Will Cursor Kill Figma? Lightspeed Raises $9B & OpenAI’s $1B from Disney & #1 App in App Store

1. 0:00 – 1:19

   Intro

   1. RORory O’Driscoll0:00

      Tick, tick, insert $9 billion. [cash register dings]

   2. JLJason Lemkin0:05

      All these leaders not IPO-ing is the greatest gift to venture in our lifetimes. It's playing the growth supercycle bet today. That's the winning play.

   3. RORory O’Driscoll0:11

      There is nothing as terrifying as a high-growth bet that slows down. This is the epicenter of the enterprise AI revolution right now. You gotta make yourself cool, 'cause 30% growth, that's what's cool.

   4. JLJason Lemkin0:23

      I love it.

   5. RORory O’Driscoll0:23

      What I realized is you have to factor in what I'm now gonna refer to as the EOV, the Elon Option Value. You can't run the numbers on SpaceX and come up with th-... $1.5 trillion. You just can't, right?

   6. JLJason Lemkin0:37

      [clicks tongue] Ready to go? [upbeat music]

   7. HSHarry Stebbings0:49

      Boys, it is great to be back. Uh, Jason, you look very smart today. Uh, thank you for joining us from the beach house. Uh-

   8. JLJason Lemkin0:56

      You're welcome

   9. HSHarry Stebbings0:57

      ... got, gotta have one. Gotta have one. Me and Rory are in the office, but we're-

   10. RORory O’Driscoll1:00

       Working stiffs

   11. HSHarry Stebbings1:00

       ... we're, we're back, you know?

   12. JLJason Lemkin1:02

       [laughs]

   13. HSHarry Stebbings1:03

       What can I say?

   14. JLJason Lemkin1:03

       Well, I'm just, I've given up based on your tweet, 'cause I'm not in OpenAI or Anthropic, so I've decided to call it, call it a day for the rest of the year, I think, right?

   15. HSHarry Stebbings1:11

       Listen, you're a smart dude. What's the point otherwise, right? Um-

   16. JLJason Lemkin1:13

       What's the, what's the point? What's the point? Yeah.

   17. HSHarry Stebbings1:16

       Well, what's the point indeed if you don't have mega funds?

2. 1:19 – 6:20

   Lightspeed's $9 Billion Fundraise

   1. HSHarry Stebbings1:19

      Lightspeed raises $9 billion across six funds, point number one. I did, like, backward maths on it to just understand how that's split up. It's about $2 billion for venture and for early, um, is how that equates, and then, you know, 7 billion across other vehicles, mostly growth. Um, so the 9 billion's a bit misleading, but the question becomes, to my tweet, if you're not playing the big game, do you really matter?

   2. JLJason Lemkin1:47

      I think it's bad for s- I think, listen, kudos to Lightspeed, right? They're playing the game on the field, and, um, it's great. I do, I do think it's bad for Seed VCs, and I put bad in air quotes, right? Because un- whether it's 2 or 9, and you gotta slice these funds up, to Harry's point, right, to really understand what's going on. It's not all 9 for Seed. It really means you don't care what you pay for Seed. It just doesn't matter, and you work for speed. And let's do the math. I mean, how, you know, w- uh, t- this is why we have 20 or 30 million pre-seed rounds, 'cause it just doesn't matter at that scale, does it? You just gotta get into 100 billion outcome. I'm not, I'm not saying it's bad. It just, it continues to c- contribute to the barbell, the barbell side o- of venture.

   3. RORory O’Driscoll2:27

      That's such a funny answer, 'cause it's kinda like it's the classic human thing, you know. The world is ending, but what does it mean for me?

   4. JLJason Lemkin2:33

      Yeah, what does it mean for me?

   5. RORory O’Driscoll2:33

      Yeah. Lightspeed raised 9 billion, but Jason's first comment is, "What does it mean for my business?" Which, you know-

   6. JLJason Lemkin2:38

      Yeah

   7. RORory O’Driscoll2:38

      ... it, it's just a good reminder that, you know, everything is personal. But, you know, Harry, you know, what does it mean? I, look, I, I think, thinking about it, to state the obvious, they earned it. I was just thinking about the last 12 months, right? If you're evaluating a big multi-stage manager as an LP in 2025, you probably wanna see them do two things. You wanna see their early fund have wins eight or nine years in, maybe 10, 12 years in. And in the last two years, they had Rubrik last year and Navan this year. So an early-stage deal where they were Seed or A go the distance. And then the second thing you want, 'cause you've also... You're not just gonna give them half a billion for early stages. You wanna see, are they picking and concentrating in the late-stage deals? And obviously in the last 12, 24 months, Lightspeed put, you know, by all accounts, a billion in two rounds of Anthropic, and that feels pretty smart right now. So if you zoom out a million miles, they did the two things that a multi-stage manager has to do. They had great early-stage companies that they built over 10 or 12 years, and they stuffed a ton of money in the hot late-stage deals. Tick, tick, insert $9 billion. So it all makes sense. If you're gonna... If you wanna make this bet as an LP, that's the kind of fund you'd be looking at. Those are the success criteria to give someone $9 billion.

   8. JLJason Lemkin3:54

      To raise 9 billion, actually, you can make the math barely work on paper with the, with the exits, but you gotta be in so many huge ones, right? You have to have even forgotten Lightspeed was in a few of the [laughs] IPOs we've had. Otherwise, the math doesn't pencil out.

   9. HSHarry Stebbings4:07

      You do, uh, but then, you know, I just released a show on Monday with David George, and Databricks 7X'd a billion-dollar fund for them, and Coinbase 5X'd it. That fund is 15X on a billion-dollar fund.

   10. RORory O’Driscoll4:20

       Yes.

   11. JLJason Lemkin4:20

       Yeah, Seed's for suckers.

   12. RORory O’Driscoll4:23

       If you're in one of the, I think in Coinbase's case, three or four largest exits, and in Databricks, what looks like one of the four or five largest upcoming exits, then most math works, right?

   13. JLJason Lemkin4:35

       [laughs]

   14. RORory O’Driscoll4:35

       I'm shocked to discover that if you buy the largest market cap company on the planet, you probably make money if you buy in early, right? I mean, it's really... So yes, um, provided you execute and get in those deals, it can work. You're exactly right.

   15. HSHarry Stebbings4:47

       This is why, though, I'm always so surprised by LPs' unwavering appetite for early-stage managers in SF between $50 and $100 million fund size. Because to your point, Jason, what Lightspeed can pay at Seed is completely irrelevant. They don't give a shit. 30, 40, 50, it doesn't matter. It's an entry ticket for them to see the A, the B, the C. And so I'm just consistently surprised by LP appetite for pure Seed play, given, to me, the destruction of Seed economics by multi-stage.

   16. JLJason Lemkin5:20

       I don't, I think that's a myth. I don't actually see that appetite. I see that appetite having faded since 2021, and I do not see a resurgence of finding tiny new managers. I don't see it. Y- they wanna find a 20VC or a Neo or whatever, but I, I don't think it's easy for emerging managers.

   17. RORory O’Driscoll5:37

       There's no doubt that the prevalence of this kind of money must make it slight- slightly harder at the margin for everyone, you know, further down the food chain to make money. 'Cause you are competing with someone who does have the ability to, you know, and the desire to invest a lot of money in the very best companies. And if you look at, actually, you, you, you cited Ni- Netskope and, um... I'm sorry, RubrikAnd if you, and Nevan has done, you know, amazing job by Lightspeed. And one of the most interesting things is the aggregate return, I think it was on one of them, I can't remember, it was only a 6, only a 6 or a 7X. But the real insight was they got $200 million plus to work. So that's the game they're playing with their 9 billion, and it's a great game, and they do it bloody well, right?

3. 6:20 – 11:28

   The Impact of Mega Funds on Seed VCs

   1. RORory O’Driscoll6:20

      But your point, you're right, Harry. I do think... I can't quantify it, and I'm not a seed investor, but there's no doubt that the dynamics of a multi-stage firm mean that if they choose to, th- they can swamp a seed business to some extent and just write it off as marketing.

   2. HSHarry Stebbings6:38

      I totally agree with that, and use it as an acquisition to get into the later stage rounds, as we've discussed. And, and that's where Dragonere raising a $4.3 billion venture fund comes in. So there's more than 13 billion across those two. But have we ever seen late stage as competitive as this?

   3. RORory O’Driscoll6:55

      Competitive is an interesting word. I mean, the better question might be, how do you feel about the capital versus the potential return? And even though it's, yeah, there's a lot of capital now, it's competitive. One of the attractive things about now and the reason this money is flowing, there are a lot of amazing late-stage companies that look like they're growing very strongly. There are places to put that capital, right?

   4. HSHarry Stebbings7:16

      Mm.

   5. RORory O’Driscoll7:16

      It, you know, 2021, it felt like that, but it turned out to be treacherous. And a lot of the, we'll talk about it later. A lot of those companies, the growth just attenuated and indeed went backwards. So it was a very competitive time in '21 to be in late-stage growth capital, and it turned out to be a very dangerous time. It is competitive today, but I suppose one of the, quote, "blessings" of having OpenAI and Anthropic in the market is they can soak up 60 billion of your late-stage dollars and just keep on moving, right? So there are places to put that money, right? So I don't know if it'll be as treacherously competitive today as it was in '21. We'll see. I mean, it's still, you know, the wall of money keeps on climbing up.

   6. JLJason Lemkin7:57

      Well, look, one thing, and maybe it's not directly to the point, but, you know, Rory made this point when we started this pod, and it's, uh, become true in spades just not that long later, which is, maybe didn't make it this way, but these c- all these leaders not IPO-ing is the greatest gift to venture in our lifetimes. The greatest gift to venture capital. The fact that you can flood these top 20 companies with venture capital, keep... Well, maybe it's not venture capital, right? Maybe it's a fusion of, of PE. It doesn't matter. The fact that the, the VCs are able to keep this for themselves. Well, of course, Lightspeed should raise 9 billion because the public markets aren't getting this. And when people used to say that they're getting ripped off, the, the, the, the retail investors, I used to scoff because most IPOs don't do well, right? But this is a supercycle where, you know, growth is, is the big beneficiary of this supercycle. It wasn't true of other supercycles, not of the SACA era and others. And it, it's a... And if you're not playing that game, you're losing, to Harry's point. That's the real game. It's not just being an OpenAI, it's playing the growth supercycle bet today. That's the winning play.

