Anthropic Raises $30BN at $900BN Price | SpaceX Files S1: How Does it Trade | Cerebras Smashes Day 1

1. 0:00 – 1:19

   Intro

   1. RORory O’Driscoll0:00

      As it's becoming painfully clear now, no one in America, other than us here in California, likes the AI trend. We have people who are brilliant scientists who politically are utter morons, and the people who are utter morons at AI but brilliant at politics are gonna have us for lunch.

   2. HSHarry Stebbings0:14

      Starting off, Andrej Karpathy joins Anthropic, and Anthropic eye a $900 billion valuation for their latest fundraise. Then we dig into the public markets. Datadog up 31%, Figma up 12%. What happens from here? Next, we have Cerebras IPO smashes expectations and breaks the $300 mark. And then finally, SpaceX, they set June the 12th for the largest IPO in history, $1.75 trillion market cap, raising $75 billion.

   3. RORory O’Driscoll0:47

      At least when Meta was busy destroying the world, they were smart enough to pretend it was all about bringing friends together but not destroying democracy. We will regret that lack of transparency.

   4. JLJason Lemkin0:56

      We're gonna have to reflate and hire thousands and thousands of people per tech leader to avoid social unrest. We see no signs that there's a short-term crash coming. Ready to go?

   5. HSHarry Stebbings1:05

      [rock music playing] Boys, it is so good to be back.

2. 1:19 – 5:40

   Anthropic Eyes $900B Valuation & Andrej Karpathy's Shock Move

   1. HSHarry Stebbings1:19

      So we're gonna kick off with our This Week in Anthropic, [laughs] starting as always. Um, we have two. We have Anthropic in talks for $30 billion at above a $900 billion price, nearly tripling from 380 in February. Greenoaks, Sequoia, Altimeter, Dragonere. And then yesterday, we had Andrej Karpathy announcing that he was joining Anthropic. So boys, over to you. How did we read this news?

   2. RORory O’Driscoll1:47

      Well, d- divide up the two. I mean, the financing, yes. It-- You know, we talked about it last week. There's nothing more to say. They can pick their price. They can pick their investors. They can tell the amount, and they can tell Evan to jump, and Evan will say, "How high, sir?" So it's all happening. They're gonna raise 30 billion, we discussed. Obviously, the question is, you know, w- how those folks pencil out the return and-

   3. JLJason Lemkin2:09

      So Rory, I don't mean to be old school here, but, um, I'm feeling old school. Do you think ARR multiples still matter? I mean, if Anthropic is-- if 900 billion is 18 times June revenue, um, it still feels like a better deal than any of the ones I did last year.

   4. RORory O’Driscoll2:26

      Yeah. I mean, there's no doubt that statement is correct. Agreed. No, I mean, just to put it really simply for listeners is that mul- you know, you're writing checks in the private market for companies of $10 million in revenue. You might be paying 20, 30, 40, 50 times ARR, right? Maybe it's three, five X-ing, but it's five years away from an IPO. And here's the last three rounds. I mean, for the last three rounds, really from the 150 billion round at Anthropic all the way on, they've been so post-IPO that you can assume there can be an IPO. So there's no "it doesn't make an IPO" risk. There's no "it will go away" risk. Typically, when those risks don't exist anymore, the only risk you're taking is valuation risk. And the truth is, every time the multiple on this has been significantly lower, uh, and, than the multiple on your median Series A or B or Series C for a higher growth rate. So it's been the best trade out there.

   5. JLJason Lemkin3:19

      The meta question is, listen, at some point, everything's DCF, right? At some point, it has to be. I gu- I guess. I'm not even sure I believe that anymore. But certainly that's equ- public markets Ec 201. Everything is ultimately the, the, the discounted, uh, present value of your future cash flows. But every growth r- I haven't been a part of any of these Anthropic rounds, unfortunately, but every growth round I've been a part of, it's still ARR multiples at the end of the day. No one's really doing discounts for lower gross margins like we did until, say, 2021 or 2022. So i- is this-- I guess the meta question, is, is this the, a fair metric for Anthropic? Its, its margins are improving, right? And so if 18X really is fair, geez Louise, I, I think, uh, I think all, everyone desperate to get in is right because it's the best deal going, if, if an ARR multiple is still fair, if-

   6. RORory O’Driscoll4:09

      You, you, you're asking a diff- I'm sorry it took me a while. The coffee's got, you know, at first... We, by the way, we're doing this early at eight, at eight o'clock this morning. So I've been up since five, but the coffee's only kicking in.

   7. JLJason Lemkin4:17

      [laughs]

   8. RORory O’Driscoll4:17

      Um, yeah, no, I mean, that's a totally separate... I mean, look, if ARR multiples are the right metric, then you should buy the one that's at 18X ARR, growing 10X year on year, that's already so fricking large it will clearly and visibly go public. If ARR-

   9. JLJason Lemkin4:30

      Yeah

   10. RORory O’Driscoll4:30

       ... multiples are the proxy for value, then this is the best value in the venture universe. Which is why I'm gonna say it. Very smart capital allocators whose mandate isn't kind of sector specific, but kind of range anywhere, stuck your mo- stick your money in. You know, people like Green Oaks, people like, um, Altimeter are doing this deal because they're like, "You know, yesterday I can do a 20 million ARR deal. Today, I can do a $50 billion ARR deal, and the multiple's better."

   11. HSHarry Stebbings4:56

       When it's so obviously a good deal, as we mentioned there, given the trade for investors, why would Dario and Anthropic do it at that price if it is so obviously a good deal?

   12. RORory O’Driscoll5:07

       Because it de- because you're giving away 30 over 900, which is like, um, let me see, 3% of your business, to de-risk it for another year of monstrous burn, where, you know, you're committing to, I don't know, six, five gigawatts this year. And, you know, the mental rule of thumb is the total cost of, you know, a gigawatt of high-end compute is 40 or 50 billion. So now you're not spending 40 or 50 billion, you're persuading hyperscalers to spend on your behalf. But you have to have... I mean, this is a big ass balance sheet war, so to me, it's a no-brainer to do it. They're gonna raise, and they're gonna raise again, and then they're gonna

3. 5:40 – 8:37

   Unpacking Anthropic's $30 Billion War Chest

   1. RORory O’Driscoll5:40

      raise again.

   2. HSHarry Stebbings5:41

      Do you think they'll raise again before they go public?

   3. RORory O’Driscoll5:43

      I doubt it. Just depend on their trajectory now, because they're saying they're going public in November. But my point is, even aft- By the way, the other comment is, when you stop having to raise, that's a disaster, because it means that you're g- Why are you raising? You're raising for CapEx, and you're raising for growth. Um, if you, once you become a, once that hypergrowth stops and you don't have a CapEx need, you also don't have a growth story, and that'll be a very different place to be. I mean, right now, you know, right now this is the highest ROI on-equity dollars, so that's why they're getting it. So they, they, they should just keep raising it well in advance of the need because the needs are so great.

   4. JLJason Lemkin6:21

      I know it sounds silly and, and maybe it's my ri- My actually read is that, um, Sam has been pushing the valuation to the absolute max since he... as long as he could on the thesis he needed infinite capital, right? He's always been clear on that, right? So the last OpenAI round was more expensive than almost the contemporaneous Anthropic round, even though Anthropic appeared to be out-accelerating them, because Sam just pushed it to the max, which you can if you're a great salesman and have demand of one more dollar than supply, right? It seemed to me Dario's the opposite. I mean, uh, he actually does own shares in this company, right, rather than indirectly through a VC fund. Uh, but it's, it's pretty diluted. He's giving away 90% to charity. So he just wants to get a, a deal done in a week that is fair. He does this deal at three eight, it seems fair, and all of a sudden he turns around, Sam's done a deal at twice the price, so he does this at, at 900. Um, I think when Anthropic's worth two to three billion, he'll do a round at like one six in 48 hours to get it done. He'll just do it. He won't push it to the max like Sam does and, and create stress. But I actually think these rounds, ironically, the last two intentionally traded at a discount in order to not rip people off and get it to done low drama in days. I, I actually think that was the trade-off of... And we've all worked with founders like this that enjoy maximizing every penny from the round, and others who want a, a 70% deal, and they truly... It's not just in the email, they truly want it done in a week, right? That's not just a game to get the money. They just like, "Give me a 70% deal in, in 72 hours."

   5. RORory O’Driscoll7:47

      Yeah. It's a super point, Jason, 'cause j- I'm remembering now the details. I mean, compe- It's so revealing. Compare the last two rounds. The Anthropic round is, "We're gonna raise 30, it's gonna be cash. You're gonna send me an email confirming you're in, and then we'll collect the money." End of conversation. The OpenAI round is, "Well, Amazon, you're gonna give us 50 billion, but 20 billion is gonna be up front. The other 30 billion is contingent on us going public or AGI. And Masa, you're gonna give us 40 billion from SoftBank, but you gotta borrow 30 billion to get that 40 billion-

   6. JLJason Lemkin8:18

      [laughs]

   7. RORory O’Driscoll8:18

      ... so we're gonna give you a little time to pay that money. So we're closing on 110 billion, of which 20 billion is clearing now, 30 billion in six months' time, depending on the lending market." It's like, "Jesus, give me a break," right? I, I, you're right, Jason. I think philosophically the Anthropic team seems to operate under, "If I wanna raise 30 billion, I should probably get a check for 30 billion and call it a

4. 8:37 – 23:12

   The True Cost of AI Tokens

   1. RORory O’Driscoll8:37

      day."

   2. HSHarry Stebbings8:37

      Speaking of getting a check for 30 billion, Jason, I really wanted your thoughts on this one. Benioff was on All-In, and he said that Salesforce spent 300 million on Anthropic tokens this year, almost entirely coding. The question I have for you is: When you look at your usage and how you use it today, is that about right in what you would have thought? Is that way more? Is that way less? And how do you think that will change for Salesforce over time?

