Navan Files to Go Public and Canva Pulls the Brakes: Why and What Happens?

1. 0:00 – 0:58

   Intro

   1. RORory O’Driscoll0:00

      Here's what nobody wants to admit. When LLMs finally work at something, the implementation will be boring as [beep] . Harvey isn't some breakthrough in legal AI, it's ChatGPT with a law costume. Lovable isn't revolutionizing code, it's Claude with pretty buttons. Price is the lever for 90% of economic transactions. If you can get a stupid price in the public market that's higher than the stupid price you're getting in the private market, then at the margin, most of you should go.

   2. JLJason Lemkin0:24

      With all these people leaving, is there any loyalty left in Silicon Valley? This does bother me.

   3. RORory O’Driscoll0:28

      Everyone who's getting a billion dollars was in the room when the magic happened. The ability of the US investment banking business to shovel [beep] out the door is unparalleled. And the truth is-

   4. JLJason Lemkin0:38

      Ready to go? [upbeat music] Guys, my favorite time of the week. What a roster of content we have this week. Now, uh, I was looking at where we're gonna start,

2. 0:58 – 9:33

   The Meta Acquisition Bombshell: Nat Friedman & Daniel Gross Join Facebook?!

   1. JLJason Lemkin0:58

      and me and Rory, we were texting saying that this is a good start when it was coming out, and it was about Daniel Gross and Nat Friedman and potentially being acquired by Facebook and, or Meta. So I wanted to start there. How did we think about this following the Scale acquisition, and how did you guys analyze it?

   2. RORory O’Driscoll1:16

      Well, I think there's a lot in it, and we should spend a little time on it. My kind of mental model zooming out is, you know, why Facebook is doing this, why, why they're buying. Second question is why these people are selling and what does that say? And then the third, and I think also very interesting question is why is it going down this way? In other words, why are people able to extract this kind of value for their labor and how does, for example, California and us being a noncom- no non-compete state impact that? So lots of things to unpack, but maybe let's start with the first one. So why is it existential to Facebook? And, you know, it's just to state what it's not. The idea that they need to do Llama, have an open source offering and, quote unquote, "compete with Anthropic," for example, that's not a thing. It's not gonna be a business commensurate with the kind of dollars they're putting out here. So the only logical thing you can be afraid of is some kind of a s- yeah, some of the writing has said, some kind of meta m- meta, no pun intended, model that basically becomes your primary interaction with the internet, with the web, has all memory about you, which is obviously where, you know, C- ChatGPT is going, and it just basically sucks attention minutes away from Facebook. In other words, if they don't build something like that, so I'm interacting with Facebook, I'm interacting with news, I'm, I'm interacting also with whatever their version of ChatGPT is, the fear is, you know, precious minutes of attention, which means precious minutes of money, goes to ChatGPT. And maybe that's obvious to all the, the listeners, but it's just worth s- stepping back and saying that's what it is. It's not that they want to open source Llama and make money off it. They won't. It's not that they want to even have an API offering of Llama, something like, you know, a, an Anthropic offering. That just won't be big. The only thing that makes sense here is if you think that the minutes that people spend on Facebook will become minutes they spend on ChatGPT, and you can't let that happen as Facebook. And once you perceive it like that, you go, "Kinda, maybe," and if that's gonna happen, you gotta do something about it. So that's the first thing. Then the second thing is you just look at it and go, in one cynical sense, you know, the, the Oculus acquisition was awful. It was like you spent $2 billion, which wasn't that bad, and then you spend another $60 billion on top of it, which is pretty dreadful, and you didn't get much. But it just indicates this is someone who's gonna make damn sure that he is not deplatformed or he is not relevant in the next platform. So they bought $60 billion of insurance with virtual reality. It covered them for two or three years, and they didn't need it 'cause the flood didn't come, and they're buying another $60 billion worth of insurance off, um, you know, b- by doing what they're doing in LLMs, and maybe the flood doesn't come, and it never matters. Maybe the flood comes, and they can kind of ride it out. When you look at it like that, in the context of, as I said, the VR spend of $60 billion, it's like, yeah, I get it.

   3. JLJason Lemkin4:05

      I'll tell you my, my rough guess, just thinking it, thinking through it a little bit more, um, you know, Meta, as we, as we do this, it has a $1.8 trillion market cap. My, my guess is it's, it's fairly simple. Uh, Zuck's put $100 billion to this, $100 billion to m- to catching up, to maintaining AI dominance, and that's the budget. The budget can't, it probably can't be $1.8 trillion. [laughs] That would be high for... I mean, it, it is possible to, to sustain that dilution. There are deals like that. But in all seriousness, that's... When you look, when you look at scale, when you look at, at looking to buy everybody for $20 billion, right? Perplexity on, it kind of ties to having $100 billion quick M&A budget to get back on track. It's 8%, I think, if I'm doing my math right, right? It doesn't seem outrageous when you think about spending 100, a quick $100 billion, 8% to get back on track.

   4. RORory O’Driscoll4:56

      And just to say around that, you know, I can simultaneously believe it's totally a bad idea and it won't work, and it's totally a good idea to do it just in case it might, which is the really zany thing about it. I mean, I really-

   5. JLJason Lemkin5:07

      Yeah.

   6. RORory O’Driscoll5:08

      Yeah, I didn't buy into Oculus, and I definitely don't... I'm not as convinced you need to spend this money and the way you're spending it will be successful, but I totally get it. When you're the C- when there's a limited number of buttons to press and you know you want to press a button, and the only kind of button that a CEO of a $1.8 trillion company presses is big buttons. You don't go to Mark and say, "We've got an existential risk. Let's spend $2 million." 'Cause that's just not what CEOs do. So there's only a few buttons you can press at that level. There's only a number, a, a few places you can buy this kind of talent, and there you go.

   7. JLJason Lemkin5:41

      You know, the, um, just to comment, it- the, uh, uh, Sam Altman quote tweeted this similar web today of i- app store downloads. And App Store obviously is not all of AI in all the world, but it was interesting. It was ChatGPT over the last 28 days, 29.5 million downloads. ChatGPT, 29.5 million. Just mobile. That's just its mobile app. TikTok, Facebook, Instagram, and X, 32 millionSo ChatGPT mobile download's just about equal to all the social media guys combined. It's probably half the answer right there. [laughs]

   8. RORory O’Driscoll6:14

      Yes, exactly. Yeah, I mean, 'cause the first rule of owning a $1.7 trillion business that spews off $100 billion a year is don't blow the $100 billion. Don't lose, don't lose, don't kill the golden goose. You know, and don't let it be killed. Taking the conversation in another direction, I was thinking about, you know, what do all these acquisitions have in common, and what makes them interesting and different, right? 'Cause if you think back to what happened here, right, everyone who's getting a billion dollars was in the room when the magic happened, and that's the soundbite. Let me tell you what I mean by that. A whole bunch of people tried to do, build these LLMs, and the early OpenAI team did it, and everyone who was in that room and knew how to do it went on to build some version of this kind of outcome. You either stayed at OpenAI, you peeled off and went to Anthropic, you peeled off and went to, say, Superintelligence, you peeled off and went to Mira's new company, right? And no one... And for the record, no one in any, with the exception of Scale AI who was selling to them, no one who was in any of the other rooms where the magic didn't happen is ever gonna get that kind of money, right? So, you know, I respect people like Cohere, I respect people like Adept, the other ones like Inflection. None of them have magic moment money, right? And, and it's really interesting. If you think about it, in a, in a... That kind of thing happens occasionally in history, in industrial history, where someone just figures something out that's so damn important that everyone who was in the room when it happened has value just 'cause they know. And then from there, how does that... What's interesting is how does that shape out into money? And I g- gonna give three examples, or maybe four, right? Is that, you know, when the Chinese figured out how to make silk, they basically executed anyone who tried to tell anyone else. Problem solved, right? If you look at things like William Shockley, when they, kind of early transistors, when anyone tried to... Uh, actually, let's do Bessemer first, the Bessemer steel process. When they tried to leave, they just litigated their ass out of it there, right? The great thing about California is we're in a nonco- no compete state. If this had happened in a non, in a c- state that allowed massive five-year non-competes, all those guys would be sitting at home getting their 300 grand a year salary going, "I can do this in two years," right? And one of the amazing things about California, I think one of the strengths is the fact that since the 1870s it's been really hard, and in fact it just got even harder, to enforce non-competes. So all these people were able to leave, rely on the doctrine of inevitable disclosure, go set up their new company, and again, not copying the past, but they know how to make the magic. And that's the aha here, right? It's just super interesting that they literally, if you were in that room, one of those 20 or 30 people in California, you can go away, and effectively you're selling th- that knowledge that you have that no one else does.

   9. HSHarry Stebbings9:02

      Does that not lead to the commoditization of magic then, in a world where that-

   10. RORory O’Driscoll9:07

       Some, relative commoditization, you're exactly right. It would be better if there was only one, but it doesn't lead to everybody having it, 'cause it turns out the price of buying it is a couple of billion bucks, right? But yes, there's no doubt there is leaching of knowledge out. And as I say, if you look at all those examples, Shockley, when the transistor, the Bessemer steel process, everyone's always trying to stop the magic getting out so they can extract monopoly profits. But if, but over time it gets out.

3. 9:33 – 13:51

   Facebook’s $100 Billion Gamble: Can Zuck Buy the Future?

   1. HSHarry Stebbings9:33

      There's layers of talent acquisition value, which is your Scales with your $14 billion and your Nat and Daniel and your Miras. But you know, Sam was on, you know, Jack's podcast, and he said that, um, basically that OpenAI's talent has been offered several hundred mil- $100 million offers by Meta several times. And so I guess that's the next layer of talent, where maybe they haven't seen the magic, but they've been in the building when the magic was there, I guess.

