EVERY SPOKEN WORD
45 min read · 9,162 words- 0:00 – 0:44
Intro
- JVJay V
Most people in the world still haven't experienced the magic of a coding agent
- JFJared Friedman
This is just an unprecedented market. Like, the market for intelligence has not existed before. Everybody should be thinking in a positive sum, grow the pie mentality.
- SPSpeaker
It's huge in developing countries-
- JVJay V
Yeah
- SPSpeaker
... like Indonesia is 4% of your traffic, Brazil is 5% of-
- JVJay V
Yeah
- SPSpeaker
... your traffic. Places like Vietnam, you know, like-
- JVJay V
Yeah
- SPSpeaker
... places where, um, a $200 a month Claude Code subscription is, like, very expensive.
- JFJared Friedman
You really know you have product market fit when, like, enterprises are bugging you-
- JVJay V
Yeah [laughs]
- JFJared Friedman
... to sign the security agreement so they can use your product. [laughs]
- JVJay V
Just like, "Please do this because I, I, I don't know who you guys are- [laughs]
- JFJared Friedman
[laughs]
- JVJay V
... but a bunch of us are using this." We want, you know, everybody in the world to have that aha moment with a coding agent.
- 0:44 – 1:16
OpenCode's Explosive Growth
- JVJay V
[upbeat music]
- JFJared Friedman
Welcome back to another episode of The Lightcone. Uh, Garry's out traveling today and will be back next episode. Our guest today is Jay V, founder and CEO of OpenCode, an open-source alternative to Claude Code that works with any model you want. OpenCode has been growing at an astounding rate this year. They're now at 4.6 million weekly active users, which is actually pretty close to Codex's numbers. Today, we're going to talk about what's driving their wild growth and also Jay's
- 1:16 – 3:39
20x Growth, 13M Users, and 7 Trillion Tokens
- JFJared Friedman
winding road to get here since the company went through YC back in 2021. Jay, thanks so much for being here.
- JVJay V
Thank you. Thank you for having me.
- JFJared Friedman
Why don't we just start with kind of like the, the crazy scale you guys are at. Um, maybe tell us about, um, any stats you can share with us.
- JVJay V
Yeah. Yeah, I mean, you mentioned the, the weekly actives. Our monthly actives, I think we ended June with around 13 million or so. Um, and that's around a 20X increase since the beginning of the year. We also recently started processing around 7 trillion tokens per day. Uh, for context, uh, OpenRouter does a total of around 6 trillion. I think, again, sort of beginning of the year, we're probably at around 300 billion or so. Um, and then in terms of sort of our revenue off of our subscription product, and if you were to pay per token with our inference, and you took, let's say, June's data and extrapolated for the year, that would be around 31 to 33 million or so. And if you took last week's data and extrapolated for the year, that's around, uh, 38 to almost 40 million. And that's, uh, the inference part of our business, so the way we sort of make money. We had, uh, launched that, call it end of September, early October last year, so about eight months, uh, to getting to around 40 million or so. I guess to sort of round out the numbers, our subscribers, so these are people that, uh, that pay for a monthly subscription with, um, with OpenCode, we launched that product early March of, I think, end of February, and that's grown to around 160,000 monthly subscribers. Yeah, and around... That, that accounts for about 18 million of sort of the annualized revenue.
- JFJared Friedman
I saw a tweet from... I think, I think he... It's Tibo. I think he's a lead engineer, at least one of the main engineers on Codex, saying that, um, something like, I, I guess 5% of all Codex subscribers choose OpenCode as, like, the main harness to actually use the, the underlying API.
- JVJay V
Yeah, yeah. So Codex officially, you know, supported, uh, OpenCode. What that basically means is that you can use Codex's subscription in OpenCode, and yeah, and, and, uh, a, a bunch of, um, their users use OpenCode directly
- 3:39 – 5:43
The Anthropic Controversy That Changed Everything
- JVJay V
to take advantage of their subscription plan.
- JFJared Friedman
And I think they did that right after, um, kind of some of the, some of the, the back and forth you had maybe with An- Anthropic and Claude Code. Like, tell, tell us about what happened and how... That seemed like it really fueled your growth. It was an inflection point for you guys.