   3. JLJason Lemkin9:03

      It's actually not that much per engineer. This is great. Mark's, Mark's one of the great classic marketers, probably the greatest marketer in classic B2B of all time, right? Uh, he's just a force of nature on all vectors, right? Company, s- physical size, gravitas. But, um, if it's... I, I think that works out, uh, to about-

   4. RORory O’Driscoll9:23

      I, I did the math

   5. JLJason Lemkin9:23

      ... 15 to $20,000 per engineer per year.

   6. RORory O’Driscoll9:26

      No, l- yes.

   7. JLJason Lemkin9:27

      It, it's not, it's nough. That's... I think that's just table stakes today. What's his fully burdened cost for a developer at Salesforce? Probably 500K for an engineer f- all in, all costs, with their share of the building and snacks. So 20 grand a year is 4% additional. Um, cheap, man.

   8. RORory O’Driscoll9:44

      Good, uh... First of all, I did the math this one, 'cause I actually think this is the most important question of the Anthropic-

   9. JLJason Lemkin9:49

      Yeah.

   10. RORory O’Driscoll9:50

       I skipped the other two. This is the one. And actually I'm gonna give you... Oh, God, I sound patronizing. I'm gonna give you an A, Jason, for math on the fly, which is, I think, very hard to do. I couldn't have done it on the fly. I did it this morning, right? The, the c- This is... th- And it turns out 300 million is eh, which is astonishing, first of all, right?

   11. JLJason Lemkin10:07

       [laughs]

   12. RORory O’Driscoll10:07

       So the numbers are: Salesforce spends $5.8 billion a year on, uh, engineers, right? It's... So it's roughly 4% of the spend. If you want it per head, they have 20K developers out of their total 83K heads, so it's 15K per head per year, which is 1.2K per head per month, right? 1,200 per month, right? I actually... We did a survey. I'm not sure if I'm front running it. One of my colleagues is gonna publish it, right? We did a survey on, you know, 40 portfolio companies and external companies. What are you spending per year, uh, or per month per developer? And the average was 1.2, 1.3K, and the s- the median was lower, right? So obviously you have some token maxing and then, you know, wider dispersion. So, uh, so first of all, you're exactly right. It's in the strike zone of normal. It's not... I mean, it, it's only the big number because, um, because they obviously have so many developers, right? So that's the first thing. Uh, y- so you are, you're kinda... Rough estimate math's exactly right. And then the question is: What does all this mean, right? Where is it going, right? And I mean, well, actually, first question is, but before that, it is still astonishing and we're r- one of the reasons that Anthropic and OpenAI are just amazing businesses, 90% of the stuff you sell to Salesforce as a vendor, you know, if you were selling them an ERP system, now obviously they have the CRM system, my guess is if they bought SAP, God forbid, you know, right, would they spend 5 million, 10 million? This is the only product that a company like... Th- this is probably the only vendor line item other than maybe rent that comes anywhere close to this amount, right? So from nothing two years ago, this is the largest single external spend that every software company's making. That's the first big aha, right?

   13. JLJason Lemkin11:49

       Yeah.

   14. RORory O’Driscoll11:50

       And-

   15. JLJason Lemkin11:50

       It's both nothing and it explains Anthropic's mediocre rise.

   16. RORory O’Driscoll11:53

       It explains everything.

   17. JLJason Lemkin11:53

       It's, it's both in the sa- at the same time, right?

   18. RORory O’Driscoll11:55

       And then you gotta say to yourself, 'cause going... Remember I kinda said it. When it comes to valuation on Anthropic, is it good or not, you... The quest- When you try and figure out how much money these companies can make, what you figure out is trying to come up with some kind of heuristic relative to R&D spend is the key, right? In other words, how much of every knowledge worker wage and how much of everyCoding wage is gonna get translated into tokens, right? And you know, we did a rough and tough estimate, and we're, we're finding it more, is that if you start thinking about a trillion dollars worth of token revenue across Anthropic and OpenAI, which is the four-year projections are saying, and they better get it 'cause otherwise that CapEx is gonna look pretty sick, right? If they're gonna get a trillion dollars, right, my rough math says it's something roughly like 5% or 7% of every knowledge worker's salary and 20% of every engineering salary. So they're currently... So if, if, if that math is correct, that, and that, that's kind of what it takes to get a trillion, right? So in other words, Salesforce might only be a quarter of the way there. Now, one of two things is gonna happen, either they stay at 300 million, in which case the TAM for some of these kind of token businesses, like OpenAI and Anthropic, will have been overestimated, and there'll be a real correction, or they keep going, they 4X their token spend from here, and in, and two years' time, Benioff is on saying, "We spent a trillion dollars... Sorry, a billion dollars on tokens," and we'll talk about the, um, the people consequences for that in a second. But one of those two things has to happen. 'Cause even on the, on the macro level, right, worldwide software business across everyone is about 1.2 trillion dollars. R&D spend is roughly 20%, $240 billion, right? The interesting thing is if you get 20% of that, you only get 50 billion, right? So to justify these Anthropic valuation and these, um, OpenAI valuations, you really gonna have to eat a shit ton of what is otherwise OpEx. You've got to replace 20% of R&D salaries. So Beniof- uh, either those valuations are wrong or Benioff is only a quarter of the way on the journey, and he's probably ahead of most. The numbers for OpenAI and Anthropic are so large that you really have to start thinking about what percent of the total wage bill of engineering in the software development market do you get. And if you're not tracking to 20% across most R&D spends, then the three- and four-year projections for some of these companies will be a bit lofty.

   19. JLJason Lemkin14:25

       At a meta level, you have to be a bull, right? Because the trend has just begun. Mark's 300 bill- 300 million is just the start of what he's gonna spend. On the other hand, I do think, and I hate to use myself as a N equals one case study, but, but at SaaStr itself, Amelia and I have, now we have 21 agents, of which three are autonomous, okay? And, um, the direct, the direct token cost that we spend, the direct AI altogether for both of us is about two grand a month. So... And that's gonna go up, but there- the bear case, the bear case is the models will get better, and they will get more efficient, and we will get more efficient, and the bear case is two, uh, 1K for each of us. And, and listen, this doesn't include third-party apps. It doesn't include tokens we buy inside of Salesforce, so, so it's higher. But there, if you, if you think about it, there is a bear case there that everybody is using, every knowledge worker has this attached, but, but the numbers Mark are throwing out is about right for folks not at the bleeding edge of token maxing. This is the bear case. It's not today-

   20. RORory O’Driscoll15:22

       Absolutely

   21. JLJason Lemkin15:22

       ... when SAP and Uber CIOs have said, "We're out of tokens for the year." But I do think we're ahead of most, right, at our little team, and we're only spending 2K a month in direct token costs. That's a bear case on the next Anthropic round, I think. I'll give you another example. We had, uh, SaaStr Annual was last week. Rory, Rory was a celebrity, Harry. We could talk about it. He was m- literally mobbed. You saw the pictures. But our very last speaker, it was kind of him to come because it was the last one, people are tired, was Andrew Bilecki, who's the co-founder and CEO of Klaviyo. Very interesting because he's a true engineer and, and turned s- F- B2B founder. He requires every single employee at Klaviyo, if they're anywhere close to product, to be committing code, anyone in product, anyone in design, anyone there, and every single person has to be running AI or agents to do their job. I couldn't believe it was 100%, right? It is... And they built their own custom framework to require it, and he went through it all. It was very cool. And so my point is he knows his stuff, right? Um, and, and a lot... And we built this AI VP marketing, AI VP customer success. Everyone thinks it costs like $8,000, $10,000 to run these autonomous humans. I go backstage with Andrew. We're talking about it on my phone. He's like, "How much do you think it costs to run an A- VP of marketing?" He, 'cause he's done it. He's like, "Maybe $250 for both of them?" The answer is $257 just to run the agents. And so, and his point was, at the end, is this, a lot of this stuff is not as expensive as we think. We do not need to worry about token maxing at Klaviyo, and everything we're doing is agentic. We have our own agentic f- framework. The most junior product person, the, every single person has to be doing this. We have to manage it, and they have a harness that manages the model and gets it thoughtful. But he's like, "If you do this right, it's not as expensive as..." And, and the fact that he guessed it within a coup- I mean, he was the only person that got it right because he's doing it. [laughs] The only one that got it, got this number right because he's doing it. And so I'm, I'm not bearish, but, um, this is the bear case. It's just, we just, we need a half or a third or a quarter as many tokens as we think we do outside of the folks running massive workflows 48/14, right?

   22. RORory O’Driscoll17:23

       At 1% of R&D spend, it's lost in the noise. At 5%, it's real. That's a layoff, right? At 20%, which, let me repeat, is what it takes to get to for these overall models to work, right, for these overall TAM analysis to work, that's huge. It's one-fifth of your payroll costs in engineering.

   23. HSHarry Stebbings17:43

       Jason, every public company CEO wants your advice on agents and AI.

   24. JLJason Lemkin17:47

       Yeah.

   25. HSHarry Stebbings17:47

       Are you more bullish on Klaviyo post seeing the inner workings of Andrew, and is he a top 1% public company CEO on AI?