   2. RORory O’Driscoll10:01

      And I saw something very cynical that said, and if it is, it's even more impressive, someone made the point, this could be total jujitsu, 'cause if you're not getting offered $100 million now for... If, if, if Meta calls you and you're down the hole in OpenAI and they offer you a lousy 30 million bucks, now you're insulted, right? Maybe he's just messing with their heads. And the other thing is, it's gonna be really hard to be the VP of HR in charge of the Meta Open, you know, the Meta LLM project, 'cause, you know, if you're sitting there on your 2 million bucks a year thinking you're killing it, and then suddenly you discover the new guy's getting 50, again, your head's gonna hurt, right? So I don't know how much of that is just very clever disinformation, but at some level you're right. Intuitively, if you... It, it gets back to the same thing. If you know how to cook this stuff, if you know how to make this magic, you have value, and in California it's very hard to stop you from monetizing that value.

   3. JLJason Lemkin10:58

      Harry, how much money would it take for you to dump all your 20 VCLPs and your listeners and go join Meta?

   4. HSHarry Stebbings11:05

      Genuinely, like, I really wouldn't. I wouldn't know what to do. I, I hate working for someone else. I get great discomfort from being in large companies. I have enough money now where I can do what I want. I'm really happy for one of the first times in my life, honestly, without being soppy. Like, I, I'm in a really good place. I, I would be miserable doing that. I got to, I'd... Spoiler alert-

   5. JLJason Lemkin11:27

      Harry, it's Mark. Just give me a number.

   6. HSHarry Stebbings11:29

      A billion.

   7. JLJason Lemkin11:30

      We'll go running together.

   8. HSHarry Stebbings11:31

      [laughs]

   9. JLJason Lemkin11:32

      Okay, done. Done. Email your LPs, tell them tough, tough, tough malarkey that they just gave you the latest $450 million, and show up... Uh, you do have to spend four days a week in the Meta office in Menlo Park, but there's great running on the trail on the peninsula. You haven't done these runs. They're great. Uh, it's a billion, vests over five years, and we'll just give their L- your LPs back their money with a nice profit.

   10. HSHarry Stebbings11:53

       So spoiler, spoiler alert that no one knows. I was offered in the last year $75 million for 20VC Media company.

   11. JLJason Lemkin12:00

       Yeah.

   12. HSHarry Stebbings12:01

       Uh, of which I own 100% of it. And I went for a walk with my mother and I said, "What should I do?" And she said, "What would you do tomorrow if you sold?" And I said, "I'd start the 19-minute VC."And she looked at me and she said, "I don't think you should sell if that's what you choose to do with the next day."

   13. RORory O’Driscoll12:18

       She's exactly right because-

   14. JLJason Lemkin12:20

       Now, moms are always wrong in this.

   15. RORory O’Driscoll12:23

       It de- well, I, I'm not gonna-

   16. JLJason Lemkin12:25

       They give you this great advice from the heart and the soul, but they, they kind of, sometimes they miss how the stitching works together in the venture industry, and the LPs, and the hold backs, and whether you have to work for Meta for four years. Moms are sort of, they're directionally correct in the heart, but, but, uh, sometimes they miss the details in these deals.

   17. RORory O’Driscoll12:43

       It, it, it depends on how much you have. At the marginal utility of the first dollar versus the 75th million dollar is very different, so a lot of it depends on your personal position. That's super clear. But also, to be fair, you gotta... I mean, I would imagine in some cases, part of the attraction has to be, 'cause none of these folks need that kind of money, is the ability-

   18. JLJason Lemkin13:05

       That's my ask the question part, right?

   19. RORory O’Driscoll13:06

       Yeah. To ability to play... I mean, I don't think it would be more fun running, um, 20VC in immediate, in, in, for Rupert Murdoch. It might be more fun running a AI project for Meta when you literally are told, "Spend 100 billion to make it happen." Whenever we sell companies and their CEOs, and Jason can smile at this, and they sell, and they go get, they join a bigger company, and they sign up for a year, I put a little note in my calendar after about three months to check in, 'cause they'll need some therapy, right? I remember one of the guys said to me, "I've accomplished my day at 9:07, and then the rest of my morning is just about not getting into trouble by saying stuff," right? It's just a very different gig. But that depends on what you need to do.

4. 13:51 – 16:48

   Is Loyalty Dead in Silicon Valley? The Great Talent Exodus

   1. HSHarry Stebbings13:51

      I love that.

   2. JLJason Lemkin13:52

      Is there any... With all these people leaving, is there any loyalty left in Silicon Valley? I, I do... This does bother me. Where's the loyalty to your LPs, to dumping your LPs? Where's the, where's the loy- I mean, I can think of a lot of folks in tech that we look up to that dump their LPs, that quit their unicorn to go into venture or other deals. I get the rationality of it. Quit their fund to go work for Meta. At least, um, Alexander from Scale gave his, his VCs back 15 billion. Like, at least he did that. [laughs] He did it, he did it right, right? But people just d- leaving ship. There's no... I, that's what I really, I find a little gross about all this, is, um, where... And maybe loyalty's dead. I mean, it's great that h- everyone on OpenAI that was a founder, except I guess, uh, Greg and Sam are gone, running their own competitors. But it, it, there's also something about it I don't... Maybe it's Sam's fault, but I don't like it. I don't like everyone dropping, uh, leaving everything.

   3. RORory O’Driscoll14:50

      Now, now you're sounding like Bill Shockley or whoever it was running Fairchild. You know, just-

   4. JLJason Lemkin14:54

      Yeah

   5. RORory O’Driscoll14:54

      ... yeah.

   6. JLJason Lemkin14:54

      I'm a Mr. Fairchild guy. Like they're-

   7. RORory O’Driscoll14:56

      Yeah, yeah, yeah. But if Alexander Wang's highest and best use is as a senior employee at Meta, then isn't it wonderful that the free market system was able to pay everyone else $15 billion? All power to Accel, who probably booked a $2 billion gain here. If that's disloyalty, any of my CEOs who wanna be disloyal to me and give me $2 billion, I'm in, baby, right? So I, I, I think the system work. I mean, yeah, right, it's different sometimes-

   8. JLJason Lemkin15:23

      I hear you. It's just when the-

   9. RORory O’Driscoll15:24

      Yeah

   10. JLJason Lemkin15:24

       ... lots of money goes through the system-

   11. RORory O’Driscoll15:26

       Stuff happens

   12. JLJason Lemkin15:26

       ... um, relationships become hyper-transactional, and maybe that's okay. Maybe it's okay. It just creates really interesting expectations between VCs and founders, and founders and management. Like, I, there's a new vi- like, there's very much a vibe of just l- you know, take 5, 10, 15, 20 million from my investors. Don't work out? Goodbye. Here's the keys, right? That's not how I grew up as a f- if I grew up that way as a founder, I mean, Rory, you saw my space grow up. My, my, my investors would've made nothing. If I could've left the keys on the, [laughs] on the table, there would've been two or three times I would've just said, "Here you go," to my VCs. "Enjoy, enjoy running, enjoy running my e-signature company." [laughs]

   13. RORory O’Driscoll16:02

       Totally. Um, I think, you know, years ago someone said, uh, an old, a VC actually, was a, one of the founders at Charles River said, you know, something like, he said, "You always gotta play the game by the current rules," right? And, you know, there was a time when, you know, money, capital was scarce, and, you know, you're right, you had an ob- You, it paid you to have an obligation to your investors, 'cause, you know, you weren't gonna get more, and it was get rich slow anyway. You know, SaaS is a compounding business. The truth now is we're in the exact opposite of that. We're in a you'll know or you, you know... I, I think a lot of these things, w- w- once it starts to hunt, you make a lot, and if it's not hunting, you don't. I think when people are making lots of money, the institutional glues get a lot weaker. It's just the nature of the beast, and you might... There's no point in get... I mean, there's no point in getting frustrated about it. Just play the current game.

5. 16:48 – 22:08

   Harvey’s $5 Billion Valuation: Genius or Bubble?

   1. HSHarry Stebbings16:48

      Guys, speaking of playing the current game, there was a, a, Harvey raising at a $5 billion valuation, $300 million. Uh, this really stood out to me as a round. Um, how did you guys analyze it? How did you guys break it down? There's different reports of where revenues are at for them. Uh, but I mean, it's a-

   2. JLJason Lemkin17:11

      What's our best g- Well, I don't know what the revenues are actually. I, I, I... What's, what's our best guess based on, uh, scuttlebutt?

   3. HSHarry Stebbings17:16

      I think, I think they're at an end of year of 100.

   4. JLJason Lemkin17:19

      End of this year?

   5. RORory O’Driscoll17:21

      Yeah. Yes, coming.

   6. HSHarry Stebbings17:22

      Yeah.

   7. JLJason Lemkin17:22

      I guess, I guess the growth rate's more important, right?

   8. RORory O’Driscoll17:24

      Yeah.

   9. JLJason Lemkin17:24

      But, but so they're-

   10. RORory O’Driscoll17:25

       4X

   11. JLJason Lemkin17:25

       ... they're approaching 50 or something? So 100X ARR.

   12. HSHarry Stebbings17:28

       Yeah.

   13. JLJason Lemkin17:28

       Growing not quite at, uh, Replit rates, though.

   14. RORory O’Driscoll17:32

       No, but pretty fast.

   15. JLJason Lemkin17:33

       Hold on, let me... Cluley says 30 million.

   16. RORory O’Driscoll17:36

       All right. Yeah, ch- J- J- He's got his cheat up. I love it.

