The Twenty Minute VCThe SaaS Apocalypse: Who Lives & Who Dies | Insight Partners Co-Founder, Jerry Murdock
EVERY SPOKEN WORD
55 min read · 10,543 words- 0:00 – 1:15
Intro
- JMJerry Murdock
Most of the companies, their view, as they've told me, is Cursor is obsolete. That's where the product is today. What we have with the tsunami happening is a wake-up call to move to higher ground. Don't get caught on the beach when the damn thing hits the beach.
- HSHarry Stebbings
Jerry Murdock is one of the most influential venture capitalists of the last three decades. He's a co-founder of Insight, which now manages more than ninety billion dollars. He led one of the most eminent rounds for Twitter, and today we sit down to discuss his biggest lessons from thirty years of investing.
- JMJerry Murdock
If I have any wisdom at all, it's because I've [censored] up so much, and I've learned from it. You really don't know the edge unless you go over it. Here's the secret, the real secret: I never left the game. I was lucky because I was losing money every year I've been in this business. [laughing] I've failed. Money does not come with instructions.
- HSHarry Stebbings
Ready to go? [upbeat music] Jerry, I've known you for years.
- JMJerry Murdock
[laughs]
- HSHarry Stebbings
I've wanted to make this happen literally since we first had that lunch, so thank you so much for joining me today.
- JMJerry Murdock
Hey, happy to be
- 1:15 – 5:02
Autonomous Agents: The Tsunami Analogy for AI
- JMJerry Murdock
here.
- HSHarry Stebbings
Now, I think it's such an interesting time because bluntly, me and a generation of investors are going, "Hang on a minute. Is everything that we've been taught for the last five to ten years completely irrelevant?" And now I get to sap on your wisdom for the next hour. When we chatted the other day, you said about tsunamis as an analogy for where we are with the AI wave that we currently face.
- JMJerry Murdock
Right.
- HSHarry Stebbings
What, what did you mean by the tsunamis, and how do you-
- JMJerry Murdock
Well, fir-first, the first thing to think about a tsunami is that it's harmless when it's out at sea. It's only dangerous when it hits the beach. Um, that's number one. Number two, it's messy. You're gonna get maybe an earthquake or two, you know, notifying [laughs] there's something possibly coming. And it's not just one wave. There's, there's these pre-peak waves and post-peak waves, but there's an event coming that is more than a single product, and in this case, it's autonomous agents. Autonomous agents is, is in my opinion what the tsunami's about, um, not just AI in general.
- HSHarry Stebbings
So autonomous agents is the big wave that comes. And so where are we now? We're in the anticipatory period where we can see it coming, and that's why we're seeing the SaaSica or the SaaS apocalypse. Is that the case?
- JMJerry Murdock
I, I'm not a doomsayer. I, I'm-- but I am one to say, "Look, change is coming fast, and you need to, you need to anticipate that. You need to be on top of that." And, you know, the idea of, "Oh, I can just bolt on AI to my company," it's possibly true. You can maybe get an exit. But being AI native and thinking that way is gonna make you a better company, and thinking deeply about what, what is going on in the, in the communities that are, that are, that are driving the tsunami, right? And, uh, those, those open source communities that are popping up in massive amounts, they're the ones that are gonna have the big impact.
- HSHarry Stebbings
We're gonna get to the bolt-on AI kind of strategies, but you have an incredible portfolio of companies. You work with many incredible founders. What do you see in the portfolio that we touched on when we chatted before on the call on Friday that-
- JMJerry Murdock
Yeah
- HSHarry Stebbings
... maybe people aren't seeing today when they read the news or think about investing?
- JMJerry Murdock
Yeah. So if I look at real true AI startups like E2B or Eventual or Lotus AI, um, GetDynasty, these are all native AI companies that are up and, and running. Aven's another great one. Um, what's happening with them is they're all using, um, OpenClaw, NanoClaw, or one of their own homemade, you know, autonomous agents. The, the, the... And I think that's not obvious yet in the marketplace, but it's, 'cause it's only about two months old. These guys have been doing it for anywhere from two weeks to six weeks, roughly, that have brought in autonomous agents to actually write code. That's the thing that I think is mind-blowing.
- HSHarry Stebbings
Okay, so they have autonomous agents to actually write code.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
What does that mean for Cursor, a twenty-seven to thirty billion dollar company that's raised a lot of money?
- JMJerry Murdock
Yeah. I, I'll tell you. So for most of the companies I just mentioned, their view, as they've told me, is Cursor is obsolete. That's where the product is today. Now, my view is, yeah, well, but that team is really smart. They've got a lot of money and a lot of customers. They've got time to embrace autonomous agents, which is what I think they'll do, and they've got shots to pivot and figure out, um, what the next direction is. Um, but, you know, in the AI business, you've got to be going where things are gonna be. You can't be thinking about yesterday. And, um, so I think those guys are gonna have to quickly embrace autonomous agents.
- 5:02 – 7:28
The Future AI Orchestration Layer
- HSHarry Stebbings
You mentioned, yeah, utilization of OpenClaw. What do you think is the impact of OpenClaw more broadly that we're maybe not considering enough?
- JMJerry Murdock
Ah, great question. Um, look, first thing you gotta do is look at OpenClaw and look at the community. I mean, uh, the commitment to open source and the number of people developing for it, right? I mean, you can look at huge companies like OpenAI, and you can look at Anthropic putting massive resources and super talented. And then you look at open source, and you've got sheer numbers of people doing integrations, massive amounts. If that community keeps accelerating and growing, um, we're gonna see agents do incredible things that they don't have today. When I think of an autonomous agent, first of all, we're gonna have to come up with what we call the claw stack or some form of stack for the autonomous agent. Back in, you may not remember, but back in two thousand and three, two thousand and four, you know, we were-Post 9/11, the world was miserable. People couldn't afford to build websites with, uh, Sun, Sun servers and Oracle databases, which were expensive. But the LAMP stack came out, which was Linux, Apache web server, um, MySQL database, and PHP front-end development tool. And that led to the explosion in 2004, 2005 of websites and ultimately commerce. Uh, Google went public in 2004 and rode that wave brilliantly. And I think in the same thing with autonomous agents, that you're gonna find the open source community coming out with a stack, right? Right now, you've got a reasoning layer that's dominated by Claude and Codex and Gemini. I think what's gonna happen with the autonomous agents is ultimately they're gonna have a, an orchestration layer where they can have multiple different, uh, LLMs, you know, that they can orchestrate on and triage workflows. They'll triage workflows and say, "Hey, for this part of the workflow, let's use Claude. They're expensive tokens, but they're gonna get the job done better. And then for this other part of it, we're, let's use an open source model like DeepSeek, Llama Three, whatever." You know, and they're gonna start from a big picture, maybe this is gonna happen as soon as orchestration gets solid enough, they're gonna determine where the workloads go for reasoning models, which is gonna be super powerful.