   26. JLJason Lemkin17:58

       I, I am... It's a good, it's a good question, right? Um, the one thing I've been thinking a lot recently, um, uh, when, when we kind of bounced off the lowest of the SaaSpocalypse, right? You think about Atlassian-

   27. HSHarry Stebbings18:10

       Yeah

   28. JLJason Lemkin18:10

       ... Figma-

   29. HSHarry Stebbings18:12

       Yeah, yeah

   30. JLJason Lemkin18:12

       ... a few others that have seen, at the end of the day, compared to their highs, very, very modest bounces off the hard deck, but growth, but more importantly, growth is re-accelerating there. That's the most important. So, so, so when you see Figma re-accelerate to almost 50% growth, when you see Atlassian, um, seemingly struggling when, when Mike was on this show re-accelerate north of 30, the meta question... And, and, and with Atlassian, it's definitely from Rovio, their agent. With Figma, it's a mix, right? But-When you see these, when you see Twilio come back from the dead to 20% growth, you have to ask yourself, is there a little more time than we thought? A little more time, right? Uh, the whole world is not in San Francisco, of all the buyers, of all the users. So this is the que- this is the-- it's both the question for Andrew and for Marc Benioff and others. These founder-led companies that are iconic with great CEOs. At the end of the day, maybe they have enough time, maybe another year if they're just getting going on their generative journey. And, and sa- and, and SalesForce is further along than... I am not sure that means their stock will re-accelerate until they-- it is proven. I think that's what we learned from last quarter. Monday, Monday did sort of beat expectations and bounced. HubSpot said Q2 is gonna be tougher, and it got hit hard. So you gotta show me the growth, right? That's the, that's the mantra. But I am somewhat more bullish than 90 days ago that there's just time. Klaviyo is arguably the single most beaten down public company software stock because of the delta from Shopify. Like, it's trading at three-something times revenue, and Shopify is at what? 12 or 14? I gotta look it up. Um, so if I were ahe- if I-- we were a long-short team, I might propose that one on Monday. Um, but you gotta show the growth, man. You gotta show... And they're not-- And even though he's ahead of the internal agent, he's not, they're not way ahead of the game for the external one, and that's the, that's the bear case, right? Why-- If, if your competitors are there, why aren't you there today? Why don't you have... This is the... So yes, I'm optimistic, but my flip side is you've had 18 months, and you've had since December, since the Claude 4s, to, to destroy your space. Why do you let these, these dumb little startups out, out, out-hustle you? You've got 2,000 engineers spending $300 million a year. That's the bull case. Like, you've had time. Um, but I'm getting more optimistic that if the leaders build the best agents in the space, 2027 could be good for them. I'm getting more optimistic, and I was pretty bearish a couple months ago.
5. 23:12 – 27:26

   Public Tech Rebound: Figma & Datadog Crush Expectations

   1. HSHarry Stebbings23:12

      We're gonna discuss Wix. I just wanna cover Figma first, though. Jason, you're always rather opinionated on Figma.

   2. JLJason Lemkin23:17

      Yeah.

   3. HSHarry Stebbings23:18

      Uh, but accelerating for the second straight quarter, NDR 139%, two-year high. This was a, this was a great quarter results. Fucking sold all of mine at the end of last year. [laughs]

   4. JLJason Lemkin23:31

      Well, you're still ahead. That was the right time to sell. They're Rory's point. I'll tell you what I got wrong on Figma for sure. Like the cap-

   5. HSHarry Stebbings23:37

      Yes

   6. JLJason Lemkin23:37

      ...like Dum-Dum Lemkin, okay? I gotta come up with something that assonance with the L, right? Uh, a Limited Lemkin or something like that.

   7. RORory O’Driscoll23:44

      Loser Lemkin.

   8. JLJason Lemkin23:45

      Loser Lemkin. I like Limited. Can we go with Limited? Can we be a little higher?

   9. RORory O’Driscoll23:48

      No, we go with Limited Lemkin.

   10. JLJason Lemkin23:49

       Limited Lemkin.

   11. RORory O’Driscoll23:50

       We go with Lemkin.

   12. JLJason Lemkin23:50

       I was completely right that Make is the worst vibe coding product I've used since I've been on this journey.

   13. RORory O’Driscoll23:55

       Wow.

   14. JLJason Lemkin23:55

       And it-- and I'm right that it was not important to the senior management, and I'm right that they left 500 million or more on the table by not building a replacer level looker better. I, I'm 100% right, and I think it's the tragedy of folks being slow. However, Limited Lemkin, I missed the captain obvious point. Um, Figma is a building software. So everyone that is in the business of really helping... Like, there is a soft-- like, there is an AI explosion, but part of the AI explosion is a software explosion. And you can see it in, in companies that Harry and I have invested on, like Work OS and RevenueCat, that have exploded because there's a software explosion going on. And even though Figma lost the vibe coding race so far, it is du- it is one-It is a beneficiary of the software explosion, one, right? Two, and two, it has internal AI tools, like, like Andrew from Klaviyo was talking about. So one, it's selling credits to make your product a little better. That almost sounds cynical, right? But what it's really rolling out now is the ability to internally vibe improvements to your Figma designs. Like, the agent can look at your Figma design. It, it actually officially rolled out, I think today. It's been in beta for a while, but it rolled out while we record this. And instead of just designing something, it can say, "Hey, let's, let's, let's up- let's update the workflow in here, let's update the journey." This is not, like, incredibly difficult, but it is difficult at Figma's scale. So even if they're not going to help you vibe products, the fact that they are making the building of software more efficient for their audience, you know, it's like Atlassian not adding massive new customers because of AI, but adding massive more value for their base. So I got- I- they're a l- they're a little slow to that. It's in beta today. I mean, it's, you know, it's getting to be summer. But, but it looks like it's pretty good. Um, and I utterly, L- Limited Lemkin missed anyone like Figma should be modestly accelerating today 'cause we're building more crap. Their new ability to agentically improve design likely will be a big deal for their customers. They likely can get another 50% or more of revenue out of their base.

   15. RORory O’Driscoll25:55

       The question is, to the extent that folks who would've been using Figma are now doing mock-ups for software products using Lovable, which you hear a lot about, you know, which is using it as a way to describe your product rather than doing a Figma, that's actually a f- a, a work stream that you would wanna own if you're Figma. 'Cause what you don't wanna have is people going around your product flow, right?

   16. JLJason Lemkin26:14

       Yep.

   17. RORory O’Driscoll26:14

       So I do think you're right, Jason. I think it's not just the extra 500 million, it's- I'm willing to- they probably have an imperative to make sure that that, that their customer doesn't leak out to a design flow that's do your actual design in something like Lovable, where you have a working prototype, not just a Figma design.

   18. JLJason Lemkin26:33

       I think so. That one for the moment appeared to be more of a Twitter mania overstated. The, the, the, the, the limited- the design capabilities in Lovable, which is a little bit ahead of Replit, they're pretty limited for anything that's professional grade. Like, for a Figma person, they're still pretty, pretty early. What, what Figma missed is I create this design, it's beautiful, I, I loop in the product team to approve it, and then I click a button which it says, "Push into full production prototype." And it just works. It works. Like, and you c- and the irony is Replit and Lovable both have that as a native insertion point for a reason. Like, if you use these products today, they have up- you know, it- right in the prompt, "Upload a Figma design" [chuckles] because they know, like, this is their number one ICP, wants to take that static design and put it into production. Why, you know, I mean, um, why Figma doesn't have that natively is a loss of, uh, you know, $500 million and going up.

6. 27:26 – 38:50

   The Death of Traditional Web Builders? The Decline of Wix & Squarespace

   1. HSHarry Stebbings27:26

      It totally is. On, on the flip side of these two great, great quarters and kind of exciting, happy news, uh, Wix down 45% since the stock repurchase. Rory, you mentioned it and touched on it. They're now a $2.2 billion market cap. Base44 announced last night actually that they hit 150 million of ARR, which is-

   2. JLJason Lemkin27:46

      That's 'cause the core business isn't growing. The pre-AI [chuckles] business is no longer growing, right? Maybe it's not- I think it says the pre-AI business is terminal. That's what the public markets are saying, right? And they, they don't think that the AI play is enough to, to rescue it from terminality, right? You've got... The 150 from Base44 is very impressive, right? But it's substitution revenue at a high level, isn't it? Because it hasn't materially grown the AR- the revenue. It's substitution.

   3. HSHarry Stebbings28:09

      If you were to assume then that it's a terminal business in terms of the core business that's existing, forgetting Base44, surely you would then ascribe the same to a Squarespace, which doesn't have Base.

   4. JLJason Lemkin28:18

      I think they're, I think it's terminal as well. I think Wix and Squarespace, one thing people forget, this is at the... And if you look, it's true. The, the- not only are they t- they're, they're being terminated by two vectors. One is obvious, one is less obvious. The obvious one, what, but is more true than people think, is it's better f- in many cases today it's already better to vibe code your own website 'cause you get what you want. And they already have templates, and they already have integrations. Not, not for folks that are truly tech fearful. They should still use Squarespace and Wix. They're great products. But they're so limited, and you can build something in a vibe coded platform so nicely in 10 minutes. A- a- anyone that's not tech-phobic should use these products. The other thing that, that we kinda forget is that Wix and Squarespace, for the last five years, they, they were low-end Shopify competitors. That's where their growth was, from merchant services, payments, e-commerce. And there was a whole world, uh, four or five years ago, where, where you had WooCommerce from WordPress, you had Wix, you had Squarespace, and you had BigCommerce, who all were viable competitors to Shopify. The other thing happened, Shopify destroyed them all. There's no reason to use... This is another category where the low end was destroyed by Shopify, who amazingly went up market and down market successfully at the same time. And there's just, it's not worth it. You can't save enough money to not use [chuckles] Shopify for your store. So, so the folks that are trying to save $14 a month have just kind of, uh, uh, evaporated for the low end of the market. They don't need these l- these sub-Shopifys. And BigCommerce, even though it's not low end, it got destroyed p- too, right? The most visceral competitor, the, it was just dead. It's, it's dead in the water. So they got hit both ways. It's, it's too, it's too bad, it's two bad currents hitting them.

   5. RORory O’Driscoll29:57

      As you... Uh, uh, uh, broadly agree. I mean, I think BigCommerce right in the, right in the strike zone of Shopify. I don't know the Wix mix between think of it as kind of information only sites versus e-com sites. But you're right, Jason, it really matters. And if it is high on e-com sites, then you have that vector to think about.

   6. JLJason Lemkin30:15

      And it was all the growth. It was all the growth.

   7. RORory O’Driscoll30:16

      It was all the growth. Got it.

   8. JLJason Lemkin30:17

      It was all the growth.

