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24:04In other words, if he picks the right problem, if he solves that problem, is the market big enough to justify, as you say, at least a 50 billion outcome from your, what is it, 5 billion, whatever it was, pre-money? And the answer is, clearly right now, people believe these infrastructure markets are having those kind of outcomes. We'll see if there's room for everyone. At the margin, maybe skeptical, but I can totally see each step of the logic chain that gets you there. Proven person, hard problem, hard problems are getting rewarded. Would I prefer to back him versus two commsci graduates out of a really good school who might figure it out?

24:38A priori, hell yes, I'd prefer to back him. Now, once the two commsci graduates actually get the work done, you can go, oh, that might be a far more attractive bet. And that's most of what we would do. But I can totally see the proven person saying, you can deploy capital at scale with me, remember, especially for these bigger funds, I'll probably solve the problem. I'll probably pick the right problem. You'll be in a good deal. So I can totally see how it happens. I can totally see why, especially folks who've backed them before, where they know they have the relationship. I think Lux gives them credit.

25:06I think it backed them twice. If you'd backed someone twice in a row to build complex technical problems and one took a long time and you showed grit, and then the second one took a short time and you made them a ton of money, when he comes into your office the third time, believe me, he gets a nice coffee and a nice seat and you're like, what do you need? Quick decisions in all those partner meetings. You know, I think some of it, I had two thoughts. One is it is a confidence game. Venture has changed to Harry's point was the question, right? One, if you're Naveen, you're at Databricks, you've seen a hundred billion dollars and more going up, right?

25:35So five to a hundred seems plausible. I'm not as great a founder as any of these guys are, but back in the day when I met Rory, it was really hard to see north of a billion dollar outcome for a lot of these startups. It was just hard to see it. And so my whole life, and the reason I sold was I was probability. It's like, wow, man, I own 30%. But if I get to IPO a bill, like it's just, I can't even make more money. Like, like you couldn't see it. Right. And then quickly you could see 10 billion. And now it's very easy. If you, if you are a Databricks alum to see a hundred billion or more, cause you were just there last week.

26:03And that round wasn't hard to close. Was it? I mean, everyone in there and their uncle and aunt wanted to get in at a hundred billion. So it's all become ventures always been a game, but for founders, man, it's a super game today, right? It is nothing but, I mean, walk out of YC Demo Day and as an investor, you feel gamed. So if the game is a hundred billion and you've already played it once, going to Rory's point, like when you start off as a VC, it really helps if you have a few hits in your first few deals, because then you have the confidence. I wouldn't have the confidence to raise it five billion in my seed round, but if I was the CTO of Databricks, I probably would, right?

26:36I just interviewed Mike Cannon-Brooks from Atlassian. And he said, listen, the trouble is there'll be a load of shit that will lose money, but there will still be some Amazons in this AI wave. Yes, but Amazon was priced as Amazon was, and that generated Amazon level returns. These are not priced in any universe of Amazon level returns. And so actually, even if you have Amazon level plus, plus, plus outcomes, they're still not venture star returns. Well, the IRR could be tolerable if you put enough money to work, right? Put a half billion into the round. If your time to value is much quicker, then sure.

27:11Yeah. Yes. I mean, let's state the banal. A lot more has to go right. Watch this then, so you can laugh. A lot more. At$5 billion pre than at eight post, right? Exactly. Did I really say that and think I'm going to get value from that? Well, yeah, totally. Look, it's, you know, I can give a bunch of examples. I mean, you look at what the striped seed round that Elad and others did was dirt cheap. The Airbnb round that Sequoia did was compellingly cheap, I look back and we have very successful 2009 and 2013, 2014 funds. And you can see it when I'm talking to the younger partners. The thing in their eyes is, dude, you were able to buy so cheap, even a moron like you could make money, right?

27:48You should try making money today, big guy, right? And entry price has an impact. It's not the only thing. The wonderful thing about venture is, there's a positive comment, it is the most forgiving equity business of getting the price wrong. PE, if you get the price wrong, they're low variance assets. If you overpay by 50%, you're toast because they're 3x assets and they're not going to ever be 7x, right? Your degrees of freedom is well. Same thing in the public markets. The great thing about venture, it has maximum variance, which means that it is the most forgiving of getting the price wrong because you have exponential growth on your side.

28:22Now, I think we all rely on that and then sometimes we rely on it too much. And we find that just because you're maximally forgiving on overpaying doesn't mean you're entirely forgiving on overpaying. And to your point, Harry, you can push a theory to destruction. And, you know, what you're saying is if you pay for everything where you've got a 5x return, if you do something wildly amazing and only one in three of the companies or one in five of the companies does something wildly amazing, because that's just the way wildly amazing runs in this world, you don't have much of a return. And that's a fair comment.

28:53I think it's another clear example, though, of the Alex Wang changing venture mindsets on entry price acceptance, because we all go, well, if Alex is worth 14.8, Jesus, Ilya is worth 30. And it justifies these prices. And you're right. And by the way, that's why whenever anyone uses comps to discuss what we should pay for a deal, I want to bludgeon them to death. because the problem with comps is they tell you what company A is worth relative to what company B and C is worth today. In the public markets and the privates too, you're exactly right. If scale AI is worth 14 and then you're like that, you're worth 15 so you can pay 15.

29:33And it's a logical way for a banker to relatively rank things today. But it turns out as investors, we're trying to answer a slightly different question, which is, what are they going to be worth in seven years? And the problem with comps is if you use the comps, you would buy in 2021 a whole bunch of assets that were only priced at 50 times revenue because the other shit was priced at 80 and you're getting a good deal. And that turns out to be a very bad way to invest. You can't rely on nearest neighbor comps type analysis to do investing. And we all do to some extent because it's easy to be a comparison shopper.

30:05But you're exactly right, Harry, is that you have to have a view that says not only is scale AI worth 14 today, to take your example, but that you believe on a sustaining basis that companies worth doing five, six, 700 million in this kind of business can trade at 20 times revenues over an extended period of time that includes the next decade. That's a lot harder story to believe. Slight variant question on here is let's assume you can, your LPs will support you. Like you can do these deals, right? Like this deal. There's only, you got to deploy the capital. Let's assume you have access to a lot of capital like Andreessen or others, right?

30:36How fast people are trying to deploy these funds, 18 months or something like that, right? How many candidates are there like these? How many of these generational founders, even if you have to hold your nose when you make the investment, even if you have to hope and pray, even if you see Rory's math, it's like 80 % of these have to work out for the math to work. There always is pressure for 90 % of VCs, there's pressure to deploy it, right? Let's actually take that drill down because I think that's really important, which is like, you know, let's look at Andreessen's new fund, you know, 6 billion now expanded to seven and a half reportedly, seven and a half billion.

