20VC OGs: SpaceX Valued at $800BN & Harvey Raises $160M at an $8BN Price | Airwallex Raises $330M and The Battle with Keith Rabois | Netflix Acquires Warner Brothers | IPO Market Predictions for 2026: Anthropic, Stripe, Databricks and SpaceX

24:40So it'll be interesting when they do a tender, the hostile offer, right? And 51 % of the shareholders take it because this may be a divergence of interest at the margin between the two. But I don't think management wants to do this Paramount deal. I thought it was interesting. David Allison said the board have not even responded to Paramount's offer. No response at all. To Rory's point earlier, in terms of where the appetite is from, you know, WBDs. And it's clear they were talking earlier. It's clear, as Parman said, they put the deal into play. And then, you know, again, that's the problem when a small company puts a deal into play.

25:13Yeah, the company that you're trying to acquire kind of mentally gets its head around selling itself. And then it can just decide to sell itself to someone else. And again, going back to the big picture here, someone else has a$480 billion market cap and you don't. That's what's happening here. And at the margin, I don't know how important it is, But at the margin, Netflix also has a revenue arbitrage. It trades at a much higher multiple. Yeah. That can come under a little pressure when you buy a large asset. But it still remains true. Netflix's equity is cheap, relatively cheap to buy this asset.

25:43And they may be able to inflate all the assets to 10 times revenue, right? If they do that, this is an incredibly accretive deal for them versus the most expensive deal Paramount could do, even if it's do or die, right? The revenue arbitrage is not to be understated in a deal like this. Though it is interesting, the Netflix stock ticked down slightly, but I think that's a little short-termist. I think even aside from the revenue arbitrage, the beauty of Netflix is, again, zooming out, because you have global distribution, you can monetize content better than anyone else. You can pay more for content because you've got more people to sell the content to.

26:17It's just that simple. The business model won. But I actually think that the fun question you asked, Harry, was what other examples of this will there be? This is the digital world taking over old school industries. Yet another old school industry has rolled over and died. And I think that's a super question. I was thinking about it a lot. What is the other industries? I think there's a bunch. And that's the interesting thing. Because when I started in the 90s, IT was exactly that. It was information technology. And most of it was sold to corporations to effectively account for their shit. You had computers to count people, to count money.

26:50That's all it did. Hence the name. I mean, IT, information systems. those boring names. And that's still the bulk of core IT investing. You have software to run B2B. But the amazing thing, this is to your point, Harry, is that only since the last 25 years, digitization ate a couple of industries. I mean, the obvious big ones it ate is it ate advertising. I mean, Facebook and Google have 70 % of not just all digital advertising, but all advertising. Thanks for playing newspapers. Thanks for playing broadcast TV. They won. So from 95 on, venture-backed Silicon Valley startups ate the advertising industry and took all the money.

27:31And now you're seeing the second big one. The second, I mean, you know, Mad Men, it looked like it was fun to be in advertising in New York. And now little tech weenies in Silicon Valley, we just did it to Hollywood. Thanks for playing, guys. I know you have these cute studio businesses, but we've got distribution on the internet. We've got our algorithms for predicting which software works. We're going to take over your sexy Hollywood business too. And so you're right, Ari, what's next? And I was thinking, it was a great question. I started, I mean, to me, you actually talked about it last time.

28:01The next one is FinTech. What point does someone like Revolut say, oh, I woke up and realized I'm the largest market cap company, bank company in Europe. Maybe I'll buy one of you branch baby thingies like Amazon bought Whole Foods, because that's the third one that got swallowed. Retail got swallowed. I mean, if you think about it, they swallowed advertising completely. They swallowed a lot of entertainment, not all of it. They swallowed a good slug of retail. Probably banking is going to go that way and at some point maybe auto. I mean, it's just amazing over an elongated period of time, just the power of digital software enabled technology in conjunction with the internet to just eat, entirely destroy and consume other businesses.

28:41Before we move to some of the biggest AI deals that we've seen go down, a couple that I I thought was super interesting and you can choose. Tiger's new$2.2 billion fund, downsizing. I know it sounds crazy. $2.2 billion is a huge amount of money, but from the lofty heights of 21, it's a big change. Anything of note that we should think about here? You know, I thought the most interesting thing in the reporting was that, so they did raise a prior fund of about 2.2 billion, right? In 2023. They only did nine deals this year versus a hundred and some odd in 2021. I think what's just interesting is this is a super smart group of folks.

29:14I think both strategies are of the moment. I actually think the Tiger strategy in 2021, when we had an IPO a day and every recurring revenue company could IPO at a couple hundred million in revenue, growing 50 % with 140 % NRR. I think that was the strategy of the day. Now, Tiger seed itself reinflate with OpenAI and others, right? It's seen everything we've talked about, the huge growth, the unlimited growth for the winners. And now they've tilted to that strategy. And I think growth investors probably should tilt to the strategy of the day. But I just think it's interesting. and we'll see what the 2029 fund does.

29:48But doing nine deals at that scale is pretty tight, right? It's a pretty concentrated focus, isn't it? It is. I give him credit. I just want to say, I'd start with, because, you know, it takes, look, the guy running that has got billions of dollars, doesn't need the grief. It speaks to a love of the game that he says, I'm going to swallow my pride because I don't think he's going to say the 21 fund was success or the right idea. You might get bailed out by some of your big investments like OpenAI, but you don't look back. I mean, we all have periods as investors that we don't look back on in pride, where you go, I got that wrong.

30:19And I'm sure a team of smartest states government looks back on 2021 and says, that was hubris and I was wrong. And I give them huge credit for not going, and now I'm just going to take my$2 billion, $5 billion and stay in my house in Palm Beach or whatever. I'm going to get back in the game, raise a smaller fund, take the little bit of knocks from the knockers that say you're wrong and just do my job and do it well. So I think it's great. All credit to them. And what you're seeing is, which is always true, is that the original strategy they had of doing the very best deals, doing them late, doing them with concentration was the right strategy.

30:52It worked with JD.com in 2012 or whatever it was when they did that in China. It worked early on in the internet land. They got carried away. They made some mistakes. And now they're sobering up, flying right, and staying in the game. So all credit to them. And a 20 % GB commit is not small. 20 % is at the limit where it's almost not worth doing. You might as well just direct invest. You're just not getting enough leverage on your money. I've always thought 20 % was a weird number, right? Assuming you have 20 % carry, right? You're not making enough money. You're not like all the grief of having LPs isn't worth it at 20 % GP commit, is it?

31:26Well, it is because you need the bigger check size. At 400 million, you wouldn't be a late stage fund. No, I actually think - You get to write bigger checks, but you don't make so much more money versus investing. In theory, you don't make enough money for the grief, I think. I understand what you're saying. Because the math is easy. You can do it in your head. It roughly doubles it. You have 20 % of your money, and then you have 20 % carry. So if you 2x the fund, half your gains come from your capital, and half your gains come from your carry. It's easy math. Ignoring fees. Yes, but in theory, now you're right.

31:54This breaks down on late-stage funds. For early-stage investing, I actually think it's worse because it's harder to get into the deal, right? It may be the opposite for growth, right? Jason, you're exactly right. If you were running, if you had$400 million of your own, and you were doing an early-stage fund becoming an$800 million fund to take other people's money. It's silly. You're exactly right. I would argue, though, in the late stage business, there's a critical amount. I mean, look, you can't show up at a$200 million round with a$30 million check and say, pick me. That's just not a thing.