   9. RORory O’Driscoll30:18

      Interesting. Because, you know, the co- I would say this. For the core... I mean, a lot of those businesses have to be customer ac- it, it's super low end SMB, especially for the non-e-com sites. It has to... You know, if your core acquisition engine works, you should've been able to a- I mean, it is still possibleThat if you can convert most of your customers to the new product, then over a couple of years you can make-- you, you, you can maybe make the math work, right? If you are a Wix. If you-- At least they have a new product. They did do the acquisition, right? Um, it is possible to... You know, you, you get this weird compounding 'cause when the new product is a hundred million and it's doubling and the existing product is a couple of billion and it's flat, for the first kinda year or so, the o- it's really hard to move the overall aggregate g-gap revenue growth rate. But if you can compound quickly enough on the new product, it does move it up, right? So that's on the revenue side. I wanna come back to-- I wanna separate the stock buyback from that, right? That's on the revenue side. But separate comment. On the stock buyback, that sucks 'cause it's like you do the classic investor banker thing of, oh, if you buy back the stock at four times, you know, it's, it's cheaper than it's ever been and that'll be good for the stock. And it sounds like it makes sense. But when shit's going wrong, things can go lower than you ever think, and sometimes it pays to keep the money in your back pocket 'cause the, 'cause the stock will go even lower, right? And I think that's just a strategy that didn't work right now, right? You took on a bunch of capital, you bought the stock back, and you didn't... You know, by definition, if the stock is forty-five percent down since that moment, that buyback strategy didn't work. And I'm always-- In fact, I'm always... It's better to have bought it back cheap than bought it back at even the crazy high prices that some people are doing stock buybacks in the past. But when your business is in trouble, things that are bad can get worse. And the actual ability to have another billion dollars on your balance sheet to maybe make an even bigger acquisition, in my view, is worth more than trying to juice the stock for the short term. So I think they look back on that stock buyback and go, "That wasn't the best move to make. We optimized for the short-term value of the stock, not the long-term destiny of the business."

   10. JLJason Lemkin32:24

       The flip side is Mark Benioff said they did a buyback. What did he borrow? Twenty billion or something like that to do it, right? Not even at the lowest interest rates, but he said, "I did it to offset Slack and Tableau. I did it to offset the dilution. I got it back," right? My theory-

   11. RORory O’Driscoll32:36

       But what does that, what does that mean? What does that mean? I actually challenge that. I th-- And I hear him saying that, and I hear them saying, "We're doing it to offset stock-based compensation," and I want to beat my head off the fucking wall. The only reason you buy stock back is because you think it's way cheaper than it should be, right? The whole... Like, if the stock was trading at a trillion dollars, would you buy it back at a trillion dollars to, quote, "offset Slack dilution"? I think it's a bogus bullshit answer for people who are just trying to manage some second order metrics when it just doesn't make sense. I, I, I, I've been on boards where people pitch, bankers pitch to do a buyback to offset stock-based comp, and I literally wanna bludgeon them to death, right?

   12. JLJason Lemkin33:15

       Well, listen, uh, uh, of course you're right.

   13. RORory O’Driscoll33:16

       Buying stock at high prices is stupid. Buying stock at low prices is clever. End of analysis.

   14. JLJason Lemkin33:21

       I think a lot of these deals, and maybe, and even Salesforce, maybe, uh, it's really just to hold off shareholder activists because that's their first play. That's their first play. So when you are down in the dumps, the, what you gotta, you know, you, and you've, Rory, you've been on boards of this. You've watched it. You wanna, to the extent you can, you wanna placate the shareholder activists without giving them what they want. And the simplest thing you can do is use all your cash to buy back shares 'cause that's their play. So if you take them out of the game, you've given them what they've asked for, and they don't really have a play if they buy you, especially if you're also doing layoffs. So if you're doing layoffs and you're, and you're doing the buybacks, may-maybe you keep Starboard and friends away because their playbook, uh, has already been used up by the management team.

   15. RORory O’Driscoll34:04

       Agreed. That is actually the... And look, if there's nowhere better you can put the money and the stock is cheap, then it pays to buy it back. But my f- And, and, and I do get the comment that you're always afraid, like, of management with big amounts of cash, that they'll waste it on a bad acquisition. On the other hand, in these times of change, right, hyper change, right, you know, you probably have two choices as a, as a SaaS company. You either decide, I am the old thing and the old thing is good enough. I'm gonna optimize for thirty percent operating margins and ten percent growth, and I'm an economic machine. It is what it is, and if I have excess capital, I should buy the stock back, give it back, do whatever, right? Or you say to yourself, I might have to do something more than that. I don't know what it is, but at least for the next twelve months, I'd like the option value of knowing if I wanna do a, what was it, a Base44 or whatever it is acquisition, I have the money, right? So I, but I agree with you, Jason. Cynical comment, you're right. People do it because it's one of the least disruptive activist moves that you can do, and normally you get brownie points for it. But the odd thing is, if you do a buyback of the stock to appease the beast and then the stock goes down forty percent, they won't remember that they wanted you to do a buyback. They'll just say you're an idiot for doing it. In the end, you're paid to be right. And when you buy and then it goes down forty-five percent, unfortunately, you can't say to yourself you were right.

   16. HSHarry Stebbings35:25

       Today they're trading at one X revenue. One X literally.

   17. JLJason Lemkin35:28

       Yeah, that's the terminal st- uh, simplifying the terminal state.

   18. HSHarry Stebbings35:31

       Yeah. Yeah.

   19. JLJason Lemkin35:31

       They also announced two years ago they were shipping a Glean competitor and going all in, but I'm not even sure it exists.

   20. HSHarry Stebbings35:37

       In a year's time, will they be higher than they are today or lower than they are today?

   21. RORory O’Driscoll35:42

       I'd say higher just because... I mean, again, I don't know if they took on debt, but I just think at one X revenues for any c- un-unless you rev-- I, I, I would like to look at their churn numbers. I haven't spent enough time. Unless the revenue's absolutely evaporating, you can get from one X revenues, especially if you had the wit and the intelligence, which they did, to buy a kind of replica competitor. So this is the thing. The, the most mature software companies that aren't growing can easily operate at twenty percent operating margins. So you're now down to saying you've got your cash and do you think you can last four or five years before you go to zero? I mean, you can calculate the terminal value here, right? At one X revenues you are nearing terminal value, right? For a company, for a product that has high growth margins and is relatively sticky. So yes, I think you can create more value. You will regret deeply buying a whole bunch of shares at three times revenues or two and a half times revenues thinking it couldn't get any worse. But, you know, fatal, fatal next sentence, maybe now it can't get any worse. And if it's at point five X a year from now or the revenues have gone down by fifty percent, then you can call me an idiot then, Harry, which I know you're dying to do.

   22. HSHarry Stebbings36:45

       No, no, it can't get any worse. I'll go and buy a load of Wix and then remind you of it every week

   23. RORory O’Driscoll36:49

       I-- Re-remember, can't get worse is not the same thing as it will get a lot better.

   24. HSHarry Stebbings36:52

       [laughs]

   25. RORory O’Driscoll36:52

       I mean, you know the question, a totally separate-- I think Jason's right about the upside in these stories. Again, it goes back to the same thing. Your, your range of outcomes has compressed markedly. It's not clear to me, if someone said, "What would you do to get a comp-- let's not pick on Wix, Squarespace, to make any of these things get to thirty percent growth and be worth five X revenues?" I'm not sure I have a single idea. I think Jason's right. You're, you're dealing with managing, you know, as they used to say about the British Empire, Harry, you're managing decline. It's okay. It's history. You wouldn't understand.

   26. JLJason Lemkin37:23

       I do think one of the downbeaten that we think is truly downbeaten, public, public software companies, in the next year will become upbeaten. And what I mean is, uh, what I mean is as, as slow as they've been to react to AI changes, they have the install base and so someone will get their me- someone that is still founder-led. It won't be anybody that isn't founder-led. One of these founder-led guys will put his best fifty folks in a room and say, "Listen, I don't even need you guys to innovate. I just need you to build a better version of especially prosumer AI app. I just need you to build a better version, stay out of it and ship it, and we- we're gonna sell it the hell out of their base." Arguably, that's what Canva's trying to do with two point O. It's complicated. The, the startups are moving faster, the models are move-- but someone's gonna pull this off with their best fifty people because they have three hundred thousand customers. They have three hundred-- So, so for every time I'm pitching these AI SDRs and I'm looking at HubSpot with three hundred thousand, I'm like, "Hurry up, Breeze, because you got three hundred thousand HubSpot customers just waiting to buy an AI [laughs] SDR from you." And if HubSpot can actually make this as good as a startup, they're gonna sell a hundred and fifty thousand, uh, Breeze AI SDR agents. It just, it just isn't in market today. So I just think there's so many challenges it's hard to predict, but someone's gonna, you're gonna turn around and you're gonna be like, "Holy cow, Drew pulled it off. Drew went from zero percent growth. He got his last fifty, got last fifty soldiers holding back the, the castle, put them together, and holy cow, he built this thing." And, um, but I don't know that we can

7. 38:50 – 48:27

   Compute Starvation: Is the Semiconductor & Hardware Boom Sustainable?

   1. JLJason Lemkin38:50

      predict who it is.

   2. HSHarry Stebbings38:51

      On the flip side of challenge, we have Nebius growing six hundred and eighty-four percent, accelerating faster than ever. Um, my question is, is it justified? Is this absolutely, uh, the sign of just compute starvation and a buy, or is this bluntly further signs of a bubble and concerns that this is over market exuberance?