   7. RORory O’Driscoll8:58

      There's a combination of reasons for no IPOs, but you, no doubt one of them was, you know, vague consumer protection post-2000. And you're right. The, yeah, the good news is the consumer's been protected from a whole load of bad deals where you can lose 1X your money, and the bad news is they've left, you know, the entire compounding of Databricks, of SpaceX, of Anthropic, of OpenAI on the table. So I, I, I think, you know, if these things, if, you know, if, if SpaceX goes public north of a trillion, if, if, if, if OpenAI goes public at 6, 800 billion, it's hard, you know, huge, all that value's been taken in the private, in the private arena. And you're right, it's been great for, in particular, the late-stage firms who've been able to get early-stage venture economics on masses of money, and looks to all intents and purposes put it to work fairly profitably. It's, it, it's been great.

   8. JLJason Lemkin9:45

      Yeah, I mean, it's a different time, but if you just compare Tesla and SpaceX just for fun, right?

   9. RORory O’Driscoll9:50

      Totally.

   10. JLJason Lemkin9:50

       Tesla had to IPO. Now, it was a different time. It really barely had any revenue, but same guy running them. It IPO'd at 1.7 billion, which seemed very expensive, 1.7 billion. The sister company will IPO at 1.7 trillion or 1 trillion. [laughs] I mean, that, that is, that is the s- the difference in time. [laughs]

   11. RORory O’Driscoll10:09

       It's 1000X more. You, no, it's a stunning difference.

   12. JLJason Lemkin10:13

       And that all went to VCs or Elon or others. None of that went to the, to the private invest- to the public investors, right?

   13. RORory O’Driscoll10:19

       Yeah. Yeah. Say what you will about Elon. You're exactly right.

   14. JLJason Lemkin10:22

       My God. [laughs]

   15. RORory O’Driscoll10:22

       Anyone who chose after 2010 could have a 70% compound IRR for 15 years. Exactly. That product was not available for the SpaceX and Databricks investors.

   16. JLJason Lemkin10:33

       And he chose. It's the same founder, right? Looking at his... He, different situation, right? You know, I'm sure he wouldn't have taken Tesla public if he had another, any other choice a long time ago, but, but he kept SpaceX private.

   17. RORory O’Driscoll10:44

       You're exactly... Which gets to my point. I think the primary reason you stay, you, you go public or stay private is relative cost of capital. You know, he'd had that difficult private round in Tesla where he had to frankly save the company from some fairly predatory VC behavior, as he at least recounts it. I wasn't in the room, but it sounds convincing. And, you know, at that point he's like, "The cost of capital from these guys, the VCs, is too damn high. Let me go public." And it, and that's worked for him, obviously, right? And now the cost of capital in the public market feels higher than the private, so everyone's staying here, and we'll see how that plays out.

   18. HSHarry Stebbings11:17

       And speaking of kind of capital ingestion machines, though, the, the biggest of all right now is, is OpenAI and ChatGPT. As always, this could be called This Week in OpenAI, but there was a lot that happened.

4. 11:28 – 14:01

   The Supercycle of Growth and Late-Stage Investments

   1. HSHarry Stebbings11:28

      ChatGPT most downloaded app in the US. Disney investing a billion dollars into OpenAI.

   2. RORory O’Driscoll11:35

      I think it's one of the least interesting. First of all, a billion's neither here nor... Yeah. It's neither here nor there. I, my understanding is also it's a cross-licensing deal. We'll get a billion in equity. Uh, we'll give you money, and we'll get money back from you as license, um, on the characters that we give you. So i- i- i- i- it, it's very roundtrippy. Um-I think it, it, it allows... And, you know, they're leaning into allowing OpenAI as a, as, as a sort of, um, image generator to use the Disney content to, you know, generate images. I think, you know, they're simult- the interesting thing, they're simultaneously they sent a cease and desist letter to Google because for unlicensed use of the content. So I don't think it's a huge thing at all. I think it's fairly experimental for Disney to say, "Okay, we better embrace this new thing. Let's see what happens. We're effectively getting a billion dollars in equity in return for allowing these guys to play with our characters." I thought that was like a, yeah, in, in the scheme of things, interesting, but no op.

   3. JLJason Lemkin12:31

      I, I thought it was a little more interesting as a content creator, which is just that we're entering the next age of beyond just ripping everybody's content off. And so I think what Disney is saying, it's a three-year deal, and they're saying, "Look, in the next era, here's the template," and yeah, we're gonna s- this is like when th- when they all take, uh, all, all the content creators take stuff offline on YouTube or cable. Like, it's a negotiation. "So here's the deal. We're gonna... The good news is OpenAI is the leading consumer player in the space. You're gonna get the leading IP in the world. You're gonna get Disney, and here are the economics, and it, y- and now there's a template, just like there's a template for ESPN or Disney with YouTube. And Google, you're gonna actually, and you may actually have to pay more because usually the first ones that go in get a slightly better deal, right? Everyone else is gonna pay worse, and we're gonna ratchet up the terms to use our IP, right? And then in three years, we're gonna raise the rates again." [laughs] That, I just think it's, it's, it's, it is a, it is an interesting resurgence of the value of IP in the age of AI when the first history was just rip everybody off. Um, and it was great for all of us as consumers. Um, but, uh, it may be the, uh, the revenge of IP.

   4. RORory O’Driscoll13:40

      It will be interesting to see in three years, is existing quote unquote old media IP worth a lot in this new age, and is that what consumers wanna use, and will it be worth ChatGPT's or any image generation software com- will it, will it be worth their while licensing that IP? Uh, will there be an economic return on it versus UGC-type content? But yes,

5. 14:01 – 21:46

   Disney Invests $1BN into OpenAI and What It Means

   1. RORory O’Driscoll14:01

      first of all, does it feel good for Disney, and then secondly, does it yield an economic return for the, you know, model providers? Is, do, do you get any extra return from having that content?

   2. JLJason Lemkin14:10

      I th- I think Disney's a big deal in IP, and I think in three years no one's gonna be working because of AI. So I, I know this sounds facetious. We'll be spending all our time at Disneyland because no one's electively working and the jobs are gone. [laughs] We're gonna watch Disney and live in Disneyland, right? I liked what Bob Iger said, even though I'm not sure what it means, [laughs] which is that creativity is the new productivity. That's the best.

   3. RORory O’Driscoll14:33

      Oh, I love it.

   4. JLJason Lemkin14:33

      The creative assets.

   5. RORory O’Driscoll14:34

      Oh, my God.

   6. JLJason Lemkin14:35

      The creative assets. There's no long tail. What we said three weeks ago doesn't matter, right? It's the, it's the constant creativity and creation of top-tier assets like 20VC that matter. Uh, I think it's true.

   7. HSHarry Stebbings14:47

      Rory, I, I understand you're kind of like it's not the most interesting, but to our point last week and before on Banioff talking about kind of the commoditization of models and the ease of switching, with IP lock-in, hopefully, I'm sure Sam is thinking like this, this is a core element that would retain consumers in a way that maybe other people aren't thinking about.

   8. RORory O’Driscoll15:08

      The big picture comment is 2025, the most down- and I checked, was, the most downloaded app on Apple was, um, ChatGPT, and if you look over the last 10 years, it's interesting what has been the winner. It's been two years of TikTok, two years of Temu, right, one year of Zoom. Guess which year, everybody? [laughs] You know, 2020, uh, the year you realized you needed Zoom, and then, you know, going back, some of the kind of social media apps.

   9. HSHarry Stebbings15:36

      Rory, do you think they will retain the consumer over Gemini as the consumer front end?

   10. RORory O’Driscoll15:42

       My gut would be yes, because they're all in on making it happen, and, you know, Google obviously has a lot of other ways to push Gemini, but it would be a very uninformed opinion.

   11. JLJason Lemkin15:52

       Well, I think to me the m- listen, that's an interesting, like, horse race question. To me, for now the more interesting question is that, uh, OpenAI's mobile app prob- it has, its growth has declined because it has to decline because we've run out of humans on planet Earth. So it'll be interesting to see whether it Robinhoods, like how well it becomes a meta app, right? Because Robinhood is on fire even though its new u- new customers are only growing 8%. Uh, OpenAI's gonna have to do that. I mean, that, that's the whole point of bringing in a head of apps, uh, and all of that, I guess. Otherwise, it will inherently stagnate because there's, you know, stagnate around a billion or something. They're 1.2 billion. So it'll just be fun to watch whether a mega app works for ChatGPT or not.

   12. HSHarry Stebbings16:31

       Hmm.

   13. RORory O’Driscoll16:32

       I don't know if I buy that. I, I, I think that-

   14. JLJason Lemkin16:34

       You have to buy it because if you look at the numbers, the growth is down to single digits. Like, it's ju- it is empirically true on any source. The growth is down to single digits on monthly growth.

   15. RORory O’Driscoll16:42

       Let's take that, yeah. Well, okay, l- I buy that sentence. I buy the facts are true. You know, as Senator Moynihan said, we're all entitled to our own opinion, but we all have to have the same facts. So I, I'm giving you the facts, uh, um, Jason. The interesting thing, but just discussing, you're right. The question is, do they go from roughly 800 million to do what, do, uh, uh, out of wanting to hear what you're saying is, do they do what Robinhood did and stay at 800 and just sell 'em more shit, or they do what Meta did and find ways to go to four billion out of five billion, pretty much every active human on the planet, right? And that, you're right, it, that is a big picture question, right? I'm not sure everyone on the planet wants to do complex AI lookups, so I'm not... It's an interesting question.

   16. JLJason Lemkin17:21

       And, uh, and if you have no ads, it's tough too. They have cheap versions in India and otherwise. I don't know that they'll be as big as Meta in terms of footprint unless they want to go all in on free.

   17. RORory O’Driscoll17:29

       No, yeah, that's, that's an excellent, yes, you're right. It's, the reason I push on the Robinhood thing is I think in fin- financial, fintech, it actually comes down to f- in financial in general, the movie is always the same. Acquire customers and then cross-sell 'em up the wazoo, right? Which is what Rob- Robinhood is doing. The young gambling addicted financial sector, he, they're gonna give him any product he wants, he or she wants. Um, the interesting question, I, I don't know what the cross-sell would beFor a consumer on ch- I suppose the only thing you can do is drive up the percentage of the free users that opt for the conversion to the 20 buck a month plan.