- JVJay V
Again, to sort of contextualize this, we were at around 650,000 monthly active users to begin the year, and the first week of January, we started to sort of hear some rumblings around, um, Anthropic trying to clamp down on people using OpenCode but using Claude Code subscriptions on there. And this was a very sort of common way to kind of use, uh, the Claude Code subscription. And the way I think they, they sort of blocked it, or they were, were trying to block it, was if the system prompt mentioned literally the word OpenCode, they would-
- JFJared Friedman
[laughs]
- JVJay V
... they would sort of reject the request. You know, from our perspective, uh, that sort of makes sense. You know, they're, they're sort of subsidizing usage. That's kind of what they wanna do. But of course, a lot of users weren't happy, and, uh, when they had kind of done that, what it inadvertently did was it put OpenCode and Claude Code on the same sort of pedestal. It, like, equated the two products in some ways and-
- JFJared Friedman
Interesting
- JVJay V
... and even for the people that weren't using OpenCode at the time, you know, they, they sort of took notice of the fact that, um, that, you know, Claude Code is, is, is taking that kind of an action against, uh, against OpenCode.
- JFJared Friedman
You got new users because people heard about you for the first time, and they're like, "Oh, Claude Code's, like, banning this thing-
- JVJay V
Yeah
- JFJared Friedman
... or, like, clamping down on this thing."
- JVJay V
Yeah, or that it, it is, like, worth looking into, that, you know, it's not just one of the other dozen or so coding agents out there, yeah.
- JFJared Friedman
It's funny how often this happens in startup. So there's, uh, there's a w- um... Same thing happened with Instacart when Amazon bought Whole Foods. It was like, "Oh, this is, like, the death of Instacart."
- JVJay V
Mm.
- JFJared Friedman
And the death of Instacart became, like, this meme, but the meme actually just, like, drove all the grocers to check out what Instacart was. [laughs]
- JVJay V
[laughs]
- JFJared Friedman
And then they just went through this, like, explosive growth of signing up every grocer in America. So it seems like actually a lot of your growth, uh, is global, sort of across the, the world. Tell us a bit about that.
- JVJay V
Yeah, so the premise of the product is that,
- 5:43 – 6:39
Bringing AI Coding Agents to the World
- JVJay V
you know, most people in the world still haven't experienced the magic of a coding agent, and, you know, it, it, it's been almost a year and I'm sure, you know, like, it, it's sort of hard to remember maybe for you guys as well, but the first time you had this experience, it's a magical experience, and when we had felt that for ourselves, we had sort of recognized that- You know, how important that moment is in sort of tech history, I guess. It, it, it comes along once every sort of generation or so, and the way we sort of looked at that was let's take that, let's take that to as many people in the world as possible. You know, have them sort of experience something similar because the frontier models and the frontier labs charge so much per token that it's going to be hard for a lot of people across the globe to have that experience, and, um, we wanted to make sure they had that with us in some ways.
- JFJared Friedman
Uh, I guess this was at a point where... Is it true,
- 6:39 – 8:56
When Open Source Models Became Good Enough
- JFJared Friedman
like, early on there sort of like seemed like there was a big gap between the open source models and the frontier models? Um, i- is that true? Kind of when you, when you were first launching the product?
- JVJay V
Yeah, for sure. I think when we had first launched, it was mostly, "Hey, you're using your Claude Code subscription with Claude Code, come try that with, uh, with OpenCode." And then, and so this was back in June of last year, and by about August, September or so, we started to see the first crop of open source models, and you had this sense that like, "Oh, they are maybe six months behind." You know? And, and of course there, there's always been sort of a gap between them, but, but that was sort of the first point when people were like, "There's the GLMs of the world, the Kimis of the world, the Minimaxes of the world, and it seems like there is now an alternative." And, um, and as that started to happen, that would trigger a wave of users coming in trying out OpenCode because that was probably the only way you could try out some of these multiple models. And, and as that gap started to shrink or the fact that the open weight models became good enough for real work is when it sort of became viable to use, uh, OpenCode with them.
- JFJared Friedman
Yeah, I think I remember you maybe a f- a few months back you were saying that, um, let me get this right, that even, even though the open source models are obviously cheaper to use through OpenCode, you still saw more usage from the leading frontier model, except was it when Kimi 2.5 came out?
- JVJay V
Yeah.
- JFJared Friedman
That, that, that was the first time that it was equivalent or it flipped.
- JVJay V
Yeah, that, that, that's exactly it. I, I think it was like probably 2.4. I, I, I forget the, the sort of exact model, but, but yeah, this was, this was, uh, February of this year where for a four-week span, and this had never happened in our data before, and I think we're sort of fortunate to be able to see this global usage. And so a lot of times we see the comparison of, you know, these open source models versus some of the frontier ones. And we had noticed for the first time that a bunch of users were just using, uh, Kimi way more than they were using the Anthropic models. It was sort of Sonnet plus Opus at the time together. And, um, that's the point when we were like, "Oh, I think we should launch a subscription product because now maybe these models actually do make sense for real work."
