AMD Buys Fei-Fei Li's World Labs for $8.2B | Meta Poaches MongoDB's CEO | Bessemer Raises $5.75B

1. 0:00 – 1:25

   Intro

   1. JAJack Altman0:00

      We're definitely not investing at the right speed. We are either investing way too fast or way too slow

   2. RORory O’Driscoll0:05

      Returns are going to be highly skewed, variance is going to go up with AI, and many of you will fail.

   3. HSHarry Stebbings0:10

      [upbeat music] So what do we have on the cards today? Well, Anthropic's draft S-1 leaks, we break that down. AMD, baby, they are in the market to buy. Fei-Fei Li's World Lab sells to AMD for 8.2 billion in stock. And then ka-ching, Mr. Mark Zuckerberg decides to whack out the checkbook to hire MongoDB's CEO and pinch him for Muse Enterprise. This and so much more in a blistering episode out today.

   4. JAJack Altman0:35

      There are, like, 10 companies that can do $10 billion acquisitions and want to.

   5. RORory O’Driscoll0:39

      Money is a signal, price is a signal, and price is sending a signal, everybody go right here.

   6. JAJack Altman0:44

      It's a talent war in the most insane way right now.

   7. JLJason Lemkin0:47

      I think open source has reached its maximum as a market share. I think it's gonna keep going down.

   8. HSHarry Stebbings0:52

      Wow.

   9. RORory O’Driscoll0:52

      What? If we're willing to fucking trust them not to blow up the world, and they've already said they might and it's only a 10% chance, I think we can trust them to with the votes.

   10. HSHarry Stebbings0:59

       [laughs] Ready to go? [upbeat music] Boys, I am so excited for the show today. A, we have a surprise guest in Mr. Jack Altman. So Jack, thank you for joining us.

   11. JAJack Altman1:21

       So happy to be here. Yay. This is-- I've been looking... Longtime listener.

2. 1:25 – 7:18

   Anthropic’s S-1 Leak: $8BN Operating Loss and $518BN in Compute Commitments

   1. HSHarry Stebbings1:25

      That's very sweet, Jack. Thank you. You know, don't worry, Rory will ruthlessly, uh, give truth to me today while we go through the news. But we have a lot of news to get through. Now number one, Anthropic's draft S-1 leaks. I think every, every venture nerd was so excited for this moment. 4.6 billion of 2025 revenue, 8 billion Operating Loss, 518 billion [laughs] of Compute Commitments. Whoof.

   2. RORory O’Driscoll1:54

      Genuine comment. Not a single piece of information in that leak. Not a single piece of useful act other than one minor comment, which I'll come back to. Like, the 2025 number's long since spent. You know, the fact that the... I mean, lots of shitty bad takes. The whole, "Oh my God, they're losing 40 million-- billion," when 34 billion of it is non-accounting lo- an accounting loss. The rest of it was exactly what you thought, 4.5 billion in revenues, 8 in compute expense, 5 in other expense, blah. The only, the only interesting factoid in that was that two customers did 25% of the, of the revenue, which means someone spent half a billion dollars on Anthropic last year, which is pretty impressive. But the point I'm making is, the only thing that counts is not even Q1 and Q2 of this year, 'cause I think everyone knows Q1 and Q2 is Anthropic killed it, right? What we said last... Q- the Q3 numbers, which haven't been finalized yet, are, are the model though. Are the, the only thing you nee- you, you need to care about because obviously the story now is, Jack, now OpenAI killing it, really exploding in growth. W- And, you know, there's very nascent data from, well, I think one of ticker trends or something that Anthropic kind of flattened out. The Q3 revenue number is 90% of the data required to make a decision on pricing on Anthropic, and everything prior to that, in particular 2025, is so leaked at this point that there was no data in the wider saying. It was fun, but no data.

   3. JAJack Altman3:21

      This is gonna be one of, one of the nice things about these companies going public, is that I actually think the public market investors will be a little bit more long-term oriented than the private investors. I think, like, we are all hand-wringing month to month about what these companies are doing, and in a weird way, I think the public market investors will think a little bit more long-term, a little bit more structurally. You think about both, you know, Anthropic and OpenAI, and it's like each month it's like the narrative is just all over the place, and it's so easy to, to flip like that. I think, at least in my conversations with public market investors, they're gonna be thinking a little bit more, at least quarters, maybe even years. And so, you know, I, I agree with all of that, but I think people are gonna mostly be oriented towards, like, what is the market structure of these things, and hopefully it'll, it, it, it will be a little bit calmer.

   4. JLJason Lemkin4:05

      I think that's true. Um, my only thought, and listen, this could be completely wrong. When I read all the press, right? Yeah, like, to Rory's point, we learned nothing, right? And to Jack's point, just getting the public m- uh, investors excited to hold an epic asset long. But man, it really reads negative. You know, not just the, the, the, the, the risk factor that there's existential risk to humanity. I mean, that one is a little jarring to, to see. But what I mean is, it may be like, uh, the, the, the Facebook IPO in that at least on the retail side, the negatives come to the top, you know? And we're all investors, right? So we're all playing for the upside, aren't we? We're all p- you know, why, you know, why is Instinct worth 10 billion? Well, it's the upside, right? Um, it's just the, the, the jaw-dropping losses that frankly I don't think the four of us care about, right? And maybe a lot of long public markets don't care about. I just think the retail market, everyone that is anti-AI may see these negatives as a reason to sour. And I don't, I don't know if that can really drive the stock down, but I worry that the IPO will be suc- it's a minor worry, but I worry the IPO will be successful. They'll hit their number, whatever they ask for. It'll be over s- more of the oversubscribed than Oura, you know, 10X. But then a month or two in, with no real change, we may see it drift below the IPO price just because of the negativity, right? The, the massive spend, any hic- or, you know, the, the CDSs or, or at, at Oracle, uh, some default on data centers, and all of a sudden the, the negatives overwhelm the, the life-changing positives. That was my only thought, is we're gonna see a lot of stuff like this, right, after the IPO. Much more than we have before.

   5. RORory O’Driscoll5:35

      I almost think the people who are gonna be big buyers of the stock are not an overlapping circle with the people who are, you know, dealing with all the kind of fallout from the noise and the negativity. I mean, so in other... I mean, boo... Uh, let me say it even more directly, right? 70% of America might think data centers suck.

   6. JLJason Lemkin5:53

      But they're not running Fidelity Growth. And a, a, a small number of highly compensated managers are the buyers of their stock, right? Right. And re-retail people excited for the thing. Where I do think you're right, Jason, is it's not so much that directly the, the dislike of AI kind of impacts the stock directly, but the indirect comment is, I do think there is a non-trivial political backlash brewing. I think it was super interesting to see the guy in Florida file basically, uh, you know, basically sue to stop this thing, uh, stop, um, OpenAI and Anthropic from building models. There's gonna be a whole lot of, "You told me in a legal document that this thing was not safe, therefore, I'm entitled to believe you, and if it's not safe, you should stop." Right? So I do think indirectly you're right, is that because they have to spew out all these negatives just to cover their ass, right? Though I'm not sure who's gonna sue you if the end of the world actually happens. You're probably pretty good on litigation side. Um, but because they have to spew out all this negativity, people are gonna be reading that and saying, "Ha, this is the first S-1 I've ever seen that poses existential risk and where the product lies to me. Maybe I should, as the attorney general for the great state of fill in the blank, sue these guys and say stop." And I think we're starting to see that. So it will be way more of a public participatory moment. Everyone's gonna have a goddamn opinion on this, perhaps in a way that everyone doesn't have an opinion on, you know, when a semiconductor stock goes public, ninety-five percent of the people can barely describe what it does. Everyone's gonna have an opinion here.

3. 7:18 – 13:18

   Instinct Raises $1BN at a $10BN Valuation

   1. HSHarry Stebbings7:18

      Speaking of topics that everyone has an opinion of, I think everyone seems to have an opinion on Instinct right now, and Instinct versus Muse and the future of agents and personal AI assistants. Instinct closes a billion-dollar Series C at ten billion. Noah Shin, twenty-three-year-old founder, amazing generational talent, raises a billion at ten billion, takes on Muse and Alex Wang and Zuck. What do we think? Jack, I think you've got a check from Benchmark.

   2. JAJack Altman7:48

      Yeah, we did. My, my partners, um, Peter and Ev led it, um, and we were all extremely excited about it. And, um, I mean, first of all, goes without saying on the point of Muse and Meta and them waking up, like they've done a, they've done a phenomenal job, and it's a great product. They've sort of reinvigorated the organization. I've got a lot of friends there, like that, that is an awesome company, and they've done, they've done a great job. But I think in a lot of ways, to me at least, when I see that, it kind of reminds me of what happened with coding and with Cursor and Cognition in the face of the labs. And our view is kind of this is such an important new paradigm where you've got, you know, these consumer agents that are... I think Ben Thompson described it as like the aggregator of aggregators, but, you know, basically, it's like these agents that can interact with the entire third-party internet. That's like a pretty important new paradigm shift, and the implications are big. It means that you can have s-- it do things for you. It's not just talking to it anymore. I think like a lot of the younger generation was already using AI in this kind of way, and I think this kind of brought it to the masses, where it's like this is something that primarily does things for you. And so I think that it's a big new paradigm. What we've seen in general, whether it was with, you know, coding or a bunch of the application areas, was just when something's that important, a lot of things can win. And so my view is basically something like there can be an amazing kind of, you know, independent player. Like Instinct, you're also gonna see, you know, the labs have some sorts of offerings around this. But if this is the main way that, you know, broad, you know, consumer bases use the product, I, I think it, I think it's gonna be really important. So, you know, we'll, we'll see how it plays out. But, you know, our view is that this is like a really big new paradigm, kind of on the level of, you know, chat and coding and these other things. And, um, I think, I think a lot of players will win.

   3. JLJason Lemkin9:33

      This is my, uh, meat and potatoes view of the big winners today, right? Is the ones that are winning today, and this is-- and I'm a Muse fan. I haven't used Instinct. I'm hoping to get an invite, but I use-- I have twenty-two agents. I'm all in on the agents, right? But the ones that win, and this is an open question, are the ones we use all effing day long. So if you look at coding, even me, I'm running, I'm running my coding agents ten hours a day now, right? I run... And, uh, legal, I got wrong in a sense because folks are running Harvey and Lagora all, like, like, like Harry's partner. You're r- like this, she gets home, she's on the sofa running it all effing day long. And there's lots of wins as VCs we're gonna make for sporadic use. And this is just a question. I don't know. It's, it's not even a criticism. Will we run Instinct Muse eight hours a day, right? If we do, I guarantee it wins, right? Um, but I think we're in-- I think this is the second generation. Generation one was Open Cloud. No one knew how to run it, right? Other than destroying, you know, all your security and credit card. This is generation two. And then gen three, I think we'll figure out. But I don't know that we're gonna do the use... This may change in two weeks, but I don't know if we have an eight-hours-a-day app yet here. I don't know.

   4. JAJack Altman10:39

      I think you described it exactly right, which is it is super early in its cycle. If you think about like when chat first launched, like how much did we use it then versus how much do we all use it now? You know, Lagora and Harvey, you know, which are... You know, when they started, if you did the reference calls on their customers when they were at a million of ARR, the customers were like, "The thing barely works. We don't use it that much." And now you talk to them, and they're like, "I run my whole life out of it." And these businesses are at hundreds of millions of ARR, growing really fast and all of that. I think same with coding. Like at first, it could do a little bit. Now it kind of does everything. In the future, it's gonna be like, you know, times a hundred. So it's an open question on the, on this stuff, and I think you're exactly right. The question will be, does it make it from where we are right now to you can autonomously trust these things to run your life? And if it can, it's big, and if it can't, it's not.