   17. JLJason Lemkin17:38

       I'll tell you why, to me, it's super impressive in a way, right? Is like, I don't know about... Like, I know a little bit about the space. I, I know a little bit about the legal needs. I know how... I know about the legacy players. I, I, I didn't, I never met the Harvey team, but I, I talked with a lot of founders doing similar things, and my problem was all the apps were great. If you run a set of legal documents through OpenAI, and then ask it to analyze the terms and conditions of a 300-page legal document, okay? If you ask it to research the current status of California, you know, uh, whatever it is, uh, you know, no auto-renew, whatever that law is. Like, it's greatLike, it, and so every a- legal AI app that pitched, I saw a demo, I'm like, "Mike, they're all great. They're all curing cancer." [laughs] So kudos to the VCs because if I'd met Harvey at the seed stage, I would've said this is great, but I don't know that I could've told the difference from the 11 other ones that were doing this amazingly as essentially, I hate the term, but as wrappers

   18. RORory O’Driscoll18:39

       I think they did some things really well, right? And I think the thing they did really well is yes, there's a bunch of people doing it, but they, they started off, they grabbed hold of OpenAI. They became the deemed winner in terms of Silicon Valley presence and in terms of lawyer perception, frankly, long before the product was there. They did what, going back to the current game, they played the c- they established what I think of as kind of intellectual mind share as being the lawyer's choice super early when the product was still mediocre. We looked at... We didn't look at them. We looked at some other companies in the space, and we did references with the Harvey customer. And the reference was some version of the following. "But my partnership has said we need to do something in AI. These guys have a big story. I'm giving them a million bucks. It's not doing that much for me now, but I have to have an answer, and I have faith that they're on the right journey," right? They marketed this thing as a limited number of customers. They made it scarce, and they signed some early customers, Allen & Overy and, and, uh, I think one, actually, the accounting firms. And they got this kind of stampede effect going, right, which was brilliant, right? I think the product frankly lagged that, but over the last couple of years they have filled in behind it. They have, you know, in kind of classic Crossing the Chasm mo- you know, like you, you... That old Geoffrey Moore analogy of the tornado. They claimed the space, followed up with the engineering, and now they have a compelling product. They claim to have 300 of the, uh, I think Law 500 or Law 1000. But they did it early. They, they, they thought bigger than some of the other people in the space who thought it was just, you know, knock down deal by deal, do good work, be earnest, make good product. Those guys are like, "No, make noise, freeze the market, declare yourself the winner. You know, details to follow." And they pulled it off.

   19. HSHarry Stebbings20:25

       If you're doing this at $5 billion, what are you underwriting this to on an outcome scenario plan?

   20. RORory O’Driscoll20:31

       I mean, obviously everyone's gonna give you the bland, at least a 3X with upside to five 'cause that's the correct answer, but obviously your real question is can this be that kind of outcome? And, you know, I think there's only... Uh, so let's talk about that. Most legal software doesn't have outcomes anything like that because most legal software, you know, there's roughly a million lawyers and we joke, but a million is actually not a lot of anything. If the, you know, 1,000 bucks gives you a billion dollar TAM, 2,000 bucks to-

   21. JLJason Lemkin20:59

       It's not a huge market traditionally-

   22. RORory O’Driscoll21:00

       It's not a huge-

   23. JLJason Lemkin21:01

       ... outside of litigation.

   24. RORory O’Driscoll21:02

       Exactly.

   25. JLJason Lemkin21:02

       Outside of litigation it's not a huge market.

   26. RORory O’Driscoll21:03

       It, so it's not a huge market if you're selling kind of software like stuff. But fun fact, I mean, there's two, there's two escalators of value. The first is that for every dollar lawyers spend on, um, software, they spend $5 on Westlaw or, uh, Thomson Reuters for actual legal information. Used to be those old books when you see kind of the lawyers of the 1960s. Now it's obviously online. But info, data and information is 5X the spend of software, right? That's the first kind of argument. And then the second argument for an even bigger TAM is obviously you make some kind of arm wavy, we can charge a lot more even than Westlaw because we literally eat the work. We replace the lawyer so you can get paid as if you're a lawyer. So all that is to say is you can't get the, the kind of outcome you need to make this work if you see it as just another piece of legal software. The math doesn't work. If you see it as an adjunct to your research tool, that gets you closer, but you probably literally have to believe it's doing some of the work to make the TAM math

6. 22:08 – 25:19

   The AI Gold Rush: Can Software Really Eat Human Labor?

   1. RORory O’Driscoll22:08

      work.

   2. HSHarry Stebbings22:08

      I agree, and I think it goes back to a, a question that you said before, Rory, which I think was one of the best statements that we've said in the last few episodes, which is, are we going to see AI software providers be able to eat human labor budgets? And if so, then we have the Holy Grail and we're all gonna do very well. If not, then we're overpaying.

   3. JLJason Lemkin22:27

      You know, it's interesting, just on the Harvey story, it was interesting hearing Rory, Rory's thoughts. Um, I did meet a little while ago with a legal startup doing something very different, v- v- but, but, uh, essentially tapping into, I mean, same buyers, right? And they quickly got to 20 million in ARR, uh, on very little funding. And, um, ROI was super high what they were doing with AI. It was super high. But, um, it didn't really do all that much AI. [laughs] And I, the point was, um, it was not... And lawyers are, you know, the IQ is probably the second highest behind engineers, but the, the, the sophistication of the purchase was not particularly high, right? It was to improve lawyer productivity, right? It worked, but the quality of the AI was limited, right? So that, it's a quest- you know, some of these, when we look at the Replit versus, uh, all, all these wars versus Lovable, there's a lot of, a quality war there. I don't know if it's possible to have a quality war in the Harvey space. I just don't know. I don't know if lawyers have enough time to switch between 11 tools, dig in, and see which one analyzed state law conflicts between Georgia and Alabama properly, right? Maybe they do, but I don't think so.

   4. RORory O’Driscoll23:31

      I think you're right. At a high level, the, you know, for the case law stuff, it's the same for everybody, so it is the best tool. I think part of the value proposition from someone like a Harvey is they'll say, "We'll integrate with your per- internal information." So Cooley picking just as example lawyer, it's not just, you know, the fact, the case law that they bring to the table, but obviously we RAG and we co- cull through all your internal stuff and we can bring that to the table as well. And my-

   5. JLJason Lemkin23:57

      Yeah, but that's so easy, Rory.

   6. RORory O’Driscoll23:59

      Agreed, but it's still-

   7. JLJason Lemkin23:59

      Our AI has RAGged 20 million pieces-

   8. RORory O’Driscoll24:01

      Agreed

   9. JLJason Lemkin24:01

      ... of SaaStr content. It, that took a day. It literally, it took six hours to, [laughs] to, to input 20 mil- to RAG 20 million-

   10. RORory O’Driscoll24:08

       I, I totally agree

   11. JLJason Lemkin24:08

       ... uh, words of content. [laughs]

   12. RORory O’Driscoll24:09

       But you, you haven't lived the dream of having sold that software to a law firm where, you know, if you look at their... If you look at the typical document management software that these firms have, it's 20 years old. It's a company like iManage. So there just does appear to be a high propensity to stick with even mediocre software. So my guess is

   13. JLJason Lemkin24:29

       Getting in the door here, like you're frankly a ruthless trier of new software, Jason. You will dump yesterday for today, and you'll dump today for tomorrow in a heartbeat. And you're one person running your own business. Yeah. If you're selling to a partnership where, remember, everyone's your boss and no one's your boss, you have 200, you know, high attitude, pain in the ass lawyers. You get them- Imagine a VC firm like that. I can't imagine. [laughs] And you get them up and running on this system. You know, two years later there's a better product. You don't need the heartache 'cause it takes... You know, you talk to them about their use of Westlaw. They've been using that thing for 40 years, and they're like, "I'm dying with this Boolean search here." Yeah. So I think there's a real institut- I think getting in the door and locking in those customers has value, so it's clearly gonna be a valuable company. I think the question, to Harry's point earlier, uh, the only question left on Harvey is market

7. 25:19 – 35:43

   The B2B Unicorn Dilemma: Are There Enough $100B Companies?

   1. JLJason Lemkin25:19

      size. Market size and market composition shakeout. There's Lagora as well, who's doing phenomenally well. I mean, they're, they're the European counterpart, but- Yeah ... I did, I did references on them. They're, they're beating Harvey in a lot of cases, uh, a lot of cases. And then, you know, we invested in Solve, which is a vertical application for patent, uh, creation, editing, submission. I think, and Crosby, which is next on our list, Crosby Law Firm, backed by Sequoia. By Sequoia. Exactly. The ones, the ones who did Harvey. Yeah. Like, uh, y- yes, the TAM, but the TAM is getting- There's no conflicts in the age of AI ... unbundled and unbundled and unbundled that actually it's not the TAM you think it is. Y- I know you're moving on. I do think the meta question for Harvey, 'cause let's... Har- I mean, Harvey's still a B2B application at the end of the day, right? I, I don't mean to roll back, Harry, but will there be enough $50 billion to $100 billion plus B2B companies in the age of AI to justify these investments, right? Enough, uh, and, and, and, and maybe the math ties to it, right? Um, but there aren't enough $50 to $100 billion plus B2B public companies today to justify these deals. I agree. If it is software, even to, I mean, give, let's just go for a simple, humble 3X, $15 billion. If it's just software, it probably doesn't... And, you know, and trades at seven times in the end, you know, when things get normalized, it's a $2 billion thing. You don't get there on the TAM. So you're right. It's, if it's all just legal software, you don't get there on the TAM. If it's legal, eat the work, then, you know, it's two orders of magnitude larger. So that's the question. Does it eat the work? And then does, do you get paid when it eats the work? Which is actually, uh, we, when we last did this, Harry, we didn't talk about that. There's two separate things. Does your software automate what people used to do? And if it does, then at least value is being created. But then the second problem you have is if there's three people competing for the same, making the same kind of software, then the law firm gets the value. Like, we don't get paid. Excel doesn't charge $60 grand a year 'cause it replaced an analyst. It charged $60 bucks 'cause that's what you get for Excel, right? So can they replace labor and keep the value? And that's the question for Harvey. And then the interesting thing, segueing to Crosby, is obviously, just for everyone, that's a company that, as you say, Sequoia, one of the successful backers of Harvey, also backed. That's a company that is effectively using AI to offer, quote, "A better, more efficient law firm." They are, as it were, using technology to eat their own work, and obviously the value prop is they'll offer a better product to their customers while at the same time presumably be more efficient. That's the bet at least. I don't know. Yeah. I, I lo- I've already done this. Oh, good. Tell me more. Well, all the legal work I do, both for the fund and for Saster Inc., everything, I run through my AI and Claude, and then I run it by my counsel to see if it's correct. Yeah. I mean, I'll give you an example, like- How many, how many ti- how many times is it not correct versus correct? Never. It's always right. It's because the stuff I'm asking, it's not that hard if you've indexed the entire world's kno- [laughs] internet's knowledge. So for example, like, I never read my LP agreements. I mean, they're like 1,000 pages long, right? But for the first time ever, I had an LP that wanted to transfer to a third party. I didn't know how it worked. I had two options. I could send it to my old counsel, who charges $3,000 an hour- Yeah ... and would give me a grumpy answer in three weeks. And then I'd say, "Well, can we get on a phone and talk about it?" And he wouldn't get on the phone. Okay, I have new counsel now. Or I just threw it into Claude, and Claude analyzed all the documents, and it gave me the, all the correct answers. I talked about different scenarios, how the LP would wanna transfer. I said, "S- write this up in a short memo for me." I shared it with my counsel. A couple days later, he read the docs. He's like, "That's absolutely correct." Right? Again and again and again, all the, all the documents. And it's, th- so what I need is a law firm work at the pace of AI today. I'm not working at the 2021 pace where we worked 18 hours a week and had three jobs. I need the answer, my legal answer in seconds, and then my law firm in, after that can con- confirm it, right? I'm at the bleeding edge, but I just love, these are the lawyers I have today. I've rebooted my legal team for folks that can review my AI answers rather than the other way around. So I, I, I buy that, right? In the sense of- Yeah ... there's a whole bunch of things like vendor management contracts, NDAs, where review should be 90% AI, 10% human check if there's exceptions, and therefore it can be instantaneous unless there's an exception, and therefore in the next sentences, and therefore you'll be damned if you're paying $1,000 for it. And I totally think that's a thing, right? And I think there are lawf- we've seen not just them, Crosby, but other firms specializing in NDA review and, you know, very typical documents. In a way, interestingly, that wasn't doable, to state the obvious, 10 years before. We looked at LawGeex 10 years ago. They were way ahead of their time, and, you know, the technology didn't support it, so they weren't able to build a compelling business at the time. But today, NDAs should be a- at the margin free. Now, the interesting question is, how does that manifest itself? 'Cause, you know, if all the existing law firms are dumb enough not to get with the program, they'll lose Jason's business 'cause he's gonna say, "I want the flat fee $50 buck review and turnaround time of 15 minutes."