- JFJared Friedman
And so speaking of that, like you guys
- 8:56 – 13:31
What Millions of Developers Are Actually Using
- JFJared Friedman
have this incredibly unique insight, like probably the only... You're the most, you have the best data on just how these models are being used by engineers across the whole world, and you released a bunch of this data. So maybe we could just like look through some of it and pluck out some more interesting insights.
- JVJay V
Yeah. So this is, um, you know, you can go to opencode.ai/data. I think we started to publish this about a month ago or so. This is basically taking all of the usage on OpenCode Go, which is our subscription plan, where you pay $10 to be able to use any of these open source models. And this breakdown specifically is by token volume per day across the different models. So what we sort of see here is that DeepSeek Flash is the one that is used a lot, and there's some sort of details here, and I can kind of go into why that is sort of the case. But if you just sort of look at the, the top three, we're seeing sort of the two DeepSeeks plus GLM, and you can kind of see all the hype that GLM has been getting sort of lately being sort of reflected here in these, in these charts.
- SPSpeaker
Which the data says otherwise as opposed to all the, uh, Twitter chatter about the GLM being, taking over DeepSeek. This is telling a different story.
- JVJay V
Yeah. Yeah, it is. It, it, it's, uh... I can, I can show you a different breakdown here. So this is by unique users, and this was the thing that, that heard you were sort of alluding to. We get to see actual usage data for each of the users as opposed to with maybe like an OpenRouter where you're seeing it aggregated across, um, a, a bunch of services or other products even that are sort of internally using it. In this case, it's, it's an, it's, you know, each one of these is sort of an actual user. But yeah, what's sort of fascinating is if we look at the market share graph, so this is breaking down for each of these labs the amount of token volume they're doing per day, you know, comparing that sort of across them. You can kind of see the DeepSeek one dip around the time GLM sort of comes out, but it, it's seems to sort of bounce back up, uh, after. And I-- W- with sort of some theories around why that's sort of the case, but, but that's sort of an interesting, uh, fact. And then if I go back up to the, the users one, uh, this is also kind of fascinating in that, um, it might be a little bit hard to see here, but if you look at the sort of top three unique users per model, you've got Flash at sort of 38K, and then there is, uh, DeepSeek Pro at 31K and GLM 5.2 at close to, you know, 30K as well. And that's, that's interesting because GLM is sort of on par with one of the DeepSeek models, but the fact that there are two of them, uh, makes it a little bit different. I'll sort of caveat this by saying that DeepSeek Flash being as cheap as it is allows a lot of users to extend how much they can use a, a coding agent because as they get closer to, let's say, their daily or weekly limits, they can switch over to one of these very cheap models, in this case, DeepSeek Flash, sort of get the rest of their work done. Again, this is- Very different from the way we sort of think about coding agents and LLMs here in the Valley, in SF, in, in, in the West in general. So-
- JFJared Friedman
What are you seeing? Yeah, that's, you know, I mean, we, we definitely are the other extreme end of where it's sort of like [laughs] yeah-
- SPSpeaker
Token maxing-
- JFJared Friedman
Token maxing
- SPSpeaker
... internet budget
- JVJay V
Just throwing money. Just throwing money at it.
- JFJared Friedman
Throwing money at it.
- JVJay V
Yeah.
- JFJared Friedman
Um, but for the, yeah, the users you see, which to be fair, it does seem like there's a general vibe shift, especially in the enterprise world towards-
- JVJay V
Mm-hmm
- JFJared Friedman
... like more, um, token budgeting. What-
- JVJay V
Yeah
- JFJared Friedman
... what do you see? Is it as simple as people, once they approach their usage limits, they switch over to one of these models? Or are the... Is there, is there more going on?
- JVJay V
Yeah, there's, there's a few different things. I think people do try and optimize for things. One of the reasons why originally Kimi had sort of taken off was it was being hosted in a way that, uh, the tokens per second was a lot higher than what you would get out of even an Opus. And so it was just a drastically faster model. It felt like you were working almost in real time. And some of these models tend to exhibit those qualities, which makes it, you know, characteristically a little bit different from, from using some of the frontier ones, for example. So, so there is a little bit of that, but yeah, cost is obviously a big driver. Um, and then the other one that pops up every once in a while is, you know, people sort of get a feel that GLM 5.2, for example, is better at front-end design as compared to some of the other models. And so that, that ends up sort of driving some usage as well.
