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22:47As being open to anyone with 50k, you know, Philip Lefort went on all in and really showed this kind of democratization in access to Venture and a new model where you could redeem those kind of liquidity built in. How do we think about this? Well, you know, I want to hear it Roy things, but I watched a lot of YouTube and they have movies and boy, the room came up, it was the story. Vin Diesel, it's just a story. Let's just rip off the retail investor. You really are the scenic here. I'm not a cynic. I just think people are our cynical. I'm not a cynic. I think this is cynical ripping people off for 50 grand that don't know what they're giving themselves into.

23:26And bringing a couple of things together. One in the fence of the thing, a lot of the big private equity firms are making the same move. They're trying to tap additional sources of wealth. I mean, we've just discussed it. a lot of the endowments are on the pressure for capital. You just got to get money where you can. And it's one more vehicle. I think if you look at people like Blackstone and people like that, it's significant and expanding portion of their capital is coming from, you know, high net worth individuals. I don't know if the bars as low as 50K, but there's no doubt that all the wealth managers have these PE type products where they've constructed some element of liquidity similar to what CO2 is doing.

24:05So it's not like it's out there, way out there in the blue. The other comment I'd make is going back to, I think, here we are. I mean, we just, this is the complete round trip. We, everything used to go public early, and then they stopped going public early, and they stayed private for longer, and all the institutions could do it. And now we've had to, now we've recreated this vehicle to allow public investors to invest in these companies. And it's very nice to quote to as well, I want to say, at better economic terms than the traditional two and 20. But when you zoom out a million miles here, this is all madness.

24:38We, these companies should be public and then fidelity growth fund could do them at 70, 50 bips instead of, you know, co -todoring them. So the core problem here is that all these companies want to remain private for longer. And you had to ask yourselves, why is it such a shitty experience being in the public markets because it clearly is? This is a workaround for a problem that would be better solved some other way. Is it a workaround that others adorbs? Is it a worker ad that lights BGC? Are those go hey, this is something that we should be doing as well? Or is it unique to go to you do you think?

25:12I think anything that works and finance gets copied immediately. It's just one of those life rules. Do you think it will work? I've respect for he's on all in because he wants people to invest and he's marketing a product time. I think that they're very smart people. I don't, one thing I didn't understand by the way is the concept of was a Dell and Bezos as anchor tenants. I don't know if you saw that part of the announcement where they said, I think it was Michael Dell. I didn't understand that because I would have assumed that they can get all the liquid or a liquidate, they can get whatever asset they want.

25:40They don't, they pass to 50k threshold. Let's put it out. Jeff Bezos and Michael Dell make the 50k sophisticated investor threshold. So I didn't understand that, but do I think it'll work in ways capital property? Well, because the facts are there. The other PE vehicles have worked. And then let's get real. You know, at the end, it'll be packages, some version of this is the only way you can get access to open AI and traffic and all the hot new startups that are changing AI, sign here and people will sign because it's true. It is the only way to get access to those assets. So yeah, I think it'll sell.

26:12Listen, I'm not a real retail guy, but based on my limit experience, I always write. If you tell folks they get access to these hot names, they won't even understand what the carrier economics are. They won't even process what it is, right? In fact, I think the way they're doing the whatever the carry is 12 .5 % and 1 .6842 % fees. It's almost two insider baseball, right? I don't think the average retail, investor even knows what that means. It's actually arguably very high, although it's low compared to traditional venture, right? Depends on what it looked like at a crossover. You know, is this fidelity or is this VC?

26:43But I think it's a new right. I didn't take into account 50 % of the assets of public. You exactly right. That's probably how they got it. Half of my assets are public stocks, which should be 50 bips. And half of my assets of venture, which should be two and twenty so you blend. You exactly right. The point does not cheap. It's market. You know, there just is a line where this could rip retail investors off and I just hope it doesn't cross it. There's really only two things to go wrong. Either you have the wrong manager or it's just the wrong asset class or maybe the third is the wrong structure.

27:11So let's take it apart. You're getting an excellent manager. Co -2 is a top tier public private manager. So if you look at the three things that go wrong, when a retail investor puts his money in, you know, dumb stuff. Mistake one's not going to happen. You've got a top tier manager. Are they top tier private manager? Like, oh, I'll do it. At least put it this way. I would say for the kind of later stage things, they are. They're clearly very sophisticated. They're in some good deals. Are they as good as a as pick a name benchmark? Are trying to know, but they've established a meaningful scale franchise and thoughtful.

27:44And you know, compared to a lot of ill thinking people, they're thoughtful investors, They're in the flow. They have access. It's not like a million billion coming in with if no access because one of the things that goes wrong is when these weird outside vehicles come in and they have an pre -existing business, you know, you just don't get the good deals. They're already in the flow. They'll be able to get the good deals. I think the real question out to the other two issues, one is just a timing adventure. Is that if the next five years are tough, no one can save you. And then obviously a lot of retail investors will think, oh my God, that was dreadful.

28:14So I mean, to me, that's the bigger question. And then lastly, the structure thing is interesting. The whole, will people internalize that there are limits to liquidity? And this is not SPY, your friendly local ETF that's fully liquid at one minute's notice, there are redemption gaps, redemption blocks, what are gates, that's what they call redemption gates. And if you remember back a couple of years back, it's either one of the blacks, don't have black rocks, I get those two mixed up, but they had a real estate fund where they had to put up the gates of liquidity because they just couldn't meet demand.