31:10Say you're putting in 300 million, 400 million of this billion raise gosh you got to find 15 of these in let's say a two-year period 20 but that's okay depends yeah 300 times 20 is 6 billion keep keep rolling you got to find you got to find them right you got fees my friend and reserves okay i agree how many are there right not to keep going how many of these candidates are there out there is there 80 year because that's kind of the seven and a half a year if i'm being really precise rory we can cut navine in half and then you have seven and a half? Yes. But you've also got to say, I mean, look, we're all Pavlovian.

31:45We do the things that feel good. Once they start feeling good, you keep doing until something hurts, right? And, you know, based on, I saw the leaked Andreessen numbers, you got to say they're excellent. They've earned the right to throw seven billion on the table. And, you know, the truth is we're human. We'll just keep doing this until Mr. Market delivers a sad lesson that says you've overreached. And so far that hasn't happened. But I don't think it will happen. And they're about to get them payday of paydays in venture land with a minimum of 40 billion back from Databrace. Totally. Look, at some point, what it takes to change is externally driven.

32:20We're jumping around here, but the people that determine whether it's allowed to continue or not are the LPs, the people who put us in business. Yeah, I thought it was a really interesting one, Jason, that you highlighted was Brown and Northwestern selling VC stakes. We saw Yale and Harvard sell VC stakes earlier this year. Will this be the new normal? Is this a new wave of LP liquidity that we just will continue to see more and more of? We can talk about illiquid assets and whether they're getting an adequate premium of illiquid assets. That's one discussion. And that's a good discussion. And then on top of that, you have the extra phenomenon of university endowments under particular pressure because of the political pressure and the push on universities for a whole bunch of changes.

33:03That means they feel the need to be more liquid. I think for those guys, it's not going to be the new normal in the sense of you're not going to be doing this because it's not going to persist for a long time. Because by definition, if you're selling a lot of venture assets, you're probably not going to buy a whole load more. So it will tail off. I mean, I think it's a readjustment. What you're probably seeing is some reassessment of the Yale endowment model and exactly how much liquidity you want to have in your portfolio. I just went through like first and hopefully the last time I had an LP sell position is the first time.

33:33I mean, I only have so many LPs. I don't have as much money as either of you do. It was interesting to watch it and this firm Evercore manage it. But even though the process was handled very poorly and frictionfully, what I thought at the end of it was there should be a lot more of this. Because what I didn't know, I'd never read the LPAC. My LPs have no rights to sell at all. Like literally nothing. There's no exceptions for if you're struggling or if you're... It's just, I'm shocked because a lot of the stuff is LP for them. This one is absolute. You have no rights to sell. And so I thought in today's world where it could be 20 years until even good funds wind down, when founders want to go longer and longer and longer, some LPs don't care, right?

34:11Some LPs literally, but if the Harvids of the world care and everyone that says to me, it would be nice if there was more LP liquidity in a way that wasn't bad for GPs. I think it would be a positive outcome. What I saw is it's a pretty broken, frictionful, weird corner of the market, right? Because they need my permission. So they're trying to manipulate me. And then these guys claimed they had the rights to do it, but they were lying because they didn't want to, they didn't have the balls to ask for my consent. It was very interesting from like a games. And I'm, believe it or not, I tried to be a nice guy.

34:41I'm like, well, if you have the rights, do whatever you want. And then we didn't mean to say we have the rights. What we mean to say is we have the moral authority to sell your position. I'm like, what? I mean, you might be oversharing here, dude. But I'll keep sharing. I'll share everything except the name of the LP. I'm happy to share. But I do think, stepping back, better liquidity is an advantage to both sides, especially as these funds drag on. So, yes, we've been supportive of some of our very good LPs who've continued to re-upping new funds. Say, you know, after 10 or 12 years, if you've got a tail end residual, one company left, does it make sense for them to clean up their books and sell to a secondary?

35:16So, there's going to be a lot of this kind of process happening because it just makes sense. It's just like the company staying private longer. The consequence of that is that you end up having to facilitate secondary shares for employees. When your time period of private is longer than half your working life, you probably want to get some equity money. In the same way, for any of these companies, even if they have a long-term perspective, which obviously LPs should if you're entering venture, given the thing, sometimes you thought long-term was eight years and it turns out to be 12 years. I think it's just healthy to be able to conduct those sales.

35:50And even if they were efficient, and it sounds like you weren't, the truth is this. No matter how efficient they are, there's still a drag to it. There's still a price discount. And therefore, it's not going to be the new norm in the sense that people aren't going to run into it saying, I love to do this. But either because you need capital or you want to close out a null fund, it's just going to be a part of the world. I mean, there's already a substantial secondary business with big players. There's always going to be secondary. And it's probably going to increase over time. Quick summary. We're acting like there's infinite liquidity.

36:18It appears there is for open AI and the secondaries, but this is a world of scarce liquidity outside of a few names, right? And so my learning from this process is everything would be better if there was more liquidity down the stack. No matter what, who cares? The market can decide the discount. Everything would be better in an age where companies are longer to exits. It would be better for more liquidity for all players. Agreed. And that's also true, I think, implicitly you're saying for companies, which, of course, is why they should go public because you're exactly right. I mean, I always say to people, when people say there'll always be liquidity because there's lots of money, I'm just going to say it so I can remember it in a year or two when it happens.

36:54Liquidity doesn't evaporate because people run out of money. Liquidity evaporates because people get scared and want to keep their money. And at some point when that happens, you'll go, oh, that's what the public markets were for. So you have a little more opportunity than this. People should just IPO, right, Roy? Yeah? They probably should. And then you've got a company like Sneak, which has slowed down growth to now 26%. I think it's about 300 million in aero. It's down from 150 % in 2022. So big growth hit. First of all, I would actually go with the more conventional English has slowed down rather than has slowed down.

37:28I just, you're sticking with the Queen's English. We'd be slowing down. It's slowing down. In Ireland, I think. But that was just me being mean, Harry. Sorry. You know, I have to do it once per show. Yeah. Dude, you corrected me on every fucking sentence. Harry may have this weird accent, but he's one of the most well-spoken people I know. Yes. It's pretty good. It's pretty precise. Okay. You're all good. I'm full of malpropism in every paragraph, and Harry just nails it in every question. I don't know how he does it here. I was just being snark. I think he is beating me up. I will admit, you can truncate almost, you can calibrate everything by coffee consumption before a show.

