OpenAI Kills Sora & Hits $100M ARR on Ads | Oura Going Public & Whoop Raises at $10BN

1. 0:00 – 1:19

   Intro

   1. SPSpeaker0:00

      So we start with Anthropic's monster week

   2. RORory O’Driscoll0:02

      We may be at the stage where we throw the humans under the bus, not the AI anymore, which I think at some level is pretty terrifying

   3. SPSpeaker0:08

      We move to OpenAI killing Sora

   4. RORory O’Driscoll0:10

      I think shooting it in the head is even more significant

   5. JLJason Lemkin0:13

      A big part of the whole strategic direction of the company was flawed

   6. SPSpeaker0:16

      Agreed

   7. RORory O’Driscoll0:17

      You're seeing the economists, the accountants have wandered into the room and they said, "We have a scarce resource here. Let's optimize it. Let's devote this compute to the people who can pay the most for it"

   8. SPSpeaker0:25

      And then we finish on the man with the biggest balls in tech, Masa

   9. RORory O’Driscoll0:29

      You haven't lived till you've seen an 85% decline in an index

   10. JLJason Lemkin0:33

       This is one where it's just backass backwards

   11. RORory O’Driscoll0:35

       I, I don't believe there's right or wrong in money. There's just money

   12. JLJason Lemkin0:38

       I just don't think raising it five or eight billion when you're at 80 million or 100 million of suspect ARR is the most exciting accomplishment in the world

   13. RORory O’Driscoll0:45

       Let me be direct. Get the [censored] over it. You should conform your company around your customers and your model, not your VCs. Being mean to a billionaire is actually a feature

   14. JLJason Lemkin0:53

       Ready to go? [upbeat music]

   15. SPSpeaker1:06

       Boys, welcome back. It is This Week in Anthropic, otherwise known as the SaaS OGs, [chuckles] which has been renamed. Um, I want to start with, you guessed it, Anthropic. Unbelievable 28-day month of February,

2. 1:19 – 8:40

   The "Claude Mythos" Leak: 10 Trillion Parameters

   1. SPSpeaker1:19

      where they did six billion in revenue, which was more than Databricks has done in their entire lifetime. Do you know what I think was the most interesting news out of Anthropic this week? It was actually the, the accidental leak of Claude Mythos. Uh, essentially 3,000 unpublished assets leaked. Um, it's a 10 trillion parameter model apparently, that is this next level step change in capabilities that they're not releasing because of how powerful it is. This is by far the most interesting to me. Jason, how did you think about this news?

   2. JLJason Lemkin1:53

      Well, look, obviously it's embarrassing, right? To Anthropic to, to, to, to leak it. Um, I actually just think we're gonna see more and more of this accelerate. Um, the faster we vibe code, the faster we ship, the more corners we cut in general on application-level security. It happens. I mean, so many folks are accidentally uploading code to insecure GitHubs, to, to database, to, to Supabases that are by default open. So this is, this is accelerating, uh, our data, which is just open on the internet. And, and you could say, "Well, God, this shouldn't happen at the Anthropic level," and I'm sure someone will get, will get scolded, right? I'm sure it will. But overall, this is accelerating, and it's going to accelerate even more as we let our AI agents make decisions. Our agents are gonna decide where to put code. They're gonna decide what level of security to use, and this is gonna become happenstance. And, you know, it's funny, I mean, uh, people are like, "Oh, how could Anthropic have a new, um, [lips smack] a security agent and have this happen at the same time?" I think they're, they're-- I think it makes perfect sense. The Anthropic AI security agents, which I've basically used in Replit, it's very, very good, and it also makes sense as we rush. We're gonna leak source code, data, PII, right? It was r- I don't know whether it's happened. It was reported today, all of Mercour's data leaked. It's being held hostage, all of it, every single interview, every single piece of PII, every single piece of humans. And so our-- you know, we used to mock these. I think it's gonna start happening daily and weekly in the agentic era. And it doesn't excuse it, but, but it's, um, it, it's a reality. Agents, agents are goal-seeking, and agents are gonna make-- not only are they gonna make the same mistake as humans, they're gonna work 1,000 times faster. So even if they make the mistakes 10% as often, Rory, help me with the math. If they do t- 1,000 times more productive, they're still gonna make 100 times more mistakes, so we're gonna see it everywhere.

   3. RORory O’Driscoll3:46

      Again, just for perspective, 'cause there's two things going on here. Anthropic, some data leaked from Anthropic about their new model, Mythos, which of itself is meant to be amazingly powerful in dealing with cybersecurity, and there was a whole consequence that we'll talk about in a second in terms of how that impacted cybersecurity stocks. But as Jason pointed out, the level of irony here is acute because it was an inadvertent leak. So you had the situation where a, a, a model that's meant to be amazing for cybersecurity actually leaks via cybersecurity leak. So that's kinda-- so we're toggling between the two. On the cybersecurity leak, it was noteworthy that Anthropic, quote-unquote, "blamed human error," right? We may be at the stage where we throw the humans under the bus, not the AI anymore, which I think at some level is pretty terrifying, but... And, and you know exactly what happened. You see this. I mean, that, down in the weeds, you often see this, where, y- you know, you're, you're about to do a big announcement. You have your content management system. You stage all the assets, you know, be it the Fed press release. In the UK, it happened on the budget, if you remember, Harry. The budget, you have the press release ready to hit play the minute the budget has ended, and someone inadvertently forgets and put it on the publish side in advance. It's the same thing here. So it probably was a human error. There's a whole bunch of content ready for, I don't know, pick a date, the March, the May 15th announcement of Mythos. They forget to secure it correctly, and out it goes. So, so that's the first thing, right? So that's kind of the, that's the embarrassing part of it. And then the interesting part of it, and you really do have to do this not, without sniggering, despite the fact that it all leaked, you also have to separately talk about the fact there's some big claims on Mythos, right? At, that Anthropic were making via, again, via this leaked memo. Reminder, no one else has seen it. Uh, the actual model, um, at least not publicly available, obviously some people have seen it, but not publicly available. And even I was trying to get copies of the leaked memo. There's just a few screenshots at this stage. It's hard to track it down, at least quickly anyway. But the statement is, it's way more powerful. Second thing is it's gonna be way more expensive for them to serve, and therefore it's gonna be way more expensive for customers to buy. And then the third thing is a particular focus on cybersecurity. It's meant to be, quote-unquote, "extremely good at detecting cyber issues." And the result of that, and the result of that was a 4% or 5% decline in the average cybersecurity stock last Friday when this leak happened.

   4. JLJason Lemkin6:06

      Yeah, just two, maybe just two other things on the leak, just for, for this trade-off, um-You know, I'm dating myself, but when I was at Adobe and we were acquired, we were an early customer of GitHub. Um, and so we were putting source code in the cloud, and that was banned at Adobe at the time. It was banned because the source code was their crown jewel. It was pretty easy to, to make a crappy PDF reader or a crappy image generator, but to do what Photoshop or Adobe Acrobat did, all the exceptions, all the cor- the thous- tens of thousands of corner cases was the crown jewel, right, of, of the company. And so everything-- We got the first exemption to be able to use source code in the cloud, and pros and cons. But when, when they used this on-prem source codes management tool, it took a month to do a release. A month. A, a month. Okay, now we're doing 60 releases a day, right? Or even Anthropic, fastest-growing enterprise company of all time, is still doing massive releases every month or two and dropping features every day, right? So we went to something that took 30 days at a tech leader to something that takes hours. There's tra- there's trade-offs [chuckles] there, and I'll, I'll take them, but we're gonna see it explode. In terms of, like, the stuff that was published today, going back a few threads on show number 50 to Rory, one of the things that I thought was pretty cool in Kairos was two things: [lips smack] um, always-on background assistant that works constantly, our AI is working with us 24/7, and agents that can sleep, wake, and self-resume without any prompt. The autonomous agents, which I've been talking about how this is going to consume orders of magnitude more tokens and change our life, I, I'm excited to see more is coming. And, you know, OpenClaw was just this, this b- brief thing that woke us up to what Anthropic appears to be all in on, right? Truly autonomous agents running 24/7, hopefully safely, hopefully not leaking all of our source code, but it's coming soon, right? Not these, you know, this whole idea that we've been doing. S- When we started this podcast, you went on to ChatGPT or Claude. No one had heard of Claude when we started this. I was a quirky guy using Claude. And you talk to it and go back the next day. The next release, it's gonna be on all the time. All the time. Debating Harry's latest investment. Was it big enough? Is he too concentrated in the fund? Where should he go? What was Rory thinking on that deal, right?

   5. SPSpeaker8:24

      Why was Rory abusing Harry by email again for the second time in a day?

   6. JLJason Lemkin8:28

      Again. We laugh, but this is the future. I, I'm excited to see it coming sooner when our agents are 24/7. Like, they're literally around us, and we give up all of our personal freedoms and autonomy as part of it.

   7. SPSpeaker8:39

      I hear

3. 8:40 – 12:33

   OpenAI Kills "Sora": A Massive Strategic Own Goal?

   1. SPSpeaker8:40

      you on the embarrassment of it being leaked and, you know, the, the human error element. But while Anthropic has Mythos, which is supposedly as powerful as it is, you're juxtaposing that with OpenAI fucking around with killing Sora, kind of ads not really working and people being unhappy with it, and it seeming like this massive chasm of the progression of force that is Dario and Anthropic continuing faster and harder than ever with a faltering, confused, and dazed OpenAI wandering around the product desert trying to find some water.

   2. RORory O’Driscoll9:17

      You're just being mean. I mean, again, as I said last w- and I'm sorry to repeat myself-

   3. SPSpeaker9:20

      Is that not fair?