28:43So those to me are the questions much more than, well, they, I don't think they'll do bad investments. They're shrewd guys. The question is, does the retail investor who thinks they want it today really want it when it's cyclical and illiquid? And then they discover that? If I step back, I do worry it's being oversold, but any single individual I know that wants to LP into venture funds, right? Anybody's including mine. I tell them, don't do it because no one understands the illiquidity. It's not worth it. It's not worth it. It's not worth it for a large amount of your income because the liquidity will stretch it out.

29:14It's not even worth it put a little bit of money. I'm gonna put 50k into 20 VC and then it does 8x but it's 17 years later until I it's just not worth it for the stress and I don't know how all the gates will play out but a lot of folks maybe get stressed that this investment is and I think 99 % of folks should only be in liquid investments including people in tech you should be as liquid as it's just too stressful for the like VTI is the perfect product for 99 % of people it's the perfect product you cannot beat it one of the things that I I just hate about venture as a founder is when I smell too much greed.

29:47Now a little bit of greed is okay. Okay. We're aligned. We're on the cap table together. There's a good greed, but there's a lot of VC today and in 2021, that's like super greedy. Like, you know, there is a super greedy element to SPACs. That's why I hate them. You can tell me there's some good ones, but it's super greedy. Okay. There's types of SPVs that an opportunity funds that are super greedy. And it's just I just don't like the smell of it. I just don't like the smell of it. And then what when times are good, this super greedy, maybe it's the right playbook, adventure, like grab the billions, grab the billions, but there's, there's, I don't know, some of it smells too greedy.

30:21There's always that feeling when you go to the retail investor that you've exhausted anywhere else. I get the cynicism. The weird thing that's happening is as private's become more and more of the economy, it just makes sense that the big private houses find more and more, have to access more and more of the public capital to kind of feed the beast. I get you but at a 1 .2 billion fund, Dothbutton O 'Parsenips on that extension of private markets. You need $10 billion to be playing it now. Where you get 10 billion to start with 1 billion. So yeah, look, I hear you. Again, I would say again, just look at what the PE firms are doing where private is a significant portion of their total raise.

30:59My guess is if you're running one of these big firms and I'm sure there's a PowerPoint on the desk going to recent that general catalyst and on light speed on this. If you're running and you want to make sure that you're matching whatever it is that those guys are the other people are doing that you perceive with your scale peers Then you're gonna do what they're gonna do and they're all copying the PE guys So the movie's inevitable. There's no point getting all More realistic about it. They just you know, it's it's the game they're playing also credit Jason to you for potentially the fastest bet to go south in a long time I mean you very confidently last week were like you know what I bet you are 100K that AI is going to replace jobs very quickly.

31:42And then this week, Seb from Cloner, the biggest proponent of replacing people in Cloner with AI, goes, yeah, seems I won a bit far. And we're going to be hiring back a load of people to walk back a lot of that AI transition process that we made. How did we think about that? A few things actually I enjoy more than being wrong. I enjoy it, right? I'm happy to admit it. I have no ego in it. I genuinely enjoy being wrong. Believe it or not, I'm thoughtful when I speak up because I'm gonna win this bet. Because, for a bunch of reasons, one thing this clarinet thing was misunderstood in the beginning and it was misunderstood today.

32:19It's misunderstood. Look, first of all, there's some drama in what the CEO's trying to do to get attention for whatever reason, drama with the sale. But here's the point, this is what's happening. There's, in everyone that's in AI and B2B, there's a slider, okay? There's either literally or figuratively slider. If you go into an app like GorgeousRum on the board where there's 20 ,000 customers using AI for SMB support. There's literally a slider and you can dial how much support AI you want from zero to 100. No matter what anybody says on X and LinkedIn, the average across their SMBs is 20%. Okay?

32:49Folks that put the energy in get to that 40 number that everyone talks about, that's for it, but you have to invest time. And out of 20 ,000, they have a handful of folks that are at 100, like Clarnage. You know how many it is out of 20 ,000 or at 100? What's your guess out of 20 ,000? How many went to 100? Probably us 100 people, maybe even five or 10. Two. Two one, 200. And these were folks who absolutely knew the trade -offs and knew what the issues were. And this is what Carned did. They moved the slider to 100. And they did not move it back to 100 % humans. He did not say that. What he said is I'm bringing back some humans.

33:21He did what two out of 20 ,000 customers in a gorgeous is he moved the whole thing all over to 100 to learn to be dramatic. And it went too far and he moved the slider back. But you know what's going to happen every three months? That slider is going to move closer to 100. It's going to move closer. And I believe in most cases it will never get to 100, but what will happen as we go into next year is folks will be like I'll deal with the downside of a hundred. It's only two today, but more and more folks will say listen Like some orders are gonna be wrong some answers are gonna be wrong But I'd rather have no humans in my new cool five -person billion dollar startup and these five -person billion dollar Starts are still gonna move the slider to a hundred so I just think it's misunderstood the fact that he bounced back So far a bit he did not say I'm rehiring everybody He did not say I'm rehiring the thousand people that I laid off in support.

34:03He's probably going to rehire 200 right and 800 will still be AI So I think I'm going to win the bet, but if I'm wrong, I like it's cool like it's possible But I literally I see all the data across 20 ,000 AIs and this slider and the two once I realized it was only two that did 100 Then I had my aha moment right that's too far But they talked them through it and they told them what the downsides was they walked through it and they did extra training And they're like we're still going for it and those were products that were simpler etc etc First of all, Jason, you're not going to win the bet because we're calling it now.

34:32You've been margin -cold, we're closing the book, we're paying you out of now, I send the money. But actually, having disagreed with you last week, I 100 % agree with the way you outlined the diss week because frankly, it was more rational. Because you're right. Stylistically, you're an entrepreneur, a sebs an entrepreneur. You've got to move big organizations and one of the way you move a big organization is you create these big -ass goals. You violently shift the thing one way and if you have to correct back a little, you know you do it, right? And it's very e -lonny and we can talk about his automation in the Tesla plant as an example of that.