38:07and this is a three coffee day. So it's just going to be tough. I'm sorry about that. Normally a one coffee day, it's easy, but I got a lot going on. So sorry about that. So what are you saying about SNCC? Just go back to the task at hand. At 26%. What I'm saying about SNCC is like, hey, has growth slowed down to the extent that they are now no longer able to IPO because there are rumors now, growth down to 26%, revenues at 300, PE buyers circling and PE is the option. Are they at a stage now where they're looking for a PE buyer and IPOs off the table. I mean, the interesting thing is 300 ARR and 26 % is about the low bar.

38:44We were just looking at this now. There's been 15 IPOs year to date. And the median IPO this year was a stunning, get ready for this,$931 million revenue run rate, 931. So the median blew me away, right? And the cutoff, there was a couple of 200 or 300, right? Growing at around 30%. The first comment, just to put it out there, is it's not like they're miles away from it. Those are, in fact, the numbers. But yeah, if it's just below that line, then yes, you've got to do those three routes. And we discussed one of them last time. You either you have PE, you have, if you're lucky, a strategic buyer.

39:19But if you're not in the AI world, I don't think people are buying strategic stuff at this point. Or you have to consolidate like DBT and 5Trans to get to scale. What price does that go for? They raised it 7.2 last time. I mean, that's a tough thing because PE buyers are six to eight, you know, plus or minus. So you multiply 300 by eight and you just end up with a different number. I'd say in the twos based on, I'm using Netscope as a rough comp, right? Netscope's at eight. It was at 700 million growing 33 % at IPO. So this is 300 million growing 25%. I'm just, I'm using the roughest VC math, but if that's worth eight, this is worth in the mid twos.

39:57Two something if it IPOs. if there's appetite for an iconic company, right? Just not a whiz, right? An iconic company. I'm using a security comp. It's not, I know it's not the same application. It's the last security IPO, Netscope, which is S tier, but it's not quite rubric. And then the problem is we start to see this triage, right? And sneak or sink or whatever, it's great, but it's not Netscope, which isn't rubric. And so you can just look at the, I don't have your skills, Rory, but I can just pull up the valuations and the numbers and spitball it at two something billion would be its IPO valuation, right?

40:28Right. So the question to play it out is, one is, does that fall just below or just above the line? Can you get a public deal done at that size? And if you can't, are you in private land? And then obviously, instead of all the preferred converting to common and cleaning up the cap table, the whole preferred stack. And then the next question is, how much have you raised? And what does that mean for all the folks? So you got all that drama to do. And do you even, if you can't, let's say you can't IPO because it's at the edge, right? It's at the low edge. Do you want to? Do you want to deal with that crap?

40:57and be ignored by Wall Street if you're a rung and a half below Netscope? Is it worth it to be one of these invisible public companies? I'm just going to put it out there because I feel I really don't like the, oh, these companies are no good because they're not worth$7 billion. I mean, stepping by one. Because the other alternative you have is compound for a couple more years of 30%. If you've got the stomach for the holding period, try and do some acquisitions, build the thing up. Because at$400 million at 30%, it's a little more compelling. You're well above the threshold line. So that is one option.

41:27And then you've got to assess, obviously, do you have obsolescence in your future? The point I'm making is this. Every single one of our, quote, successful companies, other than the most successful, are dealing with this reality. I can think of plus or minus eight or nine companies in our much smaller portfolio where we're all at this kind of stage and having these dynamics, right? I think I said it. There's just a whole bunch of cutting and wood to chop to figure out what these companies become over the next two to three years and how do you get liquidity. Is it private to private? So there's just a ton here.

41:59So what I'm saying is we're, quote, unquote, picking on SNCC, but it's a high-class company. $300 million is the high end of great. $30 million is the high end of pre-IPO critical mass. I mean, we see lots of companies in 150 going 10 or 15, right? Is the crime not just a crime of price, which is overly exuberant capital markets, stuffing cash down a company? I think it's worse than that, though. I'm curious to see what you see in your portfolio. you, but I only, I have three companies that I would say are different ARs, but are in the same bucket that you're talking about. Okay. What I'm worried about is zero have had PE offers, zero of these three.

42:32Now, if this was 2021, your phone would be ringing off the hook, even into late, even into early 2023, pre AI, your phone. Now the valuations might've gone down into early 23, but these deals were none of these I can think of, you know, one basically at sneak scale, one, one about a third and one about a 10th, but they all should have gotten PE offers, They all have the right rule of 40 numbers, the right this, the NRRs. Why not buy them? They're not going to IPO, but they're good companies. Crickets. Crickets from the PEs. Crickets. Is your phone ringing off the hook from these PE firms? Are they out there?

43:06Can I see them over there? Are they banging the door to get in this morning? You got to get off the podcast to sell a few portfolio companies at 8x? I think you're spot on, Jason, which is why if I was sitting on that board, as I always say to people, when you're private, the liquidity window opens only rarely. Whenever it opens, you should pay attention. You can decide no, but you should pay attention. And you're exactly right. I would say the same. You're not seeing infinite demand. It's not like PE is dying to do this. They've got lots of capital, but they're not in any rush to buy sub-scale assets that aren't defendable market niches.

43:43The number one thing I'd say to these companies, including ours, is you've got to take control of your destiny. What does that mean? It means a couple of things, probably three things, maybe four. One, and probably the most important thing, is you've got to make sure the management and founding team is excited and have something to play for. If the team doesn't think that they can build value here, then you know what to do. And you should incent them to build value. And we've done a fair number of these. For these kind of companies, I call them EFGs, equity for growth. right? You say to someone, you're fully vested, you've long since been fully vested, but you're the founder, you want 7 % or 8%.

44:18Conventional wisdom says, that's it, let's just all keep working. But he's like, I'm not getting any more for more time. And I've done significant equity grants that are linked to delivering growth. So they have something to fight for again, because these guys are fighters. And that's what you want them to do. I want the founder to say, I thought I was on an eight-year journey, I'm on a 15-year journey, but fuck it, I've got another seven years of equity ahead of me, and so I take three or 4 % dilution. But the guy who's in the trenches is incented, and so is his team. That's the first thing. Make sure the team are excited to keep going.

44:48The second thing is make sure you have control of your destiny by being profitable. And then probably the third thing is figure out a second act. Typically, it should be a second product or typically something that links to the AI trend. And we're saying this to our companies. You should link to the zeitgeist, right, if at all possible. If you're in somewhere like financial services or fintech, it's not really that relevant. You'll use it for the back office, but it's not going to change your product. But a lot of these software companies, you have to assume you need a second act. You have to assume it gives you seven more years of growth.

