Sam Altman's Masterplan or a Gift to Anthropic? Palantir & Shopify Crush Earnings

1. 0:00 – 0:54

   Intro

   1. RORory O’Driscoll0:00

      My big aha is it's like dealing with a deranged madman trying to estimate what the street will do. I spend no time on it. Utterly unknowable.

   2. JLJason Lemkin0:07

      You don't need half your company, and Palantir and Shopify are proving it. You don't need half your company. Let's look at Shopify for a minute. From peak employee was 2022, 11,600 employees at Shopify. Since then, revenue has grown 91%, pretty impressive for a company at 11 billion in revenue, and employees have gone down from 11,600 to 8,100. Gone down while revenue's up 91%. He's ruthless. Zuck's ruthless. Karp's ruthless. And if you think you're gonna win in B2B, if you're not ruthless, you're gonna lose.

   3. SPSpeaker0:38

      Ready to go? [upbeat music]

   4. HSHarry Stebbings0:50

      Guys, I am so excited for this. We have a amazing schedule in place

2. 0:54 – 16:12

   Was GPT-5 the Biggest AI Letdown Yet?

   1. HSHarry Stebbings0:54

      today. I wanna start with GPT-5. I think it's the top story of the week. Consensus is it's slightly underwhelming. Before I lead the witness, I'd love to hear how you responded to it. Do you agree it was underwhelming, and do you see it differently?

   2. JLJason Lemkin1:09

      So my first experience was certainly underwhelming [laughs] when it said we had the greatest market crash since the tulip era. But, um, but, but, um, listen, that's what I think. But when I look at folks smarter than me, if Aaron Levie's running this through Box and saying redline and document comparison and term extraction is materially better, maybe that doesn't make those of us who are using it for therapy excited. I get that. But if he thinks it's materially better, and more importantly, you know, everyone, everyone's talking their game. If it's materially better at coding and is... And competes with, um, Anthropic, you know, that's 6 billion of revenue that they lost, right? So but I get it. It see- does feel like it's a worse therapist at the moment, doesn't it?

   3. RORory O’Driscoll1:56

      I think underwhelming is great. Let me tell you what I mean by that. Underwhelming kind of took a little bit of the air out of these, you know, the, the kind of techno-optimist, we're underway to AGI, it's all gonna revolutionize everything, all that kind of noise. It, you definitely felt a little deflate here, right? Which is great because we're now at the, it's a really great piece of software for doing business, let's make it better stage of life, right? It feels for me, I remember, you know, the first, you know, Windows 95, yay, it's amazing, got a big launch, and then, and then there's just a steady grow- or even the iPhone, better example. The early one, you know, great launch, it's gonna change everything, and then you settle into 10 or 15 years of incrementally making it better until you plateau, right? And from a zero to one perspective, that's not as interesting. But when, and but we're now in the g- grind it out, make it better, build a business stage of life, which I think is a more normalized world, right? And in, and in, so there's two things in it. One, implicit in that is the statement, "I don't buy any of this," you know, "They're gonna keep on getting better," exponential takeoff, all that AGI rubbish. I've always assumed it's rubbish, and maybe I'm wrong. But at least right now, the pr- the evidence shifted a little more in the s- in the favor of, you know, perhaps not nearly as quickly as you think. Uh, 'cause I... 'Cause from a business perspective, there's a lot of interesting shit going on here, and Jason nailed the first big one, right? They basically, and it's less from a, the product is good, though I believe to my colleagues and more avid coders, not as good as the high-end Claude code, the s- the, the models, but a damn sight cheaper, right? And i- i- i- a lot, you know, like 10X cheaper than most expensive, um, token load based on what I saw, maybe 8X to 10X. And on top of that, it's noticeable Cursor now is pushing a, um, GPT-5 based product, you know, and has free demos of that. You know, they're, they're, they're pushing that on their user base. From a business perspective, as distinct from a pie in the sky AGI stuff, this is exactly what Jason said. This is OpenAI going at a big ass pile of revenue that Anthropic has, and maybe Anthropic overplayed their hand a little bit by kind of bullying Windsurf. And as we discussed, if I'm now Cursor, a week ago, I'm sitting there going, or maybe a month ago, I'm sitting there going, "My gross margins are set by my worst competitor, um, Anthropic, and now I'm ecstatic 'cause the big ass guy on the block is now trying to com- you know, is now another vendor of tokens, significantly cheaper. I'm gonna push the hell out of this." So that's a really big business comment. It's not as sexy as AGI making us all unemployed, but if you're trying to build a business and you're Cursor, this is the best damn thing that ever happened, right? We have a competitive product at one quarter to one tenth the price, and I'm happy.

   4. HSHarry Stebbings4:44

      If I was Anthropic, I would be in that room rejoicing, and I think everyone, when I speak to the Anthropic team, are bluntly laughing. Um, because I mean, the demos were terrible. I think it was entirely underwhelming in terms of the presentation of features. You know, model compatibility into one and model routing, and we've now taken away. That's it? Seriously? We waited f- G- GPT-5 and you gave me better model? This is, this is disappointing.

   5. JLJason Lemkin5:13

      There's a reason for it. Sam Altman, in his own way, is a marketing mastermind like Elon Musk. He knows what he's doing, okay? We can make fun of this or that. He's everywhere in the entire globe. He's doing, uh, he's doing Stargate, Farscape, uh, everything. He's ev- he's building everything. He is, uh, as perceptive as they get. He's dueling with Elon on who manages the X algorithm, right? The fact that this would come out with a bit of a thud was known to him and the team, right? So there's a reason they did it. Was it timing pressure? Um, was it to put pressure on the team? I, I actually don't know. I haven't seen it on the hundreds of Reddits I'm on. But this wasn't lo- this is, this is n- this is like Figma, us saying Figma was dumb, they didn't understand the IPO pop from last week. This is, that's, neither is true. N- the idea it would come out with a thud is not a shock

   6. RORory O’Driscoll6:03

      Uh, put me down as not quite buying that. You can sim-

   7. JLJason Lemkin6:07

      Feel free to

   8. RORory O’Driscoll6:08

      ... I mean, 'cause, 'cause I, I think, I mean, as a comment on... You can be directionally brilliant and a mar- and entrepreneurially brilliant, and it's hard not to argue Sam Altman is both. But it's always worth remembering the most popular product they ever shipped, they didn't know they were shipping a good product at the time. ChatGPT, which is, you know, 70, 80% of their revenue dollars, when they shipped, they didn't even think it was a major release. They were focused on GPT-4 the, the following March. It was a... So I think one of the bigger halves on that is not where we want to go, but to go there is you see this in venture often. If you're directionally correct, and you have, you know, big-ass vision and drive and the ability to raise money, sometimes just that's enough, and you kind of get the breaks on your side. But I don't think you have this... I don't think he or anyone has complete clarity on every step and the level, the level of what forethought that you imply, Jason, on that. But I actually don't think it can... I want to go back to what Harry said, 'cause I don't know the answer. It's interesting. You, you made the comment, you think Anthropic are laughing. They're definitely laughing at the thud, and it's hard not to laugh at the funny, stupid graph that was mathematically wrong, and oh my God, they must have burned someone after that at the stake, literally. But I do think, I'm not sure I'd laugh quite as much, 'cause I do think, you know, a, a renewed push on code and pricing and trying to get that biz... It would be better to, if you're Anthropic, to be a monopolist and the best product than to be in an oligopoly where you still have the best product. 'Cause I do think they, you know, you're right, the consensus is, you know, token for token, dollar for dollar, the Anthropic products do more and are more efficient. But, and this gets into a very interesting discussion, is with the pricing of the other... If the pricing of the other product is low and good enough for companies really wrestling with gross margin, you're gonna have some kind of use the cheap shit where you can and use the dear stuff where you have to, right? So I do think no one ever said, "I'm really delighted my bigger competitor entered my market with a product 5X cheaper than us." I mean, so I don't buy it at that level, Harry, to be really direct.

   9. HSHarry Stebbings8:09

      Well, d- but, but I think that's a very moment in time perspective, which is like everyone is aware that if you're looking at like cost of tokens today, we're seeing them reduce so dramatically within a 12-month period. I don't think Anthropic are looking at that thinking there's a permanent chasm in pricing and we're gonna be unable to match it. I think they're looking going, "Fine, they might have a, a slight, an efficiency on us today, but if our models are better, we'll win."

   10. RORory O’Driscoll8:31

       Yes, you'll win, but it just won't be quite as easy is my point. I mean, that's my point. We've, we've gone from the pie in the sky for everybody, it's gonna be amazing, you know, flowers and sunshine, to the, okay, it's a slug it out war here. This is the advantage we've got, this is the advantage they got. I, I... So I say, I just think it's a, a w- we've gone for... We're dealing now just business fundamentals. Are you better off with a slightly better 4X more expensive? That kind of discussion.

   11. JLJason Lemkin8:59

       Rory, what was your second point? I interrupted you.

   12. RORory O’Driscoll9:01

       Y- no, no problem. I mean, there's two or three. You, you, you have to take seriously, you know, I mean, and I've spent less time on this than Token, but they, you know, they, they shipped the open source products earlier this week. Or not, last week, of course, now. Right. That was interesting. After, what was it, two or three years of, two years plus of no open source. And I don't kn- I, I don't have a, as good a handle on the motivation there. Is it to mess with Elon 'cause he's saying they're not open source? Is it 'cause they genuinely feel that's a feeder for their wider models, which is somewhat articulated? But at the very least... And my point is, another interesting commercial move. So a- again, and the last one, w- you, you were sneering at it, but you know, moving away from all those models to the single model selector, yeah, it didn't work at opening. Right? But again, it's, it's, it's the kind of thing you do when you're done with imagining, you know, being the next Robert Oppenheimer and now you're focused on what the product manager tell, tells you will get 5% extra conversion among users, right? Someone in product marketing said, "Dude, we have to stop with these six different model names that make our users feel stupid and just make it simpler to use." And all, you know, all those things are, okay, it's time to get business savvy, not just, um, you know, AGI is coming savvy. So I thought, yeah, that's, that's what grinding it out looks like. That's what, you know, every iPhone release after the first one or two look like. Similarly with every Microsoft Windows release after the first two or three. It's like once you had tiling in Windows, the next 15 years were just grinding it out. Same thing with my- the iPhone. Maybe it's the same thing here. We've got the idea, it's a chatbot with AI, and now we're just gonna be grinding here.