- SPSpeaker
You also have a really interesting breakdown by geo
- 13:31 – 15:27
Why OpenCode Is Huge Outside the US
- SPSpeaker
to show, like, where the users are. Yeah, so who are your users? Where, where are they coming from?
- JVJay V
Yeah. So, uh, again, some sort of, uh, context here is that, you know, we had launched the OpenCode Go plan to be able to serve the sort of global audience. And, and you can kind of see that with, with sort of China being kind of number one at, um, at 17%.
- SPSpeaker
That's crazy. I feel like you're probably the only YC company in history that has meaningful usage in China.
- JVJay V
[laughs]
- JFJared Friedman
[laughs]
- JVJay V
It's also fascinating because a lot of these models are, are Chinese, so in, you know, in, in, in their situation, they're trying to use the ones that, uh, that are being built in, in their country. And, um, OpenCode kind of gives them the choice to be able to do that. So, that's sort of interesting as well. I think the US one is actually interesting to us because when we had built this plan originally, we weren't thinking about the US. We weren't thinking about the States because, you know, as we were sort of saying, you know, people here just throw money at it. Um, but then no, it turns out it's, it's growing really, really well in the States as well. And, um, and maybe, yeah, that speaks to, uh, the sort of vibe shift of, like, maybe you should be a little bit more conscious with, with the tokens. But then there's the other side of this where people want to use some of these. So when GLM 5.2 was getting popular, a lot of people are trying out our, our subscription plan because it's one of the options to sort of do that.
- SPSpeaker
So b- because it's so much cheaper, it's huge in developing countries.
- JVJay V
Yeah.
- SPSpeaker
Like Indonesia is 4% of your traffic. Brazil is 5% of-
- JVJay V
Yeah
- SPSpeaker
... your traffic. Places like Vietnam, you know, like-
- JVJay V
Yeah
- SPSpeaker
... places where, um, a $200 a month Claude Code subscription is, like, very expensive. So, and that makes sense that, you know, sure. But what you were telling me earlier was that in addition to that, there's a lot of, like, large US companies that have basically unlimited budgets for tokens that are also using OpenCode. Can you talk about that and why? Like, who's using you, and how come those people are using you?
- JVJay V
Yeah. This is what we had seen early on before some
- 15:27 – 16:36
Why Fortune 500 Companies Choose OpenCode
- JVJay V
of these, uh, open source models even sort of took off, is that a lot of companies would start using OpenCode because they didn't want to be locked into using a specific model or a specific harness. So, you know, some users just wanted more choice, and this was a good neutral option for them that allowed them the flexibility in the future to switch to whatever they sort of wanted to.
- SPSpeaker
And I think you had a crazy stat. It was something like a dozen of the top very forward Fortune 500 companies are using you and are, have a significant footprint.
- JVJay V
Yeah. It's, it's funny. We, uh, we get DMs, we get emails sort of internally about, "Hey, you know, XYZ company here. We're, we've got a few thousand people using OpenCode now. Please don't share this publicly." But I think most of it, what's sort of going on is like, yeah, they, they, there's just a bunch of choice there. And we can probably talk about this later, but we're very intentional with our product design. We want something that everybody uses every single day, and we hold that bar fairly high. And in those instances, I think that's what's sort of resonating with people, as opposed to the cheaper tokens thing.
- SPSpeaker
I'm very curious on a slightly different topic.
- 16:36 – 20:02
The Economics of AI Tokens
- SPSpeaker
There's been a shift for all these companies like you in terms of the AI token economics.
- JVJay V
Mm.
- SPSpeaker
Because in the old world of companies, other B2C or B2B companies, there was a lot of, uh, CAC that used to be based on ads, and now there's, the question is different, is based on token to acquire users.
- JVJay V
Yeah.
- SPSpeaker
But also even more weird, there's this thing that you're describing where there's some whales that pay for a lot of it-
- JVJay V
Yeah
- SPSpeaker
... at some point, and there might be a lot of churn, but it doesn't matter because as long as you have the power users and experts really using it-
- JVJay V
Yeah
- SPSpeaker
... they convert these large orgs.
- JVJay V
Yeah.
- SPSpeaker
And I think the big labs can su- subsidize that, right?
- JVJay V
Yeah.
- SPSpeaker
Which is what effectively Claude Code and Codex have done. They can subsidize it, but you have a magic formula to skip all this.