   3. RORory O’Driscoll39:14

      You know, it's a co- it's a mini CoreWeave, and those have been great businesses 'cause you're-- right now everyone's compute starved. And let me make the captain obvious answer, as Jason would say. If compute continues to be starved, then they will continue to be good businesses. And if they don't, if it's not, if compute becomes plentiful, they will be, they will be commodity businesses and the guys who are over-leveraged will go bust. So it's just that simple. Now, I actually think Gavin is a, Gavin Baker, who had a very articulate comment is that ironically, the slowness of permitting and the inability to bring on data centers at near the speed that people want to bring them on might save us all from ourselves. If all the data c-centers people-- Like, the disaster scenario is if all the d- the, the data centers people want to build could be built, and then at the same time we do the Anthropic and OpenAI math that we just discussed, and that trillion dollars of token revenue turns into half a trillion dollars, then you got a trillion dollars of CapEx and a half a trillion dollars of revenue and you're fucked, right? But if on the other hand, the half a trillion dollars of revenue stays, but the just inertia of building data centers means you only get half of them built, then you're saved by the bureaucratic inertia of the great American state, right? And you only build half a billion dollars. Compute remains relatively scarce, and people like Nebius and CoreWeave who have that compute do really well. Does Benev spend grow faster or slower than data center capacity? That's it in a nutshell. With, with OpenAI and Anthropic in the middle collecting the money from the first and giving it to the second. That is the bet. And I don't have a brilliant opinion on that, but that's the action on the table, as they say at the craps game.

   4. JLJason Lemkin40:54

      You know, I was driving back. We had a little Napa retreat break after SaaStr Annual this year. And it, the, the, the, the Tesla took us the long way through the South Bay, which I haven't done in a while. We're out on the bridge, and I'm passing Marvell Semiconductor, SanDisk, uh, all these folks, all, all these superstars of the nineties, um, they're on effing fire today, okay? The only thing that isn't on fire today is traditional software. Every other category, Optical Connects, everything. The old-- The South Bay, where Harry's probably never been, like, he probably ne- has never been south of Mountain View or Palo-- Certainly Palo-- He's like, "Why would you go there?" There's like trillions down there, man. Look at the skyscrapers, okay? And I was thinking, I was thinking, you know, the, the only thing that isn't inflating today is old school software. Everything else is on fire. So my point on Nebius is, and Rory made this point, listen, there's an argument to short it. There's an argument that, that, that is just surplus. There's not enough capacity in the market. But how far in the future can you short these things? How far in the-- Uh, sure, you can short SanDisk and memory and, and, you know, we fa- passed Micron on the drive. Like, you can make fun of Micron, right? Micron's had more booms and busts than a California prospector from the nineteenth century. But how f- you can't shoot short three years into the future effectively. Certainly, I don't have the skills to do so. So we could take potshots at, at, at Nebius and CoreWeave and friends, but what's the point? We see no signs that there's sh- a short-term crash coming. And it's, it's interesting, but, uh, a-anything but, but traditional software, it's just, it's just on fire, right? Every si- Cisco. Cisco's back. I should have mentioned Cisco coming up south first or Zanker. I mean, jeez, you know, every, every software, every technology company except traditional software is on effing fire.

   5. RORory O’Driscoll42:33

      Again, going back to the big simplistic picture here, all these companies are on fire because the hyperscalers and, uh, and the model companies have decided to spend, you know, roughly three-quarters to a trillion dollars a year building shitAnd 50% of that goes to NVIDIA, 10% of that goes to power, 10% of that goes to network. And you're right, everyone just gets pulled along on the bubble.

   6. JLJason Lemkin42:56

      Everyone.

   7. RORory O’Driscoll42:56

      Right? One of two things has to happen. Either corporate America has to digest a trillion dollars worth of tokens without any intermediate software layer. And I think it can do some, but I don't think it can do all. Or second, software has to start working because only if software starts working does corporate America get to spend that kind of money. And e- and if they don't-- if, if Sierra doesn't grow... Let me put it bluntly. If Sierra doesn't grow, then at some point, OpenAI and Tropic will stop growing because their customers today are primarily software companies for coding, right? And selling through software companies to corporate America to use tokens for business purpose, right? So in a weird kind of-- at some point, this all has to level out.

   8. JLJason Lemkin43:35

      I just think when we start-- I was remembering when we started this show, I think CoreWeave had just IPO'd or was about to IPO, and it was easy to mock CoreWeave. It's like, okay, well, this is just, this is just roundtrip revenue to create a little, a little supplemental capacity that we won't need in a year, right? Fast-forward a year, we need every-

   9. RORory O’Driscoll43:52

      Every damn bit

   10. JLJason Lemkin43:53

       ... every, every, ev- every, every, yeah, ev- everything possible. So I do think at some point, Sandisk and Nebius and CoreWeave all have to crash, and Marvell and even Broadcom. At some point, they have to crash at some level because they always-- I think AI can grow infinite. Like, we, we will all approach the singularity, but, but eventually capacity will catch up. Things will catch up. I just don't know it's gonna be near enough to, to the present that it matters at some level, that it matters, right?

   11. HSHarry Stebbings44:19

       Well, well, but, but, but this was the first co- I don't know if you follow Leo Aschenbrenner, who's the famous, uh-

   12. JLJason Lemkin44:23

       Yeah, he doesn't have to worry about 10 years out, does he? He'll just trade in and out of it.

   13. HSHarry Stebbings44:27

       But if you saw his latest releases on his latest filings, he put puts across everything. The guy, for the first time, added very little and actually showed his first real signs of concern.

   14. JLJason Lemkin44:39

       Yeah, it's a big bet. It's a, it, it's, he's smarter than me. He's making the opposite point I'm making, that it's, this is, this future is coming much sooner than I think it is. The tough one is, would you invest in a CoreWeave or Nebius at the seed level today? That's the tougher ve- this is still 20VC, right? It's-- as a public investor, you can say, "Hey, Sandisk looks pretty good for the rest of the year," right? As a, as a startup investor, would you do one of these deals?

   15. RORory O’Driscoll44:57

       I'll answer that. I saw a really excellent one with a superb team, a very good seed investor. I'm not gonna name it. And I really considered it long and hard. It was still a seed round. We tend to be A investors. I-- he was r- really talented team. I didn't do the seed, but when I... I, I always try and give a good answer to people when I turn it down, especially when I think they're A-class teams, 'cause I say, "Hey, look, here's my thinking," because hopefully they'll remember my thinking if they, you know, if they prove me wrong and they come back for the A. And I will admit, when I wrote out my thinking on why I'm not doing this, and he responded, I thought he won the argument. So I'm actually sitting here going, "Rory, was I an idiot?" Because he had a compelling at-the-margin story around capacity that I thought was interesting. So I literally ran the... I, I did... To answer your question, Jason, logically, I chickened out. I didn't wanna be that marginal capacity three years into the deal, three years into the CapEx boom. But there's a little part of me thinking, "Rory, that might be a dumb decision. That was a clever story with a clever team." And yeah, you, you are relying on the capital markets being there for the next three years and being able to access them. The sobering number's it's half a billion to a billion dollars to build the capacity, right? But maybe it could've worked. So I, I get the temptation, right? I literally had that-- this, that was last week. [laughs] Yeah.

   16. HSHarry Stebbings46:12

       Rory, do you always give detailed explanations to founders? I remember Jason once saying to me, actually, about founders will always kind of argue back, and actually it's easier to be like, "Hey, good luck."

   17. JLJason Lemkin46:22

       It's much more vanilla.

   18. HSHarry Stebbings46:23

       Yeah.

   19. RORory O’Driscoll46:24

       I, I, I think it depends, honestly, 'cause you can't do it to everyone, right? So I think to some extent it depends on how much time you spent with them, right? Depends on two things, right? How much time you spent with them. If you've taken one meeting and you're a no, just give a clear no. I mean, maybe your minor feedback. You know, you can't write a long email, right? If you've taken two or three meetings and you felt you're almost there, uh, sometimes I like to do it because I think it's helpful for your own self. Some CEOs don't respond well to detailed feedback, and they are-- Some of them are really professional about it, and I like them. I'm like, "Yeah, I see what you're saying. If I'm right and you're wrong, I'll be back in 12 months, and I'll say to you, 'I told you so,' and you'll pay it three times as much." And I'm like, "And I'll be glad to." But I think in the end you sh- I think in the end, even if you don't share it all the time, for any deal you spend a lot of time with, this is a separate comment. For any deal you spend a lot of time with, it's actually very helpful to write out your conclusions and keep them internally. I do that, right? Because then you can test your thinking, and you look ba- and you look back two years later and go, "Oh, my God, I turned down that for that reason. So I was an idiot." Or, "I nearly did that deal and I was totally wrong on the market." It's a lot of... Remember, in a model that only gets trained in eight or 10-year increments based on the two deals you do a year, you get a lot of additional feedback from the 20 or 30 deals you nearly did that you just don't wanna lose. So I do try and write it out for myself, and then sometimes I share it with the team, especially if I think, you know, it might be of interest.

   20. JLJason Lemkin47:47

       Yeah, I think that i- that is, that's a good point. Th- th- I did say that to Harry years ago. I stand by it. Like, if, if you've had between zero and one meetings with a founder, there is no upside in providing feedback. It's just an endless like, "Wait, Jason, that's wrong. You misunderstand." Like, I just, it's, it's... If, if you, if you've gone deep on a deal, right, um, you should, you should share the real reasons why. It's generally appreciated. Um, if nothing else, if they, if they haven't already closed a round, it's helpful to them to see the other side after two to three deals. But it's gotta be at least two meet- two... You have to have gone deep enough to actually be able to write that email. It can't be because I, I, I just, I don't see it. Just, just don't. Like, then you, then it's just gotta be a one-line,

8. 48:27 – 52:03

   Cerebras IPO Smashes Day One

   1. JLJason Lemkin48:27

      right?

   2. HSHarry Stebbings48:27

      I think I know the deal that Rory's talking about, um, but, uh, we shall move on.

   3. JLJason Lemkin48:32

      Yeah.

   4. HSHarry Stebbings48:32

      Uh, I, I wanna talk about Cerebras, the biggest US tech IPO since Snowflake, uh, priced at 185, which was a, a big expansion from where it started. I believe it was 120 in the, or 110, 120 in the early days, which went to 150 and then 185. It popped 68% on day one. Um-It was a, it was a fantastic IPO, uh, an amazing story. Does this open the window for many more companies of that size? And not the two trillion dollar companies, but does this open the window for many more companies to go out and IPO?