   13. JLJason Lemkin10:38

       I think GPT-5 didn't achieve what Sam wanted it to achieve by July 31st, and you gotta manage the team, even at the highest profile company on planet Earth. And everyone that's been a founder that's shipped software has had to make a decision. Do I give the team another month, another quarter? Anytime you do a release and it gets too complicated, your team always wants more time. They always, "I need another week. I need another month." And at some point as a leader, you gotta, you gotta ship it. And, uh, we've been, you know, we've been, you know, one, you know, well, I don't know, earlier on this show we had a Kalshi on when will GPT-5 ship, right? And it was all over the place. I think Sam said, "August is time, boys [chuckles] and girls. And if it's gonna be underwhelming, I'm gonna make the call that we're not gonna wait for nirvana. Um, I don't have a firm date on what it was supposed to be, and I'm just gonna box it up and ship it, and we're gonna make some basic stuff better for Aaron Levie. We're gonna cut some costs, um, and that's it." That, I, this, maybe it's 4.9, right, or 5.000. But this is just my theory. He decided there's so much attrition in this industry, there's so many resources flowing back and forth to Meta, to here, to there, that I think he just decided, ship it.

   14. HSHarry Stebbings11:47

       I also think aligning to a $500 billion fundraise, it's actually better to get it out, to continue to press on-

   15. JLJason Lemkin11:54

       Yeah

   16. HSHarry Stebbings11:54

       ... than to have continuous waiting.

   17. JLJason Lemkin11:56

       Yeah. It's like the Replit $3 billion round. Just get it done.

   18. HSHarry Stebbings11:59

       Rory, would you do OpenAI at 500 billion, and do you feel more or less confident post-GPT-5 about OpenAI?

   19. RORory O’Driscoll12:06

       I'm gonna say more confidentAnd I'll tell you why. Uh, it goes back to what I said earlier, right? I think the grandiosity was totally necessary at the start, 'cause if you'd walked into people and said, "We need to raise $30, $40 billion, and at the end of it we're gonna ship this chat app that, trust me, people will use as replacement for search," that mightn't work as well as, "We're gonna change the known universe. We're gonna exponentially eliminate all labor." You gotta be selling... You know, when you have to raise 30 billion on nothing, you're selling dreams, the future of humanity. We're now at the, I gotta make a business, you know, con- converge roughly on profitability over the next three to five years, so just go run the business. It's a combination of a just ship, run the business, make it better kind of next step. So yeah, I feel like... And the interesting thing is, I'm gonna say this, without... And this is where I've come, evolved a little in the last few months just thinking about it. Without any need for AGI or any of that rubbish, right, I think both of these companies can be plus or minus, you know, half a trillion to trillion dollar companies. I think the opportunity, it's just so obvious that, you know, everyone's gonna be paying 20 bucks a month, and people are gonna be paying more, and you get an interesting discussion how, how big the high end will be, which matters more for Anthropic than these guys. But they have the mass market, everybody paying 20 bucks a month. That's a big-ass company, and it's just, from here the throwaway is such that you probably can see a 2, 3X just on that. Probably some noise along the way. You might be ahead of yourself. It's... But yeah, I feel they're on the destiny that's now locked in for them, which is to be the, the go-to place for information and it, you know, for pretty much everyone on the planet.

   20. HSHarry Stebbings13:52

       I always think that actually AI's a bit like, um, crypto, which is like, hey, don't fucking worry about all the underlying assets. You'll make money if you just invest in the core, which is Bitcoin. And I'm like, the core unwavering asset here is NVIDIA. Do we think OpenAI or, uh, um, Anthropic or Grok or you name it are gonna win? I don't freaking know. With each month the benchmarks change. The last humanities exam changes. Next humanities test will come. NVIDIA. They all just... Elon, NVIDIA.

   21. RORory O’Driscoll14:23

       I mean, some, uh... I mean, what you're saying is true at some- which is sometimes just keep the main thing the main thing. And as, and, and I often make that mistake, 'cause you, you try and li- what are the... And this is gonna sound really cynical, but early on you listen to all the proselytization and all the crazy stories, and I'm very much a rationalist, and I try and take them seriously, and I deconstruct them, and I realize, oh, the ra- the, these crazy stories are bullshit, therefore the thing itself is bullshit. And that's wrong, right? All the stories... And every single thing that people said they'd use Bitcoin for in 2013, except maybe finally stable coin payments, has been bullshit. But the thing itself totally worked, 'cause it's got this, you know, the store of value idea, the asset independent from everything else. Bitcoin worked. Everything else... Ether to some extent. Everything else, all those little weird coins didn't matter. Same thing here. The main thing is the main thing. You wanna make the chips. You wanna be the company that's... Uh, in an OpenAI's case, you wanna be the company that's pretty much selling to every consumer. Looks like its market share is pretty hard to change at this stage, so you start multiplying. You know, you'll have a paid tier at 20 bucks times a lot of people. You'll at some point have an advertising tier. And plus or minus, you're Google with a subscription business. There you are. It's $1 to $2 trillion. Thanks for coming. Keep it simple. Don't, don't... Overthinking, they go hard... Maybe I'm not saying it clearly. I am often guilty of overthinking to the point where I've now learned to watch myself when I overthink. Sometimes-

   22. HSHarry Stebbings15:50

       See, I'm-

   23. RORory O’Driscoll15:51

       Yeah

   24. HSHarry Stebbings15:52

       ... I'm very, I'm very lucky. I don't have the luxury of the ability to overthink, Rory, and so I'm always a simplistic thinker-

   25. RORory O’Driscoll15:58

       And-

   26. HSHarry Stebbings15:58

       ... which tends to do me, which tends to do me quite well. [laughs]

   27. RORory O’Driscoll16:02

       Look, it's, you know this kind of internet meme graph where you have on the left total fucking idiot, in the middle overthinking it, and on the right not thinking at all just like the other guy,

3. 16:12 – 27:35

   Should Perplexity Really Try to Buy Chrome for $34.5B?

   1. RORory O’Driscoll16:12

      and you win.

   2. HSHarry Stebbings16:12

      Listen, a- a- another element that's just, like, crazy is Perplexity trying to buy Chrome for $34.5 billion. Uh, I, I spoke to Arabin before. He said, "Legit. It's in their court." I, I... How on earth is this even-

   3. RORory O’Driscoll16:30

      Where is he getting the capital? Just to confirm.

   4. HSHarry Stebbings16:32

      Well, that was my question to you. [laughs]

   5. RORory O’Driscoll16:34

      From Elon?

   6. HSHarry Stebbings16:35

      How is it, how is it-

   7. RORory O’Driscoll16:35

      Elon had his, had his capital secured a while back, didn't he?

   8. HSHarry Stebbings16:39

      How, how is this possible, guys? What, what did you make of this when you read it?

   9. RORory O’Driscoll16:44

      One, I mean, you can get tactical and say, "Where would the money come from?" But, like, stepping back, why would Google sell? Um, just big picture points just to cover it for people. Why would Google sell Chrome? Answer, they don't want in a million years. The Department of Justice says they have to. And if they'll, if, if they can appeal, then at some point maybe they have to. They don't wanna sell this thing, right? The second question that's interesting one is what's the Chrome business worth, right? And the totally interesting thing about that is it's so dependent on who buys it, right? 'Cause the asset itself, like, it doesn't have... Like, Mozilla has couple hundred, $700 billion I think of revenue, right? reasonable market share. You know, you don't get paid for owning a browser, to state the obvious, right? And the, but the reason the DOJ is going on this is s- you know, as well as owning Chrome, which was one of Sundar's crowning achievements that got him the big job building Chrome, Google also pays Apple for search placement on Safari $20 billion a year. And the Department of Justice is looking at those two things together and saying, "Oh, paying to be in the browser is bad. Owning the browser is bad. It allows you to continue your search monopoly," right? But the question is, owning Sa- so from Apple's perspective, owning Safari in the iPhone, where it's kind of a pain in the ass to change, is clearly worth $20 billion of profit a year, right? Is owning Chrome... How much is own- Chrome worth, right? In other words, uh, how, how locked it...Who, who would buy it? What would they sell through it? And how locked in would the service be? Ironically, the most valuable... The person for whom Chrome was the most valuable, if it wasn't owned by Google, would be Google. In other words, if someone else owned Chrome, the highest person to monetize Chrome is Google, 'cause they have a search business. So they would probably... And the Department of Justice won't let them do it, but they would probably say, "Harry, if you bought Chrome, you have no revenue source, but we will happily pay you $20 billion a year for all your search service, and you'll be, you know, the richest single person company ever," right? So now you get to the... So that's- so it's a kind of a weird asset, where intrinsically in itself it has no value, but it's kind of a gateway to some product that does, which now gets to Perplexity. The thought process there is they're already building a browser. If they had Chrome, they could basically be the AI backend. A- a- instead of having to build their business browser by browser, they would basically jam Perplexity into every Chrome user, and every person who's using Chrome today, including me, they would have some version of Perplexity as their deflaut- default, you know, AI engine, right? Great work if you can get it, right? And I totally get now, is that worth 38 billion? Is it worth more? Is it worth less? Do they have the money? All those things, A, are unclear, and B, may never ma- may not matter yet, to Jason's point. Is it real? But would a, would a AI engine competitor to ChatGPT absolutely kill to own the Chrome user base? Absolutely. So that's ki- sorry, long-winded answer, but that's kind of how you get there, and totally. You know, for what it's worth-

   10. HSHarry Stebbings19:57

       Do you think it is, do you think it's likely in any way or is it a complete-

   11. RORory O’Driscoll20:00

       I assume Google will litigate this to the end of human time. I mean, it's, uh, which actually gets to step back and say something else. I just got to get it off my chest, right? The Department of Justice gets around to killing American companies and technology just when they've become irrelevant anyway. We all had a long... No, irrelevant's the wrong word. Just when they're at risk. The idea is Goog- think about it. The whole idea here is Google is so powerful and almighty that we've got to smash their search engine monopoly with legal remedies, when all of us here are talking about could Google be screwed because OpenAI and ChatGPT could be a better product? It's literally not kicking Google in the nuts when they should have, right? When they were evil bastards for the last 15 years, grinding everyone down like Yelp. And then finally, when their backs are to the wall, now we're gonna kick them just too late, when in fact they're now at risk. So it's... At, and I forgot to mention, at a zoom-out level, all this is fricking stupid. It's the Department of Justice. Because they take so long to make decisions, it's like they only started kicking Microsoft when Google was in the ascendancy and Mic- Microsoft was on the defensive. It's the same thing here. Leave poor Google alone. They're just a simple, humble trillion-dollar company trying to survive. So dumb as rocks. Sorry.