- 7:28 – 11:08
The Rise of ASIC Chips & Nvidia's Threat
- JMJerry Murdock
And my guess is this'll lead to the rise of open source models more m-more proficiently, and that it's gonna lead to the rise of ASIC chips, because what's gonna happen with ASIC is you're gonna put the model on the chip. You know, ASIC is gonna be a lot cheaper, a lot more tunable for a specific workload than an expensive, you know, uh, chip from Jensen. So I think that we're gonna see massive, you know, development of, of, of, uh, of, of, of autonomous agents influencing, uh, open source models and ASIC chips. From the big picture, that's a revolution.
- HSHarry Stebbings
So one of my dear friends is Rory O'Driscoll from Scale, and he went... The thing I love about Harry is the statement, "That's great, Jerry, but what about me?"
- JMJerry Murdock
[laughs]
- HSHarry Stebbings
Uh, [laughs] which I specialize in as a venture capitalist. I have a shitload of Nvidia, and I'm thinking through as I listen to you, can you just play out for me that migration from Jensen chips to ASIC chips and, and just like how that actually plays out in reality?
- JMJerry Murdock
Right. Well, it's the thing that wasn't mentioned as to why he bought Groq. He needs that capability so that he can handle, uh, ASIC chips eventually, right? I mean, 'cause Groq is the, is-- those guys know how to put, you know, memory right on the chip. And so that's automatically, you know, an ASIC chip today, right? And so I think Groq is not just about, you know, handling different types of workloads and getting memory on the chip, it's about making sure that CUDA can also support ASIC chips, and they're gonna have to go out and make sure that they can get, you know... They know what's coming, they absolutely know what's coming, and so they're, the, I think the Groq acquisition is gonna help them, uh, make sure that CUDA is viable for the ASIC explosion that's coming.
- HSHarry Stebbings
If the ASIC explosion comes and CUDA does migrate with it, does Nvidia retain their value, or does it still denigrate because they have a leakage of value with the ASIC chip expansion?
- JMJerry Murdock
Depends on execution. This is the thing about the game, you know? Who's gonna out-execute? Who's gonna get it more? I mean, look, you know, a, a lot of people like to criticize Meta here and there about being behind the game, but they had the balls to say no to Jensen. "Sorry, Jensen, we don't need you." So why did he do that? Because he's betting on ASIC chips, no question about it.
- HSHarry Stebbings
You also mentioned the routing and the triaging between different models.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
It makes me think a couple of different things. One, is that not just like a commoditization of models, where it's a, a race to the bottom on price and who can deliver the cheapest, fastest? And then two, aligned to that, what if then we just see models do what we are seeing, which is eat into the application stack? How do you think about those two elements?
- JMJerry Murdock
I think the answer to that question is gonna be decided by the autonomous agent, not developers. The agent is different than a developer. If you and I are developers, we're gonna go and do something based on what our experience tells us, what we've, what we think, "Okay, let's go build something here, and we're gonna use an ASIC chip," or whatever. What's, what the difference is, an autonomous agent is probabilistic. So the probabilistic nature of an agent is gonna say, "I don't know which, uh, which is better, ASIC or, or, or, or, or use one of Jensen's chips. Why don't I just go out and get ten Python libraries, run them in ten different sandboxes, write the, work the workload, and then to see which, which one performs better?" That's what's gonna happen. And so look f-look for autonomous agents to have a more of a say in that.
- 11:08 – 13:26
How to Invest When Anthropic Can Kill Your Startup
- HSHarry Stebbings
But when I think about it, again, that's great, but what about me? Jerry, I'm investing in the agent layer today, like many other investors are, and I'm also seeing Anthropic release incredible application layer products very quickly, whether it's legal, whether it's their co-work.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
How do we determine between safe for us to invest versus in the path of an Anthropic product update?
- JMJerry Murdock
You know, that's why you get paid the big bucks, Harry, is that no one's gonna tell you what's safe.
- HSHarry Stebbings
Oh, I thought you were.
- JMJerry Murdock
And you're gonna have to figure it out.
- HSHarry Stebbings
I thought that was the point of this, Jerry. [laughs]
- JMJerry Murdock
Yeah. I've, like-
- HSHarry Stebbings
Go on.
- JMJerry Murdock
Uh, listen, e-e-eighty, I'll tell you, about eighty percent of the investments I've made, uh, have returned less than one point three X. So it's the, it's the twenty percent that made all the money in my life and m- and made all the impact. Money is just a sort of batting score for how much impact you had, you know, as an investor. That's the way I see it. And so there is nothing safe right now. You're gonna have to watch who's gonna execute and the, and, you know, who's gonna execute the best.
- HSHarry Stebbings
Do you think the public markets over-rotate when it comes to priceResponsiveness on these updates. You saw Cloudflare and CrowdStrike hit like ten percent-
- JMJerry Murdock
[chuckles]
- HSHarry Stebbings
-on the back of an Anthropic security. Is that an overreaction?
- JMJerry Murdock
Look, you know, to answer your question in-- about the markets and they over-rotate, if you go to Wall Street, you'll see the giant bull that's there and the statue. It's because of a herd mentality. And yeah, I think-- and I think investors are like, "Hey, I'm not a technologist. I'm just gonna sit back and watch this." Someone panicked, maybe the others are just sitting on the sidelines. What you're seeing is, is less about panic selling, uh, because it'd be down a hell of a lot more than it is, and what you're seeing is, is cautious on the sidelines buyers that are saying, "Hey, I don't see a deal here. I'm not sure I have enough information to jump back into CrowdStrike and bring the stock price up." So is it an over-rotation or is it just a pause where a lot of investors are sitting back saying, "Hey, let's, let's get more information about, you know, who's gonna be the winners and who's gonna be the losers"? That's the
- 13:26 – 20:22
Parallel to the Dot-Com Crash of 2000
- JMJerry Murdock
way I see it.