32:20He's sizing for the business at hand. And I agree. I think every LP probably draws a huge amount of comfort from that check. I mean, I personally think, especially when you're dealing with wealthy people, where they put their money is what you want to know. And I actually think LPs don't focus on that enough. I find that enormously reassuring that someone cared enough to write, you know, 20%. And, you know, when things get tough or when you're trying to, God forbid, get your capital back versus play to win, that 400 million will keep these guys focused. So I think it's great. Again, everything about that's good.

32:50I haven't picked up on the 20%, but that's awesome. For folks who might be founders or others, like that's a lot for a fund, right? I think the average growth fund is about 1%. And even that can be manipulated in where you come up with 1%. Maybe one or two of the partners that are richer at putting the money in. It can be from loans. It can be from cashless things. 20 % is, to Rory's point, you got to love the game if you're that rich. Even if you had a rough couple of funds, you got to believe this is worth it, right? This is so much of the fund. And money is a great fruit serum. Don't tell me what you think.

33:19Tell me what you do. Do you love the game is one question. Do you love it? 400 million is a very different damn question. And clearly they do. At 400 million, you're exactly right. At 400 million, you're in because you're in. I also think it pains him greatly that their brand has been tarnished in the LP community and he will do everything possible to make other people money again. I think he is wounded and an incredible dude, actually. I'm a big fan of Chase. Totally. I've never met the guy, but that's how I read it. Absolutely. There's a point at which you're not doing this for the marginal money.

33:50You're doing this because you like it and you like to do it well. You take money from LPs. You value that relationship. I totally agree. I think that will be a highly disciplined, highly focused machine. Next, Naveen Databricks, head of AI, announces his$500 million seed round at a$5 billion price. We actually discussed this like months ago. I don't know if you remember it, but well before it was announced this week. It was just announced this week and caused a stir at the$500 million seed. Anything to discuss if you haven't? Sure. I mean, I think it's, I can't remember who wrote the book about another entrepreneur, which perhaps didn't apply as much, but it was the title was Once You're Lucky, Twice You're Good.

34:31And Naveen's done it twice. I mean, you just look at that and you go, at this point, you can draw a line. And once you can draw a line, the VCs are going to just show up en masse. It totally makes sense. And everyone's doing that. I'm delighted to back Naveen tweet yesterday morning. Yeah. And it is true to some extent. There's such a lot of data in someone who's been successful twice. You just got to look at it. I can totally see how you can extrapolate to that. What kind of seed deal at$5 billion can give you a 3 to 5x return? I don't have clarity on that. It's a lot of enterprise value to be created.

35:01I know how I'd write that investment memo if I was writing it for my colleagues. It would be, once you're lucky, twice you're good. This guy's done it twice. Back him. Different than saying, I see a$25 billion outcome here. I just don't know it. The one lesson that I've learned from a lot of these deals, whether it's thinking machines or this or some others, is that although it's$505 billion on the sticker price when it's announced, there's actually several rounds before that Sequoia and Andreessen have done that are considerably cheaper. And the$5 billion sticker seed is actually very different to the first two rounds before that no one's picked up on.

35:33I don't know if that's the case in this case, and you might know better than me, but you're right. We're seeing a lot of that. It's just so weird. And just for listeners, what you're seeing is it can either be different investors doing early runs and not get announced. Or even weirder, where you see one investor commit, and they commit some money to you at$300 million, some money at$500 million, and some money at a billion. And from the investor perspective, they make the commitment and even the checks at the same time. So their blended cost is$500 or$600 million. So that's their economics, and that's the facts.

36:05But the entrepreneur can then announce a headline billion-dollar raise. It feels a little FOMO-y. Obviously, the idea is both that you get attention and maybe that the next round investor is foolish enough not to realize what actually happened here. And maybe it works. But it's when professional economists make lists of things that you see in bubbles, this is widely up there on kind of weird stuff you see at top of markets. But it does work in my limited experience, because even if you do three rounds at the same day at 300, 600 and 900 or whatever it is, when you're oversubscribed, it's just a message to the new investors.

36:39The price is 900. The price might even go to one, two. Like I've seen it too. It's just a step function and investors that are struggling to get into the round, accept it. They acquiesce to it because it just is what it is. As long as there's a, I think sometimes in venture and when deals are hot, you just have to pay the price that it is in hot deals. You just have to walk or pay the price it is. So if you can stair step around, even in a matter of hours, so that the outcome is logical, then investors can either opt-in or opt-out. It is a little douchey, but it actually leads to a very efficient process for folks to opt-in or opt-out, right?

37:12I mean, YC has been doing this for over a decade. You know, even in the old days, you get in before YC demo day, you paid six pre, you got in after YC demo day, it was always nine. There was always a 50%. Now the step-ups are even higher before or after demo day. So this has been going on since I started investing in YC companies, right? In 2014, the first did one. Everyone had a step-up after demo day. It just didn't used to be up to 60 or 100 listen it's not three rounds in a day but it is three rounds in a year our favorite the trusty the trusty harvey is back announcing 160 million dollar round led by andresen 8 billion dollar valuation just to give the metrics 150 million in ar are growing 300 year on year 98 gdr 168 percent NDR.

37:57Good numbers. Small raise in comparison. 160 million led by Andreessen at 8 billion. So like less than two percent dilution. Tours? You know, it's funny when you can get around for this for like three percent or less dilution, I'm super in favor as an early investor. Right. It's a great deal, especially if we no longer care about the downside risk. If we no longer care if it's worthless, I think it's an amazing deal. The funny thing is when I started investing, I was taught, and in fact, I was told by one of my anchors, these kind of deals, you can't recognize the markup. It's too small. I had a deal like this during the 2021 boom.

38:31It quickly got marked up to$3 billion by a good investor. But it was 2 % of the company, right, to get into the company. And I never recognized the round or marked up. My LP said, you can't do it. I guess here it's$160. That's not chump change, is it? No. But it's so small. It's so small. Is it a real valuation? I don't know. Just a push on that, right? $160 over$8 billion is 2%, right? I mean, let's just do the math here. At$800 billion in SpaceX, 2 % is$16 billion. They're not doing a$16 billion secondary. We just took that valuation seriously half an hour ago. I think the interesting thing is, again, we said it a million times.

39:09There's no legal company. I mean, so 3x is$24 billion. There's no legal company, software company, been more than$2 billion ever. So it's 10x that. The data companies, the Westlaws and the TomVest are worth more than$2 billion, you know what,$5 and$10 billion. So still less than this. This implies huge time expansion into labor. And then if you go on the website, huge time expansion, I'm sure, beyond just legal into other professional services. That's what you have to believe if you're going to see this being attractive. I think, yeah, you do. And you also have to see market dominance, I think.

39:44Oh, yeah, you have to be the winner. Like number two, this is not the prize for the, you know. But not only the winner, though, Rory, I think actually market dominance in a way that Uber and Lyft is. You can't have a cloud composition there where four players take. But there are so many and there are so many fragmentations of this. You did GCAI. I mean, so I think you need to win the whole market. That's actually a good comment. What you're saying to paraphrase is not the typical apps oligopoly, but almost like the way Netflix to go back to dominate streaming. It's like, not only did I win, I have 80 % market share of street or whatever it is.