   12. JLJason Lemkin21:13

       Maybe just two things. One, um, I, sometimes I'm a little slow, uh, on marketing, but th- there's a huge amount of need in AI to do constant marketing. Constant marketing. And there's a huge need to be one of the top two players, right? And everyone's doing a lot of marketing, you know? Lovable project, lovable. Like, why are you doing these hackathons? Why is Bolt doing a hackathon in every city? Why is Sam Altman everywhere? Why is Anthropic founders everywhere? Um, y- I'm not even sure, even with Nvidia, Jensen's everywhere, right? And he probably doesn't need to be. But, and I think it's important for Perplexity to be in that conversation because we can think of a lot of tools that aren't in the conversation. You know, we talked the last couple weeks about, um, Cognition buying Windsurf, right? At least it was in the conversation. I mean, two of my portfolio companies use Devin, like their AI tool, and they love it for niche use cases, but we never talk about it, right? And so I don't think it's cynic- I mean, it, it's a little bit cynical. I don't, I c- 'cause even if he had 38 billion, I'm guessing another suitor might come out of the woodwork. Like, I think Satya would raise his hand and say, "I got 39." [laughs] There'd be a few other folks, uh, you know. But, um, you got like... And, and the, uh, to, to grow at the pace the AI leaders are growing, right, at this incredible pace, you do need to fuel the marketing engine. You need to fuel it aggressively, and you're not gonna do it on AdWords, um, and a few sponsored blog posts in SEO.

   13. HSHarry Stebbings22:39

       You absolutely have to. And I actually interviewed Arvind at an event, um, and I said, "To what extent do you feel like a politician or a state leader, where you actually don't do anything in the machine, but you just entirely speak for the machine?"

   14. JLJason Lemkin22:51

       Yeah.

   15. HSHarry Stebbings22:51

       And he said, "That is completely my job." And that is the job of Dario, that's the job of Sam, that's the job of me. We are on the machine-

   16. JLJason Lemkin22:56

       Super important for them

   17. HSHarry Stebbings22:57

       ... shouting. And then you also look at the, bluntly, poor performers, and I hate to name people, but this is the show that we have, um, like Coherent Mistral, and you also correlate that with who does next to no marketing or speaking publicly, Coherent Mistral. I have no idea to the extent their models are good, not good, not good, whatever, but they are both incredibly quiet and don't do press, and they are also the ones which people have deemed the losers.

   18. JLJason Lemkin23:23

       You, you do have to do it. It is not, there... Virality alone isn't gonna do it. Yeah, I guess the other Captain Obvious point is, you know, one of the things that's very interesting in the media is where does Google stand today, right? Um, you know, is search under s- under massive, uh, uh, existential threat? Yes, but search revenue's up, right? It's confusing, right? And I think o- Ca- the Captain Obvious theme is that no matter what happens, Chrome ends up being this accidental gem, right? Chrome was built very strategically in the old days, in the desktop-focused days, to counter a, you know, IE, which it destroyed, right? And then it's open source. So, you know, Safari and Opera and everything's built on Chromium. They gave away the open source version. They destroyed everything, and then it kind of plateaued like a lot of software did, right? We had plugins, we had cool... We took it for granted. Now it's the crown jewel in the age of AI, right? It's the crown jewel. Again, it's the return of the br- it's not just the browser warsIt's the return of the browser being this core piece of software that we forgot about for the better part of a decade

   19. RORory O’Driscoll24:26

       Only be- uh, uh, first of all, agreed, and, you know, I, I, I can't resist the Chrome wasn't built in a day statement, but moving right along. Um, uh, you're right, and it's only because for 10 years Google won in the sense that no one else could monetize traffic anything like the dollars they could, which is what, you know. So why bother building a... I mean, you, you could have these, you know, niche browsers, but you couldn't build a humongous business 'cause the only thing you could do with that traffic was monetize it, and the only place to monetize it at scale was Google. And the interesting thing now, to your point, Jason, is y- you can envisage a world where someone monetizes Chrome traffic via an ad-supported product, but there's also, you know, ChatGPT is a cons- the astonishing consumer subscription product. What is it, 20 million, like 700 million free users, 20, 30 million paying consumer subscribers, I think is the numbers. So that's a very profitable business where the rate limiting constraint looks like your ability to sign up people, which means having... Which is why Perplexity is smart. If you could get a billion people coming through your door, and if, you know, a billion of them were free users, and you have the same conversion rate as ChatGPT does, right, which is a leap obviously, I doubt you would, but any kind of conversion, what's it, four, 20 over 70, that's about, yeah, that's about the 2% plus or mi- little under 2%, which is what you see with premium. You know, if you get one or 2% converting into paid users, it's a compelling business. So su- suddenly Chrome matters, not because it got better, not because the browser is uniquely different, but because you can plug it into a machine now that can collect checks and-

   20. HSHarry Stebbings26:01

       Do you know what we're not, we're not talking about AI for normies, and this sounds incredibly condescending and patronizing, but AI for normal people, and normal people is kind of the, the slow laggards to adopt. And what I mean by that is-

   21. RORory O’Driscoll26:14

       For the record, normal people is not patronizing, but slow laggards is, so you might want to work [laughs] ... Yeah, I, I, I'm willing to be normal. I prefer not to be slow, but keep going, Harry. Be a jerk

   22. HSHarry Stebbings26:24

       Fuck it. I'll, I'll, I'll keep going with this. A great example of that is Threads, something that we all deem in our circles to be like, "Who the fuck uses Threads?" Threads is actually a massive success, massive hit. And what I, what... The reason I'm going there is because, yes, we all think ChatGPT is great and a massive hit, and 700 million is amazing, and yes, it is. That's unbelievably incredible and insane. I'm not doing a prior guest and saying it's not. But Gemini is great, actually, and it's getting better and better and better, and they will plug it into the core engine and the core distribution channel. And actually, for AI for normies, there's a real chance that they don't lose any market share

   23. RORory O’Driscoll27:02

       You're right. For a good slug of the population, getting an AI answer, th- th- there are going to be kinds when AI answers meets your need on Google, and you're done. There's going to be... Yeah, Gemini as a model is actually apparently pretty damn good, even for coding, someone was walking me through. So yeah, they're gonna have market share. They're not gonna roll over and die, and the search revenues will go up. It's simply you've gone from a situation where you're the only game in town to a situation where these other guys are taking a significant slug. So, uh, you know, it's always better to be a monopolist than an oligopolist, but it's still pretty okay to be an oligopoly

4. 27:35 – 39:06

   The $3B N8N Deal: Genius Bet or Bubble FOMO?

   1. HSHarry Stebbings27:35

      I, I do want to move to, like, a, an insanely hot deal, guys, that really in Europe, like, was a talking point for everyone, and it's N8N. It was done at $3 billion. Uh, reportedly, it was at 40 million ARR, ending the year at 80. Um, Excel led the round. Um, massive. It was like in, I think the last round was not too long ago, at 300 or so, give or take. Um, it's not a new company. It's a 2019 company. How did you think about this?

   2. RORory O’Driscoll28:06

      With envy. Um, let's start with that, 'cause in fact, we had talked to them in about '22 or '23, and you're right. It, you know... W- what we clearly underestimated was, you know, and kind of this whole, you know, workflow automation, it's a category. Pre-AI, it's a category. We'd looked at a lot of players. It's, it's a noisy one. You have all the way from RPA to process mining to kind of low-code, no-code, and this big indigestible mass of things where, you know, every, every solution blurs into the next one, and it's just hard to know what's what and hard, and therefore hard to build a big compelling business, especially with lots of competition. And clearly they did a brilliant job of co-attaching to AI, 'cause when you, when you go from automating workflows so people, in a very deterministic way, to actually getting more of the work done using AI, the value prop of your software goes way up. Instead of saying, you know, we're gonna automate a little bit of shit, now we're gonna literally do the work, and you can get rid of all these people that were doing the boring work. So they did a, clearly did an excellent job of that, and in the space of, you know, six, nine months, just massively accelerated, right? And, you know, well done them. You know, it just shows you got to stay on top of these things, and yeah, I mean, g- g- good on the guys. Highland, I think Europe did the last round. Good on them

   3. JLJason Lemkin29:26

      As I've gone into vibe coding, right, deep, right, um, I've, I've, like, reused Zapier so much at the low end, at the low end, because, um, I've got to hook stuff up, right, without wanting to code it. And if NA- NAN is a more developer version of that, so I'm having a Zapier renaissance. But today, man, with the explosion of applications we're building and the explosion of things we want to connect with AI, it's like an order of magnitude bigger. It's an order of magnitude bigger. And maybe, maybe, Rory, when you met them, you couldn't predict, right? It was hard to predict the accelerant that would happen, and it, and it's probably in the last seven months, right, from the revenue, right? And then boom

   4. RORory O’Driscoll30:02

      Zapier, and that's the aha. There are companies that you've tracked for a while that you mentally might be m- writing off, and what you got... You can either decide it's not knowable, you bet randomly. You can try and track them just based on metrics, or the most logical thing, you sit down and you say, "What areas will the model significantly impact in the next six, 12, 18 months, and what are the companiesThat could benefit from that. And then the second criteria, and you've talked about this before, Jason, is it's all very well to say that there were probably 10 related workflow automation type companies. Which one of them will get the prize? I tell you, it always comes down to the founder who gets it the most, gets it the quickest, and just puts everyone in the room and says, "No one's leaving till we're shipping an LLM-enabled version of this, and we're gonna get it in front of 20 customers by Friday." Right? And, you know, in retrospect, that was the aha here. They clearly had those elements, and if you tracked it, you'd have made a lot of money.

   5. HSHarry Stebbings30:58

      The thing that's really stuck out to me is Index. Index are making everyone feel like shit right now. In s- particular, in Europe, Sequoia and Accel. Accel have to win, otherwise the gap widens more and more and more. And they won Lovable at any price. And now they're winning N8N at, I think, any price. It, it... I think it's, it's a, it's a well-priced deal. And I think that-

   6. JLJason Lemkin31:23

      But they did that in Facebook back in the day when they were out of the game. They bid a- they bid... I think they... What did they pay for Facebook, uh, Rory? Maybe $200 million or something pre?

   7. RORory O’Driscoll31:31

      500 million pre.

   8. JLJason Lemkin31:33

      They were insane. People said Accel was washed up, and they had to bid up this, this fledgling social network.

   9. HSHarry Stebbings31:38

      I, I'm, I'm, I'm actually praising them. I'm not saying it's bad.

   10. RORory O’Driscoll31:41

       Yeah. No, I, I, I think you're saying the same thing. Look, if you pick right, no price is wrong.

   11. HSHarry Stebbings31:45

       Yeah.

   12. JLJason Lemkin31:45

       Absolutely.

   13. HSHarry Stebbings31:46

       But I think, I think, I do think there is a retaliatory element from Accel of, "Oh, shit-

   14. RORory O’Driscoll31:51

       Uh-

   15. HSHarry Stebbings31:51

       ... we have to, and this is an existential-"

   16. RORory O’Driscoll31:53

       Again, y- y- you know your European market better than me, and maybe 'cause they're smaller. I, I, I don't... Humans are human, so that kind of dynamic... It's a bad way to try and make money, and it's hard 'cause we're all prone to, you know, regret, FOMO, decision eval- you know, looking back at decision. But y- I, you know, you'd like to think you just make every decision on the basis of is it a good bet or not.