   5. HSHarry Stebbings11:23

      Does it not massively cannibalize the chat usage? I'm, I'm so, I'm so sorry for any awkwardness, Jack. I, I used to be a massive OpenAI. It's kind of like you win both sides, so forgive me for this. I used to be a massive OpenAI user in ChatGPT, and now I just live my life through Instinct.

   6. JAJack Altman11:37

      Yeah.

   7. HSHarry Stebbings11:37

      And you see a lot of people cannibalize that chat usage, you know?

   8. JAJack Altman11:41

      I think it does to some extent. I mean, I think there, like on some level, we're each only awake for so many hours a day, and like we are all on our screens so much at this point that like there are not m-- you can't really get us out of the like- ... parks where we're playing soccer too much anymore. Like, it is all coming from other time that we were spending on the internet. So yes, it, it does to some extent. The form factor cannibalizes. That doesn't mean that these products cannibalize the other companies, but it does mean that the form factor takes some amount of the space, whether the labs do it themselves or not.

   9. JLJason Lemkin12:10

      Yeah.

   10. HSHarry Stebbings12:11

       Can I be a dick? Isn't this what, like, OpenClaw was meant to be? And w- the founder Pete, Stipe, and like... No, but, like, dude, they've been watching from the sidelines for six months, and now you've got Muse-

   11. JLJason Lemkin12:22

       Yeah, but Open AI needed to give everyone a, an entire virtual CPU in the cloud, right? And storage and everything. It, it... This is just these guys looked at... They were all inspired by OpenClaw. We all were. They just Instinct did it, Jack and Ev Story, and, and the whole Muse team said they were inspired the next hour to build Muse. Muse was built since OpenClaw. It's just OpenClaw didn't make sense for any of us.

   12. RORory O’Driscoll12:40

       To be clear, Harry, what you're saying is not OpenClaw standalone. What you're basically saying is when OpenClaw got subsumed in, uh, OpenAI shouldn't have done this.

   13. HSHarry Stebbings12:48

       Yeah, 100%. You were best placed to do this. That was the most strategic thing with the person who did OpenClaw.

   14. JAJack Altman12:53

       I actually don't have the sort of full inside scoop here, but OpenAI's dev day is, you know, today. And so we'll see, you know, what, you know, their sort of reaction to all these things are. But, you know, also back to Jason's point, it's like there's generations of these things, and they keep moving, and everybody learns from each other, and it happens in like two seconds. You know, when Cursor came out, it was... They had, like, a long window before the labs caught up. Now, you know, you look at the Instinct to Muse window, it's short. It-- these, these cycles are only

4. 13:18 – 16:37

   Why Benchmark Is Writing Growth Checks at Early-Stage Risk

   1. JAJack Altman13:18

      getting shorter.

   2. RORory O’Driscoll13:18

      Uh, first of all, I just gotta say in passing, Jack, I gotta hand it to you guys. You know, I've, I've known Benchmark since '95 when you started, right? And when you guys said after 30 years you're gonna embrace growth, I thought you'd tiptoe in. And I gotta hand it to you. No, when we're embracing this thing, we're fucking embracing it. It's 10 billion pre, pre-revenue, big ass check. No mincy little, little steps here. It's all in on day one. So congratulations. It's like, you know, coming off the s- coming off the dry and then basing the booze.

   3. JAJack Altman13:47

      Thank you.

   4. RORory O’Driscoll13:47

      You know, big party night, first night.

   5. JAJack Altman13:49

      Yeah, and what, what, what's funny about it-- So yeah, and we, you know, we, we invested, you know, first at two and a half and ten. And what's funny is, in our minds, it was actually kind of an early-stage investment. And I know that sounds psychotic, but it-

   6. RORory O’Driscoll14:01

      It is.

   7. JAJack Altman14:02

      Yeah, but that's kind of how we saw it.

   8. RORory O’Driscoll14:03

      Genuine comment here. It actually, uh, one of the things that's been funny is in this cycle, we've had investments with early stage request. Risk require super late stage capital, which is just definitionally a strange time to be playing. But yes, I think, yeah, you, you, you thought you were raising a growth fund. In fact, you're just expanding the early stage fund because it just takes bigger checks now. And, and good on you guys for doing it, 'cause I thought your logic at the end is basically some version of, "If this matters, it'll matter a lot, and if it doesn't matter, it won't matter at all," and there you go.

   9. JAJack Altman14:32

      That's right.

   10. RORory O’Driscoll14:32

       Right? I mean, it's funny 'cause I, I'm just pushing... I was [laughs] I was lit- I listened to the Noah interview and, you know, I, I did the boring stuff. And I'm gonna make the boring point, and then I'm gonna kinda, kinda backtrack it. From the boring-- When you listen to the interview and you talk about monetization and travel and all that, and then you go away and you do the data on, you know, the number of Americans who fly more than one or two times a year, which is pretty small, the fees available from that. The number of Americans who book not just dining, but fine dining. It's, you know, it's like ten percent or less of total dining experiences are fine dining where you don't need a reservation for McDonald's or Applebee's. So if you start thinking, and he mentioned, if you think of it as travel monetization, you could get pretty angsty about market size here. I mean, you guys were smart enough to do OpenTable 20 years ago, uh, 26 years ago now, Jesus. And, um, you know, it's just, it's a billion-dollar business today. You'll be pretty bummed if you're only doing a billion dollars in restaurant bookings on Instinct. So there's implicitly some level of, "Yeah, we'll get all this travel revenue," but there's something more here and... Because you guys run the same numbers and you know it, right? Is there a, is there a part of the monetization that's just, you know, finger in the air and says, "If this matters, shit'll ha- good shit'll happen"?

   11. JAJack Altman15:48

       So, I mean, back to the point before, which is slightly tongue in cheek, but slightly totally true, which is like, do you think of... Is this a, is this a growth investment because it was billions of dollars evaluation, or is this an early-stage investment because it's, like, nine days old?

   12. RORory O’Driscoll16:02

       Yeah.

   13. JAJack Altman16:03

       And both are kinda true. And if you think of it as a growth investment, you say, "Okay, how do I underwrite this, you know, relative to, you know, public companies that have two and a half billion of ARR, and they're worth ten billion?" And so, you know, you kind of logic that out. If you're thinking of as an early-stage investment, you say, "Gosh, this paradigm, we just have no idea." And so I think in our heads it was close, yeah, it, it, it was closer to that where you say, you know, the, we are so early innings here, where there was OpenClaw, there's the... Like, you know, b-between now and Christmas, there's gonna be like three more evolutions of the whole thing. It's like you don't even try to guess all of that.

5. 16:37 – 20:29

   How Do You Size a $10BN Early-Stage AI Bet?

   1. HSHarry Stebbings16:37

      How do you think about sizing it then when you're writing growth checks at early-stage risk material?

   2. JAJack Altman16:43

      I think there's, uh, you still to the extent that you can, I'm a believer that, um... And I think, you know, th-this is sort of like something I've kind of picked up from the crew, that you still, you still need enough investments no matter, no matter how, you know, accurately you think you can pick. At the early stage, let's define this, forget the price, but, uh, you know, early on in a company's life, you just need enough shots on goal to get something that's gonna really matter. And so on some level, I would say the sizing is constrained by wanting the fund to have enough chances to get something great. And so that's the constraint, and then, like, the upper bound is, you know, these rounds are big. You need to matter in, in the context of the round, and if the valuation's already high, you know, you, you gotta put more dollars in to sort of get some ownership. And so those are kind of the boundaries.

   3. RORory O’Driscoll17:28

      It was a very good, articulate, not quite answer, but v- but exactly the right questions. Absolutely. No, I, I think you were exactly right. It's that-

   4. JAJack Altman17:36

      Yeah

   5. RORory O’Driscoll17:37

      ... y-you do some kind of Kelly betting, and then you kinda, you know, how certain-- wha-what's the upside and how certain are you it's gonna happen, edge over odds.

   6. JAJack Altman17:44

      Yeah.

   7. RORory O’Driscoll17:44

      And then you say, "Do I have the stones to do full Kelly or do I back off?" [laughs]

   8. JAJack Altman17:49

      Yeah, and I think, like, sophisticated public markets investors probably spend as much time thinking about their sizing as their actual positions. I think, you know, we, we, we obviously don't. Um, but you know, we try to at least give ourselves some boundaries knowing that we're gonna, you know, sizing correctly almost every time.

   9. RORory O’Driscoll18:05

      And it's probably actually the hardest one to size because you're right, you have high upside, which s- leans in, super high variance, which leans out, but still a requirement for meaningful dollars. You're right, the sizing discussion must have been almost everything. Hmm.

   10. JAJack Altman18:19

       Yeah, and it's like on some level-

   11. RORory O’Driscoll18:21

       I, I wanna ask. I want to a- I mean, have you dis- Okay, I'll ask it in a way you can take the ... Have you disclosed the dollars, total dollars in the deal?

   12. JAJack Altman18:29

       I don't think we did. I don't... I, it, uh, I'll find out if we did, and if we did, we can, like, stitch it back in here with some AI, but I, I don't think we did disclose it.

   13. RORory O’Driscoll18:35

       [laughs] Good. Got it. Yeah. 'Cause it, the way to think, I'm just thinking aloud in real time, to make it something we all could talk about rather than the guys with the big checks, is that how would you think about that bet as a percentage of your fund? If you're typically doing 20 deals, which means 5% on average, right? You know, you look at the capital needs and you say, "Hey, maybe I need to do 10% of the fund in this." You look at the risk and you say, "Maybe I need to do two and a half." Harry, you always jump on me with these kind of real-time questions. What percentage of, of your fund would you put in Instinct at 10 billion pre as a percentage of the fund? 'Cause that's the way a Kelly better thinks.

   14. HSHarry Stebbings19:10

       Super easy. I'd do 5%. If it's meaningful enough [laughs] that it returns the fund with the upside, it's gotta be. 5% obviously is, I think if you can project out where it is. [laughs] Um, but then on top of that, I think you have real downside protection here. It's only raised like a billion and a half. It's clearly a really phenomenal team. The bet that Microsoft or any of the large providers would buy it, I think is very clear. So you've basically got a 50X upside on it being the WeChat of the West that we've all hoped for for many years, and downside protection on a 1X plus. I think-

   15. RORory O’Driscoll19:40

       By the way, just as I, I'm, I know I'm being a jerk, but you do it to me all the time. If you really believed in that risk profile, 50X upside, 1X downside, the Kelly bet answer was probably 30% of the fund, just to be clear.

   16. HSHarry Stebbings19:51

       But this is what I think founders don't understand, which is like, it's nuanced. Like, for me at my stage of career, if I did a 30% of the fund bet, my LPs would shit the bed. You, Rory-

   17. RORory O’Driscoll20:01

       No

   18. HSHarry Stebbings20:01

       ... respectfully, because of the incredible tenure that you have and the many, many years, you know, as you said, you've known Benchmark since 1995, a year before I was born, um, you have slightly longer relationships, so maybe it, it does differ.