45:15It's almost certainly going to be related to what's going on in AI and how workflows become agents. So I think if you do those things, then play out the being in the company. If you have those things in hand, then as a board member, you feel a lot more secure because, you know, I have a plan. I have a plan that doesn't rely on the kindness of Toma Brava or the kindness of anyone, right? I'm building my independent company here and everyone's aligned. So that, to me, is the job of the board right now. And we've done that, you know, a couple of companies. Sorry, that was a lot. Again, too much coffee.

45:47It's good. And what's the first one you call it? A FAF? What's the FAF? EFG, Equity for Growth. Yeah. No, you inspired me. I just proactively did one of these for that reason. You learn a lot from the process. But you got to do it. It's not enough, but you got to do it, right? You got to do it, right? Especially because a lot of folks won't ask. Some founders are very aggressive in asking, where's my next 10%, Rory? But a lot of folks just won't ask. I think I learned it's good to be proactive. And in return, it's the only time you get the right to say, in return for this, you've got to dream big again.

46:15But if we're going to be at 20, going to 15, going to 10, then with dilution, you're way below my cost of capital. Let's admit that and let's go for a sale and then you get what you get and you don't make a fuss. but if you think you can keep it at 20 and walk it up to 25 or 30 and keep going for three more years hey that's value creating at a very different level the astonishing thing for me about your aaron levies or your drew hustons or your mike cannon brooks is the longevity you know we mentioned sneak there but how few actually really do the 15 year journey because it's hard you know Well, look, I am.

46:50Can I ask you, both of you, you've seen more than me. When the founder leaves and there's a CEO brought in, what percent of the time does growth re-accelerate to positive outcomes come? Break it up into two categories. If you have product market fit and you have a CEO who is very entrepreneurial but just not a great manager, then it can work. because they've done the entrepreneurial act, but they're not great at the management. And maybe they're so bad at the management that a competent manager stepping into a post-product market fit company can give it a lift. It's not ideal. I'd much prefer to err on the side of making that founder work by surrounding them with good people, but it's not crazy.

47:32If, on the other hand, you don't have product market fit, the founder's not working out, and you think you're going to hire someone to get the product market fit, you're deluding yourself because it's just too hard and too unlikely. You are what's called wrong and you should sell for what you get and move on. That's not an act that a professional manager does. Because if they were capable of doing that, they'd be founders. The answer is zero in that case. I think it's bad in all cases. But the first one, I just think back when Andreessen wrote these handcrafted blog posts themselves, but their point was, we always bet on the founder.

48:04Sometimes the founder doesn't stay and we have good outcomes there, but the best outcomes are when they stay. So we do everything we can to surround the founders with other executives to help them. But if they don't, if they can't finish the journey, we'll support them either way. That's my answer, right? I never want the CO ever to leave. Good God, right? But if they raise their hand and you've given them the faff thing or whatever you call it, the re-up, and you've had the conversations and you've begged them to stay, and they're still just don't want to do it, there's no point, right? Most humans should take the millions and relax, right?

48:35They may be dissatisfied. Which is why the most useless question VCs ask founders is, Rory, Rory, if you were offered 500 million for the business today, would you take it? And then when they go, VC's like, I told you he's not here for the long term or she's not here for the long term. So I got to say, to be clear, I never asked that question. I think it's a stupid question on its face on multiple dimensions. Let me give you just two ways which is a stupid question. The first thing is, and I said this before, people's opinion on what they'll do if they're offered$500 million at a point in time when they haven't been offered$500 million is meaningless because it's a purely theoretical discussion.

49:18I've seen people go both ways. I've seen hell, I'll never sell people when they're offered the money. Shit, I'm out of here. And I've seen people where I thought they were mercilessly like, no, we can keep going. So I literally don't ask that question because there is zero information content to it. And the idea that you wouldn't back a, quote, really good founder just because you're afraid they might sell in a good outcome that doesn't become great, that's just so low down the list of things that you're worried about when you're doing a deal. You want to know, is the market good? Is the founder want to build a big company?

49:46If they start on the journey to doing that and someone will get intercepted, it's a high-class problem. There's a couple who I look back and go, I wish we'd run that longer. but in the list of things that will reduce the return of my venture career versus backing B-level people who don't even make it happen. It's a concern, but it's also to make it actionable. I also think that you can tell your best and your worst within the first 60 days. The messy middle, you don't know. There's a TBD, but the ones where you're like, shit, we regret that one. You tell pretty quickly and same with the God, they're on it.

50:16That first update, the first board meeting. Yeah. I do agree that at the 70 % level. On all my best deals, there's been a moment somewhere in the first year where I remember sitting around the board table going, oh, Rory, you clever boy. You're going to make money here. And all I have to do now is cheer them on and not have to do a lot because this is just humming. You're exactly right. That's always a good feeling. Speaking of those moments where you go, wow, you know, well done. I'm in a great company. There are a couple of like standout raises that I wanted to talk about. One is Vassell raising 300 million at$9.3 billion.

50:49Jason, again, highlighted this, announced pretty quickly after the post from Guillermo, the founder, which we're not getting into because we don't do politics. But the timing is interesting to bring up. One, I want to hear your thoughts on the timing. And then two, I've heard these described before as suicide rounds. but just because it's like a super high price with actually not such a huge amount going in, 300 million. And so it sets a huge expectation with not massive capital injection. How do we feel about those two, the timing and the suicide round status? The suicide one is an interesting one.

51:25The Vercel thing, I don't claim to be a total expert, but I am 200 hours into my vibe coding journey. I think Vercel and Superbase are actually tied in a sense, which is that these are not the most profound bets that the world of software development has completely changed. That everyone that's going to build a web app going forward is going to build on Supabase. It is the default choice to how to host and manage Postgres in this world. And when folks want to host apps live, right, they're going to use Vercel. It's super easy to use. People do love Vercel. And you've got to host this app and you need a database.

52:00Like these are two structural components and that the number of apps is also exploding, which it is. So if this is the future of hosting management database and it's exploding, you got, these are good bets to make. These are the leaders. These are two leaders. You could debate the valuation, whether it's a suicide round, but I think in terms of valuation aside, these are actually captain obvious bets. I think they're both captain obvious bets because this is where developers are going. Like that's how you make money. I mean, Michael Cannon Brooks would probably iterate that from a few years back, Like follow where the developers are going.

52:29If you become the leader, bet there, you're going to make money because those markets are pretty, pretty damn large if they're growing. Beyond the suicide round, I think these are, these are good bets. Just Vercel is at 9 billion. It's still a lot of money. Hopefully you have more than one of those bets at 9 billion to Rory's point. First of all, I agree, Jason, what you're saying. It's, I was talking to one of my partners yesterday, we're just talking about it. And we're just saying, you know, the more you do this, the more you just say to yourself, You just need to do big, exciting deals in trends that are absolutely obvious.

