20VC: OpenAI's $3BN Acquisition of Windsurf: The Breakdown | Are Endowment Funds F******* & How LP Deployment to Venture Will Change in 2025 | Why Revenue Multiples are BS, The Rise of AI Rollups and Multi-Stage Funds Destroying Seed Investing

23:10And I'm picking on Krugman, which is not fair because God knows we're going to need international trade economists in today's world. But yeah, there was still, is it matter? Is it all just a bunch of kids? Is it all stupid? Two years into AI, everyone on the planet and every company is saying, shit, I got it do something here. So does a common consensus across the entire knowledge worker world and the entire corporate world that this shit matters? And when you have that, I don't think you turn up to your board and say, well, AI really matters, but I'm a bit nervous, so we're not going to make a big play.

23:39Maybe we'll get another, someone else to run this operation. So I think there's just a willingness to bet big. Harry, I caught up with Mark Benioff the other day in about AI. And his feedback was we have a group that's all in, right? And he had all those logos, the Leonard Holmes and Singapore Post. And he's like, but I gotta tell you, it's so early for others. It's so early. And what I thought about that, then I thought about it for a minute. What do we see happening? There's just my sense, okay? I think what's happening with AI is every early adopter in the world is looking to deploy. Every single person, whether it's an experimentation budget, whether it's a restaurant that actually cares about AI, whether it's the three of us, like, I mean, I'm running our Saster AI.

24:21I'm running on tools. I'm ready and from 2021 to 2024 you couldn't let get me to look at anything. My life was too busy. So I honestly just think this growth, it is crazy, but it's a moment in time where every early adopter is in market. A hundred percent of the early adopters are in market and that's why I think it's early because 90 percent of sales, the enterprise is not even there. They're just playing with service now and they're just playing with things. But I just think this growth is and a lot of it is self -serve and product -led and easy It's a deploy and it's cheap. These products, if you don't use much, any wind surf, it's 20 bucks a month, dude.

24:56This is not high risk. You have to put it into production, but like this is not 400 ,000. It's, and yeah, they have an enterprise sales team. 20, all these products are cheap, guys. My jaw drops how cheap these products are, and they make regular B2B look like a friggin rip off. And so every early adopters, like I can use Higgs field for five bucks, I can use wind surf, why would I? I'm in market, right? If it was 20 grand, which is what a traditional, like just to get it last year and to engage with you, it was probably 20 grand for the enterprise, right? For like some 20 year old tool. But man, 20 bucks, 20 bucks, right?

25:31So I just think every early adopters in market, and that's why we're seeing growth at the levels we have. I don't think it's as crazy as it sounds, just instead of 5 % being in market, it's 95 % of the early adopters, completely. One of the other investors in Windsor was KP, and it was surprising news when I saw that Bucky was leaving KP. Bucky's kind of heralded it as like one of the successes. It's just like one of another younger people in venture, leaving one of the bigger brand name firms. I'm intrigued to hear how you thought about it. Jason, why don't we start with you? How did you read this?

26:04And what are you seeing in terms of younger people leaving brand name firms? Well, first of all, honestly, in a way I was accidentally an early version of this. Okay, if you have a hot hand in venture and you're not running the place, I would leave the next day. That's what I did. I had the same conversation with Thomas Tungus who just already raised like 700 million, and everyone loves Tomas, right? And I won't share all the conversation, but one of his things was I should have done it earlier. As great as Red Point is, he's basically a solo GP managing coming up on a billion dollars, probably better economics than being paid 400K to a million a year, plus waiting 22 years for some carry.

26:44I mean, why? I'm not saying that's what happened with Bucky, but probably if he was gonna run the place in the next five years, he would have stayed, right? Or whatever the dynamics are, it's just if you can raise your own fund today, you would be silly. And I know it's not true at scale. I'm not saying it's true at scale, Roy. But at 90 % of UC funds, why would you stay? Be given, you know, when I worked for someone else's venture fund, I was told what my salary was. I mean, FU, I did 10x in that fund and you're gonna tell me what my salary is and I don't even get to go to the management meetings in a tiny fund.

27:20F you, right? I mean, it doesn't. Why would anyone stay in those environments? Roy, listen, you're on the other side of the table fascinating. You have amazing young people. Why do they stay? And what would you say to them? Well, first of all, I'm laughing. I remember meeting Jason for the first time. I'm going to say you said, if I wasn't doing ex, if I had a hard hand and I wasn't, I wasn't running the place I'd leave knowing you as I do, Jason, you can delete the the first part of the sentence. If I'm not running the place, I'll leave. Some people just want to run the place. And you know, that's you.

27:51When I totally respect that, right? I'm giving you a shit here on that bit. No, no, no. Sometimes you just want to be a partner as a founder. You don't need to run the place. You just want to be a partner, a true partner, not a general partner or whatever. You want to be a true partner. That's actually a much more actionable comment. I agree. I think, because I don't think it's as easy as, hey, you know, I just want to leave. Because it's not trivial. There's a bunch of stuff required with raising a fund and all that. And yes, if you pull it off, it's great. I think I like your distinction. I think people want to work in environment where it's fair in the sense of their Return the compensation again is roughly commensurate with the value they put into it That's hard to do especially in the business with with ours with has such long lead times and such long proving out times But if you don't build that kind of organization, then you don't have to it's you know You need to do that to have generational stability So I think starting with that come because there's a lot in this comment, right?

28:40And you want to make sure, in a rational world, everyone's, everyone's incentive to stay rather than leave, which means brutally put. And none of us says this, but the implied statement in this is the harder your hand, the more incompetent it is on the leadership of the firm to make sure you're in the circle not out. I think it's central people where you push there, right? If you're sitting there as a leader and you've got a hot, talented, younger partner and they're killing it, If you're not putting them inside the tent as quickly as humanly possible, you're an idiot. So the good thing about that is the system works.

29:15It's polite, because venture guys are polite are then your hedge fund guys. But in the end, well -run firms make damn sure and the main that people who are doing well get promoted and cut in. And that's our job. And if we're not doing that, you start to lose good people and shame on you. That's the job of quote, the established side of the table. The specifics are all over the map. And I'm not, I know I know that's well, I know Moon very well. I remember when Moon was a young guy moving on from his first firm, we've all been on both sides of the table, right? I'm not going to comment on specifics, but it has arranged a wise people leave.

29:48Sometimes it can be that I'm doing great, and I am not getting the reward I need. Sometimes it can be I'm doing great, and there is no freaking reward, because everyone else has lost all the money. So no matter how hard I work in the next five years, I'm just digging out of someone else's hole. Well, you think we'll continue to see spin outs from A grade firms from young, incredibly promising partners. Well, I think it's the nature of the business for the last 30, 40 years. So I see no reason to change now. Well, it is, but the level of spin outs has been significantly increased. When it's only, again, risk of signing all that, that's only because your window of view is fairly limited.