   17. JLJason Lemkin32:15

       I don't know what you think, Rory. Th- this is what I was taught. I'm not a growth investor, right? If you're writing one of these checks, and you, you believe it's a winner, and you see a clear path to 5X, right? S- you do... So, and you can deploy enough capital, you do the deal. Like, not neces- like, i- in a certain moment in time. So if they believe this... I mean, 5X with dilution's a lot. It's gotta be worth a $20 billion company, right? Or Lovable's gotta be 20. They all gotta be 20. But if you genuinely believe it and you overpay it and it keeps you in the game and it's for your brand, like, it, you know... And it's not your whole fund. It might not be worth the ba- if you genuinely see a 5X. It do- the growth run zone all have to be 10X or 500X, right?

   18. RORory O’Driscoll32:54

       That is definitely true. It's-

   19. JLJason Lemkin32:55

       It's wide overpay to get into a good deal where you're not into space, but it's not insanity if you see your way to 5X, right? It just might not be a 5X fund returner if that investment makes 5X in a growth fund.

   20. RORory O’Driscoll33:06

       Well, there's, there's actually two things to unpack there. One is the 5X versus fund return. You're exactly right. Growth investors typically, when they're looking at something, can say a three to 5X. And the interesting thing is... And they'll say, "And most of the time, it's hard to go beyond that." And then by virtue of the power law, one in every 10 does. It, it's just like the [laughs] ... It's, it's, it's, it's l- not dissimilar in a very... It's factually similar to seed, but just when they're much bigger, it's harder to envisage, right? But the truth... I mean, I remember a Face- a Facebook investor, an early Facebook investor said, you know, they'd bid another deal, they'd lost it, and they said they could see a three to 5X from here, and obviously they made 100 times the money, right? So yeah, you basically just operate on the power law, and some of them turn into amazing. But you wanna be able to say your base case is a three to 5X. That's totally, absolute- that's the business they're in, right? Now, you went from there halfway through the se- uh, halfway through the paragraph into some kind of a, "We should do it for brand," or, "We need to be relevant." At that point, what you're really saying is, "I don't see a three to 5X, but I'm just gonna convince myself to do it 'cause I gotta be relevant." And the sad thing is sometimes that might be the right thing to do. I mean, I recoil against it, perhaps wrongly, to be perfectly honest. Maybe there are times when you should just do that. But it's just when you're writing, it feels like, you know... I remember when you... When I was a Ca- uh, w- when they teach you in Catholic school about sin, and they'd say you start on little things, and then it will just get worse and worse. It seems once you start doing deals not for return, does it just get worse and worse forever? So I don't love the, "I won't make my return, but it's good for marketing" school of investing. But I also recognize that sometimes you can say, "Ooh, I can squint and get a 3X, and it'll be good." And hey, sometimes you do what you do.

   21. HSHarry Stebbings34:51

       Do you know the funny thing is we have a, like, YOLO segment of our fund, which is like-

   22. RORory O’Driscoll34:56

       [laughs]

   23. HSHarry Stebbings34:56

       ... yeah, yeah, which is a tiny pool of cash, whatever, like two million or three million, whatever. But it's basically we have amazing access because of the shows, and people will give us positions at high prices, but we get into amazing names, and it's good for marketing and brand. It's 7X as a pool right now. It's, it's-

   24. RORory O’Driscoll35:14

       No

   25. HSHarry Stebbings35:14

       ... I mean, as in... But at crazy pri-

   26. RORory O’Driscoll35:16

       No, it makes sense. It makes sense

   27. HSHarry Stebbings35:17

       ... when we did it, when we did it, we were like, "This is total brand. Never expected."

   28. RORory O’Driscoll35:22

       No. No, and I think that the-

   29. JLJason Lemkin35:23

       Yeah, but then you... And it's great, and then, but then as you get later into the fund, you're like, "Well, so what?" [laughs]

   30. RORory O’Driscoll35:30

       [laughs]
5. 39:06 – 45:30

   Why Datadog’s Best Quarter Ever Still Tanked the Stock

   1. HSHarry Stebbings39:06

      on, I do wanna... I, you guys are gonna be exceptional on this, and it was nuts week in terms of earnings in many respects.

   2. JLJason Lemkin39:12

      Yes.

   3. HSHarry Stebbings39:12

      I wanna start on, I wanna start on Datadog 'cause wow, best net new ARR quarter in company history, 260 million ARR in the quarter. Initial reaction, pretty positive, and the stock is down 10% in today and lower than before results. And I just, I just couldn't get my head around this, guys, honestly. It seemed great, and the market puked.

   4. RORory O’Driscoll39:38

      One of the things that when you talk to CEOs of public companies, and you should do this thing, other than the obvious, you know, major beat, major miss, and we'll talk about one in a second. For all the middling things, if you talk to a lot of CEOs... And I remember we used to play this fun game on some of the boards where you, you'd look, you'd know your numbers, and you wouldn't know the market's reaction to those numbers, and you'd try and speculate. And at least half the time you're wrong. It's actually a very fun game to play on a public board. You have the earnings call internally, the internal thing. You look at the numbers and you say, "Okay, the stock's 32. When we announce these numbers, up or down and by how much?" The error rate is massive. In other words, uh, perfect information doesn't tell you shit. It's, it's, it's, it's incredibly hard. Other than the obvious, when you miss by 20% or you're beat by 30, the s- it's pretty obvious what happens. But in the middle, it, it, it's very hit or miss, which is the odd thing. I just offer that as a kind of a prelim comment. I remember watching my CEOs internalize that. So I actually, I've stopped worrying about it. I've really internalized it. 'Cause remember, you know what you did relative to your budget, so you know how you feel as a board member or a CEO, one in the company. They're comparing, they're comparing your numbers to two things. One, their internal estimate of what they thought you were going to do, which you've no visibility to, and then even more zanily, the Keynes quote, what they think everyone else thought you were going to do to try and figure out what happens. And if you look at Datadog, the stock went up in the aftermarket, right? In other words, people looked at it and said, "Oh shit, this is good. Stock up." Next day it's like, "Oh, it's not good. Go down." My big aha is it, it, it's like dealing with a deranged madman trying to estimate what the street will do. I spend no time on it. Utterly unknowable.

   5. JLJason Lemkin41:26

      So there's folks that are directly benefiting from the AI boom. They're selling AI products, N8N and others. Then there's folks that are benefiting because AI is exploding. So apparently OpenAI pays Datadog $240 million a year, okay? Um, and so what's happening is, and I, and I'll give you a very small example. Harry and I are both investors in a company called RevenueCat that po- powers 40% of all mobile subscriptions, okay? And it is already, it, it, its usage has already doubled this year from when it ended last year, even though it's not an AI company. Neither of these are AI companies. But RevenueCat's more extreme, but all the AI guys are using their product. So it's very exciting, but it also has concentration risk because there's, there's only so many of these large players, right? There's pricing pressure. And OpenAI has already said they're gonna renegotiate down the Datadog deal, as they should, right? So there's folks that are exploding not because they're AI, but because of the AI economy. But I, I, I, I'm not sure that's why the m- that's why it's up, one of the reasons, um, it's up. But there's also a fragility when you're indirectly benefiting from this. But it, obviously that's, you know, that's a lot of incremental revenue for Datadog. A $240 million a year customer is, is high. But the incremental revenue in spend is from AI, right? If you want... If you're a B2B company, you gotta go get AI revenue, right? 'Cause you're not getting it from John Deere and, uh, the rest. They're spending the same.

   6. RORory O’Driscoll42:53

      You, you, uh, in fact, probably a little less. No, you're exactly right, 'cause that's the meta point zooming out from this, right? Is that-I mean, you see the data. Almost the entire GDP growth is AI CapEx. So if you can co-attach, even if you're not AI CapEx, if you're not Nvidia, if you're not... If you can just co-attach to the money, you're gonna get a pop. Now, it may not last very- But yeah, the spend is happening there. That's where all the CapEx is going. So it's literally, I always think of what is the bill of materials to build AI? If I wake up tomorrow morning and said, "I wanna be safe super intelligence. I wanna build me one of those LLM models," you just make a list of the things you need, right? And it starts with very di- you need chips, you need a data center, you need power, you need some coders, and then you are... It's all the little things. I need to keep the server running, I probably need Datadog. I need, you know, what- all the other software tools to make it happen. And if you just co-attach to that, it's the biggest single sh- I mean, it's showing up now. Funny thing is the productivity's not showing up, the revenue's not showing up at the app level, but the CapEx is showing up in the GDP numbers that's so big, right? So you're exactly right. And if you can get your piece of that, then I'd pref- I mean, I'd prefer to have it than not. I mean, people are saying, "Oh, it's a bad $120 million concentrated risk customer." It's a downside better than not having that $120 million customer.

   7. JLJason Lemkin44:14

      No, and it c- listen, I don't know how much of like-

   8. HSHarry Stebbings44:16

      But I'm sorry, i-i-i- is this a gift or a curse? And forgive me for my naivety, but the concentrated risk of 260, yeah. And if OpenAI continues its trajectory, it'll be 520 in a year's time.

   9. RORory O’Driscoll44:26

      Yeah, whatever. It's a... And yes, it's a gift. We, we agree. I think both of us are saying the same thing, Harry, which is the people who are worrying about it, that's why you're getting into the second order derivative thing. You know, like the, the, the people trying to value the stock, they're not just saying... I mean, if you were the operator, you would be coming into your board and you're saying, "We killed it this quarter. We signed a $100 million ARR deal with the most exciting company on the planet. It's fricking amazing." End of conversation. And no one is gonna say, "Oh, I'm really worried that they might kind of reduce the price in two years. That's bad." They'd be like, "Dude, we're so happy," right? And as a board member, I would be too. You know, Wall Street get, as I say, it has this different role, which is not just guessing what you are now, but guessing, you know, how you're gonna be compared to what they thought you were gonna be and, you know, th- they're paid to second-guess themselves. As I say, my, my best advice is ignore it. Maybe two years' time you'll be dealing with a renegotiation. But as you point out, maybe you'll be dealing with the fact that OpenAI is growing so quickly that the contract has doubled and they don't have the engineers to waste on kind of engineering you out, and you

6. 45:30 – 1:01:33

   Palantir’s 50% Growth at Scale – Can It Last? Is Palantir Overpriced?

   1. RORory O’Driscoll45:30

      just take the check.

   2. HSHarry Stebbings45:30

      Are we just seeing like big-ish tech just win? Like, just invest in big-ish tech. And what I mean by that is like AppLovin crushed, you know, HubSpot gains, Shopify are ripping, Palantir obviously ripping. Like these are not Mag 7 quite. They're great companies. They're not Mag... Just be long big-ish tech. The wh- AI wave is mega.