   18. JLJason Lemkin18:03

       Well, there's shopping and there's ads are the classic one, right? And everyone's tried that. Instagram for e-commerce, ads, um, I don't know. I'm not, I'm not smart enough. But I know that, that, that, that growth has s- slowed. There's no debate. So it'll be, it'll be interesting to watch. And if, it, you know, there's Google versus Gemini armchair quarterback, and then there's, you know, maybe, maybe this is one simple reason Anthropic is better, is because it doesn't have the same headwinds of already having 800 million users. Like, consumer gets you there faster, but maybe Anthropic wins the bigger prize because the enterprise and the backend are just, are, they're, they've just gotten going.

   19. RORory O’Driscoll18:38

       And I don't think it is the case, but to take your point, there is nothing as terrifying as a high-growth bet that slows down. Because what happens is you go from being valued on growth to being valued on cash flow, right? And you really would not want that to happen while you're still private. Now, I don't think it is. I'm not sounding the alarm on OpenAI. I think that they got a load... But, you know, the one big risk of the staying private longer bet is that at some point, someone is left holding the bag. And we're seeing a lot of it in the twen- the class of '21. I'm holding the bag on this thing that I paid 20, 30 times revenues because it was growing at 100%, and now it's growing at 8%. It's five years later, and I can barely clear the last round price. And that, that, that's the... It would, it would be very bad for a lot of folks if OpenAI's growth slowed. There's no indication it has. User growth maybe has slowed, to your point, Jason, but they appear to be still finding ways to monetize. But if that were to taper off, it would be a world of pain.

   20. HSHarry Stebbings19:36

       What about the cliff vesting ending entirely? Is that, uh, emblematic of just the hiring wars that we're seeing? How do you think about that?

   21. RORory O’Driscoll19:46

       And, and maybe just an explanation for everyone is that typically when hi- uh, startups hire someone, they obviously universally give stock options, and the typical format is four-year vesting but with a one-year cliff. In other words, you, if you leave within the first 12 months, you get nothing, and at the end of the 12th month, you catch up on a full year's vesting, and then you vest ratably over the remaining three years. And the idea is you hire people, you go through, you know, there's a lot of change. They leave, you don't, they don't work out early on. Do you really wanna ac- accumulate a whole lot of extra shareholders for three months vesting? And when three months vesting was worth $10,000, you could see that. But clearly what's happened here is market pressure has said to them, hires are saying, "Even a, I don't wanna be here 11 months, have you whack me, and maybe at the current rate I'm vesting on 2 or 3 million bucks. I wanna know I'm gonna get that." So I think it is a sign of, [laughs] a sign of the times, a sign of the extraordinary sums of money you're dealing with, where even a individual contributor coming in says, you know, "1148," you know, and, uh, just under 25% of my total vesting package is real money. If I'm getting $10 million over four years, it's $2 million if it's slightly less than 12 months. And people will probably say, "For 2 million bucks, I'm gonna push back on vesting." And can I... And they've clearly decided to give.

   22. JLJason Lemkin21:07

       It is. You know, the one thing that's, that it took me just to tap an obvious beat to get is, um, it obviously makes leaving easier, right? It, it makes leaving. Because if you're leaving somewhere, you've hit your cliff. And so on the one hand, it, it seems like a dumb idea, like you're creating mercenaries, and perhaps you are, but in the age, in, in... You're asking someone that's 18 months in to somebody else to leave and wait 12 months to make a dollar. Um, that can be a tough sell in, in, in an age of plenty, right? So you- they probably also had to make so many exceptions, it stops mattering. [laughs]

   23. RORory O’Driscoll21:38

       You're exactly right. I'm sure they had a gazillion exceptions, and at some point the VP of HR said, "Guys, I, I just can't be dealing with this. Let's just accept this is the market today."

6. 21:46 – 27:23

   Oracle Hit Hard: Is Now the Time to Buy

   1. HSHarry Stebbings21:46

      Listen, Oracle, oh my God. Oracle shares plunged 15% on Friday. Disappointing earnings. They've plunged 45% from September highs, 14% down in a week. They've spent 12 billion in quarterly CapEx, higher than the 8.2 that was expected. Bulk of it's going to data centers dedicated to OpenAI. Guys, this is above my pay grade. What's going on?

   2. RORory O’Driscoll22:13

      Okay. One of the reasons I like to admit I'm wrong is 'cause it then allows me to do "I told you so" when I'm right, right? This one to me was to- Yeah, we talked... I mean, play the tape back. I mean, I know what I got wrong this year in our conversations. This one at the time when they had that 30% pop, it was absurd, and it's just been unwound, right? And the pop was because, oh my God, you signed all this revenue, and everyone gets really excited about the RPO. That was like 40, f- maybe 50, I don't know, 60, 90, 90 days ago probably, last quarter's announcement. And now everyone's like, "Oh my God, to meet this revenue obligation, you're gonna have to incur a whole lot of expenses." Well, shock horror. You know, you just opted to enter a very capital-intensive, you know, physical data center building business to service one or two super large customers, principally OpenAI. It's a tough business, and now I think people are internalizing that. And I think the s- you know, the stock is, it probably is now below w- where it was. In fact, I know it is. It's about, I think, 15% below it was when they annou- just before they announced all the, quote-unquote, good news. You know, so to me, it was fun to... I'm actually, my real sentiment here was I knew it and I should have done those shorts. I should have bought those puts. Because, you know, in retrospect, 90 days ago we were right. It's a s- it's, it's a sugar high, a total sugar high on a huge contract that, with someone who may or may not be able to afford to pay for it, that's OpenAI. And even if they can afford to pay for it, it's not a great business, 'cause it's capital intensive and doesn't, not nearly as good as your existing free cash flow positive business.

   3. HSHarry Stebbings23:48

      So you'd say that it's returned to a, like a normal, it's not gonna rebound from here?

   4. RORory O’Driscoll23:53

      No.

   5. JLJason Lemkin23:54

      That's not what I think.

   6. RORory O’Driscoll23:55

      No. Oh, you do? Go for it.

   7. JLJason Lemkin23:57

      I just, listen, I think it sounds odd, but let's, let's, let's bring Oracle and CoreWeave in together. I think they are very interesting, and if you look at the leaders, they're the weak guys, okay? They, they don't really own anything themselves. Um, they're at high risk of margin compression. So the market's gonna have jitters between now and an even bigger AI future. We've talked about this. It's gonna have ups and downs. It's gonna have bumps. And it makes sense. Oracle down 46% since September, right? CoreWeave down 60% from its high in July. It makes sense. Those should be, have the str- they, they should see the biggest impact from bumps. And there's no reason, actually... Listen, I'm not saying that, that these are even the best companies we've ever had, but there's no reason I don't think they will rebound as the overall trends. I think these are just jitters. The overall trend, I think, is still, you know, we're still anti-gravity here.

   8. RORory O’Driscoll24:47

      And that's the key question. First of all, I wouldn't do a mega short, I'd do a put, but yes, um, which is the coward's way out. But you're right. I mean, y- you're exactly right. They b- these companies become the high octane bet on AI. If you think it's gonna go up, you buy Google, you get 20% appreciation. But if you buy CoreWeave and you're right, you could get a double. You're right. So th- they, they are the highly amplified bet 'cause they are the marginal provider of the commodity, and you're right, they have no other business to diversify their risk.

   9. JLJason Lemkin25:14

      They have no IP. Well, Oracle has others, but they have no IP here, right?

   10. RORory O’Driscoll25:17

       I agree. I agree with your characterization. The question is, you're right. So I suppose to take your point, Jason, if you think the CapEx cycle has two more years of strong legs, then you could see these guys rebound. And if you think we may have found an equilibrium, but they're not gonna-- there's not much more increase up from here. In other words, the marginal investment rate's gonna go down from here, then you're right, then you would be scared of owning them. That's, that's exactly it. It's a, it's an easy way to figure out what's, what's going on at the margin in the AI space and at the margin's where the money's made.

   11. HSHarry Stebbings25:49

       This was my question. Is this like a micro-market hiccup, small undulation that we pass over, or is it a canary in the coal mine that's foreshadowing something much bigger to come next year?

   12. RORory O’Driscoll25:59

       It doesn't have to be something bigger to come. It just... I mean, I always think the markets, they're al- It's like this person always interrogating you for truth. You know, you know, the markets are always trying to find out what's true, what's true. Should you really be spending this money, right? And you could argue right now the market is-- The market tw- six months ago was saying everyone should be spending money on AI, and that's great. Now the market's saying Gemini, Google, you keep going. You, you got a plan. Microsoft, mm, like to see more of a plan, but yeah, you got this thing. OpenAI, we're good for it. We'll give you h- $40 billion. Facebook, not so lo- in love. And then CoreWeave and Oracle, you guys, it's not clear to me why you're doing it. So it's doing a good job of kind of filtering through from the overall mega trend, which is amazing, to which of the guys have a good plan in this space and which of the guys do not. So there is a world, to answer your question, Harry, where what happens next year is Google still continues to invest in more CapEx than before, which increases overall demand. But some of these marginal players m- maybe can't be as aggressive as they've been. So neither the end of the world nor a rebound is a totally plausible scenario.

   13. HSHarry Stebbings27:04

       That's why me and Jason have bigger social media brands than you, my friend.

   14. RORory O’Driscoll27:08

       Yeah.

   15. HSHarry Stebbings27:08

       'Cause we're great at binary statements. [laughs] You're like the third option in the middle. In the middle. Nice.

   16. RORory O’Driscoll27:14

       You're so right. The world is full of in the middle, and no one wants to hear it. By the way, that might explain a lot of our problems in the wider society with social media, but we'll come back to that another time.

7. 27:23 – 34:40

   Broadcom's Market Cap Drop and Anthropic's AI Chip Orders

   1. HSHarry Stebbings27:23

      Broadcom was another one. Lost 300 billion in market cap in 48 hours. Investors being concerned a 21 billion order from Anthropic will drag down the margins, higher costs in the chips business. Is this a reasonable concern? An order from Anthropic seems like a fairly, um, securitized asset to back. Is this a reasonable concern? And a $300 billion loss in market cap seems like a, an exaggeration.