- HSHarry Stebbings
Is there a parallel to a prior time where you can remember this? Whoa, whoa, whoa. Immense uncertainty. I do not know what happens. I'm better to sit out and watch because I don't wanna see Monday drop another forty percent.
- JMJerry Murdock
Yeah. But so March of two thousand, uh, almost twenty-six years ago, tech stocks y- dropped between thirty and forty percent across the board, and then if you missed a quarter, you were down over fifty or sixty percent. And we lived in that malaise, uh, March through the summer. And by the way, we were still able to get a couple IPOs out at, but at lower, um, multiples during that time. And we just sat in misery, um, until nine eleven, which what I call was the coup de grâce to finish us off. And, uh, the market got destroyed. And we were thinking, "Hey, you know, we don't do dot-com investments in Insight. We're gonna be fine." 'Cause we knew that in ninety-nine that there was a bubble, and we knew that dot-coms were gonna blow up. We said, "Look, it just can't be sustainable. There's not enough commerce. There's not enough people on dial-up. You can't do commerce on dial-up, and there's not enough fiber in the ground." So sure enough, there was a burst. However, the tsunami came in, took out the dot-coms, and then took out all software. We all went down, and we were in misery for years.
- HSHarry Stebbings
Do you think we are in that same pattern? Do you think there will be a depressed public markets atmosphere for years, or will it be different now?
- JMJerry Murdock
Well, it's always gonna be a little bit different. Um, what's happening now is the speed at which things are changing. You know? Like, we have this company, E2B, and you think, okay, they do sandboxes, great. If you talk to most technology people, they don't particularly put much of a, um, emphasis on differences between sandboxes. It's just a thing to keep your, to keep your agent safe, right? Or keep whatever code you have safe. Um, in reality, it's also a productivity tool. [coughs] And for the agents, uh, if you're making sandboxes for an agent, it's gonna have a qualitatively different speed. For example, about four hundred milliseconds is about a time period that humans can recognize a delay. So a lot of systems from mobile on that four hundred millisecond timeframe, and that's what most sandboxes are. Well, E2B has sandboxes that, um, respond in eighty milliseconds. I'm like, "Wow, how-- no one would ever notice it." He said, "The agents notice it, and that's what matters." When an agent spins up literally a hundred thousand sandboxes in seconds, that, that's response time is critical.
- HSHarry Stebbings
We, we've sp-spoken a lot about autonomous agents. When you have autonomous agents, do they make your systems of record valueless, or do they make them much more valuable because they have existing distribution which they can incorporate those agents into and leverage? Which one?
- JMJerry Murdock
Well, it depends, you know. Um, I'm an investor in Carta and have been for a long, long time, and that's a system of record of sorts for, for stocks, and it has a lot of potential. Um, and I believe they're doing the right thing on all fronts. But if, um, tokenization of stocks come and they use Carta, then Carta's gonna be infinitely more valuable, right? So because they have the cap table, they can help manage the tokenization. However, if tokenization comes and they bypass Carta and a new system of records get built, then there's not much to say that that system of record's gonna be worth much in the future. So it depends on execution of the Carta management team and their ability to, to go capture the trends that are coming forward.
- HSHarry Stebbings
If you were to look at a Salesforce today, which camp would you put it in?
- JMJerry Murdock
There's a lot of companies that, you know, sit on top of it, like nCino. There's dozens and dozens of companies that have built on top of the Salesforce system of record. So the real question is, let's look at their health. [chuckles] Let's see how they do. You know, if those guys start getting knocked off one by one, and they-- enough of them get knocked off that they're, you know, the, the underlying value of Salesforce becomes less, then you're gonna say Salesforce is gonna be worth less. But in the, in the history of companies, Salesforce is like a Mount Everest, right? It's an eight thousand meter peak sitting there. It's not gonna melt overnight. That thing is gonna be around for a long time. The question is, how valuable is it? And the way to look at it, that question, the way to analyze it is how valuable are all those companies that build themselves on top of it? If those guys start going down, well, th-Then you're gonna see some issues.
- HSHarry Stebbings
I'm a little bit stuck here, [laughs] because our job is to ascribe where we see value and where we think there will be more value, and the things where we used to ascribe value, revenue, growth rate, margin, have become transient/questionable. So in that time, how do you think about where you ascribe value?
- JMJerry Murdock
You know, it, it, it depends on what the timeframe is. If, if you look at most software companies that are out there, um, normally when a new technology comes, it sort of expands the market before it contracts, because people are already in their momentum, they're doing what they're doing. I wouldn't expect to see normal software companies just, to see software just fall off the, the, the, you know, off the radar. That's not gonna happen. I think what, what happens is, is that people get fearful and prices change, and then the underlying quality of the business changes based on how well the management team adapts to the situation. Um, you can imagine some companies that have system of records that have great context could actually increase value if they're able to put that context to work and be, you know, with agents, with autonomous agents. And then you have other people that, oh, they don't really adjust fast enough, they don't really understand what the new market's like, and then their system of record or their software declines because they haven't really moved fast enough. What we have with the tsunami happening is a wake-up call to move to higher ground. Don't get caught on the beach when the damn thing hits the beach. Move to higher ground. And that kind of adapting of your business, some people will do it, some people won't.
- HSHarry Stebbings
You said there move fast. You've been doing this a long time. I, I have shockingly been doing this 10 years now, which shows on my wrinkled face. [laughs]
- JMJerry Murdock
[laughs]
- HSHarry Stebbings
Really,
- 20:22 – 24:19
Agents as Employees: The New Reality
- HSHarry Stebbings
it does. My question to you is we're seeing growth rates like we've never seen before, ever. I mean, zero to a hundred million in revenue actually quite frequently, or semi-frequently in some of these cases. Is triple, triple, double, double dead? Have we completely had growth expectations blown out of the water?
- JMJerry Murdock
Well, think about this. Right now, s- all software is eventually purchased by human beings. Software is going to be purchased or used by agents, and what's gonna happen is an agent, a- an autonomous agent, becomes an employee. You give it credentials, you give it identity, and then it's up to the agent to make the decision. You will review them like an employee and say, "Hey, what did you buy? What did you spend? What did you accomplish?" And you will manage that autonomous agent just like an employee. So you need to prepare for that. If whatever you got invested in, is that future gonna be done and controlled by agents, and am I in the right position for that or not?