   2. RORory O’Driscoll30:30

      And, yeah, and if those firms resist that, then you're right. There's gonna be an... Maybe Jason will do it himself, but typically there'll be Crosby, you know, firms like Crosby will be wildly successful 'cause they'll take the business away from the older law firms. I gotta believe, though, enough of them are just gonna get with the program. 'Cause remember, they all now in our new world already have Harvey, right? They've got the guns too. They've got the tools. So I think you could, uh... It'll be interesting to see, fast-forward five years, where the incumbents have Harvey or, um, the Swedish company, I'm sorry, the name escapes me.

   3. HSHarry Stebbings31:02

      Lagora.

   4. RORory O’Driscoll31:03

      Lagora. Um, it's hard to keep up with these fo- um, legal names. Um, but they, all the incumbents have, you know, brand-new technology that could allow them to do things super fast, but they have business model inertia, and all the new Crosbys are competing for Jason's business, and they say, "Dude, it's 10 bucks for an NDA, 20 bucks for a vendor agreement, and we only charge real money when you have to do a complex transfer," right? My gut is some of the old guys will be slow, but enough of them will adapt that y- I don't know. It'd be interesting to see how much the new guys can build in this space.

   5. HSHarry Stebbings31:36

      This is exactly my point, though, which is venture is defined by two types of outcomes. One, where you drastically underestimate the size of the market and it's so much bigger than you thought it could be. Or two, when you actually overestimate the market size and you see it fragmented and unbundled into so many different composite parts that it's actually not as valuable as you thought it was, and I think that is exactly the case here. When you look at the... You know, when I was doing the diligence for Solve, patent creation, there were, like, 15 competitors. As in patent create- patent creation. In every different legal adjacent, there is the same, and I think it is as fragmented and unbundled as it is, which will actually make it a smaller market than people give credit to.

   6. RORory O’Driscoll32:13

      I, I think it will. I do think there's about five or six legal kind of, uh, process-specific processes like patent that, and immigration, that stand on their own. And then I think there will be the general corporate solution for general corporate law, which will be the Harvey and the Lagoras. But yes, that, even peeling off, you know, you peel off 50,000 patent lawyers, that's gone. You peel off another 50,000 immigration lawyers, and then you have even up, you know, 50,000 personal injury lawyers of whom 40,000 live in Texas. And, you know, pretty soon that million-dollar legal market is down to half a million-dollar kinda core corporate litigators and contract writers. So you're right. Y- you start unbundling it. I mean, we did the math on lawyers, and look, the truth is, if you're doing plaintiff law, you don't need Harvey. If you're doing patents, you don't need Harvey. But if you're Wilson Sonsini, you need Harvey. If you're Latham, you need Harvey. If you're a mid-tier law firm in, you know, Phoenix and you're a 400-person local firm, you need it. But, you know, you probably halve the market, which is why the math only works if you start to eat that work, baby. Otherwise-

   7. JLJason Lemkin33:19

      You know what the triggering thing is about the Crosby thing? Th- this is the triggering thing. It's the truth, is, um, it just exposes, like, how mu- how much human, how much human labor is gonna re- be replaced by AI, we're still learning. The truth is we're still learning, right? But what things like Crosby show is it, it just highlights the mediocre with, like, a blinding spotlight. Because if that associate... Forget about the senior partner. I'm willing to pay the senior partner whatever the be- Because there's only w- two ways to win in services. You have to be the best of the best or hyper-responsive. Everything else is almost worthless. And when that mid- mediocre associate takes a week to get back to me and it's wrong, and Claude told me the exact answer from my LPAC, like, those folks are all gonna be out of a job. Like, the mediocre, the mediocre at everything, there's no need. It's not just NDAs, Rory. I mean, uh, uh, just Claude alone can review very detailed commercial agreements. Like, "Okay, I wanna get out of my Salesforce contract. It's 1,000 frigging pages long. What are my options?"

   8. RORory O’Driscoll34:17

      No.

   9. JLJason Lemkin34:17

      Claude can give you that answer in five minutes, right?

   10. RORory O’Driscoll34:18

       Yes, and it's just a big no. You cannot get out of your Salesforce contract. It's the rules. Um, but I, I-

   11. JLJason Lemkin34:23

       Well, what, well, okay, but then what, what if they, will they sue me? What are the odds they'll sue me? What happens if they sue me?

   12. RORory O’Driscoll34:27

       Joking aside, you're, you're exactly right. I mean, I think the AI is just gonna pound on the efficiency. I remember 30 years ago someone saying, yeah, the internet. The internet ground out commercial inefficiency. They ground out middlemen like travel agents, you know. Anyone who's connecting buyers and sellers and that was their only thing, the internet exposed that, right? This is gonna grind down knowledge work mediocrity. Anyone who's just really re- recycling stuff that's easily known and is just slow and unresponsive. You're exactly right. And, you know, it's pretty impressive. And that's the way capitalism works.

   13. HSHarry Stebbings35:04

       Rory, when you ask me next time why I'm responding at 1:30 AM within a minute's notice, I'll remind you that the, to win, you either have to be the best or hyper-responsive, and I am the latter.

   14. RORory O’Driscoll35:15

       Yes, and, and we know you can't do the former, so you've got no choice, baby. [laughs]

   15. HSHarry Stebbings35:19

       Listen, humility-

   16. JLJason Lemkin35:19

       They both work

   17. HSHarry Stebbings35:20

       ... is crucial to everything.

   18. RORory O’Driscoll35:21

       Yeah.

   19. JLJason Lemkin35:21

       They, they both work.

   20. RORory O’Driscoll35:21

       They both work.

   21. JLJason Lemkin35:22

       I mean, vent- if you think venture is a service business, which most people think it either is between 10% and 99% a service business, it holds true, right? I mean, there's someone in your investor syndicate that, like, oh, you know, you know, speaks from the top of Sinai and knows everything, and then there's the one that responds to you in 60 seconds, and then I don't care about anyone else on my cap table. [laughs]

   22. RORory O’Driscoll35:40

       Totally. Yes.

   23. HSHarry Stebbings35:42

       Guys, you know, we,

8. 35:43 – 39:32

   IPO Mania: Why Navan, Canva, and Circle Are Shaking Up the Markets

   1. HSHarry Stebbings35:43

      there's so much doom and gloom. Every week we also have new IPOs. This week, Navan filed for their IPO. This is gonna be a big one. I mean, I think their last valuation, Jason, you'll be able to tell me, but it was, like, in the $10 billion range. There will be several venture firms here who make a lot of money from this. How did you guys analyze this one going out and filing now at this time?

   2. JLJason Lemkin36:06

      I mean, IPOs by number are up 62 and a half percent this year apparently, based on data I saw today, right? And just about every IPO is up, and everyone's ready to go today, right? Uh, even when we did this a couple, like, we weren't t- everyone other than Canva doing its tertiary at $40 billion or, or whatever, or Stripe, everyone else is now planning their IPO. They are just planning it today. This is just too good a start to the year.

   3. RORory O’Driscoll36:33

      Why wouldn't they?

   4. JLJason Lemkin36:34

      Yeah. Anyone that's got the numbers, anyone that's got the numbers is gonna go public, right, in the next 12 months. They're all gonna go public.

   5. HSHarry Stebbings36:39

      Is there a limit to how much the public markets can take so quickly? With the stampede that is coming on the supply side, is there a limit to how much the demand side can ingest?

   6. RORory O’Driscoll36:49

      You know, Jason reminded me a while back, and in 2021, there was an IPO a day. I think the ability of the US investment banking business to shovel shit out the door is unparalleled, right? And the truth is, when stock-- Look, when someone does Circle, we're all very Pavlovian, right? When you do Circle at the IPO, when you buy at 31, and, you know, three month la- three weeks later it's trading at seven times that amount, let me tell you what your little Pavlovian reptile brain says. Do more of that, right? And the next one won't be quite as good, and the one after that won't be quite as good again. But as long as it still feels good, you know, those rats will keep pressing the button, right? So no, um, it's gonna happen for... There's not a practical, there's not a cash limit. As long as this stuff keeps working and nothing exogenous happens, they'll be able to get deals done.