   3. RORory O’Driscoll45:53

      That's true. I mean, I'd say I think there's maybe two things going on. One is, yeah, the AI wave is mega, and I think, yeah, pr- definitely Palantir, probably Datadog, not so much Outdog, HubSpot, and Shopify benefiting from that, right? But then the second thing is, you know, rather than this whole, oh my God, SaaS is dead thing, I think what you're saying is, and I think it's correct, is that these markets are big and huge, and if you're the winner and you're public and you've got scale and you execute well, add a little AI, you can defend your position, grow nicely, kick off a ton of cash. I wouldn't like to be a little startup trying to enter the HubSpot space or the Shopify space. But yeah, you know, it's the death of SaaS has been overdone for the public market winners, which is a very different thing than saying you'd want to invest in, quote, "the next Shopify at a billion pre, at a billion in revenue," right? No, these guys, they have clear market leadership positions. They, on every case, have strong founder CEOs. They have profitability. And yeah, the c- the growth re-acceleration this quarter has been pretty real across the board. Even for, as I say, as I say, I'd put HubSpot... I mean, if I was to rank them in terms of their AI and... HubSpot and Shopify are in that, yeah, they're using AI, but they're not direct beneficiaries as much. Um, Datadog in the middle 'cause they got a big-ass contract from the biggest company in AI, so they kind of caught that. And then obviously Palantir, white hot in terms of their AI story. They have brilliantly become the way large corporate America implements AI at scale. It's a beautiful position.

   4. HSHarry Stebbings47:27

      Can you guys help me on Palantir? I always look at it and I go, "Pff, amazing company, but oh my God, look at it. It's so overpriced." And every time I do that, I'm proved wrong and it goes again. [laughs] How do you think about that? And, and legitimately, how would you advise me? I love these shows 'cause I learn from you both.

   5. JLJason Lemkin47:45

      I mean, the growth is f- frigging breathtaking, right? It goes from 12% growth at about $2 billion revenue in 2023 to almost 45% growth at $4 billion in ARR. Goodness, I mean, this has never happened. Forget about w- the fuel, right? The secular fuel. The contracts are getting bigger. Record number of five million and up contracts. The fact that, that they are the AI solution for both commercial and military. If you, if, if I didn't even know how to spell Palantir or what it did, which I think most people didn't even know until 12 months ago what it did. When you see going from 12% growth for a public company of billions in revenue in 2023 to almost 50 today, we've ne- I mean, maybe Rory can up with an example. I don't think in enterprise software we've ever seen that level of re-acceleration e- ever, right? And so you can either, you can either say it's gonna decay like all curves do, or you can say, "Good God, this is my te-" You know, everyone in the public markets, they're 10 baggers. That's what, that's what my social media is full of. What's your 10 bagger, Rory? What's your, what's your 10 bagger? [laughs] And it's, this, it, it's, it, you know, the chart keeps going. This is unprecedented in enterprise software.

   6. RORory O’Driscoll48:52

      Yeah, no. I, look, a- a- across 20 years, about only one in three companies we accelerate for one year, and about one in nine, one in 10 we accelerate for two years. So that's just the data that-

   7. JLJason Lemkin49:05

      That's daunting. [laughs]

   8. RORory O’Driscoll49:07

      And these guys have re-accelerated significantly at scale for two-plus years already.

   9. JLJason Lemkin49:12

      Yeah.

   10. RORory O’Driscoll49:12

       So I can see how you can build a model that say if you go from t- 12 to 23 to 45, you're right. The next question is do you fill in 55 or do you fill in decay at that point in time? And the problem is any exponential curve up can justify almost any valuation. I mean, my gut, Harry, is your instincts are right, which is it's an amazing company smack in the middle of two huge trends, we'll come back to them a second. At the same time, 120 times revenues plus or minus is probably not sustainable. I mean, I saw the data. It looks like... It was a good statistic. Someone says five years of 40% to 50% growth, and then they'll be valued about the same in terms of a revenue model as Google is today. So the interesting thing, and you know, you can have two responses to that fact. Part of me says, "Oh my God, five years where you gotta pull it off, that's a lot." And then you gotta go, "It's not crazy." I mean, you know, you look at it, they... I mean, I'm, I would be terrified of buying it at that price. But the interesting thing about that calculation was you go, oh yeah, it's the beauty of compounding, right? You know, five years times 1.5, you just ended up in an amazing place. Now, I haven't checked that math fully, right? So that's kind of like... I mean, it does feel incredibly lofty at scale. I mean, there's that great Scott McNealy quote about trading at 10 times revenues where he just, you know, walks through how absurd it all is when Sun was trading at 10 times revenues in '99. And every once in a while you should reread that quote, 'cause he was totally correct and it went in tiers. So intuitively 122 times revenues is not a sustainable place. But yeah, they got three huge trends on their side. They're the AI solution for large corporates. They're, um, they are the AI solution for defense, which is having a boom, and they got the administration on their side.

   11. JLJason Lemkin51:03

       Just this last quarter, they closed 843 in US commercial bookings outside of... Up 222%. So help me with the math. 222% at 843 million. I mean, this is, this isn't quite lovable growth, but this is pretty good. [laughs]

   12. RORory O’Driscoll51:17

       Well, because... Yeah, because I think, and this was-

   13. JLJason Lemkin51:20

       222% at 843 million in their commercial division. [laughs]

   14. RORory O’Driscoll51:23

       And, and you've gotta again step back and give credit to the founders and obviously Thiel and Book. Uh, in 2000, I think it was '03 or '04, with a sense of mission around 9/11, you know, built this stuff, you know, then moved into commercial. It was a slog for a while. Some of the early co- commercial customers weren't wildly successful. But they've ended up now whereby one of the things you think about is big companies, there's relatively few places... When big companies wanna do big things with a project like this, y- y- it's not the kind of thing you can give to, you know, little SaaS company just starting out. Big companies need to spend big initiatives with big vendors, and the point is all the other big vendors are old and stodgy like IBM and Accenture, and now you can have these dudes who've been, you know, working for the US government, they've got their whole forward deployed shtick. I see how it's working. 'Cause corporate... I mean, I, I went through the last earnings and actually went through a bunch of the use cases in corporate, and it's all over the place. Yeah, supply chain planning, you know, scheduling for an airline. It's a whole bunch of very different stuff, right? And you know, so you say how can a single... And a single SaaS app couldn't do that. But what they have is a platform that's been around 10 or 15 years. They have another platform they've added around enabling LLMs, and take that, take the forward deployed engineers, and you know, you can squint, and I deliberately say this not 'cause I'm... You can squint and say a lot of it's services, but who the hell cares? The margins are 50%. And the reason they can get it is they can look, you know, m- the CEO or the CFO of a Fortune 100 company in the eye and say, "We've done 10 of these. You give us the $10 million, we'll get this puppy done," right? And the other two competition is a little SaaS startup that says, "We have $100,000 product that's way more efficient than Palantir, and it'll work, but it'll need a lot of work." And they're like, "Ooh, don't know about that." And the other competition is Accenture saying, "We're gonna build it from scratch." They're just in that sweet spot of they can make the pain go... You, you, you can get your AI initiative as the CEO of a large corporate company. You give them $10 million, you got your AI initiative, they'll probably get it done. It's a golden place for the next couple years. I mean-

   15. JLJason Lemkin53:34

       You know what the other crazy thing about Palantir is? Uh, cut me off, Harry, if you wanna move on, but I thought this was fascinating with Alex Karp. So they're a Rule of 94 company today, right? Pretty good, right? Um, so he said... I mean, he's, he's on fire. Just watch the, his body language. He knows they're, they're gonna crush it, right? But he said that when they will, they will be, when they're 10X bigger, so at $40 billion, they'll have 10% less employees than today, and they're already on the trend of that. And I think when we... There's a meta point. I don't, you know, maybe, maybe he needs a few more, but I think this has been well thought through, and this, this is a hint of the future in Palantir, right? This efficiency level. Microsoft has already reached peak employee, right? Google's already reached peak employee. But Alex Karp going on record saying, "At $40 billion in revenue, 10 times, we will have 10% less employees," I think it's the journey we're all kind of on, but he's, he's out there, 'cause he doesn't give a rat's ass what anyone thinks in his farm in Vermont in sandals crushing the numbers, right? But to me, this is the future of B2B companies just trying to get to this, right? Massive, massive scale with few humans.

   16. RORory O’Driscoll54:41

       Yeah. I wouldn't pencil it into my model, but it doesn't matter because as you point out, 10, 50% operating margins today don't bother getting more efficient, just scale. So-

   17. JLJason Lemkin54:50

       Well, he is getting... He's not, I don't, he's not doing it obviously directly for the margins, right? But it's, it's how to structure the company. But-Uh, this, this may be where the future is. Like, he just, he's just so, he's so far ahead, he can make these, these, these visions and bets, right? And not, not be hiding in 7% growth, um, you know, as, as some others. I just thought that was, that's the future. I think this age of these bloated companies is just, is... And, and same with, you talk about Shopify. Shopify is at 1.3 million in revenue per employee now, and it's re-accelerated, and it's re-accelerated. I don't think it has... We can talk about Shopify if you want, but the efficiency at Shopify is, not at Palantir levels, but it's, it's breathtaking, the efficiency. The breathtaking. And R- Toby's ruthless on this, and founders should be too. Founders should be ruthless on this. You don't need half your company, and Palantir and Shopify are proving it. You don't need half your company. You literally don't need half the people working at your company. You don't need them today.

   18. HSHarry Stebbings55:46

       I'm glad that half isn't listening to this show. Um [laughs]

   19. JLJason Lemkin55:49

       Work hard, work harder. Learn your product. Ask yourself, are you actually valuable to your company? Be honest. Not just are you a people person. What i- what are you doing at your company where you're irreplaceable? It's not that you're gonna get fired or anything. You j- well, you may be moved out. It's just your future is uncertain if you're not irreplaceable. It's just uncertain.

   20. HSHarry Stebbings56:06

       Uh-

   21. RORory O’Driscoll56:06

       You're not getting fired, Harry. You're just getting moved out, you know?

   22. HSHarry Stebbings56:10

       Oh, there we go. I, I... It might be slightly hard to move me out, Rory. I feel slight protective layer around me, but it's good to know that-

   23. JLJason Lemkin56:16

       Yeah, but your team should be uncertain. You may not need them for investing or content production in two years. You may not need anyone else helping you to invest.

   24. RORory O’Driscoll56:22

       I was more giving Jason a hard time on the Ethan at the moment.

   25. HSHarry Stebbings56:25

       Okay. It's, this is an interesting question. Do you want your team to feel uncertain? Do I want my team to be scared that they might lose their job? Now, it in one hand forces them to find the irreplaceability of their roles, and it also can make some people uncomfortable, horribly uncomfortable, scared. It's not a nice thing.