   5. JLJason Lemkin49:08

      I think it's good first for, uh, SpaceX. I think it's good for anyone above their level. I think it's gr- it's great. It just shows anything that is that or better, um, and better in air quotes, the demand is infinite. I'm not sure if this is really gonna help folks that are below that level. That-- We, we don't know, right? I doubt it. Ev-even you're looking at Figma and you're like... I, I mean, I don't think anything sub-Figma can IPO and have a decent IPO. This is the new great, better than Figma, BTF. Now, Cerebras arguably is a different category, but if you look at the backlog of twenty-four billion and you're, and you're, and you're Pollyanna about it, right? That's more backl- What's Figma's backlog? I don't think it's twenty-four billion, right? So I'm oversimplifying it, but I think it's gotta be better than Figma, and if you're better than Cerebras, then, uh, you, you know, it's a good time to IPO.

   6. RORory O’Driscoll49:58

      This is very much an N of one bet. It's an extraordinarily complex technological product that they've brought to fruition just at the time when demand for that product has exploded. And unlike when they pulled an IPO two years ago, they were able to line up arguably the marquee customer for that product, OpenAI. So it's a... Semiconductor is hot, they're a semiconductor company. Inference is hot, they're an inference company. A-OpenAI is hot, they're selling to OpenAI, right? It's a N of one positioning and, you know, for a-- Jason, for a market that's starved of ways to bet on OpenAI and Anthropic, this... You know, they really only have things like CoreWeave and, you know, obviously you have Nvidia. This was a chance to play. So yeah, I'm not surprised it went wi- If you remember last week, you asked, "Is it gonna go really well?" And it was-- we recorded before the IPO, and we appeared after the IPO, and I was like, "Of course, it's gonna go really well. They've already raised the range. They're not idiots." And it went exactly like that. They went to the... They went beyond even the range. They, you know, went to the max they could do without refiling. It, it was an obvious winner category. And worth pointing out how fickle the world is. Two years ago, they couldn't get this deal done. So I think you're right, Jason, actually. It is at the margin, it's a positive tell for SpaceX. People are willing in to... You know, people are very much risk on for the kind of things that look like they have the kind of upside.

   7. HSHarry Stebbings51:18

      Rory, would you add it to your public book at three hundred?

   8. RORory O’Driscoll51:22

      Probably not. I go back to the base rate. You know, the base rate return on IPOs, not from the day of the IP-- not from the day of pricing, but from the first day's closing price, which is typically way above it, the base rate return on that is negative. What? Six months, twelve months, one year. Yeah, two years, right? Is that, in other words, across the thousand or so of them, if you buy on the pop, you know, you tend to be an unhappy camper, right? Is it a company at the right price you believe can be a long-term enduring company? Absolutely, yes. It's got technological differentiation like no one else, right? So just, uh, blindly buying the day every other retail idiot on the planet is buying is probably not the best way to make money, just statistically. I think... And base rates matter.

9. 52:03 – 1:02:30

   SpaceX Sets Date For the Largest IPO in History

   1. HSHarry Stebbings52:04

      Totally agree. We said it's good for SpaceX, and SpaceX sets June 12th for the largest IPO in history. It was suspected one point seven five trillion valuation, seventy-five billion dollar raise. My word, this would be epic.

   2. RORory O’Driscoll52:23

      It will. That's one word for it. Um, and you know, again, back-

   3. HSHarry Stebbings52:28

      Is that, is that... How, how does this go?

   4. RORory O’Driscoll52:30

      I don't know. Um, I mean, I think it's funny. We're recording this the day they're due to file the S1, but I haven't seen it. I checked before I came on. The interesting thing about the S1 is in one sense, you really wanna read it. In the other weird sense, there's actually gonna be very little in it that actually matters at the margin. What do I mean by that? Is that the S1 will tell us ab- and I'm really curious to read it because it got to the SEC really quickly. The S1 will tell us everything about SpaceX as it existed in December of this year, which was without x.AI, without the Cursor deal, without the, um, Anthropic deal. And if y- because if you think about it, the most recent, I don't-- I presume their calen- their year end is December. So they'll have last year, which is SpaceX and Starlink standalone. You know, the leaked figures are eighteen, you know, fifteen, eighteen billion in revenue, twenty, thirty percent growth rate, EBITDA positive. Would like to see the CapEx before I comment, but pretty much a bounded, understood company, right? In February of this year, they closed on x.AI, which, you know, bought them a pitiful amount of revenue and a burn as big as Croesus. [chuckles] You know what I mean, right? And then in... So that's gonna be pro-ratad into the S1 for maybe one quarter, right? So that's all. You literally have half a quarter's information on something that's kind of taken you from a profitable company to a loss-making company. Then the other two big deals, the Anthropic deal won't even be in the financials because it's a signed deal, and then the Cursor acquisition won't even be in the financials because it's not closed yet. So you're literally gonna be reading this S1 going, and no forward projections are allowed in an S1, right? You're gonna read this thing that says, "Here's the company we used to own on December thirty-first of last year. Pretty nice fucking company it was too, dude," right? "However, we've since got AI pilled, and now it's totally different. By the way, we can't tell you much about that. You'll have to talk to our bankers." Well, it's gonna be the funniest S1 ever in one respect. Is that, I mean, you know, revenue, you know, fifty percent, thirty, forty percent of the revenue isn't in the S1. All the loss isn't in the S1 except for half a quarter. You know, some of the bankers are gonna be having to tell the story via the roadshow. So in one sense, I'm looking forward to reading the S1. In the other sense, there's just a lot to come. And it is... So that, that's the first comment is the, uh, the storytelling around these acquisitions are gonna be-- are not gonna be in the S1, and it's just gonna be interesting how they get that across. There are other markets and other times where people will look back and go, "You must have been mad to buy the stock on that little information." So I think it's a, it's a s- it'll, I think it'll, again-The probabilities it gets done and extraordinary well, and the excitement is amazing 'cause the market is in the mood for excitement. We're selling ex- we're selling the most exciting company at the pla- uh, on the planet at a time when the market wants excitement. If the market ever wakes up and says it wants cash flow, it's gonna be a totally different story. Oh, well, you know? Right now we're exci- we're into excitement.

   5. HSHarry Stebbings55:21

      June 12th, this goes out. It's Elon. It's Elon, the pump machine. Does this have the mother of all pops with retail getting behind Elon in a way that we haven't seen before?

   6. JLJason Lemkin55:33

      Gotta do better than GameStop.

   7. RORory O’Driscoll55:36

      No.

   8. JLJason Lemkin55:37

      Yeah. I think there's a reason it's 30% retail. I think some of it is, uh, being Robinhood and, and Democratic, right? He's selling nothing, um, 30% to retail, but, um, I, I just, I just think the, the Robinhooders and the GameStoppers have gotta be more excited about rockets than, uh, than plushy toys at GameStop. To me, it's more exciting.

   9. RORory O’Driscoll55:57

      Oh, look, I, I agree. I think everyone will be wildly... Everyone will want to own some of this, which means retail will buy a lot of it. You're exactly right.

   10. JLJason Lemkin56:02

       Yeah. I'm gonna put 2,000 bucks on my, on my, on my iPhone into this thing, right?

   11. RORory O’Driscoll56:05

       And the reason why I said no is because remember, GameStop... And again, I'll go back to fi- numbers. GameStop, I think, pops 10, 30, you know, 20X from low to high just based on retail. When you start at 1.7 trillion, and the largest market cap company on the planet is 5.5 trillion, NVIDIA, it's gonna be hard to 10X from here, right? [laughs] So just-

   12. JLJason Lemkin56:25

       Are you sure?

   13. RORory O’Driscoll56:25

       That's what I meant. But you're right. The excitement on retail will make this a super interesting story. And then the other thing is, as you know-

   14. JLJason Lemkin56:32

       Do you know, literally, I- Rory, I'm completely ignorant. I- obviously, it's gonna be a huge float, right, uh, mathematically. Could, could the, could the GameStoppers and the Robinhoods, I'm admitting my ignorance, if they, they could, they could believe it'd go 10X. This is- they're not doing any DCF analysis. They're trading. Is there, is it possible for them to t- to trade enough shares to create a 10X pop? Is it mathematically possible to influence the float that way? I just don't... 'Cause sometimes it's a thin float when you're able to manipulate it, right?

   15. RORory O’Driscoll57:01

       The float isn't that small. It's 75 billions. I think the interesting thing is if it's, yeah, it's already healthily priced at 100 times revenues. It will be interesting to see what happens. I mean, when these things, and so, and Harry, you can go, "No comment" at this point. When institutions play shares... Sorry, when an IPO gets sh- when institutions take shares in an IPO, they have a price target, right? And, you know, if that price target gets achieved on the first day, you tend to see additional trading. I mean, it will be, you know, the 70% of... If BlackRock spends $10 billion on buying in the S, uh, in the IPO, as has been rumored, again, I'm not, have no clue about the facts, right? They, they run an internal analysis, and they say, "We think we should buy 10 billion because we think over the next 12 months we can make 40% on our money." And if at the end of the first day it's up 40%, it'll be sorely tempting to have another $10 billion [laughs] come back to market, 'cause you'll be looking at your price target and going, "I have a price target. I've achieved it. Time to go." Right? And you see that phenomenon when IPO pops. The institutions. And I used to think, "Oh, my God, they're disloyal. They're leaving." But in fact, it's just, "We bought, we, we wanted to be a holder, but we had a price target and you've achieved it." So it will be interesting to see that price action, if it does in fact do a GameStoppy type up price. You, you could al- I'm just gonna say it, not to be neg. You could also have the Facebook effect, where the IPO was frankly a dismal failure. It, early on, it hung around its price for a day or two, and then look it up in 2012, and then it dropped, you know, at one point 40, 50% below its IPO price. It was a horrible IPO, right? And obviously an amazing company, which can also happen. Price matters. I think it's, it's, it's going to be wild. I, I genuinely hope it succeeds because I think the damper effect of it not succeeding would, and trading well, would be pretty profound.