- JVJay V
The broader context here is that for you to use AI, and especially these coding agents because of, um, the amount of tokens they use, to use them well, you have to really sort of understand them, and this is the expert thing you're sort of talking about. And to get there is fairly expensive from a per token perspective. And-
- SPSpeaker
Token maxing is expensive
- JVJay V
... right. It's, it's very expensive. And, and that is a chasm that is very hard for a lot of people and a lot of companies to cross. And so what, you know, the Anthropics and the OpenAIs of the world do is they subsidize it so that people are able to cross that. And then, yes, like the, the whales, uh, idea here, a certain percentage of them cross it, get to that point, are spending the, the crazy amounts that you sort of see- And then it makes sense. The entire sort of funnel then sort of makes sense. But when we had sort of approached this, we, we had thought about it from a product perspective where it was, you know, we, we sort of talked about, we want, you know, everybody in the world to have that aha moment with a coding agent, so that's sort of our free tier. And then because the open source models were now cheap enough and good enough for real work, you want a subscription plan that allows them to do real work with it. And that is sort of the thing that allows somebody to buy into, "Okay, now I can justify spending so much more to potentially redo some of the processes within my company to take advantage of these coding agents," and that's when hopefully, you know, some of these sort of turn into whales.
- JFJared Friedman
And is that-- Sorry, and that's what you're seeing, like you're seeing people come in through the free tier to try it out and then become advocates to be like, "Oh yeah, like we should adopt this at our like Fortune 500 company"?
- JVJay V
Yeah, I mean, it, it's to the point that we'll... You know, in, in sort of the older, uh, sort of SaaS enterprise world, you would have this procurement process that a lot of them sort of go through where, you know, somebody sort of reach out and you, you have this whole dance that they do. In our case, the inbounds that we get are typically just like, "Hey, there are a bunch of people at this company, at our company using you guys. Can you fill out the security questionnaire?" And we're just like, "Oh, I-- First off, I didn't know." [laughing]
- JFJared Friedman
[laughing]
- JVJay V
"I did, I didn't know we had users there. Uh, but, but, but secondarily, uh, g- give us a second." Uh...
- JFJared Friedman
You really know you have product market fit when like enterprises are bugging you-
- JVJay V
Yeah
- JFJared Friedman
... to sign the security agreement-
- JVJay V
[laughing]
- JFJared Friedman
... so they can use your product.
- JVJay V
Just like, "Please do this because I, I, I don't know who you guys are, but a bunch of us are using this." Uh, and so, so it is, it is a little bit different now, yeah. [chuckles]
- JFJared Friedman
Once you're through the procurement and admin side of things,
- 20:02 – 22:58
How Enterprises Are Using Coding Agents
- JFJared Friedman
what are the enterprises asking you for? Like are they, are they asking you to... Are they trying to pull the product in a different direction? 'Cause that often tends to be something that open source companies have to think through and be careful about.
- JVJay V
What's interesting here, I think, is, um, these coding agents are at the core of how an LLM does work, and so a lot of times when we get these enterprises sort of reaching out to us, it's because they're trying to figure out where else they can use it. The, there's the obvious one, yes. We've got a bunch of developers at our company that are using OpenCode. Let's just figure out how we can officially use it. And then on the flip side it is, "Oh, there are some non-technical people that would wanna be able to use this as well." And then, you know, secondarily there's this, our product is probably going to be using a coding agent as a part of its core loop. Can we sort of use it there? So yeah, so we, we get some sort of pull there. The other bit of pull that we see is mostly around just managing, you know, tokens a little bit, but, but being like, "Hey, there's a, there's certain organizations within our company that don't need the frontier models. Uh, can we, can we sort of limit access there or, or, or, or have some more creative ways of, uh, of managing token spend?" And we see pull there, and so, you know, there, there's some sort of questions around that. The strange one we had gotten recently was, uh, somebody wanted to be able to, you know, mostly just have really good visibility of exactly what everybody's doing at the company, and then that sort of gets into questions of like, you know, is that something we wanna build? [chuckles]
- JFJared Friedman
Didn't Ramp use you in sort of an interesting way?
- JVJay V
Yeah. I, I, I think Ramp was very sort of forward-thinking. They had published a blog post, I think this was in December of last year, but they had reached out prior to that where a team within Ramp had kind of built this Slack bot that was, uh, essentially running OpenCode behind the scenes, and it was just sort of incredible to see. It was, it was mind-blowing partly because we hadn't even done that yet internally, and they were showing off a use case that, that was definitely pointing towards the future and-
- JFJared Friedman
Uh, what does that mean exactly? I think it can be hard for people to get their head around 'cause they think of you as like a-
- JVJay V
Yeah
- JFJared Friedman
... like open source Claude Code. Like what does... So what does that mean that their, like their Slack bot was running on OpenCode?