35:02I think you're exactly right. I think I don't know if the CEO of Clarenne believed it and thought maybe we can do it. If he didn't believe a buddy thought we'll get to eight, the only way to get to 80 is to try for 100. But it's unfolding exactly the way I would have said last week and I agree what you're saying this now. It is pre LLM, your customer support, B2B, our B2C, you can chip away 20, 25 % of the number of tickets and unfortunately they were the easy tickets because it was you know how to fix my password so you actually didn't save all that much of headcut. Depending on where you are on LLM's you can get to 50 60 70 percent without any deterioration in service and in fact based on some references we did an improvement in NPS.

35:42That's what's going to happen is the base case. Some people are trying to try and do 100 and then probably back off a little. My guess is in a year or two you're right. Maybe won't be clarnic as they're big and they're doing money but if If you were running a small DTC company with a fairly simple product and you would just really focus on, I can see in a year or two saying, we just don't do support. We answer all the questions. So the direction of travel is clear. It's going to take longer than people told a year ago, but it's not gone backwards. So I'm violent agreement today. This is just a five year trend, not a one year moment.

36:13So I love Sab at the East. Fantastic. I've had him on the show, Friend Investoring Project Europe. So this is all Sab with love. I'm surprised by the lack of strategic analysis around the timing of how he bluntly presented this. Public markets, I had the founder of Juleen Gorneshow recently, very clearly said, hey, public markets take a very binary approach to AI. You're either an AI winner or you're an AI loser. Very simple. When we started, we were an AI loser. You saw that in the stock price, chat GPT is coming for language. We changed our positioning around how we use AI. Content creation is powered by AI.

36:47Now we're an AI winner. reflected in pricing. Okay, I'm summarizing but really I can very well articulated there. When he was going public, he was singing the song of we're AI first, AI AI AI. Now he's no longer going public. He is able to say, actually, when a bit far, I don't need to project that AI progressiveness right now. And I can save that for the next day when I do want to go public. I think it's a very clear strategic message from a CEO who was about to go public meeting an AI story, very wise and quite right of him, and it's just the walk back of that. You're probably right, you would know best.

37:25I think in general, though, when I see a lot of these statements from public companies CEOs, they're really also telling their team, it's time to change now. Enough. And honestly, a lot of big companies, CEOs I talked to, they're honestly like, I'm not sure I need 80 % of my team today. They're just the wrong people. It's not 3%. Microsoft laid off three three three percent of their company today. It's not enough. It's not enough the people running the 2018 playbooks are gonna become almost useless going forward. So you always see these comments about CEOs like public I'm saying we got to go harder guys.

37:55I'm not sure who listens to those statements pushing the dial to a hundred people gonna Listen right they're going to always but I think that's what it is because you know the fiber guys like my job is at risk and it looked dramatic, but I think he's right. So, CEOs are trying to give folks shock therapy. And I don't know that there are anyone's listening, but hey, at least he said it ahead of time. Your job is at risk. The five of us said everyone's job at the companies at risk, including mine, with AI. Toby, it's Shopify kind of implied that too, that everyone's job is at risk. And I believe it with my bet.

38:22I don't think it's five years, the Rory said. I think it's, I think by the middle of next year, in tech almost every single person's job will have changed by the middle of next year. It doesn't mean they'll be mass on employment, but their job will have, it's not going to change in five years, it's going to chain by next year. See, I was at least trying to tell people before you get fired. And lately, you got to step it up. And maybe an interesting distinction here that I'm just internalizing Jason is this is if you're in charge of driving change, in order to view the seat you have a large organization, you have to take these hyperbolic statements.

38:53Because otherwise, it's just so hard to move 10 ,000 people. So, right? You have to put stakes in the ground. It's a management technique. Look, I'm setting back, frankly, as you know, was small VC, an analyst type person. I'm saying, what I'm trying to be very precise. What percentage will be automated in the next 12 months so I can build my five year kind of expectations on revenue growth? It's a very different thing. I'm trying to find the right answer. The CEO is trying to find the right answer for his organization to make progress. And by definition, that's a much more umphi -lifty kind of statement.

39:25And I'm looking at my best CEOs as they're driving change here. And they're doing stuff like this. I mean, I'm thinking of one in particular. I got the mess of it the start of the year by God we're going to drive this and I was like wow That's what it takes to get true to people and I think that's what's going on here So I don't think it's some mysterious I may know them and maybe there's some public market messaging in the cloud I think I don't know but I think it's just a CEO of a big organization trying to drive change and the only way you can Drive change is just push push until something breaks and then throw it back a little literally a CEO of a company and he just crossed a hundred million, asked me, not that I'm any smart, how do I create more urgency in the say age?

40:01I don't even think it's about, I think it's about, as you see how the hell, we've had this level of urgency for years. I need to double our level of urgency because everything else is urgent today. How the hell do I do that with 10 ,000 people? How the hell do I create even 5 % more urgency? What did you say? The only advice I gave to this particular CEO is immediate, like he was hybrid. So I said to force 100 % of people returned to office in 30 days and let everyone go, except your S tier engineers, let them all go. Because you don't need them. If you're there from six in the morning, like 20 VC till midnight, like Harry is, Harry posted on Twitter last night, my whole team's here.

40:35I get the BST and the PST confused, but there's a multiple messages in that tweet that Harry sent out. He's like, don't work for me if you don't wanna be here at night, right? Or whatever the hell was it. Yeah, it's a message. And we were late and we believed that the hot E, the lucky E got 100%. This is my only half decent idea to create urgency for everyone to come into the office. And to be honest, we have a beautiful office in Palo Alto. I only go two days a week. So I represent a acknowledge its hypocritical. I'm not willing to go back, but it's the only idea. I was speaking of driving change.