- HSHarry Stebbings
How does the world change when you're not selling to people but you're selling to agents? How does that interaction change, the interface? What changes when there's that ch- core change in buyer?
- JMJerry Murdock
Well, first of all, it's never happened before, right? So it's happening now. My guess is the way pricing models will work better, and it's been in process for a few years, one of my companies, Docker, has been moving dramatically toward this, uh, as they move into AI, which is a consumption-based model. If the, if the agent has the c- has the access and is w- and, and has the authorization to use something, say a sandbox, you're just gonna pay based on consumption. The sandbox is nothing more than you're buying memory or buying compute, and so you just open it up, it's free, start using it, and then you get a, an, y- then you ultimately have to pay. Then the agent will come and tell you, "Hey, we've reached our limit with the sandbox company here. What do we need to do?" And that's how it's gonna work.
- HSHarry Stebbings
Going back to what we said earlier about bolt-on AI strategies-
- JMJerry Murdock
Yeah
- HSHarry Stebbings
... there's a lot of public SaaS companies, I don't wanna name any of them, who are, who are trying to move, and not public actually, even kind of late private, who are trying to bolt on, who are trying to pivot. Does that work? How do you think about the bolt-on strategy as an effective strategy?
- JMJerry Murdock
Well, you know, look, I was just at the Olympics, and there's a lot of people trying to win a gold medal, and not many people do. [laughs] And so, you know, you can try all you want, but you better be world-class at what you're trying to do if you're gonna get the medal.
- HSHarry Stebbings
So, like, I have the CEO of monday.com on the show tomorrow.
- JMJerry Murdock
Yeah. Yeah.
- HSHarry Stebbings
When you think about the question, I'm, I'm not picking on Monday, but I'm saying the question of will enterprise software and will software just be entirely vibe-coded, personalized, customized? How do you think about that? Because that is the kind of eradication of a lot of their market caps.
- JMJerry Murdock
Well, first of all, um, autonomous agents, and it may take a year or longer for most enterprises to actually e- enable, um, and get committed to autonomous agents, but they're gonna write software faster, cheaper than any human being on the planet, and they already are. And so, again, it's this thing of, like, if you're making your software for autonomous agents, and they have a reason to use it and it's valuable, great, you're gonna do fine. But if you're not making your software for autonomous agents today, you're gonna be challenged in the future. Maybe it's six months, maybe a year, maybe 18 months, but you're gonna be severely challenged if you still think human beings are gonna buy your software.
- 24:19 – 27:39
AI & the Labor Market: Which Jobs Go First?
- HSHarry Stebbings
And so we have agents buying software, and we review their decisions. Great. I don't have to deal with sick leave. I don't have to deal with entitled millennials. I, I sound incredibly old school, but-
- JMJerry Murdock
Yeah
- HSHarry Stebbings
... this is the truth, as you know. Um-Are you worried about what happens to labor forces, given what you said most importantly being the speed of change is so fast?
- JMJerry Murdock
You know, I'm glad you brought that up. Um, we're about two and a half years from the next presidential election. I'm here to say that that is gonna be a major issue on the next presidential election. It could decide the election. It'll be one of the most important things because there's no easy answer. There's no question that, um, anyone that i-inputs data into a computer, that does scheduling, that, you know, like an executive assistant or people doing marketing, those jobs are, are, are probably ultimately gonna be better done by autonomous agents, white-collar jobs. People have been saying that for years. I mean, this is nothing new. The question is, when was it gonna happen? And now with the advent of OpenClaw and NanoClaw and all the other autonomous agents that are coming, they're the direct threats. First of all, not to the people with the job. First of all, to the next person in line, the next junior developer you wanna hire, the next executive assistant, the next marketing person. So the first thing you see is people stopping or slowing down hiring of, of white-collar employees that i-input data and use a computer. That's the first thing. Second thing, depending on the speed at which these autonomous agents evolve, because there's a lot that they need to do. We've proven-- they've proven it exists, that they can write code, and they can do anything you want from a scheduling perspective for your life. So they already can replace a human being. They will. I think that the job market's very uneven. I think the first companies that are gonna go with this are gonna be small, medium businesses because they're the ones that, wow, one secretary makes a huge difference in their-- in, in how they, you know, a two, three, four-person company, how they handle customer service. I know one company, RetroApp, that is out there today. I think they're using autonomous agents to help, you know, triage their support email, you know. So all of a sudden, wow, their customer support can shift immediately. You don't need humans doing it. You've got the autonomous agent doing it. So I think we have to look at what's the speed at which the autonomous agents grow in three sectors: consumer, small business, and enterprise. My guess is enterprise is last. This whole AI revolution, they have been last. Um, they may catch up in a year or two. We'll see. That's gonna be what I think ChatGPT and Google and, and Anthropic are absolutely gonna be focused on, is getting their own version of autonomous agents adopted by enterprises rapidly. When this happens, we're gonna see dramatic change, and I think politically, the minimal viable income may become a reality, or at least a ballot question in two and a half
- 27:39 – 30:35
UBI as the Policy Response to AI
- JMJerry Murdock
years.
- HSHarry Stebbings
What does that mean, a minimum viable income, UBI?
- JMJerry Murdock
I-It means that, that you know what? You're gonna go get a-- get effectively, you know, a certain amount of money guaranteed to you every month, and so that y-if you're a white-collar person, they'll, they'll change the unemployment program because no administration's gonna wanna sit there and say, "Yeah, I've presided over ten, fifteen percent of the country unem-unemployed." What they'll do is give an option to put them into a program and y-- well, retrain people to do something different, maybe to have a better quality of life. If you take the optimistic view, people living, you know, uh-- you know, those jobs that are gonna be going away are not gonna be jobs that get you a, a vacation in Brazil anytime soon. They're the jobs that are-- you're suffering at every day, making a living, and you're struggling as to whether you can pay your healthcare or not. And so maybe those people say, "I'm gonna move out of the city, move out of the suburb, and maybe I'm gonna move back to the country and, and grow food. You know, I'm gonna get this grant to do so." Um, there's already innovative businesses in Wyoming where they're taking veterans and giving them, um, ranches to lease, because now with technology, one or two people can run a massive ranch instead of eight people. And so th-there's new things like that happening everywhere.