   4. RORory O’Driscoll9:21

      Yeah, but it's, a-a-again, narrative is overdone on both sides, right? So, um, I think some parts of it are true. Obviously, y-you're true on a bunch of different things. The decision to shoot Sora in the head, right? Al-almost certainly a good decision. Look, it's obviously embarrassing to say something's gonna be amazing less than four or five months ago and then shoot it in the head. But if it's a mistake, give them credit for at least saying it's a mistake, move on, right? And yeah, that relationship with Disney, again, I think-- I, I'm gonna give y- I, I, I-- It wasn't me. I was sneering at it on Real Time when it happened. I think someone else in this podcast said it's really significant. Just saying, right? It's cockshit.

   5. JLJason Lemkin9:56

      I do. I think it's massively significant.

   6. RORory O’Driscoll9:59

      I think shooting it in the head is even more significant. [chuckles] Um, an old one-

   7. JLJason Lemkin10:02

      I think it's saying that the ent- a big part of the whole strategic direction of the company was flawed.

   8. RORory O’Driscoll10:08

      Agreed.

   9. JLJason Lemkin10:09

      The whole-- That we are going all in on consumer. The w- from what I read, Sora made single-digit millions of revenue, right? And was consuming a million a week, which actually sounds way too low, right? It must, i-it-it must have consumed billions and made single-digit millions. It makes no sense as a product either in the short term or the long term. But if you want to own the whole consumer experience with AI, you've-- They decided we have to own image and video, and Anthropic never even attempted to do it, right? So it's a massive retreat. It doesn't mean it's the right-- It's probably the right decision, to your point. In fact, almost certainly is. But man, that's, uh, our strategy was wrong. Like, this is a huge own goal. Our strategy was wrong.

   10. RORory O’Driscoll10:47

       Agreed. But I-- And, and I agree with that, but I still think the, uh, as I say, I still think Harry's over- kind of over-egging it a little bit, 'cause look, you made a comment about ads that I think is, uh, quote, u, uh, hyp- effectively implying that the ad strategy hasn't worked. That's a bit of a, a bigger leap. I mean, Sora hasn't worked. They've killed it. I think I'm with Jason. I think that's smart, 'cause I think one of the things you're seeing right now is in a world of scarce compute, and astonishingly, despite all the investments that we've seen in terms of actual available compute for people to sell AI on, we're in a scarcity mode. You don't devote compute to things that are highly compute intensive and low revenue intensive. I mean, it, y- and Sora was almost the definition of that. Video generation is extraordinarily compute intensive, relatively speaking, and the revenue is almost minuscule. Conversely, you know, Cogen, while it is compute intensive, is orders of magnitude less compute intensive, and there's real dollars attached to it. So you're literally... What's happening right now, I actually think at a, at a higher level, it's actually very healthy. You're seeing the economists, the accountants have wandered into the room and they said, "We have a scarce resource here. Let's optimize it. Let's sell-- Let's devote this compute to the people who can pay the most for it." So that's the Sora comment. On the ads comment, Harry, y- it's early days forYou know, ChatGPT ads. But again, I cite that quote that Brian Kim did I thought was really good. Of course, they're gonna run damn ads because there's no other way to build a mass consumer business, and they've no choice, right? Because, you know, their, their consumer conversion rates run roughly 5%. It gets them to a, I think, a roughly $10, $15 billion consumer business,

4. 12:33 – 17:58

   OpenAI Hits $100M in Ads: Why OpenAI Must Make Ads Work

   1. RORory O’Driscoll12:33

      right? And, you know, out of their 500 million uniques or whatever it is. So one of two things has to happen in the consumer business. Again, I'm gonna leave the enterprise business out. On a consumer business, either, A, they take that conversion rate to a number we've never seen before from a typical consumer business. I think that's unlikely. I don't think most consumers are gonna pay 20 bucks a month for this. Or option B is you make an ad business work. They got no choice to make it work. And by working, I don't mean $100 million. People are kind of ragging on the 100 mil. It's in the noise, it's scale. Big picture here, Facebook and Google each do 200 billion plus or minus a year in digital ads. If these guys aren't doing 20 billion within a couple years, they're not even in the game. And to get to the market cap of... I mean, remember, Facebook has a 1.7, whatever it is, trillion market cap doing 200 billion. Alphabet/Google has a 3 trillion market cap doing 260 billion plus thing. If they're gonna grow into their market cap on the consumer side, 20 billion's not enough. They have to do 50 billion, 70 billion of ads. So unlike Sora, this is not gonna be a try the ads and then fold. This is a, there's only two existential bets for this company. One of them is ads to make the consumer business work, and then the other is, "Oh my God, we should have done coding all along. Let's get a competitive coding and enterprise model out there and compete with Anthropic on that side." So those are the only two things they're doing, and they're the only two things they should be doing. It's straightforward. I mean, I actually see this as good news. Like, at least they've... Like, we've gone from the let's wander around the woods feeling cool building shit to there's only two things to do, let's get them done, right? It's net, net it's a positive. Better late than never.

   2. JLJason Lemkin14:10

      Man, dude, they had the Wall Street Journal this week. They had, uh, they had a story of why Dario left, uh, OpenAI. Did you read that story?

   3. RORory O’Driscoll14:17

      Oh, that was juicy. Yeah.

   4. JLJason Lemkin14:19

      I mean-

   5. RORory O’Driscoll14:19

      Yes, I did

   6. JLJason Lemkin14:20

      ... the amount of tension at OpenAI, the fact that Greg Brockman att- recruited them, and no one would work for him. He and Da- and his sister would not work for Greg Brockman, would not talk to him. They would not allow him to be part of the LLM or GTP [chuckles] groups. Um, then Sam had to constantly tell each of them that they were in charge, right? Told Dario he was the boss, then told, uh, Ilya and Greg they could fire him at any time if they wanted to fire Sam, right? Then begging then Dario to come back, then Dario saying he would stay only if he directly reported to the board and nobody else. [laughs] I mean, the level... And then, and then firing Sam, and then bringing him back, and then Sora and de-Sora, and we're not doing coding. It's just, I mean, I'm exhausted. I, I, maybe I'm wrong. I have to think at least someone like me would feel much more comfortable at Anthropic, where it appears there's a much more consistent process and leadership, right? Same founders, same things, same goals. It just, I have to think a company organized like that's just gonna ex- out execute someone with that level of drama. I, I, I almost can't take it.

   7. SPSpeaker15:32

      You're gonna kill me for this, Rory.

   8. JLJason Lemkin15:35

      Yeah.

   9. SPSpeaker15:35

      Is the best thing for OpenAI not to buy Sierra, incorporate that as its customer support product, and have Brad Taylor come in as the day-to-day CEO, and Sam can be fundraiser, Sam can be master of-

   10. RORory O’Driscoll15:48

       I'm not in the boardroom, so, you know, I, I heard... Look, at the end of the day-

   11. SPSpeaker15:53

       At the end of the day, I think you're right, Harry, and I would favor that as a board member, but I'm not going to say that publicly because I don't want Sam to break my balls.

   12. RORory O’Driscoll16:01

       I am too unimportant for Sam to even give a shit about, right? So I don't worry about that at all. So let me say this delicately. That amount of board-level and senior team-level turnover over an extended period of time is probably the highest warning signal that you could have as a board member about how your CEO's doing, right? And if, if it was anything other than a founder... Let's put it this way. If it was anything other than a founder-led company and this level of drama was going on, you'd probably be having, you'd probably be sitting down with the CEO and asking, "How's it going?" at least, or, "What are you thinking of doing about this?" Um, I don't think you turn on people just when things go to shit, but you probably wanna cut down the drama from here, build a team, and try and call a shot and play it for more than 20 f- you know, for more than six months at a time.

   13. JLJason Lemkin16:50

       When you've worked at or observed startups where the CEO is spending so much of their time load balancing talent that can't work together versus when you've worked at one or with one where the talent's rowing in the same direction, to say that it's night and day would be an understatement, right? It's like the, the, the backside of Pluto and the front side of Mercury, and it's just ex... And I think Sam, well, you criticize him. Actually, when I read the... Everything that I've seen, and then when I read the Wall Street Journal article, it's like, my God, this guy has spent so much time load balancing the drama of these extremely brilliant personalities. It's just, oh my God. That, that can consume num- most of your time as CEO. Most of your time load balancing them.

   14. RORory O’Driscoll17:28

       You're exactly right. It is the drama of... You know, we're not dealing with a bunch of people just trying to crank out some B2B software and make a paycheck. We're dealing with people who are angsting about whether this is gonna change the world, who have fears about the technology, who have, you know, desires to be seen as credited for the technology despite their fears about it. This is a... I mean, as is often the case, extraordinary talented people come on an extraordinarily high bandwidth, a, a, a demand on attention and care and feeding. It's fa- it's been a real slog, I'd say.

5. 17:58 – 20:52

   Masa Son's $40BN Bridge Loan: Investing More Into OpenAI

   1. SPSpeaker17:58

      Okay. The man with the most balls in investing, Masa Son. SoftBank gets $40 billion bridge loan to buy OpenAI stock. How deep can Masa go?

   2. RORory O’Driscoll18:11

      He'll go as deep as they let himI mean, that's the one thing we know. If they give him another 20, he'll borrow that too, right? I mean, look, this is a high-- And I checked the SoftBank. You've got SoftBank holdings. Have to be careful. There, there's the Telco group, which is mu- reasonably levered at the Japan level, and then SoftBank Group is around, it's around 2X levered, right? One and a half to 2X levered in terms of equity, right? What that means is a 30%, 40% decline, you know, wipes them out. Uh, it's a very aggressive stance, right? It would be like me taking our $800 million venture-- $900 million venture fund, borrowing $1.8 billion and investing it all. And if, you know, if it works, I make, you know, I really juice my return. But if it goes wrong by 30%, I'm done, right? And it's ju- it's, it's super aggressive. I mean, I suppose his lesson is Masa survived 2002 when, I remind everyone, the Nasdaq went down 85%. You haven't lived till you've seen an 85% decline in an index, right? And obviously, if that happened or anything like it, um, you'd just be way underwater, right? So it's, it's a, it's a fairly high amount of leverage for an investment fund, to say the least.