- JVJay V
Yeah. So you can think of OpenCode as a two-part product. There is the UI and the application part that you sort of see and that you interact with, but then there is the agent loop, the thing that's actually doing work while calling the LLM, and that is sort of behind the scenes. That's a little bit of like w- we call it the server. That server can be embedded separately from, from the UI, and so in this case, they were embedding that and running their Slack bot off of that.
- SPSpeaker
YC's next batch is now taking applications. Got a startup in you? Apply at ycombinator.com/apply. It's never too early, and filling out the app will level up your idea. Okay, back to the video.
- SPSpeaker
Can you tell us a bit about, um, sort of these, these
- 22:58 – 24:56
AI's New Unit Economics
- SPSpeaker
numbers and how the, um, unit economics work? Because, uh, there was a shocking, um, stats that was mentioned in Dylan Patel's podcast that Anthropic is profitable and by a huge margin. In Q2, they are on track to be doing 50 billion annualized revenue and around 70% margin. But they got there. Before, the previous year was not profitable and way less, and they crossed this chasm, which it sounds like where you're heading, but you don't have to subsidize it, which is special.
- JVJay V
Yeah. I mean, we, we do subsidize a little bit, right? The, the subscription plan that, that we kind of have. But yeah, the, the-
- JFJared Friedman
And you have a free tier too.
- JVJay V
And we have a free tier, yeah. And, and, and I think that's the, that's the CAC part that you were sort of talking about early on where-
- SPSpeaker
The new, the new ads is-
- JVJay V
Yes
- SPSpeaker
... uh, rather than ads-- The CAC is rather than paying for ads, is paying for tokens.
- JVJay V
Yeah, it's because that's, that's how people sort of experience that kind of magic moment, and that's the way we sort of get them into using the product, understanding what a coding agent is. All this stuff is, um, is definitely like, you know, a little too much for, for a lot of people, and I think the, the part here In terms of the unit economics that kind of works out is if you're actually paying per token, there, in the case of Anthropic and in the case of how we sort of operate as well, we're able to get, at least in our, in our scenario, we're able to get volume discounts because of the amount of tokens that we sort of serve. And so when you pay per token, that effectively turns into our margin. Whereas when you're subsidizing, yeah, obviously you're, you're sort of eating the cost there, or in the case of the free tier, yeah, you're eating the cost as well. But, you know, you were sort of talking about this before, as you start to get more and more of these whales, those whales are paying, you know, per token and it's directly feeding into your margins.
- JFJared Friedman
Yeah, the discounts you're able to get by sort
- 24:56 – 29:55
Why Model Choice Matters
- JFJared Friedman
of, um, aggregating the tokens is interesting because, I mean, it's something we've talked a lot about over the last year in particular. It's where's... I mean, everybody in, in the valley is at this point, so where's the value gonna accrue? Will it be the frontier models are gonna make all of the money and everything at the app layer or, um, uh, is left for dust, or will it go the other way? Um, how have you thought about that? 'Cause yeah, you're, you're in an interesting spot because you're at your... Y- you actually really do own the relationship with your end user, and you're sort of effectively making it easy for them to pick and choose the models that they want to, to run with. So just what, what are your thoughts on where this all plays out and what, how it will hopefully play out in a good way for OpenCode?
- JVJay V
Yeah, it, it feels like a little bit like a marketplace where a user is able to sort of make the choice of the model that they kinda wanna use, and different models, different attributes, you know, different cost characteristics. And our, our claim here is, look, we want to showcase that diversity as well as sort of possible, and that also creates an environment where the, the labs are aware of each other, and that competition ends up being good for, for the consumer in this case. Whereas the flip side is if you're locked into a specific vendor, then you don't benefit from, you know, uh, the, the sort of competition that, that would otherwise sort of come with it, and you're likely, you know, helping their, maybe their margins in some ways.
- JFJared Friedman
Yeah, I kind of feel like your growth is, is, is a pretty decent proxy for the fact that the choice has only improved over time, right? Like-
- JVJay V
That's exactly it. Yeah, yeah. I, I think every... We could probably track back to sort of our bump in, in, uh, monthly active users down to some sort of bump in the open source, uh, model market. And the way we sort of think about this is that it's not that we're picking a winner in terms of a model lab, we're just betting the field. We just think the rest of the field is going to do well.
- SPSpeaker
The next logical conclusion of this is that models are becoming commoditized utilities.