41:07I mean, the single biggest change in 20 VC and how we do what we do is is simply chat GPT. Of course, everything. This week, a couple of big bits of news. New CEO of apps. Fiji Sumo, I love Fiji. I had her on the show when she was at Instacart, fantastic operator. How did we evaluate this kind of layered CEO beneath Sam now CEO of apps for OpenAI? What did we think? They weren't going to start being normal now, dude. We are 10 years into the least normal startup in the planet. Why stop now? I think the weirdest thing in this is that for OpenAI, you have a CEO and now another CEO that are both not technical.

41:44I just think it's really weird. I think it's really weird. And listen, Sam is obviously off the charts genius level. Even though he's lost a lot of people, he can recruit like no one on planet earth. And maybe that's all that matters is CEO. My life experiences, non -technical CEOs, now we have two of them. They can't win at companies like OpenA. And yet they are winning. But my experiences, they almost all fail. That's almost... Fiji built on that psychosystem at Facebook, unlike any other, what does it need to be technical? I'm naive, help me understand. because the rate of change is so fast that I find non -technical CEOs just can't understand it.

42:17Now they're really great at sales and marketing and they're really great at knobs and dials and spreadsheets and price increases. Honestly, Harry, no matter how many times you talk to me about rag and vectorizing my content, I'm never going to understand how it works. I could spend a hundred hours with the smartest people in the world. I will never understand how open AI works. never. Now she's smarter than me, but my point is all the non -technical CEOs that I've seen, especially takeover my investments as outside CEOs, they never understand the product. They never, and Sam is S tier, like I mean S S tier, right?

42:50And she's S tier. But it's still weird to me that one of the greatest technological innovations of our lifetimes is now run by two non -technical people. I just still think it's weird, right? Roy, does it impact how you think about their expansion into the app ecosystem? You mentioned before very wisely, I think, chat, coding and customer support. Does it impact how you think about that? A little, not a ton. Going back to that common event. Actually, one of the things you told me how it is is that doing this would make me up my own game on thinking. And you've been very right, by the way. I decided after that, that comment was wrong.

43:23I think they will do, obviously, they've done coding, they've done the, I don't know if they'll do customer success because it's so idiosyncratic. So I think the apps that they'll do will be very broadly horizontal in a way that coding is and the way obviously the chat is and you can envision a huge amount more on the consumer side as they shopping in particular. Absolutely. Probably. Yeah, it's a thing. I mean, yeah, so I do agree it is astonishing that the most compelling technical product in the last 10 or 15 years has been created with the city or the head was not technical. And it just speaks to some fruitiness by him and empowering that technical team and feeding the money and providing them leadership.

44:02It's a stunning achievement. We'll look back and go, wow. But I think it is going to work. I mean, at the margin, it doesn't matter. I suppose it's what I'm saying. They have one. They have just huge. And there's just so much more to do on the coding and on the consumer side. And you're like, Jackie P's going to suck in all your brain. It's going to suck in all your phone call. It's going to know everything about you. And you know, it's going to be like, remember what once a way back when you thought ever note would know everything about you, you ain't seen nothing yet. It's just going to take it all in and you're just going to be able to defer to it.

44:34Web traffic and shopping is just going to be a huge thing. So yeah, I think there's a time to be done there. It takes someone who's not focused on the pure technical stuff and not focus on raising, you know, $500 billion. And it looks like this is that person. Should we just all chuck in our funds into open AI at this point? It seems like the easiest way to get a 3x. You know, the short and window to liquidity. I am so sure the open AI is going to be a one and a half to two trillion dollar company right now. I think you should put, listen, I don't, I remember, I might have this a little bit wrong, but I remember I was around when David raised Kraft ventures one, right?

45:08And I think the next week he put a third of the fund into SpaceX. And I had just a little bit of overlap with LP and they're like, they're like, David's crazy. I'm like, listen, I only know David is a founder. We were founders together. I don't know him as a vester. This is one of the smartest guys I know if he wants to put a third of his fund into SpaceX I think it's gonna work right? I think he did it like the first I think he is called up you on any extra share I don't know what the story was but and I might have this a little wrong But I think it's mostly correct in it and obviously worked a third of the fund fund one and it seemed like a You know a nutty move, but it was highly concentrated can't lose Agreed and we just discussed tiger half an hour ago where it may well be that the saving move was doing exactly that It's not a crazy comment.

45:47It's not what my LPs are paying me to do, but in an open canvas, you say to yourself, that's a compelling company of one that does have just a huge, enormous market opportunity ahead of it. Obviously, it's got to sort out its entire messy legal structure. The question for you, Rory, you mentioned that it's not where your LPs pay you to do. What would you do if you didn't have LPs in that respect? If they just gave you blank canvas completely? I mean, look, we've discussed as a number of times the kind of single bet variance the end making one exception without making an exception across the team on everything.

46:22I don't know. But like you could put the fund and put 25 % in Surangil, 25 % into root, putting 25 into open AI and 25 into you name your other breakout. It's not what your LPs pay you to do, but you're like strategically, that is how I think we will have the most value created in a good time window. I do believe we are in a world of fewer, bigger winners. And that loaths up and down the entire venture ecosystem. If you thought your portfolio count had to be 30, a seed from the head to 30 deals, you need 45. You know, we typically are target portfolio as 20 deals in our fund. I believe at this stage, we need 25 to 27, 28.