   3. JLJason Lemkin19:26

      Yeah. I mean, yeah, for sure. It's, it's dramatic. Having said that, you know, real estate investment funds get the maximum leverage they can by design, right? They're-- That is how they work. I would imagine if venture had access to more debt, we, we'd all, we'd all load up on it. [chuckles] If we all could, if we all could do the growth rounds in your hottest company and, uh, may- maybe we would... And we could get, and we could get all the carry from it with, uh... And the worst thing is we leave the keys to Fund seven on the table. We might, we might load up too. I'm not sure. But certainly real estate funds load up as much as they can.

   4. RORory O’Driscoll19:56

      But just pushing back again-

   5. JLJason Lemkin19:58

      Yeah

   6. RORory O’Driscoll19:58

      ... because real estate funds load up because the cash flows are predictable, right? At the end of the day, I mean, look, in a low-

   7. JLJason Lemkin20:04

      Well, and they can-- but they can. Because the cash flows are predictable, they can load up.

   8. RORory O’Driscoll20:07

      Agreed.

   9. JLJason Lemkin20:08

      Right? We don't-- We, uh, it's just harder for my little fund to go to Silicon Valley Bank and borrow $200 million against these, uh, against these assets.

   10. RORory O’Driscoll20:13

       And in the continuum of risk, I would argue the SoftBank portfolio, not the telecom company at the subsidiary level, but I would argue the SoftBank portfolio is more like Jason's fund than it is a real estate fund. So I think it's a high level of risk.

   11. JLJason Lemkin20:25

       Well, plus, see, what did he lose on WeWork, $12 billion? He know- he knows. He knows what it's like.

   12. RORory O’Driscoll20:30

       You-- The, the two big assets from memory are, um, obviously the OpenAI position and I think the Arm position, which I still think is in, um, the, the, the, in the holding company. And yeah, but I mean, amazing companies, world-class companies. Easily imaginable I bought them but decline 30%. So yeah, it's a hell of a way to live.

6. 20:52 – 22:57

   Cybersecurity Stocks Tank: Is the Anthropic Panic Justified?

   1. SPSpeaker20:52

      Speaking of declining 30% and being in the hole-

   2. RORory O’Driscoll20:55

      Yeah

   3. SPSpeaker20:56

      ... we, we me- we touched on it earlier, but obviously Mythos leak hammered cyber stocks. Uh, CrowdStrike, Palo Alto, Zscaler all down 6%. Okta, NetScout down 7%. Tanium down 9%. Was this a justified dip, or is this an unjust reaction to Anthropic news?

   4. RORory O’Driscoll21:16

      I was listening carefully to the na- 'cause I was listening carefully to the names, and there's different aspects of security. And some of them I can say, "Yeah, maybe that overlaps." And then some when I go, "That's just a different thing," right? And when you listen to all the names being thrown out, you say, "That's just, you know, baby with the bathwater." 'Cause step back, how does, how does Anthropic, you know, make security better? At the code development stage, they can look at code and find security flaws. So there are companies that upfront, um, do something like that and, you know, application security companies, and you could argue that this is a different way of doing that, maybe some of those guys will be impacted, right? What they're not doing, for example, is real-time perimeter defense. They're not in a run-- in a real-time basis, you know, blocking people like a firewall, right? Nor are they doing what, for example, Okta does, right, which is single sign-on and authentication. That's simply not what they do. It's a different thing. And the fact that both of th- those kind of stocks sold off says it's just a kind of knee-jerk reaction rather than anything thought through. It will have an impact. If you were doing application security or code review for se-secure, security code review, you're probably gonna have to either incorporate how this works in your analysis or you'll be redundant, just as the, the, the coding companies. Anyone kinda just have GitHub had to roll in complete models and figure out how to adapt this, right? So for some of them, this is really gonna matter. And then for others, it's like it's just a different thing. Stepping back, I think we're in the panicky stage, right? I think we're in the stage of because these companies are doing so well, because they're private, no one sees the numbers, because AI is so sexy and so potentially amazing, we're at the stage now where everything, anything can cause

7. 22:57 – 28:15

   The Golden Age of Cyber: Why AI Agents are a "Golden Goose" for Security

   1. RORory O’Driscoll22:57

      a panic.

   2. SPSpeaker22:57

      Robinhood was down like 10% because Elon didn't potentially give them the tender and was going straight through E*TRADEs, and that alone was like a massive hit for them.

   3. JLJason Lemkin23:08

      Well, obviously there's a panic in the market, and the question is: Is the panic justified, right? The panic is that this revenue is not durable, right? That's the panic. The cybersecurity one's really interesting. In my, in my experience and opinion, this is one where it's just back ass backwards. Um, because if you're in the agentic world, this is the golden age of security. The number of security threats and issues is going up orders of magnitude. Claude leaking its source code, it doesn't matter. The number of, of apps exploding, the number of like there's so many mobile apps that App Store is like it's like a month to get your app reviewed versus a week. It is-- Everything is exploding. These apps are being built by agents. They're being built in unpredictable ways. Folks aren't looking at the code. The pace of features being shipped, products being shipped, corners being cut. This is a golden age of taking any mature category and acknowledging, "Good news for us, there's more threats [laughs] Good whether-- I don't care whether it's application level, perimeter. Uh, like the good news is threats are exploding and s- the, the whole shtick of cyber... I'm not a s- real cybersecurity expert, although I'm doing another investment right now for just this reason. The whole shtick in my whole lifetime has been, "Look, you've got to constantly buy new products because new threats keep emerging." Like this is... There's been a golden goose of cybersecurity that has allowed new entrants to come into a conservative category. Someone like Wiz will show up and say, "Guys, we know how to do this on the web." And people are so terrified of new threats they'll take the meeting, right? This should be the golden age for new and existing investors because the threats are terrifying and you can't stop the rogue engineers that vibe coded something that accessed your data. This, this should benefit everybody. Like everyone should be a rocket ship, like everybody built, like everybody monetizing GPUs is a rocket ship. We have... And the fact that the market doesn't see it shows we're in a, in my opinion, we're in a true panic, which is hard to predict a bottom. [laughs] But I don't get it. Everyone should be benefiting when you see an explosion in application production and a change in the paradigm. The change in the paradigm's good for everybody except, you know, Windows Defender from 1996. Like it probably doesn't help that product or whatever the hell they have, but anyone, everyone with engineers should benefit.

   4. RORory O’Driscoll25:18

      I broadly agree with Jason. I mean, there might be-- there are more than Windows Defender 2006 that might be impacted. As I say, some of the application security code review stuff could be. But big picture, Jason's right. Instead of having people trying to get into your firewall, we-- everyone's now downloading an agent, giving it full root access [laughs] to their computer and telling it, "Have a go," and as Jason just pointed out, work overnight. It's gonna... I mean, no one yet... And funny, we-- my colleague, Gareth, who does a lot in the security side, we've been looking at a lot of these companies. No one yet knows the exact approach that we're gonna have to take to defend against agents running within the organization. But everyone 100% understands that this is, this is a emerging mega threat because of the velocity of adoption times the power of the solution. So I, I agree with Jason. It, it mightn't be the old guard that takes advantage of it, but there's no... But they tend to be pr- I mean, one of the things I admire about the security companies is, the CrowdStrikes, the Palo Alto Networks of this world is, they know damn fine that when a new threat emerges and a new solution emerges for that threat, when, when an earlier winner comes out, you better spend your $300 million, your $500 million and just swoop up the winner and add it to your product, right? So I think there'll be a ton of fast acquisitions as agent security solutions emerge. You know, and, uh, and people will be doing, if they're smart, and I think those two companies are extraordinarily smart, they'll be doing acquisitions long before it's, quote, "certain", because you're gonna have CIOs come and talking to you, right? One thing worth mentioning on that is, it was interesting again, I- and somebody leaked information from Anthropic. They're masters at selling fear. One of the things they're doing is they're releasing the Mythos model first to CISOs within companies. It's kinda like, "Oh, it's so scary. We're gonna give you this model and give you time to figure out how to use it." Of course, part of that time will involve giving a million bucks to Anthropic for [laughs] um... So it's just great marketing. So they're actually leaning into that and saying to the CISOs, "You're gonna have to figure this out. This is the new terrifying weapon we've invented. Please give us a million dollars and we'll let you defend yourself with it also." Great marketing and... But it speaks to the perceived, to Jason's point, it speaks to how correctly afraid every security for, um, CISO should be given the pace of agentic AI adoption in the enterprise.

   5. JLJason Lemkin27:44

      The golden age of cyber.

   6. RORory O’Driscoll27:46

      It should be.

   7. JLJason Lemkin27:46

      Wish I'd bought more-

   8. RORory O’Driscoll27:47

      I mean, it's just, it's just [laughs] how hard is it to get a meeting? Whoever you are, if you have any established brand, "We, we, we've got a new agentic product [laughs] we're gonna help protect you from this," you're gonna get a meeting that afternoon. [laughs] Right?

   9. JLJason Lemkin28:01

      Wish I'd bought them over Figma. That's a depressing chart that I'm looking at. Um-

   10. RORory O’Driscoll28:04

       You, you need to let go, Harry. You need to let go. It's gonna be fine.