   7. JLJason Lemkin37:41

      Navan is clearly a top point one percent startup, right? Th- there's no question. The metrics will prove it out, right? But even, say, being objective, is it better than, say, Ramp, right? I mean, I know not a direct competitor. But my meta point is just this. My, my only and one question. When you have a point one percent but it's not, it's not, uh, the point, you know, it's-- you're not sure it is the generational company, how do you know when you-- to g- push all the chips in, to Harry's point, right? It's eas- it's fun to do it, right? I, I've done it twice, and I don't know, it's kind of [chuckles] not to that level. It's fun to push all the chips in, but you gotta make sure it's at the edge of generational, don't you? That's the Roblox point that, uh, uh, that Altos always makes, right? You gotta wait for that Roblox and then push all your chips in, right? Is Navan as good as Roblox? I mean, it's generational, but I mean, it's great. Is it as good as Roblox, though?

   8. RORory O’Driscoll38:29

      I mean, the, the, the fundamental point you're saying is, yeah, concentration without absolute excellence, you know, w- w- will beget subpar returns. You, you gotta be right relative to price. 'Cause the trick is not just you gotta concentrate, but you gotta concentrate while the price is still attractive. 'Cause remember, the other thing, it's just worth stating, is on the last, you know, five or six IPOs, there's been at least one round that was cl- in the private side that was clearly priced wrong. Now, you know, we've seen it in, yeah, a bunch of them. I mean, obviously, you know, we've seen it in Chime, we've seen it on Hinge. Um, I think, I don't, I doubt there was a Circle round that was priced as high as it's currently trading, so everyone is golden there. But in general, y- you know, it, it's hard to concentrate, and it's even harder to concentrate and get the price right. So yeah, when you, when you do it and you pull it off, you obviously get a stellar return and, you know, more power to him.

   9. HSHarry Stebbings39:18

      Circle today is a $68 billion business, which makes it more valuable than Robinhood and New Bank-

   10. RORory O’Driscoll39:23

       Yes

   11. HSHarry Stebbings39:24

       ... just to set some parameters. Um-

   12. RORory O’Driscoll39:27

       And, a- a- and, and even more compellingly, more valuable than Coinbase, to whom it gives half of its gross

9. 39:32 – 46:34

   Meme Stocks & Market Madness: The Circle Rollercoaster

   1. RORory O’Driscoll39:32

      revenue.

   2. HSHarry Stebbings39:32

      Will it survive falling interest rates, and is this peak meme stock?

   3. RORory O’Driscoll39:38

      Too extreme on both sides. Of course, it will, quote, "survive" falling interest rates. It won't go bankrupt, but there's no doubt that its current model is all about, as someone succinctly described it, letting people give you their money and g- and getting to keep the interest, right? So if the interest is less, they keep less. It's a far worse business at two percent money market fund than a four or five percent money market fund. So to the extent rates go down, obviously it won't be as compelling. So that's-- but it will survive. And then the second thing is, is it peak meme? So I mean, I, I think there's definitely some element of right deal, right time with all the crypto reform in the House and Senate. It just feels perfectly on point. There's probably a fairly thinish, you know, probably reasonable float actually, 'cause there was some secondary. But it's the kind of stock that can run. It's an N of one. The story makes sense. And yeah, it's obviously gotten carried away. I don't for a second thinks any-- I don't think anyone believes, who's done any kind of math analysis, that it's worth 57 times run rate re- uh, 50 times run rate revenue. I don't think anyone thinks that.

   4. JLJason Lemkin40:45

      But here's the question I, I struggle with, Rory. You, you've got more experience th- here than me. Uh, forget it. Uh, we can talk about, I do believe it's a meme stock, and maybe that's the answer to this question. But how, how do you go from June fifth at $83 a share to $231 a share in, uh, in, in two weeks with no news? I, I would get if a quarter or two goes by. I would get if you have a beat or two. I would get if something radically changed in the, in the crypto market. This is the same company that IPO'd, isn't it? Is there any difference between this company that IPO'd just a fortnight or two ago? [laughs]

   5. RORory O’Driscoll41:18

      So, so I, first of all, agreed, it's the same company. So therefore, one mitigation comment to the bankers. I think this is the old Hollywood quote, "No one knows nothing." You know, no one knows anything, right? Is that, you know, we g- we give people a lot of grief. Oh my God, you priced at a 31 and it opened at 67. You must be dumb, Mr. Banker. Well, we saw it open at 67, Jason. You did, I did, and Harry did, and now it's 270. Did any of us buy at the end of that first day? We, we left a 5X on the table. No, we didn't, right? So I think one of the things you have to conclude is some parts of what happened in this kind of thing are fundamentally fairly unknowable. And so to your point, you are Jason, nothing's changed. And you do have to say then at some level, you probably have some... I mean, I hate the word bubble because you're, you're making a call, but you're definitely having something where people aren't buying it 'cause they think it's worth 57 times revenues. They're buying it 'cause they think somewhere out there someone else thinks it's worth 58 times revenues, and maybe they can flip it to the next guy. And that kind of thing always ends badly. So do I think there'll be a, yeah, significant correction? Yeah, but it's still a great company and a great win.

   6. JLJason Lemkin42:22

      But forget, okay, so we could argue whether the IPO is mispriced and someone could play the role of grouchy Bill Gurley, who's definitely smarter and more successful than me.

   7. RORory O’Driscoll42:30

      Totally.

   8. JLJason Lemkin42:30

      But the last five days, it's up 46.4%. What, Rory, what changed the last five-

   9. RORory O’Driscoll42:35

      Nothing. Nothing

   10. JLJason Lemkin42:36

       ... [laughs] 46. Forget about making 5X. Harry and I could have just taken our funds-

   11. RORory O’Driscoll42:41

       Totally

   12. JLJason Lemkin42:41

       ... stuck them all, f- four days a- five days ago and made 46 point... What's the IRR? H- I can't do the IRR math good, Rory. If we did 46.9 in five days, what's the IRR annualized for that deal?

   13. RORory O’Driscoll42:51

       It's, it's awesome. It's awes-

   14. JLJason Lemkin42:52

       Yeah

   15. RORory O’Driscoll42:52

       ... No, you're exactly right. There's no-

   16. JLJason Lemkin42:53

       I'm gonna, I'm gonna wait for [laughs] my portfolio to appreciate.

   17. RORory O’Driscoll42:56

       Yeah, no. There's, look, there's no logic. I mean, you just have to say to yourself, these kind of high, there's no logic to it. It's a trading asset, and it's all the, I mean, again, it's all the symptoms of what you see in, you know, speculative bubble behavior, which is vast price movements in short periods of time for no information. The efficient market hypothesis people get all mad and say they're really, I mean, you know, Fama, they'll say, "There are no bubbles." And you'll go, "Hmm, this looks pretty bubbly to me." You know?

   18. JLJason Lemkin43:20

       Yeah.

   19. RORory O’Driscoll43:20

       I, I, I think, you know, large numbers of small volume ill-informed traders in a stock where relative to the float, there's not a lot, and, you know, I've no doubt in my mind that when the other 80% of the stock comes off in six months, I don't think it'll be trading at 57 times revenues.

   20. HSHarry Stebbings43:38

       If you're looking at this as the Canva exec team, can you genuinely help me understand why do you delay an IPO? You're looking at Circle being priced where it is, but everyone else, everyone enjoying the fruits of public markets, treating them well. Why do you delay?

   21. RORory O’Driscoll43:53

       It's a great question, 'cause it's actually only reason to pose the question. Let me tell you what I mean by that. When you have all these things, should you stay or should you go, to coin a music phrase, on the IPO, and you have all the private is great, the real question is, is the cost of capital cheaper in the public than the privates? And for a long time, the private has been cheaper. We've been wonderful cost of capital. We give you money, provided you get a preference, we leave you alone, we don't bug you, you don't have to do analyst day. We're not really that mean. I mean, some people think we're mean, but compared to, you know, the guys in New York who run hedge funds and are, and various kinds of funds like that, w- activist funds, that's the word I couldn't think of, yeah, we're nice. So it's been really nice being private. The only thing that's gonna change that is not kind of some kind of... I was thinking about it, 'cause you'd asked the question two or three weeks back, you know, "What would you change in the public markets?" And I hadn't a good answer. You know what I realized? It's kind of the wrong question. Price is the lever for 90% of economic transactions. If you can get a stupid price in the public market that's higher than the stupid price you're getting in the private markets, then at the margin, mostly you should go. Right? And I think you're right. Maybe not Canva. Maybe people have ideological reasons not to. But let me tell you, if you're owning a Bitcoin trading operation, a stablecoin operation, you are typing as fast as your little fingers will let you. And there are bankers locked in rooms as we speak doing that, because price is how the public market sends a signal to the private market, "Hey, come on in."

   22. HSHarry Stebbings45:24

       Would you not argue that's a relatively, um, naive way to think about going public based on a transitory moment in time of what public markets will price you at? I was with a, dinner with a $10 billion public CEO last night, and he's a friend of mine, and he was just moaning about being public. And very simply, it's a transitory moment in time. You will appreciate, depreciate. Who gives a fuck what you went out at?

   23. RORory O’Driscoll45:48

       But, uh, look, if it's, first of all, I'd say it's less naive than reductionist, just upping it, right? And look, you're right, there are all the other negatives and positives of being public that are hard to change. My point was at the margin. If you get all the grief of being public, and on top of that you get a lower price than the private side, and a consistently lower price, then you never bother.

   24. HSHarry Stebbings46:11

       Yeah.

   25. RORory O’Driscoll46:11

       But if you get all the grief of being public, and it's still a pain in the ass, but in return you get a liquid stock and a 50, 80% consistently higher price, then the argument is hard to resist. Now, you're right, if it's a flash in the pan and it's gone in two months, then yeah, then it, it, then it would be a naive w- reason to go public. But if on average the capital is cheaper in the public markets, then over time it'll

10. 46:34 – 49:56

    Canva’s Billion-Dollar Question: Why Stay Private?

    1. RORory O’Driscoll46:34

       pan out.

    2. HSHarry Stebbings46:35

       But if we just go back to Canva, though, I just don't get it. It's a very strong consumer brand, very well known, with incredibly strong financials that we know of. It's north of 3 billion in ARR. Why would it not go out?

