI platforms, just integrated Guardio directly into their Gen AI chain. What that means? every single site built with Lovable now gets scanned in real time. Phishing pages, impersonation sites, scam redirects are blocked before they ever go live.

1:13:34And that's a huge shift. It's rare to see companies take responsibility for the safety of the broader internet. Lovable did, and Guardio is the engine making that possible. Guardio also leverages advanced AI threat detection to block highly targeted, socially engineered scams before they ever reach you. From phishing emails and fake login pages to financial fraud, Guardio protects you across the way you actually live and work online. If you want to see what modern proactive protection looks like and protect your platform, go to guard.io forward slash 20VC. AI changes how fast threats appear. Guardio changes how fast they can get stopped.

1:14:15And as Guard.io defends your clicks, HubSpot turns them into customers. You want to grow your company, right? But instead of having the time to get to the next level, you start maintaining the status quo. It's freaking maddening. Well, HubSpot's customer platform, it actually solves this breeze. No, it is not a fabric refreshener. This is the next generation. Their built-in AI takes over all the busy work. It writes emails. It qualifies leads. It answers common customer questions and even help create content. Also, your marketing, your sales, your service teams can focus on what matters most. And the impact is undeniable.

1:14:51Teams are saving 750 hours a week. One even increased leads by 251%. And these results show up in days, not months. Over 238 ,000 businesses already use HubSpot. So join them. Visit hubspot.com slash AI. And while HubSpot builds your funnel, Framer builds the experience around it. Are you still jumping between tools just to update your website? Don't do this! Framer unifies design, CMS, and publishing all on one canvas. No handoff, no hassle. Everything you need to design and publish in one place. Framer already built the fastest way to publish beautiful production-ready websites, and it's now redefining how we design for the web.

1:15:34With the recent launch of Design Pages, a free canvas-based design tool, Framer is more than a site builder. It's a true all-in-one design platform. From social assets to campaign visuals to vectors and icons, all the way to a live site, Framer is where ideas go to live, start, and finish. No Figma imports, no messy HTML, just design, iterate, and ship all in one place. And it's completely free to start. Ready to design, iterate, and publish all in one tool? Start creating for free at framer.com slash design and use the code 20vc for a free month of framer pro that's framer.com slash design and use the promo code 20vc framer.com slash design promo code 20vc rules and restrictions may apply