   19. JAJack Altman20:15

       I wouldn't have the guts to do that at all. So no-

   20. HSHarry Stebbings20:17

       [laughs]

   21. JAJack Altman20:17

       ... I don't, I wouldn't, I wouldn't wanna let it ride. No, I think, look, I can see. I would come out... I mean, 5%, typically 20 deals in the fund, 5% is a full whack deal and-

   22. HSHarry Stebbings20:26

       Yeah

   23. JAJack Altman20:26

       ... you know, I, you're right. The upside... Go ahead, Jack.

6. 20:29 – 23:43

   Is Venture Investing Way Too Fast—or Way Too Slow?

   1. JAJack Altman20:29

      I think the other thing that I was gonna say, I, you know, that sort of like in support of kind of Harry's view on this, is we're in a moment in time where a lot of investments are shaped like this, where, like relative to other times, I think it is, uh, much more dispersion on these investments and things are both really expensive and then the upside's, like apparently look very high. And so one, one of the things that we, you know, think about and I scratch my head about a lot is we're in a moment in time where everything, valuations are e- like extraordinarily high, and then traction and, you know, outcomes and all of these other things are extraordinarily high. And so, you know, people are like, "Do you think we're, are we investing, you know, the right speed?" And I'm like, "We're definitely not investing at the right speed. We are either investing way too fast or way too slow." But when both supply, you know, when both sides of the equation are this out of whack, the odds of having it right are zero.

   2. HSHarry Stebbings21:23

      I'm really sorry. Every venture investor is in a WhatsApp group right now saying the market is totally fucked, just to be super clear.

   3. RORory O’Driscoll21:29

      Yeah, but then, then those will be the same, and to, to Jack's point and to schizophrenia, those will be the same investors who get out of the WhatsApp group and then wire another check for 50 million bucks to a Neo lab, right? So yeah, look at what you do, not at what you say, as Harry Haldeman said about Watergate. But to your point, Jack, funny, we actually just did our annual meet, and we had Tyler Cowen, the economist, speak, and he was great. Just great. But so, and one of my partners who was doing the meeting asked just a, a tangential question on venture, what's gonna happen in venture. And he just quietly said, as economists do, "You know, returns are going to be highly skewed. Variance is gonna go up with AI and many of you will fail." And then just moved on to the next question. Some of you will get rich and many of you will fail. [laughs] Well, thank you for clarifying that, Tyler. And he was exactly right. Jack, you're right. It's like the highest variance time which, which, which speaks to even when you're doing these bets with the upside, having enough to do 20 is key. Which is why I don't get the... We've talked about this before, is that it's why you're right about Instinct being an early stage bet depite- despite the price. It's not yet at the stage where you can have the concentration discussion. You know, the folks having the concentration discussion are really talking about OpenAI Anthropic at the last two pre-IPO rounds. But you're right. At, at a, even at a 10 billion pre, if it's where it is today, you don't wanna put 30% in.

   4. HSHarry Stebbings22:45

      I, I also think, like this is not the round that worries me. If you were to look at the Instinct cohorts, which I haven't seen, but I imagine the usage is incredible. I imagine the depth of usage is like we've never seen before. What worries me is when you have three rounds in three weeks with no material movement in between and no data to suggest there's been anything different. That's what worries me. Like the, the people who say, "Oh, 10 billion, 14 people," like it's just like people who said, you know, a billion for what? For Instagram was stupid. It's like, yeah, you don't look that smart today.

   5. JAJack Altman23:12

      16 billion for WhatsApp.

   6. HSHarry Stebbings23:14

      Y- yeah, exa- exactly. Um, but you know what I love? I love the fact that I actually had your partner, Ev Randall, on the show and he said, "Ah, we're gonna look back at Andreessen and General Catalyst and LightSpeed." And he retweeted it, which is so humble and like non-VC like, where he was like, "Maybe I was wrong to say that Andreessen won't do a 5X in this vintage." Because Mr. Martin Casado is making, uh, us look bad because the man has had OpenRadar,

7. 23:43 – 27:47

   AMD Buys Fei-Fei Li’s World Labs for $8.2BN

   1. HSHarry Stebbings23:43

      the man obviously last night had Fei-Fei with World Labs-

   2. RORory O’Driscoll23:46

      And Cursor

   3. HSHarry Stebbings23:47

      ... and then he had Cursor. Um, I mean, so for the new story of the day, AMD buys Fei-Fei Li's World Labs for $8.2 billion in stock. At first big Neo lab exit two and a half years into the company's journey

   4. RORory O’Driscoll24:02

      Let's focus on the entrepreneur first, right? I think it's great for Fei-Fei and the te- I re- I mean, I've only met her once. I thought she was awesome, very humble. I love her book, if you read it, very moving book about being an immigrant to the US. I was myself, so I know it, and kind of came up from nothing. As someone pointed out, it's not an overnight success. Cranked through ImageNet, kicked off the whole damn thing, 'cause the entire AI kind of resurgence was really kicked off when that ImageNet project that she built, when the winner of that was Ilya and two or three other people, I think in two thousand and twelve, where their model using kinda neural nets just kicked ass and blew past everyone else, and it was the first hint that this technology, this deep learning technology, was gonna blow everyone away. And she kinda set that up, didn't monetize that, has, you know, worked at Stanford, worked at Google, and then, you know, m- midlife, quit, did this two and a half years ago and nailed it. So I think it's just an awesome story. Um, you know, yet another, just a reminder, yet another wildly successful immigrant story coming to the US, making a ton of money. So I'm stoked for her and, you know, good on AMD. So I mean, we can come to the venture money later, but that-- it's just a great story. And if anyone deserved to enca- Like, it would be pretty criminal if we had the biggest boom in AI history and Fei-Fei Li didn't get a big ass check. So I think karmic justice has been restored, and it's good, right? Cash the check.

   5. JLJason Lemkin25:29

      Well, ju- just one thing, you know, uh, it, it, it's, you know, AMD was like one of your grandpa's investments, right? Uh, you know, he and his buddies from Fairchild, or I don't know what the exact... But this is an oldie moldy. It's up two hundred and seventy-nine percent this year to one trillion. So I don't even know whether they're gonna continue the 3D world models or they're, they're just gonna be their counterpart to NVIDIA's model team. But whatever it is, for eight percent of that market-- Eight percent? Yeah. Getting a world-class team to make sure that two hundred and s- seventy-nine percent run continues, like, it's cheap if it's the right team, right? It, it's a moment in time, to Jack's point, right? If AMD was up three percent this year, they, they ain't gonna be spending eight tr- [laughs] eight, eight billion. But this is a run that you've-- You know, it's epic, but you gotta maintain it, right? They've gotta be number two to NVIDIA or whatever the goal is, and it's, uh, the, it's a, it's a, it's a habit trail that keeps going faster. So I'd certainly invest eight percent of my market cap to, to keep the good times going.

   6. RORory O’Driscoll26:21

      And I think it's the first of a few. We've talked about this a couple of times. You look at these investments, and candidly, I, I don't think the World Lab companies, not the World Lab in particular, but they're kind of those World Lab-type companies, would on a standalone basis have anything like the trajectory of Anthropic and OpenAI, where there was a very quick path from here's an amazing AI technology to here's chat, and that can monetize, and then, oh my God, here's coding, and that can monetize like a mother, right? I don't think the path would have been as clear, which is why I've been a bit nervous about those deals over the last couple of years. But in retrospect, the thing I think that's now become obvious is I think all the big foundation model companies are probably in the market to acquire, to acquire some kind of robotic foundation model story. I think that, as you say, AMD just wants to be relevant to NVIDIA. So I think that wouldn't surprise me if there was a ton of acquisition interest. I mean, there's still a hundred Neo labs, so [laughs] you, you gotta be in the ten that win, but I think there will be a bunch of these big assed acquisitions over the next six, twelve months if the market continues to hold.

   7. HSHarry Stebbings27:25

      Do you? 'Cause I, I, I, I invest with a brilliant French partner, Paul, who is, you know, incredibly cynical just by nature of being French. Uh, and he wrote this report on a hundred and two Neo labs, seventy billion dollars plus raised. And my question is just like, just how many of them can get acquired? When there were ten to twelve, like, yeah, it'll be okay. Hundred and two, we all gonna have downside protection?

8. 27:47 – 29:46

   Why $10BN AI Acquisitions Are Becoming Normal

   1. JAJack Altman27:47

      It was very easy when all the sort of Neo labs got started and the trend took off to just say th- this is total insanity. And, you know, to your point, Harry, we don't yet know what the, like, net balance sheet of the whole thing will be. But we are definitely starting to see data points like, you know, World Labs and many others where, like, there is real interest. And I think part of, part of what's so different now than certainly any time I've ever seen, may- you know, may- maybe there have been other points in history like this, but there are just a lot of acquirers. Like, there, there are like ten companies that can do ten billion dollar acquisitions and want to, and that's just so different. And it's much easier than going public and it's quicker, and you don't have all of these long cycles and the hand-wringing and, um, that, that has really changed things. And obviously, you know, like, you know, extremely impressive run by Martin, and it's just shown that, like, you know, in these infrastructure lab-type companies, there, there's, there's a lot of room to run. So I, I don't, I don't know how it will go obviously any better than anybody else, but I'm definitely, I'm hesitant to be too skeptical at this point given what's happening.

   2. RORory O’Driscoll28:53

      I agree with that, and I think when you deal with the hundred, and yes, there might only be ten or twenty acquisitions, but it's the... Yeah. This is where, you know, people sn- you know, they use the word consensus in a negative sense, but there is no doubt that credentialism matters. Like, you got Fei-Fei Li. You know, I could write that press release. You know, originator of the whole AI thing. It's a little like, you know, the, the quality folks at OpenAI and Anthropic. I-- So I think, uh, the other part of this is, and then Neo labs, making sure you have the pristine, the pristine tech asset versus the gritty team. A lot of the stuff I do in the apps level, I love my gritty teams, right? I think for something like, you know, building a world model, you need to have proven technical success because that's both what it needs to deliver and frankly what it needs to navigate and be the desired acquisition candidate. I mean, I'm, I'm sure that's not true overall, but it's just something I've observed.

9. 29:46 – 33:10

   Do You Need a $1BN Fund to Compete in Venture Today?

   1. HSHarry Stebbings29:47

      I was talking to one of the best CIOs in the world last night, and he just said to me, "The honest takeaway, dude, you really think you can play in venture with less than a billion-dollar fund now?" And I, I candidly, when I look at many of these companies, you know, the first round for this and Fei-Fei was like sixty-five. Um, you know, I, I just paused. I had my team say to me the other day, "We can't find anything under a hundred million." I said, "Wow, seed prices are expensive." They said, "No, no, a hundred million round size."

   2. RORory O’Driscoll30:13

      Pushing back a little, I, I think the weird thing about this tech is... 'cause I've, I've been thinking about this a lot too as a nine hundred million dollar fund size. Um, you've got two kinds of businesses. You've got businesses where you can ship a product on less than four or five hundred million dollars, like huge NeoLab raises. But you've also got to admit the following, which is also true. You've got companies that use that NeoLab and that, um, OpenAI and Anthropic technology that are shipping products on relatively little capital in. I mean, you know, you guys are in Higgsfield, right? You run into a bunch of these guys who are like, "Well, we took ten million dollars, but we shipped the product for three million bucks, and then the customers took off, and shit, we still got five million bucks in the bank, but we're gonna raise fifty anyway 'cause we can." So it's not like everything is a hundred million dollars just to, you know, spin up some GPUs. There's a whole bunch of ten million bucks got us a long way, and then maybe we're raising a hundred, but for different reasons, because we can, right? So it's not kind of uni- consistent. It's almost two different worlds, and it kind of makes sense as the big technology lift up front from the guys raising ten billion is what's setting everyone else up to do amazing shit on relatively little.