   11. JLJason Lemkin28:07

       I'm down 30% in a month, Rory. It's hard to let go after 30% in a month.

   12. RORory O’Driscoll28:11

       Okay. No crying in the casino. Move on.

   13. JLJason Lemkin28:14

       Uh, w- we, we,

8. 28:15 – 31:08

   Gross vs. Net: The Truth Behind AI Revenue Accounting

   1. JLJason Lemkin28:15

      we're... [laughs] I, I do want to d- discuss revenue kind of questionability. Uh, we've got Anthropic recognizing revenue in a very different way to OpenAI, and then you also have questionability around Emergent labs. Is, um, and is it okay if ARR is kind of, uh, questionable in sorts of how it's accounted for? Um, how do we think about that? You can choose which one you wanna take. Let me just... Can I just... I, I... Maybe Rory can dig into it, but I'll, I'll tell you this one startup I invested in that's over $100 million AR, uh, ARR, and I get the... I, I, I, I own just enough to get the investor updates. It's not, I'm not on the board, and I get three numbers every month, three revenue [laughs] numbers. Uh, I don't know what the hell they are, over $100 million, but the smallest one is ARR. [laughs] Now I'm, I invested at seed. I don't really care. I'm in the money. I don't, I don't have a choice. But I, I can't understand. This company's doing great, but I can't understa- I, for the life of me, I cannot understand these three numbers, and there's asterisks and daggers, and there's charts that go everywhere. But they keep going up and to the right, which I think was, on this Emergent thing we could talk about our next, I think that's what some of the investors said, "Who cares?" But I can't tell the hell the difference what a, what an ARR is in 2026. [laughs]

   2. RORory O’Driscoll29:24

      Well, well, well, what I always get is like pipe, which is complete bullshit.

   3. JLJason Lemkin29:28

      Yeah.

   4. RORory O’Driscoll29:28

      The contracted, and then there's live. So first of all, stepping back. But to be fair to both Anthropic and OpenAI, they have a very clear and sensible way they define ARR. What they take is they take the last, the average of the last four weeks to smooth out times thir- 13, because there are 13 four-week periods in a year, which is more sensible than monthly because you have these varying months. So they're basically, what they're saying is realized revenue for the last four weeks averaged, you know, the average of the last four weeks times 30. That... Sorry, obviously, if it's the average, it's times 52. But basically, it's actual GAAP revenue. What did we bill for the last fourThe average across the la- calculated across the last four weeks to take into account holidays, that's their run rate, right? So it's actually pretty... It, it's not commit- to be fair to them, it's not committed to any of the bullshit kind of higher level stuff. It's actual money flowing through the system. Anthropic is roughly at 19 billion according t- based on that kind of trailing four-month, four-week metric, and OpenAI is around 25. But now let's talk about your thing. There was this kind of whole meme of OpenAI reports net on their partner revenue and Anthropic im- reports gross. And what they're saying there is if OpenAI sells through Microsoft and Microsoft takes some money off the top, OpenAI only reports the net amount. If Anthropic sells through AWS and they sell $100 worth of revenue, they report the gross amount, and then they give 20 gra- $20 back to Amazon as a cost of sale. So there's two different methods for what look like the same revenue kinda mix, or same revenue approach.

9. 31:08 – 42:20

   The "Vibe Coding" Era: Reselling Tokens and Triple-Counting ARR

   1. JLJason Lemkin31:08

      I thought you were gonna extend that. I thought part of where you were going was to Michael Cannon Brooks' point on the show was that a lot of this revenue is getting double or triple counted because of how it's being recognized.

   2. RORory O’Driscoll31:16

      Yes.

   3. JLJason Lemkin31:16

      And not only does this happen, then Cursor's selling it again and recognizing the revenue, right? The, the same to- people keep reselling these tokens again and again and recognizing them as their own ARR. Um, how many times do we get to resell these, these poor little tokens?

   4. RORory O’Driscoll31:29

      I think that's actually a great point, Jason. I hadn't got... But you're exactly right. No, it's like the [laughs] e- everyone's got amazing revenue growth because it's the same little token going.

   5. JLJason Lemkin31:37

      Same token.

   6. RORory O’Driscoll31:37

      I just don't think it's a different token.

   7. JLJason Lemkin31:40

      I mean, if we all agree to have essentially 0% gross margins, an infinite number of us can keep reselling tokens to each other, can't we?

   8. RORory O’Driscoll31:46

      [laughs] Yeah.

   9. JLJason Lemkin31:46

      This is our new 20VC Scale Saster Demo Day. We all resell a million tokens to each other on the first week. So everyone in batch 0001 has a million ARR its first week because we just resold our tokens to each other. So yeah, it's completely fair. The VCs don't mind. [laughs]

   10. RORory O’Driscoll32:03

       And, and you're exactly right, and the sentence that you added in passing is the key one. Until we all have to get profitable, all this, you know, can continue. And then at some point, that's why I said I think you're starting to see it, someone's gonna have to say, "Assuming we wanna have a net present value and a cash flow, what's going on here?" And then, a- a- and then all this becomes more clear. I, I didn't comment on the, um, Emergent labs fastest to $100 million-

   11. JLJason Lemkin32:27

       Jason, you, you actually tried... You, you tried it, didn't you? You thought it was good. I did. I thought... I mean, listen, it's hard for me to know the criticism, right? I, you know... The, the, the... Some folks in the press in the India B2B environment tried to make this some sort of scandal, right? Because... And in, in a sense, fair enough. If you go to Emergent Labs, and Emergent Labs is sort of an Indian competitor to Replit and Lovable, which I'll show you what I learned in a minute, right? And if you go right now to the homepage, they say zero to $100 million, I think in eight months. It's right there. It's the biggest banner. So in all fairness, if you're gonna put yourself out there, not, not just as a tweet, but if it's gonna be right there on your website, one would expect 70 to 80% accuracy in that number. Ideally higher, right? So if it's lower than that, I think it's fair that some daggers came out. But I was curious, um... But I don't actually know what happened. Is it triple counting to... I, I, I can tell you one thing that I learned, which I don't love, which is that what a l- and a lot of AI startups do this, so this is not unique to Emergent. They kind of hi- tr- instead of getting used to free version, they try to get you to immediately do a free trial instantly that says it's $0 and $20 a month thereafter. Now, so many folks do this. It is not unique to them. It's probably best practice in most accelerators. But I'm pretty sure that means they recognize all tw- $240 in ARR that first month when you're paying zero. And, and they trick you because you're not even... Y- yeah, you do have to click on the Stripe link, but you almost think you're just using the free product. So is that... If I do a $0 a month product, um, that's discounted as a marketing cost and I churn after 30 days, does that count as $240 of ARR? I think for a lot of startups it does, okay? So th- that's a fair criticism. I'm not saying this is what Emergent did, but a lot of startups will instantly recognize that as $240 in ARR, which is how they rock it if you're self-serve. That's how you... Otherwise, you can't get there that quickly, right? So, so they clearly did that. I will say what was interesting is I f- uh, overall, I think the criticism is probably unfounded because I thought the product was pretty good, much better than Make. Like an order of magnitude better than the disaster of Make. Um, because I, I do a five-part test, a six-part test. The first part is awareness test. So I ask it to redo the saster.ai homepage. Uh, actually, of all the platforms, it did the best job. It, it beat, it beat, it beat all of them, all of the leaders, 'cause I redid this recently. I redid it and, and they're all good at it. Replit, Lovable, v0, they're all good at... They all pass the test. But it actually, it actually was probably the best and it, and it passed a bunch of the other tests. So I'm not gonna switch to, uh, uh, Emergent Labs, but I would say it's in the top 10% of vibe coding apps. That's pretty good. So that tells me it's a legit business. Like they did, they did the work. And a lot of these, they're just... The, the truth is, if you play with a lot of these, even from leaders, like Make's not the only one that's crappy, okay? Because they're basically relying on the fact that Claude code does 90% of the work for you, right? They're just putting the, the simplest wrapper around this. And so they did a good job. But it, it's... I really didn't like the way they do the billing, but we'd probably have to, to shoot half our portfolio companies that, that do like PLGAI, 'cause I think it's a sus practice. I just don't like tricking you with the $0 for the first month when you think you're using a free trial, right? That's the sus part. I don't, I don't love that kind of gray art. Um, but the product's pretty good.

   12. SPSpeaker35:45

       You know what I don't like when it comes to confusing? I was wondering whether to go off on one in this show, and then I thought, "Fuck it. Let's go off on one. It's been a long day."

   13. JLJason Lemkin35:51

       Yeah.

   14. SPSpeaker35:51

       I'm pissed off by these tranched rounds. I see them all the freaking time. The amount of Sequoia rounds where it's like, "Oh, you know, X raises money from Sequoia at 5 billion." Trust me, Sequoia got in at 1, but they just club it together and then announce the sum and then the n- latest valuation. And it's just very misleading. The tier 1es get in early. A tier 2, tier 3 instantly marks it up same day.

   15. JLJason Lemkin36:16

       It's the same as crypto, isn't it, for years? What's the difference?

   16. RORory O’Driscoll36:20

       Well, I think crypto not-

   17. JLJason Lemkin36:20

       We'll give the Andreessen crypto fund, uh, the, you know, essentially 80% off the, the token. What's the... It's the same thing, isn't it? The s- the, the... You're paying for the, paying for the signal.