- JVJay V
Yeah, yeah. I think, I think what's sort of interesting here is that the market is so large that it is hard to imagine people not, or model labs not picking off niches and chunks of their own in that they're specializing for specific areas or specific characteristics. Like in our case, when, when you sort of see some of the data that we were looking at before, you've got obviously the frontier labs, you know, we sort of know them well. But when we see the success of DeepSeek, it's very clear that they have picked the cost part of, of the quality-cost, uh, performance sort of, uh, axes, and then they're basically saying, "Look, we wanna be very, very good at that part." And, you know, it, it, it's hard not to imagine that happening across the board across all these characteristics.
- JFJared Friedman
Yeah, it feels like if you truly believe the sales pitch that the labs themselves make, which is this is just an unprecedented market, like the market for intelligence has not existed before, everybody should be thinking in a positive sum, grow the pie mentality, in which case, like, they should really want you to grow and succeed because you'll end up just being like a, a huge customer for all of them.
- JVJay V
Yeah. I, I, and I think that that's sort of true now with these open source models. We're the largest customer for most of them.
- SPSpeaker
You're the largest customer for most of the open source models?
- JVJay V
Yeah, yeah. Just in terms of the token volume-
- SPSpeaker
That's huge
- JVJay V
... I think the amount that we do, yeah.
- SPSpeaker
Wow.
- SPSpeaker
So that means that you guys must be sort of like locked in this like symbiotic relationship now where like you both need each other for this machine to work.
- JVJay V
Yeah, the other half for us is the ecosystem, right? So we, we look at the open source ecosystem as a whole, and we're going, "Look, we, we need to make this entire thing sort of work." And, and again, with, with all the talk of sort of open source models lately, that's, that's essentially our pitch.
- SPSpeaker
Since you're the largest driver of most of the open source model companies, you must have this incredible, like, insight into like the GPU market and where all this inference is actually happening, 'cause you're the ones driving the inference. Um, are you seeing anything interesting in the GPU market? Where's all this OpenCode powered compute happening?
- JVJay V
Yeah. So we, we, we rent GPUs. We, we work with providers that provide just straight inference. We work with the model labs themselves. But one thing that we started to notice that was sort of interesting at some point because of our global usage was that the peaks and troughs over the course of a day for GPU utilization wasn't that far off for us, again, given the fact that like, you know, when sort of the, the East is sort of working, you know, maybe the West is sort of asleep, but when the West is working, the East is sort of... And, and so as a result, we have a reasonably stable 24-hour GPU cycle, which allows for pretty good utilization, and it helps sort of the unit economics for us in running these models a little bit more efficiently. And, and that ends up being a competitive advantage, um, when we think about some of our counterparts that maybe just serve one part of the world.
- JFJared Friedman
Do you think, um... It's just such an interesting spot to be in.
- 29:55 – 34:21
The Product Decisions Behind OpenCode
- JFJared Friedman
Like, do you think there are like specific product choices or design decisions you made when you were first launching the product that have led to just like quite like this sort of like the fact that you're growing and winning so much?
- JVJay V
Yeah, it's funny, you know, the, the name OpenCode, like, literally comes from that. I think we'd, we'd done a similar project in the past, it was called OpenNext, and the idea was when you've got a dominant, or in this case, two dominant players in the market, the rest of the market coalesces around an open alternative. And picking that position ends up being really valuable because if you pick it, it's very hard for somebody else to displace you, and if it's open, you should try and become the default as quickly as possible. So when we had launched, you know, the name was, was, uh, was a very deliberate choice. The fact that we wanted to support... Even, even at the time of launch we said we, we'd claimed that we supported 70-plus models and providers. Just to make that happen, we had to create a separate open-source project called Models.dev that built up this entire database that didn't exist at the time, and now obviously now, now you can, you can contribute to it, and this, this is probably the best data set of all the models and providers out there in the world. But again, just to sort of make that happen and to, you know, occupy that position, um, it, it, it was a very deliberate choice.
- JFJared Friedman
Can you think of any other examples of, like, intentional product or design choices you made that you think have really sort of, um, helped you hit this inflection point?
- JVJay V
Yeah, I think the name came a little bit later. Uh, it was... This happened within a, a span of a few weeks. But yeah, the first thing I think that had happened was with our past product, we had just hit sort of being break even, and around that time, this is February or so of 2025, Claude Code comes out. We look at Claude Code and we go, "This is fundamentally different from using autocomplete, using AI in that form, and this is something that actually does make sense for us as a kind of a core developer." You know, we were, were sort of Neovim, Vim users at the time, and so Cursor didn't necessarily resonate with us as much. But watching sort of Claude Code and sort of using it a little bit, we kind of realized that it wasn't up to the standard of some of these other terminal UIs like the NeoVims of the world, and we wanted to build something like that. And, um, that was really the, the first sort of bit was that, you know, when you open this up, this should feel like a modern terminal experience. To a lot of the core developer audience, the ones that we were going after very early on, it should feel like one of these other things.