53:00And every time you try and make it harder than that, you just lose money, right? And both of these things are exactly right. They are on trend, capped and obvious for the, there's a new wave of people building apps. And these are two parts of the infrastructure that people will use to build those apps. Both of these companies have done a brilliant job who were pre, just as a reminder, Vercel and Superbase were our infrastructure components that existed pre-OpenAI, pre-DAI trend, pre-Vibe coding, but just have inserted themselves into relevance as kind of components to build these next generation of apps and are just riding the train.

53:39Because of that, they just have momentum. They have growth on their side. and yes, the price might have doubled in six or so months. It may also be the company doubled in six months. So the revenue multiple is the same, which is actually a super interesting discussion. What you're effectively saying is normally you figure, you start with high revenue multiples because by definition, your revenue multiple is infinity on the seed round and your multiple is 6X when you get a 30 % growth and your idea is your revenue multiple is coming down as the rounds go up. But what you're seeing in some of these AI companies is people are effectively saying, you know, when they were doing 100 million, I paid 20 times or 50 times.

54:16When they're doing a billion, I'm going to pay 20 or 50 times because the growth is still the same, right? And it's logically correct. I mean, there was a market size question jumping at the end of it. But from a growth rate perspective, I'm willing to bet that you look at those two rounds and they're not wildly different in terms of... Is that logical? Because actually, it depends where you intersect with it on the growth curve. It does. You can have the same growth rate, but actually you only believe they've got 20 % left of the market to go. That's why you said it correctly, Harry, and you're agreeing with me.

54:47Exactly. And, you know, it applies even to Entropic. The growth rates remaining the same. And normally you expect growth rates to decline. So you can have this mental model. And we talked about growth persistence, but they're not declining here. So when you do these rounds at the same multiple, but with an order of magnitude more in the valuation, the thing that can go wrong is you hit a market-sized wall or some kind of wall, and they deaccelerate rapidly, and then you're wildly wrong at scale. That's the risk. If the Vercel market or the super-based market is finite and can't support a$10 or$20 billion valuation, even if you have 100 % share of vibe coding, then you could see very abrupt valuation changes.

55:28And I'm not discounting that. I'm simply saying I know how they get to doing these quick rounds because the underlying growth's so quick. We've been looking at some markets where we've seen two and maybe even three rounds within the year. And part of me goes, that's crazy. And part of it then goes, hmm, the B was at the same multiple as the A. Maybe, Rory, you need to update your priors to the world as we see it now and accept that if you're getting the growth rate, and these growth rates are, and I really, Jason, you called the discussion a while back, it's well beyond, you know, a triple, triple, double, double, double.

56:00Maybe you can lean in and maybe it does make sense to have these rounds. But I definitely wouldn't call them suicide rounds, Harry, because the growth might justify. And B, the other part of what you said is, are they raising enough? Yeah, they are. Because if you think about it, take Superbase, where they did two rounds. Someone, smart dudes at Excel, looked at the$2 billion and said, you need whatever,$300 million. And then six months later, they pick up another$100. They still have the$300. So it's only a suicide round if two things happen. One, you deaccelerate quickly. and two, you start losing money such that you're forced back into the market in the next period of time where you would have to take a down route.

56:37So I don't think it's wildly, outrageously, stupidly risky. I mean, if you want to talk about risk, there's a lot of riskier things going on in infrastructure land than Bursell raising it$300 million at$900 billion. I don't think that will be the problem that brings the whole thing to its knees. I totally get you. I think an interesting thing for me is like this is like one lesson for me is king making, which is like when you obviously have very quick rounds and a lot of money going into categories does absolutely exist in this space. Yes, it does. But it doesn't in large enough categories is what I'm seeing.

57:08And what I mean by that is in law, for example, there are many who have got a lot of funding and a lot of traction. Same in healthcare, same in customer service, same in coding. But then as you go smaller markets, kingmaking really becomes more prevalent. And the smaller the term, the more prominent the kingmaker ability is. I'm not sure I buy that at all. It's obviously easier to be a kingmaker in a small market because it takes less money and more people have small money than big money. It's the Julius Caesar quote, I'd rather be first in a village than second in Rome, which indicated he was a psychopath, by the way, but we can come back to that.

57:45But I disagree because I think kingmaking is going on in the biggest markets. I think to some extent, everything OpenAI done has been both brilliant technically and financial kingmaking. I think in many of the markets you - I'll just pause on that. What do you mean by that? They have not been like king made, so to speak. They have many competitors. It's by no means a monopoly. I think it's a duopoly. I think their capital strategy has been to the point where it's going to be very hard for anyone else to attract that kind of capital. I mean, you know, if you take someone like X, I mean, if they really do need 100 billion and they've locked it up, I can't remember how much X has already owned, But there's a lot more ways to do that.

58:23So I think that is a kingmaking strategy. I don't think that Anthropic could and Grock couldn't. I think they both do. I think it falls away very quickly. I don't think it's a monopoly, but I think it's definitely an oligopoly. So I think that, yes, the number two, Anthropic clearly can. It's a differentiated number two with an overlapping strategy, but not, you know, one is winning in consumer, one is winning in business. Do I think all of the other recent very high-profile startups are going to be able to attract the kind of capital it takes? No, I don't, because there's not that much capital out there.

58:52So that's an example, I would say, of the largest market, kingmaking. There is so much more capital in venture, but it's so stratified, right, into 20, however we define it, 20 companies, 50, 100. We could go down a lot. You know, it was one thing back in the day when you would kingmake with a$20 million round or a$50 million round, right, or kingmake very late stage. But now, even though there's more venture than imaginable, you really can exhaust the capital in a category, the nine figures or more. Or how many of these categories can support 200, 300, 400 million dollar rounds? And then if it is capital intensive, it's tough to compete.

59:25I mean, it's crazy. I mean, if Base44 has 10 % of the VibeCoding market, right, as part of Wix, if that's accurate, it's crazy. But where would they have afforded those tokens? I mean, if Replit and Lovable are losing some money, where would this poor guy in Israel with eight developers get 50 million of tokens? Like, I don't know. I mean, there is kingmaking happening here, right? I've been thinking about it, too. and I'm actually going to change some of what I said, Jason, actually listening to what you said. I don't like the word kingmaking, I've decided, because it imputes way too much value to venture, right?