   26. JLJason Lemkin56:43

       My learning is it doesn't matter anymore. Um, there's so much uncertainty out... Like, we coddled people for since 2020, like, sec- since, since the middle of 2020, and then we coddled them like there was no tomorrow until early 2022. T- take three jobs, work two days from home. Life is eas- like, take care of yourself, and if you can, come to work, but take care of yourself, everybody. Take care of... And then ev- Shopify had twice as many employees at the peak as it has today. Shopify. Forget about them. Twice as many. And Toby was, was telling everybody to, to relax, guys, in, in, in, in late 2020. "Take, take it easy, guys. The, the, the commerce will come." Now he's freaking ruthless, isn't he? He's ruthless. Zuck's ruthless. Karp's ruthless. And if you think you're gonna win in B2B, if you're not ruthless, you're gonna lose. So I don't think you should scare p- I don't think you should tell people, "Hey, if you don't step up, your job's over." I actually think that's a dated approach. Just, just step up, and they'll quit. I'll, I'll give you a small example if you want this issue. They'll just quit, right? There's a tool, for example, that we use. We use s- 10 AIs now at Saster, up from zero at the start of the year, okay? Uh, but one is a niche tool called Momentum.io, okay? It's a cool startup. Rory, you should do the next round if you can maybe. And it basically mashes up everything, Gong, Granola, everything, so that you have real-time insights to everything your sales team's doing, okay? It's, and it, and it-

   27. HSHarry Stebbings58:04

       Oh, I'd-

   28. JLJason Lemkin58:04

       And nothing's-

   29. HSHarry Stebbings58:05

       ... I turned down that pre-seed. Is it good?

   30. JLJason Lemkin58:07

       It's a good product. It's a good product. It's not perfect, but, um, here's my point. Here's what's interesting. It's not that any com- it's like a lot of AI product. It's not that any int- any in- individual component's all that interesting. It's how it synthesizes it elegant through three AI. But I'll tell you, every company, and I got turned onto it then through Kyle Norton at Owner, and I brought it into other companies. Every single time it's been brought in, someone on the sales team has quit the first day. Quit every single time, they quit the first day, including on our little Saster team, someone quit on the day we brought it in [laughs] . He quit that afternoon, um, because the gig was up. The gig was up. And so that's why, Harry, I don't know if it matters whether you prepare the team, because there's gonna be so much AI around us, the gig's gonna be up one way or another. You're gonna... If you're not productive, if you ca- if you've, if you were too busy to get the podcast out this week, if Harry had to do it himself, if you forgot to do the TikToks, the gig's gonna be up across tech, so you don't have to coddle people or scare them, I think. They're just gonna s- get a report every day that, you know, you didn't push out enough code at Shopify, you're gonna get pushed out [laughs] .
7. 1:01:33 – 1:14:19

   Shopify’s Ruthless Path to 91% Revenue Growth With 30% Fewer Staff

   1. RORory O’Driscoll1:01:33

      I, I think that's, that's an appropriate level. I mean, you should feel the need to hustle there. I don't think that's called fear. You understand me? You, you, you're putting on a weird face, like as if you disagree. You think that-

   2. HSHarry Stebbings1:01:42

      Well, no, I j- I just think there's like a generation of 23 to 30-year-olds who aren't really masters of the craft in any way, don't really know what they wanna do, and so they're doing SDRs or marketing, and they're about to get a train hit them in the face, and they're gonna go, "Oh, shit." And I don't know what else-

   3. JLJason Lemkin1:01:59

      Well, let me give you, let me just give you a quantitative version of it

   4. RORory O’Driscoll1:02:02

      But they'll pick themselves up and keep going because you're young, you've gotten a good education. You know, yeah, it'll be a little bit hard-

   5. JLJason Lemkin1:02:07

      Yeah

   6. RORory O’Driscoll1:02:08

      ... but, you know.

   7. JLJason Lemkin1:02:08

      Nah, they're checking out. Um, just to pull the numbers, 'cause Toby, Toby did do the night sh- the, the black and white at Shopify. Okay, let's look at Shopify for a minute. From peak employee was tr- in, was 2022, 11,600 employees at Shopify. Since then, revenue has grown 91%, pretty impressive for a company at 11 billion in revenue. Um, and employees have gone down from 11,600 to 8,100. Gone down while revenue's up 91%. So I'm sorry if, like, you, you, you're, you're worried about... Like, look at Shop- 'Cause, 'cause Toby, Toby and now, was early on this. He went nu- he went into beast mode, okay? And he destroyed the competition. BigCommerce doesn't exist. WooCommerce doesn't exist anymore. Um, Amazon was never a threat even though it wasn't a direct competitor. He went into beast mode, and he just got there earlier than the, the, the cracked kids in San Francisco. He just got there earlier. And Shopify is doing 91% more revenue with 30% fewer employees. And if you wanna fight that, like people would say I was toxic or it was hurting their feelings a couple months ago on LinkedIn. I'm like, "I'm trying to help you." Like, you wanna be one of the 8,100 at Shopify or not? [laughs] You gotta decide, um, because you can't leave work at 3:00 to get your salad and go, and go work out. It's just not gonna work. You're never gonna learn the product. And even worse, you're never gonna beat the AI that knows your product cold. This is the coming reckoning for these people is that the AI knows sh- every Shopify feature and every Shopify, every AI at the Shopify merchant knows the products better than the humans. AI's smarter than most humans already. Pre, pre-AGI, it is smarter. Have you ever talked to an SDR that even understands the product they sell? Any 22-year-old? Like once in my career have I talked to a 22-year-old SDR that knows the product better than me. It's worse with AI. These people are gone. Uh, Shopify is gonna be at 7,000 and 200% bigger. You gotta adjust, right?

   8. RORory O’Driscoll1:04:05

      Rory, when you-

   9. JLJason Lemkin1:04:05

      The ship's left the station.

   10. RORory O’Driscoll1:04:07

       A- and do you think... And the last question here, scale. I, I, I wanna... I, I feel, I, I agree with that. Look, the automate-

   11. JLJason Lemkin1:04:13

       The Shopify numbers are stunning if you think about it, isn't it? 30% employee reduction, 91% revenue growth, and it's just starting. It's just starting. That, and that is before all the AI mandates went out, right? It's concurrent, but it started before everyone... Everyone in tech is now, before you replace someone, find an AI first, aren't they? It's become the mantra, so it's gonna accelerate.

   12. RORory O’Driscoll1:04:34

       And then just again, yes, agreed. And I think that we... But I'm going back to the scared comment, uh, 'cause I, it's funny, I sound like I'm arguing, but I'm actually agreeing. I think... My guess is that person's paying 100 grand, maybe they only get 80, but whatever. I, I, now this sponsor, the thing you should be scared about is you, and you should be scared, is if you're onboard something like Shopify, what you've really lost there is the opportunity to participate in four years of equity that could have made you four million bucks, right? That's, I mean, I suppose, for fair, that's where fear... Anyone who's in the kind of j- I'm scared every day because you should never take your job for granted, especially if you're in the kind of job you c- you make, yeah, millions of dollars if you do it well, right? And I think that's the level at which you can be scared, right? And I think, I, I look, and, and those folks, they should've been scared, I think not because they went for the 100 grand a year job. I'm just trying to think of the equity, the thing.

   13. HSHarry Stebbings1:05:26

       I, I, I get you, Rory. The, the opportunity cost on the upside of the equity is insanely real. But I, I, I, uh, but, but having come from some, a family that's lost everything, I worry about downside. And quite frankly, I don't think there's a ton of employers that are queuing up for a 23 to 30-year-old grad from a mid university that's not a specialist in anything in a world of AI, cost-cutting, and economic questionability.

   14. JLJason Lemkin1:05:53

       No, no one wants to hire them. No one wants to hire them.

   15. RORory O’Driscoll1:05:55

       They'll have to suck it up and learn to do different things, but to a rounding error they'll be fine. I mean, if you look at the graduate unem- the anecdotes are there, but, and it is higher than it's been, but I'm not gonna cry for someone in their 20s who has to adapt, right? It's a very different feeling. Like put it this way, the kind of fear someone feels at 55 when their job as a fill in the blank could go and they've got nothing ahead of them for 10 years, that's fear, right? And I've seen that kind of fear too, right?

   16. JLJason Lemkin1:06:23

       It's gonna grow.

   17. RORory O’Driscoll1:06:24

       You know, with all due respect, are you what? The tw- I think we're actually in the end saying the same thing.

   18. JLJason Lemkin1:06:28

       I think-

   19. RORory O’Driscoll1:06:28

       You were vastly overpaid. You could probably get another job. It won't be as good. It won't have the equity upside of 2030.

   20. JLJason Lemkin1:06:33

       You're not even gonna get another job.

   21. RORory O’Driscoll1:06:34

       They, they will. They will. I mean, they'll be fine.

   22. JLJason Lemkin1:06:38

       Listen, if a coup- until maybe 18 months ago, if any seasoned B2B executive that I knew needed a job, okay, that I knew reasonably well, I'd get him a job by an email. I could reach out to someone in, not even in my portfolio, extended network, founders I met that I knew, met on 20VC, I could get them the job. Today, odds like are 10% I can get them a job. One, the fire's not there. Two, they're not willing to be cracked, right? Three, they're not willing to come to the office. Four, they don't know the AI tools. I can't get, I can't get them a, the, a job anymore.

   23. RORory O’Driscoll1:07:08

       You're interesting but you're jump- are you talking about the 50-year-old guy or the 20-

   24. JLJason Lemkin1:07:11

       Yeah, now I'm talking about 38, 35 to 55 to 95.

   25. RORory O’Driscoll1:07:15

       No, those folk-

   26. JLJason Lemkin1:07:16

       I can't find them any jobs, the veterans. They're not-

   27. RORory O’Driscoll1:07:18

       Got it, and I totally agree

   28. JLJason Lemkin1:07:19

       ... not a single job. I said go to Cisco. I'd say go to Cisco before Cisco realizes they don't need you.

   29. HSHarry Stebbings1:07:24

       Guy, guys, the, the thing I love about these shows is learning from you. I, I learn from you on Palantir. I don't fricking get monday.com has a n- has a good quarter. It's down 30%.They... What the f- What?

   30. JLJason Lemkin1:07:41

       Well, Rory may have a more nuanced view than on this one. I mean, I know the Shopify data and Palantir data. I, I think Monday is actually, um, the one that should worry us more as investors, right? Which is that Monday was priced to perfection but growing to perfection, right? And the, you know, I, I don't think it's this quarter, it's that they're... it came, came up a little soft in where they thought the growth would be. But it's still as, you know, elite. [laughs] So the bar, the bar, this 50% at 500 million ARR and never missing a quarter and keeping it going, we, we throw around all these numbers at shmuvable and lovable and NAN, but man, the bar's high. Mon- That's the only reminder to me is like, you know, just the expectations are so high today for the top performers that the ones that have those outlying revenue multiples, it's just so high.
8. 1:14:19 – 1:20:29

   Are Seed and Series A Valuations Now at Dangerous Highs?