   2. RORory O’Driscoll27:53

      It depends on where you're starting from and if you look at it. I mean, I don't think it's unreasonable in the following sense, is that, one, Broadcom's an amazing story. It's just an amazing story. You look at what that guy's achieved over the last 10 years, it's stunning. Its current market cap plus or minus 1.6 trillion. I mean, as a reminder, the first trillion dollar market cap company was Apple in 2018, and now Broadcom. A company 90% of people couldn't even name or tell what it does has a 1.6 trillion market cap even after this correction, and I think it's trading at high teens in terms of reve- sales multiple. So it's not like it's cheap, right? It totally makes sense that the Anthropic order... It's, it's actually, it's similar to the OpenAI, AI- Oracle discussion. Why is Anthropic buying chips from Broadcom? Answer, they don't wanna pay 75% gross margins to Nvidia. So it totally makes sense. And so they designed this other chip and they say, "Hey, dude, I'll, I'll buy this chip from you, but I'm not gonna give you quite as much money as I'm giving Nvidia, 'cause if I'm gonna pay full retail, I might as well go buy the designer brand." Right? The whole point is this is meant to be coals here, dude. You're meant to get lower gross margin, right? So it just makes sense that it's a really good business. They'll make good coin at it. But you're not-- it's not going to have quite the same margins and defensibility that you'd expect Nvidia to have where they're imposing their architecture on their customers, right? Broadcom is being kind of a made to order business. They're saying, "Mr. Customer, Mr. Anthropic, tell me what kind of chip you want and we'll make it, we'll design it," et cetera. But it's not the same as, you know, marketing a branded product like the Nvidia Blackwell or whatever it is. So yeah, it makes sense. I think again, it's the same thing. The market's just got a little bit of ahead of themselves. You know, y- when you type in the revenue number, you get all excited. When you type in the EPS number, you get a little less excited, and it's just this process of discovery. So I didn't think it was anything. It's just stunning that you can drop 300 billion in a single day and still be worth 1.6 billion. Let me tell you what a real crash is like. I mean, you know, it's-- when you're still trading at high teens sales multiple, it's just... Yeah, it's not like these-- It's not like everything went cheap.Harry, it's just slightly less expensive

   3. JLJason Lemkin30:03

      It is interesting you lose so much over guiding 100 basis points lower. So what's in- what's really interesting, and I'm not smart enough to fully predict this, who gets a pass on gross margins and who doesn't? Now Broadcom-- If you, if you're a Broadcom or someone, you're not getting any pass. Even though you're getting massive AI spend, we're very worried. All we care about is, is, is, uh, we're worried you're gonna lose insane profitability in the semiconductor industry due to AI. Oracle got this great pass until it didn't [laughs] right? CoreWeave gets a, a, apparently an entire pass. Um, uh, OpenAI does, Meta doesn't. I can't keep up f- with whom, who gets the gross margin pass. All I know is we learned in Palantir some folks deserve the pass, and then we're gonna find out some don't deserve a gross margin pass. I don't know.

   4. HSHarry Stebbings30:47

      Rory, you s- you said it's, it's, it's not a crash, and it can get much worse, and it can go much lower. Markets are at the same PE peaks as 2000 and 2021. Apollo predicted zero public equity returns in the coming years. Always optimistic. How did you read that, Rory?

   5. RORory O’Driscoll31:06

      Sure. I think you have to be very precise in what Apollo said. They said the predicted 10-year return is zero. And this is a piece of work that's fairly well understood, and it's actually a very important piece. It's probably one of the things I look at most. Vanguard send it to you. They're really good about that. They basically show a correlation between entry PE and subsequent 10-year return. And they show three graphs. They show your, your one-year return, there's little or no correlation. In other words, when you buy at a high price, you can st- it can still go higher. The correlation gets stronger for five years, and it's strongest at 10. In other words, if you buy at a high price, I can't tell you how you'll do next year. Maybe the stocks will keep going up, and you'll feel smart. But what I can tell you for sure is the probability of making money over 10 years is very correlated to your entry price, and that's the graph that Apollo showed. 'Cause what they're doing, and it's what all the sensible investment houses and f- asset managers do, they don't make one-year predictions 'cause you can look like an idiot, and it's hard to know. I mean, it's not just do you look like an idiot, it's actually empirically hard to know. But you can say with a high level of certainty that if you buy at a PE that's, you know, 50, 60, 70% higher than the long-term average, your forecast return will be significantly lower. Going back to '99, 2000, you see the same thing. You could have said things were expensive in '96, and Greenspan said they were expensive. That's when he gave his irrational exuberance. But shit kept going up for three more years. You can't predict the short term. But what was true is, by the time you were piling in in '99, it took 10 years for the overall stock market to get back. So you did go zero for 10 years. And even more impressively, and this is a really amazing fact, Cisco, the darling of '99, just got back this week to its '99 stock price. So in other words, if you buy the hyper-expensive company at just the wrong time, it takes 25 years to earn it back. That's a compelling statistic, and I think it speaks to the same thing as the Apollo comment, right? Now, the interesting thing is what do you do with that information? I know over the next 10 years you're screwed, but it might go up next year. Do you stay in? Do you, do you go out and risk being, having a '96 moment where you leave three more years? I mean, I think you actually end up just making a... You look at your overall asset allocation, but I don't think you go binary on it because you do have that thing of it's not predictive in the short term, but it is a warning sign. There's a reason that nice Mr. Buffett has piled up, you know, 300 billion in cash, 'cause he reads these data too, and he understands them better than most. The meta point to make that kind of goes back to our business, 'cause we're not public market investors, is when you look at all these private valuations that look attractive relative to the public, and they do, you have to say to yourself, "They look attractive relative to a public market that hits all-time high." And a more normalized public market might well leave some of these private valuations somewhat high and dry. Now, growth might save you. In a nice story, if the Apollo graph is correct, and you just get zero return for the next 10 years, and that's not traumatic, that's not the way life and markets work. What tends to happen is, at one point in the next two or three years, things drop 30%, and then you crawl back slowly over the rest of the decade, right? If that happens, then some of these private valuations that are comped off that could feel lofty.

   6. HSHarry Stebbings34:29

      We, we mentioned Broadcom's dip on the back of, in, yeah, many respects, but one of them being Anthropic. Um, Anthropic announced, uh, they're launching an AI coding tool for designers.

8. 34:40 – 47:02

   Cursor Competes with Figma: The Convergence of Design & Coding Tools

   1. HSHarry Stebbings34:40

      Jason, I'm super intrigued to hear your thoughts on this. [chuckles] So it's a UI inside the Cursor browser lets you tweak web apps, drag and drop CSS. Uh, it's really the first move kind of up the stack, so to speak, for them. Jason, is this the first credible threat to Figma's position where design decisions start?

   2. JLJason Lemkin35:00

      You mean, you... Well, you mean Cursor doing it, right? Not Anthropic, right?

   3. HSHarry Stebbings35:03

      Yeah. Sorry, Cursor.

   4. JLJason Lemkin35:04

      Um, I think, well, maybe. I think what we're, what, what, uh, all of us need to be hyper-aware of in '26 and '27 is massive convergence of categories. It's not just the old days of seven years later Datadog would decide to compete with PagerDuty, which certainly hurt them. That's, that's how we grew up. Like ev- a couple years would go by, and se- you know, all of a sudden n- now, now, you know, Brex is competing with its partners rather than partnering. That, that's the old school. AI is creating convergence, where the same products can do more things. Um, so I'll give you an example, and then I'll talk about Cursor 'cause you asked. It's already happened e- in e-commerce, which I can see, which is that marketing, sales, and support have already convergedOkay. This last week too, Andrew Bilecki, the CEO of Klaviyo, brought on the ex-co-CEO of Workday to run most of Klaviyo, right, which is at $1.3 billion, growing 30%, because the entire world of e-commerce software has changed. So he needs to get back to product full-time, because in 2026, 2027, there will be no such thing as marketing software that got Klaviyo public. Marketing, sales, support have already converged to one agent, okay? So it's already happening there. It's actually surprising it's taken a full 12 months to happen in coding [laughs] . It's a lot of time, because if you've built any apps like I have, the disconnect between design and the output, it's the most jarring thing when you get good at something. When you get good at Replit like I am, or Cursor or whatever, it's, you can build such cool stuff and you're like, "Man, the design, it all looks like friggin', um, Claude artifacts." They all look like Claude. Like I can find a vibe-coded site in... Like, 30% of the last YC class looked vibe-coded to me. I could see the Claude artifacts all over their homepage. So it kind of breaks your heart. So the fact it honestly took this long is a surprise. So should Cursor own that or Figma should own that, right? Or someone new? They're all gonna converge. You shouldn't have different tools for design, prototyping, and production. The agents are just too good. Like we... And to put differently, what I've learned is we all want to talk to the same agent, designers, product people, engineers, DevOps. Um, in an ideal world, there's this meta agent where we all can collaborate and work together as one company, not us all being on 11 different AIs. There's a lot of fracturing in AI and, um, I don't know who will win, and it's probably mean to say Figma feels behind, but it is how it feels as we record. It feels like Figma is tiptoeing into vibe coding, just like Canva and others, and there is some disruption risk that the tiptoe is too slow.

   5. RORory O’Driscoll37:37

      I think that's awesome, Jason. I mean, I... And a real, that insight on the... I mean, 'cause I want to do the coding Figma thing, but also the bigger comment on wanting the single agent for everything. And that's just a huge insight, 'cause it's only become obvious to me in the last few months as I've been talking to companies, no matter how hard you try, you try and translate your prior experience into this, and, you know, you have a sales SaaS company, so now you have an AI SaaS company, sales company. You have a, um, SaaS marketing company, so now is there an AI marketing company? And I think you're right. On a lot of these processes, the reason you have these separate siloed companies is the humans were siloed. There was a salesperson, a marketing person. But if the AI is doing everything, let's just take the customer journey. You can have a single AI agent within your company dealing with your customers as you're selling them, as you're, as you're prospecting them, as you're selling them, and as you're customer supporting them after they onboard. And I've seen some companies doing that, and I'm like, "Wow, that's a powerful idea," right? 'Cause if you think about it, one of the shittiest things about dealing with any company is you, you start off with sales and you build this rapport and they tell you, you know, they, they seem to know exactly what you want, and then you just get transitioned to a totally different person and you start again. And it's like you, as the customer, are being put through that.

   6. JLJason Lemkin38:50

      It's not okay in the age of AI.