   3. HSHarry Stebbings31:19

      Yes, I would say that just bunny talent costs are so much higher than they've ever been because of a lot of the alternative options for the talent that y-you can't do a two to three million dollar round anymore. Like ten to fifteen is-

   4. JLJason Lemkin31:30

      You know, you know what's a challenge to that though, Harry? I agree with the math, and Rory made the point last week, and I want to hear Jack's thoughts, that I think nominal inflation's like two and a half X in venture since twenty ten. I might be, I might be m-maybe I-

   5. HSHarry Stebbings31:39

      You know exactly why I keep my-

   6. JLJason Lemkin31:40

      I sometimes get my nominal and non-nominal confused. All true. But if you look at the n- at the undiscovered gems, okay? I think seed rounds, and maybe they're called pre-seed or pre-pre-seed or post-conception, but whatever we call it, they're still what does it take three to four folks to get eighteen months down the road? It's the same thing. And if you're coming out and you're lucky enough to get a million dollars of free tokens from whatever, a half million from OpenAI or Anthropic to start a company, you get all these other things, you can still get pretty far for a couple million bucks, especially if you're willing to, uh, share, share, all share in a, a eight thousand dollar a month apartment in San Francisco. So y- I, it's not that I disagree with the math, but the truth is you can do as much, I think, for two to three million bucks as you could ten years ago. And if you don't have folks die-- dying to give you capital outside of demo day, that, that may still be the natural atomic amount of capital for, uh, what... I get the terms wrong today, but a seed round. It still should be two to three million bucks.

   7. RORory O’Driscoll32:34

      Yes. In certain mark- I mean, just at the risk of being a patent, right? Yes, in certain markets where you can ship a product leveraging everything else, it's a couple of hundred million minimum to enter the NeoLab space, and it's five hundred million to enter the semiconductor space. And, you know, I'm just making a point is that, I mean, especially, you know, full scope. There's a ra- the weird thing to Jack's point, there's such a range of different financing things you got to get your head around, right? You know, you wanna put a hundred million in a semiconductor company to still pre-tape out a two billion. Hmm, let me think about that. And then tomorrow, let me look at five million dollars for a seed round for a software company where maybe they can get a product out the door and consumer revenue

10. 33:10 – 38:35

    Is Traditional Seed Investing Broken?

    1. RORory O’Driscoll33:10

       on nothing more.

    2. JAJack Altman33:11

       The, uh, the characterization that Harry opened up with I, I mostly agree with, which is basically that the initial rounds have gotten so extreme, and there's two reasons. One is that there's like, you know, you all are saying there's these labs where, you know, you can't do anything for less than two hundred million, and so that's the first round. The other reason is there is a set of founders that are very, like, in the Silicon Valley network that don't necessarily need to raise, you know, a fifty million dollar seed, but they can. And so they skip the first round, they skip, they, they skip the six at forty or whatever that round used to be, and they just don't raise it. Or maybe they raise three hundred thousand dollars just to, like, get a month in, and then they raise the money. And so in many, in many lanes, I think that round has kind of evaporated. And so I think there is a, there is a cohort of the market where traditional seed investing, where you're gonna write three to six million dollar checks by, you know, eight to fifteen percent, where I just think that is fully broken slash just isn't there anymore. All of that said, there i- there is another part of the market which, you know, Jason, I remember reading your blogs like way back when I was starting Lattice, you know, twelve years ago, ten years ago, whatever. And, um, you know, a lot of it was just like, you know, trying to get my head around what the venture math was, and it's, you know-

    3. JLJason Lemkin34:28

       Yeah

    4. JAJack Altman34:28

       ... you own a small fund, you buy ten percent of a company, you hope it's worth a billion or two. You get a hundred to two hundred million. You do that a couple times, you know, out of a basket. I actually think that that, that, that might still exist, but the way that it exists is not in the things that we're reading about on Twitter and in headlines. It is these rounds where, um, at the moment, they, for one reason or another, can't go do that round. They're either not in the right markets or the shape of the company isn't quite right. And then, you know, they somehow pivot or they get more traction than you thought, and it just kinda, it just kinda gets bigger, but it happens the slow way. Like, we have now gotten accustomed to all of these stories playing out in a year or three year. Like, you know, it's like, you know, we're talking about Instinct. It's like, you know, these, these stories play out so quickly, they get big. But even if you take a company, you know, like Lagora, which, you know, obviously I know Harry knows well, and you know, these, these stories still play out in a short number of years, and we've all gotten used to that. But it, you know, there, there is another part of venture that takes place over ten to twenty years, where a software company just kinda compounds slowly. And so do I think that there's a three at thirty round happening today, where in twenty forty-one that company is just gonna have quietly compounded in the market of police or fire departments or libraries? Like, yeah, I probably do. So it's just, it's just a different, it's just a different part of the market, and it has really had a big dispersion.

    5. HSHarry Stebbings35:49

       I just don't think that's an industry. I just think that's an anomaly. And we're in an industry, and I don't wanna bet on a potential pivot three years down the road that might lead to a misshapen company that then becomes shapen again. Like, fuck, I can't bet on Slack pivots

    6. RORory O’Driscoll36:04

       Jack, every time I try and pitch the story to Harry, he clubs me-

    7. HSHarry Stebbings36:07

       It's bullshit

    8. RORory O’Driscoll36:07

       ... just like that.

    9. HSHarry Stebbings36:08

       It's bullshit. And I-

    10. RORory O’Driscoll36:09

        And I, I, you know, and a- and I, I wanna believe in it 'cause we've made some magnificent bets on companies like that. But I do agree the, the, the table at the moment is 80% the fast action table and 20% the slow action. Which makes sense because in 2022 there was a discontinuity and everything before that became obsolete. So by definition, anything at this stage four years in is fast action by definition 'cause it started in '22.

    11. HSHarry Stebbings36:36

        Also, if you wanna go for that model, your numbers will be crap for quite a long time. And we always forget that we're in a n- no, but we're, we're in an opportunity cost game where people can put money into your Sarah Guos and your benchmarks of the world. And while you guys post numbers that are just never before seen. I was messaging Chathan last night, Jack, being like, "Oh God, just stop." Like, the latest fund is just ridiculous. Um, and like we're an opportunity cost. You can be in those... Well, you can't be in those funds, but [laughs] you know, you can try and be in those funds. And so trying to be smart where no one else is.

    12. RORory O’Driscoll37:09

        That's li- agreed. It's about... Yeah. The, the giant sucking sound, the, the... Basically money is a signal, price is a signal, and price is sending a signal, everybody go right here. And everyone will go right here 'cause that's the job of price. Mr. Hayek would be happy.

    13. JLJason Lemkin37:25

        The problem with the quiet compounder, to Jack's point, in my view as someone who's pitched quiet compounding since 2012, is they're just not, with, with exceptions, they're just not stable. You have to build so much more software so much more quickly, right? Jack and I are both on the board of Owner, which is, you know, a rocket ship north of 100 million in revenue, but look how much effing software they have to build this year, right? How many folks can pull that off? How many folks can raise the capital? Like this, it, like... And even if you, you have 10 times more competitors, right? I, I have another company at 100 million, they put up a competitor slide at the last board meeting I never heard of eight or nine of the ones. I thought we had one competitor. Turns out we have nine, right, at 100 million. So it's not that I don't wanna believe. Forget about the fact that the, the, it's harder to raise LP capital, which is Harry's point. I, this instability is something that I think people under-reflect on, right? That's the problem. It's just, it's so unstable that it, it, it's just, it, I... It's so undurable.

    14. RORory O’Driscoll38:18

        Put another way, yeah. If you're making a compounding play, the quid pro quo should be low risk. And if the world is such that the tech environment is changing so much that you get the compounding not the hypergrowth but you get the same level of risk, that by definition is a suboptimal game.

11. 38:35 – 39:10

    The AI Talent War Is Getting Insane

    1. JAJack Altman38:35

       I think the, uh, sort of to me one of the most dominant reasons why I do agree with Harry here is it's just like, it's a talent war in the most insane way right now. And it, it, it's just the- these opportunities are just too enticing for great people.

    2. RORory O’Driscoll38:48

       Which is a perfect segue, perfect segue, Howie. Come on, figure it out.

    3. HSHarry Stebbings38:53

       Are you suggesting that Jack teed me up there, Rory, for a slam dunk that I didn't take?

    4. RORory O’Driscoll38:57

       I, I am. But you were listening-

    5. JLJason Lemkin38:57

       No one told me Superbase was doing so well. I'm outta here. [laughs]

    6. JAJack Altman39:00

       Harry, I didn't see it either, and I also try to be a podcaster, so I... That was a hard one.

    7. HSHarry Stebbings39:04

       Jack, I think we're just a bit slower than Rory, okay? Professor O'Driscoll, um-

    8. RORory O’Driscoll39:08

       No, but genuinely

    9. HSHarry Stebbings39:08

       ... he's very sharp. He's

12. 39:10 – 43:42

    Meta Poaches MongoDB’s CEO as the Stock Drops 20%

    1. HSHarry Stebbings39:10

       very sharp

    2. RORory O’Driscoll39:10

       We should remind... Stop, stop, stop, stop. Stop the bullshit. We should just, for the viewers, we sh- or listeners, we should just say, look, what happened here is the CEO, the chief executive officer of a standalone independent public company, MongoDB, a very successful $20 billion market cap public company, who just took the job less than nine months ago, got an offer from Muse, hit the bid, moved over to Muse to run their enterprise, s- uh, Facebook/Meta to run their enterprise division, and Mongo's stock dropped 20% in one day. And then, um, Dev stepped back in, who'd been the f- not the founder, but the CEO from a long ass time, and is now back running it. But the point, to Jack's point, was the money can exert such a powerful influence. It was powerful enough to persuade this guy to quit the top job, go work at Facebook, 'cause I assume the offer was just earth-shatteringly compelling, right? And that, and that, and that's your point, Jack, is that when you have the hot stock, when you have the momentum, you can make people offers that just allow you to take whatever talent you want. And this is an example of that.

    3. HSHarry Stebbings40:09

       Do, do you think it is the money? I, when you're earning 52, maybe I, I don't earn 52 million bucks a year, but I imagine if you're earning 52 million bucks a year, earning 120 million bucks a year, that's nice. But I think for him when he looks at this, he's like, "Holy shit, I have the chance to impact far greater"-

    4. RORory O’Driscoll40:25

       Nah. No

    5. HSHarry Stebbings40:26

       ... into-

    6. JLJason Lemkin40:26

       I think it was a $52 million package and he was offered a $500 million package-

    7. RORory O’Driscoll40:29

       Agreed

    8. JLJason Lemkin40:29

       ... by Zuck to run Enterprise. He, 10X is easy. What does it take? 520 million, then done, right? Um, no one wants to step down from CEO of, to be the, the chief executive enterprise products and tokens officer. No one [laughs] wants-

    9. HSHarry Stebbings40:45

       He's paid 500 million bucks a year though.

    10. JLJason Lemkin40:46

        Yeah, it's 10X.

    11. HSHarry Stebbings40:47

        Yeah, yeah, yeah.

    12. JLJason Lemkin40:47

        It's, it's 10X.