47:01Why? Because instead of xx150, we're gonna exit best case at 300, which is two or three more years when one or three of these companies will fuck up. So by definition, if you wanna end with three or four winners, You just have to have more at bats. The moving out of the bar has had consequences in term that I think ripple up and down the ecosystem. And it will be instead of us having 20 deals and having four great outcomes, we might need 20, 70s, but only have three great outcomes, but they will be bigger because they will have compound, the good ones will have compounded on from 150 to 300, and the bad ones will have failed.

47:34So if you take that to extreme, you're at your point, Harry. Fewer bigger winners all the way up the stack to one huge winner. by open AI staying caught private for longer, it might get to Facebook type valuation before ever goes public. Facebook today, not Facebook, but one public. So yes, what you're saying makes sense at some directional level. I mean, the hard thing then to assess is at the same time, you can still overpay for growth assets and be wrong by five or six years. And the history's complete with examples of that. I mean, you know, you look at the nifty 50 in 68, they didn't come back for 10 or 15 years.

48:09You look at 2000, the NASDAQ didn't come back for 14. It is possible to take a good idea and push it to such extremes that you end up wrong. And I just don't know, I haven't seen those numbers to say, like, is 27 times forward revenues for something I got with the right number is what's it? They're doing four, let's take open AI, doing four last year, 12ish this year, 360 million. And what's that? Is that what kind of revenue multiple? Are you looking at what kind of compound are you embedding there? I don't know. I looked at it side by side with Google and it had tracked virtually the same to now.

48:43But if you look at their forecast for the next three or four years, it in fact, their leaked forecasts are showing higher growth than Google. So at some point you're over extrapolating into the future. And when is that point? It's not a stupid idea, but obviously you haven't done it. If you were just about making as much money in the most efficient way possible, would you do it the way you're doing it? I think the question is, can you, I think the problem with in private markets, you put all your effort into being able to do one thing well, and the cost of that is you don't focus, you're not equipped to do something else.

49:16So it's not been something I focused on, so I don't think starting from here, I don't know if it's easy to be successful at it, but starters, let's start with the basic comment. Because that's the question this, very basic comment is that, Open AI set in the last round. You either show up with 250 million, or don't show up at all. Right, remember that? That's an example of to play in that space, you have to be equipped to play in how you have to set out and to make that be objective. And you have to equip yourself as a fund with the ability to write for $250 million checks. Otherwise, you're going to get to see the deals.

49:47So I just think sitting here with my $30 million check size, I mean, I can make a phone call, but I don't think they'll get back to me. You know, leave a voicemail. Jason's AI will like 100 % will just look at my customer support ticket and say not what we're applying to. It always replies, but you're right. Dear Mr. Adreskel, you do not meet the accredited investor at $250 million. Moving this on because I could pass here for a while. You know how dare Kavi. No, I'm not a dare. The question that we brought up there was the non -profit versus the full profit. And this was a big point. Now, that's gone back.

50:24That's still a not for profit. As a whole point, was they were moving for a full profit? Jason. It is interesting. The most interesting thing of all of it for me is that when Microsoft did this deal, it seemed like a crazy, weird, get around M &A, any trust game. And Microsoft was just going to lose billion, subsidizing a backup bet. Now it looks like Microsoft got a great deal. I mean, that's the way Venture works. But getting everything they get plus 10 % of all revenue until there's AGI plus the returns, I see why Sasha was sitting pretty and wasn't really concerned about all this, he got not only could he afford to lose it, but in the end, but looked like a weird, backdoor license in M &A is like an epic investment, right?

51:05Not that I think Microsoft cares about it as a financial investment, it can't care. That's the irony, but I guess they have to work it out, is the answer. It's like US and China, like at some point, like it's gonna be messy, but they just gotta work it out. Sometimes things don't work out. But kind of staying with this one and leaving the US. That was a murky intrusion. Yes, sometimes. Stay with this. I think Jason, you are. I think it's funny. It's, there's a bunch of great reasons for doing it at the time, both the original for profit, not for profit, and then the Microsoft structure around that.

51:38But now you're left with this interesting conundrum. It's clear that, I mean, to prepare the not going back, I think you said Harry to a not for profit. They're not doing that. That's not what's happening. What's happening is they're not going to just convert the underlying company to a for -pro, or classic for profit, they're going to convert it. Oh, it's a public benefit corporation, people like Patagonia, where basically, it's just like every other company, but you have in your articles of incorporation a specific obligation to look out for interest other than the shareholders. So the good thing about that, that actually strikes me as a decent solution at that level, because what it says is, we're going to be trying to make money, but at the same time, we don't have this binding obligation, just a maximized shareholder value.

52:19So when you're public, you won't get pounded by the Delaware lawyers and told you can't do this. You can't do that because it's not in the shareholder's interest. It's a useful legal structure. As I say, Patagonia use it. It's not something they pull out of thin air. So the idea is you drop the assets into that thing and then at the holy company level, you have the not -for -profit, which has a significant... The foundation, I think it's a foundation not -for -profit. You have a significant board control and you have a significant economic stake. that structure makes sense and maybe it will be a little less contentious in one sense than the pure the subsidiary being a for -profit.

52:58But to your point the hard part is everyone has a veto. To Jason's point, the Microsoft it's so weird and so -called clever that onwinding it, I mean you basically told how do you value what percentage of a company? Imagine if Jason did a deal in one of these companies and said you've got to give me all your profits until I get my 20 million investment back, then I got to get away with share, then I got to get something else with a cap. And now you got to convert that to a percentage ownership in a simple deal. I don't know. That's an interesting one because you do get into this. Two people have to agree.