   1. HSHarry Stebbings1:14:19

      guys, we mentioned that, like, actually where is the upside and where's the opportunity. Carta's, uh, State of Tw- VC Q2 2025 came out. Couple of things I wanna dig in on, and then we'll wrap. But highest valuations ever for Seed and A, I thought was an interesting one. And it goes back to what we said there about actually comparing to Monday. How do we feel about risk-adjusted where dollars are best? And how do you feel when you see highest valuations ever for Seed and A? Do you see that reflected in your daily work?

   2. JLJason Lemkin1:14:49

      But the Carta data and everyone else data also says there's fewer seed rounds been done than 12 months ago and 24 months ago. So Rory would be better at slicing the data. You know, everyone should be... Everyone that doesn't read this stuff, founders especially, be cognizant there's fewer deals being done. And it's worse than that because the deals are very specific, right? So it makes... Forget about the, the, the, uh, the, the, the breathtaking growth of A- AI native leaders. Um, it makes sense if you're concentrating into winners, this would happen, right? We're also just concentrating into winners across the board. It's not just 10 deals for 40% of dollars. It's everywhere we're seeing concentration.

   3. RORory O’Driscoll1:15:26

      Agree. And that, to me, was the much more interesting point. The concentration... Sorry, Harry. The concentration in late stage rounds-

   4. HSHarry Stebbings1:15:33

      It's called, it's called Revange, Rory. Don't worry. It's fine [laughs]

   5. RORory O’Driscoll1:15:35

      ... and, uh-

   6. HSHarry Stebbings1:15:35

      The leader of all collab lists

   7. RORory O’Driscoll1:15:37

      ... and, and, and the concentration in late stage rounds, you know, is just amazing, right? And, you know, w- we run an internal process. We look at every deal done. We look at the total dollars. We do it every quarter. For the last couple of quarters, we've literally had to back out one or two deals because they just make the statistics so weird. Like in Q1, well, you know, the deals we forecast in total, you know, deals in our sweet spot, enterprise B2B, teleph- totaled, I think, $12 billion in total dollars raised. OpenAI raised 40 in the same period. It's just, like, literally twice our entire addressable market for us and 100 other A and B firms was done in one deal. That's a huge level of concentration. Same thing in, you know, Q2. I mean, you have, interesting enough, in some deals, Meta gets reported as an investment in Scale AI because they, quote, "put the money in." You know, so in theory, it's a venture investment, which is absurd, but you have big rounds for Anthropic, xAI, where literally, you know, your entire sector is smaller than one round at the super late stage. That, you know... I've seen concentration, but never to that extent. It's, it's just-

   8. JLJason Lemkin1:16:45

      It's unpre- the concentration's unprecedented, right? It just is what it is, right? People should be aware of that.

   9. HSHarry Stebbings1:16:49

      Is, is that a, uh, is that a momentary element of time where we are in the cycle, or is that going to be a continuing feature of a new age of venture and technology?

   10. RORory O’Driscoll1:17:01

       It's probably not gonna compl- look, it's not going to go back completely to where it was. Do I think there's gonna be a $40 billion round every second Monday? No. Right? But there's no doubt... I mean, there's a couple of industries now that are now appear to be venture accessible that are fairly capital intensive. Obviously, LLM model creation, obviously a lot of defense. So there does appear to be a higher propensity to do more capital intensive industries. That's one thing. And then the second thing is, the more you stay private for longer, the more this becomes a phenomenon, right? Is that, you know, it's literally just, it's the effect of holding them longer means they become bigger companies. Bigger companies just to run their balance sheet. You know, you can... If you're running a $100 million revenue company, you can have $20 million on your balance sheet, cash flow positive, you're fine. If you're running a $10 billion company, even if you're profitable, you probably need a couple billion bucks on the balance sheet just to, you know, manage fluctuations. So as these companies stay private for longer, there's gonna continue to be this steady stream of fairly humongous later stage financings. Um, you know, and as I say, and then add to that the nature of the businesses, the, the model companies, the defense companies are, you know, capital hounds in a way that, you know, SaaS or consumer internet even wasn't. So yeah, I think it's maybe not as pronounced as now, but it ain't going back to everything being As, Bs and Cs and nothing being more than a $100 million raise.

   11. JLJason Lemkin1:18:26

       It ain't going back, and everyone that wants it to go back or give that dated advice, um, you know. We had Brian, Brian Halligan was so good, right, before. If, if folks that got this far and haven't watched him, that was S tier. Go watch that one. And his point was, when he's talking with Sequoia, he's like, "At best, half of what I learned at HubSpot matters today." It's true in venture, right? We're not going back. The AI is so much bigger than cloud and so different, and unless the LPs cut off the, uh, the valve, uh, it's, we're not going back to the old venture.

   12. RORory O’Driscoll1:18:57

       Yeah. Which, you know, has been a good fact for the large firms. Just to put it out, like, you know, it's the synchro- the synchronicity of people having a lot of money, putting it out in lots of deals in 2021, that not working. And you could have said, and I, I might even have guessed, that the next stage of the movie was kind of real retrenchment on those firms because, you know, you'd seen that doing 100 deals at 10 billion pre didn't work, and maybe you can't deploy that much capital. But along come this crop of extraordinarily good companies like, you know, OpenAI, like Anthropic, which, where you can deploy large amounts of capital. I, I think it really has providedJustification for the opportunity for those larger funds to say, "Hey, look, you can't put a billion dollars to work in two or three model companies." And, you know, you old world of thought in ventures, oh my God, there's no diversification, that's terrifying, and it's not our business. But I can totally see talking to an LP and saying, "This is the only way to access that risk. If you wanna access that risk, you need this vehicle." And that's why they exist. It's, it's, it's been marvelous for them.

   13. HSHarry Stebbings1:20:05

       Oh, I've com- I, I've said this before, I completely changed my stance on, like, the mega, mega platform funds being able to deliver actually great returns. 'Cause if you can move a billion dollars into OpenAI at 30, like Josh and Thrive did, I'm not sure what their ongoing check was, holy shit. There are very few opportunities where you can get a 10X on a billion dollars. And actually, now with outcome scenarios being so much bigger, I'm much more bullish.

9. 1:20:29 – 1:28:46

   Can a Single Founder Build a Unicorn?

   1. HSHarry Stebbings1:20:29

      Um, final one and then we'll do a quick fire or Kalshi. Um, do we believe in the one person billion dollar startup? It's something that's so often hailed.

   2. RORory O’Driscoll1:20:39

      As a theme, I mean, Jason articulated the numbers really well, as, um, as a theme of less people doing more, yes. But it's kind of in the limit thinking. I mean, you know, it's just hard to imagine. Like by definition, you can't talk to any customers. Like, what would that person do on a da- I mean, a billion dollars start, what would they do? Right? What would they not do? I mean, how would you, how would you run the key functions of a business? Like who'd make the... Doing the accounts alone. Stop. It's, it's an idiot comment in the extreme, right? If you do it, if you run a company with a billion dollars in revenue, you're probably making some money. You gotta file the tax... Maybe you can outsource everything, but you end up just, yeah, someone's gotta meet the accountant, someone's gotta review the tax return. Like, even if your only problem is putting the fucking money in the bank and paying the taxes, you're gonna need people. But of, is headcount gonna be less? Absolutely. Is it gonna be one? It's, it's, it's, it's a metaphor. It's not a reality. Jason's gonna argue with me.

   3. JLJason Lemkin1:21:35

      No, I... Well, two things. One, a- as I've said before, I, I, I take everything Sam Altman says, I think through it very carefully now in a way that I thought was marketing hyperbole going to the beginning of this conversation to get attention. Now I, I believe it's all carefully thought through in signaling. Um, look, I, I don't, you know, the one person... It, it has a little structural risk in a billion-dollar company, a little hit by the bus risk, [chuckles] even if it were possible. I actually think that if you allow for some outsourcing agencies, um, resources that come and go, I think we will see a bunch of 20, 30, 40 person billion dollar companies because a core of engineers, a bunch of AIs making... And people are gonna be like, "You know what? Dude, not, I don't want 100 sales, uh, reps." And if you don't, and if you're more SMB or self-serving, you don't need the forward deploy engineers of Palantir. I think folks will, are gonna make a trade-off with AI and leaner teams, and they're gonna say, "I'll do more PLG self-serve, tr- have a little bit of trade-off from humans so that 30 of us can run a billion dollar company together." Software, you used to, you used to, you used to write software, stick it on a CD-ROM, uh, and you'd write once and a million people will buy it. I think AI is gonna be the renaissance of that. It's gonna be the renaissance of that, and we will see it. And people wanna work with 30 or 40 great people, and they're gonna s- they're gonna use AI to n- to try to not hire the other 950. They're gonna try to use it in any way they can. And a- agencies, outsourced accounting, out... Like, when we say 30 or 40 people, you're gonna need a lawyer, you're gonna need accounting, but it doesn't need to work for you. They don't need to work for you. And they, that accounting firm or law firm may be AI-powered itself, right?

   4. RORory O’Driscoll1:23:21

      I, I, I kinda buy that as an, uh, better argument than the one person. Like, I mean, look, there's one, there... In one sense, there are solo GP billion dollar funds today, so you can argue there you are, but they don't just have one employee, even Alad Gil. They have some junior people, they have some account, you know. You, you have stuff, right?

   5. JLJason Lemkin1:23:38

      Yeah.

   6. RORory O’Driscoll1:23:38

      I think Jason's description. It would be fun to get someone like, is it Basecamp or Zapier on here who has probably run the thought experiment. You know, if I'm, if I've been running a business with wildly profitable with 50, 100 people, I'm willing to bet they've sat down and said, "With AI, can you grind it down to 30, 40? You know, what are the natural limits of a pure PLG software company? You know, where, how far can you go and no further?" Right? That would, uh, 'cause-

   7. JLJason Lemkin1:24:06

      Yeah, but they're gonna... But let, uh, I'm, I'm doing it accidentally. If we're lucky, it's not as easy, but if we're lucky, SaaStr Inc. will do 20 million this calendar year with two people. Two people. Two people. And depending on how you count them, like two, two, two employees. Now, we have other humans. We have outsourced accounting, which is great, right? Uh, we have some contractors, but we have 10 AIs and two people doing 20 million and I, we sorta hate it, but we would never go back. [laughs] Never, ever, ever go back.