   7. RORory O’Driscoll38:52

      And I gotta tell you, like-

   8. JLJason Lemkin38:53

      Yeah

   9. RORory O’Driscoll38:53

      ... really I, I'm thinking of a couple of deals I saw within the last week where what you expressed is suddenly going, you're exactly right. The single view of the customer on the customer side. So, so I, I just think that's a really powerful 2026 theme. I don't even know what it means in terms of what kind of apps are built, and I'm thinking of sales and marketing at this point, and we'll come to Figma and Cursor in a second, but I just want to say you nailed it there.

   10. HSHarry Stebbings39:16

       Rory, can I ask you, how, how does that shape your thoughts when you look at investing in support tools as you have done in the past?

   11. RORory O’Driscoll39:22

       I think that you're going... I think all these companies are going to expand their footprint. I think, and you're going to have... I think going back to the thing, the good news is there's a huge return on ROI on AI, and I do believe there is, and the bad news is, I think to grab that return over time, you're going to have to be more expansive and aggressive, and you're going to be going into adjacencies much more so than in the past. Because, and again, it's only obvious to me now that I've started to think about it, is that if you were selling software to automate work, then you probably sold to each department that did that work. But if you're selling software, AI software to automate an outcome, just sell to the customer who want, the person in the... someone who wants the outcome and, and they'll be like, "Yeah, I'll take all that." So I think you're right. We, we lo- we have an investment in customer support. We have a number of investments in AI, Sales Stack. I just think over the next one to three years, there's gonna be mass convergence. Just like, to kind of jump back to Jason's example, in the same way, if, if there's one... You know, the, the old line is, in any company that you're either selling stuff or making stuff. Well, we just talked about the selling stuff people, but then Jason was talking about the making stuff people. The making stuff people between design and production. I think what he's saying there too is you could argue that instead of having a separate design function and a coding function, I think what you're saying is, does that all come together over time? Is that right, Jason?

   12. JLJason Lemkin40:45

       I don't... I think we're gonna have designers. I don't think we're, we're gonna have multiple platforms. It's better if they're the same. It's just, it's so much faster, so much more efficient. Um, and, uh, I've invested in a, in a small startup called Al- Alloy App that sort of bridges it. It lets you vibe code your existing product and change it, and they're... I mean, it's early. There's already insane demand, but that's just the first step. Like, I mean, it, the... Everyone loves Figma, every designer lo- I mean, I'm sure some, some are grouchy, right? But I think, I think it's up there with Klaviyo.

   13. RORory O’Driscoll41:17

       Yes.

   14. JLJason Lemkin41:17

       Everyone in e-commerce, their favorite app is Klaviyo because it just gets you more customers. Klaviyo's radic- brought in a co-CEO because their whole business model has changed. It's gonna be there in software in a year. It just doesn't make sense to have to wait days for designs to change, and then they only sort of work in my code base, and then I've got to integrate it. All these guys added a design mode with, um, you know, with Google 3 Pro or whatever it is. They all added a design mode. It's, like, pretty good, but it's still recycled stuff. But you could see a hint of it where now you can make a somewhat beautiful website while you vibe code. 2026 is gonna be at 50X better

   15. RORory O’Driscoll41:56

       Jason, you're, you're so well-informed on this. If we take that view then of the kind of collapsing of it all into one platform and one location, if, if that is the outcome-

   16. JLJason Lemkin42:04

       Yeah

   17. RORory O’Driscoll42:05

       ... if I pressed you on saying who the winner of that will be then, who will that be? Will that be a Cursor? Will that be a Claude Code? Will that be a Figma?

   18. JLJason Lemkin42:14

       Honestly, and I know this sounds Captain Obvious, I honestly think it's gonna be who wants it the most. You almost have to work so hard. You have to 12, 12, 9. As hard as we're working at Cursor, and it's been great, we might have to work even harder, but maybe Figma works even harder. I know this sounds silly, but everyone can copy each other in weeks now, not in months or years or quarters, and it's who really, really wills it into existence. I, I don't think we can sit back as VCs and just, even with our king- great king-making checkbooks, I don't think we can fully control the outcome. I think the ones that work, that produce 10 times more output are honestly the ones that are gonna win, the leaders. I don't think we can predict. It's easy to bet in favor of Cursor over Figma because Figma took, what, a decade to get to a billion? And Cursor took [laughs] you know, a year. So if we're momentum better- be- betters we have to, we have to bet Cursor, right? Even though there's reasons to bet against it, right? They don't, they're not designers. They don't have the base. They don't have the customers. But if I had to pick, I would bet on that, that, that, that rapidity today.

   19. RORory O’Driscoll43:19

       Is this the interim step to Cursor moving down further or up, whichever way you wanna take it, into consumers and into Lovable and Replit zone?

   20. JLJason Lemkin43:28

       It could be. I, I, I think the only reason Cursor didn't build Replit or Lovable is it wasn't worth their time because they're in an even bigger, better market for the moment.

   21. RORory O’Driscoll43:36

       Agreed.

   22. JLJason Lemkin43:37

       I, I honestly think it was just a distraction. As big as that market is, as, as exciting that those guys together will go to almost 500 million in a year, Cursor got there in nine months. So you, you're taking your eye off the ball to invest in a high churn, friction-full space when they probably have 160% effective NRR at a rev level because nobody leaves Cursor, right? Why would you invest in a smaller high churn space when you have insane retention, um, and you're growing even faster? It's just you'd have to... A- and you wanna have a team of, in triple digit number of employees. [laughs]

   23. RORory O’Driscoll44:07

       Okay. And just intrinsically, the budget for software teams building professional, you know, enterprise grade software is just logically larger than for demo apps or prosumer apps. So maybe there's more individual users of a Lovable or a, or Replit's kind of in the middle, but the reality is you're accessing the big dollar spend of every software company and every enterprise company when you're Cursor. I don't think all, all, uh, that the Figma market and the Cursor market fully converge. The equivalent now of a Figma design is in fact someone using Replit or Lovable to do a, a direct mockup, an interactive mockup versus just a design mockup. But there's clearly between them all, there's this kind of smooshing together and that's just really significant because what were separate markets are all... They're all gonna be competing with each other 'cause the prize is just so big. And, you know, I thought, Jason, you did a nice blog post, uh, well, I don't know if you did it or your AI machine did it, but, you know, making the point that, you know, when you look at, uh, citing the Menlo work, which is really nice, that, you know, 50, 60% of all the end user spend on AI right now is coding and coding related. This is the big kahuna, right? Everything else, even customer support, all the other stuff is, everything else to a rounding error is 45%, and software and coding related stuff is 55% of all enterprise end user spend. This is where, this is the epicenter of the enterprise AI revolution right now. 55% of AI spend is in coding. What will it be in three years?

   24. JLJason Lemkin45:41

       Well, that was the point of my post. I don't know. Like if, it, it, it, you, you hope the other categories are just behind in a sense, right? Um, but maybe it's intrinsic to the extreme value, right, in a very large category of software. Maybe we, we, w- I, I don't know.

   25. RORory O’Driscoll45:55

       Yeah, I don't know. But, uh, how about this answer? I can give you... I don't know the answer to that question. I can give you a quick answer to an adjacent question, which is fun, is that the total spend, the, is kind of 15 or 16 billion on apps and another 15 billion on, plus or minus, on enterprise infrastructure, which I don't fully understand what that category is, but leave that by the by. So the big aha again is end users in the enterprises are spending about, per the Menlo data, $15, $16 billion on AI, and the people who make AI are spending $400 billion on, quote, "making AI." Right? If that's 16 billion at 3 or 4X last year, it's got to 3 or 4X a bunch more times before it can cover the nut on the CapEx spend, right? To me, that's the most important. I mean, I, I, I'm less clear on what the mix will be, but somehow enterprises have to find not 15 billion, but 150 billion of budget. Otherwise, the people investing 150 billion in CapEx are going to have a sad day when their CapEx is greater than the revenue line. So I think the overall growth is the

9. 47:02 – 56:43

   The Biggest Danger for Incumbents: Being Maimed by AI

   1. RORory O’Driscoll47:02

      key question.

   2. JLJason Lemkin47:02

      Could I just go back to one point on Cursor versus Figma? 'Cause I do think it's so important to founders and investors and exec- I think one risk is that Cursor completely displaces Figma. We don't need it. Let, let... That's unlikely for a lo- a lot of reasons. I think the bigger risk for so many vendors is that it maims Figma.

   3. RORory O’Driscoll47:18

      What does that mean, Jason?

   4. JLJason Lemkin47:19

      Not... The old customers don't leave, okay? HubSpot and Box and, and even Anthropic using it, they don't leave. They renew. They don't buy as many seats, right, because the team is also using Cursor. But of course, they don't churn. The logo retention remains good, but NRR drifts down, and new customers, the next generation, the kids from YC, they defer that purchase because they're doing enough in Cursor. And I'm seeing this across my older portfolio, that folks are maimed. Like the re- the, the, the existing retention's good, um, but the new guys are just taking enough of the new budget that your growth materially decreases. I think this is a risk for almost every- everyone that's established, is you just get maimed.You don't get killed, you get maimed. And Cursor could easily maim this market, it's so big

   5. RORory O’Driscoll48:06

      I do f- think of the Holy Grail movie where, "It's just a flesh wound." [laughs] Sorry.

   6. JLJason Lemkin48:11

      It's a deep one, though. It's the one that never quite heals. [laughs]

   7. RORory O’Driscoll48:15

      Mm.

   8. JLJason Lemkin48:15

      And you sit in the board meeting and you're like, "Well, w- we had-

   9. RORory O’Driscoll48:18

      No

   10. JLJason Lemkin48:18

       ... 15,000 customers last quarter, Rory. Now we have 15,200. Hooray. [clapping] Uh, k- kudos." [laughs]

   11. RORory O’Driscoll48:26

       L- low growth is miserable. Agreed.

   12. JLJason Lemkin48:27

       But it's this maiming that I think people aren't, a lot of founders aren't being honest about how they're being maimed by AI leaders. They're being maimed. They're not being c- they're crushed is the narrat- we- narrative we talk about, but maiming is almost worse.

   13. RORory O’Driscoll48:41

       Jason, who, uh, who, who else is being maimed?