40:19I'm the winner. I'm the Uber. Because, yeah, you've got to extract a lot of money. But also not the unbundling, Rory. As I said, we're seeing this vertical unbundle into lots of different niches that we are both in and invested in. I think you have to believe they subsume all of those and be able to expand broader. And the theory would be, first, marquee customers in the law firm in particular, that's the investment thesis, top of class metrics. And the challenge to that, though, is Lagora, 40 million ARR, so a lot less, but they're doing 10x year on year growth on a smaller base, admittedly. Yeah.

40:53They are doing very well in Europe. Like Lagora's European progress can't be underestimated. And really, the analysis from investors today is that Harvey won the US and Lagora winning Europe. I think we're making it too dramatic for VCs. Here's my analysis, OK? If Harvey went from 50 to 150 this year and 10 to 150 in two years, I would just do some classic math and just draw the chart out. And my entire life in B2B as a founder or investor, every time we try to be too negative on TAM, it bites us. Now, we talked about, what did we talk about live in London? Something TAM? What do we call about it?

41:30The TAM trap. The TAM trap. I believe in it. I'm living it with my portfolio. But we agreed that those were older companies. I agree. Yeah, when you go 50 to 150 in one year, and if the last quarter, last four months, if the growth's consistent, so you can see a path to 400 next year, this isn't, this is the same multiple we just talked about. But Jason, you could extrapolate that for infinity. But that's our job as investors is to find outliers. And if this growth is, here's my point. Listen, I'm a simple man, okay? If this growth is durable, okay? If we're seeing signs that it's durable, if it really has 170 % NRR and 98 % logo retention, and it's accelerating at 150, this is just the bet you do.

42:11You don't pull your hair out or have to have lengthy dinners about supplanting labor with AI and whether it'll be 10 trillion tokens. You just do the deal if the revenue is durable and it triples from 50 to 150 in one year. And the guys that got in at$3 billion in the beginning of the year got an insane deal. It's not that complicated. Rory and I can go back to old SaaS spreadsheets and justify this deal. You cannot assume that it will grow infinitum at the same growth rates. Great, then step out of venture and return your last fund to your LPs. You guys, as usual, are doing the extremes that loses the plot.

42:45No, this is a pretty simple math. Your big picture point is a fair one, but let's just talk about the numbers behind it. Because, Harry, he's not saying the same. I mean, what we're basically saying is it grew 10x last year, it grew 3x this year, this is amazing growth, lean in. That's the sword for what Jason is saying. And the only argument against it is, you know, 3x this year is slower than 10x last year. So probably next year is 2x. I mean, it all boils down to the same thing is multiple companies doing 10x growth rate is not something you saw in SaaS. So one of two things is true. Either they'll have that kind of 10x growth rate and then decline with the same rate of decline as SaaS companies, in which case they'll continue to grow for a long period of time, or they'll grow fast and they'll slow down fast.

43:31If it goes 10x, 3x, 50 % growth, then you might have been wrong. That's the knowing fear. I mean, I agree. You lean into the things that are working because I think the alternative, which is trying to be clever and do things that aren't working, that might work in the future, is just too hard. So help me just understand this. 10x to 3x, totally yeah. Then let's say it does 2x, okay? So 150 turns into 300. Fantastic. Then let's say it goes to 80%. That 300 is now... Harry, that's exactly the right math to do. Okay, great. So then why would you pay$8 billion? Because you are paying three years ahead of time for a public company multiple that that would be.

44:11So Jason, you say do the deal. I don't understand. I'm really naive here. I'm not arguing. I'm trying to understand. You're paying three years ahead of time for what that would be in a public market. Well, look, if we'd go from$150 to$450 next year, then we're paying 20x revenue at the end of next year. So we're paying a year ahead. We're paying a year ahead if it triples next year. If they can peg the growth. We're all saying the same thing. If the growth stays the same at 3x even, then you earn your way out very quickly. If it declines even to 2x, which is still amazing growth, then you could be a little ahead of yourself here.

44:44That's what we're saying. It's as simple as that. We published on this like 10, 15 years ago. In SaaS, you could use the following rule of thumb with a high degree of accuracy. The growth rate for any year was roughly 85 % of the prior year's growth. So if it's growing at 100, it would probably grow at 85. If it's growing at 85, it would probably go in the high 60s. And it was just rough rule of thumb. It was roughly right. The thing here is, instead of seeing that best-in-class 3x growth, you're seeing best-in-class 10x growth. As I say, if that only declines slowly, if it goes 10x to 6x to 3x, these are amazing companies and any price can be paid.

45:18If it goes 10x to 3x to 2x, then good prices can be paid, but you could get ahead of yourself. And if it ever slows down to sub 100 % growth before you hit this, like if any of these things go down, then you're just way wrong. It is possible to lose money on a great company. Because it's the only risk you're running when you're paying$8 billion, right? There's not going to be a risk that Harvey's not one of the greatest companies. It's a given. It's clearly the biggest. There's only one risk you're running. It's back to where we started, actually, about price. You have no operational risk. You have no business market risk.

45:49You have no time risk. The only risk you're running is you're paying$8 billion for something that might be worth $4 billion. If it's worth$4 billion, you're wrong. So you can be wrong on price. So far, no one has been in AI. The stuff that's worked has been marked up and marked up again. And right now, that's the right bet to take. So Jason, to your point, you go back. The short-form version of what you're saying is it has been the right bet to take so far. It could turn. And if it does, everyone will be over their skis. But so far, as you say, the person who was agonizing about his$3 billion bet and biting his nails at the start of the year is like, oh my God, I'm so smart.

46:20I'm so smart. I have a two and a half X in six months. because the momentum kept coming. I think Harry's got an important point going back to 2021. I think in 2021, we kind of reached peak of people paying three years ahead, right? In terms of multiples. Maybe we're back to that. Maybe, and that would be logical, right? Maybe three years ahead is the limit a VC can do even with the most optimum, like it has to tie to something when you put together the investment memo, right? And in the old days, it was 1X, like Box and others, when Rory was there, their growth rounds were often at a modest discount, right?

46:51You weren't paying years ahead. you were actually paying a discount. And I think it peaked around three years ahead, right? The classic 100X ARs in 2021 were really three years ahead. Between two and three years ahead. Jason, that's right. If Harry's asking, is that crazy? Time will tell. Like it might be, it might be peak AI bubble at least. It was crazy in 2021 because two bad things happened. Not one, but two. One is you had a recession. And then on top of that, a lot of those companies became functionally obsolete in terms of where the excitement was. with ChatGPT. Paying up in 2021 was a horrible decision.

47:26I do believe in this case, the big advantage you have is, as I say, I think that the direction of travel is pretty clear here. I don't think we'll wake up in two years and go, oh my God, we're not using AI for legal. That's not a thing. So I can see why people are leaning in, which is why I go back to my common, the only remaining risk is some kind of TAM and competitive dynamics. Can you get enough of that market and is big enough, which is why the leaders are getting this premium, because you can just say, I'm going to be the leader. It might take time, but it's a big time. I got it. We'll see.