   18. RORory O’Driscoll36:30

       I think if you break it down, first of all, just so everyone's on the same page, because interestingly neither Claude nor GPT was on the same page and didn't know what a tranche round was, and they gave the old conventional venture tranche round based on performance milestones, you know, BS from back in the day when we actually ran businesses, right? So they didn't have a clue about this. So let's be clear on the practice here. The practice here is when a, a company, a hot company raises a round where there are effectively two different prices per share. A first... Let's call it a first close and a second close, even if they're at or near contemporaneous, where the first one might be at 250 and the pre, and the second one is at a billion pre, and, you know, the highlight, and the headline is they all raise at a billion pre. There's two impa- impacts of this. First, let's do the simple one where there's just a single participant in the round, right? That's where, you know, if I'm the new investor, I wanna pay 600. The company wants a headline of a billion. A- a- and to win the deal, someone says, "Okay, let me put some money in at 250, some money in at a billion." I can do math because I'm paid to do math 'cause I'm an investor, so I know my overall basis is a billion. Uh, sorry, 600 million. So I'm getting what I want, and the company's getting what it's want, which is a headline number of a billion, right? It's silly, but that's all that's happening in that case. That's the single participant tranche deal, right? And it's j- and for some- if a company wants a headline, that's what they get, right? Generally, those things come back to bite you, 'cause by definition, if you're the company, just as a c- the investor can do math, presumably you can do math. Y- if you accept that combined deal, you're implicitly saying, "I know I'm only worth 600, but I'd like the optics of a billion." You better be damn sure that your next round you're at one and a half billion, otherwise you'll have the optics of a down round. And if you're an optics believer, that's probably worse than the uptick, right? So that's kind of the single participant version. The much more annoying version that Harry clearly was getting on his high horse about is when you have the same structure, but access to those rounds where the, the lead investor maybe does all of the 250 pre-round and only half of the billion round, and then some new investors just get to do the billion round. So literally at the same time, the lead investor is investing at 600 billion, and the follower investor, nes- less marquee investor, is investing in the same asset at a billion. And there's... I, I don't believe there's right or wrong in money. There's just money, right? That's where at the minimum you have to look yourself in the mirror as the other investor and saying, "Wow, that's the price of being cool," right? That's the price of access. I'm paying 50% more because I just can't access that deal, right? And that feels like pretty invidious thing to... I mean, again, going back to the comment, the, the profe... I mean, you gotta remember, i- if you think about it, and again, trying to avoid morality and saying, "Oh, it..." 'Cause it would feel shitty. I mean, you really would feel like a loser if you did that. But let's play it out.

   19. JLJason Lemkin39:35

       [laughs]

   20. RORory O’Driscoll39:35

       There's been a situation where the c- the, the, the lead investor, let's say it's Sequoia 'cause everything good and strong should be Sequoia. They're admitting it's only worth 600 on average, and they're just doing this fakey transaction. The company is admitting it's only worth 600 on average 'cause they're taking the money at a blended cost of 600. So what you're saying doing it a billion is you either saying, "Either I have a lower cost of capital and I'm willing to take a lower return than everyone else," or the only positive spin you can come up with is the company thinks it's worth 600. Sequoia thinks it's worth 600, but I am smart enough, even though I don't have access, I am smart enough and clever enough to know that it's really worth a billion and I should do it at a billion even though I can't get to 600. And I'm willing to put up with the upfront tax and foolishness look because I think six, 12 months from now it'll be obvious that I bought at a great price and maybe I'll look like a genius.

   21. JLJason Lemkin40:27

       Yeah, but we've e- well, we've entered an era though, the o- I think the meta thing, m- maybe this wasn't exactly what you were queuing up, Harry, but it is tough. We've entered a, an era where so many founders are obsessed about headline prices. Obsessed. They're obsessed coming out of demo day. They're obsessed, they're obsessed at... Once they cross a billion, which I think should be a moment to take a pause because of the M&A options, they're obsessed about driving to 11 billion and nine billion and one-upping their competition, and the numbers have become a joke to many founders, right? They just don't... Maybe joke's the wrong term. They don't think through the, any of the ramifications of the valuation they're hiring, and they don't care. And I'm not even saying that's bad. I mean, I think burning the bridges is a good way to have a big outcome, but it's become utterly gamified on many levels, right? It's just become gamified. And so this e- 11 team tranches in a round is just part of gamifying it, right? It's been true of YC since I started investing. There, there was always a cheaper price before demo day if you're reasonably hot, a higher price at demo day, and then a 20% or 30% after demo day. So that version has just become institutionalized, and so be it if it's what the founders want. If they wanna gamify it, so be it, right? I, I just don't think raising it five or eight billion when you're at 80 million or 100 million of suspect ARR is the most exciting accomplishment in the world. Like, I'm not gonna, like, I'm o- I'm gonna send a few thumb emojis on the email, but that's about it.

   22. RORory O’Driscoll41:50

       [laughs]

   23. JLJason Lemkin41:51

       [laughs] That's about it. They're all, they're all fake anyway. They're all just bets, right? These are not public companies.

   24. RORory O’Driscoll41:57

       It goes back to your point, though, on Emergent Labs and the graph doing the eight months to 100 million. The gamification of, like, the race to 100 million.

   25. JLJason Lemkin42:03

       Yeah.

   26. RORory O’Driscoll42:04

       I'm not choosing Emergent Labs, but-

   27. JLJason Lemkin42:05

       They... Listen, I think they built a good product. I think, I'm sure they've been overly lambast- 'Cause whether it's 100 or 80 or 60, I don't care. It's pretty damn good, right? Whatever it is. But if you're gonna, if you're gonna, if you're gonna do that, you deserve the, uh, the daggers to come out when it's not 100%,

10. 42:20 – 52:27

    Oura Going Public & Whoop Raises $500M at $10BN Valuation

    1. JLJason Lemkin42:20

       right?

    2. RORory O’Driscoll42:20

       One that I thought was fa- fantastic, exciting. I always like to see a potential IPO Oura to IPO shortly. Um-

    3. SPSpeaker42:28

       I thought this was fascinating. It's been an incredible journey actually from like, you know, Scandinavia, these founders building this business. It's had a couple of CEO changes. Um, the business is actually in incredible shape, both actually and Whoop announced today that they raised, I think it was $500 million at 10 billion. Fitness and health data. Do you know what actually, Rory? Jason's annoyingly right again. I don't know if you remember his predictions, but he predicted, if I'm not wrong, that 2027 would be the year for like human healthcare data and longevity.

    4. RORory O’Driscoll43:00

       Yes, and it looks like it might even be 2026. And yeah, no-

    5. SPSpeaker43:04

       Yeah

    6. RORory O’Driscoll43:04

       ... and, and you know, the great thing about both stories is very def- I mean, you know, Jony Ive aside, very defendable from... And this is not an AI envy story. This is-- I mean, they use AI in what they do, but these are fundamentally standalone products with a clear consumer value proposition and they're, you know, they're not gonna be Claude coded on Friday. I totally see it, and they clearly have had critical mass in terms of revenues. I think it's awesome.

    7. JLJason Lemkin43:28

       I think the question-- Listen, the interesting thing for, for these products, uh, obviously it's exploded, is they are, they are recurring re- you know, going back to the topic of ARR, RR. These are recurring revenue products, right? Um, for the most part, right? So fairly expensive subscriptions. Um, and they're exciting until like Peloton when they aren't, right? Now, it's not, there's not a, a $2,000 cost here. Um, but um... And I'm not being critical. I, I think that they're exciting, but there's also a faddishness-ism. People can switch. So the RR, the ARR, the pirate R, um, uh, what multiples do these companies deserve? What it is? I, I'm not smart enough to know, but the, but the acceleration is a force of nature, right? I'd love, I'd love to be a seed investor, don't get me wrong.

    8. SPSpeaker44:13

       Do you think there's a faddishness in the same way? I think we ascribe-

    9. JLJason Lemkin44:16

       I think you can switch from Ven- Harry, you're into fitness. I, I'm, I'm not so much, but I run 360 days a year, five miles a day for 10 years. So if there are a better treadmill, a better device, a better thing, I would switch. And, you know, whatever... You're, you're fairly fit, Harry. Like if you're, if you wear Oura and you love it, but Whoop is, is better and you care, you're gonna switch. So it's not, it's not ServiceNow ARR, right? [laughs] It's not. You will... You're loyal, you're loyal, but, but, but there's just some disruption ri- like look at Peloton. When Peloton blew up, but actually as the world changed, even though people love Peloton, right? Super high MPS. They... You remember the Peloton addicts of 2020 on Zoom. They, they loved it. But when the world changed, they just... The simple answer to Peloton is they just switched. They, they just switched. And, uh, Whoop is different than Oura, and there could be a Whoop or W- W- Whoop Oura, and, uh, maybe one is your ankle and it has your AI rock from Jony Ive in it, and we'll switch.

    10. RORory O’Driscoll45:14

        T- t- two comments on this. One, disclosure, we are lucky enough to have a small investment Oura through the acquisition of one of our companies, so I don't have a ton of information, so I'm not gonna breach any confidentialities. But just in an abundance of caution, I'm not gonna comment on numbers at all, right? Great products, right? But to your point, Jason, on, um, you know, it's not ARR like ServiceNow. Let me be direct. Get the fuck over it, right? Not every business on the planet-

    11. JLJason Lemkin45:41

        Oh, I'm over it already.