30:25Right? If you look across 30 years plus, it's exactly when it should happen. There's two reasons why it should happen. Now, one reason why it might slow down. The reasons why it should happen are one is you've had five or six years of slowdown of you know what looked like amazing performance lots of promotions and then a whole liquidity gap markdowns and everyone's looking at the last two funds and saying oh my god I cashed a note if I was here early enough I did grade in those early funds the last two funds maybe I'll be hanging another five years will make a 1 .7x maybe I'll make some money if I'm a junior person and hot to chart and my career and I think I'm good I'm not gonna not go on the expected value this isn't great right?

31:01I'm a rational actor and anyone who's won in money should be a rational actor. So the first thing that's causing it is big -ass firms where you're not sure you're going to get money. And then the second thing that's causing it is LP's still wanting to do the asset class, but it's really funny actually. And wanting to do new firms, what simultaneously also doing huge checks to the very same firms that people are leaving for. Right? And it's quite a funny dynamic. And I think what's really happening here is this is perhaps too silly. Is that deep in their heart, you're kind of looking at these mega platforms and going, hmm, I got no choice because it's the only place to put a lot of money But oh my god, I'm scared.

31:36I'd really like to feel good about myself in the morning I should do some young up in commerce too So you know, I put my $200 million into mega fund and I gave 20 million bucks to Thomas I feel good and I think there's a quite a receptive market at the moment to Do you think you suffer from the barbell which is exactly that you want to put money in the sub -a -hundred young new firm or the platform play with multiple billions and GC lightspeed and reasons. I think suffers an interesting word. I mean, I think we're all only as good as our last game. I understand what you're saying. In a world where people say there's only two things I want to do, the mega funds and the design of new funds, yes, in that world I would suffer.

32:17But that's not the world that worries me because there's something that worries me more. The world you really suffer is if you don't perform. Right. And if you do perform, no one gives a damn if you're a small medium of large, You know, right? You know, it's things out there. It doesn't matter for mountains black a cat is black or white as long as you can catch them out I that's why I said my my My colleagues I say, you know that guys were a confidence but our number one job is to be competent if you execute I believe there'll be a market for venture returns if you don't then you're right Then you have the you're in the absence of success People can impose their biases and then you're different and you're right at the margin people love these new firm the news stories because it's the promise of the new.

32:57The other wonderful thing about starting a new firm right now that no one will ever say, not only do you ditch your colleagues track record, you also ditch your own. You literally go there and go, I was at mega firm from 2016 to 2024. I did some deals, summer grades, summer shade, it's not obvious yet, but deep in my heart, I know I'm just going to sever that thing like a stage of a rocket, move it behind, raise money now And I will never be asked about my megafund return ever again as long as I make this new fun work. It's beautiful. Well, you still stealth tell the stories of your winners from the prior fund, right?

33:33And pick out your own returns and your own results from my winners, right? To take an example of that, who I think is by far one of the most talented investors of the last 30 years. I mean, Fred Wilson, Flatiron was widely unsuccessful in the .com crash, went on to do a new thing and killed it from day one, which is why it might also be a sensible bet. You sever your own track record good, bad or indifferent. That frankly was largely a function of the times, not you, right, which people don't have to say. You learn those lessons, you're way more intentful as a startup about what you're doing, and therefore you kill it, right?

34:07And that is the cycle of renewal that can happen. It's just one of those things that happens at this stage in the cycle. The one thing I would say is I would not want to be going out of fundraising at this time. The LP appetite for new funds, I think his learn that's been in a long time. LP's are not jumping at the bit to commit to new managers, either existing re -ups or not new. LP's are waiting. They don't want to spin out. You would know better than me, Harry. I'm shocked that the spin out play, but maybe it's for the reasons Rory said, I think the spin out of the successful GP, right? It de -risked it on the two by two.

34:40It's not the spin out, it's not the 2021 playbook of I'm getting three buddies together to do an $80 million seed fund. And this is cherry picking, a top manager from a known brand fund. You would know better than me. They're still appetite for that. It depends who and where from. It might vote piece from index all day, every day can raise 10 times whatever he wants to raise 100%. But the withdrawal from endowment funds is very real. The awareness that finds is coming very likely for many of them. And tax exempt status is at risk. Means that there's just a lot of uncertainty and a lot of them are just waiting.

35:13I agree. I think that as is often the case, two things, especially when you've three people and all busy talking past each other, two things can be true at the same time. I think that Jason said, right, the large number of new funds that were happening in 21 whenever needs to be eventually is way down, first statement. Second statement, the funds that are getting done are talented mid -career GP's from top tier funds with good track record. A much smaller number, but we all know them by name because they've been in our business for 20 years in a way that I didn't know, you know, Joe XYZ who raised in 21, I've never heard of.

35:45Right? Every single one of these people here, yeah, that makes sense. We're going to deal with them. They're smart. They're good. You do references. They're great. But I do think to last your point, that was then. And this is now the interesting thing about the next couple of years will be is their pressure on endowments who are typically one of the best funders of new designer funds, you know, high, high intensity, high conviction, smaller are they in such a world of hurt in the last two or three months that even with the best will in the world they're just not going to be able to do these deals and I think that's a legitimate question which is why I think it won't always be the case that every young person says yeah I've been successful I should leave there might be you might see in the next one to two years a little bit of clinging to the life boats here guys because you know it's not going to be as easy as it was I think 23 24 was a unique time where it's never easy to raise a new fund.

36:37These are really talented people. But 25, 26, you're right, Harry, could be tougher. You can want to do something all you want. You can want to buy a Ferrari if you want. But if you haven't got the money to buy a Ferrari, you can't buy a Ferrari. And these guys are going to be really strapped for cash. Roy, can I ask you, do you think the endowment funds are as in crisis as people seem to make out? I wouldn't be surprised. It's a terrifying set of circumstances. I mean, if you're an endowment, you have, I mean, we'll talk in a second about the The other thing is that you have down public markets, you have ill -equity, those two, and you have low venture returns for a long period of time, those things alone would have put stress on the system.

37:16And what typically happens when you see stress is that it's the exogenous variable that puts you over the top. In 73, it's the oil crisis in 25 is the Trump crisis. He has clearly taken on himself to decide to significantly change with brute force, a significant slug of the very institutions who have large endowments and are providing a lot of capital that they start up. So I think deliberately not commenting on the merits of it for a second at least. If I was a CFO of an Ivy League university, let's just say my cash planning for this year would be dramatically different than my cash planning normally.