53:32I'm not sure where the leverage is. And I think Microsoft's ledges might be pretty strong because the current deal is pretty interesting and attractive for them. So I think you're unwinding something that was a little maybe made sense at the time it feels a little clever now and they have a block and then separately you have the whole risk of litigation for me on even on the this structure is it's still not not for profit enough to do it. So there's a lot of wood to chop yet and a lot of Delaware lawyers and California lawyers and New York lawyers who are going to put their kids to college on the litigation.

54:08A lot of kids going to get put through college on this. Absolutely. A lot of kids. It's going to be new children. We're The legal bills are probably 20 million a month, they could be 20 million a month, 20 million a month, so I could be 10 million a month, the legal bills, right? In the end, that kind of, the public BBC structure is actually what a traffic did from day one. They got it right. It's interesting, but OpenAI is basically saying we're going to go for something like what the structure on traffic already has. It's obvious that that's the end point that just about works. You know, somehow they get there, but God knows how.

54:37We're going to speed through a couple of companies where there were notable announcements and then Jason's got Saster, big wheat rory for Jason. Go Saster. On a decent day. That's, I mean, on a, honestly, what a frickin' hero. Ppleasty, $500 million rumoured round, at a $14 billion price rumoured to be led by Excel. Any thoughts? I just think it's interesting. I do like Ppleasty. Ppleasty of the, of the leaders is the closest to like Google on steroids, right? I mean, they announced they were at 100 millionaire are recently, right? So let's say they're at 200 today, which is still generous growth, right?

55:13Does it justify this or is this a distant number three getting a massive premium? I don't even know if the ontropic valuation is they may be getting too much of a valuation premium compared to open -A. And I just don't know if it deserves it. In a world where we have a rational M &A strategy, and it's TBD if we will on the disadministration, the big picture here is this is an at bat, a one in three at bat, and a trillion dollar company. because Google's a trillion dollar company and this is the one is where you're there's only three people that are going to be relevant here. It's OpenAI, Antwerpic, Pupplexalite, right?

55:45The mere fact that you're in the arena to use the phrase and you know you've got users, you've got revenue growth, you were first with the idea of web search plus LLM combined, you got that done, you got that out the door, that gives you the right to play the game and maybe you can build a standalone thing and get public in a world where in a world where IPOs happen like they happened in 96, for search engines when public in 96. You don't remember any of them except yeah, I was like us excite. I can't even remember the fourth proof because it was a big obvious market. It was happening fast. All of them had a chance to be big.

56:20So going back to an upside junkie comment I made last week, what perplexity is selling from an investor perspective is an at -bat, a credible one in three not equally weighted to be clear. Opening eyes clearly going win, but maybe you can be third and that's worth a damn sight if the prize is a trillion bucks. That's what the salon. I imagine an investor in the plastic. I think I have to announce that otherwise my CFO will fucking kill me, but like that was exactly my thinking, which is that how many companies have a credible chance of being a trillion dollar company where it is still very small, very, very, very small, very small, but still a credible chance.

56:55In a world where you can do M &A, which may not be today, there's also a whole bunch to become this who need to be credible in this space too. So plan B shouldn't be awful. Now, as I said, the weirdness of M &A in tech for the last five years is head bankingly depressing, but there's no doubt in my mind. You know, there's a couple of trillion dollar companies who like, maybe I'd like to mess with Google's head. I need to have this. 100 % agree, incredible team around them to be fair. And then also one thing that no one also sees is that distribution strategy has been very, very smart in terms of large partnerships.

57:26They've done quite a few in Europe with big telecoms providers, which enables them kind of default access to consumers phones. That is very smart. If you look at Google in the same way in the early days, they did exactly the same. It was distribution through partnerships. Very smart. I realized that investment centered investment was should be updated. The first paragraph should be odds of trillion dollar outcome. You think I'm being positioned, but I'm using an old template. What I remember the first DLA ever did was pipe drive. We talked about it years ago worried. I remember when I wrote up the investment member was the odds were getting to a hundred million dollar exit.

57:56That was the old structure. And I was forced by the traditional VC from to fill out the numbers and I said 5 % chance of 100 million dollar exit Right it did sell for 1 .25 billion But I'm just using my 2013 first investment ever lens and I did 5 % now instead of 100 million I mean then it should have been a billion and then 10 billion But maybe there needs to be another row which is one trillion What are the odds in the I am of one trillion and if it's north of 2 % answer to we do the deal I think some version of that is truth the way I said the opposite is if you're looking at a deal that has all the worst of a classic private company, but doesn't have embedded upside beyond the base case you probably shouldn't do the deal.

58:33As I say, well, all upside junk, it's the pixie fairy dust that lands on our portfolio every five or six years that makes the math worthwhile. So if it doesn't have that, you know, you got to ask yourself why it should you do it? And this one hasn't spades because it's the biggest pixie dust. It's a trillion dollar pixie dust, not the hundred billion dollar pixie dust. Totally agreeing, get both of you that in a similar ish elk. So you're going to do your super pro rata is the answer in this alleged I know this is just what I'm doing super pro rata pro rata or none What are you going to do with your check my business is not to do 14 billion dollar price You know so after giving me crap half an hour ago Consisting and just doing what the right thing to do is you're saying it's not your business I just want to note that moment.

59:12I accept it But Roy before the visuals have been made. Do you want to pick this fight my friend? No, I, uh, it was very fat point, very fat point, but no, uh, I, $14 billion is not my game, but I'm thrilled that it sell a room at the, uh, the cost average. That's the thing. You don't, that's as it existed. No, that's the, you don't have to take the nominal price too seriously. Your dollar cost averaging is the interesting thing is the other one and then we'll let Jason Rones actually clay. You know, clay obviously did this kind of billion half dollar priced transaction. I think it was employees, secondaries with Sequoia.