47:58Yeah, well, it might be we're underestimating a risk that a lot of apps can be Jaspered. Agreed. There might be a GPT-6, 7, Anthropic-5 risk where we thought we had a stable place in AI. So of course, Harvey and others are going to win, right? Because they control the customer, They can swap LLMs out. But the Jaspers of the world and multiple others thought they had winners. And then AI changed and they became a very limited value. I don't think we should assume AI is stable. And I think that's why there's a code right at OpenAI, because Sam said it's not stable. I think that's fair. I think I actually saw a good piece.

48:32I can't remember the gentleman's name. And he was very skeptic about most software apps companies in the age of AI. His comment was models will do most. So you either help make the models, which is building the AI, or you have to do very different apps that were only possible in the age of AI. But the comment he was making is exactly that, which is whenever you do an AI app, one of the non-negotiable disciplines before you do it is you should go and try and use the core models to do the same thing. And you should try and build a functional version of that as simply as you can. And if you can get even vaguely close to it, you need to pause.

49:07because I don't think, for what it's worth, I don't think every app goes away. I don't think someone wants to maintain their own self-force. But I do think, Jason, you're right. One of the gnawing risks in all these investments is, you know, just model improvement. I mean, we're seeing it in coding where the models are clearly trying to eat the apps. Yeah, just there could be, I'll give an example. I mean, Replit was around for eight years before Cloud4 made it work. Gamma was around for four years before it worked. We feel like there's a stable plane, but it could be that as AI evolves, as we're able to do incredibly complex, long context windows, deep reasoning in seconds instead of 15 minutes, I could imagine a new generation of founders develop legal software, other software that takes advantage of deep thinking in milliseconds, which seems impossible to say.

49:55And all of a sudden we don't need, I don't want to wait forever for these slow analyses. Like all of a sudden it works like magic again, like it's an order of magnitude better. And all of these apps, we could say, oh, they'll just rotate out their LMs, but it might not be that simple. These could all become obsolete in an area of infinite deep reasoning. They could. I think this actually goes back to our discussion about Sierra's implementation within Enterprise, which I've seen with Solve, which is like a lot of the defensibility, the moat, the skill is in the GTM and the implementation. And so I don't think it's just quite as simple as like, oh, well, like a new model will happen.

50:26I think that's like a really respectfully Silicon Valley view. No, but no, I disagree. I think that if you could take a Sierra example with like Macy's or wherever else the customer says, if you could ingest all their data, do massive deep reasoning with a different model and solve customer problems in milliseconds. None of these products work in milliseconds and they all still have some set of issues around them, right? People would immediately move to a vendor that could be 10 times better than all of them. Sierra Finn, Schmin, Din Nguyen. They are 10 times better than what we had two years ago.

50:58If you've used these products in the field, you can see, on the one hand, they're amazing. On the other hand, they are slow. On the other hand, they are complicated to set up and ingest data. On the other hand, hallucinations are a minor issue, but they're not a non-issue. They're not a non-issue, especially when the answer has to be correct. So I'm just like, as investors, we have to imagine a world where that all goes away in the next two years. OK, and it's not stable. And all of our investments could go to zero. I'm pushing back on you. I'm saying Wilson, Sonsini, Cooley, the biggest law firms in the world have all been piloting and building relationships, building implementation pathways, integrating them into their workflows for the last year.

51:38And just because Anthropic comes out with a new model that is three to five percent better. You're not listening to me. I'm not saying three to 5 % better. I'm talking about a step function can well be coming. But we benefit from that. How much time do you spend coding with deep reasoning? We benefit from that. You don't even know what you're talking about here, Harry. I know what I'm talking about. That's complete crime. You have a hybrid VC argument that you think because Wilson Sonsini invested in Harvey, they're not going to switch in five years. Bullshit. We sit on top of them. Harvey sits on top of it.

52:10It benefits from it getting better. Okay? that that is uh uh hooray like i i literally today i'll tell you today for example this is not even what i'm talking about about deep reasoning right but literally today replet change i don't don't want to over talk about replet i just spend so much time in it okay now with replet you don't pick your model anymore it's all dynamic it's all gone you don't pick a high reasoning you don't pick short reasoning you don't pick anything it just and it rotates google and others that i mean in a way that plays to your point but it's so much change That pays to my point.

52:42You're right. But I don't think you use the deep reasoning enough. I mean, 15 minutes, 10 minutes to get an answer. I'll tell you, let's find a Sierra implementation because I've tried with Decagon and all the rest. They make plenty of mistakes today. So does Finn. And these are great products. They're not 100 % right. I do believe that the domain focus, the workflows, the customer commands give you some kind of lock in. And if the models move slowly or you stay on top of them, I think the apps company should be fine. But I do think it's fair if you snooze, if you're like, I can imagine if instead of the next generation of either Entropic or OpenAI being another incremental turn of the crank, there was some kind of reasoning step function, which I'm not holding my breath for, by the way, but some reasoning step function or AGI step function, I can't even say that without snickering.

53:29You could imagine another turn of the crank that made everything you've done so far be not the way you do it anymore. As long as that risk is there, at the bare minimum, I mean, what I would say is I haven't seen any of my companies at the apps level totally go, oh, my God, we used to do this. Now we don't. They haven't been, to use your phrase, Jasper, right? But I have seen a lot of them have to wrestle with their offering quite significantly because some things you thought you could do on economic and then other things that you couldn't do six months ago are now way more compelling. And what I would say is, as I say, product market fit is a rolling feast at the moment.

54:03And it's a moving target, which is why if you look at all your good apps companies, one of the things you see is when the new model comes out, they're on it that afternoon. You know, it's pizzas and late at night. And you got to know what's in the box pretty damn quickly. Because until this pace normalizes, you can be displaced. I guess here's my point. We'll just see. I'm just talking about for B2B apps. I don't think, sorry, maybe I wasn't being clear and I was making two seemingly conflicting points or making two points at the same time. I think we haven't even begun to see deep reasoning in B2B apps.

54:33We haven't even started. We haven't even started. We are doing relatively simple prompts that can get answers back in a second or two or less. Okay. You can't wait five minutes for Sierra or Decagon or Finn to give you an answer. No one's going to wait five minutes for that, for that answer. Okay. And this is part of the code red at OpenAI is, is they want to move away from reasoning. But I think when that goes from five minutes to five seconds or better yet, a second, just like we thought Jasper was amazing. We haven't even begun to imagine what B2B will do with AI when it can do deep reasoning in a second.

55:06It's just not accessible to B2B apps today. We just can't wait five minutes for Finn to tell us an answer. We just can't wait. We don't got that time. I need to find out what happened with my sweater. It's what I find so funny when people compare the LLM market to the cloud market, because the thing that you don't have in the cloud market is the promiscuity that you do in the LLM market. I've spoken to two companies today, and they're like, the upgrades in Anthropic recently have meant full shift to Anthropic away from OpenAI and improvements in our product that we really didn't expect, which is amazing.

55:39We're so grateful to Anthropic, but this real shift overnight for them. Agreed. And actually, that segues to, clearly, you're not capable of keeping us on track anymore, Harry, so I'll just cover the agenda from my side. You were going to ask us about the Benioff comment on LLMs being a commodity, which is exactly where you're going here. And it's actually, it's a super interesting comment. And let's start with the point you made is that, yes, I've been struggling to find, you know, because you always try and think in analogies as an investor, like, you know, how sticky slash commoditized slash profitable, all of these are related terms, but not the same, are the models.