37:53And if someone sointed into my office and said we need more illiquid assets, I would say get the freak out of my office. Right, we don't. You know, I'd be like, no, I'm thinking Barnes here, dude. I'm thinking index funds. I'm thinking accessible cash at a moment's notice when 30, 40 % of my revenue could disappear. Roy, I literally had across channels 50 plus LPs in my inbox post -all -art show. They will all be screaming, okay, but if I don't do these venture funds, I'm going to lose that trusted relationship with Mamuna K .P. with Danny Adindex with Brian at Founders for you name it. I can't just go, no I don't want more liquids.

38:33So what would you advise them with that in mind? Two things going back to your part come to Newfound. What they're saying is I don't want to lose what I have and what you see then is the bias to I got to start by protecting what I have, the relationships I have. Yeah, it would be a mistake if you've been in choir for 30 years and you've one shit left this year. An option A is nuke sequoia and do this new font to really smart people. They could be amazing. An option B is keep a sequoia relationship and you know because those guys do vindictive like no one else that if you pull out you're done forever, what are you going to do?

39:08You're going to probably stick with your existing relationships. So first of all, you write they themselves have to make choices. And then as I think we mentioned it last year, then the second thing is at some level, some choices get made one level above you. You know, they can say I want to keep rather than add a new one and that's one choice. And then someone one level up says, I want liquid assets, rather than illiquid assets. Right? And it's liquidity premium is one of those words that doesn't mean shift until it means everything. And when you need money, when you need money to fund your students are to pay your professors are to fund your research, you end up selling, you end up giving up on upside either by not pursuing new deals or even shark hara selling existing assets because you just need money.

39:51And we are seeing that Yale are reportedly selling reported about $6 billion pool of different assets in a secondary sale. Are we going to see that is that the start of a new trend for endowment funds and getting the liquidity they need for the outflows that they have? I mean, and Jason, chime in here because I've been I went on around there so I don't want to hard to the mic, but I was thinking about this because it's a really, you know, I was listening to your list of questions and this question is a big deal. You know, Yale has been the intellectual godfather of the Endowment model. And David Swenson's book, I'm sure we've all read it 20 years ago, and I'm like, hmm, that's the defensive book.

40:28I don't need to read any other. This guy nailed it cold. And, you know, the Yale Endowment alumni have gone all over the world, you know, they've been higher, they've been in the court or the king, they know what's how to do it. It's spread across many endomans. And intellectually, as I said, it this would be like if Vanguard said, you know, we've been thinking active management is the way to go, right? So, it's all right. And the question is what really going on here? So because there are mitigation circumstances, I mean, I was mentally running short. First of all, the rumor might be not true.

41:00I think it is, but I don't know. But there's two or three reasons why they could be doing it. In, I should put this, ascending order of severity. The least severe is, hey, we just think we're going to need money. It kind of sucks. We love these assets, but we just need capital. It's not a knock on the model. It's just a knock on, you know, I didn't plan for the fact that the president states my try and effectively take away our federal income. So there's no collapse of the intellectual theory. It's just you misjudged the amount of illiquidity you could afford because you misjudged the variability of your cash flows.

41:33That would be a conclusion that it's bad short term because it's bad and it speaks to other people having the same plan But it's not saying the whole model falls to pieces Obviously an even worse conclusion would be they've been lucky and I'm thinking and saying the entire private sector Is overfunded. I want to pull back a little and we just think systemically long term That's not the case, but it is a big deal because they're so damn good and for good for solar You guys would know better than me, but in the few conversations in the past is one Everyone got their distribution planning wrong, their cash planning wrong.

42:03That's what happened in the industry. This is even pre -Trump, pre -everything. This is conversations I had late last year with LPs. We're cool with our paper returns. We're cool with our growth set, our net, our RR. But we got our cash planning, we did not plan for this liquidity drawout to last this long. Okay, this is what I heard. So cash planning was off. I had heard two things. The second thing I heard, and I know this is 20 VC, not 20 PE. The second thing I heard is venture whatever. It's PE is the big problem. They're really the same thing. I mean venture is a subset of PE, right? And the PE is so much bigger and the fact that these deals are did not go public in two to three years is the bigger stressor venture venture they don't love it, but they're they're modeling 20 year illiquidity with regular cashouts, right?

42:48But they don't sweat the VC as much as the PE. I think we're suffering for that for the bigger cousin. What does that mean? Sorry, we're suffering for the Bay of Cousin because PE hasn't had the liquidity. Because they're putting five times as much into PE or 10 times as much as venture. Ventures are rounding error in most endowments, right? It's a subset, just like seed is a subset of venture. Ventures a subset of PE. It's not that important. It's just juice, right? It's just a way to juice your returns. PE is where you put deploy more capital. And if it's been five years, and your cash flow models are off there, they haven't brought, it's greatly bought Zendez, Ganana plan, and Shmana plan.

43:23But if none of them are returning cash, that's an order of magnitude bigger issue than these little eight or nine figure checks into scale of 20 VC, those around in errors. Those are just juice. Those are to get some extra basis points and the overall endowment, right? I mean, there's exceptions, right? But mostly it's juice, right? Mostly it's a little extra alpha on the endowment. Don't forget Cuiper and Zuiper and Duiper. I mean, that's the stress that this is pre -trum, but that's the bigger stress than ventriloquidity, right? We constantly go in and out of like denominator effect on their public books and where it's weighted according to their privates.

43:59And every time we have a big swing in public, it's everyone's like, oh, oh, oh, they're feeling the denominator effect. And I'm like, is that really a thing given the increasing volatility of public markets today, meaning that you constantly in and out of the denominator effect danger? It's a thing, but it's not the thing that we're wrestling with now. I mean, I think a lot of things in life can be problems, but the question is how serious a problem, right? The denominator effect you might, it often happens when, you know, just in case any of the readers don't know, is that you have a target allocation in the private equity.

44:30It saves 10%. Everyone's going great, but then the public markets take a bath and you're just an allocation 10, 90. Public markets take a bath, that 90 goes down. So your allocation and the private don't mark to market is aggressively on either side. So your private allocation goes from 10 to 12. So you have, quote, a denominator effect. It's an issue and you know, I've definitely had conversations with people over the decades where that's a thing. But I don't think that's, I mean, if that's all that was happening, I think people would power it through. Right? I think Jason's exactly right, which is it's a combination of at a minimum, maybe it's crazy.

45:05At a minimum, the cash models have been wrong and it's all taking longer. That's what we know for sure, because it's true. The second thing we don't know, but that's the scary thing is we don't know our models wrong on timing, but our IROs good. In other words, are we still going to get the return we want from this asset class just over a longer period of time, same IOR, but just compounding for six years rather than four in the case of PE or 12 in the case of eight for venture, right? In other words, am I still good for my 17%, which is 600 basis points above small cap return, or if it's more concerning than just timing, has that 17 % gone down to 15 or 14 or 13?