    13. HSHarry Stebbings40:49

        I'm, I'm hitting the bid. Hit the bid.

    14. RORory O’Driscoll40:50

        I, I, I'm just kind of agreeing with Jason, 'cause you were gonna go down some kind of Mongo's not exciting and Meta Enterprise will be exciting. I think that's true, but conversely, no one who's been a CEO goes back to not being a CEO. It's just, it's just so damn hard, right? So the answer is it must have been just a compelling offer.

    15. HSHarry Stebbings41:10

        Right. I mean, dude, we saw, we saw Nick Clegg, who was deputy prime minister, go and work as Mark Zuckerberg's... I mean-

    16. RORory O’Driscoll41:17

        We, we, we know exactly how much... I mean, yes.

    17. HSHarry Stebbings41:20

        So, like, you know, that's-

    18. RORory O’Driscoll41:21

        I'm, uh... Yes, I'm try- yes. Yeah.

    19. HSHarry Stebbings41:24

        Be careful what you say. [laughs]

    20. RORory O’Driscoll41:25

        I'm just trying to not be mean about Nick Clegg, our England, our David Cameron, our Mark Zuckerberg, and it's just too hard, so I'm just gonna let it slide. But-

    21. HSHarry Stebbings41:34

        What, what should we take from this, though? That actually even the role of CEO is one where departure is normal now in face of money?

    22. RORory O’Driscoll41:41

        No.

    23. HSHarry Stebbings41:41

        What should we take-

    24. RORory O’Driscoll41:42

        You should take what Jack said. It gets back to the conversation you were making. He, he, 'cause he segued it off your comment on opportunity cost. The market is sending a signal that the only place to be is in these extraordinary hot AI companies, and it's sending that signal via price, and people are responding to price.

    25. JAJack Altman41:56

        To me, I think it is, you know, it It is the money, and it's also, though, the, um, it's the attention, and it's where, it's where the zeitgeist, and it's like the white-hot center, and I think that is so alluring to people. I think there's a, there's an entirely separate thing here, you know, with kind of the way that this all went down that I'm not close enough to at all to know the details of, and I think that's kind of its own unique beast. But in general, I just think that it is so alluring. And the money is part of it, but it's, it's not just the money. It's also, it's the thing in all of the headlines. It's the th- it's the products that we're all using. It's the thing that all of our families are talking about, and I think that it's just so concentrating. And so, you know, there, there's all of these short-term things that are negative about it. But one of the things that I will say, just kind of this is zoomed out broad positive, is that the, the much higher, uh, transition rate of talent that I think we've ever probably seen. One of the benefits of it is that talent feels very unstuck right now. You have all of these times in history where great talent gets very, very stuck in places that you might not want it to be, and we are probably in one of the higher liquidity moments in the market where great people are in fact going to the most important opportunities, which I think is probably on some societal level very positive, even if in these, like, short-term situations you scratch your head and you're like, "What's going on here?"

    26. RORory O’Driscoll43:19

        You're right. I, I, I tend to focus on the money, but you're right, it's not just that. It is the zeitgeist. I give you and Harry that point, yeah. It's what's good about here even versus the East, you know, I, I can't remember was it someone on garden leave either in the East Coast or the UK. The great thing about California, you got none of that. It's just like I go across the street, the next day I start in the new company. Yes, and that is the highest and best use of talent. What are you doing, Harry?

13. 43:42 – 47:12

    Investment Committee: Jev AI at a $10BN Valuation

    1. HSHarry Stebbings43:42

       It's time for the ambass- it's time for the investment committee.

    2. RORory O’Driscoll43:45

       Oh, no.

    3. HSHarry Stebbings43:46

       Yeah, yeah, yeah. It's time for the investment-

    4. JLJason Lemkin43:47

       You already, you already did one. You did a great one for Instinct at the top of the hour.

    5. HSHarry Stebbings43:50

       Oh, no, no, no. That wasn't an investment committee.

    6. JLJason Lemkin43:52

       You win.

    7. HSHarry Stebbings43:52

       No, no, the, the investment committee this week is Jev. Jev is in the market to raise at a $10 billion price. Uh, Jason, welcome to the room.

    8. JLJason Lemkin44:03

       Yes.

    9. HSHarry Stebbings44:03

       Can you please present whether we should be doing this deal or not-

    10. RORory O’Driscoll44:07

        How many minutes?

    11. HSHarry Stebbings44:07

        ... at $10 billion a week after the seed at about $200 million?

    12. JLJason Lemkin44:13

        Well, of course we should do it. What's the price, $10 billion?

    13. HSHarry Stebbings44:15

        Yeah.

    14. JLJason Lemkin44:16

        Yeah. We should put... At first thought we should do 5% of the fund, but after the last 20VC, I've decided to recommend up to 30% of the fund. Um, you know, Jev's already seven- 17% of the traffic on OpenRouter. It's 20% of the traffic through Vercel's router. Many people will of course copy it, just like many will copy Instinct and others. But we are reaching the point where as exciting, as exciting as the Neo labs are, as exciting as Anthropic's pending IPO and OpenAI are, these, uh, AI costs are unsustainable. Infrin- it doesn't matter if Sonnet 5.5 and, uh, the, the latest, um, Opus is cheaper. It is unsustainable to spend these costs 10 to 12 hours a day and the competitive bar just goes up. Jev is a 70th of the price and 100 times faster. And listen, as my good friend Jack Altman says, the pace of change is so fast or exploding so fast, m- maybe Jev isn't the winner next year, but this is exactly the kind of bet we have to do. We have 100% downside protection. Someone's gonna scoop up this team out of X OpenAI no matter what. Um, 17% market share on OpenRouter. Uh, I mean, as much as I advocated Instinct last year, last week, this week this is my deal. I'm all in on Jev. 30% of the fund. I know it's risky, but I wanna get the ownership, and I do believe there's a 50x upside to $500 billion, so I, I defer into Rory. I say we do, well, 20% to 30% of the fund.

    15. RORory O’Driscoll45:32

        [sighs] Jack, I should warn you, for some reason, Harry likes this kind of, th- the soundbite, and it plays well on pod, so who am I to judge?

    16. HSHarry Stebbings45:41

        Dude, you, Jack, you know me so well. At the end of the day, I'm a clip, clip monkey. Okay?

    17. RORory O’Driscoll45:44

        You're a clip bitch. [laughs]

    18. HSHarry Stebbings45:45

        Exactly.

    19. RORory O’Driscoll45:46

        I would say, j- just, but, but, but, but going back, the funny thing is, um, in this case you can do some basic math and it's not crazy. I mean, we talked about this last week. You know, spend right now today is roughly $100 billion. And you do the analysis and 20% of that is relevant to Jev, so 20 bil- that's $20 billion of accessible revenue, right? Say they compress it five to one, that gets you to four billion bucks of accessible revenue, and what we've seen that's been amazing is the developer adoption's been lightning fast, right? A whole, I mean, you know, rumor has it they're at, you know, numbers all over the place, $100 billion run rate, and given that the tokens are half nothing, that's a shit ton of usage, right? You know, you could credibly get to a billion-dollar revenue line relatively quickly here, right? By literally taking money that's already been spent and saving 80 cents on the dollar. So, uh, Jason's comments aren't wrong at all. I mean, he has to learn that if you spend 30% of the fund every week, in three weeks you're out of action, but other than that-

    20. JLJason Lemkin46:49

        Well, we, we, we're Benchmark. We just go back to the LPs with one email and we have a new fund. It's not a constraint. It's not a constraint. [laughs]

    21. JAJack Altman46:56

        Jason will just recycle something and it'll all work out somehow.

    22. JLJason Lemkin46:58

        Yeah, we'll recycle something.

    23. RORory O’Driscoll46:59

        It'll work out. [laughs] Can you flip it in two weeks?

    24. JLJason Lemkin47:01

        We also recruited Martin to the team. He, he's gonna help. We'll just recycle. [laughs]

    25. RORory O’Driscoll47:04

        Yes. We'll recycle.

    26. HSHarry Stebbings47:05

        Instinct, Instinct, can you please email LPs new fund, please? [laughs]

    27. RORory O’Driscoll47:08

        Yes.

    28. JLJason Lemkin47:09

        Yeah. I mean, we invest 150% of the fund.

14. 47:12 – 47:19

    Modal Hits $15BN as Baseten Eyes $26BN

    1. HSHarry Stebbings47:12

       Another big round is Modal triples to $15 billion and Baseten talks at $26 billion.

15. 47:19 – 49:59

    Why Inference Has Been One of the Best AI Trades

    1. JAJack Altman47:19

       It has turned out that the right tra... You know, like there was, um, there was a period where you look back, and maybe we're still in that period, but there was certainly a period where you look back and the right answer with investing was just put it all in the labs. Just buy the labs, right? And every round people were like, "It's expensive," but the, the correct answer was just keep buying the labs. And it has now turned out in the last 18 months or whatever, the correct answer was just keep buying inference. You have Modal, Baseten, Fireworks, Fal together, and it's just all worked. You know, my partner, Eric Vishria, had this, you know, line that I've been kind of whipping a lot lately 'cause it's true, which is that like it's all gonna work. And he was on the Invest Like The Best podcast and it was like, "Is it this or that?" And Eric's like Dude, it's all of it. And it doesn't mean that every company's gonna work, not every sector's gonna work, but in general, a crazy number of things are working. And inference has been a really great way to get an index bet on everything outside the labs. Jason just made the point, which is a big part of why these inference companies are doing so well, which is that the costs are just not sustainable. So you have that on one side, which is it's too expensive. And on the other side, you have this dynamic which I think is we have now crossed sort of the threshold in a lot of areas and more and more happening where you get sort of like intelligent saturation where it is now good enough to do the thing. You know, to take a simple example, your tax return is filed correctly or it's not filed correctly. And you can-- You-- O-once you have filed it correctly, throwing more intelligence at that problem doesn't do you any good. If your job is to hit a hammer, you know, to hit a nail in with a hammer, your hammer's good enough. Making it a gold-encrusted hammer that costs $30,000, all your-- your whole job was just to get the nail in. And so we have more tasks like that, and as a result, you're gonna see more open source, and as a result, you're gonna see these inference companies. And, you know, there's obviously been, you know, I can't remember who just mentioned it, but open source is doing tremendously well. By the way, this whole cost dynamic does not mean that open source just runs away with it. Uh, the, the labs are obviously also going to offer much cheaper versions of their own models. And I think people forget how cost-advantaged they are in a lot of ways. Their access to compute is structurally very strong. Their access to users is very strong. They have a lot of different ways to make money and therefore can subsidize certain costs in certain situations as it makes sense. So it doesn't mean that open source will dominate, but it does mean that open source is gonna be a big part of the market, and that means that you're gonna have-- it means you're gonna have great inference companies. So I, I'm long inference.

16. 49:59 – 54:00

    Has Open Source AI Already Peaked?

    1. JLJason Lemkin49:59

       I think open source has reached its maximum as a market share. I think it's gonna keep c- go-going down.

    2. JAJack Altman50:04

       Even if it does, even if, even if it goes down by 50% and total consumption goes up by 10X, you still got-

    3. JLJason Lemkin50:10

       Yeah, there's still good investments. There's-- I'm not saying that there's not, there's not an almost infinite amount of inference, but I think we've reached peak open weights.

    4. RORory O’Driscoll50:16

       W-w-well, Jason, why? Sorry, help me understand.