   14. JLJason Lemkin48:43

       Well, I mean, Atlassian is slowing down, right? GitLab is arguably being maimed. I mean, m- many public companies are being maimed. You've got to be Datadog and have so many leading products in market almost not to be maimed. M- it looked like Mongo was being maimed until they fought, until they fought back, right? It really looked like they were being mon- m- maimed by all the new Postgres and other competitors. Um, they're back, although maybe they're maimed in the sense they should be growing faster given the growth of AI. Like, Mongo should be this great, uh, Broadcom-like AI beneficiary, and, and they are, but they're not, they're, they have so many competitors now. There's so many Supabases and others that are taking pockets of market share away from them, um, that, that you might not even see some of the maiming, right? Maybe Mongo should be growing 50%. Why shouldn't it be, right? It was the leading platform, and the explosion of apps that we're building today is unprecedented. Why isn't Mongo growing 50%?

   15. RORory O’Driscoll49:33

       The way you see it is y- you, you see those CIO surveys where they rank their priorities, and what happens is, you know, as AI has gone up the zeitgeist, it's gone up the priority list, and just something that was number three goes to number six, and then it doesn't get funded. And I think that's part of the SaaS slowdown that we've seen across the board in the public companies. You're not selling the new, new thing. So I'm kind of with you, Jason. And even at the infrastructure level of the, you know, the GitHubs and things like that, y- y- you have to co-attach to where the budget is. And, you know, if you're selling infrastructure, but you're selling it to the people who aren't doing AI, then you're going to be dealing with a slow-growth secular story. If you're selling that infrastructure to, you know, Anthropic and OpenAI and the JP Morgan AI initiative, you're probably gonna... You're not gonna be an AI company, but you're gonna have some of that growth rate.

   16. JLJason Lemkin50:20

       I mean, maybe the most maimed that I can think of, it may not be fair, is UiPath. Like, we can say, "Hey, UI-" Until Daniel came back, we missed the AI wave, but it's not that simple. Like, UiPath is not hemorrhaging customers. It's growing.

   17. RORory O’Driscoll50:32

       That's a good point.

   18. JLJason Lemkin50:32

       It's back to 16% growth. Stock's up 27% this year. Go Daniel, right? Um, it just got maimed because, uh, you know, RPA in part got replaced with agents and AI. It got maimed. It got maimed.

   19. RORory O’Driscoll50:44

       Yes. You would just do... I think that's a great example genuinely, Jason, 'cause I think you are, you would just... It's kind of one of those moments where you do it in a different way if you were starting now to automate, and you'd start with an agent. You just wouldn't start by doing the thing that they do. What do you do if you're Daniel?

   20. JLJason Lemkin51:00

       Well, he has stabilized the ship, right? Ri- he ha- gr- growth has come back a bit. He basically checked out, like a lot of folks did when times were easy, when n- products didn't change. He called it a day, and then that, how long did that last, eight months till he had to kick out the CEO he brought in? It wasn't even t- he didn't even make it to, to do a year. [laughs] But-

   21. RORory O’Driscoll51:17

       I think what you have to do is say to yourself, there's a way you do automations in 2025 that are agentic. UiPath's automations were very deterministic and brittle. You know, you do exactly these three steps in exactly this order, and then it works, and you can automate away humans. Now you can have a 10-step automation where you have some decisions. The, the good news is there's a bunch of companies from Y Combinator on that are doing this kind of stuff, and you should buy or build enough to just take the pain and insert yourself into relevance, right? That's, and I'm sure he's on it. I mean, this is not a, this is a very smart man who knows what it has to take. But it's just, as we've discussed before, the, the hard thing isn't intellectually knowing what you have to do. The hard thing is just driving it through an organization who will invariably say, "Our stuff already does that." I mean, yeah, we've looked at a lot of the companies that are the next generation companies, and you do the research and you do the reference calls, and the UiPath team will say they have something like this. And they do, but in the eyes of the customer, it's not perceived as the new thing, and you've got to change that perception, and it just requires, you know, a supreme act of CEO will. I didn't like the founder mode cliché, but I've come to the conclusion it's what you're dealing with here. You know, it's like you just got to say, "We are, we are refounding the company in the age of AI. We are not gonna lose any of these AI-first deals, and we're gonna make it happen." That's what you have to do.

   22. JLJason Lemkin52:42

       You know, in a way, though, I agree with all that. I think Daniel, as hard a job it is, he has an easier job than some. Because let me just step back to the numbers. Here's what I would do. Com- 1.8 billion in ARR, but he's got 98% GRR and 107% NRR.

   23. RORory O’Driscoll52:56

       Yep.

   24. JLJason Lemkin52:56

       Okay? So mathematically, one problem is his NRR has fallen from the 140% peak at the IPO because people aren't buying that much more for UiPath. But he's got 98% GRR, 98% retention. He has enough time as one of the greatest B2B founders out there to build the agentic products that $2 billion of his customers want to buy and aren't leaving. It's the same opportunity Marc Benioff has. Now, I think I would argue Marc, with his megaphone, is actually, like an Aaron Levie, is doing a better job publicly of bridging the gap, but they have the same job. We have extremely high revenue retention. People aren't leaving.

   25. RORory O’Driscoll53:33

       Yep.

   26. JLJason Lemkin53:33

       The entire, no matter what anybody says, we're in the first inning for AI B2B. I can tell you why. We're in the first inning. It's brutal, but you have time. You've got six, 12, 18, 24 months to roll out a high ROI agentic products, and you just got to get enough of your $2 billion base to buy them, and you're back to 30% growth. He goes from 107 NRR to 100... You know, Databricks has 150% NRR at 5 billion ARR. Get it up10 p- I mean, I know it's easy to say, but that's the job. M- make those happy customers buy more of your eugenic product, and it doesn't have to be all of them tomorrow. It has to be more of them each, each quarter, and you're back in the game

   27. HSHarry Stebbings54:14

       Isn't it as simple as, like, the Alex Rampell quote, which I love, which is, you know, "Can the incumbent acquire innovation before the startup acquires distribution?" Exactly this point.

   28. JLJason Lemkin54:24

       Yes, but then I... Listen, you don't have infinite time, but I think everyone has time with 98% GRR in 2026, 2027. You don't have infinite time, but don't p- like, pa- get rid of the CEO you brought in so you could relax. Like, go into Sergey Brin mode, but you do have time. It... The game is not over

   29. RORory O’Driscoll54:42

       To take that quote, I think it's a good quote, and to some extent it is, quote, "that simple," but actually I'm gonna find myself surprisingly agreeing again with Jason on the human factor. I think the hard part of doing it is can I... You know, can big co acquire innovation faster than new co can acquire distribution? Let's take that as a construct. That's actually not the issue, 'cause they c- they can acquire innovation if they can push it through and if a technical fou- The really hard part is there's gonna be about two or three years where you're lifting the growth rate from 9% to 11%, and the stock doesn't give a shit. And then 11 to 13, and the stock gives a shit. And then you're at 50, doesn't give... And then the activists whine. And just... Because the problem is, we talked about this with Salesforce, the physics. Like, if I have a zero-revenue company and I can go to 100 million, that looks amazing. If I have a $2 billion revenue company and I sell them 200 million of the new thing, I'm twice as big as this little sexy startup, but I've only got a 10% growth, so I'm valued at five times revenue, right? You've got to push that Sisyphean rock up the hill for four or five years, keep everyone motivated, and just accept that it's a grind, right? And that actually is the hard part, and that's why I admire the CEOs. You know, I, you know, I admire Benioff for turning up and keep doing it. I admire Dynes. I admire Aron enormously for that. They're just saying, "We're not gonna roll over and die, which... 'Cause we can be relevant, and we're just gonna do what it takes." But the point I'm trying to make more than that is there's not a moment of, "Oh, I've invented the magic thing. We're cool too." No, the market will say, "No, you're not cool. You're a $2 billion boring old company." You gotta make yourself cool, 'cause 30% growth, that's what's cool, and it's just that journey

   30. HSHarry Stebbings56:17

       30% growth, that's what's cool. I love it. Uh, Daniel is also one of the biggest warrior CEOs. You know, the Ho Nam's cockroach founder. Just relent-
10. 56:43 – 1:02:23

    Boom Supersonic Raising $300M to… Power Data Centres… WTF

    1. HSHarry Stebbings56:43

       There are two that you could pick on for that from this week. Boom Supersonic, the plane builder that gets an order from Crusoe and is raising 300 million in the back of this to fund it and to open up this new line of business, or Harness, which raised 240 million at 5.5 billion to automate AI's after code gap. Which one do you wanna take? 'Cause both of them are-

    2. RORory O’Driscoll57:07

       Harry, Harry, anyone who chooses between a supersonic plane and a software infrastructure provider and chooses anyone other than option A has no soul, right? Of course you gotta talk about the supersonic plane. For God's sake, man, this is not even a choice. Um, so, yeah, just for context for everyone, yeah, Boom is just an awesome company. They are building a supersonic airplane from scratch, and they're designing both the plane and the engines. This is a hard, hard, hard task, even for existing plane manufacturers. Typically, Boeing builds planes, G- GE or Rolls-Royce builds engines. So they're taking on the full enchilada. I love it. It's a Y Combinator company. You know, they got a prototype out for, you know, with less than 100 headcount. So everything in your heart wants that to work, right? A, 'cause it would be great to have supersonic flight other than from Concorde, and B, just 'cause it's, it's just an awesome entrepreneurial story. So when I saw this, I will admit, I was like, "Huh." But then you do a little research, and I'd forgotten this, but, um, Rolls-Royce, it's not as crazy as it looks, 'cause what Boom said, Boomie said is, Boom said, they're also going to sell their engines to data centers as e- as for, for generation, right? And when you say it like that, it's like, "Ha, you were making planes and now you're selling turbines?" But in fact, all the airline engine manufacturers, you know, GE in the, the United States and Rolls-Royce in Lon- in, in, in Derby in the UK, I used to run a manufacturing company near there, they all do the same thing. 'Cause it turns out the bulk of what it takes to build an airline engine, o- airplane engine, other than the last bit of propulsion, is very similar to what it takes to build a generator. So it's not crazy at all, and my guess is, this is Jason Captain Obvious, it's a lot easier to build a generate... to take an engine and plop it on the ground and have it generate electricity than it is to put the same damn thing in a plane and have it generate propulsion. So it was actually not crazy at all. I don't know if it's defensive because the plane isn't, is, you know, has a huge regulatory hurdle, or if it's offensive 'cause they can make more money there now. But genuine comment, I wish them literally all the best of luck

    3. JLJason Lemkin59:23

       Well, well, hold on. Boom, Boom comes out of YC. Cool company, right?