45:44Am I getting paid? Because now I've got not getting paid for the risk and taking the risk, I'm not getting paid. That's the second issue, my return's there. But the third issue and most catastrophic, which I think is particular to the endowments now and not anyone else's, I actually need the down money. Well, I think that is actually very important, those endowments, because they have a lot of the time mandated outflows, which they have to spend on upkeep of community facilities, scholarships, where a lot of other institutions do not have the mandated outflows. But yeah, when that happens, you know, things just get harder.

46:16six months ago, I'm all too bad if you looked at because endowments do June 30 to June 30. No one had on the plan for FY 624 to 625, which is the current period. Don't forget the plan for the president of the United States taking away two thirds of our funding. Oh, didn't have that on the plan. So we're just dealing with such an extreme and it's just so off the norm that I'm sure everyone got caught. It's like saying COVID. I didn't have a COVID plan in January 2020. Right. Needed you. Needed it anyone. I hope they're happy too. I hope Harvard and everyone's happy because I know I'm not going to write a big Jack because they poke the bear I'm not sure whether I've empathy or not, but all the all the emails saying please give give us more money Like it ain't gonna work on me.

46:56I ain't gonna I ain't gonna write a huge check because they poke the bear. It's not my problem Yeah, well the last thing my wife said to me because we are a paranoid former green card holders who have now Thank God that's why citizens issues don't say anything that will get you singled out to the president literally lasting she's had before I walked upstairs. So I'm just not being political here. I'm not joining your bandwagon I'm not joining in and that I'm not joining in against I'm just a simple humble nationalized naturalized citizen I want to say in this country. I do feel a little empathy for some of these organizations despite their prior sins.

47:32The one thing I will say is I was surprised when we raised the fund last year whatever it was nine months ago. Obviously, I spoke to a lot of tier one endowment funds. The amount who had over 30 % in privates was shocking to me. And over 30 % even in venture was shocking to me. Like that in my head. I didn't know there were that many were 30 % in venture. That, that, that, it was out now. Yeah, it was, it was, it was a six to 10 % on a C Jason. When I heard 30 from five plus big names that you would know. Reciting my David Swenson, one, it's not shocking if you have the perspective, which you should do correctly that the longest lived institutions, political institutions in the world, or corporate institutions in the world, other than the papacy, are the universities.

48:15Decades and centuries timeline, the bunch of, yeah, Bologna was 30, Oxford and Cambridge were 13th, 14th century, Harvard, is I think 18th century. These guys are multi -multi -century timelines, and if the longer the timeline you have, the more you can take on ill -equated U .S .C. provided you're getting paid for it. So it's not crazy for these guys to have done that in a world where your plan was to disperse 3 % of you endowment at most every year to fund scholarship needs You just didn't plan for the situation where the world could change utterly so I get whether they're I Didn't go to any of this but I am I'm gonna come back to Jason I am mildly I am more than mildly sympathetic despite the past sins I think there's pounding, there's trying to drive change and then there's pounding too hard.

49:04I'm just looking here, it's quite gotten, as a non -American university graduate, I never thought I'd be given this commercial, but this is one of the best products we have in the country. We get foreign students to come over here, pop down 60, 70 grand a year without blinking an eye and pony up for our education and we get them to feel good about us afterwards, right? It's not clear to me why I kill and this particular golden goose is a good idea, but That's not my mandate. So I've got that up my chest and I can move on now. I think that was fantastic. I think your wife would be thrilled. Another one that I saw this week, which I thought was really important, was actually, I think it was Bryce from OatVC.

49:41But he was essentially saying, if we're building single -person billion dollar companies and AI makes it so much cheaper to run companies, why are rounds bigger than ever? Traditional seed companies. Round's a bigger than ever. Why, if everything is much more efficient? Everyone wants to invest in the companies that don't need their money. As valuations inflate, they're just gonna absorb more capital. So that's the number one. We all want to invest in things we don't, that don't want us to. Founders are utterly insensitive today at raising and astronomical valuations. There is no sensitivity to the risk of it at 100 million, to me, is the last chance to not go for it, okay?

50:18So I tell every founder to stop at 100 million valuation, if you're not sure you're gonna IPO, now you may get it wrong. But if your gut says, I don't, I'm out IPO man 50 % of 500 million that's not me don't raise at North of a hundred One billion two billion three billion the kids these days Harry the kids the generation after you they don't care They they see no risk in raising at Billy multi three ten billion dollar back They just don't see it and so the combination of that and wanting to get into the hot deals means they'll absorb up to a Delusion threshold they'll absorb lots of capital. They'll just absorb.

50:50I don't think it's anymore There's other reasons, but I don't think it's anymore complicated than that I don't think the amount of VCs want to invest in companies that are capital -fishing and don't need their money Excel figuring out how to buy 30 % of Atlassian back in the day was the genius move You know I at but I started investing I think I met with Rich Wong I'm like, why don't you do all these deals? He's like we just can't find enough He's like we don't want to do anything except Atlassian. We want to be the only investor in own 20 to 30 percent of a bootstrap company, right VCs love companies that don't need their money I love it Jason, we see someone invest in people who don't need us.

51:25We want to invest in capital efficient companies and we want them, and I want to do that in a capital inefficient way. It's a power duct, but it's true. Do you know what I see more than ever? Insane amounts of AI roll -up plays, whether in legal, whether in accounting, whether in professional services, a lot of home real estate plays. Is this a venture model? Is this not a venture model? How do you guys feel about the AI incentivized roll -up play? I'm modestly skeptical, which means ironically I'm going to start by citing a success. We were investors in New Orleans, a speech work, which became New Orleans in 2000.

52:01And they were a generic speech recognition company, AI prior generation, and you did a lot of broad corporate stuff. And then they found this vein of gold in medical transcription And the way they built that business over the decade from 2005 to 2015 is they bought crappy little mom and pop transcription companies, injected the AI and made it work. So there's an example of where it did work over an extended period of time, but, and this was my butt, I think it's a crappy model, just for contrast, right? You aren't expecting that, well, you're howy. Why do you think it's a crappy model? because the bear you're taking is you buy a set of customers that weren't picked by you because they are suited for your product.

52:47They were picked by some mom and partner who was being the 10 customers they could sell to. And then you come in and maybe your AI is so good it can address all the needs of all 10 of the customers. But my view you may find much more likely that you know of the 10 customers three or four of them perfect sweet spot you get them across to being all software. It's great. The other five or six to a greater or lesser extent, the needs are slightly different because, remember, they didn't pick you cause of your AI because you didn't have their eye out when they pick you. So you're going to have a lot of churn in people where you can't make it work.