    12. RORory O’Driscoll45:41

        Hang on. Not every business on the planet has five-year design debt. If you're running a bar down the street, every night I can go drink at a different bar. If you're selling Coca-Cola, every day I can switch to Pepsi, right? If you're selling on Am- if you're running Amazon consumer, every ti- every day I can go and search and go on Walmart, right? Not every business is gonna have enduring kind of long-term lock-in, and that's obviously you prefer to have lock-in, right? But there are lots of businesses that have been around for 50 years, where every day they have to earn the right for the consumer to go to them, right? And I think there's no doubt in my mind that any kind of consumer hardware/software combination product has some residual asset from the subscription. But then, yeah, that every new device has to be awesome. You're in competition with other awesome products. It turns out capitalism is hard. You know, if you want to make $10 billion in value, you got to deliver value for your consumers. And I think for, for what it's worth on Peloton, I actually think what really happened to them, it's a little like the Zoom story, is demand that should-- would've been wonderful. It would've been the greatest stock ever had that demand been spread out over five or six years, increasing at 20% a year. We'd be talking about the Peloton compounding machine. Instead, everyone bought the damn thing at the same time. They staffed up to kind of meet that demand. The market was wildly saturated, and then the stock went down and it broke the narrative. So I, I do agree. You know, I, I... Yeah. There's nothing you can do to make a market bigger than what it is, but I, I think they got whiplash by virtue of the COVID demand spike followed by demand fall off.

    13. JLJason Lemkin47:14

        No, I think the quest- the q- I think the meta question... Listen, Oura, I, I, I, as Harry said, I guess I called it, these are great markets. They're large markets. They're mar- markets where people will pay actually relatively high subscription fees for data, right? A lot of attractiveness. The, the meta question for venture is, you know, the classic Peter Thiel zero to one. "Only competition's for losers," is what Dr. Thiel said. "Competition's for losers. Competition destroys pro- pr- profits. Mon- monopolies drive innovation. You want to invest in monopolies." And so that's just my meta anxiety is if these are, are unmonopolizable markets, are they good ones for venture or not? And I, I, I... Obviously, there's two sides to it, but we hope to, we hope... I, I would feel more comfortable investing in things that become monopolies. [laughs] I mean, it's a, it's a better landing place, um, than, uh, than, uh, it's con- than investing in bars.

    14. SPSpeaker48:10

        And you can't, and you can't ascribe the same durability of revenue to this as you can Workday. Like, as much as I love-

    15. RORory O’Driscoll48:15

        Agreed. But on the other hand, you can ascribe super high growth and you can ascribe big TAM. You might just... It... Look, if there were enough monopolies to do even one good monopoly a year, I'd be in, right? And, you know-Yeah, speaking of the, the founders are about to get the all-time prize because they invested in the space monopoly, and 20 years later they're gonna cash in their chips, right? Monopolies are better businesses than competitive markets. But I do think you can still build billions of dollars of value from a high good consumer product, right? And there are lots of prior examples of that, you know. And yeah, we all understand the dynamics of... I think it's much less comp- I mean a- actually for what it's worth, I think if you look at consumer products that flame out, like the GoPro, it's much less, and I'm doing this on the fly, but it's much less a competition issue. It's not like GoPro died because the competitor to GoPro emerged, right? It's that y- saturation is as big a problem as anything else.

    16. JLJason Lemkin49:11

        Well, DJI might disagree with you. I mean, there was a whole step function in the industry that they got, they got left behind, right?

    17. RORory O’Driscoll49:17

        Yeah. Would you prefer $2 billion in consumer hardware revenue or $2 billion worth of five-year contracts, um, like Palantir? Yeah, I'll take the contracts with a 90% gross margin and the five-year lock-in, please. You'll start off at 10. But you gotta give a lot of respect to these comp-

    18. JLJason Lemkin49:32

        I think maybe the more interesting question, Rory, that you brought up, um, 'cause so much has changed. This is our 50th show, so much has changed, right? When we started this show, uh, uh, public- durable public company revenue, despite slowdown in the top line, was the gold standard, right? It was the best revenue out there. Fast-forward to today, do we g- or going public, do we give a crap what type of R it is? Because the, the durable software stuff is w- trading lower than the S&P 500. Maybe I'd rather have ring revenue and I'm, I, with, with a somewhat suspect, uh, customer lifetime value because this, the software value is so low, maybe I don't care where my R comes from, right? It used to matter. It used to matter, right? We were so... We'd be in board meetings where you would torture companies so that they would have more ARR and that they would have less variable revenue. I mean, that seems, like, archaic today. [laughs]

    19. RORory O’Driscoll50:20

        Yeah, y- and, and I remember doing that, and I remember telling people not to do that. Because I'm a big believer is you can't make... You should sell your product the way the customer wants to buy it. And I go, one of the things I hated about venture was when people would say, "Oh, make it all recurring revenue." And then the fun one that's actually really relevant right now is you remember everyone would say, "Oh, you know, it's a hardware product, but all the value's in the software, so we're really like a software company." And now hilariously everyone's going, "Oh, thank God I've got hardware," 'cause hardware's defensible, not software, right? And I think it's... A, a big-picture comment is you should conform your company around your customers and your model, not your VCs. 'Cause I agree with you. This kind of pretend it's ARR, but then next year we hate ARR. It's just a total waste of time for entrepreneurs. Things are what they are, and you do best in business if you actually say what they are and just live and die by that. Most consumer products have high volatility associated with them. You better have a damn good R&D function and continue to build great products.

    20. JLJason Lemkin51:17

        We look today, this week they also talked about how I think Allbirds was, was, was it acquired for less than $30 million?

    21. SPSpeaker51:22

        Yeah, it was, it was acquired... Yeah, I was literally about to bring this up, Jason. It was acquired by Amex for $39 million.

    22. JLJason Lemkin51:27

        So my question is, if a company like Oura goes public and you see weakness in a quarter, should you dump this thing instantly like Allbirds, um, versus forgive a little bit of weakness in a, in a sales force or service now?

    23. RORory O’Driscoll51:39

        Again, I, I, I'm gonna avoid any specifics. Genuine comment here, right?

    24. JLJason Lemkin51:42

        Yeah.

    25. RORory O’Driscoll51:43

        'Cause it's not appropriate. But I would say something, unlike the other two guys, I've ran a textile manufacturing company 30 years ago. The technology required to make an Allbirds or a shoe is not the same as the technology required to make a modular electronic device that sits on the human finger and measures blood. Either of these kind of consumer electronic products, they're not a monopoly in the same way NVIDIA is, but they're pretty... It's pretty rare number of companies that can do that. They're not... Go, go down... F- Put it this way, Jason. I'll name a wearable, you'll name a wearable, and then I'll name a sneaker, and you'll name a sneaker. We'll be done with wearables long before we're done with sneakers, 'cause there's a lot of different sneaker companies. And yeah, turns out sneakers are easier to make than wearables, which are easier to make than NVIDIA GPU chips.

11. 52:27 – 56:19

    Epic Games Layoffs: The Reality of the Attention Economy

    1. SPSpeaker52:27

       Speaking of, like, do we care, what do we actually care about, there were two that... I, I, I don't know if you guys know this, but I have wonderful partners, and one of my partners is much more intelligent than me, which Rory you're gonna make some form of gag about. But he helps me put together some of the schedules too, and he was like, "Whoa, I had no idea about this." He was like, "Whoa, Epic Games laid off 25%. I didn't even hear about that."

    2. JLJason Lemkin52:51

       Yeah, and then I, and then I had h- had Marc Andreessen on your last pod sort of laughing about how we all overhired in 2021.

    3. SPSpeaker52:58

       Well, M- Marc Andreessen was, was very clear. He thought that we were all using AI as an excuse-

    4. RORory O’Driscoll53:03

       Yes

    5. SPSpeaker53:03

       ... and that we were all overstaffed by 50 or at least 75%.

    6. JLJason Lemkin53:08

       Did any of his portfolio companies do that overhiring in 2021?

    7. RORory O’Driscoll53:10

       No, Harry, just logically it's, it would be 75 or at least 50%, overstaffed by 50 or at least 75. This doesn't make any logical sense. But keep going.

    8. JLJason Lemkin53:20

       [laughs]

    9. RORory O’Driscoll53:20

       Just picking up on the errors here.

    10. SPSpeaker53:22

        Rory-

    11. RORory O’Driscoll53:23

        He's, he's pissed now. He's pissed.

    12. SPSpeaker53:25

        I would love to see you do a day of my life. [laughs]

    13. RORory O’Driscoll53:27

        I would love to.

    14. SPSpeaker53:28

        Give me a fucking break. [laughs]

    15. RORory O’Driscoll53:29

        That's actually fair. I now totally get it. You've been cranking hard all week.

    16. SPSpeaker53:32

        I, I, I will give you two hours sleep for six hours a day-

    17. RORory O’Driscoll53:36

        No

    18. SPSpeaker53:36

        ... running two companies at once, and then you come-

    19. RORory O’Driscoll53:38

        Okay. Now I'm feeling guilty. Move on. But no-

    20. SPSpeaker53:40

        Don't worry. But, but point being, like, went completely under the radar.

    21. RORory O’Driscoll53:46

        They didn't try and do an AI bullshit story. They basically said, you know, d- um, active, d- daily active use of their Fortnite game and their games is down, so your revenue's down, so you take your expenses down. It was, struck me as a no bullshit layoff announcement. It's like, you know, we sell less stuff, we have less people. It sucks. You know, and again, I, I really do try never to be cavalier about people losing their jobs, 'cause every one of those has to put food on the table. They're not earning the kind of money we're earning, and now they gotta go out and find another job in a shitty job market. It sucks. But the lesson is, and that's why I respect them, it's like, we're selling less, so we gotta do what we gotta do to keep the company profitable.

    22. SPSpeaker54:24

        Guys, we keep talking about these layoffs and these big numbers. I mean, it was over 1,000 people laid off in this layoff.A thousand. Uh, like numbers are relatively meaningless, and we've had so many of these conversations. What happens to the labor markets?