    4. RORory O’Driscoll59:27

       Yeah.

    5. JLJason Lemkin59:28

       Quickly raises at a, at a a- arguably fake billion-dollar round from airlines with no revenue, right? December 2024, a year ago, crashes, down round maybe $500 million valuation, but it might be worse when you think about the cram down and the, and the effects. That's, that's, like, not... That's a tough moment. AI, AI booms, and now you're back up to 1.5 billion. [laughs] Like, it's just, like, 2021, 1 billion, no revenue. Crashed to, crashed to half of that or less at the end of last year. Massive cram down round, and then back to 1.5 billion.I mean, if I was an investor, I might still have whiplash, but it's great. [laughs] But who knows how it looks with all that change? I'm not sure. Crazy story. There's so many of those. We all have them. We all have the ones, a couple ones in our portfolio that actually got a big AI lift this year. Big, big one. This Boom, didn't know it would be Boom, but it was. Boom, boom.

    6. RORory O’Driscoll1:00:20

       But you must admit, the, uh, it's one thing to get an AI lift because your cool little network monitoring tool is selling to Anthropic. It's quite another thing to kind of walk into the factory and say, "Guys, strip those engines off those planes-

    7. JLJason Lemkin1:00:33

       Yeah

    8. RORory O’Driscoll1:00:33

       ... slap them on a trailer, and make them generate electricity for a, a, a data center down in Texas." I just love the hard engineering of it all. I would argue, I don't lump Boom into the re-acceleration. I, I think, I think the real, the interesting distinction bet- is I think Boom, in its old and new incantation, are ultra-high risk, very ambitious companies, and then versus the software-centric known business model re-acceleration. I mean, I think that's an, that's the interest- I mean, I wouldn't lump Boom in with some SaaS company that's re-accelerating to 30%. They're just such dramatic risk profiles. You know, I think the interesting question, and I'm gonna tie it into the, the forthcoming biggest IPO ever, is how do you think as a growth investor about ambitious, hard engineering projects like Boom, where, you know, as we've seen, your, the risk of it going horribly wrong and not building a plane is quite high, and maybe you get saved by building an engine. So you go, "Oh my God, that is way more risky than, you know, anything in even AI, LLM land," right? But on the other hand, we're about to cover the big story of 2026, which is possibly the largest IPO in history is going to be a rocket company. So I think the aha is when those h- and it's something founder Sundar said, when those hard tech problems work and when you solve the technology problem, and if you pick the right problem, you know, you have a wildly compelling business. But as the Boom plane part of the story makes clear, they're damn hard problems.

    9. JLJason Lemkin1:02:06

       Well, they've sold zero of either. They've sold no planes and no, and no jet turbines for, for AI power. [laughs] So it's a, it's a big bet.

    10. RORory O’Driscoll1:02:13

        It is a big bet. And you know-

    11. JLJason Lemkin1:02:15

        It's a big bet. [laughs]

    12. RORory O’Driscoll1:02:15

        And, and, and three failed launches in in 2007 and 2008, that's probably what SpaceX looked like, too. You're right. And if it works, you're a genius.

11. 1:02:23 – 1:17:17

    Will SpaceX IPO at $1.5TRN and The Elon Option Value

    1. HSHarry Stebbings1:02:23

       Speaking of the trillion-dollar outcome and the big IPO for next year, we chatted about it. We chatted about the $800 billion secondary. Uh, following that pretty quickly, uh, rumors around the $1.5 trillion IPO.

    2. RORory O’Driscoll1:02:36

       It's funny. The, the exact chronology of last week is we recorded on a Tuesday. We talked about 800 million, billion, sorry, being a high price for that secondary round, and I was like, "Ooh, that feels like a high price based on the numbers." And I'd looked at the numbers and the growth rate and the s- some of the acceleration going on, and I'm like, "Ooh, 800 feels high." And then on Wednesday, before we even released the damn podcast, um, we see the leak that says they're going pub- they plan to go public at 1.5 trillion. So I'm sure everyone piled into the 800 million, billion round thinking, "Oh my God, it's cheap," right? So you can be wrong by 800 billion in a day, right? So I've obviously been thinking about that a lot. And, you know, it's just, how do you get your head around that? It's a, you know, the company's doing 15, 16 billion this year, 2025. Starlink is the growth driver. You know, growth rate was down a little la- this year over last year. Maybe they do early mid-20s next year. So you're talking, you know, 78 times 2026 revenues, right? What's the thought process? I'm genuinely thinking, how do you talk constructively about that? And what I realized is you have to factor in what I'm now gonna refer to as the EOV, the Elon Option Value. Because on all his public companies, you just run the math, you value what it's worth as a business with the TAM, taking it all into account, and then you look at the difference between that and what it's trading at, and that's just basically the Elon Option Value, right? I mean, if you look at Tesla, it's trading north of a trillion. It's roughly 100 and something billion in revenue. Earnings are down. You kind of apply a normal multiple, maybe you get 300 billion. The, the rest is the EOV. It will be the same thing on SpaceX. And he's earned that EOV because he pulled the Starlink rabbit out of the hat. I mean, it's just a st- you know, it was a rocket company, and then it became a communications company. So he's earned... It is credible to say in his case, as in almost no one else's case, this is one of the few people on the planet who literally might find you another trillion-dollar market that you weren't in, that wasn't in the original plan, so roll the dice. If that premium ever evaporates, oh, dear God, if he were ever to die, right? Oh my God, the stock gap would be something horrific, right? Uh, um, so I, I just... What I recognize is you can't run the numbers on SpaceX and come up with the 1.5 trillion. You just can't. But what you can say is someone who's funded, let's be clear, the most successful car company ever, OpenAI, and let's not forget, also founder of OpenAI, looks like the most successful AI company ever, and the most successful rocket company ever. If you're gonna... You know, we said last week, once you're lucky, twice you're good. Three times, you're fricking amazing. So I just have let go. I've let go of valuation. I'm like, I can't figure out how it's worth 1.5, but you just apply the EOV on top of the tw- uh, on top of the 10X multiple, and away you get. It's awesome.

    3. JLJason Lemkin1:05:30

       You have to manifest it.

    4. RORory O’Driscoll1:05:33

       And I'm not-

    5. JLJason Lemkin1:05:33

       That's the, you're missing. This is what he's doing. Even Harry's manifested almost a billion dollars under management. Like, you can laugh, but if you have enough, enough behind you, if you have enough magic and proof points-

    6. RORory O’Driscoll1:05:44

       Totally

    7. JLJason Lemkin1:05:45

       ... uh, you man- you manifest. I think he's manifesting a $1.5 trillion company, and, um, I don't know if all the kids can manifest it, but it's, he's doing it.

    8. HSHarry Stebbings1:05:54

       I can teach him. I, I've learned a lot.

    9. JLJason Lemkin1:05:56

       Yeah. Teach him how to manifest it.

    10. HSHarry Stebbings1:05:58

        I'm manifesting a beach house in Laguna Beach.

    11. JLJason Lemkin1:06:00

        You're a manifestor. Harry, you are... People don't get it. You are an S-tier manifestor.

    12. RORory O’Driscoll1:06:06

        Then Elon would definitely be an S squared, S cubed, S to the power of 10. I mean, it's just genuinely-

    13. JLJason Lemkin1:06:10

        It breaks the, you just have this other thing up. Yeah, it's just not even at play in the same game.

    14. RORory O’Driscoll1:06:14

        As I said, 'cause I really was thinking about, you know, look, I, I, you look at the numbers and you go-Uh, you know, 15 billion plus or minus, you know, two, four or five billion of space revenues, which is wonderful but capped. You know, you've got these customers, there's a certain amount of vol- ... They already have 90% of the volume. Then you start estimating, well, how big can Starlink be? Dear God, let it be on every United flight soon. If, if anyone from United is listening, I actively avoid your planes 'cause they don't have U-, um, Starlink enough, so please fix that. So they get all that. They get all the world broadband. You still struggle to get to anywhere close to, you know, 1.5 trillion, and that's just... And, and then you just have to go. You're buying a share in probably the only person since the demise of Steve Jobs to literally not do it once, but do it three times. I mean, Jobs did it with Apple, Pixar, and then Apple again, right? Elon's done it with, you know, o- ... I mean, if you get the small ones like PayPal, and then on top of that, Tesla, SpaceX as a rocket company, SpaceX as a communications company, and then of course, OpenAI as the leading intel- um, AI company.

    15. HSHarry Stebbings1:07:24

        He did SolarCity as well, didn't he?

    16. RORory O’Driscoll1:07:26

        He did, but that didn't matter as much. I mean, that was a, a just a simple humble two or three billion dollar outcome, you know. Not- nothing among friends. So yeah, even rounding out the little ones, right, you're just left with it's the most entrepre- it's the most impressive entrepreneurial record possibly of the last 30, 40 years with, as I say, with the exception of Steve Jobs. And you just at the margin, you lean in. Now-

    17. JLJason Lemkin1:07:48

        I can't get the math to work either, right? But the one thing is I do think E- Elon's all over the place, unlike Sam Altman, where every single thing I think Sam says, as off the cuff as it looks, is very thoughtful. But, but I think Elon talking about space-based data centers is his next big play potentially. I think there's a reason he's communicating this well ahead of the IPO. I think this is the, one of the big plays. Is it's, it's... I mean, I mean, it is, it is, i- I mean, it is an incredible business as it already is. I have three Starlinks. I'm, I don't know what I'm paying. A lot, right? And it's great. But i- if all of that, starting at the beginning of the conversation, if all that Oracle and CoreWeave and Neebus revenue all goes up, up in the sky, [laughs] deep far in the sky, th- that is a lot of money, and, and, and he's the only one that can do it. He's the only one that can build data centers in space. And, and I don't think he's joking. And it's easier than going to Mars, or at least it's easier than getting back from Mars. It is not easier... Going to Mars is not a huge challenge. [laughs] It's getting back. So we might be underestimating the data centers, uh, in space. It's possible.

    18. HSHarry Stebbings1:08:50

        Would it be a successful IPO at 1.5 trillion?

    19. RORory O’Driscoll1:08:53

        That's an interesting question. For the buyers or the sellers? It will be the most successful IPO in human history for the sellers. You know, I mean, I just think what Founders Fund are gonna record on this is gonna boggle the imagination. Will it be a good pro- stock to buy at 1.5 trillion? Is that what you're asking, Harry?