- HSHarry Stebbings
Does this labor displacement, does it help or, or hurt a Trump administration?
- JMJerry Murdock
Depends when it happens.
- HSHarry Stebbings
In the next two years, I think we both agree that in customer support, we're already seeing bookkeepers, legal would be the three-- and coding would be the kind of four really-
- JMJerry Murdock
Yeah
- HSHarry Stebbings
... vulnerable areas.
- JMJerry Murdock
I, I think, I think healthcare may hit that before the, the labor market hits it, um, because it's gonna happen. We'll find out this fall what's the impact of healthcare on the election, um, and if it's a big impact, then you can assume that labor will be a major impact on the, you know, on any administration.
- HSHarry Stebbings
When we think about the impact of agents on companies, I had Seb from Klarna on the show, and he said that at their peak, there were seven thousand. By twenty-thirty, they're gonna be less than two thousand. Is head count a bug, not a feature now in companies?
- JMJerry Murdock
[laughs] You know, look, and the m-- people never really talk about it, but it's all about culture. What's your culture, you know? I mean, if you're looking to have a culture of A players, and Steve Jobs talked about this at Apple. You want-- How do you just continue to grow with A players? Um, you're gonna have a hell of a lot more agents than people.
- HSHarry Stebbings
[chuckles]
- JMJerry Murdock
So it depends on what those two thousand people are doing at Klarna that are left. What's their culture like with those two thousand? If they're all able to have a greater quality of life, have more time with the kids, maybe it's an awesome win, you know. But I'm not there, I'm not him, so I can't comment.
- 30:35 – 36:37
Billion-Dollar One-Person Companies
- HSHarry Stebbings
Do you think we will have billion-dollar single-person companies? It's often said. Do you think it's actuallyA realistic-
- JMJerry Murdock
Yeah, absolutely. I mean, I, I mean, it's all about how smart is your agent? How s- how mu- how, how smart are you to deploy the agents, and how well are you willing to listen? I think the thing that's shocking is that autonomous agents work, that OpenClaw worked, and that's why so many developers are so passionate about OpenClaw because it's something that's working on its own without having to be reviewed. You know? Uh, like, it's an employee. You've gone from an assistant to actual employee. Think about that. That's major, major difference, uh, uh, in life, and I, I, I think those kinds of changes are gonna be really important to notice.
- HSHarry Stebbings
I am Orlando Bravo, and I'm sitting looking at my book, and I've got Anaplan, and I've got Cooper, and I'm not picking on him, but I'm picking on him.
- JMJerry Murdock
Right.
- HSHarry Stebbings
P. What do, what, how does it impact me? I need to... these assets to go out. They're fifteen to twenty percent typical enterprise SaaS companies. What happens to traditional P tech in this environment?
- JMJerry Murdock
Well, the, let's go back, um, to, to nine eleven. There was, uh, several of these traditional buyout firms, they were called hedge. Now they're, now they're called, you know, something more sophisticated, private equity, but they were kind of buyout shops. Teddy Forstmann, whom I knew, ran a great one, except in two thousand he went all in on telcos, virtual telcos. Then it was over for him after nine eleven. Done. No more Forstmann Little. And so there'll be stories like that. I don't know about Bravo or anybody else, but there'll definitely be PE firms that end up like Forstmann Little, and then there'll be other ones that had the right bets and did the right creativity, and they'll be bigger and better and more important than they were before. Life is basically a, a set of experiences you have and the total sum of the decisions you make. And so any of these firms is about the decisions you make. Es- and now we're at a point in time when you need to review what your assumptions are and, and what decisions you're gonna make going forward.
- HSHarry Stebbings
If you were to make a decision about where you would place a firm today, seeing the atmosphere and the landscape that you have, where would you choose your investing shop to be?
- JMJerry Murdock
The problem is you got an old man here who's gonna wanna have it up in the mountains in Aspen or in the m- or in the Alps. [laughs] That's my new thing. I'm not like Elon or Jensen that are gonna do this for the rest of their life. I'm just doing this for impact. I can't even imagine going out there and doing it for the same reasons I did it years ago. It's like Bob Dylan got interviewed, and they asked him, "Well, what was it like for you back in nineteen sixty-four at Newport?" He says, "I don't even know who that guy was." I [laughs] you know? And I feel the same way. I don't even know what that guy was like back in nineteen ninety-five. It's moved on. I, I was always into this business for the creative impact and to play a very small role on a team that was doing something meaningful. So I wanna do that. That's gonna be important. But, you know, I, it, it's just a matter of h- having the right amount of wisdom about how the change is gonna impact people and how you're gonna do it. I mean, VC firms should have their own autonomous agents. Everybody should. I mean, can you imagine the, the medical an- analytical work? Certainly, uh, the PE firms are all gonna have a- autonomous agents analyzing markets, analyzing where the opportunity is. So if I was starting from scratch, the one thing I could imagine is having incredible data I could vet on a new opportunity for the white space for where these new AI companies are gonna go and say, "Wow, the data says this guy's on the right market. He just needs to execute." And then you evaluate not just the person, but the quality of, of how they use autonomous agents. That's gonna be the deciding factor for venture capitalists and startups. We're gonna be on the same level playing field. How well do we use autonomous agents in our job?
- HSHarry Stebbings
Going back to I don't remember that and Bob Dylan and that, I, I think actually money makes people better investors. I've spoken to some of my most successful friends, and I say, "Has becoming rich made you a better investor?" I'm intrigued to hear your answer. Have you become better the more money you've made?
- JMJerry Murdock
Well, if we use money as a proxy for success, it's funny, you know, with some of our mediocre companies, we thought about swapping out the CEO, and it's like, well, the problem is it's a mediocre company, and anybody we would put in would have to already be worth, you know, a couple hundred million bucks. So why would they do it? [laughs] So you're forced to sort of limp along with the existing team because you're just not gonna recruit someone better. They wouldn't be successful. There's no validation unless they've made a lot of money. So number one, you know, they m- it's a proxy for success, and success is a combination of experience and validation of when and how to make decisions. For me, there's two components to every decision. There's the logic, and the second is the intuition, and you need the intuition. And so the one thing that the autonomous agents aren't gonna have is intuition, not anytime soon. And so we need people. We need good intuition and to, and to make good decisions. And without that component, you're not gonna succeed. So in my humble opinion, maybe I've got better intuition, and that's the reason I've been more successful.