   16. JLJason Lemkin58:51

       I think it'll trade up to 5 trillion. I'll take this bet. But I think there will be enough sitting in Brickell in Miami, day traders, yahoos that love the brand. Uh, folks hate the brand. That's why he lost the, the trial in Oakland, I think. They hate the brand, too. But enough folks love the brand that it, it, it can float up 3 to 5X based on partially influencing the float. There's not enough. There isn't enough demand. I, I, I'm, I'm... This could be L- Limited Lemkin speaking, but I'm, I'm gonna take this bet that it's gonna trade up 3X in 2026 just based on GameStoppers driving it up.

   17. HSHarry Stebbings59:24

       I want me to-

   18. RORory O’Driscoll59:25

       I, I, I think it's gonna go to 3 trillion. I don't discount the fact that it goes down. I don't discount the fact. I didn't say it's likely. I'm just pointing out here, you're paying 100 times for a Robinhood account.

   19. HSHarry Stebbings59:40

       Let me get my wish to our Robinhood account. You boomer. You boomer.

   20. RORory O’Driscoll59:43

       I am a boomer.

   21. HSHarry Stebbings59:43

       Fucking boomer.

   22. RORory O’Driscoll59:45

       Yeah, yeah, yeah. [laughs]

   23. HSHarry Stebbings59:46

       5 trillion's reaching it. I think it's gonna go down. [laughs]

   24. RORory O’Driscoll59:49

       I didn't say... Hang on. I didn't say it will go down, Harry. You gotta be able to live in both worlds.

   25. JLJason Lemkin59:52

       Did I tell you when I got into Bitcoin?

   26. HSHarry Stebbings59:54

       Yeah. [laughs]

   27. JLJason Lemkin59:54

       I've made billions on my Bitcoin. Uh, this is going higher than Bitcoin.

   28. RORory O’Driscoll59:58

       Okay. Good for you.

   29. JLJason Lemkin1:00:00

       You, you do realize that space is bigger than Bitcoin, right? The entire universe, there's a trillion stars just in our own galaxy, and there's a trillion galaxies. That is larger than all the Bitcoins out there. You have this completely wrong. Did I tell you when I got into Bitcoin? Did I tell you guys when I got into Bitcoin?

   30. HSHarry Stebbings1:00:16

       Okay. Thank you. I mean, okay, I'm just trying to be serious here for a second.
10. 1:02:30 – 1:13:03

    YCombinator's Mic Drop Deal & The Drama Behind Elon Musk's OpenAI Lawsuit

    1. HSHarry Stebbings1:02:30

       keep rolling. Uh, news last night, mic drop moment with YCombinator, and I do think it's actually important. Sam Altman just offered $2 million in OpenAI tokens to every YC startup in the current batch in exchange for equity. It reminded me of Yuri Milner and DST doing the exact same with the very early YC batches. Um, what do we think about this, and does that impact the valuations that we ultimately get it at, if they can get $2 million in OpenAI tokens from Sam?

    2. RORory O’Driscoll1:03:02

       First of all, it's always smart. You know, I, I think that it's back to, you, you know, you have let Anthropic steal a march on you, more than a march, many marches, uh, on people, on mind share, on respect, and you gotta do what you can to earn it back. And that's just one more thing, you know, developer hearts and minds. So, smart. Um, second is, you know, I'm assuming it's not transferable. [laughs] 'Cause if it's transferable, then it's money, 'cause let's be real, compute is money, right? But it's... So I- I'm sure they've thought of that, so it's not transferable. So yeah, I mean, it... No. So to your comment on does it impact pricing, maybe at the margin. But, but if you're compute intensive, it does, but probably if you're compute intensive, you're raising 200 million anyway, right? For the most... I mean, if I think of the last YC batch and I sat to it, most of them are building software on top of AI, but where agentic spend would be, you know, token intensity would be 10% of revenue. So it's valuable, but it's not gonna replace the need for humans. You're still gonna need four or five humans to build the code, to build the agent for call centers or whatever. So, um, you're still, they're still gonna need revenue. At the margin, it takes a little bit of the edge off, but it's not like any of them can build a next generation whatever with it. It's, it's nice at the margin.

    3. JLJason Lemkin1:04:19

       I think it'll increase the valuations, for sure.

    4. RORory O’Driscoll1:04:21

       A little bit, yeah.

    5. JLJason Lemkin1:04:22

       Because they'll... Uh, if nothing else, even, even, even if you don't view it as, uh, inflationary, they have two million of tokens now.

    6. RORory O’Driscoll1:04:29

       They do, yeah.

    7. JLJason Lemkin1:04:29

       That, that's a real investment. Like, let's, let's take this seriously. Like, we all can use the tokens. So that is two million of de-risking that investment, two million more that they can use to add value to the deal. Um, there's plenty of YC companies that don't raise two million at demo day, right? So now they've raised another... They, they, now they've radically de-risked these investments. Uh, it would make sense that typical post might go up to 60. There's some, there's some correlation I'm not smart enough to do. Um, and, um, it, it, it, it may even GameStop it higher since they're investing at 100. We... It's hard to predict. It's... You, well, you can come in... Harry, if you do the deal a month before demo day, it's 20. If you do it the week before, it's 40. If you do it after, you're at the OpenAI price, it's 100. You can... But you are welcome to come in at the OpenAI price, and r- it's not even a premium. Okay? We'll do it because we love the pod. Uh, we'll let you, Harry, and Jason all in at... And no premium, just at the o- no, no, no, no, um, nothing, just at 100.

    8. RORory O’Driscoll1:05:28

       You're right, Jason. If you navigate on optics, it probably causes an anchoring effect. You know, I got two million at 100. Why would I take another four at 50?

    9. JLJason Lemkin1:05:37

       It may shrink the size of the rounds, too.

    10. RORory O’Driscoll1:05:39

        Yeah.

    11. JLJason Lemkin1:05:39

        Like, it may make it even harder on VCs to invest in YC rounds, uh, because they've... Uh, you know, the average ownership for VC rounds has already been sliced to, like, 5 or 6% at YC. This could slice it to 2 or 3, just because you, you just don't need as much capital. That, that might even be the bigger impact, potentially, right?

    12. RORory O’Driscoll1:05:54

        In fact, yeah. Uh, depending on, depending on how much of your bur- Remember, at scale, if you're successful, any software company can use up two million in tokens without blinking. The question is how m- how... Yeah, the interesting question is how much leverage in that f- I'd love to know, in the first 12 months of the typical YC company's life, how much of their spend is either, today, is either tokens to serve customers, tokens to build product, and, or engineering spend that can now be replaced by tokens. It all goes back to that 20% number. Can you replace... I mean, can... 'Cause out of the gate, you're probably not selling so much that you're, you, you know, you're reselling, that you're kind of using those tokens to serve customers. Most of what you're probably doing with those tokens is building a product. So if you can replace-

    13. JLJason Lemkin1:06:37

        Maybe. What if you're building a Lagora or a Replit? You could burn through all those tokens in 12 months.

    14. RORory O’Driscoll1:06:42

        Yes, se- se- serving customers. But if you are-

    15. JLJason Lemkin1:06:44

        Yeah

    16. RORory O’Driscoll1:06:44

        ... can I make a comment? If you are, given that token intensity for a, a l- a Harvey or a Lagora is probably 20%, in terms of revenue, that probably means... So to burn through two million, you're gonna be at 10 million in ARR. If you're at 10 million in ARR, in today's world, you're gonna raise that 500 million anyway.

    17. JLJason Lemkin1:07:00

        Well, hold on. With love, that, I don't think that's the early stage math. The early stage math might be to, like, a, a, a, you know, token spend-

    18. RORory O’Driscoll1:07:06

        I know

    19. JLJason Lemkin1:07:07

        ... is marketing spend. So I'm gonna give away 20, $30,000 a month of video creation-

    20. RORory O’Driscoll1:07:11

        That's true

    21. JLJason Lemkin1:07:11

        ... of audio creation, of s- of my Suno competitor, of my Replit competitor. Now I can give away $50,000 a month of tokens my first 12 months, where it would've been stressful AF-before this deal

    22. RORory O’Driscoll1:07:23

        You are, you are exactly right. I was mentally putting in two categories, which was token spend for engineering and token spend for full-price customers. You're exactly right. The minute you said it, I agree with you. What you'll now do is everyone will have destructive free token programs because you wanna try and ap- th-th-there'll be a bunch of freemium products. You're exactly right. That's how it com- manifests.

    23. JLJason Lemkin1:07:40

        And if Sam increases it to, like, four or eight or 10, like, as OpenAI grows-

    24. RORory O’Driscoll1:07:45

        Yeah

    25. JLJason Lemkin1:07:45

        ... then think about how, how, how much that could change the game. If as a startup you get 10 million of tokens to build another Lagora or Replit for your, for your first year, then you're just B to the wall because you don't have to worry about anything except shipping the best Opus-

    26. RORory O’Driscoll1:08:02

        Yeah

    27. JLJason Lemkin1:08:02

        ... 5.- I mean, not Opus, sorry, a 5.7-

    28. RORory O’Driscoll1:08:05

        How you-

    29. JLJason Lemkin1:08:05

        ... Codex product if you can-

    30. RORory O’Driscoll1:08:07

        No, it's a fun moment there
11. 1:13:03 – 1:27:06

    The Looming Backlash: Mass Tech Layoffs and the Politics of AI

    1. RORory O’Driscoll1:13:03

       right? And there's, but there's a statute of limitations on a fraud claim. So if Elon only found out about the conversion to for-profit when it happened in 2023 or '24, then it's within the statute of limita-ta-tions and the c- and his claim could proceed. But it was obvious to anyone with the brain of a pea that given that he was in the r- that he was discussing a conversion to for-profit back in the day, and therefore-You know, it, it was a ludicrous allocation that he didn't know. That's why they took-- Uh, yeah, the, the reason it went to a jur- went to a jury and also to a judge versus just being a black-and-white thing is that it was about knowledge. When did you know? The, in the case of fraud, it's when did you know you were defrauded is when the clock starts for statute of limitations, but it's pretty clear he knew. I think the real truth is anyone who was trying to-- anyone sane wouldn't have taken that, wouldn't have been the plaintiff. Elon just didn't care. He didn't do it based on probability of winning. He did it because even if he doesn't win, he can damage the other side. He's really angry and pissed off about what happened. And if you're worth eight hundred tril- billion dollars, so what if I wasted forty billion do- million dollars on a bullshit case? I yanked everyone's chain. I'm happy. So my take on this one is justice was served. Elon got his pound of flesh for the forty million or whatever he spent on legal fees. He's going to appeal it. It won't get a second past appeal, and it'll go away, right? So I, I actually think it came out exactly as planned.