    23. JLJason Lemkin54:39

        Well, one thing on, on the Epic thing, if you, um... And the Wall Street Journal did a good article on this one, the, the, two this week on the, a permanent decline of Hollywood employment. It's permanently in decline. It's n- it's not... They're, they're... It, it's on, it's in decline because fewer, uh, movies and TV shows are being made, TikToks and YouTubes are doing it, and it's in permanent decline because every other country provides larger subsidies, right? And so there's this permanent decline in Hollywood labor. I think entertainment is, is sort of a, shows us the future. Ep- Epic Games is entertainment too, right? And, uh, th- they will absorb as much AI and technology as they can to address the, to, to adapt, and it's just early. It's just early. They've had to adapt to YouTube, they've had to adapt to social gaming, and I think, uh, we talk about these, you know, thousand people at Lastune or whatever, but I think Epic Games is just, it's, I think it's a more interesting view of the future than Block. We talk about folks might vibe code a B2B app, but content's already being massively disrupted.

    24. RORory O’Driscoll55:39

        And some part of that is, as you pointed out to me when I got it wrong a few episodes back, AI-related in terms of recommendation engines. But I think a lot of it is just, you know, a very competitive attention economy. You're right, Fortnite was the d- was the game everyone talked about, now it's not. It's the nature of the gaming industry. So yes. What, what does that mean?

    25. JLJason Lemkin55:58

        It's the Fortnite circle coming for everybody at the end of the day.

    26. RORory O’Driscoll56:01

        Oh, I, yeah, yeah, the lethal circle.

    27. JLJason Lemkin56:01

        It's coming for everybody.

    28. RORory O’Driscoll56:02

        No, I got it now, sure.

    29. JLJason Lemkin56:03

        Even Fortnite. The Fortnite circle has come to Fortnite itself. [laughs] It surrounded itself. Poor Epic Games is in the middle of its, of its end game of Fortnite. [laughs]

    30. RORory O’Driscoll56:11

        Yeah. We wish them... Yeah.
12. 56:19 – 1:02:31

    The Manus Scandal: Founders Trapped in China After Meta Deal

    1. SPSpeaker56:19

       The o- the other one that s- kind of relatively was, I think maybe a little bit overlooked is reports of Manus founders. Manus obviously for context being bought by Meta-

    2. JLJason Lemkin56:28

       Yeah

    3. SPSpeaker56:28

       ... recently. Um, Manus founders trapped or kept in China.

    4. RORory O’Driscoll56:33

       So just, again, give people context, and then put out one question mark there. Manus was a company originally based in China, had some Chinese investors, then redomiciled to Singapore, Benchmark invested. Effectively f- we founded as a US/Singapore company. Meta acquired it. I wanna s... And I use the word past tense acquired, 'cause my understanding is the transaction's closed and the money's moved, though interestingly ch- neither ChatGPT nor Anthropic were clear on that, but my understanding is that's what happened. But then now the latest thing is two of the f... The Chinese government has a, takes a dim view of this because they don't want Chinese talent leaching overseas and going to the US and effectively not being Chinese anymore, and they, they, they feel it as a brain drain. So they did something that was, yeah, pretty coercive in the sense of two of the key founders of Manus, I think w- were, were either in China or summoned to China, and they're no longer able to leave. So that's, those are the facts. And yeah, of course you care. I mean, I think that, uh, well, starting from scratch. I mean, that, that sucks. I wish them the best because that's not a pleasant place to be. I mean, I think you've had the Jack Ma thing of, you know, at Alibaba, of effectively going, as it were, under the radar for a few years when you kind of incurred the displeasure of the administration. You also have people who've had significantly worse consequences than that. So let's start with the basic, you wish them all the best, right? Um, but to your comment-

    5. JLJason Lemkin57:57

       I don't think another deal like this would happen, do you? I think this whole Singapore-Washington thing is over. It's over.

    6. RORory O’Driscoll58:02

       I, I totally agree. That's where I was gonna go with that long preamble. I'll tell you who did notice. Maybe no one in America spent any time thinking about it, but every Chinese founder who was thinking about doing this is going, "Hmm. Hmm. I don't know how I feel about this. I don't know if I can do this deal. I do know if I do this deal, I am never going home again." But I'm with you, Jason. I think all these other China-Washington deals, they're put on pause or they're put on reevaluation or... Next thing is gonna sound harsh. It's a fairly coercive regime. If your family's not out of the country, do you have exposure there, right? I think it puts... It, it just shows, I mean, authoritarian governments can take pretty drama- drastic steps to impact their citizenry if they want to. And I agree, Jason, it makes it really hard to imagine doing another one of these deals without being worried about this consequence, and hopefully they'll kind of go, "No to you, pay a thir- 50%..." Like, you know, [chuckles] California makes it hard to leave too, but if you pay them 13%, they'll let you go to Nevada, right? Yeah, hopefully it turns out to something like that, and please, God, it's not something more, you know, coercive. But I, I agree, Jason. Wouldn't do another one.

    7. JLJason Lemkin59:06

       You know, in venture you take risks, right? It's part of the job. So we've all had deals where there's some rule, some corner that was cut and we talked ourselves into it's okay, right? This, this is, this is companies... Something weird about this company, but it... And we convince ourselves as, as, as, uh, talking to some mediocre lawyer or asking an LLM today that it's okay. So like the Singapore-Washington must work, right? They've moved to Singapore, it's gotta work. And you convince yourself if you talk to a few people and you take the risk and it, and it bounced, it appears to have bounced the right way for Benchmark and friends, right? It appears they've gotten their money. But you don't do the next one, right? And there's 242 millionaires in Singapore. The majority of the inflow is Chinese. You don't do the next deal. Th... And maybe, maybe other capital does the deal and that's fine, right? Capital is fungible. But you just, in venture you just don't, you just can't do the next one like this. It's too risky.

    8. SPSpeaker59:55

       What do you do if you're Meta? Part of the asset you're acquiring is the team. And now-

    9. JLJason Lemkin59:59

       2 billion's not a lot for Meta, and they have the product.

    10. RORory O’Driscoll1:00:02

        Yeah. What are you gonna do, Harry? What would you recommend? Getting angry at the Chinese? That'll work well for them.

    11. JLJason Lemkin1:00:07

        [laughs]

    12. RORory O’Driscoll1:00:08

        Right? I mean, I think it'll be, you know, yet, yet another acquisition that looked clever but, uh, in retrospect wasn't amazing.

    13. JLJason Lemkin1:00:17

        Well, listen, for Meta I'll just say one thing. I, I, I only have a tiny bit of information, but I, it appears to me Manus is running mostly smoothly as, as an application and a company. Now, I don't know if the founders are working on it, you know. I, I certainly feel strongly when you lose your founders you lose your heart and soul of your company. But in the short term I, I don't think it's a big deal for Meta outside of the founders because it's running smoothly.Right? That, that's my... In the short term. The, the-- it's not down. The team's functioning, they're running and, um- But it's crazy

    14. RORory O’Driscoll1:00:47

        And at the risk of being Pollyanna, but also s- wanting to assume the best of people, I would hope that the Meta management team and board, to the extent they do have any influence, can help these guys come to an amicable end. And if it requires a tax settlement or whatever, you know, just... You, you don't wanna leave, you don't wanna leave people you just acquired in limbo. At some zoom-out level, when you listen to the rhetoric on both capitals, you just have to realize that trying to tread between those two, these two countries is pretty hard right now, right? You know, you know, we have China hawks in the US government. They obviously have a whole ton of US hawks or whatever the equivalent is. There's a real perception of competition. You know, we don't let them buy the NVIDIA chips, et cetera, et cetera. You, you, you're playing with fire in that thing and sometimes it bites you.

    15. JLJason Lemkin1:01:35

        I just think overall it's natural in, given the outcomes in AI and given the growth, that I think it's tied to taking the highest levels of risk we've also taken because the payoff seemed to be there. And when this deal happened, folks kind of thought this was v- aggressive. Uh, "Benchmark's never done a deal like this. Why are they doing a deal like this? It's not even very cheap, right? It seems a little crazy." And they're like, "Well, we've never seen anything grow like this, and the team's incredibly talented," right? So they took a little bit of risk and, um, and they made their, they made their profit. We're all taking more and more risks. Folks that, you know, "N-now it's a week of revenue at a demo day. I did a million dollars my first week. It's amazing." What about the second week? I don't know. Like, it-- but it, it, as long as it all works out in the aggregate, um, and I think this is why nobody cares, to Harry's point. I cared about, I cared about Manus. I added it to the, to the list. I don't think anybody cares. We're all focused on getting a million dollars our first week.

    16. RORory O’Driscoll1:02:24

        Just good realization that the worst thing that can happen is not just, oh, you lose your money. [chuckles] There are, there are worse outcomes

13. 1:02:31 – 1:08:20

    The Billionaire Tax: Why the Golden Geese are Leaving California

    1. RORory O’Driscoll1:02:31

       than that.

    2. SPSpeaker1:02:31

       I mean, speaking about cooling their shot on making billions of dollars, Steve Jurvetson, he's tied his career to Elon very smartly, so that's not in any negative way in terms of the investments that he has plowed, trebled, doubled, quadrupled, everything in between. Um, leaves California, buys most expensive home in Incline Village, and, and these were Jason's notes. Will anyone with liquidity be left in California? What if California is structurally bankrupt?

    3. RORory O’Driscoll1:02:58

       Well, [sighs] I mean, yeah. And go-

    4. JLJason Lemkin1:03:00

       It's not a great sign when they keep leaving, is it? It's not a po- it's not a positive. [laughs]

    5. SPSpeaker1:03:05

       But Rory's staying, Jason.