56:14And you're right, you start with the basic comment. In Cloudland, there was an oligopoly of Amazon, Microsoft, and Google, but you couldn't easily switch between. People muttered cliches about how I want to be multi-cloud, but no one's really multi-cloud. And many of my companies move from cloud A to cloud B. It's two years, it's millions of dollars, it's a pain in the ass. Here, you're right. These are APIs. And most companies have multiple providers on the same system and switch between them. In fact, Sierra did an interesting piece on how a lot of their application is a constellation of models.

56:49So in real time, you're always looking at multiple things. So you're right. It's way more fluid in terms of your ability to shift between than anything you've seen before. So yeah, I do think that's true. And the question is, what does that mean? And of course, Mark's right. Mark, just like Replit today can auto rotate models, right? Without you knowing it, Salesforce is and should be doing the same thing. And they have their own LLMs as he talked about, right? You know, and that's great today. And I think it's an interesting topic for 2026. Just going back, not to push, but we use Asian force ourselves.

57:19It is great. I can talk to you how it really works. It takes about 30 days to train and deploy, and then you've got to keep going and upgrade. And it's great. And it works just as well as the other agents. And in one way, it works better than all the rest. Just one way, and it's Captain Obvious. It is native to Salesforce data. So it actually works better than all our other agents in Salesforce. We can show you that I can prove. Okay. So it's great. Use it. It's going to be a multi-billion dollar business. But imagine when instead of taking a month to train and a couple other months to iterate, it can happen in minutes.

57:49This will be nothing like the AI we have today. We're just starting. Not only will that make Salesforce a better company, probably, it may disrupt all these incumbents when all of this can be done instantly. When the Harvey that we used in 2025 seems just quaint in two years. Like what a joke that we had to spend all this time training it and ingesting and all the mistakes it made and the associates. And so I don't know. I think it's very exciting, but I think it makes our investments even less stable. This is going to change. And it's going to be very exciting to go from months to training agent to minutes.

58:20It's going to come. I think the interesting question on this from the Mark comment was there was an implication there that because they're, quote, swappable, which is true, that the LLMs themselves are bad businesses, right? That was the implied statement. The dis? I read that as the implied statement. And it's interesting to say why that's not the case, because I don't think it is. And I think Mark actually used the analogy of it's like hard disk drives. And if you read Clayton Christians, and it's the prototypical example of a wildly competitive commoditized market where there were 30 providers.

58:54But I think the analogy breaks down because if you look what happened in the hard disk market, capitalism works. If you have 30 commodity providers and you don't ingest antitrust, 27 will go bust. And you end up with two or three providers, the survivors. And that's what it takes so they can extract enough profits to survive. You know, not 30 people don't get to make it. And I think so if you look at the hard disk market, it was brutally competitive for a while. It remained a commodity even after it consolidated to three, but they were able to extract enough profits from it. So I think Mark's sentence, oh my God, this is a commodity market like the hard disk.

59:31It might be true at the start, but there's an embedded comment there that isn't true. I think it's totally plausible that even though there is a fair degree of switching possible between models, you still will evolve to an industry structure where those model companies make decent money. Actually, Noah Smith had a good piece on this, even though he was negative on the comment, but he made a comment, the model companies could be a little like the airlines, super high fixed cost, easy to switch. And his implied comments, that's a bad business. It's not an awful business if you if you consolidate.

1:00:05If the antitrust people would let them, we'd only have United in San Francisco, and then they just charge through the nose. So I think you would see consolidation. How do you think about the volatility of revenues that's inherent in a business where the quality derives so much of the switching? So like Anthropic will have suddenly mass usage that will drive revenues and then others will lose it. It's a good one. I think what happened, businesses evolve. If you're going to be surviving business, you can't live like that in the long term. It's just too hard. So microeconomics will make it happen.

1:00:38I think it's probably two things. One is, as the cost to enter gets higher, the fixed cost barriers, I don't know if there's going to be 10 of these. There might be three or four, but I doubt there'll be 10. If it really does cost a lot to make these. If it doesn't cost a lot to make these models, then you're right, all bets are off. That's one way. And then obviously the second way, and you're seeing it right now is, hey, if at the API level, I'm a commodity and there's me, OpenAI and Gemini and the swap in between us, I have got to grab the apps. And that's what you're saying. I mean, Antropic is grabbing the coding app and obviously OpenAI is grabbing the ChatGPT consumer app, right?

1:01:16Because you're basically saying, I can't be sitting in the back here getting swapped out by some rotational round robin on AI. I got to own the end user here. I think Mark is right about the, it's a competitive industry, but I think the, I think. I don't see the volatility of revenue on the consumer side because you have memory. And I think now, I don't know about you guys, but I'm seeing this so much in the LLMs that I'm using where memory drives so much of the actual end product that I get. And that's incredibly sticky and will drive a lot of value. But on the B2B side, where you can have our companies on the B2B switching so easily, there isn't that stickiness well just two thoughts on the b2b side we talk about a couple lms but like so many of the hot companies use their own lms and their chinese models cursor's own model chinese model windsurf so like all of our portfolio companies that are using their own lms they're not really using their own lms they're using cheap open source or if they could they would use chinese hosted models and sometimes they do because they're a fraction of the cost so we're exactly this all goes, we don't know.

1:02:20But all of these startups that have their own model, they're Chinese open source models. They all are, including Cursor, right? So there's a whole other group that is competitive that because they're not raising massive venture capital, and maybe they're inferior in some ways, but if Cursor is using its own model 30 to 40 % of the time, it's not that inferior because Cursor is doing pretty good. Comment number one, Chinese models are already being used by our hot startups. It is a real threat. Idea number two, Harry, you think memory is is a moat and permanent and it absolutely is but I think why Sam called the code red is imagine today imagine today when we're doing this if chat gbd went away tomorrow okay here's what's changed google ai mode's pretty good now it can't it's not going to be our therapist it's not going to have as much memory but ai mode's pretty good the google stack's pretty good and if open ai for some reason just chat gbd went away tomorrow we would survive we would complain Keith would have some good comments you'd have some comments that Twitter would explode and in a week we'd be like whatever we've moved on some folks would go to Claude even though we've forgotten about Claude but Google's pretty good this is why I think Sam called the code right because OpenAI is a consumer company and even said listen we're going to do even more on ChatGPT we're going to do less on apps we're going to do less on imaging and video we got to make it good because we would be in a tough spot for a while if Anthropic went away because all our apps wouldn't work that would suck but if chat gbd went away tomorrow we'd be fine in a couple days we'd lose a little memory we'd have to rebuild it in google but we use google every day would not be the end of the world it really would not be the end of the world if this massive thing which is the greatest consumer app went away would not be the end of the world i don't know if i buy that yeah it's not the end of the world because nothing is the end of the world unless it's the end of the world be worse to lose netflix that has more proprietary use cases than chat gbt that that's a more interesting comment actually genuinely it's like i paid 20 bucks it's not true could you not apply that to all of them like including anthropic i'm genuinely asking you jason you're the toter here and i i submit to you on this one you could switch anthropic out and it would get like a 90 efficiency on other models netflix like it would just be like well there aren't that many i do think look look the anthropic is more enterprise in my experience it is stickier because of that there's more work than than just moving in a day that's why i slightly challenged your point that you're saying consumer was stickier.