59:56Like as if we're making the difference. And I think there's often mild versions of that. You see something where, oh my God, Sequoia led this round, maybe people back off the other competitors. But in general, the entrepreneur is the king and the entrepreneur makes the good company. And then with so much capital available, they can get into this virtuous circle of getting the prestige names, prestige amount, and significant amounts of capital that help build barriers to entry and deter invaders. So the fundamental act of creation that allows that to happen is the entrepreneur and the revenue success.

1:00:31But that's just not true. I'm sorry. I mean it in the nicest way. Like A, the cash enables that execution. And the execution wouldn't happen without cash and then two what you've seen is king making pre-revenue which is companies that are at three four five million dollars in revenue which is great but bluntly not a huge scale getting 50 to 200 million dollar successive rounds on the back of a tier one with an iconic or you name your multi-stage fund coming in very quickly afterwards and at that point it actually is the venture investor that is doing even first of all i agree what you're describing as a phenomenon.

1:01:08You know, we've seen it in a bunch of markets. We've looked at those markets. We've struggled to find a way to compete in those markets and figure out what to do to be really doing, right? But this is my point. And everyone knows them and goes, oh, fuck, we don't want to go in after, you know, Sequoia and Iconic into a company that competes with a relative of the world. That's exactly. But I think that going back to king making, I think in every one of those cases, we may just be arguing semantics, but it's an important comment. You start with the company doing an excellent job. You're right, they get to$2 or$3 million in revenue.

1:01:42In other words, the moment of gestation is the company doing a really great job and having a small early lead. And then you're right, the wall of money allows you to build on that lead and defend it. The brand name firm allows you to raise a follow-on round very quickly. Arguably, the growth allows you to do it. So there is this self-reinforcing thing going on. I think we're describing the same phenomenon. I'm just saying it's earlier and earlier because I don't even, you know, in some cases, literally, Rory, it is pre-execution. Its founder has unique insight on GTM, on a product insight, on you name it, and that is enough to catalyze the fire.

1:02:18Yes. But in most cases, I think you'd agree, you described more correctly, it's a couple of million dollars in run rate revenue with prestige customers, a strong founder growing quickly, has done one seed, raises a good A from a top tier firm, gets a B six weeks later. Now you've got perceived momentum. And yeah, we struggle with those? And frankly, both struggle to know, should we compete? And then secondly, struggle to compete. Because once you have the top tier firm, you get a whole bunch of people willing to pay up. And I'm meeting a lot of founders who are going, my God, I did not realize quite how powerful kingmaking is.

1:02:51Because I'm like, everyone is just saying, whoa, we don't want to compete against that. Well, I always remind people, it's a long way from here to 300 million in ARR and a public offering. I don't know if it's the right attitude to say I just can't compete. I mean, you've just got to say it here. Harvey looked like they'd been king made, if that indeed is the past tense of it, right? And then Legora came in from Sweden, for God's sake, and killed it. They did really well. They shipped that product. They took what looked like a monopoly and took it into a door. Those two companies playing aggressively in the legal space.

1:03:22So there's an example of they were second to the market. Harvey had established a lot of mindshare plus capital. They had Sequoia. They had Conviction. They had really strong people. and give Lagora credit. They shipped a good product, a very good product. They got Benchmark in. They've just done a third follow-on round with, I want to say, Bessemer after taking Redpoint. So there was room for a second person to be kingmaker. And by definition, if you have two people being kings, it can't be a king. Which goes to my original statement of the size of the market does impact the ability to kingmake.

1:03:53Law, health, difficult to kingmake. Smaller markets, absolutely more plausible to kingmake. Validating my original statement, Mr. Thank you. I'm not sure I agree, but you said that so confidently. I'm just going to give it to you. The question is, would you do a third in that market, in the law software for corporate law firms? I think it's hard. I think there's other markets in law equally interesting that we'd like to play in. But you're right. At some point, it gets kind of cooked. I remember when Michael Cannon Brooks came to SASTR, which was a long time ago, SASTR Annual. We had the CEO of Trello interview him right after he got acquired.

1:04:29It was interesting. It was like a board meeting kind of at SASTR Annual. and he asked him, could you do Atlassian today? It's like, no way I could do Atlassian the same way today because I had five years to be left alone. That's the way why bootstrapping worked is because everything was so slow the first five years. The flip side today, I think, is if a lot of the AI startups are seeing start off very, very low capital demanding, right? Two, three folks, some free tokens, some free Google Cloud, it costs nothing, but then they consume a lot of capital. And if the question is, if you could be a new entrant to the market at number three and number four, choose to be capital light, that's great.

1:05:04But if the space requires capital to win or the founders believe it, then kingmaking becomes a prophecy because you just bow out. If I believe I need a hundred million to scale base 44, to compete with Replit and Lovable, then I'm going to bow out and sell the Wix because there's no option. That's what's a little bit different than classic 80 % gross margin software is if you were lucky, there was a third path. And if you were lucky, someone at a left field, you didn't hear it, They got to a hundred million. Yeah. Well, it took five years longer in the early days, but they caught up. They, they would, we used to catch up around 10 or 20 million ARR.

1:05:37And actually in some cases in SAS, you would lose your, your capital advantage around 20 million ARR because you would catch up, right? Like, like in the last year, Qualtrics, I'm not sure that's true in the age of AI. I'm not sure that you lose the capital. I think it's often is inverted where that capital is more helpful, right? In the age of AI, that's what makes it harder to invest on number three or number four. And you might be like, listen, yeah, but those guys only need 10 million and we'll see how it goes. If they're going to need 200 million, it's not as fun to invest on the number three or the number four player, is it?

1:06:05I agree with that. I think what you're saying is exactly right, which is, is that you could do Atlassian and bootstrap it for five years because no one was going at it and you had an uninterrupted run. Today, I think the direction is obvious and the capital is available. And therefore, even if you don't want to do it, someone else will do it. So therefore you have to do it. It's like, you know, nuking the cities. You know, I didn't want to do it, but I knew they were going to do it. So I had to do it. And pretty soon everyone's launched$50 million Series A checks at each other. That's what's happening because, and you're right, that money can either go for, I mean, it can either go because you need it to build the product or deliver the product at scale if you have a token cost.

1:06:44It can go because you need distribution or it can go just because the other side have it and you feel the need for credibility. I know in some of these wars, having looked at some of these deals and kind of the ERP space and some of the other spaces where you're dealing with enterprise customers, the balance sheet becomes a criteria for qualification. There's a whole bunch of reasons to say this is the way the game's been played now. And I'll admit I've taken a while to process and internalize that. Roy, Jason, you're in a portfolio company. You get one of the big funds who is trying to king mate with one of your companies.