59:45My thinking there was people are now believing that Clay is the next credible threat to Salesforce. And that is why people are getting so excited by it. That actually it's much more than, no, we're like shaking heads. How do we think about this? Maybe the VCs are. I don't know what, maybe that's what Sequoia says. I'll tell you just two things I see in the field. This is pretty close to our core audience, right? Is Clay? First of all, Clay is a great success story. Let's simplify it that, right? There's a couple things that are driving Clay. Certainly there's super sophisticated, cutting -edge teams, right?

1:00:14But there's also every struggling marketer today that doesn't understand AI wants to deploy clay. Massive pull. Every 2021 CMO that is scared they're going to lose their job. They nothing's working. Search SEO isn't working. Content isn't working. Everything's down. They're hiring clay consultants, clay engineers to point writing checks like Hoppin in 2020. Okay. It's literally like Hoppin in 2020, but for marketers. And I think they earned it, right? So I don't know about the sales horse. Maybe that's the vision. I tell you what's happening on the ground is just like people needed a digital event solution during the pandemic, marketers need an AI solution now.

1:00:50They are their jobs and lives are at risk because they're playing. This is what I'm seeing. Literally, we were at a saster pre -event last night and I'll tell you everything I heard about Clay. That's what everyone's saying, every same. We're gonna have a CMO summit on Thursday and I'll ask and Clay is the winner. There's not many things unsustainable. I'll tell you my second question. So every CMO, we're gonna have 400 CMOs on Thursday If you come, you can sneak into the CMO summit and ask them. You can ask the question for me. How many of you are using Clay Raise your hand? How many of you are scared of AI?

1:01:16I bet if it's a closed door, they'll say, because I'm scared. The only question I have for Clay is, boy, I've never seen more great founders than I met last night that have the Clay target. They're going for it. Everyone. Everyone want, I want an easier to use Clay. I want Clay with better data sources. I want Clay that can be self -serve. I want Clay for this. I want Clay. And I'm not saying Clay won't win, but literally this is a category that the knives are out and it doesn't mean they don't already have scale and won't win. I literally met the CO last night. He's like, hey, are you Annelimkens' father?

1:01:47I'm like, yeah, well, I just dropped out of Stanford with your daughter. I have a new competitor at Clay already at two million. Wow. All right. He just dropped out in his 19 or 20 with my daughter. Like, what do you mean? You're at two? He's like, well, we're just, honestly, we're just much easier to use and we have better data. So it's the story I've already told you like the third time. So that's two million, in like in a couple months, right? So Clay has won this like Q1 2025 vision of the marketers platform. And I'm not betting against them. It took like four years for folks to figure out why Gong was successful.

1:02:15Like anyone in sales adopted Gong and they're like, I can actually listen to my reps calls. The dumb things they say to prospects, but it took everyone else about four years to figure out why machine learning on voice calls was disruptive. Now it's happening in like days with AI, right? Or weeks they're figured it out. So just competition's gonna be insane in the space is my summary of my Ramley point insane So I would raise even more forget the secondary I would keep it as primary because I'd build up my war chest So you raise it as primary. I mean, I'm just saying the competition is so high We know we started this conversation on owner and why did owner raise 120 million right?

1:02:49You know part of it is because it's even though it pulled away from some of its venture back competitors It's such a competitive space I'd love it if you could win into competitive space and be cash low positive with 50 employees but we have a lot of history of that playbook not working. So I would armor up a fire clay. I would hire everybody. I would raise another 100 million and I would just scorch her with everyone in the space. A lot of the great, I mean, it's worth pointing out that the original clay product is a pre -GENI product all around combining multiple data sources, manipulating those sources.

1:03:22It was a horizontal spreadsheet -type functionality initially that's focused on marketing. And the problem it solves is, Hey, you need to build a 10 ,000 -name list of B2B, CFOs, between 50 and 500. Do you use Zoom? Do you use people data? Do you use one of the others? No, you use clay. You import from all of them, and they brilliantly consolidate the four or five different entities and give you a clean combined list. It's a rev -up function that was pre -AI that they solved brilliantly. Right, let's start with that. That's what the product actually does. Now, what they've added is these clay agents in the last year or two that take that list and start, you know, they're going to start doing EMA, start doing enrichment, start doing all the agentech work after that.

1:04:06So they're moving down funnel from list management to enable AI SDR. So it's a totally excellent product. It hit the sweet spot of the day. It's so initially was not a, oh my god, AI GPT story. It's something totally different. I mean, so far from Salesforce, CRM that I can't even think about it right now in any useful fashion. So that's what the product actually does, which should never get in the way of a good story from a VC obviously. And it doesn't really well, and it fills the need, and you write it. They have the chance to run fast on top of that and do a bunch more on top. And it's the roadmap is pretty clear because you've got this AI left.

1:04:43And now you've got clarity on what the next five set of automations could be. But there's lots of people doing that. You know, we have investments in that space. I'm sure you do too. There's a whole ton of AI automation coming to top of funnel, sales and marketing. That's what's going on though. I do think being the vendor to take advantage of AI fear is a great strategy the next 18 months. And that's sustainable. I don't care if it gets me to 300 million a revenue, like the world changes. Like I basically, I hope him was at 200 million in revenue. Yeah, but we did come out of the pandemic, Harry.