    3. RORory O’Driscoll46:48

       They don't have to sell securities. They, they're kicking off cash, which means that they're net buyers of their security from buyers, not sellers. So they don't need to raise money. I mean, let me give you, if, the, the, what's the guy? The, the Dead Center guys, Backus, Cor- Cor- Cor- Corey? You go public, I mean, fundamentally, you go public to raise capital. What's odd about some of these companies, they've been private so long and have done so well, that they're post-needing capital. Like, they're just kicking off cash. So it's just not an imperative.

    4. JLJason Lemkin47:17

       If Canva's generated enough cash, like you could imagine J- Canva generating a billion dollars of free cash flow or more a year, maybe a billion and a half, right? It's easy to see, right? They could have 40%, uh, uh, free cash flow margins, right? You could pot- if you have enough secondary interest too, you could just buy everybody out. There's enough cash at a billion and a half a year. You could buy out even all the grow- uh, just about everybody. And no one listens to the guys that bought a few shares at the late rounds anymore. But, but forget about that the Blackbirds and everybody got as much liquidity as they want, right? Return the fund. If you generate enough cash, why, you, you... And, and, and the founders have given most of their, their shares away to s- to, to charity. They're not trying to build, buy the biggest, I don't think they're trying to buy the biggest yachts. If you gen- if you could generate 20, 30 billion of free cash flow the next decade, why go, do, maybe you don't need to go public at all. Just buy everybody out. And pay dividends as founders. Just pay a d- a billion dollars out as common stock dividends a year. If the founders own 80% of the common, you, most of us could live on 6, 700 million a year in dividends, couldn't we?

    5. RORory O’Driscoll48:17

       I think you, I, I think even you could manage a Jason. And you know, you look, you're right, is that-

    6. JLJason Lemkin48:21

       Seriously, it's not-- There hasn't been so much ca- I'm trying to figure out exactly how much has gone in in real time, but it's not so much they can't buy them out, the-

    7. RORory O’Driscoll48:28

       I don't think they could buy it all out, or it would take too long. But I, I, I get your metaphor. I, I think-

    8. JLJason Lemkin48:32

       They've raised less than a billion, I think.

    9. RORory O’Driscoll48:33

       Wow. For what... But they might own, if they own 30%, then they need 10 billion. But yeah, it's not crazy. And sure, but when we talk about Oracle-

    10. JLJason Lemkin48:40

        It's possible

    11. RORory O’Driscoll48:40

        ... when we talk about Oracle-

    12. JLJason Lemkin48:41

        That's the thing, unlike a lot of these startups-

    13. RORory O’Driscoll48:43

        Yeah

    14. JLJason Lemkin48:43

        ... it is possible-

    15. RORory O’Driscoll48:43

        Agreed

    16. JLJason Lemkin48:43

        ... to buy them out, right?

    17. RORory O’Driscoll48:44

        Yeah. If you've got low capital raised and high cash flow margins, you could. I don't think that's the reason. I think that, I think a lot of what they've said is they're really trying to focus technically on their AI development, 'cause they got a lot of new stuff to build, and they just don't need the grief and the distraction, and they don't need to do it. Which is a perfectly rational reason.

    18. JLJason Lemkin49:01

        All I'm saying is if I, if we were, if three of us were running Canva, and let's say we're still growing north of 30% or 40% like they are, and we sat around, "Listen, guys, we could buy out our last investors at 3X. It may take a few years to get there. They'll make the 3X. Blackbird made 50,000 500,000 X and friends, right? Or, or the others. Let's just chill. Let's just pay ourselves a billion dollars a year in dividends, like, like the Basecamp guys do on steroids, and let's buy out our guys at 3X when the time comes." And why, why would we wanna deal with... Like, I don't know a single public CEO that's happy, going to Harry's point. I literally don't know. I mean, even the ones, even, you know, the most successful ones, you know, Palantir and Cloudflare are the two most successful public. I, I mean, they're great, but they don't seem happy, do they? Do Matthew and Alex seem... I, I, they don't just seem like the happiest people on planet Earth. They're driven, like, mad respect, but [laughs]

    19. HSHarry Stebbings49:52

        I, I'm not commenting on Matthew.

    20. JLJason Lemkin49:53

        [laughs] Well, I wo-

11. 49:56 – 53:59

    Larry Ellison’s Power Play: How to Buy Back Your Own Empire

    1. JLJason Lemkin49:56

       I would have that discussion with the three of us. Why don't we buy them out? We've raised less than a billion, right? We can get to 10 billion, generating four to five billion of free cash flow a year.

    2. RORory O’Driscoll50:04

       It's a legitimate question. I, I, I think if you are post-cash, strongly cash flow positive, such that you don't need to sell shares, in fact, you're a net buyer, um, as you point out, either 'cause you're doing buyback for employees or because you're doing buybacks of founders, then in fact you're not trying to optimize valuation, so going public might make sense. I think you end up doing it for other reasons, mass liquidity, including your own. You know, if you're someone like, I mean-

    3. JLJason Lemkin50:29

       But isn't, like, Larry Ellison kind of doing that in a way?

    4. RORory O’Driscoll50:31

       Yes, yes.

    5. JLJason Lemkin50:32

       I mean, they just reported he's, he's at 41% ownership of Oracle now.

    6. RORory O’Driscoll50:35

       No, that's really a funny, that-

    7. JLJason Lemkin50:36

       He's buying out his shareholders every year with cash flow like we've never seen before, right? Uh, why don't we learn that lesson and do it before, not even bother to IPO? [laughs]

    8. RORory O’Driscoll50:45

       No, that is true. Uh, probably the beauty of being p- I mean, first of all, you're right. That's, I, I think we've... Let's talk about that now. I mean, I think that, 'cause it's been interesting, 'cause for people, for background, at IPO, I think Larry Ellison owned something like 23% of Oracle. Typically, that goes down over time. He now owns 41% of Oracle, right? What's he done? Every year he's run that business superbly. It's got 43% operating margins, and he's used that cash to buy back shares. He hasn't sold any, so his ownership has just gone up over time. It's exactly what Jason said. It's a beautiful thing, right? Now, really interestingly, two things happened this year. One is the stock really popped 40%, right? And he got a lot of cloud credit. But the interesting thing is, this is the year he actually abandoned the buyback strategy. 'Cause this is the first year where instead of taking all that cash and buying shares back, he's taken all that money and put it in CapEx. You know, Oracle was not free cash flow positive this year.

    9. JLJason Lemkin51:43

       His own money, really. [laughs]

    10. RORory O’Driscoll51:44

        Yes, he put his own money and he said, "No, we're gonna, we're gonna take this lovely, mature, cash flow positive software business and join the other crazy people in this CapEx crazy hyperscaler land." So I think the CapEx budget was, I'm winging it here, something like 30-something billion, and effectively you were free cash flow negative. So the trick that he used to get to this point is now not happening, but luckily, not luckily for him, it's so clever. He bought when it's cheap for 10 or 15 years, then invests in AI, and then gets a 40% stock pop from that investment in AI just when he owns most of the company. You know, it's a thing of beauty, and puts him firmly number two richest man in the world, I think, for a period of time. You gotta love it.

    11. HSHarry Stebbings52:29

        What a strategic mind. Also, I-- he looks phenomenal for his age.

    12. RORory O’Driscoll52:32

        Totally.

    13. HSHarry Stebbings52:33

        I don't know what he's doing, but someone needs to give him more credit.

    14. JLJason Lemkin52:36

        I need all his people.

    15. RORory O’Driscoll52:36

        What?

    16. JLJason Lemkin52:37

        Whoever his people are-

    17. RORory O’Driscoll52:38

        Totally

    18. JLJason Lemkin52:38

        ... I just, I need all of them. [laughs]

    19. HSHarry Stebbings52:40

        I haven't, I haven't told you I'm actually his blood boy. That's why I didn't sell the company. He pays me much more.

    20. JLJason Lemkin52:45

        Well, I'm just gonna be it.

    21. RORory O’Driscoll52:45

        No.

    22. HSHarry Stebbings52:45

        Yeah, there you go.

    23. RORory O’Driscoll52:47

        And I think, yeah.

    24. HSHarry Stebbings52:50

        I totally agree with you guys.

    25. JLJason Lemkin52:51

        Yeah, 30 billion in 2024 into CapEx alone-

    26. RORory O’Driscoll52:53

        Yeah

    27. JLJason Lemkin52:54

        ... instead of buybacks, right?

    28. RORory O’Driscoll52:55

        Yes.

    29. JLJason Lemkin52:55

        Clue Lee agrees.

    30. RORory O’Driscoll52:56

        It's just a totally... What's fascinating about it is it's such a different bet at a time when most people, you know, in their 80s, are getting conservative. It, it's like he took the Warren Buffett book Bible for 15 years and did the cash buyback like Buffett did at the Washington Post, and then last year he said, "Fuck it, I'm 80. I'm just gonna double down here and just switch strategies." It's just fascinating. If it works, it'll be a, a legend.
12. 53:59 – 1:01:41

    The Sales Tech Revolution: Why “Cheating” Tools Are the Next Big Thing

    1. JLJason Lemkin53:59

       if we look at AI for coding, okay? If we look at Replit, 10 to 100 million in 5.5 months, right? Announced yesterday. Crazy, right? If we look at Lovable, not far behind. Uh, you know, on and on and on, right? Cursor and... Like, what kind of bums me out is that on the GTM side, on the sales side, I know the, everyone's made investments in there. They're not as good.They're not as good. They're slow to release features. They don't work that well. They're just not, like, the sales tools for AI are not as good as the [laughs] the developer tools for AI. So what I'm looking for is who's approaching this from a consumer level that has a consumer-grade experience that could work for GTM. And I, you know, there's no one... Uh, th- listen, I love my old sales team. Everyone I work with is great, but overall, the sales reps I talk to for all the products I buy, they're terrible. They don't know their product. They know nothing. They add no value. So they all need to cheat. All sales reps need to cheat 'cause they don't know anything, and they all need something like KlueLe. And I've used, there's a limited number of tools in, that do this in sales, but they're either not real time, right? Like I'm using KlueLe right now, right? Or they're, they have an enterprise niche, or they're glorified note takers. This is what every sales team needs, and at, will it be KlueLe? M- maybe not, but once in a while, like a, y- like a Slack or something, you need something to come up from the bottom to disrupt a market instead of coming from the enterprise. And I just don't see sales tools... All, we can look at cra- things that are crazy successful like Clay and others, but Clay is like a, a, a six m- you know, multi-month deployment period with an agency that you pay 50 grand to, right? I want tools that you can use in five minutes. And, uh, not to ramble, I, I'm not saying KlueLe does all of it today, but I can already see hints of... Like, it's cl- like, if it could do, like, two things today, like we could use it, it, it would be the cheating tool for sales reps. It needs like two features they could build in a month. That's why I may be an intern. I was invited to be an intern this week. I, it may take me a week to get up there, but, uh, I, you think I'm kidding, but, um, there's always, I, I, s- when I joke, there's always seriousness in it, right?