   8. HSHarry Stebbings1:24:37

      How, how big is the house that, that you're buying in Yellowstone? Is it big enough for me and Rory to come and do a roadshow?

   9. JLJason Lemkin1:24:42

      Well, there are, you know, to, to support you and Rory in London for 3,000 people at London, there are some physical costs, unfortunately. It's not a 90% margin, right? But, but it, but, but the work, but it does tie to the work, right, in a sense, right? Um, and, and there's trade off. Like, we could be doing more revenue, we could be doing more s- marketing. We, like I don't wanna do that stuff, and we don't wanna do it. So that's why I think... But, but like, as I said, our AI BDR we deployed this week, it set up three meetings in the last two days s- for six-figure sponsorships. That's the trade-off people are gonna make. They're gonna say, "I'd rather spend, I'd rather orchestrate these AIs than deal with people, 100 people quitting every day because they wanna go to yoga or to weightlifting," or, or, or, or they just don't, they're not gonna wanna do it this generation. They're not gonna wanna do it. I don't wanna do it.

   10. RORory O’Driscoll1:25:27

       God, you just loathe this generation. I, I, maybe it's 'cause I have kids.

   11. JLJason Lemkin1:25:30

       I lo- I, I love everybody, but, but people just don't, they don't wannaIf you can choose an AI, you're gonna choose an AI over an unreliable resource

   12. RORory O’Driscoll1:25:38

       And but when I show up to SaaStr in London, there's gonna be-

   13. JLJason Lemkin1:25:42

       Yeah

   14. RORory O’Driscoll1:25:42

       ... 50, 100 contractor people running a business, just to be clear, to be grant- am I correct? There's gonna be-

   15. JLJason Lemkin1:25:47

       Yeah, there'll be 100 people scanning badges, and so I'm, I'm... That's, that's my original point. People will do... They'll be transitory resources, um, but the, the, the head count... And going to, to your earlier point, this is a tough... To Harry's point, the equity will not go to those people. The equity will get more and more concentrated. That means people will make more and more money from equity, right? But it will become isolated and fewer and fewer people making more and more money. We're already seeing this in the, in the big AI wars, right? We're already seeing the $100 million engineer packages. We're gonna see the best salespeople that are orchestrators be able to make 10 million in sales, not one million, which is what a top rep's today. We're gonna see the top sales folks make 10 million, but they're gonna be AI-fueled, and they're not gonna have 200 reps under them. They're gonna have 10.

   16. RORory O’Driscoll1:26:33

       Yes. And the other 90 reps-

   17. JLJason Lemkin1:26:35

       And they'll get 10 million bucks

   18. RORory O’Driscoll1:26:36

       And to be clear, and the other 90 reps will have intermittent jobs scanning badges at SaaStr. And this is your point, where if you had a half-

   19. JLJason Lemkin1:26:44

       Maybe

   20. RORory O’Driscoll1:26:44

       ... million-dollar business, you won't starve, 'cause you can get jobs scanning badges at SaaStr, but you won't be living the life you led. That's your point about fear. Going back, I've been thinking about what you said earlier. That-

   21. JLJason Lemkin1:26:53

       It's a real issue

   22. RORory O’Driscoll1:26:54

       ... the... And I think that's... As I say, I really hope we don't live in a world where everyone's scared, 'cause that's not great. But if you're getting more than the national median wage, you should ask yourself, are you contributing more than the national median amount? And the h- and the more you're getting, you know, the bigger the gap. And you're right, there are a lot of jobs in tech, I do believe that, where the gap between what you're getting now and the gap you'll get in your next best use could be 70, 80% of your current income.

   23. JLJason Lemkin1:27:22

       Yeah.

   24. RORory O’Driscoll1:27:22

       And that would make me scared. So I'm coming around to the view that you're right. Unfortunately, more people have to be scared. It doesn't make it a great world, but you're right. Even, even at the 100 to 200K level, you probably won't get a replacement slot.

   25. HSHarry Stebbings1:27:38

       Jason, you see, we're, we're, we're even convincing the great master.

   26. RORory O’Driscoll1:27:42

       No, no, no, I'm, I, I-

   27. HSHarry Stebbings1:27:43

       We're turning him

   28. RORory O’Driscoll1:27:43

       ... am convinced by facts, and eventually, Jason-

   29. HSHarry Stebbings1:27:45

       I am

   30. RORory O’Driscoll1:27:45

       ... will run out. His, his statistic about two people running his business blows me away. I'm just-
10. 1:28:46 – 1:34:09

    Kalshi Quick-Fire Round

    1. JLJason Lemkin1:28:46

       the job-

    2. HSHarry Stebbings1:28:46

       Okay

    3. JLJason Lemkin1:28:46

       ... you need.

    4. HSHarry Stebbings1:28:47

       We're gonna do a Kalshi quick-fire. Uh, uh, Kalshi's obviously this prediction marketplace, bets on cool real-life things. Uh, I'm gonna create my own first one in following our conversation 'cause I really want to. Uh, Palantir over or under five-year market cap 2 trillion. Its current market cap is circa 450.

    5. RORory O’Driscoll1:29:09

       I love the company, and I th- they've exceeded all expectations. I just think compounding to 2 trillion from here is pretty damn hard. So I'm a no.

    6. JLJason Lemkin1:29:18

       Hmm. Gosh, I, I'm pretty decisive. I'm just comparing that to Salesforce. Salesforce at 40 billion worth 222 billion. Um, and now I'm feeling gravity when I'm looking... Literally, I'm looking at the number one and, and number two by market cap. It's, you know, Palantir's worth almost twice as much as Salesforce as we write this, and Salesforce is number two, right, at 40 billion. So I'm look- and I, I... The AI is bigger than cloud, so that's the reason it's gonna happen, right? Um, but I'm worried about a, a gravity when Salesforce is only worth 222 billion as we record this. So I'm gonna... I, I wanna take this bet, but I'm gonna go the, I'm gonna go the under.

    7. HSHarry Stebbings1:29:56

       Okay. We've got, when will Stripe officially announce an IPO, before June 1st, '27 or after?

    8. RORory O’Driscoll1:30:05

       The correct response is, "Does it matter anymore?" I mean, aren't they so post-public? [laughs] I don't know. It trades all the time. I mean, yeah. I'm sorry. I'm being a little bit like, whatever. Cashflow positive, wildly so. They're just doing their thing.

    9. HSHarry Stebbings1:30:22

       But do, but do you think they will go public in the next two years?

    10. RORory O’Driscoll1:30:26

        Yeah. As I said, I'm going back to what I said, 'cause it... If the cost of capital gets markedly cheaper in the public markets, then maybe. But they seem to be more resistant than most, and there's nothing gonna make them do it because they're ca- they're strongly cashflow positive at huge scale, and there's liquidity. So the truth is, it's an idiosyncratic bet, and the Collisons haven't shared their opinion with me, so hell, I don't know.

    11. HSHarry Stebbings1:30:50

        Very honest. Thank you, Rory.

    12. RORory O’Driscoll1:30:51

        [laughs]

    13. HSHarry Stebbings1:30:52

        You're not, you're not chatting to them in an Irish WhatsApp group.

    14. JLJason Lemkin1:30:56

        Over a b- over a beer in the studio. [laughs]

    15. HSHarry Stebbings1:30:58

        Over a cheeky pi- over a cheeky pint with Dario. That was a very, very important sign, I thought. One of the best fintech founders in the world is a moderator to Dario. I just thought it was ironic. 10 years ago people were like, "Harry, media will never work for you, dude, just to let you know. It's not a thing." Okay?

    16. RORory O’Driscoll1:31:17

        True. I think they've, uh, for what it's... I think Stripe do a super interesting job in media with the publishing and all that. They're just, more than most companies, there's an intellectual curiosity there, which I find the most attractive thing about that company. I like the one-

    17. HSHarry Stebbings1:31:30

        Totally agree

    18. RORory O’Driscoll1:31:31

        ... that went public, which is-

    19. HSHarry Stebbings1:31:31

        No, I, I meant it as a compliment. I didn't mean it badly.

    20. RORory O’Driscoll1:31:34

        No, I think... I know. I just wanna pile on now. Yeah, it's two smart people talking to each other. I like the-

    21. HSHarry Stebbings1:31:38

        UhOkay, let's do a final one. Will xAI sue Apple? There's odds for this one, and I know you like your odds, Rory.

    22. JLJason Lemkin1:31:47

        Oh, I see.

    23. HSHarry Stebbings1:31:47

        So yes, $100 gets you $209. No, $100 gets you $151. So Elon has made it pretty clear he's very unhappy with Apple.

    24. JLJason Lemkin1:32:03

        [laughs] And he's already sued, uh, OpenAI. There's a precedent there, right?

    25. RORory O’Driscoll1:32:11

        Yes. Not be... A, because he appears to have a propensity to pick fights with everyone, which is just fun to watch. B, because his dispute with... The only reason he would ev- it's all about the dispute with ChatGPT, and to some extent you could, uh... I mean, I saw a good tweet that basically said Elon's wrong because the whole idea that Apple's gonna favor anyone, you know, they don't need ChatGPT to be wildly successful. They need to figure out their... So it's a marriage of convenience. If... Maybe the better answer is this. If Apple continued to be, quote, you know, "aligned" with ChatGPT, then probably they get drawn into it, 'cause the ChatGPT versus x.AI fight is going to be existential for a long time, 'cause that's both... It seems to be both personal and business, 'cause you have the old x.AI business. So that fight ain't going away. So anyone getting sucked into that could get pulled into the mess. So to the extent they are, then yeah, so probably not a bad bet. It's kind of like getting named in the lawsuit. You know? I didn't, you didn't do anything wrong, but you're dealing with someone that did something wrong to me, so I'm just gonna pull you into this mess and depo all your executives anyway.

    26. JLJason Lemkin1:33:17

        I think it makes sense. I mean, suing Epic was, was, was... I mean, Epic suing them was sort of worth it, right, at the margin. Um, and he's, he's, he's incensed, and he's got a lot of money in xAI. I mean, he has... He's the richest man in the world, but he doesn't have unlimited capital. So I, I think, I think it happens.

    27. HSHarry Stebbings1:33:36

        Guys, as always, I so appreciate this. I want one final question from you. You gave me a target of, like, someone to get for the show. I think I delivered with the people that I've, I've lined up. If you were to add one more name, who would you say it is?

    28. JLJason Lemkin1:33:51

        Well, look, for what it's worth, A- Alex Karp's always been my dream since the beginning of SaaStr. Asked every single year since, like, 2015. So, uh, per- personally, I, you know, I mean, um, if he has the energy to do it from his farm, that would be my, that would be my dream.

    29. HSHarry Stebbings1:34:06

        Guys, you, you are awesome.

    30. RORory O’Driscoll1:34:09

        Yes.

Episode duration: 1:34:19