53:20It's going to take longer to bring them across and you're not going to develop any new deal muscle. So I would worry that you end up just piling it. Yeah, this sudden mass of services would have relatively low multiple and I don't know if it'll be a compelling business. I love that insight that they didn't pick you. I mean, it's obvious now, but I'm going to take that with me because that's the, this isn't something new. It's just in somebody's been accelerated by AI, right? This is since the first job I ever had. If you were overvalue, you always look to buy a terrestrial asset on the cheap, right?

53:52And and and tack on eight figures of revenue. This has been true since the dawn of the internet, but they didn't pick you. That's the problem they didn't pick you. Did they? They're not going to, it's not durable revenue in any way, shape or form, right? So it's financial engineering is all it is. I would actually push back on both of you. One of my fastest growing companies has gone from zero to 30 million in revenue in two years with a pure roll -up play, which is helped by AI tooling. And to your point on, like the customers, not picking you. The customers are all pretty much identical. It's a real estate management product.

54:23They are identical in the service that they require, the product that they engage with. There is zero ambiguity. And so the ability to roll out to a uniform customer base makes it a very efficient model, actually. And so the things that matters most, then, is just acquisition price. Can you acquire it effectively at a good enough price? What's your speed of turn around in terms of your payback and what's your margin juicing? Like we go from five to 40 % in six weeks. That's a big increase in a short time. Agreed. And the key sentence was the first one, is all the customers were exactly the same.

54:57And it's all tuned to your technology. And I buy that. There will be examples of this that work. there's examples of everything that work, right? But the more broad it is, like people are going to just buying, for example, buying called BPO's, you know, and everyone's looking at buying BPO's, right? Everyone's looking at that in the content center. The more broad base you go, the less likely it is to be efficient. I'm not saying it never going to work. I'm just saying it's probably a lot harder than you think and it really does boil down to this very clearly defined use case where you be certain that more than will come across.

55:29Where is no one going that more people should be going? If we're seeing Roller plays be massively over -invested, I see it more than ever. Why do you think not enough people are? This is the moment where your little heart inside says, if I knew for sure I'd be down, if I'm going to tell you how he's stirrings. You're doing it a long time today, Rory. You're like, delete your filters. You're like, No, you're a hypocrite. Sorry, I just came off a board meeting. It's been a tense day already. So, and it's only 10 o 'clock. I think we talked a little bit last time about we still, but Jason and I would do the travel, travel double, double, course, ass company in enterprise.

56:08Normally you try and try out esoteric areas, but all these are taric areas are full. I mean, those people doing rockets, those people doing the fence, those people doing health care. So there's a little part of it that says, it's not our focus area, but a part that said to be yesterday. guys, everyone's running away from consumer. Maybe you should spend some time there. And yes, not our thing, but you know, as a, if you were a personal investor, whenever you say to yourself, whenever everyone's running away, if there's still a technology that's animating progress, as this thing from just being a trailing edge tech thing, you do have to say to yourself maybe, but I don't have a ton of amazing new plays inside, especially to do.

56:43It's so easy to say that. I tweeted and thought this week, like five years ago, there were two to three competitors for everything that we looked at. Now there's 10 to 15. I just got out of an IC where we were looking at an L &D tool, learning and development tool, or Genai security. And then it came up with like red flags, and then it came up with the market map. And I was like, well, wait, in the last 12 months, these are the competitors for learning and development in large enterprise for Genai tool security. Oh, God. But if you just step back for a minute, the LMS space, this was already overcrowded before AI, right?

57:21Wait, this is, LMS was one of these classic spaces of too many vendors from mid -sized TAM, right? That's the worst area to invest in. I've done several investments like that, but you have to be intentional if it's tons of vendors, smaller TAM. But I will say just being very tactical, there's not as much innovation in the true enterprise. Not B2B, not Mid -Market, but But gnarly big problems, it's just not what all the kids in SF know. And so there's always going to be less investment with A and S tier teams solving gnarly enterprise problems, especially outside of security. There's just going to be not that many.

57:58There's not going to be that 100 kids that want to build the next service now. There's just not that many. And there's many other examples. And the other one that is obvious, but I think people miss is there's so much excitement around vertical agents, whatever these are. There's still, I believe vertical SaaS is still under invested in because the AI wave is just coming to vertical SaaS It's just starting in a lot of these categories and you're gonna see five competitors But you're not gonna see 500 in a lot of categories in legal you are in sales tools But a lot of categories are not gonna have 500 AI competitors They're just they're just not gonna know the markets well enough.

58:32So this deep market expertise and enterprise I still think you're gonna have fewer competitors You guys speak to all the companies in this space We really map it that. When they are 10 to 15, will you do that work? You'll try to, because you know, everyone wants to say you do it all. Everyone has their model on what works, and if you're doing seed by death, I think it's really hard to. At the stage, we invest at first of all the observation, which is when you look back and success, when you have this market and you can going in, picking the win on to state the obvious, disproportionate degree of outcomes, and it's the first stage at which it's vaguely knowable.

59:06Maybe that's a better comment. is it's all unknowable, right? But there's this early proto market. Everyone has a million to three million in revenues. You can at least try and figure out who the winner is, right? Do you actually get in front of every company before you can pull the trigger? It's hard to do that because that's get real. You talk to the first thing, it's interesting. You'd want to talk to the others, but you might have to make a decision now. So I'm not going to lie and say, I never pulled the trigger until I've seen all the players. But I'll tell you where you've got to be damn sure of.

59:35You've got to try and figure out what you're pulling that should, do I know who the universe of competitors is and how I had decent sense of how they're doing through, you know, jungle telegraph, customer references, third party references, whatever you can, you should do that, you know, you shouldn't be blundering into deals like, and therefore the fatal error by definition in our stages is, you know, you fast forward 12 months and it turns out the number one competitor is someone you haven't heard of. You know, at that point, you should be committing rituals suicide in the board's table because you screwed up.

1:00:04And so you do want to have sense of the market map, you want to have, it's okay, maybe a, to say the earlier comment more succinctly, you often go into deals and you don't end up in the winter, duh, that's what losing looks like. But you really don't want to go into a deal. Knowing upfront, you haven't got the number one. That's like saying, let's lose money here, or we have a good plan, people. By definition, that is kind of one of the key things you just got to do dealings at this stage is a some compelling reason why these guys are ahead. When you look at the distributions that you've had, have they been markets where it is winner -takerl or much more distributed?

1:00:39Is it an Uber and a Lyft or is it a sales force and a HubSpot and a lots of CRM plays and a Viva also for a specialized industry and much more fragmented? The data says consumer tends to be more winner -take -all and enterprises tend to be more allegopolis, right? And we were fortunate enough to be early investors in HubSpot, so yes, we can speak to oligopoly, right? It's just the nature of the beast. And even within enterprise, I would argue infrastructure where my colleagues invest tends to be a little more winner takes all, because you don't need a separate router for healthcare versus banking.