- HSHarry Stebbings
Jerry, when's your intuition been most wrong, and what did you learn from it?
- JMJerry Murdock
The first thing is, how do you know it's
- 36:37 – 46:04
Intuition vs Wishful Thinking in Investing
- JMJerry Murdock
really intuition and not wishful thinking? So that's the first thing I've, I've learned over time-That intuition was almost never wrong, but what I was wrong was me thinking it was intuition, it was nothing but wishful thinking.
- HSHarry Stebbings
When did you wishful think too much?
- JMJerry Murdock
[laughs] When I found an entrepreneur that I liked, who was smart, but maybe too comfortable. Maybe a, a person I liked as a human being more and they weren't crazy enough, they weren't really driven enough. They didn't have that chip on their shoulder. They didn't have that obsession. You know, because, you know, I-- you wanna work with people you like, and so most of the people that I liked were the ones that let me down and let themselves down. It's the people that you struggle with that are a little sharp-edged, that are a little aggressive, um, that are-- and that you may not like as people that are like, "Wow, okay. Well..." But they're-- they, they might be the ones that succeed, and you have to find that core of humanity in them that you can like them and help them, right? Um, but most of the most successful people are gonna be challenged socially.
- HSHarry Stebbings
[laughs] That makes, makes me feel incredibly validated 'cause I've never felt more awkward than being at a birthday party for another 30-year-old. I'm much more a-akin to 60-year-olds. [chuckles] My best friend is 63 years old, and, uh, I feel much more comfortable with him. Uh, but Peter Fantomon's told me the best founders make you feel uncomfortable, and I think that's very true. Have you changed as an investor, Jerry?
- JMJerry Murdock
Yes. If you don't change, you die. It's like, you know, th-- y-changing is a-- what allows you to adapt to the world, right? I mean, um, the most interesting thing in AI, if you look at future stuff is Fei-Fei Li's new startup about this visual representation of a world. I mean, what she's clearly articulated is that, you know, language is, is a very subpar descriptor of the world. It's, it's just limited. So for autonomous agents, we need a new system where we can visually recognize the world to be able to have an ob-- an objective view of reality for the autonomous agent. That's why we have poets, because we can't really describe the world in, in enough detail with language, but we can s-- give you a feeling about it, right? And so I, I, I think that, that what we have to do in the world is to definitely be aware that we have limitations in understanding it with language.
- HSHarry Stebbings
I think limitations is interesting to you. I, I often reflect on regret. I love being in Europe. I have family. I, I, I make a lot of money in Europe [chuckles] which is great. But I never tried to go to Hollywood as the actor, and I'm just wondering if I'll regret that. What, what would you say to me as a wise OG?
- JMJerry Murdock
You know, there's a great British actor I had lunch with once named Kenneth Branagh, and he was reflecting on exactly that question. He said-- He's made Hollywood movies. He-- But he's done a lot in theater, a lot with Shakespeare, and he said, "You know, I could've been more like Olivier that went to Hollywood and did Hollywood films late in life, but I didn't. I chose a different path." And for Branagh, I think he was very happy he didn't move to Hollywood. He could've had that career, and he's sixty-five, sixty-six now looking back, and he's saying, "Yeah, I could've been that, but you know what? I'm, I'm, I'm really happy I didn't do that." So maybe you're like Kenneth Branagh. You're gonna be happy you didn't do the Hollywood. I didn't. We, we started in New York. I've never left Aspen. I lived in New York part-time. I never moved away from Aspen. Jeff and I founded Insight in New York City, and I cover the West Coast because it was a lot quicker for me. But Jeff and I just lived on airplanes for the first ten years, you know? And that's how we handled it. Back in the day, that was pretty revolutionary. Remember? Silicon Valley was all about people walking down the street. There was VCs that said, "I don't invest in anything more than five miles from my office." That was quote-
- HSHarry Stebbings
Dude, if you can't cy- if you can't cycle there, it's not a deal. That was the thing, I think. Yeah, yeah, yeah.
- JMJerry Murdock
Yeah. Yeah. I mean, it... Look, you, you choose your life. You choose your path. You shouldn't regret it if you're getting what you want and you're growing as a person. The most important thing looking back is what have you learned about yourself. When I would talk to our younger partners, like you had Jeff Lieberman on your show and some of our other partners, I'd say, "Hey, guys, you know, it's-- it doesn't help to get super rich early like you have unless internally you learn that you have the sense of self and about the-- and you're comfortable with the decisions you make," 'cause that's the key thing. You know, you, you, you can, you can become super successful early, but you've got to internalize that success, recognize where the failures are. If I have any wisdom at all, it's because I've fucked up so much, and I've learned from it.
- HSHarry Stebbings
I made money very young, and I was also an alcoholic, and the combination of failing badly and passing out drunk many times and my mother being disappointed in the drunk son that she had actually showed me, like, what life's really about. And I, I'm so grateful almost for failing and being like that.
- JMJerry Murdock
Absolutely. You gotta go... Hunter Thompson was a writer that lived near the Aspen area who I used to love Hunter Thompson's works. He said, "You really don't know the edge unless you go over it."
- HSHarry Stebbings
[laughs]
- JMJerry Murdock
And clearly you did. So-
- HSHarry Stebbings
Oh, dude, I've been over so many fucking times. [laughs]
- JMJerry Murdock
[laughs] So knowing the edge, Harry, is, is, is... That's what it's all about. We've gotta all go over the edge and hope to live to tell about it. That's what gives you the sense of knowing. That gives you joy in life and gives you a sense of ease and comfort as you move through it.
- HSHarry Stebbings
When did you go over the edge?
- JMJerry Murdock
Well, well, I did a different kind of... At nineteen, I got accepted to the United States International University in Nairobi, Kenya. So nineteen seventy-seven, I get on a plane, go to Europe, hitchhi- hike around for a couple of months, and then I go spend, you know, six months in Africa. And-I would spend weekends documenting traditional dances, uh, with the director of Bomos. I was out in the hinterland in, you know-- Kenya's the size of Texas with, you know, thirteen major tribes with seventy-six individual clans and dialects, and we wanted to document it all. And going out and living with these people on the weekends was going over the edge. I mean, I ate things I'd never believe I'd eat again. I mean, I'd lived in little huts with goats, you know. It was not a pretty sight.