    2. HSHarry Stebbings56:03

       Jason, you're taking a way too academic approach to this because the right-

    3. JLJason Lemkin56:07

       It could be

    4. HSHarry Stebbings56:07

       ... tact or the right tact or the real question is, are they going too far in their bid to get attention? Posting pictures with strippers on sofas, uh, police cars arresting people outside of parties.

    5. JLJason Lemkin56:20

       I, you know, I thought that at first, and when that initial stuff went out, right, I didn't even know what KlueLe was, right? When that in- uh, stuff that we would call inappropriate went out. It, it w- seemed crazy, right? And if you look at that social network thing he did along with Andreessen fundraising, that went, like, the other stuff went to other folks. Cuing back to the social network went to me. Okay? It went to me. It went to matur- maturing the company just slightly because there's a whole generation of us in B2B. Harry, this is where I am a, a, a couple clicks older than you. I can't tell you what it was like when I took my team to see that movie. It was generational, okay? This whole, you don't know what it was like when everyone was piling on Zuck telling, saying this was a terrible company, hoping it might be worth $1 billion today. What is it worth? We started this episode [laughs] $1.8 trillion, right? And, and, and it was such a m... And then, and then his point is, and his point when he did the interview was like, "Listen, I wanna bring, like, you guys on Twitter and LinkedIn are, like, two or three years behind what's going on on TikTok and Insta." You're in the middle, Harry. And he's like, "I'm gonna bring some of that knowledge to the Twitter, LinkedIn gen." And I thought that was, the social network thing you did, I thought it was a 10. You, I know you can laugh.

    6. RORory O’Driscoll57:33

       I, I, I, I wanna come in on this 'cause I actually read, I don't even know who wrote it 'cause I can't, 'cause Notion's got such a shitty UI, I can't figure out the read piece. But, uh, I got a piece sent around internally called Leverage Beta Is All You Need, the LLM business. It was so clever.

    7. JLJason Lemkin57:47

       Yeah.

    8. RORory O’Driscoll57:47

       And it gets back to this, 'cause there's two separate questions at stake here. One is, how much should be steak and how much should be sizzle? In other words, how much should be core product versus marketing? And then the s- which is a general question, and then the second question is, are there certain forms of marketing that are just go too far, which is KlueLe, right? And you could argue, the Harvey comment I made was, you know, they did marketing. This was such a good piece. I'm gonna read out a couple lines from it. "The brutal truth about the LLM business. Here's what nobody wants to admit. When LLMs finally work at something, the implementation will be boring as fuck. Harvey isn't some breakthrough in legal AI. It's ChatGPT with a law costume. Lovable isn't revolutionizing code. It's Claude with pretty buttons. So you have two choices. Option one, wait until the LLM actually works, then scramble to build your ChatGPT wrapper along with everybody else who just realized the same thing. Option two, start now while the tech is garbage, lie about how good it is, burn money on marketing, claim the territory while everyone else is still laughing at you. These is the leverage be- the companies winning at leverage beta aren't the ones building better products. They're the ones who understood this dynamic first. They're either lying about the present, 11X or Icon, are arbitring the arb- arbit- arbitraging the obvious, Harvey or Lovable." It's a great piece. What he's basically saying is the models are getting better so fast that even if you can't do it now, you will be able to do it in a year from now. So your choices are wait for a year and just complete the course along with everyone else, or lie, complete the course now, establish this kind of mental perception of the winner, and then collect the check when the time comes. And going back to what I said, Harvey did that in a high-class way, 'cause I don't think you sell to law firms by hiring strippers, right? I don't just, right? And you could argue-

    9. JLJason Lemkin59:39

       You ne- you never know, actually. I mean [laughs]

    10. RORory O’Driscoll59:41

        I'm not gonna speculate. I'm gonna keep this thing highfalutin, right? I think KlueLe is doing it in a different kind of way, and as I say, we can discuss reputationally does that kind of marketing work. But the meta comment of claim the ground with marketing and let the product follow on 'cause it's gonna get there 'cause the models always get better, it was a wily insight for piece and point. I, I would give him or her credit if I could just figure out in Notion where the writer is, but there you go.

    11. JLJason Lemkin1:00:09

        KlueLe might know.

    12. HSHarry Stebbings1:00:11

        [laughs]

    13. RORory O’Driscoll1:00:12

        What? What?

    14. JLJason Lemkin1:00:13

        I, uh, Hal, I'm gonna a- like, I, let's see. Who wrote... I'm gonna ask KlueLe. Who, who-

    15. HSHarry Stebbings1:00:15

        Jason, why didn't you invest in this company?

    16. JLJason Lemkin1:00:17

        Who... I didn't get a chance. I would've. I wouldn't have invested in the company three weeks ago, like, or whenever Suso did, but I would invest in it right now that I get it, right? I'm, I'm not always that fast, Harry

    17. HSHarry Stebbings1:00:27

        Go, just so actually, to be fair, my partner Paul actually picked this guy out when he was like ki- kicked out of Columbia-

    18. JLJason Lemkin1:00:32

        Yeah

    19. HSHarry Stebbings1:00:32

        ... and cold DM'd him.

    20. JLJason Lemkin1:00:33

        I get it.

    21. HSHarry Stebbings1:00:34

        Um, so J- but Jason, would you do this 15 on-

    22. JLJason Lemkin1:00:37

        I didn't get it then. I did- I didn't get it then

    23. HSHarry Stebbings1:00:37

        ... Jason, would you, 15 on 100, would you do it?

    24. JLJason Lemkin1:00:41

        Uh, Cluley says author is not named. Rory doesn't know, and, uh, he doesn't have enough data in Notion, right? Show me the... If, if you can show your transcript to Cluley though, Cluley will, Cluley can look it up.

    25. HSHarry Stebbings1:00:49

        Jason, would you do Cluley 15 on 100?

    26. JLJason Lemkin1:00:52

        If I would, I could do like five. I don't think I could get to the other 15. That's too much risk. But I might do it. Yeah, I might do it.

    27. HSHarry Stebbings1:00:59

        You might de-fy from your fund.

    28. JLJason Lemkin1:01:01

        Yeah, yeah. I might do it. If, if, listen, I'm making a... The problem... Listen, I get excited about companies in general, and then sometimes you meet the founders and it's not what you thought, right? We're all on our own journeys, and, and there's probably a good chance what I see in Cluley is not what the team wants to build, right? I mean, the, it, it, it is started off as a cheating app, but if it is, I, I've, I just think all the B2B people are so, I'm not, I don't want to be mean, sub, sub-cursor grade that I'm looking, this is all I want. I'll, I'll, I'll take the risk if someone can build, can pull together an S-tier team in GTM, I'm, I'm in on it for real. They all claim they do, and they're just pretty good. [laughs]

13. 1:01:41 – 1:07:16

    Slack Lockdown: Is B2B Software About to Get Ugly?

    1. HSHarry Stebbings1:01:41

       We, we mentioned, well, I'll tell you afterwards. We mentioned like buying islands and, uh, be- being in Hawaii. The thing that I just can't get, and a lot of my companies are really perplexed by it, is the Slack lockdown, uh, cutting access to it. Can, can you just help me understand like, will it work? How do we think about what this actually means for Slack moving forward?

    2. JLJason Lemkin1:02:02

       You know, all the leaders in B2B, I think most of them are gonna close, circle the wagons and become more locked down. They have to be. They have to be. And when you're sitting around the table, especially with the CRO and others who are, who are under stress, what does the CRO want to do? Lock it down, move to s- move to multi-decade contracts and raise prices. Like, that's the strategy when things are stressful. And I think we can argue whether this is a mistake, but, but, um, but I think MCP is an existential threat within 12 months to every B2B company. And so folks are gonna lock the stuff down more because you, you can lock down your AP- API, but when your MCP server's open, y- man, it's, it's rough. It's rough. And I love what like Zapier's running like 1,000 times faster now to become like Zapier Prime because of this. They get it. HubSpot is figuring it out, but they were first, right? And Salesforce, I think most people do what Salesforce is, which is lock the, lock the S down. Lock this, lock this down. [laughs]

    3. RORory O’Driscoll1:03:00

       You know, I, I, I think, funny, uh, that was helpful context, Jason, 'cause, you know, my instinctive reaction is, "No, you can't do this." I, I, I'm a Salesforce customer. If you were telling me I can't integrate in and out and, you know, access my data, I, I'd be miffed. And then what you did nicely, Jason, is remind me of the, you know, the du- the duplicitous and sly ways that especially the closer you are to having a monopoly, the easier it is to start locking stuff down, and you're exactly right. LinkedIn, obviously. I mean, think Epic in the, uh, um, um, medical record space is notoriously difficult to integrate to. You have to pay fees and all that. So it is interesting that as you get defense, as you get big and defensive, you're right, there is this instinct to lock it down. I mean, part of me says they won't be able to get away with it, that the customers will say, "Look, if you're gonna do that, then the value of Slack goes down so much to me that you can't do that." So my God, and I think you said this to me, Jason, I, I was talking to someone, is that probably this reverses to some kind of fee-based thing, which is MCP access to my Slack information is an AP- i- is a priced API call. I, I don't know if you can get away forever in a horizontal app like Salesforce with a commu- with a channel like Slack denying access, the, denying the customer access to their own content over the medium term. I don't think it stands, uh, intuitively. I could be wrong, and I, and you, and you did well to remind me of other areas where they do it. But I just think it's a sign of a decaying empire. It's a sign that you can compete on the merits, and it's, I, I-

    4. JLJason Lemkin1:04:39

       For sure

    5. RORory O’Driscoll1:04:39

       ... it's a little bit of a dangerous sign. It, it's one of the signs that says, "This would be a good time for you, Mr. Customer, to consider your options," right? It's like when PE moves in. Price rises are coming.