1:01:12You just need a router, you just need a GPU. At the ads level, the reason it tends to be more fragmented is their markets and their submarkets with real nuances between them. So there's a lot more, because you throw out HubSpot and Salesforce. So you're right, the boat winners and CRM, but very different to the point where I actually Salesforce was an investor at HubSpot early on. The markets were sufficiently fragmented that they could build huge companies in markets that at one sound bite level are the same, but one level down were very different. So much more oligopolies and multiple winners in enterprise apps than either infrastructure or consumer.

1:01:49Jason, does that kind of tie with you? Yeah, I mean, when I look at the billion dollar I've had there all in brutally competitive markets that were all a gopacol or similar. I wish I wish it was a marketplaces because you'd prefer that right? I mean, Jason Murray, can I be blunt? How many 10Xs have you had? You can. I've had four or five above a 10X. Jason? What is 10X mean? Sorry. You mean cat. It's distribution. I've only had $3 billion exits, I think. Right? You mean 10X, just 10X deals? No, 10X distributed cash back on deals. Well, only three, but I mean, hopefully there's more right? I think only three maybe four maybe I got an after only dude It's so damn hard to have for you been doing a decade less than me, which is depressing in itself But I remember it's so damn hard to get one of those especially across a cycle enough with the only I mean so many people don't get any so many people get one or two I had a decade where I had none from two thousand I am and I said this I think that's me I am more proud of my 2Xs and 3Xs in 2004 and 2005, 6, than any 10Xs are kind of sailed into the 21 bubble and made me a fortune.

1:02:58Rory, did you ever have a crisis of confidence as an investor? And what would you say to young people now who are looking at 20 to 23 and going, fuck, am I actually any good? I have crisis of confidence all the time and my most recent yesterday. Right? Absolutely. It's actually an interesting question. This is such a hard business and if you don't have angst about your ability to do it, you're missing the point because first of all, starting out of my first five deals, there was one point where I thought I'd lose money on four. I spent three years of my life not pretty much sleeping, terrifying, right?

1:03:32I was dreadful with this business. It was 95 then, early on. So yes, that was one crisis of confidence. Was there a crisis of confidence in 2000, 2010 when I was vaguely confident but no one's making any money? Yes. Was there five or six years where you felt amazing? Yes. Do I have more crisis or comfort at the last three or four years when the spite having, you know, 25 plus years of doing this, you start making dumb, you have deals that make it clear you got it wrong again. Of course you do. I think anyone running money, inventory or anything else does that. I mean, I always, and the question is, what you can't do is say, hey, I was great then.

1:04:03So it'll work out. You have to say, what am I doing wrong right now in today's market? Am I playing the game correctly for where it is today? What did I miss? And just go back to basics. I do believe if you do the right steps in the right order, you can't stop mistakes, but you can minimize them and probably do okay across the cycle. When I look back and recent mistakes, I think I kind of skip the step. Shame on me. And when you step a step, it bites you in the ass. Where do you think your scale is not playing the game correctly today? I'll give you an example for me. Like, I have access to amazing hot rounds, like some of the names.

1:04:39I don't them because I just think they're crazy priced. They seem completely detached from reality. And then I'm proved wrong consistently. I see your turning on me in eventually your hypocrite comment, which I wouldn't say is revenge. I'd say it's more tit -for -tat, you know? And Tony, I'm Catholic. I've done confession. I can do this. I think it's one of the things you are wrestling with is you have your strategy. You want to stick with it. We all get some version a bright, shiny object, right, which is like, oh my god, other returns, you know, you're looking at other things. And you do try and keep it focused on the main chance, you know, in, be around, with product market, fairly early revenue, looking to scale.

1:05:19So broadly speaking, we have kept on mission. But I'll say that sometimes when you say to yourself, I don't want to drift off all the time, but I'd love to be able to do the hot one of the hardest things I think to do in an investment management firm, which is make the occasional exception without making it rule, which is really hard to do. Can you reach for that $1 billion deal that you see it, you have good connections, you should do it, and it makes sense without doing the five other deals that are massively overpriced at a billion. The ability to move beyond your strike zone once in a while is a muscle that's hard to do, but it would have economic advantage if you do it, but would be catastrophic if you did it wrong.

1:05:58That's one area. And I'm sure you have the same, because you You implore yourself, how you see this later stage deal and you go, it's not what I said, I do. I shouldn't do it. But every once in a while, you say to yourself, if I could do, I mean, dumb comment once in a while, should you? I wrestle with that. We have 11 labs at 25 million. I could have had one percent of the company. And I was like, one percent, one percent in like no way. We're, it was a 25 million dollar fund, three billion dollar company. Now, I would have been a fundraiser on the one. Well, look, for what it's worth, there's a lot complexity here, right?

1:06:29But I think any deal where you have 100 % conviction you'll 5x, 100 % conviction of 5x, you should do it irrespective of ownership evaluation just to do it. If you've already met with the founders, you already believe that you have and you're not thinking you could make money but you're like, I am 100 % sure I'll 5x it. You'll always like to get an extra 5x out of X millions in your fund. You'll never, it may not return the fund but you'll never look back when you're in carry mode and say, you know, if that if that I've become 25, that's an extra five million bucks in my pocket. You'll never regret the sure thing, five X.

1:07:02I know it sounds silly, but this is where I started investing. And I lost track of it going to this. This is my rule, and this is my rule today again. If I'm 100 % sure I'm going to make five X, then I'll do it, period. Like no matter what, I'll just do it. I have $125 million seed fund. If someone in my team comes to me, and goes, I want to write a three or four million dollar check, I'm going to five X and I know, but I don't know if it's going to be my fault. No, this is what you get to do running the place. then your team isn't allowed to use this heuristic you're allowed to use it to join the bots and that's why Jason should be in his own firm Because it's a not a comments here I actually think Jason had the right answer because if you play back what I said earlier If you in established an exception strategy in a team organization whether you know bodily equal team Then it's really hard to rein it in that's on sand.

1:07:49We're a bodily equal team at scale seven people who can write checks. If you start breaking the rule once, then you broken it for everyone. It's no accident that the firms that have high position betting variance where they will it to go anywhere are single -lead or dominated. Jason, you're exactly right. If you're running your own shop, that's the joy running your own shop. You can range high, range low. You're not trying to follow a model. You're not trying to build a thing. So Harry is right. If you know, it might be corrosive to your entire culture and piss off your junior people. But the only person who can have the pulling out the exception card is you.