- HSHarry Stebbings
[laughing] Dude, you've built a firm that many, and including me, would-
- JMJerry Murdock
Yeah
- HSHarry Stebbings
...aspire to. I just wanna understand some wisdom. Knowing what you know now, what strategy did you do with Insight or product did you do with Insight that with the benefit of hindsight, you maybe wish you hadn't done? What did you learn?
- JMJerry Murdock
Oh, that we hadn't done. In the early days of Insight, the, the big mistake, we hired some famous guy to start Insight Europe, and after six months we shut it down. It was a, it was a mistake and a half. We were not mature enough to do that. And, um, Europe was something-- Well, you know, we, we loved Europe. Early on, fund one had an investment called SLP in Paris. Fund two had a company called MetaQuatro in Spain. It went public. That was a big win. We did deals in Portugal. We did deals in the Czech Republic in the nineties. So we thought, "Oh, let's do a fund." Big mistake. Too much difference. Too much to-- We needed to stay in New York together. We needed to focus. We needed to learn from each other. Having people in Europe was too challenging. That was a mistake that we made.
- HSHarry Stebbings
So I always say the product that we sell our LPs is the quality of our investment decisions, and that reduces with remote decision-making. Do you agree, or do you think that today remote decisions work just as well?
- JMJerry Murdock
That's a function of the team. That's a function of who's involved, and then a function of experience, you know. Overall, if I were to invest in a company, I would be very suspicious of remote management because human beings today need it. As we move to autonomous agents in human beings, that's a good question. You know? That's a very good question. I don't know how the future's gonna play out. But in the past, a remotely managed situation-- I know for me, 'cause I didn't live in New York as a co-founder, it was really hard on my team for me to fly in, fly out, fly in, fly out, and because you have to make decisions remotely. You have to sit with an entrepreneur. You're in San Francisco, and you have to commit now.
- HSHarry Stebbings
Yeah.
- JMJerry Murdock
And you've got a whole team in New York. You know, it's really tough being that remote guy. You know? If you're all local and you all sit in the same office, you gotta make a decision tomorrow, it's a lot easier. So I would argue that remote decision-making is very difficult.
- 46:04 – 47:32
The Single Most Important Factor in VC
- HSHarry Stebbings
You mentioned momentum and the importance of momentum in some ways.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
Critics have suggested that momentum was a challenge for the twenty-billion-dollar fund and the speed with which it was deployed and the high prices. Just with the wisdom and experience you have, Jerry, I'm fascinated, how do you reflect on that fund?
- JMJerry Murdock
One correlations you can look across all VC, um, funds and look at their vintage, whether it's a ninety-nine vintage or a two thousand and four, two thousand and five vintage, and the one correlation you can make to success was timing. Timing. If you did a, if you did a fund in two thousand and five, two thousand and six, you know, you were in great shape to take advantage of the mobile thing that started happening in two thousand and eight when Steve Jobs got ten million subscribers from AT&T. That's when mobile became real. And so if you had an, an oh-five, oh-six fund, you had a chance to get some of the best, most iconic companies, right? But if you started a fund in two thousand and nine, eh, you're gonna miss being early in Twitter, or you're gonna miss being early in Facebook. You're gonna miss being in Uber. You're gonna miss all that. So timing is the most important thing, whether you're early stage or late stage. You can't apply it to just an overall general strategy. Depends on the timing of when you did the investment.
- 47:32 – 49:21
Is Now the Best Time Ever to Start a New Fund?
- HSHarry Stebbings
Do you think now is the best time ever to be starting a new fund?
- JMJerry Murdock
Absolutely. Absolutely the best time. 'Cause you're in a sea change. Humans are no longer gonna be the decision-makers about software. It's gonna be autonomous agents. This sea change, this tsunami, is so different than anything that's come in the past, that people that embrace this new model can embrace it from scratch right now, can have a huge advantage over people that have been successful with older models that don't quite move fast enough. 'Cause they're already rich. They already made a lot of money. I don't... You know? Hard to get old, old dogs to move fast.
- HSHarry Stebbings
How do you feel about getting back in the game then, Jerry? Y-you're doing this show with me. You're talking about [chuckles] autonomous agents. Like, seems like you're an old dog moving quite fast.
- JMJerry Murdock
Here's the, here's the, here's the, here's the secret. Here's the, the, the real secret. I never left the game. I retired from Insight. I retired from negotiating term sheets. I retired from board seats. I retired from internal investment committee meetings. I retired from having dinners with LPs and answering LP phone calls, but I didn't retire. Um, I haven't done a single investment on my own that someone didn't bring me that I love and I trust. Every investment that I've done, which is over a hundred, has come from someone close to me and said, "Jerry, I need your help to help me think about this thing." And through that process of trying to help someone else, I end up in itAnd that's been fun, 'cause it's a f- it's, it's a, it's an experience that I'm-- that you're not doing on your own. Your experience you're doing with people you
- 49:21 – 52:10
The Twitter Bet: What Jerry Saw in 2009
- JMJerry Murdock
care about.
- HSHarry Stebbings
Final one before we do a quick fire.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
Do you believe the future of venture is like the go big or go home? We see Andreessen raise fifteen, we have Insight, a mega platform. We have the mega platforms of GC and Lightspeed. Is it go big or go home now?
- JMJerry Murdock
That's the only way I played the game. [laughs] And I mean, I went big on my things, you know. When I invested in Twitter in two thousand and nine, um, there was thirty-something people, no revenue. My fund were like, "Are you kidding me?" Um, w- w- it was a, it was a watershed moment that my partners allowed me to make that investment. And-
- HSHarry Stebbings
What did you, what did you see?