1:07:14Do you say, take the money? Fantastic. When the money's on the table, take it at a high price. Or do you go, this is a good company. That's a lot of money that could distract them and defocus plan? Pragmatically in this market, I think if you have something that's working, and even if you don't know where you're going to put the money, if it's on attractive terms, you probably err on the side of taking it. Because if you're in a reasonably big market, you're going to have to grow and you're going to take capital. So I think you err on the side of aggression precisely because you have to play the game.

1:07:43You have to do the game theory. It's not just what do you think, but what are they going to do where they is your competitor. And you can say you're going to be careful and slow and rational, but if they're not careful, slow, and rational, then you just end up outclassed. And as I say, I've resisted the kingmaker word, but I think where you are correct, Harry, is that capital has a consequence. It has a consequence to customers. It has a consequence for hiring. I think one of the biggest drivers of when you take capital and don't is, unfortunately, you have to look at the competitive dynamic, which I don't love because you want to steer your own ship.

1:08:17But if you're in a competitive market, it's hard to. Take the money, Jason. I think what I've learned, it has changed over the years. There's so much more information. There's so many more founders. There's so many more quickly growing companies. Founders have already made their own decision now. I haven't had these conversations in a while, Harry. I think two of my best current portfolio companies, one will consume an infinite amount of capital. The other has 60 years of runway. It is DNA. I could argue one is overspending and I could argue the other is underspending. That'd be a very easy argument to make, right?

1:08:45Don't matter what I think. Their DNA is different. Their customer is different. The market is different. all of it, but especially their DNA is different. Some folks want it and they understand the downside or they don't, but they get it. They get that there's some risk, but they're effing going for it or it's what their friends are doing. It's one of many topics that it no longer matters what I think. I can't influence it. So the best I can be is if someone asks me, I can tell them at the last minute and the first minute and I can try and influence it, but I can't change how they're going for it.

1:09:12Chaps, any other topics before we do a quick fire that you would like to cover or think we should cover? Oh, okay. I'm just going to say it here. Chumat's terms are almost legit. There you go. It's like the new SPAC. I mean, I will say the new SPAC terms, SPACs, which were an alternative mechanism for going public in 2021, they've been around for a long time, but exploded in 2021. Subsequent return of those investments was miserable. It became obvious that one of not the only, but one of the primary reasons for that was the incentives between the person sponsoring the SPAC and the investors in the SPAC were misaligned.

1:09:51And the sponsor made money simply by getting a deal done. It's like a venture capitalist getting paid your 20 % just for investing money in the ground. And it turns out that if you do that, money gets invested. And now the terms are still not cheap, but you only make it if the stock, if you make at least a 50 % uptake on your stock. So it is a more rational structure. I still think there's issues with it around incentives, uncertainty. I still am skeptical it will be an amazing replacement to IPOs, but it definitely is less egregious and less misaligned than the last time. Does it prevent Shemath from having the ability to pump and dump like he is accused of doing?

1:10:32That's nothing to do with that. You used the wrong word. Prevent. Prevent. There's two words used. Pump and then dump. Pump is an interesting, in the context of SPACs. The whole thing about SPACs is entirely separately. The SEC has really tight laws about what you can say about an IPO. Really, really tight. And you can't make any future leading statements at all. But bizarrely enough, SPACs are exempt from that. So you're allowed, because it's a merger from a legal perspective, so you're allowed to articulate any future leading story you like. So anyone, let's not pick and poach them at, anyone can pump all they want.

1:11:06Because you can, I mean, it's such a weird difference. You've one company going public in an S1 and you can say nothing about the future. And then you have the other one going public in a SPAC where you can say, it's going to be freaking amazing. The next 10 years are going to be enormous. I'm tweeting like crazy. So the pumping takes place because of the regulatory thing. But you're right. The dumping here now, you can still dump. But at least you have to get the stock up before you can dump it. Before, literally, you had the odd circumstances. The investor could come in at 10. The stock could go to 5.

1:11:34But the sponsor got their stocks at a penny. So even at 5, they could dump. And the investors lost half their money. And the sponsors made money. That's not a thing anymore. Now the investor comes in at 10. Until the stock gets to 15, the sponsor gets nothing. But once it gets to 15, they get a 30 % promote. So it's not cheap, but it's a little better than before. This probably makes SPAC a marginally more attractive competitor to the IPO. But I still think a well-run IPO beats it by a head. Can I just add, I know for one last, the crazy deals. Like the reason it comes up is SPACs are back, right?

1:12:06It's really a sign of the times we'll run out of time. Related to that, good God. The New York Stock Exchange invests$2 billion in Polymarket, which was essentially illegal last year. It was essentially illegal. And the Biden administration decided this was gambling, offshore gambling. And as I understand it, it was going to shut down Polymarket. Trump, and listen, no politics here, okay? But it is interesting. The world changes. Trump comes in. His son joins the board and invests in the company. David Sachs, who I am a fan of as a SaaS founder. We go back trying to remove all the regulations from crypto and all this.

1:12:41And now you go from something that was essentially illegal last year in the U.S. to now something that Trump Jr. owns a significant share of. And now the New York Stock Exchange is investing$2 billion at a$9 billion valuation. I mean, if that isn't a sign like SPACs being back, if that isn't a sign of the times, that is such a change. Forget about it. AI isn't the only thing in the world. Just removing all this regulation. And now that Polymark gets on the inside and the New York Stock Exchange is investing, to me, that's quietly the craziest story and the legitimized self-dealing in it. It's just a different world, right?

1:13:16I don't know if it's better or worse. No politics, but it sure is different. I think the deregulation is great, to be clear. I think the fact that the Biden administration chose that hill to die on was, I think, both probably wrong and definitely stupid, which is the low quadrant. and goes a long way to explaining their terrible polling numbers among the 20 to 30-year-old male demographic. I actually give credit. I think the deregulation is one of the few joyous parts of the rest that's coming out of current administration. I think it's great. Go team. Whether or not, I'm not going to comment on the, you know, what interpersonal relationship it takes to get something done.

1:13:51And I don't think it impacts the deregulation, but that's a morass that I have no doubt will be unpicked on another day by someone other than us with judicial powers. I think the interesting thing about those businesses is if you look at the volume, and I didn't check part of it, I think I checked culture, it's still 70, 80 % sports betting. But the real question is, can you build prediction markets for other things? And you're seeing that. And to the extent that you can do predictions for other things, like the questions were going to be asked, like, you know, I just saw it, you know, who's going to be next?