    6. RORory O’Driscoll1:03:07

       I mean, look, all-- first of all, you were exactly right. All credit to Steve and all pow- more power to him. I've known him intermittently for 30 years. He made a brilliant call to align with SpaceX, been on the board of Tesla a- and SpaceX. Tesla for a while and then came off, obviously, for those back in the day. But SpaceX too, yeah. He's, he's put his money in a compounding machine, and now he's clearly hit the DPI moment, right? But yeah, going back to the thing, yes. Capit- I mean, h- the truth is this. That's why we said last week, high, ultra-high net worth people have a high degree of mobility. And unfortunately, if you put the hammer up too high, they can leave and choose to go across the border to Incline Village and save thirteen percent on, um, any realized gains. Plus, as we pointed out, five percent on all gains if this wealth tax passes. You know, at the margin, why wouldn't you? You know, it's not like you need to be in California to be a Tesla board member or a SpaceX board member, given they're down in Texas. So yeah, actions have consequences.

    7. JLJason Lemkin1:04:09

       Well, it's interesting also this week, um, Washington State did pass their nine point nine percent state income tax for millionaires, and the governor said, the, the, the reason the governor said he'd sign it, 'cause there's a lot of folks who said, "Don't do it," right? It's our-- I mean, already s- Howard Schultz left. He said today, he said, "Well, they just deserve to pay more." And that may well be true. It, it may well be true. Like, I don't wanna debate that. This is not political, right? I'm, I'm more concerned about the tipping point when, uh, we kill golden geese. You know? There have been-- Washington and California, and to a lesser extent, New York, have been the gold-golden geese. It's, uh, you know, Washington said they're gonna lose mon- they're not gonna make money on this. It, it appears that mo-mo-most folks that are neutral or right have said California will lose money on the billionaire tax. Everyone's left. And, and the tax itself assumed massive amounts from Larry Ellison, who's been gone a half decade, right? So no one's g- it's just I do, I, I do worry they're all, they're all, they're all leaving. [chuckles] Everyone that doesn't work at OpenAI, Anthropic. Uh, you know, on this show, we've done it 50, and I said w- in the beginning of this that you leave after the Series B, and, and I, now I see that used again and again by these folks who are on the right on it. They say all the founders will leave after the Series B, but it may happen by show 100.

    8. RORory O’Driscoll1:05:23

       And one of the arguments I'd make is, 'cause, you know, the truth is this, articulating the argument to the o- to, you know, the activist on the other side as being, you're being mean to the billionaires is of genuinely no interest, and being mean to a billionaire is actually a feature, right?

    9. JLJason Lemkin1:05:38

       [chuckles]

    10. RORory O’Driscoll1:05:39

        Uh, uh, but I think the real articulation is this: if you, you actually are losing revenue that won't be available to California, and the marginal dollar in California probably goes into ho- you know, payment for homelessness, payment for young, young kids, payment for foster homes, payment for marginal social welfare services that are easy to defund when times are tough, right? And by choosing to obtusely tax without any attention to ability to collect that money, you've actually reduced the revenue that's available to you, right? And that's the argument you have to make to the, to someone on the other side of the table. You have literally chosen something. Instead of getting, you know, two hundred, uh, fifty mi- I'll pick a number, fifty million from the Larry and Sergies and the Jurvesons of this world, you went for two hundred million, and now you're gonna get zero. And what that means in real terms is somewhere down the line, long after all these changes have been made, somewhere in Sacramento, someone will zero out a line item on the budget. And let me give you a clue. It won't be payments to the teachers. It won't be payments to the firemen. It'll be marginal services to marginal people that your crass stupidity and desire to make a political point has ended up costing them money. And that's the only argument that moves the needle, 'cause it, uh, 'cause it's true. Y- y- and you're right, Jason. You're saying is that it will have a net negative return. How, now do you feel good?

    11. SPSpeaker1:06:59

        Rory, if you were Steve, would you have left?

    12. RORory O’Driscoll1:07:01

        I think from my perspective, I'm just so glad to be in California. It's so wonderful. I moved around a lot early in my life. I have my friends here. I have my life here. At the margin, the whole point of having money is to be able to do what you want, and for three or four or five or even thirteen percent of your income, do you really wanna leave? Now, I will say that's why you can tax income, income re- relatively highly because it comes all the time, and you can't control timing, and therefore, you have to uproot your whole life for the rest of your life to avoid it, and I don't think it's worth it. So I wouldn't move to avoid income tax. Conversely, if you have this pending capital event where literally in one year you're gonna sell, quote, all your SpaceX stock and realize a two billion dollar gain, and you're gonna pay an extra thirteen percent of that in California, which is two hundred and sixty million dollars, maybe you turn to your wife and say, "Honey, for the next two years, why don't we live in Enclave Village 165 days? I'll pay for the plane. We'll go back every week. You won't lose contact with anyone, and we will save $260 million." And you go, "Hmm, that's real coin." So... And that's the point about, you know, that's not the life I live. That's not the situation I'm in, but that's the argument you make. It's like, it's not crazy.

    13. SPSpeaker1:08:16

        That's real coin, baby.

    14. RORory O’Driscoll1:08:18

        That's real coin.

    15. SPSpeaker1:08:18

        Is there any,

14. 1:08:20 – 1:12:15

    Do VCs Actually Add Value? The Ron Conway vs. Matthew Prince Spat

    1. SPSpeaker1:08:20

       is there any story that I haven't hit on, guys, that we should hit on?

    2. JLJason Lemkin1:08:23

       I just have to bring up [chuckles] the Ron Conway-Matthew Prince one because it was so... I highlighted that one on Twitter. It was just the funniest thing in the world. And, uh, you know, I don't know Ron Conway.

    3. SPSpeaker1:08:33

       A few cultural context. Do you wanna provide some context, Jason?

    4. JLJason Lemkin1:08:35

       Yeah, I don't know Ron Conway, but he's certainly viewed as one of the Silicon Valley gems, right? Seed investor in so many leaders, always out there as an advocate everywhere. Uh, probably could have retired years ago, right? Very founder-centric. And he wrote that he had helped Cloudflare navigate some very significant issues earlier in the day. I think on Jack Altman's podcast. Yeah, on, on Uncapped. And, and they asked Matthew Prince, CEO of Cloudflare, the question. He said, "Well, maybe. I don't remember any of that." [laughs] And it's just, uh, it's not... And he wasn't mean. Matthew can be fairly, uh, sharp, as, as Harry knows these days. It wasn't meant mean. The tweet was not mean. He literally just memory couldn't remember getting any help from this beloved VC. And I, I think it just said so much to me about VCs adding value, but also VCs thinking they add value, VCs possibly adding a modest amount of value, but founders not really thinking that modest value was consistent with the bravado of the VC. It just, uh, it just, it just crystallized the whole value add idea to be in a, in a single tweet. It wasn't mean. It's just I don't remember any of... I don't remember Ron helping, but maybe he did. [laughs]

    5. RORory O’Driscoll1:09:42

       Yeah, I, I, you're right, Jason. I, I did laugh at that. And I think it does... I think actually my bigger heart to your point is both to some extent are right, is that, you know, as a... You know, we all wanna have agency. We all wanna feel we help and, you know, wanna be good people. And you look and you go, "Hey, I spent some of my time helping the CEO. I feel I helped." But from the company's perspective, they're founding a company. They're doing a million things. On one or two things on a f- ten-year journey, you helped. You remember that vividly. They're like, "Dude, it just fades into the background of, you know, a hundred things," and you know better than me, Jason, they have to do every day, right? And the truth is this. I, one of the proofs of this, an interesting way to check it is I often read business biographies and business stories of great companies, venture-backed companies, and how they were formed and what happened. And you know what I notice in them? Every single one of them, very few little mention of VCs. If you just read them, you, you eyeball them, says, "Oh, that's a biography." Yeah, and they crop in and come out a couple of times, right? And I think that's right because we listed the... In the journey of what's going on, the only significant things we've done, I've said this before on the podcast, we put in the money, and we put in more money when they need it. We decide to hire or not hire or fire the CEO. We agree the broad strategic direction, and anything after that is at best an assist, right? And if you read the biographies of businesses, what, what you generally see is the only time the VCs come in is on some version of those, right? And it's, you know, five pages of the journey early on interspersed across 200 pages in the first five chapters. And by the time they get to the IPO, it doesn't even rise to the level of a thing, right? I was reading the, you know, the, the OpenAI biography, the c- bunch of them recently, and that's just the way it is. Microsoft bio, same thing, right? You know, so don't... I mean, and yet the VC can feel those five minutes of impact were amazing, and they feel really good about them, and you feel warm and fuzzy. But, you know, the only thing founders really remember for better or for real is, "Oh, my God, our backs were to the wall, and no one would put in money, and they put in money." They remember that.

    6. JLJason Lemkin1:11:43

       Some- some- sometimes. S- in my experience, sometimes, Rory.

    7. RORory O’Driscoll1:11:46

       Sometimes they even forget that. Well, but to your point, Jason, if they forget-

    8. JLJason Lemkin1:11:49

       At least half the time they forget that

    9. RORory O’Driscoll1:11:51

       ... if they forget that, they're definitely gonna forget the time you made that phone call to help them connect with X, Y, Z and that helped them do something, 'cause that's something that happens 100 times a day. No, you're right.

    10. JLJason Lemkin1:11:59

        Yeah. Yeah.

    11. RORory O’Driscoll1:12:01

        We're not the stars in the drama. We're j- we're bit players who get well paid for our part.

    12. SPSpeaker1:12:06

        Boys, as always, the most humbling 90 minutes of my week. Rory, thank you.

    13. RORory O’Driscoll1:12:10

        I, I expect you'll get more.

    14. SPSpeaker1:12:11

        Thanks.

    15. RORory O’Driscoll1:12:11

        You'll be humbled tomorrow.

    16. SPSpeaker1:12:13

        Uh, you'd be surprised. [laughs]

Episode duration: 1:12:40