    5. JLJason Lemkin50:18

       Two, two reasons. Jack hit one of them, and there's a second one. They're, they're crystal clear. One is, at the end of the day, um, Anthropic and OpenAI are just deciding what they wanna price their non-max frontier models, and they have many ways to compete directly. They have man-- There's no reason they can't be as cost competitive as they wanna be. Now, they're n- they're, you know, y-you ne- you need f- Anthropic's got its numbers if you exclude 7,000 things that has eighty percent gross margins. Okay, we can make fun of that stuff, but they have the ability to be as competitive as they wanna be, right? It is-- And, and Jack's right. There's-- At-- For, for sure there's a certain point where all that matters is resolving a task, but even that I don't think is that-- is, is quite that simple. But they can price Sonnet plus five-five, which just came out. I just tested it. It's, it's only like twenty percent cheaper, but that's twenty percent cheaper in one week. They can do thirty, they can do forty if they want. That's reason number one. Reason number two is, boy, uh, you know, people really don't want Anthropic and OpenAI, um, uh, training on their own, uh, first party data. But they also-- Th-- I mean, I just got back from Dreamforce, and I gotta tell you, I know there are a lot of blazers there and, and, and, and ill-fitting suits and stuff. No one [chuckles] wants to run on open source models there. Chi-- At least Chinese, China-based. Nobody. Nobody. No-- Not a single person is comfortable with it that I talk to, okay? Um, uh, now founders aside, but no customers. So I think just those two trends mean we've hit the peak, right? T-to Jack's point, oh, it's not that op- No, I mean, it's ridiculous to say it. No one at OpenAI and Anthropic's stupid. They can twist the knobs and dials and do what they want, um, and be as cost competitive and just... You know, there are arguments for op- but I just-- This, this anxiety at the C-level is only gonna increase. It's only going to increase, and it's only gonna increase as security becomes a bigger issue, and it's only gonna increase as Astra 5.1 was pulled back for security concerns. And no one at-- Listen, I know it's fuddy-duddies, but it is the real world in enterprise. No one-- I asked them. No one wants to use an open weight model on the floor that I talked to. Nobody. So I just think the market share has peaked. I'm not saying it's not m-material.

    6. RORory O’Driscoll52:12

       Did you ask open weight or did you say Chinese open weight? 'Cause I think there's, uh, there's a bunch of things going on-

    7. JLJason Lemkin52:17

       I get, I get your point. I'm simpl- I'm simplifying that, um, the vast majority of these models that we're consuming today are, are China origin models, right?

    8. RORory O’Driscoll52:24

       Yeah. And where some of those guys are also moving towards not being open weight themselves. But yes, I do think that's why the whole poolside NVIDIA thing is interesting. It would be interesting to have a low-cost US-based alternative. And going back to Jev, for a c-- it's not open weight, but it is US and it's not an LLM. But for a certain class of, um, use case, it is a direct competitor, right?

    9. JLJason Lemkin52:46

       I'm not saying that they're destroyed, to Jack's point. I just think they've peaked. They've peaked in market share. I think it will come down, and I do not-- I don't even think it's gonna maim Modal or Baseten or others. But I think these market share charts that have seemed crazy this year, right? There's been a lot of sources, but, but I think there is a lot of structural benefits that the, that the U- that OpenAI and Anthropic have here, and they're, they're gonna take a- take advantage of it in the coming months, right?

    10. RORory O’Driscoll53:06

        The question is, though-

    11. JLJason Lemkin53:08

        And OpenAI just hit seventy billion, they said in enterprise. Like, it's, it's a l- it's a lot of traction there.

    12. RORory O’Driscoll53:14

        Yeah. Pushing on that, and again, I don't know the answer, is that provided you have opportunity at the frontier, you won't waste time with the second string stuff. To some extent, you're probably more likely to spend time on, as you say, doing the tax return if you feel you asymptotic on some of the frontier stuff. 'Cause the thing that you're allocating at the margin is your compute, and if you're OpenAI or Anthropic, I would love to know what the math is like on do you take this next chunk of GPU and build a model for biology that can, you know, cure cancer, or do you take it and do, you know, Jack's tax return, which is a pretty finite t- probably not a pretty finite task, actually, now that you benchmark product. It's pretty infinite task. But, you know, within the context of AI, it's pretty finite. And, uh, th- super interesting set of trade-offs

17. 54:00 – 55:32

    Will Enterprises Build Their Own Models?

    1. RORory O’Driscoll54:00

       there.

    2. JAJack Altman54:00

       A couple other reactions are, one is that to, to the point of, you know, non-American models, I, I do think that there's a lot of anxiety there. I also think we are starting to see and will continue to see a lot of enterprises post-train their own models. And draft off of open weights and use inference, you know, com- companies to make their own models and then run them themselves. And so I think, I, I don't know how that will factor in, but I do think we will start to see more of that in the US, and I think that will have, you know, some amount of impact. The other thing is you can kind of, you know, I, I, uh, I often try to just kind of like step back, blur my eyes and like what's like the one thing here. And I think, um, one of the things you could look at here in general is it's kind of all just gonna come down to like who's got the compute. And, um, you know, if you look across all of the inference clouds, I think it's, you know, on the order of like a gigawatt or something like that.

    3. RORory O’Driscoll54:55

       Yeah. And OpenAI has-

    4. JAJack Altman54:55

       And I think OpenAI and Anthropic, you know, high single digits each. And so, you know, you could say maybe one's a little bit more efficient than the other, maybe one's got better, you know, token efficiency, one prices a little bit differently. But on some level this will also just come down to like all of the computers firing all the time and like who owns it, I think is gonna turn out to just be a dominantly important part of the equation.

    5. RORory O’Driscoll55:18

       Yes. You, yes. Your, your compute share probably proxies to your token share, probably proxies with a little adjustment to your revenue share.

    6. JAJack Altman55:25

       I got it. At least within 2X or something like that.

    7. RORory O’Driscoll55:28

       Yeah, yeah, yeah. Within, yeah. Got it. That, that, that does make sense.

18. 55:32 – 58:45

    OpenAI Reopens Its $200 Plan and Halves What You Get

    1. HSHarry Stebbings55:32

       Speaking of tweaking the levers, OpenAI reopens its $200 plan that it paused because it ran out of compute for the latest Azure model, but halves what $200 buys.

    2. JAJack Altman55:44

       So Harry, you're right. You're, you're... I, uh, so this is getting at the same topic, which I think is like kind of on some level the fundamental equation of all of this. I think it's extremely important. The other parts of it that we just don't know that are also updating variables continually are how many tokens do you need per task, you know? And so it's like as the models get better, they get much smarter at consuming a token. And then the other is like what is the utility per token? And so we just don't know. So like is it true that there will be-- there are more tokens being consumed, they cost less dollars, and what we just don't know on the other side of it is like how many do you need to like file the tax return, for example, and that's just like an open, it's an open question to all of it. So can you get more intelligence out of a gigawatt?

    3. RORory O’Driscoll56:31

       Yeah. And when you try and get to grips with that, you realize how hard it is. 'Cause you know I'm a geek, I went away and tried to figure out, you know, you got the token cost going down, number of tokens going up, token efficiency. And you, the truth is you're multiplying three numbers, each of which has an error bar that's pretty damn large. And if you're, if you're any intellectual honesty at the end you kind of go, "I just don't really know." Right? The only thing you can observe that's actually actionable is the buying decisions of people who are allocating their money. 'Cause I can't figure out, you know, multiplying three big numbers together what it means. But you know, some buyer spent half a billion dollars last year on Anthropic, you gotta assume they ran the numbers and are getting value from it. Which is why in the end I go back to what I said, the proxy for all this, and Jack you out, when the rubber hits the road is people allocating budget saying at the margin automating this task makes sense and it's worth spending, you know, half a billion dollars, half a million dollars, whatever it is to do. Right? That's the only... 'Cause other than that it's just super hard to really convince yourself you've done the math well enough to understand it, or more importantly, to predict it 12 months out. And that's why if you c- if I could know one thing, I go back to my comment over and over again, I would know the Q3 numbers for those two companies. I knew I, long term it doesn't matter, but short term it matters a shit ton is my opinion, just from a momentum perspective and, you know, how those budgets are continuing to expand.

    4. JAJack Altman57:52

       You know what it's worth for, for, just for fun, there's an app I'm trying to finish called Saster Connect, and I just ran an eval my own... I, I don't know if you can call them evals, but um, I ran it on Sonnet 5.5 which just came out.

    5. RORory O’Driscoll58:02

       Yeah.

    6. JAJack Altman58:02

       Right? Um, input tokens 42% higher than before. Output tokens 44% higher. So who knows if Jack's tax return's [laughs] getting all that cheaper. Now there's benefits from it, right? It, it passed more of the blind tests, right? Quality went up, which is what you would expect. Cost went down about 10%, not what they... not 30% because more GUs, but plus 40% more tokens. I just think the stuff's hard to predict, man. 42%'s a lot from a, from a, to go from 5.5, right?

    7. RORory O’Driscoll58:28

       That's at the level of granularity of Jason doing J- Jason's task, and it's 10X, 100X harder to say tasks in general from people I don't know or I don't see their token spend, which is why you just gotta look at what the Jasons are doing.

    8. JAJack Altman58:41

       [laughs]

    9. RORory O’Driscoll58:43

       What else on that one?

19. 58:45 – 1:04:18

    Oura Pulls Its $16BN IPO

    1. HSHarry Stebbings58:45

       Well, today we have news on, on the flip side of like the incredible multi-trillion dollar IPOs, we have Oura pulling their IPO, which was planned for a $16 billion... Rory, you look like you're-

    2. RORory O’Driscoll58:59

       What?

    3. HSHarry Stebbings58:59

       Jack, I, I have to... Whenever I basically say a new topic, I read Rory's face, and it's always miserable, but it's just the extent of misery that I have to judge.

    4. RORory O’Driscoll59:08

       Yeah, yeah. Well, I, I-

    5. HSHarry Stebbings59:08

       It's like, you know, in terms of-

    6. RORory O’Driscoll59:10

       I, Oura, you're right, we actually have short-term position-

    7. HSHarry Stebbings59:13

       Oh, no, you've got some of Oura, don't you? Sorry.

    8. RORory O’Driscoll59:15

       Yeah, yeah.

    9. HSHarry Stebbings59:16

       Yeah. Oh, I'm so sorry.

    10. RORory O’Driscoll59:17

        I'm speaking-

    11. HSHarry Stebbings59:18

        Oh, we'll, we'll, we'll set up a GoFundMe page just for you, Rory-

    12. RORory O’Driscoll59:21

        Yeah, yeah. [laughs]

    13. HSHarry Stebbings59:21

        ... just so you can get-

    14. RORory O’Driscoll59:22

        I was... Yeah, yeah. No, I'm-

    15. HSHarry Stebbings59:22

        Get some shack, get some shackles in your pot to make up for it. [laughs]

    16. RORory O’Driscoll59:26

        You're all sweet, Harry. I know you care so deeply. But look, I just comment, yes, I'm in the position of having an ownership interest, but not in any way being actively involved, so not having ins- any insider information. But I will admit this surprised me. I mean, it super surprised me. Oura were, you know, um, had planned to do an IPO. They were a long way down, meant to price this week, Wednesday, right? Uh, we, you know, they went into it feeling very strong. In fact, the, the, the... and they had w- for the record, they had Morgan Goldman, uh, Morgan Stanley, Goldman Sachs, and JP Morgan. I mean, all the people. I mean, you, there was no people left that you couldn't have, right? So it's not that they had the dummies here, people, right? And then the second thing is, you know, it's a profit with the big company. Consumers know it. It's the kind of thing that should be very doable. And the third interesting thing is when they first filed, one of the largest investors, Forerunner, who I think are super smart, said they're gonna sell all their position, which I've been doing a long time. I'd never seen someone in an IPO s- being able to sell all their position, right? So I was like, "Hmm, ballsy call and give you credit 'cause, you know, consumer electronics is hard." But the fact that- A priori they'd said, "We're gonna do this," right? To me, you wouldn't say that unless you are highly confident the deal's getting done. 'Cause look, it's always harder to get a deal done when there's secondary action, and when the more secondary action there is, the harder it is to get a deal done. Do you understand me, right? So having leaned in at, up front to say, "We are effectively, we are doing this with a primary and a bunch of secondary," right? "And we think we're gonna get a lot of secondary off the table," to have to walk it back, "We're gonna downsize the deal, and now we don't like the price," right?