1:08:23We've chosen not to do that. Jason's got no other investors. It is just him. No, it's not. It's in any can. And that's it. There's a reason why you know the guy in Omaha who doesn't list to anyone is the richest man on the planet because he's like thank you all for your opinion. I don't give a shit. And and this is the tension always between building a building firm, having a consistent strategy versus on the other hand doing the reach. And I think going back to what Jason is actually right about his common high conviction because it's and it again with the caveat that it's not an institutional building strategy but something you said Jason that resonated with me.

1:08:58You know there's a rule in engineering that you only as accurate as you're least accurate variable and everyone gets all caught up with the revenue most when a price it actually is the conviction level you have if it's informed conviction not bullshit I swing from the from the gutter night but if If you have high knowledge that this is a thing, you've got to wait that extraordinarily highly. Because the future is so damn uncertain. Most things you don't know what's going to happen. Most things, you know, a lot of things don't happen. So if you get to that unique insight of this is a thing and it's going to run and run, then finding a way to monetize that bed is actually your job, right?

1:09:35Because there's very few things about the future, you know, right? I remember realizing when I realized, oh my God, every single app for the next 20 years is going to be rewritten as SAS. I should monetize that bet. In the same way, I give all credit to the people who said, like, going back to where I said, these AI models are a thing. You just got to get me a piece of the one or two that are going to work. When you have the high conviction and you're not trying to build a consistent internal strategy for management reasons, make the bet. So why aren't you doing billion dollar rounds if you can see 5X plus in them with the core fund?

1:10:07When you're trying as a firm to build a strategy, it's very much that's a very idiosyncratic leader, as Jean, I mean, as what Jason said is that when you're trying to do leader, as genius making all the decisions you do that, when you're trying to build a peer team that are doing deals, broadly speaking, you stick to what you're doing and you have a plan and a strategy. And you just accept the fact there's going to be deals outside your core confidence that work really well, but your job, which is hard enough, is to execute your course strategy really well. I'm far more worried about missing a five or a 10x deal that was in the scale sweet spot of, you know, one to 10 million in revenue series ARB enterprise software.

1:10:44When you miss that or even worse, when you turn it down, that's when that's when you have a bigger problem because it's not the, oh my God, I missed the Hail Mary that was outside my sweet spot, which might probably be personally, but in terms of building a team that an affirm that's functioning. If you're not, you know, if you're not playing the system the way you want it, and seeing the deals you want to see in your sweet spot, especially things defined down that sweet spot, so you can be successful, that's where you should I've been agonized a lot more. It's a different -spoted personal investing, frankly, in building a firm.

1:11:12Rory, I'm aware you've got a rock and roll. This has been a pleasure, my friend. Good to see you guys again. Fun to be back. And fun to defend Harvard, which I never thought I'd do. Do you know what Rory, you are fantastic. And I'm a hypocrite, you know? Well, we knew that already, how he'd no surprise there. My favorite on the law show, when you're like, you'll just edit us all out and just make yourself sound disciplined. And I was like, yep, this guy's just small. Yeah, I know, yeah. Yes, yes, yes, yes, you did last time. As they say in the civil service, why attend the meeting when you can just write the minutes?

1:11:44Take care. Have fun. Jason, I wanted to ask you one more question before we wrap. Sure. And it's actually you mentioned it on this sheet, which is the bay now has 82 tech billionaires, per penny impotenters, a firm, and going up. Is there any point in being outside of the valley? is this the ultimate centralization of talent back towards Silicon Valley, unlike any other time? I love living at the beach during that global pandemic. Have a beach house in Southern California. I mean, I know all the best brew pubs. I mean, it's good living. But man, it's, I mean, literally, literally, I'm just, you know, I just got a DM yesterday from a new generation tech billionaire.

1:12:25I don't know. I'm just gonna go meet him tomorrow in downtown, in downtown. I'm gonna walk to this meeting and it would never have happened if I wasn't here. It's just one example from this week, right? Man, the density here. Listen, you asked the question, how often do you do like meet all the companies in the space and investment? I only did it once on my first investment in pipe drive, and I gave up, I've never done it. I've never reached out to a competitor, I've never done any competitive diligence, right? What? Not once. And so the way I invest, the Bay Area is just perfect for it because I can get to know people for real.

1:12:55I can kind of understand the space. I have some time, and I'm just not the, I'm just not the Zoom guy, so it's so back. SF is so back. Why would you not do my partner pool would literally have a halt of time? Why don't I do any for two reasons? First, do you have outlier growth? Okay, only so many can have outlier growth. If you invest, if you're an inception investor, if you invest pre -product market fit, I get it. But like if you're saying, listen, I wanna see someone growing, ideally this one to 10 and five quarters or less, here's the thing Harry, I only meet a handful of them. When you do Algolia, when you do Tortess, when you do New Name, and your owner grew, grows, growing it, it's rocket ship today.

1:13:39But your Algolia is your Tortess. When you invested, your revenue cast, they were not rocket ships. They were like, good and exciting, but they weren't obvious rocket ships. But they had top point 1 % growth. I can pull up the old... No, I mean, Tortess went from 1 to 15 and 5 quarters, okay? Okay, Algolia was growing 20 % a month for the first two years, okay? Pipedrive as flawed as it was was the fastest growing one in the space. So listen, I'm not saying these are the right way to invest. What I'm saying, I gotta be honest, I don't meet every hour with a founder growing that quickly that I believe in.

1:14:13I have to believe in the founder and they have to be growing at 0 .1 % rates. Maybe you with your network every hour you're meeting someone going from 1 to 100 in a week, but I find that that plus a found do you believe in plus that the up not every opportunity exists for a variety of reasons you might not meet them there might be ownership issues fun size issues there's a million issues too because I have such a narrow sweet spot right like I have to rule them out if they're too late or too early that I feel like I do every single deal where every box is checked and I don't have the luxury of deciding is there one that's even better than top point 1 % growth.

1:14:51I'm not saying it's not flawed, but it's worked okay. Is that annual box that you're less straight on it being checked? Yeah, unfortunately, it's that competition box. Super loose on that. As long as the founder has a large piece of white space in the space, I'll do it no matter how competitive the space is, even though if I would prefer not to. Everyone would prefer no competition, all a Peter teal, right? I just don't feel like in B2B to Rory's point where we're building oligarchies, We have this luxury so often to have no, you know, Windsor started our competition. It doesn't have any no competition, right?

1:15:23I would love to have no competition, but that's the box I just completely have given up on. Despite wishing I could check it, no competition. I would, if I could, that would be a gift, but it's the one I give on. And it's harder than ever. Everything is more competitive today, right? Going to your point earlier. So that's the one I give on. I won't give on growth. I won't give on CEO. I no longer will give on CTO. We've talked about that in the past. That's when I will never give on again. S tier CTO, or I'm off. I'm off the, I'm off it, but I'll, but the competition and I don't care about college.