1:04:39I mean, I do think memory is a big deal, right? It's getting really, really, really good at the edge of creepy, but it'd be like a TV show. We would just shrug and we would just switch the next day. Life would be the greatest consumer app of all time. So far, we'd be fine. Put me down for not agreeing. I think we, look, obviously we would get on with life because, you know, we, three years ago, apparently we were without this and we were fine, but I think it would leave a significant gap. I think, you know, there's no doubt that it's a superior product and you'd miss it. So I disagree. I think that the test you'd lose is this.

1:05:12When we were looking at consumer hardware once, one of my colleagues gave me a mental test that I actually think was one of the most insightful things I heard about consumer products ever. He said, the only test you need to run on this one is this. If you lost it today, would you go out and buy another one tomorrow morning? If you lose your phone, you instantly go out and get one in the morning. If I lost our coffee maker at home, I would be down to Sola Table in an hour. Then there's other things where you go, yeah, would I take a week? I might get around to it. Maybe I wouldn't bother. It's just a really good test.

1:05:43Using that test for chat GPT. I think if I lost chat GPT now, I'd be like, I got to go find something. I don't think Gemini is quite there. I think it would leave a void, which I think speaks to their strength. Maybe it's not a, I would die void, but it's 800 million people who use it. So I think there's a lot of gravity in those individual consumer users and the habit involved. I think it's the biggest asset. But it could be just as sticky as Yahoo Mail. We survived and moved to Gmail. It was okay. It was, but it took a sustained five years of under-execution by Yahoo to get that done. And I think the Yahoo Mail and Gmail were more similar, I would argue.

1:06:19Even today, despite all the progress in Gemini, the chat GPT experience, I think is still better. controversial take perhaps play on it some more let's talk about it in january i think you're going to come around to my position that it's just the same one that sam has which is it's pretty good now i don't think it's going to stop uh open ai's future but it's it is everything's just unstable including harvey i think i think what you're seeing with open ai is the awareness that they've been massively diversified way too much they need to consolidate they need to concentrate they are absolutely aware that they have fumbled the ball over the last 12 months and they need to massively reduce the portfolio of products that they have.

1:06:54There's a focus on healthcare, there's a focus on codex, and there's a focus on obviously the consumer product, and that is the BFD for them. And I think Brad feels the pressure. I think Sam feels the pressure, and it's game time. Yeah. I just think the way markets work is there's this formative period where there's a lot of change, and then it locks in, and then change is much harder to happen. Remember we talked to Tomas, he had some congealed grease thing. My mental model is always, it's like the Big Bang. Early on in the Big Bang, everything happens. And from then on, it's just expansion and nothing changes, right?

1:07:30This is one of those moments in time where how you end up ranking by the end of 26, 27, probably, I think, will determine the trajectory for 10 years. And I think the variance, the high fluctuations we're seeing now will steady out. I can't prove that. You could have a world where it remains constantly changing. But in my gut, economics tends to force that kind of stability. So you really want to be sure that when things start to lock down, you lock down in the number one position. We'll move on. But Andreessen said a couple months ago that 80 % of its startups use the Chinese open source models for AI.

1:08:02That's not a correct quote. I understand. Martin Casado then tweeted and said that's not quite a correct quote. I think it was something like only 20 % of the time my companies are using open source. And when they are using open source, 80 % of that open source is Chinese open source, which is a very different thing, but still a significant thing. It's an interesting comment here. What it says is that there is a demand, no surprise, for a quote-unquote cheap open source model. And given that both formerly idealistic, now highly commercial corporate entities have stopped providing state-of-the-art open source models, there is a latent demand for that, which for their own good reasons, which we can speculate about in a second.

1:08:41the Chinese tech industry appears willing to fill. Even though the market tells him to stop doing it, it was kind of nice when Zuckerberg was willing to fund R &D development and keep churning out excellent llamas for everyone to leverage. Jason, should U.S. startups be able to leverage Chinese models? Listen, assuming there's no security issues, I don't care. I think the issue that I don't fully understand inference because for most cases, if you're running a Chinese open source model on Amazon, it's really not any cheaper. like you're not saving that much you save a little bit of money you you've correct you don't have to pay for the for the model but the inference is where most of the cost is so i i think there's still this gray area where it where obviously it works for cursor right at scale whether exactly where it works i don't know but look as long as we're not sending data back in the way we shouldn't i couldn't and more importantly listen i just want to make money like everyone it's 2020 going into 2026 area don't tell me about it as an investor i this is this is an area of unlimited greed.

1:09:39I don't want to hear about it. We're going to forget about it in a week anyway. We already forgot about real and dippling. We forgot about all of it. I just want to make money and be quiet. Okay, just don't talk about it. I just want to make money. The question on quote Harry's, should we use Chinese open source models? You have to break it into two. Are there national security issues or regulatory issues? And it's the job of the government to figure out that and we should take our lead from that. If the government says no, you should abide by the law. If the government said, yes, you should at least take that into account.

1:10:07And you can say there's not national security issues. And then separately from that, you have the business issues. Is it good value? Is it cost effective? And all that stuff. I mean, I think the interesting thing is because, you know, Harry, I've watched your little dispute with Keith on Airwallex on Twitter. The odd thing is I can't quite figure out what I'm, the national security guidance on China is quite confusing because obviously we're now back to selling them advanced NVIDIA processors. I think the logic is some version of they're going to figure it out anyway, so we shelter them. So it's not clear to me where we can say we can do it and where we cannot.

1:10:38And then separately, if you can do it legally, then after that, it's just practical, functional, if the models work and you do what you can. So I'm getting into a very dangerous zone because Keith Reboy is a friend and an LP of mine, and Airwallex is a$7 million investment of mine. And so I'm screwed both ways on whoever wins and loses in this one. But Airwallex raises$330 million at an$8 billion valuation led by Lee Fixel at addition, big investor in Stripe. And then in the last few days, Keith Raboy has been very public in stating that there is a data concern about the data flows that will go back from Airwallex to potential Chinese officials, government, you name it, whatever institution that is.

1:11:27And that is the news. Based on the conversations we had, a billion in ARR, eight billion revenue. Why is it so cheap? It's because it's an excellent, excellent payments company. And it'll be value-like payments company and a payment company. I mean, excellent growth rate, excellent payments company with an Asia discount, right? You know, it's cheap in the context of it's not the AI magic pixie dust. So you probably would have a higher. And then on top of that, you have the Asia discount. You're exactly right. Rory, it's doing the same revenue that Ramp does. it has more integrations and more underlying infrastructure it is absolutely the asia discount yeah let's assume it's growing the same as ramp it has the same gross margins right it's the same arr let's assume maybe the margins are different but let's assume it's the same for the sake of argument it's trading at a quarter of the price it's the asia discount i get why it's dual headquartered in sf just seems a quarter of the price it seems i i completely agree with you which is kind of why it's such an obviously good deal.