    20. HSHarry Stebbings1:09:11

        I'm saying will there, will there be investor demand at 1.5 trillion, enough to satisfy it, and then a stabilized period where it doesn't tank afterwards?

    21. RORory O’Driscoll1:09:21

        Gotcha. I can ans- I don't know, because I, the, the thing is, because you're asking me to assess something that's not within the bounds of logic, right? I don't understand the Tesla market cap relative to the financials or even the TAM. I don't think people get though, I'm running the numbers. So you're trying to assess the honest, the, the, the non-quantifiable. So I, I don't know how you c- I don't know how you can come to an informed conclusion. I don't understand the mindset of someone who, um, would buy based on the intangible at that kind of price. I think as a rational buyer, you look at the upside downside risk and you get very nervous. But I think the same has been true of Tesla for the last five years. It's been up and down. The financial performance has been fairly mediocre for four years, but the stock has stayed up. So y- you're asking me to speculate on the propensity of the marginal Elon believer to buy the stock at 1.5 trillion, and I have no way of assessing that. I think it'll be a tricky one to get done. I would not en- The bankers are pitching this week. I would not envy them their task.

    22. JLJason Lemkin1:10:22

        He does seem to have an ability that maybe no, no one other than Bezos in his prime has, which is give me five years. All his, all of Elon's, uh, dates are wrong. E- everything is full s- full s- self-driving. Everything's, everything's behind, from the Model S to the Model 3 to, to Starlink, and everyone gives him another four to five years. And the day traders are gonna enjoy this stock. So it's just hard to predict when everyone gives you another four to five years. They're really not trading on today's revenue or today's anything. Um, and it, it's a, it's a gift, but he's very good at that. He's very good at over, at over-predicting but ultimately delivering.

    23. RORory O’Driscoll1:10:59

        You're exactly right, Jason. And, and, and, and, and that, that is true. I mean, maybe going back to the quest- on a technical level, for lack of a better word, you know, I can't speculate, but, like, it is a daunting task. You know, are you gonna raise 30 billion, which is only 2% dilution, which means it's still widely traded, or are you gonna do the typical IPO has 8% dilution, so that would be, I mean, let's do the math here, about 120 billion, right? Is there 120 billion of raw risk capital that says, "What I really need in my portfolio in 2026 is some 70x run rate revenue space investors, investments," right? I, I, I, again, some poor banker is gonna have to get on his PowerPoint, get on his private jet, and start flying around the world and saying, you know, "How much of this do you want?" Now, and I think in this market, it, it... I don't know, I don't know how to assess who that investor is. Do the index funds buy it? Do the, um, you know, do the sovereign wealths buy it? You know, I think there'll be a lot of a consumer and retail appetite. I, I just don't know how that all comes together. It will be fun to watch because it will probably be the most challenging IPO story if it's anything like that valuation. Now, the other thing you might see is the valuation gets walked back, um, to the merely outrageous. [laughs] The most impressive thing is the entrepreneurial oomph by articul- I mean, I heard Peter Thiel speak about this years ago. It's like when you have a big enough vision-You do get a buy on the little shit. And Elon, by having that big vision, I think has been able to paper over the cracks that would've killed many a lesser man. Good luck to him. I mean, it's great. In the end, I like my Starlink too.

    24. JLJason Lemkin1:12:35

        I mean, here's one snare for what it's worth. Uh, Google anchors them with 10 billion. They're already, they're already a 10% shareholder. Um-

    25. RORory O’Driscoll1:12:42

        In for a penny, in for a pound.

    26. JLJason Lemkin1:12:43

        They may have... Maybe it's a, maybe it's a Gemini partnership in space that's part of it. They get first access to the TPUs in space. It's not... No. So they put in 10 billion. Um, it's, it's good timing with AI and, and as soon as that is, we're running outta space in the IPO, and the banks run around. Google's in for 10 billion. Every, uh, everyone else is in for another fi- Fidelity's in for 2 billion, and all of a sudden you start to panic that you're not gonna get your shares.

    27. RORory O’Driscoll1:13:08

        Maybe... I- if you get a call in 10 minutes from Goldman Sachs or Morgan Stanley, you'll be signed up as a banker by Friday. I love it. You're exactly right. That's... It's a na- Maybe the best company. It's a narrative story, and Jason's just shown how easily a narrative can change. It's not a story like a PE-backed public IPO where it's like at eight times ARR you can get 6X coverage and at, you know, 10 times ARR you can only get three, so the deal gets done at eight, right? This is a totally different thing, and, you know, this is, this is in tune with the zeitgeist. It's all narrative all the time. And you're right, that would be a very clever way to do it.

    28. HSHarry Stebbings1:13:43

        Jason, that was fantastic.

    29. RORory O’Driscoll1:13:44

        Yeah. He, he should be a banker. He's right. He's exactly right.

    30. JLJason Lemkin1:13:48

        Well, Google almost bailed out Tesla at the last hour when it almost went bankrupt. It's already happened, and Sergey's back running Google. It's just 10 billion. I can tell you, we, we do work closely with the, with a lot of the folks at Google Cloud with SaaStr. They are feeling strong. We work with a lot of folks in marketing and product. I've never seen a team feel more energized in the entire decade I've worked with them. Like, they are on... They are feeling that they are winning, and so why not put a $10 billion to get my TPUs in space? It's a good deal.
12. 1:17:17 – 1:21:46

    Would You Rather…

    1. HSHarry Stebbings1:17:17

       Okay, we're gonna do a w- we're gonna do a would you rather, Rory. You love this. You've got a Figma at 17 billion or Cursor at 29.

    2. RORory O’Driscoll1:17:25

       Cursor.

    3. JLJason Lemkin1:17:26

       I, I, I'm gonna take Figma, um, only because I don't believe Cursor's future is as short.

    4. RORory O’Driscoll1:17:35

       Ooh.

    5. JLJason Lemkin1:17:36

       I think a Cursor is magical. I think it's a gift to humanity for folks that have built software. Um, but I, I think we are... I think if we keep doing this podcast long enough, we're gonna see I'm right about something else, which is everything's much less stable than we thought this year. The categories, the Harveys, the Cursors, these are incredible companies. I wish I invested in all of them. Don't get me wrong. We're gonna look back in 24 months and see there was a lot less stability in, in these so-called leaders than we thought. It's not that they w- gonna go to zero, but we are so early in AI that I just, I, I, uh, I'm gonna, I'm gonna take Figma on this one. But it's a tough one. It, it's a tough one.

    6. HSHarry Stebbings1:18:13

       Rory, you don't...

    7. RORory O’Driscoll1:18:15

       No, I don't feel the need to argue. Um, I mean, I think that, you know, that's the beau- that's the beauty of money. You just make your bet and then, you know, you don't have to justify your position with English. In the end, you're right or wrong on the numbers.

    8. HSHarry Stebbings1:18:29

       Yeah, Jason. He doesn't need to argue. God. [laughs]

    9. JLJason Lemkin1:18:32

       [laughs] I don't like to argue.

    10. HSHarry Stebbings1:18:34

        Let's shit on Harry's tweet and then just not argue. Um-

    11. JLJason Lemkin1:18:37

        I was a little argumentative last week. I hope it doesn't happen again. But yeah, keep going. What's the next one?

    12. RORory O’Driscoll1:18:42

        OpenAI at 500, Anthropic at 360, or Google at two trillion I have to take Google. The reason is, is just the l- the level of con- I don't mean arrogance, confidence in where they're going that I see across the team we work with. I, I know it sounds small, but it's not. When I see everything's going right and the team feels it, and the team knows it, how often does that happen at this scale? Not that I... I don't think everyone at Meta is cheering that they're crushing it, right? I gotta just, uh, just, just odds risk-adjusted, take Google. Wouldn't have been true a year ago. Gotta take it. But the point that I'm gonna give you... Okay, I don't know my answer yet, but a- actually the point is, a year ago it should've been time to take Google 'cause the stock's up 60%. You may now be the other s- you may be the wrong side of that trade. Um, you should've taken the quick pop. Um- I'm not a trader. [laughs] I know. True enough. [laughs] Um, I mean, they make north of 100 billion a year, 20, so you're buying in at 20 times plus or minus opera- um, EBITDA. It clocks in north of 100 billion of profit a year. Everything else was a positive when we talked about it nine months ago, and the risk was erosion of search. All the positives have kinda gotten better, and the erosion of search haven't happened. So yeah, you do have to give it consideration. Um, eh. Ugh. This is hard. At 170 I'd have taken the Anthropic. Do you think An- um, actually, 'cause yeah, interesting company. Anthropic is y- you're giving me the, you're giving me the future round on Anthropic. Has it happened at 300? But the future round at OpenAI is when would that... Is there another round coming on OpenAI? I mean, th- they're always continuously raising, but- Yeah, yeah, yeah ... if you were to do, like, live pricing on them, Anthropic's would be 360, unless you were getting grandfathered into a prior round. Like, the real live price is 360. At 170, Bill, I'd take Anthropic all day, every day, 'cause I think they're being way more sensible than OpenAI, and I think they will get public. And yes, a- at 170, at 300 you might be fully valued. I think the difference between A- Anthropic and OpenAI is OpenAI has more ambition perhaps, but it's more likely to just get caught in the middle with ex- with commitments it can't meet. Whereas I think Anthropic is very sensibly and boringly converging on profitability, will go public, and will be a very nice public company. So of the two, I'd take Anthropic. I'm processing on Google, and it just feels late. I mean, you could argue they're all almost public already. You m- Ugh. Come on, Rory. Shut your face. [laughs] Um, I think I'd go Anthropic. I think I'd go one of the pure plays, even though I do agree with the Google t- I think I'd go one of the pure plays. Boys- Cow, sheep, slow fire. [laughs] Cow, cow, sheep, slow fire. You know, actually I like to think before I comment, so call me strange. Um- Don't worry, we, we edit anyway. It's all good. [laughs] Yeah, yeah, yeah. Get rid of that one. Boys, thank you so much. You continuously make me more and more, um, questioning of my own questions. You know, I, I've done this for 10 to 11 years, Rory. I, I never questioned my own interviewing ability until I started doing this with you, and now I'm deeply forensic on the quality of my questions. Um- I'm just a dick, what can I tell you? No, but you're great.

Episode duration: 1:21:56