1:15:51I don't care if you went to high school. I don't care about any of that. I'll give on all the educational crap. You can have a super competitive market. Is the core skill set that you look for in a CEO different to a non -competitive market? No, because if you're post revenue and you're growing it outlier, or it's you figured something out. And I will be honest, Harry, for every single investment I've made, every single investment I've made, I have not truly understood its competitive positioning until after I invested. I'll do a lot of internet diligence. Don't get me wrong. Anything you can do on Google or chat GPL do it.

1:16:19But to really understand the market, like if you didn't come out of that space, it could take you the better part of a year, six months to really understand that market. How are you going to figure that out for sure before you invest? I mean, I'll tell you, the guys will do 30 references. Tam with team, Paul Stimpras and Tam with customers. Oh my God, I love it. Yeah, I mean, I just did an investment with Mara Tech and saw their due diligence. I've never seen something that's good in my life. Oh my god, 100 customers they talked to. The notes were trans, like I literally said to the founder, you got to share this with everyone in the capital, I've never seen such good diligence in my life, right?

1:16:52I talked to two customers when I invested in this company. And actually, after the term sheet, I talked to two. Do you know what's so shocking, though, honestly, dude? This is just the entry ticket for growth firms to get a meeting now. That's why the diligence is so good. Yeah, it's so fucking difficult for them to get in the door with that $7 million, a $1 to $7 million in a year, air or founder, that that is just the ticket. Hey, it's worth your time to meet me because look at all the work that I've done on your company. Yeah. Well, look, for what it's worth, I'll tell you why I have this strategy, right?

1:17:24Honestly, at this point, listen, I really do love a lot of the founders I invested in. You talked about revenue cat. You write, I invested crazy early. I love the founders, no matter what, I love them. I love them. I love a lot of the founders, right? But in a business model, I'm only in it for one big mass of win. and that's it. Everything I'm gonna do for the next next years, it's just for a wizard better. I don't care about anything else from a business model. I don't care. So I'm gonna do the best I can to find a wizard better going forward and anything else, these are just means to an end, right?

1:17:54So I gotta check all those boxes. And I think if you invest in enough folks in that top point 1%, and you're lucky enough to do them, one of them will hit. One of them will only worth another true eight billion dollar outcome, not fake eight billion on paper, but a real eight billion dollar outcome, right? That's it. Nothing else matters. How able do you think you are to know whether you'll invest before even meeting the founder? I know that seems strange, but if you know the market, the traction, the competition, where they sit, the background, revenue, revenue growth, every single time I've known I want to invest before the first meeting, 100%.

1:18:30Dude, if you get everything you need and you meet the founder and they are just boring, That uninspiring and dry. Do you do the deal? Dry? You just like, they don't need sight. Never met one. I never met a founder that could write an incredible email, express incredible excitement about a boring industry. Get me, I've never met a founder that could get me excited by email. That when I met him, I'm like, this guy's just dull because they're already so passionate about their business. Anyone that is like that passionate about their business, it's like you could meet, you know, whoever makes the best mugs in the world is going to be fascinating.

1:19:05Whoever makes, I would love to talk. Let's bring the CEO of sure on 20 VC, going to be fascinating. So I've never met a CEO with this outlier growth that's crazy, that didn't go to college, that dropped out after a month to do a podcast, whatever. I've never met this person and they're not interesting. It's just, I've gone to other people's meetings. I've gone to other VC's meetings where I literally wanted to cry from boredom and bang my head, but I've never once had a founder that legitimately passed the bar pre -meeting where or I didn't meet him, I'm like, this guy's pretty interesting. Owner is gonna be a huge success, okay?

1:19:37But I don't think I've actually invested in a company with more competition than owner, not a single one. Direct competitors, adjacent competitors, virtually identical competitors, like, never. Why don't know why, and Dean, the CTO is so good. And that's why I invested, but why is that, just because you can play with the app, doesn't make it fun to invest in, does it? I mean, a shit monkey, like every invested does this, and they always go, look who's the winner now. Dude, Olo, Noah is great. Love Noah. Great founder. It's a billion, just one billion, and it's been 15 years fucking brutal slog.

1:20:16Listen, and I'm only an expert in Olo from afar, right? But Olo is a story of doing the wrong end of the tale, right? Olo is trying to do an, basically an enterprise play in an SMB market. That's really brutal, right? It's the same problem in anything in B2B e -commerce. If you're not doing some SMB in e -commerce, like, yeah, there's a few niche players, but like, it doesn't make sense to fund it. Even take a Shopify, only 25 % of the revenue is big brands. So if you only big and rest in anything that's like the consumer end of B2B, you're gonna be niche, right? You're gonna be niche, right? And the niche competitors to Shopify are dead or dying like Salesforce, right?

1:20:57And although it's great, but it's like high -end, right? It's chains and stuff like who it's hard. There's just not enough tam. Do you know what I love? The amount of amazing founders. And I don't think I've told you this. And I didn't mean to rub it in. But the amount of amazing founders who tell me like, your friends with Jason, I emailed him and he never responded. And now I'm like a billion dollar company. And I'm like, ah, yeah. I would love to have invested in everyone, Jason, didn't respond. That's why that's that's why the real I just want to do it all I want to do is one more whiz one whiz right that's all I want to do for the next one year 10 years or 15.

1:21:34It's that's that's the that's the math right now to the rest matters right but yeah I got to do better but actually Harry the AI is already gonna solve half that problem for me and so it has a rule and I've still tweaking the rule but if if the metrics are good enough it forwards an alert to me to look at the deal so now it's better than an associate honestly it's better than a so it can it will review your deck, it will provide you feedback. You can iterate. There's no pressure. You're not being just the AI does not judge you, but the AI is better. It will provide you all your feedback on your tan.

1:22:00It'll tell you how good your growth is. It will compare it to other investments. It will tell you whether you're in the sweet spot. It'll tell you the check size we do and the ownership size we do. And then you just set up a trigger like if it hits these numbers just send it to me. I love talking to you. You've been amazing. Thank you for doing this and I

1:22:20I need to know what you think of these shows. Please let me know on Twitter at Harry's Debbings. I want your feedback. Let me know what we can do to make them better and I so appreciate all your input. But before we leave you today, here are two fun facts about our newest brand sponsor, Kajabi. First, their customers just crossed a collective $8 billion in total revenue. Wow! Now, second, Kajabi's users keep 100 % of their earnings, with the average Kajabi creator bringing in over $30 ,000 per year. In case you didn't know, Kajabi is the leading creator commerce platform with an all -in -one suite of tools, including websites, email marketing, digital products, payment processing, and analytics, for as low as $69 per month.

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