1:12:22I'm not sure. I think some portion of it is, a significant portion of the Asia Disc. I also think - What is it if it's not that, Roy? I would love your thought. I think it's a slight, I mean, one is I think Ramp has, versus the median fintech, you're taking the other extreme. Ramp has an extraordinarily good revenue multiple. I think most, I mean, my wider comment is fintech multiples tend to be significantly more bounded than open-ended AI multiples. Ramp, you're right, is the most extreme. No, but I would actually push back and say, look at BRAX at$13 or$14 billion with a much worse growth rate, much less profitable, and$400 million less in error.

1:12:59I would agree with that. I agree with that. Between that median one and where you come out, that is some kind of Asia discount. You're exactly right. My point is between that and RAMP, I would argue, because look, there's obviously different RAMPs and BRAX, and I think that's the high-end execution, et cetera, et cetera, markets. And there's two things in the discount is all I'm saying. But yes, let's stipulate to advance the conversation that there's a significant Asia discount in here. 75 % off is a lot. It's a huge amount. The question for me becomes actually, when is that shared? Because in the case of a ByteDance, it's never shared.

1:13:33ByteDance is still the massively discounted versus the method, despite it being a phenomenal business, both in margin and revenue scale. And that's a good question. And first of all, I think that the ByteDance situation is trickier because, one, ByteDance itself is clearly a Chinese company. And then what you're really talking about, are you talking about the ByteDance? I didn't talk about the fact that you have the whole TikTok dynamic because that's a media company present in the phones of millions of Americans who has an end owner that is ultimately based in China. So that's that discount. I'm saying ByteDance is just the overall company.

1:14:09Yeah, I agree. Well, there should be a China discount, not just because of us, because, you know, for all the problems of our government, the Chinese government, the dictator of China said about five years ago, you shouldn't be doing social media. You should making hardware shit. And he has complete and untrammeled power. So there's a reason there's a discount. The reason there's a discount is the one party dictatorship that runs the country doesn't think those are good businesses. So it's not like it's a China discount for nothing. Now, the question is, is it too much? Can we just appreciate it?

1:14:36Sorry, our world is not a Chinese business. I know, but you mentioned ByteDats. I'm just pushing my... Zoom has many more engineers in China than Amazon. This is what I'm going to say. So you mentioned ByteDats, so I went down that rat hole. What you're really talking about in the context of Airwallet and many other companies is something like the following. These are absolutely not companies that were headquartered in China, not owned by Chinese investors. They are U.S. or international companies. international in the case of Airwallex, I think originally based in Australia, headquartered in Australia, subject to Australian law, et cetera, et cetera.

1:15:11So when someone says that's something like a Chinese company, that's a gross, that's incorrect. What is true, however, is if you have a significant number of engineers or data centers based in China, then you are also subject to Chinese law, just as when you have data centers in Europe, you get the Europeans on your case. And if you're a European country based in America, you get the Americans on your case. All the superpowers, if you lump Europe kindly into that, any of those countries are entities in the case of Europe. Regardless of where a company is headquartered, they have a regulatory role to the extent you're operating in those countries.

1:15:47So my legitimate question back to you is, if Zoom has more engineers there than Air Wallis does, why are we not holding them to the same account? Microsoft and Apple do too. It's a great question. And I think every one of those, to the extent that these kind of issues start to crop up, I think it's going to be a thing. I mean, once you start doubting the other side bona fides, things just get worse. And it's probably true to say, if you have critical mass of engineers, and particularly a service center based in China, you should assume just based on the standard Chinese law that government entities have the right of inspection, just as in similar, not quite the same way, when you're based over here, you have all the rights of inspection that US government would have and access to information.

1:16:31I think we're a more rule of law country, but I still think all three of the big entities, including, as I say, Europe is the other, have some version of that. So if you choose to put your back-end data center or back-end employees in China, you're taking on that risk and you're vulnerable to this kind of statement where someone says, oh my God, your key information is flowing through a Chinese data center, flowing through Chinese employees. Maybe it shouldn't be. The further apart the countries grow, the more this kind of thing gets problematic. If you're trying to sell one of these companies, the embedded risk in China would be a key consideration.

1:17:05A US domicile company buying one of these companies would be thinking about that. You probably will struggle to get some US government contracts. It's just going to be a thing more and more. So I think you're just going to see a gradual separation. You'll just examine the risks and go, yeah, I can get great engineers, I can save 20%, 30%. But in return, I get embroiled in arguments on Twitter. But more importantly, I probably get precluded from government contracts. I have an extra layer of due diligence. It's just too hard. Just like all those Chinese companies that went public in the US. Let me give you the counter example, because we all see it from our perspective.

1:17:43And I do think we are the good guys. But it's also interesting to step into the other party's choose. A lot of Chinese companies went public in the US, and the SEC said, as part of being public in the US, we want to have access to your audit papers, including the audit papers for your Chinese auditors. They said no. And as a result of that, we pushed a lot of them off being listed in the US. You're going to see this kind of thing happening more and more. I mean, look, we're not even friends with Europe anymore after our national security policy. So you're probably going to see some of the same thing.

1:18:14I mean, we're dealing with a gradual unwinding of globalization, and this is what it looks like. And to your point about, you're like, no one except Keith yelling at you, the competitors are going to be the people who use it first. Because if I was an all-American fintech company, I'd have my all-American flag out there and say, these guys are a bunch of commies. They have commies looking at your data. You know, our stuff is in Texas. We win. That's going to happen. I think the thing I would say to Jason's point of like, no one cares, no one cares. You know what? I know Alex very well at deal when I'm not commenting on what happened there, but zero churn.

1:18:47I know Jack and I know I will experience zero churn. Well, I suspect, listen, a couple of things. First of all, I suspect this won't lead to churn. I think this is probably an offensive to dent progress, right? Let's be clear. I believe you that it helped. I do think the goal is to impede, right? Whether it worked or not. I would just say two things. One, just I don't know the CEO. He seems ultra impressive from afar, not just from the recent press, but from following for a while on social media. You just, when this happens, you just have to not only say no as U.S. data sent to China, you have to make it unimpeachable.

1:19:17You just have to remove the objection. An objection has been added to a sale. Let's just step back for a minute. Two thoughts. One, an objection has been added to a sales process, maybe to derail a financing, maybe to limit the size of the round. Who knows? It's probably linked to the timing of the round. So it's an objection. Is there maybe a racist element to it that I don't like? It feels like it. It feels racist to me. I don't like it. But my point is, from a sales perspective, it's an objection. A lot of are going to come up, right? Maybe Ramp has a security issue next week they have to deal with, for example.

1:19:47OK, you've got to deal with it. If I know my data isn't going to China 100 percent, I think outside of the U.S. government, the objection's over. I do think to Rory's point, in my experience, you're never going to get a government contract. But so what? The world's big. You're just never going to get a government contract. So what? That's just life. Oh, my God. Sentence I never thought I'd say. Defending Keith. Well, I don't think it's racism. Look, I genuinely don't. I think, you know, we're in a very difficult - I don't think Keith is racist, but I think there could be an element of racism here.

1:20:14It's very easy to pick on someone that, my understanding, is not Chinese, is Chinese Australian. And they did it with Eric Wanted Zoom. It was very racist for a while. It was very racist when people wanted to make it a Chinese company. And Harry's right. They do have a large Chinese presence. It was a vulnerability for Zoom, right? I'll disagree. I don't want to devolve down to it. I think they're legitimate security questions. When you read the laws of the relevant countries, just like our laws can seem very own. Look, just let's give another example. When the Europeans get all bent out of shape about our lack of privacy laws and they put up their own weird laws to stop because they're worried about us, that's just a mirror image of this.