- JMJerry Murdock
What I saw, and this is really interesting, like our early investments, the idea of the, of the, of, of Twitter, which I call the status update for the world, was so brilliant, so over the top, it was far better than anybody on the team's ability to execute against it. So I think Twitter could have been infinitely a more interesting company, but VCs got involved and created politics, and they fired Jack Dorsey early, and I don't know if that was right or wrong, but they created issues and the company was pretty messed up from that trauma of firing one of the founders. And at the same time, they were very excited and the community was growing, the community was helping it. And for me, I saw an incredible idea that wasn't easily replicated, and there was enough momentum to it that this was, for me, a no-brainer. And it was the, the bet that I put my entire reputation on the line. I got Jeff Horan and Devin Parekh to jump in with me on this, and we-- I pushed really, really hard. We did that investment less than thirty days from the time I met the team and the time we closed, and it turned out to be a watershed investment for the company and got us into lots of things like consumer and things we weren't doing at the time. And, um, yeah, that was, uh, that was just because the quality of that idea was insanely great.
- HSHarry Stebbings
Did you ever have a trough in confidence?
- JMJerry Murdock
Um, I was lucky because I was losing money every year I've been in this business. [laughs]
- HSHarry Stebbings
[laughs]
- JMJerry Murdock
I failed. So I was always, you know, balanced in that I knew I was gonna fail, I knew it was gonna be miserable, but I knew I was gonna win some, you know? And you know, we were fortunate to do what we did. Um, you know, we were very, very fortunate, but failure to me was always part of my job, and I had to just suck it up. And so there was nothing that came down the pipe that, that, that caused me to lose confidence because I'd been taking and dealing with it from day
- 52:10 – 1:00:23
Quick-Fire Round
- JMJerry Murdock
one.
- HSHarry Stebbings
Listen, I'm gonna do a quick fire round with you.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
So I say a short statement, you give me your immediate thoughts.
- JMJerry Murdock
Yeah.
- HSHarry Stebbings
What advice would you give to a graduate entering the workforce today looking for a job for the first time?
- JMJerry Murdock
I would have him go buy a Mac Mini, have an OpenClaw, and go to the, uh, jo- job interview with his OpenClaw.
- HSHarry Stebbings
[laughs] Who is the best sourcer? When they bring you a deal, you pay most attention to it.
- JMJerry Murdock
Oh, that's easy. The, the partners at Insight. I mean, what, what we've really built is one of the great sourcing engines of the world. I mean, uh, Mike Triplett, Jeff Lieberman, uh, Devin, these guys all just were focused on sourcing and managing their teams, and they-- a- and to get through the gauntlet of Insight due diligence and get to something that could be funded was a pretty big accomplishment. And so, um, I think that those guys were the absolute best sourcers in the world.
- HSHarry Stebbings
Who is the single best picker that you know? Like they see value where others don't?
- JMJerry Murdock
One. Eh, I don't wanna build egos up, but Peter Fenton, uh, John Doerr early on. Um, those guys were astounding at picking deals.
- HSHarry Stebbings
What is the single most memorable first ma- founder meeting you've had?
- JMJerry Murdock
Oh, wow. This is not gonna be a quick thing. I mean-
- HSHarry Stebbings
You, you, don't worry. We, we, we edit the shows to be-
- JMJerry Murdock
Yeah. Okay. I, I had the founders of Truecaller in Sweden come to Aspen. I d- I said I'm not gonna invest in them, but they took their last dollars to get a plane ticket to Aspen, and they came to me and it was-- this was written about in the information by Amira Frati, the story about it. But basically, these guys were nice guys and I couldn't let them down. I didn't wanna-- I told them, "I don't wanna invest, but I'll help you," and I ended up helping them and giving them some money and making it a successful company. And it went public a few years ago, and it was a great company for a number of years. But that's one I did not wanna go into, and I didn't wanna go to Sweden, but I liked the guys so much when they came out to Aspen, I said, "Okay, I gotta do it."
- HSHarry Stebbings
What's the difference between a used car salesman and a software salesman?
- JMJerry Murdock
[laughs] The used car salesman knows that he's lying.
- HSHarry Stebbings
[laughs] I love it. Um, you've got, you've got OpenAI, you've got Anthropic, and you've got Groq. Which would you most want to be in as an investor?
- JMJerry Murdock
It depends what stage you get me a shot in.
- HSHarry Stebbings
I'm, I'm getting you a shot in OpenAI at five hundred, and I'm giving you Anthropic at three eighty.
- JMJerry Murdock
That's a t- I'd take them both. [laughs] I'd take them both, but I think I, I, I, I, I think for me it's, it's OpenAI because they got eight hundred million people using it.
- HSHarry Stebbings
Wow. Really?
- JMJerry Murdock
Eight hundred million. When you got eight hundred million people doing it, and when you cross a billion, then you're there. Like, I'm not that big a Bitcoin fan. I'm big in, in a couple of crypto things, but until you get to a billion-Users, I'm suspicious of, of any consumer technology
- HSHarry Stebbings
I get you, but do you not think Gemini and Google can still wipe the floor with the distribution advantage that they have, than this and the speed that they're moving?
- JMJerry Murdock
They can, and they are long-term better assets. They've got... If I have an autonomous agent business and I've got Gmail, you're gonna have a phenomenal asset that OpenAI doesn't have. Um, but the, but the issue is, who's got eight hundred million people getting to a billion first? I mean, that just... I mean, look, you can say there's a billion users on their other properties like YouTube and things. If you can convert OpenAI's chatbot to my own Jerry Murdock autonomous agent from ChatGPT, which is I think what Peter Steinberger is gonna do, you're gonna have an insanely great business.
- HSHarry Stebbings
What do people not know about having money that they should know?
- JMJerry Murdock
[chuckles] Very e- very easy answer. Money does not come with instructions.
- HSHarry Stebbings
What does that mean?
- JMJerry Murdock
Just remember that. Well, everything else you buy, you get. You know, you got a Rivian, it comes with instructions. You get an iPhone, it comes with instructions. Money doesn't come with instructions, so you need to learn to respect it. It's energy. Money is the equivalent of energy, and you need to respect it. You know, you don't just, uh, leave the lights on at home and the air conditioner on your home all day long while you're gone. You respect energy. You, you treat it with respect, and you use it for good, and you use it to make things happen, and you don't waste it foolishly being an, an idiot. You know? You don't wanna go to Las Vegas and hand out hundred-dollar bills to just random people. Take that energy and do something great. I mean, I don't know, it was Larry Page that said if he had extra money, he'd just give it to Elon to let him build things to change the world.
- HSHarry Stebbings
[chuckles]
Episode duration: 1:00:33
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