    6. JLJason Lemkin1:04:50

       That's why I have the most respect for, for HubSpot, and especially Dharmesh for being number one here. Like launch day-

    7. RORory O’Driscoll1:04:55

       Totally

    8. JLJason Lemkin1:04:56

       ... MCP op- uh, OpenAI partner, ChatGPT partner. Launch day, because I think it's a threat to HubSpot. I think it's an opportunity. Of course, it's an opportunity, right? Which is why they're doing it. But to embrace the threat, right? I mean, it's, it, that's badars. That's the way you do it. [laughs] You don't wa- But, but, uh, yeah, I, it is, it is a, it is a sign of deteriorating, uh, everything, right? And, uh, you know, as, and as Slack deteriorates more and more, like it becomes less and less this, the, our, our, our sort of our, our neural network, it's gonna get locked down even more, isn't it?

    9. RORory O’Driscoll1:05:26

       Yeah. It's hard to imagine a world where you say, "This is," as you say, "This is the neural, this is the means by which we all communicate with each other, but no one can access that information f- for the use of AI." That's just not a thing in twen- it's not a sentence that survives. So we'll see.

    10. HSHarry Stebbings1:05:41

        Final one. I have dinner with Benioff in London in a couple of weeks. What question should I ask him?

    11. RORory O’Driscoll1:05:47

        Taking Jason's theme, this idea of agents, I would say kind of try- I'd try and get some data and dialogue around it. How do you measure the efficacy of your, of Salesforce agents running on the Salesforce stack, and how does that compare to third-party agents running on the Salesforce Slack stack? Are you better because you have the data? Are you worse 'cause you're a little behind? Do you even objectively measure it, right? Do you understand, you know, if you're using your sales agent, how you measure success? Do you understand, you know, we're all in, we have a wedgie in the AI SDR space. There's a bunch of others. How do you compare to them? If you're in Service Cloud, how do you compare to all, how does your agent compare to all the independent agents? 'Cause to Jason's point, what would make it go faster? It's really simple. If the resolution rate on Service Cloud was 20%, so you could only, let's be honest, eliminate 20% of your-service, uh, center personnel, and the resolution rate with some third-party product like Decagon, Thane, Sierra, is 50 or 60%, then you're gonna lose business pretty quickly. And are you measuring that? That's the question I'd ask them. And then I'd har-

    12. HSHarry Stebbings1:07:03

        Look, Rory, do you want to come to dinner? Do you want to come to dinner and stab me? I'll, I'll have dinner with Jason.

    13. RORory O’Driscoll1:07:07

        No, I, no, I'd be sc-

    14. HSHarry Stebbings1:07:07

        That's a really interesting question [laughs]

    15. RORory O’Driscoll1:07:08

        I'd be too scared. I'd be too... He might get mad at me, and then he'd, you know, cut off access to my Slack, and then I'd be screwed.

    16. HSHarry Stebbings1:07:15

        [laughs]

14. 1:07:16 – 1:16:05

    Kalshi Quick-Fire Round

    1. HSHarry Stebbings1:07:16

       Right, we're gonna do a Kalshi Quick-Fire. As you know, this is like a bef- uh, uh, incredible betting platform which does predictive bets on world outcomes. So we have, will OpenAI accuse Microsoft of antitrust violations this year? Yes or no?

    2. RORory O’Driscoll1:07:35

       And the odds are 36%. You always have to state the odds, otherwise it's just a meaningless co- 36%, which means if you bet only 30% probability, which means if you bet 100 bucks and it turns out to happen, you get 246 bucks back. That's what it means, right? So I'd take that bet. Yes. Accused, by the way, is a wonderfully vague word. Um, will they file a lawsuit and prevail? Maybe not, but will Sam throw words out? Absolutely. So yeah, that, the two and a half X on a yes, I'd take that chance.

    3. JLJason Lemkin1:08:05

       Uh, no chance. Um, I'll, I'll tell you, in my, my opinion, 0%. I'll tell you why. I think he already did.

    4. RORory O’Driscoll1:08:12

       Yes.

    5. JLJason Lemkin1:08:12

       He already did.

    6. RORory O’Driscoll1:08:12

       So w- I win. Yeah. I think that's right.

    7. JLJason Lemkin1:08:15

       They already accused Microsoft of antitrust.

    8. RORory O’Driscoll1:08:17

       They floated it internally. They didn't have the-

    9. JLJason Lemkin1:08:19

       Yeah. Sam- everything Sam s- uh, you know, it took me... I'm a little slow, Harry. I'm not as quick as you with Cluley and some of the others. It took me a while to figure out that everything Sam says that seems off the cuff-

    10. RORory O’Driscoll1:08:29

        Is, if planned. Absolutely

    11. JLJason Lemkin1:08:29

        ... or like on the side or a little futuristic, he's very clearly telling you what's going... He's very direct, and when he says, when you hear that they're thinking about it, he's done it, okay? It's the same as filing. I'm not saying literally. So I already think he's threatened it in a, in a pleasant way. And so the question is, does he have to go through on this threat which has already been made? And I think it will. I think it's enough to have said it. I don't think Microsoft wants to be sued by any trust, so I think, uh, it's gonna get worked out.

    12. HSHarry Stebbings1:08:57

        By the way, I completely agree. I think he's one of the most strategic communicators. The interview he did with Jack, who I love, Jack's great, but like, what brilliant timing-

    13. JLJason Lemkin1:09:05

        Man

    14. HSHarry Stebbings1:09:05

        ... for, for the message he wanted to land. He knows the message, which is Meta's poaching for 100 million. He's just put a h- stagger in the heart of the recruiting campaign of Zuck-

    15. JLJason Lemkin1:09:16

        Yeah

    16. HSHarry Stebbings1:09:16

        ... to take from OpenAI. Brilliant. Perfectly done.

    17. JLJason Lemkin1:09:17

        He makes it feel like he's just sharing things with you, which he is, right?

    18. HSHarry Stebbings1:09:21

        With his brother-

    19. JLJason Lemkin1:09:21

        But I didn't get how clever it is. I didn't get how clever his communication strategy is, right? It's as good as... It's the best of anybody, isn't it?

    20. HSHarry Stebbings1:09:27

        Beautiful.

    21. JLJason Lemkin1:09:28

        Yeah. [laughs]

    22. HSHarry Stebbings1:09:28

        Beautiful. Okay, so the next one is, will the US government take control of any AI company or project in, in the, it, it is cut off, but it's in the year of 2025? And so the odds, 100 bucks gets you 297 back if it's a yes, and 100 bucks only gets you 125 back if it's a no. So...

    23. RORory O’Driscoll1:09:53

        I still think no. I think, I just think, you know, [sighs] um, any, I think the, just the, the push from the folks on the tech side has been very much AI for good, not AI to control it. I think all the very active tech people from David Sacks to Andreessen Horowitz, their approach has not been, "AI is dangerous." It is entirely corrected by the way, being, in my opinion, AI is wonderful and we should make lots of it right here in America. And while it's pretty clear that the tech bros don't run the administration, it's pretty clear that the big guy runs the administration. My guess is this is just not important enough for the big guy to give a shit. So thanks for the money, guys. I- in this, you can do what you want. So no, I don't think there's any impetus to say let's seize control of Entropic or something like that. No. So I would, even though I only get 25 bucks more than I put in, I, I, I would, I'd take a no.

    24. JLJason Lemkin1:10:51

        I, I don't, I don't know, but I haven't seen, watching what David says, which I think is very careful on the government side, right? Very, very careful what he... Kudos to him, right? I, but I haven't even seen a hint of this, right, from our AI crypto tsar. Uh, now, now if he knew it, he wouldn't say it, right? I mean, here's where having an ex-lawyer, uh, very briefly a long time ago in one of these roles [laughs] instead of Elon probably helps. Sacks knows exactly what to say, but I, I feel like there'd be a, a hint if this, if this were true given that we're halfway through the year. Um, but, um, I don't know.

    25. RORory O’Driscoll1:11:24

        Agreed. It's far more likely to see some kind of regulation of Chinese AI companies, not obviously taking control, but some kind of pushback there. I think that's highly likely, but not US.

    26. HSHarry Stebbings1:11:35

        Brief, brief short detour before the final one. Sacks had to divest a load of assets, including a load of crypto and also late-stage companies. Do you think he was hurt or helped by divesting? He divested in a pretty good period to divest, at a pretty buoyant part of the market.

    27. RORory O’Driscoll1:11:52

        I, I think it's hard to... Look, the markets since then have been down but then back up. You know, the overall, I mean, just facts, the overall S&P roughly flat, um, so no, not a gain, not a loss, but crypto up. So it probably cost him money, and again, credit to him. You don't have to like a ton about it to say, you know, he's doing public service. He's, you know, he's sold his assets to do that and, um, there probably has been a cost to it. So, you know, putting his money where his mouth it. I mean, there are famous occasions of people having to divest to join public service and then taking part in administrations that totally shank things up, and as a result, [laughs] the divestment looks like genius. Um, but I don't think that's the case here. I think it cost him money. 'Cause look, look at crypto alone. I think since the election we've went up a little bit, then we dipped down a lot for liberation day, then we're back to roughly flat. It's been kind of a, a no-op.

    28. HSHarry Stebbings1:12:49

        Final one, boys. Trump mobile smartphone, will it be released before September? The odds are $100 gets you 716 back on a yes. 100 only gets you 108 on a no. The man moves at speed, boys. What do we think?

    29. JLJason Lemkin1:13:06

        It's impossible. There's no, there, there's no supply chain evidence of any phone in production. There haven't been any leaks of an actual phone in production. Um, and there haven't been any leaks to sites of true product development other than a mock-up of a golden phone.

    30. HSHarry Stebbings1:13:19

        I thought he was doing a p- product partnership with AT&T, and he was basically just sticking a Trump sticker on, on top of a different phone.

Episode duration: 1:16:16