1:20:51I don't think this phenomenon is driven by anything other than large country blocks with very different perspectives, increasingly being uncomfortable with how the other countries' systems are governed and wanting to exert power in a world where they can. It was great when we were the dominant power. Everybody did what we wanted, and it was freaking awesome. And everybody did what we wanted because they wanted to be in our game. Now, for whatever reason, we've convinced ourselves that that was bad, and now we're going to have a world where people don't want to do what we want, and we're going to find it's a bigger pain in the ass.

1:21:21All right, boys, this has been fantastic. I'm going to push you to three companies, okay? And you've got to pick one, okay? Yeah, I know, Roy, you love it. I almost do it because I know that you really do. I know, you do it to humiliate it. No, not to humiliate, to force great thinking. Air Wallachs at$8 billion or Ramp at$32? Which would you rather own? Jason, bail me out here. I'll tell you, let's assume the revenue and the growth rates are the same. And I don't think they are. I don't have the time, but I think Ramp is a more enterprise-y product and Air Wallachs is more money movement. And I think that's a significant point.

1:21:57But just to give you an interesting discussion versus a boring one, And if I was on the Airwallex board, because I don't think it's quote unquote a Chinese company, I think it's a perfectly normal Australian company, I would put in at$8 billion. And part of my closing condition would be within 24 hours, we do not have a single paid employee in China. And we relocate the entire service organization to some other jurisdiction. Then I would do it at eight, if they are equivalent. Because I think that's something you can do. I'm going to give them credit. I think Madness did a great job on that. I think Benchmark did a good job of making it very much a company from people who used to live in China.

1:22:30That would be a value add moment. And I've had that with another company where I'm not going to mention names. We had a significant Russia presence. And this was before 2014. And I was like, let's just hire people somewhere else. It's not worth the extra 20%. So I think the same thing here. I would do air wallets at eight or nine. I would go on that board and I would say, figure your location strategy and get relocated out of China within the next 12 months. I wouldn't make that a condition at all. I would just trust Jack to figure it out. Obviously, he's well aware of the issues. He's well aware of the trade-offs.

1:23:02He's well aware engineers are global. VC condescending to tell the CEO how they're going to work it out. I think it is the kind of VC. I think it's beyond condescending. The great CEOs will figure it out. I'm going to push back hard on that. Okay, but people are going to see you as condescending, Rory. I wouldn't push back. I disagree. They like you a lot now. Don't make them think of you as condescending. It doesn't help at the end of the year. Don't push back. Take a mulligan and delete this. No, I won't. There are a few things where it is a board's place to say something. And this is one of them where you're like, strategic fatal error risk is exactly what a board has to do.

1:23:37The ability to sell the company is something a board has to work on. I remember this other case. Say to the CEO, look, you will limit your pool of buyers dramatically if you have this significant exposure to this thing. How you get rid of that, you can talk about as a CEO. But it is one of the few things where you as a board member might have a little more perspective than someone. Because when you're down in it, you can go, that's silly. It's wrong. I know these people, they're trustworthy. It's not really an issue. They don't have access to the data. And one of the roles of the board members to say, step back, dude, everything you're saying is true.

1:24:06But when it goes to shit, no one will care. Why pay the tax? How much extra would it cost? So I disagree. That would be one where I would think that would be something you should say. But this is good because we're meant to have disagreements. I think you just do the deal at Airwallex and trust him to figure it out. I think it's that simple. 8X ARR is a good deal. You trust great founders to figure it out. I think it's a fine deal. It sounds like a dislocation in the market. You could do worse than invest in a dislocation in the market. Calci raised a billion out. 11 billion. That doesn't seem like a dislocation in the market.

1:24:36That seems like a location in the market. A very precise, heat-seeking missile, just like Maverick and his team of Tomcats hit that right in the movie. Dude, prediction markets, it's a thing. You can have Calci at 11 or you can have Polymarket at 13. I want whichever one is better for insider trading. I'm going to do right because that's really the exciting part, right? Either betting illegally on sports or even better is betting legally on confidential Google information and meta information like they're doing right. This is a great time to be an engineer. You don't have to be Nancy Pelosi to make money legally out of confidential information or you could just be a senior engineer at meta Google and make millions on the side.

1:25:18It's a great time to be alive. He's come out punching today, hasn't he, Rory? And just in case anyone doesn't know this, these comments are driven by an anonymous prediction market person who had made literally millions of dollars betting on things like, what will the number one query term on Google be today? And getting it right, like sequential days in a row, leading the suspicious mind to assume that they have, in fact, access to that data. Correct, Jason? You're exactly right. Well, also, Pony Pony's bet on OpenAI News. He's doing great. Like just being able to sell 20 million every two years isn't enough.

1:25:52Now he can day trade on the information. These are great days. No, I think you're exactly, it is quite a phenomenon. It will probably result in some level of regulation because you have both insider trading on these kind of arcane information and you're beginning to increasingly see concerns in the sports gambling side that do you have, especially when you can do these micro bets. It's one thing to say, am I going to throw the game for, you know, my bet on the side? But if you can actually bet that in the third quarter, XYZ athlete will only score one whatever basket or whatever, you can have these micro bets that don't change the thing.

1:26:28And you really are very vulnerable to a person betting on something that they can control either themselves or through someone else. So I think super interesting bets. God, I wish I was in one because it's interesting. But there's a cesspit of issues coming here. and if there was a turn to regulation ever, there's going to be a bunch of congressional, in about three or four years, just like the quiz games in the 50s, there's going to be a bunch of congressional hearings where someone's going to be asking the Calcian party market CEO, how did this guy get that right 27 days in a row? Do you know your customer?

1:27:03And he's going to go, it's all crypto-based, I don't know. And they're going to say, maybe that's not how we're going to roll anymore. It's good times. But super interesting, Because you can also assume that, back to the value of prediction markets, just kind of taking both sides of this argument, you can assume that people betting these arcane things really strongly almost certainly have inside information. So in fact, you get to know. I mean, that's the whole way prediction markets are meant to function. Because there's two levels of, I won't say corrupt, there's the, I know the information, so I'm just betting with inside information.

1:27:33And the good thing about that is it's actually, it's why insider information used to be legal. It's actually contributing to the information in the system because it's a fact, it's correct. And then you have the even more invidious thing where the person betting not only knows the information, but can manipulate the information, which is where you go from merely insider trading, which is illegal, to something worse than that, where you're actually changing the outcome by virtue of betting on it. And that's the point at which the thing stops working. And that's where we have Pakistan play cricket.

1:28:03By the way, Harry, yeah, someone remind, how are you guys doing in the ashes at the moment? and that's a wrap to the show baby great times great times boys this has been so much fun uh as always uh jason you brought some spice today there rory's condescending and i need to go and learn code and do replet you were on fire just spend more time on reasoning that's all no dude the 20 vc jumper is giving you superpowers you're a star it's all it's all in the sweater But before we leave you today, now most people who get scammed never talk about it. And if it can happen to tech savvy professionals, CEOs and investors, it can happen to anyone.

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