    17. HSHarry Stebbings1:01:00

        Do you think it's the right decision, Rory?

    18. RORory O’Driscoll1:01:02

        Well, because there was a huge secondary component, right, the secondary buyers who are venture people on the board, it really matters to them the price they sell at, 'cause they're actually crystallizing it versus, you know, if the company's taking 10% dilution and it leaves a little money on the table, then with all due respect to Bill, who has been positizing on this, I'm gonna say something awful, no one really cares. The stock pops 20%, everyone moves on, and the stock is trading nicely, and it's set up nicely for secondaries down the line. That's the normal move, right? If you're actually selling your entire position, right, at the IPO, and you think you're gonna get 22 bucks a share and suddenly you're getting 18, that's gonna reduce your entire venture return by 20%, so you become very price sensitive. So maybe, maybe they felt they could get the deal done any time and they only wanted to do it at a high price. That's the o- that's the positive version of the argument, that the investors liked the deal but just wouldn't pay up and they decided, "Hey, at that price we'd prefer not to transact." It's a totally rational outcome, but it's kind of a weird one.

    19. JLJason Lemkin1:02:00

        You really think Tom Hale decided not to do the IPO because Forerunner couldn't get the price they wanted? I don't buy it.

    20. RORory O’Driscoll1:02:05

        I don't know. I don't know. That's what I'm saying. I, I, my, I, I'm trying to piece it through because-

    21. JLJason Lemkin1:02:09

        It's possible. Don't get me wrong. He's not a founder, but, uh, I find it, all the effort that went in-

    22. RORory O’Driscoll1:02:14

        You agree. If I'm the company-

    23. JLJason Lemkin1:02:14

        Uh, he wants his liquidity

    24. RORory O’Driscoll1:02:16

        ... i- if I'm the company, I'm bummed, because I always think doing an IPO... I, I've been in IPOs that nearly pulled on the last day before, and you know what it's like, those bobsled races. My opinion, I always tell people, just the minute you unveil the S-1, the minute it goes public, you're jumping in that bobsled and you're sliding to the bottom and there's very few easy way out. You know what I mean? Before you unveil, you can do what you want, but once you unveil, look, this is the hardest thing to do, which is to pull a night or two before the thing. If it was an enterprise company, it would be even harder because then you get all these second-order questions. Are they at risk? Are there dynamics? But because it's consumer, consumers don't care that much. Because it's already profitable, they're not at risk. So it's not fatal. I'm with you. It's like a whole bunch of hard work to get it this far, and then a bummer at the last minute. It sucks. I'm like, I don't know why that hap- I don't know why that happened. I'm a bit bemused, to be honest, as you can tell.

    25. JLJason Lemkin1:03:09

        It does soften it slightly, the employees had 534 million in tender offer just a couple months ago.

    26. RORory O’Driscoll1:03:16

        Agreed.

    27. JLJason Lemkin1:03:16

        It does soften the blow, but it's definitely a bummer. [laughs] Like the whole w- if you've been on the other side of it, going public, you know, there's just so much emotion, right? It's a bummer if the stock price is lower than you thought. It's a bummer if the pop is less than you thought. What I thought when I read it, I was like, man, there's just, it's j- there seems to be so much liquidity, you know? We, that we talk about all the M&A deals when we started it.

    28. RORory O’Driscoll1:03:36

        Totally.

    29. JLJason Lemkin1:03:37

        But man, you can't get a damn IPO done. [laughs]

    30. RORory O’Driscoll1:03:39

        And that's what D- I mean, Dan Primack made that point. He said, "Don't like it 'cause of market conditions. We are 1.4% off the S&P all-time high," right? The Shiller PE is at an all-time high. This, I mean, what else do you, I mean, how much better does it have to be, big guy? Right? So I agree. It was like, huh. I mean, maybe it's... I mean, and it, it will be interesting to see any of these other non-Anthropic IPOs. I'm not sure what's up next. I know, was it New- is it New- not New Scale, it's...
20. 1:04:18 – 1:05:17

    When Will the First AI-Native Companies Go Public?

    1. HSHarry Stebbings1:04:18

       What'll be interesting too is we haven't really seen any of the, like, AI native companies go out yet, and my guess is a lot of them would trade very well because public markets don't have enough exposure to them. But I think, you know, p- it's, it's scary to be the first one. It's scary to do it before the labs have gone out and everybody can see how the markets react to all of those things. So I think there's a lot of companies waiting in the wings, and I think if the market holds on, I would, I would expect that in 2027 there will be quite a few of these. We just, it's interesting that we haven't seen one yet.

    2. RORory O’Driscoll1:04:50

       Totally.

    3. HSHarry Stebbings1:04:51

       Which will be the first, Jack?

    4. RORory O’Driscoll1:04:53

       If I knew that, I would, you know, I'd be really good at my job. I'd be able to pick them all. I don't know. Um, I think there are many that can choose to go out tomorrow if they wanted to, but it'll just be a decision with the management teams and the boards to the point of this, you know, the Oura conversation. It's, it, it is, um, it is not a question of can they be public, it's just what price do they get and are they happy with it? So it's, um, there's a lot of companies who just, you know, it's at their option right now.

21. 1:05:17 – 1:10:58

    Nubank Eyes an $8–12BN Monzo Acquisition

    1. HSHarry Stebbings1:05:17

       On the other end, you've also got Monzo, the British bank, getting acquired for... Oh, Rory, why do you not like that one? Come on, give me something.

    2. RORory O’Driscoll1:05:24

       So I love that one. No, I, I, I think it gives me a chance to bitch-

    3. HSHarry Stebbings1:05:26

       Give me something

    4. RORory O’Driscoll1:05:26

       ... no, I, no, no, I'm sorry about my face, Harry. You, I love that. I'm actually really excited. I'm really excited to do Monzo. I have stunningly opinions on this.

    5. HSHarry Stebbings1:05:34

       For everyone, Rory has an astonishing RBF, which is a resting bitch face. But whatever you say, it's continuously just miserable. Um, but, uh, Monzo, 8 to kind of 12 billion, there's quite a range now, on the suspected acquisition price by Nubank. Um, honestly, I was really surprised by this. Like, David is very focused on winning the US. Buying Monzo, which is, uh, bluntly a phenomenal asset in the UK, you know, a really strong, strong British bank, but it, it's in the UK. To bite off the UK and the US at the same time I thought was respectfully very strange. David's brilliant and much better than me, so he knows what he's doing. But I was shocked to see this news.

    6. RORory O’Driscoll1:06:15

       Put it another way. It is more surprising to see that Nubank wants to buy than it is to see that Monzo wants to sell. That's effectively what you're saying, Harry, and I agree.

    7. HSHarry Stebbings1:06:25

       Oh, yeah, Mon- Monzo wanna sell for sure. They're too, they're way too small to be significant in a US public market, and that the European public market's a shit ass. And so you've got, you, you're praying for someone to come and save you.

    8. RORory O’Driscoll1:06:38

       Agreed. That, that, funny, 'cause I thought you were gonna take the other. That's exactly right.

    9. JLJason Lemkin1:06:41

       Yeah.

    10. RORory O’Driscoll1:06:41

        So yes, 'cause... Yeah, so the question is why Nubank? 'Cause in fact, and the interesting thing is the stock market agreed. I think the Nubank stocks went down on this, right?

    11. JLJason Lemkin1:06:51

        $6 billion.

    12. RORory O’Driscoll1:06:52

        I mean-

    13. JLJason Lemkin1:06:53

        Yeah

    14. RORory O’Driscoll1:06:53

        ... you know, the po- I'm not- I'm gonna make the argument, and then you can tell me why it's dumb, 'cause I think it is, is that, you know, you can make the argument that, look, the problem with the US as a, um, neobank market is we're just so damn efficient in terms of our banks that there's not a lot of fat profit to be taken, which is why Chime, which I admire as a company, trades well, but not amazingly. I, I, $5, $6 billion, whereas Revolut, which is sticking it to all the crappy old-school banks in Europe, is making out like a bandit, right?

    15. JLJason Lemkin1:07:22

        A bandit.

    16. RORory O’Driscoll1:07:22

        So may- maybe the argument is, if I'm Monzo, look, b- the reason they did so well in Brazil, it's another market full of crappy old-school banks that overcharge. Maybe they're just focusing on another, you know, ni- focusing on the less efficient markets than the US, and that's possibly the argument. But you're right, even then, A, you're entering the UK, not Europe, because you guys left Europe, you silly people, and then, B, uh, you compete with Revolut, who, as you point out every week, Harry, is not exactly a shrinking violet when it comes to competition.

    17. JLJason Lemkin1:07:51

        Oh, my God. Uh, terrifying. Terrifying. Um-

    18. RORory O’Driscoll1:07:54

        Think Ja- Ja- Ja- Jamie Dimon, but as a Russian. [laughs] You know, what could go wrong?

    19. JLJason Lemkin1:08:00

        Nu- Nubank are down 23% over the year.

    20. RORory O’Driscoll1:08:03

        Ooh.

    21. JLJason Lemkin1:08:04

        Yeah, mark-

    22. RORory O’Driscoll1:08:04

        Well, it might have been over the week. Yeah

    23. JLJason Lemkin1:08:06

        ... mar- market cap is 46 billion, or 47 billion.

    24. RORory O’Driscoll1:08:10

        Ooh.

    25. JLJason Lemkin1:08:10

        Over the week, they're-

    26. RORory O’Driscoll1:08:10

        Amazing

    27. JLJason Lemkin1:08:11

        ... over the week, they're down 12.6%. I'm gonna buy this.

    28. RORory O’Driscoll1:08:15

        Cool. That's, w- w- we're all-

    29. JLJason Lemkin1:08:16

        Real time, Jack. This is how we do business. [laughs]

    30. RORory O’Driscoll1:08:19

        I love this. Yeah.
22. 1:10:58 – 1:12:44

    Bessemer Raises $5.75BN as Venture Fund Sizes Explode

    1. RORory O’Driscoll1:10:58

       we backed.