1:05:13No, I'm with Jason Howe because I think that you can use that fear. No, no, no, no, I'm thinking of some companies where genuinely, I think when you did references on them two years ago, you talked to the very few customers and they'd be like, I'm buying this thing because I need to do something in AI. And you fast forward to today, and they would say two years ago, the products are great. You fast forward to today. And the same people would say, the products improved a lot. I'm now getting real value from it. But they sold on the fear well ahead of the product. I'm always biting my tongue to think of companies, not name companies, but have a couple of mine into professional service, relevant professional services, white collar spaces where they've gone to finance, gone to legal, gone to folks like that.

1:05:55And it's been very airy, fairytale at the start of GPT, but they got in the door, they told the big story, they sold the fear, and then over the last two or three years, they built a product. It's different than hop in where the fundamental end demand died. Yeah, if you seize ground, but then the ground turns out to be waterlogged, you're toast. But if you see the ground that it matters, then you win. I think there's an element of the AI field story that has been real in the last year and probably for another year or so. I think people that have budget will spend a lot to not lose their jobs. So if you're that one app for the CRO, the CMO, the CCO, the CFO, where if they spend six figures on you, the odds that they won't lose their job, you will find budget.

1:06:34And not only will you not, you will find budget out of the budget cycle. You will find budget this month. You will find six figures of budget if I buy you and I might not lose my job. and I'm just smelling this with CMOs and Clay. I'm just smelling this fear. I'm gonna lose my job. And all I have to do is write a six -figure check. I'm all in. My budget's 5 million, 10 million of marketing this year. All I have to do is come up with 200k for Clay. It's done. Send over the contract tonight. In the end, you have to deliver. And you've got to deliver the thing roughly that you said you're going to deliver.

1:07:01Not something different. But it's a totally legit tactic at this point and the cycle provided the product gets there in the end. I mean, seriously, I know we got to wrap, but I can't tell you how many marketers, if they're honest. And when I talk to them, they're looking around and they're like, I don't know what my team's gonna be doing in six months. I just don't need this writer with chat GBT with AI. I just don't need my team. And then everyone's looking for the AI wizard, the AI magician. And to the extent this person exists, they're going to work for like a super hot startup. That's the other fear with the CMO.

1:07:29They're going to work for Windsorff. And how is your B2B company growing 19 % this year at 81 million in ARR? How are you going to get the AI wizard even in marketing to come to your company. You know what? There's no chance, right? So you need this Hail Mary to save your job because my infographic person that needs a week to make an infographic, and then my product marketer that takes 30 days to turn around a proof for product marketing and it's terrible. And you're looking at your team and you're like, I don't even know what to do with these people anymore. I don't know what to do with them.

1:07:59So I'm going to buy clay. I'll tell you the one thing that is so far off is video. Video and AI capabilities around video editing and security for complex video is so far. But Higgsfield is so good man my jaw drops with Higgsfield Listen, I don't think you can produce 20 VC with the I don't get me wrong and that's a good thing right But I don't even think there's a point in having a static marketing image after Higgsfield I don't see a point I It's so good and I think within two years will still be at 20 VC level for my video team. Yeah, you'll need it, right? But I think even when I look at like Opus where I invested like in some ways you can make fun of Opus Because you'd be like now everyone can do clips right?

1:08:35I mean other folks do it but Opus democratized clips, right? We tried it. They went nearly good enough for us. Well fair enough, but I'll tell you what's interesting I'll just give you one last thing to close on so the and the meta problem is when everyone could use opus And everyone used opus and so then the 20 VC clip gets even more valuable because it's so differentiated right and it's Opus has a feature that's coming out which for you is not valuable, but for me now they will create a Clips video and search all your video. I have a 12 years of video. I'm gonna go off the sastray in five minutes We're gonna produce 300 pieces of content.

1:09:06You think I can make a one hour video out of the best of all these speakers? Now, for 20 VC worthless, okay, worthless. But for a CMO that's still struggling to get their Zoom webinar working, that's a big change. But it does not make my content more valuable, sadly, Jason, it actually makes it less valuable because it brings discovery as a problem to be a massive fucking problem because now we have infinite supply of content and discoverability as a queen. So sell into that make money out of this trend. If you're not seeing any money out of the fear, make money out of fear. The two ways to make money are one is sell the tools so everyone can produce this content at scale.

1:09:44And then back to your common sense, I don't do it with my people. I do believe the marketing people who know how to use this stuff, not only continue to have their jobs, but become even more useful. Again, it's the same. You've got to be on the side of using this shit and leaning into it. If you're resisting it, you're toast. You're right, but the honest truth, maybe to break on, is it's far fewer people than you can almost even talk about in public. So few people are on top of what AI can do. They're just gonna hire agencies and they're gonna lose their job. But now you're doing the clown thing again, dude.

1:10:15You slide the scale to 100. I think the scale advances steadily at 5 or 10 % a year, and yes, you're gonna need less people. You're gonna get more efficient. Maybe it's 20. A month. 5 or 10 % a month. But Harry still makes a stuff handcrafted with care and central London. So there trust me. I'm with Rory on that for video and for me I love the balance that we have of the beautiful nuance of Rory and then the binary US Provoto of Jason coming together is just wonderful and then me just sitting in between Other than co -2 where I just unleashed guys. This was fantastic Jason good luck for Saster dude Thank you me and Rory are rooting for you.

1:10:54It's gonna be a special one All right, well, we'll see you at the one in December in London Christmas and London Well, I'll do it for a week of December together. Thanks guys. All right, talk to you later. Bye. Take it back They are just my favorite shows to record my favorite thing is that I get stopped when I'm walking around London with my mother and Everyone says oh my god. I love your shows with Jason and with Rory And then there's his pause and then they go we really love Rory I'm not sure what to take from that Jason. I think Rory is the fan favorite I so appreciate your support if you want to watch the video you can find it on YouTube by searching for 20vc 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 dollars in total revenue.

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