    2. JLJason Lemkin1:14:29

       But then Jason actually found one of the new stories that came off the back of this, which I didn't actually, which is that Elon spawns dozens of other investigations into Sam Altman's finances on the side, creating more problems for Sam.

    3. RORory O’Driscoll1:14:42

       I, I think that's true. I think the separate comment is, is that... And it's, and I, I feel-- Okay, words I never thought I'd say, I feel empathy for hi- Sam Altman in the sense that he hasn't taken any equity in OpenAI, and he's been asked about that, and he said he's had no economic interest in OpenAI. And we probably all took that to mean he doesn't own any equity. But what's gonna happen now is a whole bunch of people, including in a congressional testimony, are gonna say, "But you have an ownership interest in YCombinator that has an ownership interest in OpenAI. You have an ownership in these companies that are selling to OpenAI, and therefore, you're nefariously trying to get the money." And in one sense, he may have been factually incorrect to say that. In the other s-sense, it's obviously bullshit. He's not-- Because if Sam wanted to get four percent of OpenAI, the board would have given him four percent of OpenAI. So whatever he gets indirectly is minuscule compared to what he could have gotten had he not been so f-- Uh, and the reason all this is biting him in the ass is this whole, "We're doing it for the good of the world. I'm not getting paid." It's all... Uh, what I en-- The enjoyable part is all these bullshit good intentions are biting him in the ass. It's kind of [chuckles] unfair, right? Had he been a for-- Had he been Larry Ellison and saying, "I'm doing it for the money," it would all have been clear, right? So yes, Elon is gonna get... He's gonna be able to continue to make the man's life... It turn-- He's gonna, he's gonna continue to make OpenAI's executive team life a misery, which clearly makes Elon happy. And not only that, but other people are going to be able to pile on, too, because of the complex nature of OpenAI's structure in a world where a much simpler structure wouldn't attract any attention. I mean, if he owned twenty perce-- I mean, to be fair to Sam Al, he was the founding idea behind OpenAI. He convened that meeting. If he'd taken ten percent ownership day one or ten percent ownership when the conven- no one would blink an eye, right? So it's, it's one of those things, good intentions bite you in the ass. But yeah, El- Elon G-

    4. JLJason Lemkin1:16:34

       Well, maybe-

    5. RORory O’Driscoll1:16:35

       Yeah.

    6. JLJason Lemkin1:16:35

       Let me add just two final thoughts as we go forever. One, and I've said I'm on Team Sam now. More importantly, I'm on Team OpenAI. OpenAI, okay? But he, he did not have no consideration. He set up an entire venture fund where he got all the carry and claimed it was OpenAI. If, if Elon keeps this going, he m- this will reverberate forever. He did not... Th-the idea that Sam took no consideration from OpenAI is the biggest load of malarkey because he set up a venture fund on the side-

    7. RORory O’Driscoll1:17:02

       I, uh-

    8. JLJason Lemkin1:17:02

       ... probably without telling the board, this is probably why he got fired, and kept all the carry. Like-

    9. RORory O’Driscoll1:17:08

       I, I, I, first of all, Jason, I agree

    10. JLJason Lemkin1:17:08

        ... and you know why he did this? 'Cause he didn't think OpenAI would be worth anything as a nonprofit. So he said, said, "How c-- I wanna do this. I'm deeply passionate about it, but I also want to monetize it. And how do I do this? Do what I did at YC. Set up a fund on the side and keep all the carry. Call it OpenAI Venture Fund and make all the investments and keep all the carry. That way, I can at least make eight hundred million like I did on Stripe."

    11. RORory O’Driscoll1:17:28

        Ironically, if in fact, just as a commenter, if in fact you're correct, it's evidence of an, of a belief that OpenAI is not going to make any money, which ironically would actually have helped his case. He could [chuckles] say, "Hey, I..." Right? I mean, I think what it really points, genuine commentary, what it really points to is complex arrangements, especially that, you know, complex arrangements bite you in the ass. 'Cause again, I go back to my comment that once it became a for-profit, if you wanted to just be a paid CEO, you could have got your ownership. You didn't need to do all this other stuff. And you're right, Jason, when you do all this other stuff and then you make an enemy of the richest man on the planet who is clearly malevolent and willing to go to the ma- to the mat for this over and over again, you're in trouble. Then add to that on top something we haven't talked about, but I think goes back to where you're wrong in your comment on the jury, right? They didn't find for OpenAI because they found OpenAI more sympathetic than Elon Musk. I think it's, as it's becoming painfully clear now, no one in America o-other than us here in California likes the AI trend. And I think probably if you asked a jury what they thought of all the people involved, they would say, "A curse on all your houses. What a nasty, obnoxious, arrogant, entitled bunch of shits. But we did our job, and we followed the law, and I hope I never see these buffoons again, and only bad things happen to them." My guess is that-

    12. JLJason Lemkin1:18:51

        Well, probably that was the jury. [chuckles] Yeah, that's probably the jury.

    13. RORory O’Driscoll1:18:53

        That was the jury, right. "And now can we get our lunch and our daily stipend, and are we done?"

    14. JLJason Lemkin1:18:57

        Did you guys see the Eric Schmidt?

    15. RORory O’Driscoll1:18:59

        Eric Schmidt got booed. Yes. I think that w-again, go back to my comment here. We've spent-- We have the leaders of this thing spending three years telling us how it might destroy humanity, and it's gonna put us all out of jobs, and then we're shocked to discover that people don't like us. Oh, and by the way, your electricity is going up in the meantime, but have a nice day, right? So in general, yeah, we have people who are brilliant scientists who politically are utter morons, right? And the people who are utter morons at AI but brilliant at politics are gonna have us for lunch.That's the movie in the next three years. They're gonna have Sam for lunch because he's lied to them as far as they're concerned, and they're gonna have the AI industry as a whole in lunch because we're firing people left, right, and center, and the politics are gonna be brutal, right? And, you know, we'd have done a lot better, say, [chuckles] you know... At least when Meta was busy destroying the world, they were smart enough to pretend it was all about bringing friends together but not destroying democracy. We will regret that lack of transparency.

    16. JLJason Lemkin1:19:56

        Yeah, this is why I'm on Team Sam. I think he's doing the best balance he can here. I think it's mostly a positive image. He's tho- he's not doing the Dario thing.

    17. RORory O’Driscoll1:20:04

        Yeah.

    18. JLJason Lemkin1:20:04

        Um, and people still shot at his f- house.

    19. RORory O’Driscoll1:20:07

        Yeah. 'Cause I don't believe it's- [laughs]

    20. JLJason Lemkin1:20:08

        It's not funny. It's not funny. Eric Schmidt got off light. I mean, it's not funny.

    21. RORory O’Driscoll1:20:12

        And it's very telling, 'cause actually three years ago, I was at... Maybe four years ago, I was at my son's graduation the year, the first year after ChatGPT, and it was the exact opposite. Someone, uh, one of the speakers made a, a kind of a semi-nice reference to ChatGPT, and all the kids clapped in a totally knowing fashion that basically exuded, "We've all cheated for the last year using this product. We fucking love it," right? And it was a really sweet moment. I'm like... Including my son. And I'm like, "Oh, I get what just happened here," right? And we've gone in three years from graduations clapping about OpenAI, 'cause it was like, "Oh, my God, that got me my final essay done in 24 hours when I didn't do it," to we now boo Eric Schmidt. You might wanna think about the trend here and the direction of travel if you're, you know, representing AI. And that's why there's been a message s- shift, that Dario hasn't got... But most people are now trying to emphasize the positive. But it's gonna be hard to do that, 'cause as we speak today, you know, Meta are laying off 8,000 people, that's 8,000 lives impacted, because he wants to put it all into CapEx. So I, I think the politics are going only one way.

    22. JLJason Lemkin1:21:19

        What did the Standard, what did the Standard... [laughs] These British, Harry knows the British... What did the CEO of Standard Charter Bank says? "We're not, w- we're, we're getting rid of 8,000 jobs, but we don't have job losses, we just have job reductions in favor of the machines."

    23. RORory O’Driscoll1:21:32

        Oh.

    24. JLJason Lemkin1:21:32

        This is the greatest graduation speech of all. No job losses at, at, at Standard Charter, 7, 7,800 reductions. We just have job role reductions in favor of the machines. This is a level of honesty [laughs] that I think is as, just as genuine as we get. He's not even seeing them as job losses, because they're no longer necessary. The machi- they're just in favor of the machines. This, this, this statement should echo through history, that he accidentally said-

    25. HSHarry Stebbings1:21:55

        I, I, I don't wa- I don't wanna end on a negative, but Cisco cuts 4,000, LinkedIn cuts 875, Meta cuts 8,000, Intuit I think-

    26. RORory O’Driscoll1:22:04

        I will give LinkedIn credit. They specifically said it's not caused by AI, it's realignment. But yes, the trends are tough here.

    27. JLJason Lemkin1:22:11

        Intuit's a big one, too. Old school.

    28. HSHarry Stebbings1:22:13

        Intuit's 16,000.

    29. JLJason Lemkin1:22:14

        Yeah.

    30. HSHarry Stebbings1:22:15

        Wow. Yeah.

Episode duration: 1:27:16