1:14:19Prime Minister of Japan was running because the election thing. Whether or not there's a, quote, legitimate non-sports gambling business there that someone like, it was the NYSE, which is really intercontinental futures that Atlanta company is the core owner of that. Whether or not that's a non-sporting business is TBD. But I think it's super interesting. I think those are two really interesting companies and credit to the venture investors who stuck with it, right? During the regulatory time. I think you go, you got a really nice asset now. I totally agree. The thing that I did just find like a little bit confusing, like$2 billion is a huge amount of money.

1:14:50Again, comparing that to the Vassell's$300 million. I don't know, but there is not a computer infrastructure spend. I guess there's a right spend in a lot of cases, but$2 billion. I mean, did you need$2 billion? We have to see the details. I think there's some level of implicit exclusivity here. There's data sharing, right? You invest$2 billion for it to be, in essence, an affiliate of the company, right? There may be some vague similarities to the beginning with OpenAI and AMD. This is a bonding investment, right? This is buying a quarter of the company or 20 some odd percent. And someone's putting something in here more than money.

1:15:25In return, they want to own a lot, right? These guys are strategic investors. They're not doing it for a 2x return. They're doing it because they own, I can never remember, was it NYSE or the NASDAQ? I should have checked. They own a bunch of market-making companies. Yeah, I do confuse. Intercontinental Exchange owner of the New York Stock Exchange. Yes, and they are called ICE, and I was going to say ICE, but of course, that would be confusing to the average reader, listener, right? Yeah, Intercontinental Exchange. They bought London Financial Futures like 20 years ago. They're like if there's an exciting and interesting financial market where people buy and sell electronically really interesting shit we like to own some of that so it totally makes sense strategically good for them we're going to do a quick fight good addition there jason by the way i totally with you fucking nuts deal nuts okay so number one this is an official koushi tim cook leaves apple this year yes a hundred dollars turns into 879 no a hundred turns into 107 i mean is he Is he already confirmed?

1:16:22Those odds are terrible. Agreed. But leaves is the word, right? I mean, again, I hate these things because I'm riffing, and Jason can do it in real time and look things up. But wasn't there some kind of succession planning announcement? I can't remember that the VP of engineering would in time. I should have looked it up. I didn't. So there's clearly a succession plan here, as one would expect, if you're a competent board and you've got a chief executive over 60. But leaving, I think the only reason, I think leaving this year is a very tight bet. So the only way that would happen if you thought things were failing.

1:16:54So I actually, I know why it's a very modest payout because it's very unlikely, which is different than saying, separate comment, the board is starting to think about what is the transit, what's the skills required for the next leader. I think, again, I could be just imagining this. It's been so crazy this week, but I think it was the SVP engineering. So it's very much. Yeah, that was a leaked rumor that he was a successor. He's 50 and Tim Cook's turning 65. So it's their job. But there's no way it's this year. Unless it's a health issue, there's no way it's going to be this year. You're exactly right, Jason.

1:17:21I think both sides of that are crazy. But it's exactly their job. If you're on the board of the most valuable, second or third most valuable company on the planet, your CEO is hitting 65 and you're not thinking about succession, then just call yourself the Disney board and give up. Roy, you're still a holder. I'm still a holder. I trimmed a little when Warren did. I got in before him, but I'm like, I pay attention. Trimmed a little, 99%. No, no, no, no, no, no, no, no, no. And continue to worry about the growth rate and continue to worry about the air story. But fundamentally, you need instantiated physical products to consume all this stuff.

1:17:55And they're the platform of choice for middle-class consumer on up worldwide. So it's still been going to bounce back nicely from where it was. I mean, there was a little low there and I'm like, ooh, maybe I was wrong. I don't get these VCs invest in the public markets, but it's good content. It's good content. It's not what I do. I feel the need to defend myself. I have almost no individual public stocks other than companies that I get distributed to. But I also wisely bought in 2009. And my basis is so low now that I just can't bring myself to pay the 37 % tax. Yeah, don't sell it. Don't sell it until you move to Puerto Rico or whatever.

1:18:28No, I'm not going to move out of California, but I just can't bear to give it up. But maybe I'm just stupid. Okay, next one. Rapplin and Lovable over under 250 million ARR by end of year. They're both in the 160 range now, 160, 170. Is there a Calci or is this a binary question? This is a binary question. This is a Harry. I'll tell you the only interesting thing. So I would say over, over 250, but barely. There was an interesting report this week. It wasn't Bloomberg. It was someone at Barclays. Barclays tracked what they believe the web traffic was to all the categories. And what was interesting was it looked very accurate in the sense it had base 44 hitting the numbers that tied to what Wix publicly disclosed.

1:19:08so we can assume that's accurate, right? And it had Replit tying to when they launched V3, which was a big boost. And then they had Bolt's numbers, which roughly tied to what I think they are. And so what it said is, look, traffic has flattened, flattened to down, okay? And so initially you might say, oh my God, sell your stock. But I actually think it's a good thing because the looky-loos aren't gonna renew. The problem with these products is you have to segment churn. There's folks like me, I'll never churn off Replit, okay? I'm 200 hours in, I've got eight apps into production. It's impossible to leave.

1:19:39The odds that I'm going to spend somewhere between$300 and$3 ,000 a month for a long, long time. Okay. But Abigail that wanted to build her own CRM and was told you could do it in 60 seconds and it didn't work. She's going to churn, right? Or he's going to churn. So it's good to get rid of the looky-loos because even though they got these guys to a hundred million, they ain't going to get them to a billion. We've all had companies where this is the case, where we had a segment of customers that were very high churn and a segment that's very sticky. So I think it's okay that interest is flat because it'll be higher value, but it is something to reflect on.

1:20:10It looked right to me that we've seen at least a temporary plateau in interest in these platforms. And it makes sense to me because a lot of use cases, they're not viable. I love Replit to death, but all of this is the edge of marketing misrepresentation. So rambly answer, I think they'll hit it, but I do think there's deceleration. It's not like ChatGPT. There's going to be deceleration in lay users wanting to use these platforms. For the record, there's deceleration in chat GPT too. It goes back to what I said earlier. What rate of deceleration gets you from 10? How much deceleration can you do at 12 billion to make sure you still take 100 billion is my question.

1:20:45But we don't have time for that today, but I'm thinking about it. I don't have anything to add in lovable and replant. I defer to Jason entirely. But I will tell you just one thing. I don't want to spend all the time. They're getting better. I'm almost 100 days into VibeCoding. The platforms are so much better than 100 days ago. So it's like a lot of things in venture or startups. You got to be careful how you predict. This is not SaaS of 2016, okay? The rate of improvement is so high that that's why I feel pretty good about the error numbers, even if I think the prosumers may fade. Let's wrap it.

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