    2. JLJason Lemkin1:10:59

       Totally. Um, uh, guys, there's two different spectrums here in terms of venture. Bessemer raised a fresh $5.75 billion, to the point of you only need one, well, they think you need close to six. Um, but a very, very modest $1.75 billion seed fund, Jason. So seed isn't for suckers when you're, when you're, [laughs] when you're doing about 40 million a year in fees. It ain't for suckers, baby. Um, uh, and then on the flip side, you've got NFX now just investing GP capital, um, not taking a new LP capital in new funds. So two different ends of the spectrum there. Well, the Bessemer thing is just what Jack's talked about at the beginning, the learnings at Benchmark and going big on growth early. I think it's probably the same story. Uh, B- I mean, Bessemer didn't, did- they weren't Menlo into Anthropic, but that was a great one, right? The growth team accelerated, they blew up. The whole team's there, Sameer and the whole team. It's been a win. So of course you put more, more money into it, right? They said that... I think they said the seed early was still mostly growth. [laughs] But, but even there, to Jack's point, uh, it's 2026. Imagine a seed r- around this 30 million. How many can you do with reserves in a 1.75 bill- fund if you can't count on recycling? 30 with, with one-to-one reserves? You can't even... You'd, you'd need... Even a billion starts to sound small for seed funds if you believe 30 b- 30, 30 million's a seed, and it, you know, that, that barely gets you a TechCrunch article. So the math sounds right, even if the returns may, m- may, you know, may be some work. That's why Rory's a pre-seed investor today, with his 900. Just, just-

    3. RORory O’Driscoll1:12:32

       He's just... Okay. All right

    4. JLJason Lemkin1:12:33

       ... yeah, your friends and family round, Rory's the first shekels in. [laughs]

    5. RORory O’Driscoll1:12:37

       Yeah, that's me, exactly. I, I totally agree. And then, and then NFX shutting shop to externals?

23. 1:12:44 – 1:18:10

    Why NFX Is Switching to Its Own Capital

    1. JAJack Altman1:12:44

       I agree on the... Like, there, there's... Both of these moves make sense. Like, you know, for Bessemer it's, it is the market around you, and they've got, you know, a long history and tons of LP trust. And if you wanna play the game, why not just go j- why not just go bigger and play the game? And then on the NFX side, you know, like, you know, the Homebrew guys I think did this before, and that works out really wonderfully. And I think it, it probably changes the texture of how the, of how the game feels, and I think people also really care about that. When you're not managing external capital, you get to, you get to do things without any explanation to anybody. And I think that, you know, there, there's probably some ways in which that lets you, you know, freeze up kind of like your activities, but I also think some people just get to a place where they prefer it, and they wanna say, "You know what? This ownership stuff, I don't care. I wanna put, you know, 100K into, you know, into Jev," or something like that. And that's hard to defend out of a seed fund, but if you're an, investing your own capital, it lets you, it lets you do it. So I d- I do also think back to the prior point, I think money's a big driver, but I think there are also non-financial drivers for a lot of these things, so makes sense.

    2. RORory O’Driscoll1:13:50

       Totally agree.

    3. JLJason Lemkin1:13:51

       The only thing I thought about, this doesn't have to do with NF- NFX, I mean, I, I get the q- the, uh, the, the appeal of investing your own capital, right? And I think, uh, frankly, I think anyone investing that has some resources has thought about it at least a little bit, right? If you've got a little bit of money, I'm like, "F the LPAC and the, the, the, all this. Well, I'll just do invest my own money," especially if I have a hot hand. I'll get into these great deals and, you know, I'll get 100% instead of 25% or 20%. Everyone's thought about it. The only thing I always thought about, if it's such a great idea, why didn't Peter Thiel do it?

    4. JAJack Altman1:14:21

       Well, Peter Thiel did put a huge amount of his money into his founders fund.

    5. JLJason Lemkin1:14:23

       Yeah, but not all of it. But not all, but not all of it, right?

    6. JAJack Altman1:14:25

       He didn't put all... No, not all of it. I think, um, on that one-

    7. JLJason Lemkin1:14:27

       It's just an, it's just an example, right?

    8. JAJack Altman1:14:29

       No, no, no, I-

    9. JLJason Lemkin1:14:29

       Of not doing all of it, right?

    10. JAJack Altman1:14:30

        I think you're right. I mean, I think I... But the... I think what he would say, without having ever talked to him about this obviously, but I think what people like him would say is if you wanna build a firm-

    11. RORory O’Driscoll1:14:40

        Yeah, yeah, yeah

    12. JAJack Altman1:14:40

        ... you actually, you need outside capital. You need, you need salary to pay people. You actually need kind of the tension with stakeholders outside your firm to do it. So I, I think if your aspirations are firm building, then you would say, "I'm gonna put in as much of my own money as I can, 'cause I believe in the strategy, but, you know, as much, you know, LP capital as we need." So that, that would be my guess.

    13. JLJason Lemkin1:14:59

        Yeah, it's like 30% of the fund that he funds or something like that.

    14. RORory O’Driscoll1:15:02

        Which is a lot.

    15. JLJason Lemkin1:15:02

        But the NFX thing, I did notice, I think they said goodbye to the team in the, in the notes. So to Jack's point, yeah, it's, it's easier if you don't wanna have a team, right? If you don't wanna have a-

    16. RORory O’Driscoll1:15:11

        It's, it's a d- it's a different thing, and y- you're right

    17. JLJason Lemkin1:15:13

        ... And they have life goals too. It's not just the money. You can, you can fund the salaries, but they have life g- I mean, they wanna be partners.

    18. RORory O’Driscoll1:15:18

        You're building a firm. You have junior people. They want to have a goal. They want to have a career. You have to take outside money. You gotta do all the things, right? I think, by the way, the beauty of putting 30% of your own money in is you can look the LPs in the eye and say, "Thank you for your opinion, but as the largest LP investor here, I'm very comfortable putting 20% of my fund in SpaceX in 2008. So duly noted that you're concerned. Um, but hold that thought for 18 years, and you'll be glad," right?

    19. JAJack Altman1:15:43

        Yeah, and you know, by the way, I think a lot of this gets lost. You know, we, we, we rarely talk about, you know, LPs and all of those things. But the j- like, the, you know, the, the end result of all of this, you know, venture capital work is, you know, hopefully that you're generating money for, you know, groups that, that, that it matters for and all of those things. And if you're, you know, an employee at a firm where it's all the principal's money, you're kind of like a family office where if you do a really good job, you, you know, you enrich that person versus, you know, hospitals and endowments and all that stuff. I, I do think people care about that too.

    20. RORory O’Driscoll1:16:16

        Agreed. On, on both sides, I will say, just as a comment. You, you, you care about it a lot 'cause you wanna do really well for your LPs, and you also feel the burden of it too, right? Is that, you know, you're not just letting yourself down. You... I mean, you know, I'm always conscious of the charities that many of our LPs embark in. And I have a, this mental model if we're doing wrong or do- doing something that's not working out. I have a couple of charities that are super small where I'm like, "I know exactly where this money goes," in some mid, homeless programs for teenagers in the Midwest. And I'm like, "We're sticking it to them," right? "Okay, people, let's get back to work and make this happen here," right? But you're right on that.

    21. HSHarry Stebbings1:16:50

        Jason, would you, Jason, would you ever do this move? I think you're probably the closest-

    22. JLJason Lemkin1:16:54

        Yes

    23. HSHarry Stebbings1:16:54

        ... to us in doing this move with the greatest of respect.

    24. JLJason Lemkin1:16:56

        You know, the o- I thought about it, and, and to Jack's point, the reason is, um, and you rethink it, right? I'm like, okay, not- notwithstanding most of this conversation, if I wanna be able to write a $5 million check to be relevant, right, that's too much for my balance sheet. It's too much risk, okay? So I don't want like... I, I don't... I mean, Homebrew, f- first of all they, they were phenomenally successful, right? Small LP and some other funds, right? They just didn't w- They're, they're comfortable with tho- those diverse size checks, right? I just didn't wanna do 'em. Like, I don't get a lot of joy out of the, the 100K check that I do in 60 seconds. If I got joy out of it, then maybe I would do it, but I'm like, "Hey, I gotta be able to write a $5 million check, or I don't wanna do this game." Um, but if it wasn't for that, I probably would, I probably would... In fact, the Homebrew guys recommended I do it when I started. They're like, "Don't do this fun thing. Like, back in the day, you have enough of a brand. You have enough... Just, just, just do it. Just, just, just, just do it direct." Um, so that echoes with me once in a while. But you got, you gotta, you gotta mold... Even if benchmarks change, you do, you, you do have to fund the check size you, you, you're, you're optimal at writing, right? Somehow you gotta fund it.

    25. RORory O’Driscoll1:18:00

        Which can change.

    26. HSHarry Stebbings1:18:01

        What have I missed? Rory, Jason, is there anything where you're like, "You've missed this, you cretin"?

    27. RORory O’Driscoll1:18:09

        No.

    28. HSHarry Stebbings1:18:09

        Anthropic's

24. 1:18:10 – 1:20:17

    Anthropic Founders Move to Lock In 50.1% Voting Control

    1. HSHarry Stebbings1:18:10

       founders locking up 50.1%?

    2. JLJason Lemkin1:18:13

       You know what's weird? And that, you know what I didn't get in that story? Maybe you guys have some color. Like, why, why'd they wait so long? Why didn't they lock up the control a little bit earlier? [laughs] Like, what am I, what am I missing in the, in this story, right? Uh, did the guy from Skype not let him do it, and Dustin Moskovitz vetoed this? Like, what the hell happened? Why did it take so long to, to get voting control? [laughs]

    3. RORory O’Driscoll1:18:32

       You probab- That's because you probably actually have it in the pre-IPO structure, right? I'm willing to bet just based on a bunch of different things. And then it's when you convert everything to, um, common stock that, you know, your pri- Typically, voting rights expire on the IPO. So what I... My guess is they had a pre-IPO deal, and now you gotta recreate a post-IPO deal 'cause everyone's cap structure changes. So I've, you know, I've been in situations where it's been in existence pre, and then you realize, oh my gosh, everyone, all these preferred stocks that have minimal voting rights or maybe two out of five board members convert to common. Now it's just based on ownership. Oh my God, in this case, I own 2% of the company. I think we're gonna do it differently. And look-

    4. JLJason Lemkin1:19:13

       Could be. Yeah, could be

    5. RORory O’Driscoll1:19:14

       ... th- I mean, this, to, to, to me, at this point, look, if we're willing to fucking trust 'em not to blow up the world, and they've already said they might and it's only a 10% chance, I think we can trust them to with the votes, right? [laughs] You know, this is, this is so low down the list of... I mean, can you... As I sit up and draw up the S-1, having argued over founder control before, right, and is it a good term for the public markets, and as I've mentioned to you guys, I've changed my mind, and I've come to the conclusion it is because of the activist pressure. In the case of this deal, it's literally item 17 on the agenda, right? First, risk of blowing up the world. Second, risk of cyber attacks. Third, risk of hostile state actors. Blah, blah, blah, blah. Oh, item 17, oh, by the way, we'd like to control all this. Yeah, right. I mean, everyone else is like, "Knock yourself out." [laughs] I mean, sure, you have charge of it. That way they'll know who to indict.

    6. HSHarry Stebbings1:20:03

       [laughs] Boys, it's a wrap. Well done. Thank you so much for joining us, Jack. You've been a star guest.

    7. JAJack Altman1:20:11

       Thank you for having me.

    8. HSHarry Stebbings1:20:13

       It's been so good to have you.

    9. JAJack Altman1:20:14

       This was a joy. You guys are awesome.

    10. HSHarry Stebbings1:20:15

        Awesome.

    11. RORory O’Driscoll1:20:16

        Thank you, Jack, for joining.

Episode duration: 1:20:27