- JFJared Friedman
That's so interesting because I feel like, um, I feel like a lot of Claude Code users, 'cause you have such low expectations for the term- like, what you can get out of a terminal UI, people are like, "Wow, like this is kind of crazy how much you can get done," and like these graphics and effects are really cute and cool-
- JVJay V
Yeah
- JFJared Friedman
... and that's awesome and... But, like, the fact that you were sort of like terminal UI connoisseurs it sounds like, you were looking at it thinking of, oh, like you would actually do like so much more in the terminal.
- JVJay V
Yeah. And we had built a couple of terminal UIs in the, in the past, one as a part of our core product with SST. The other, Jax had sort of built on the side with a couple of, uh, his friends. You could buy coffee online. It was, uh, it's a terminal UI, it's a complete storefront. Um, it w- it was sort of a fun pet project-
- JFJared Friedman
[laughs]
- JVJay V
... but it showed off what we could actually do on, on the terminal.
- SPSpeaker
Wait, wait, so your product was a terminal UI for buying coffee, in case you wanted to buy coffee without leaving your terminal?
- JVJay V
Yeah, 'cause the idea was, you know, you're a hardcore developer, you're in the terminal all day. You can't be bothered to open up a browser.
- SPSpeaker
[laughs]
- JVJay V
Right? So you go sshterminal.shop, and you order coffee over SSH.
- JFJared Friedman
Yeah, it makes sense. Way easier. [laughs]
- JVJay V
[laughs]
- SPSpeaker
I, I feel like this is like an example of like, of, um, of, of that PG essay-
- JFJared Friedman
Yeah
- SPSpeaker
... where like if you're a developer and you build things that you want yourself, even if it seems really goofy to other people and a VC would like turn up their nose as like, "Well, that's a horrible business. What are you talking about, a terminal UI for, for buying coffee?" It like has this tendency to like pull you in an interesting direction.
- JFJared Friedman
Yeah, it just... It like generalizes just having eccentric tastes.
- JVJay V
[laughs]
- JFJared Friedman
It's like, like can, like, not always like lead to something interesting-
- SPSpeaker
Right, right
- JFJared Friedman
... but like it's kinda how you get to these like outlying things.
- JVJay V
Because we were so embedded in the open source community, and because most of the people that, that sort of surrounded that community were people that looked up to products that were really good in the terminal, we knew that if we built one of those it would resonate with them almost right away.
- JFJared Friedman
It's pretty easy to think that you guys have sort of just came out
- 34:21 – 41:16
A 16-Year Overnight Success
- JFJared Friedman
of nowhere and have just exploded and are this, like, overnight success story. [laughs]
- JVJay V
[laughs]
- JFJared Friedman
Um, but the company's actually been around for, um, a little bit longer than, like, six months. [laughs]
- JVJay V
[laughs] Yeah.
- JFJared Friedman
And so tell us a bit about that backstory because y- you know, y- you went through YC five... over five years ago now.
- JVJay V
Yeah.
- JFJared Friedman
But even before that-
- SPSpeaker
Yeah, but the story starts way before even that
- JVJay V
... [laughs] Well, the, so, so it, it was, uh, it was second year university, and I was like, I'd just done a co-op term at, at Waterloo, and I was like, "Wow, I don't, I don't want to do this." [laughs]
- JFJared Friedman
[laughs]
- JVJay V
Um, and so I, I sort of come back, you know, being very naive, find the smartest people I, I can get ahold of. It ends up being Frank, uh, my, my college roommate, and the two of us were like, "Yeah, let's just, let's just start a company." Uh, again, I'm, I'm a 21-year-old, and so I, I picked the name Anomali as the name of the company 'cause I'm like, "Ah, I'm special." But yeah, it literally starts off with me reading PG's essays.
- JFJared Friedman
And again, how long ago, how long ago was this?
- JVJay V
2006, 2007. Um, and I, I, I think I started reading PG's essays, you know, because I was like, "Yeah, I, I want to start a company. I would want to do a startup." And, and this was effectively, you know, the best thing you sort of find on it at, at the time. I think my first, I, the first YC application was probably around that time, but the first interview and what brought me the first time to Silicon Valley- I, I forget the exact batch, but I think this was the Mixpanel batch, uh, 'cause I, I know the day that I interviewed was literally after Mixpanel, like Souyella sort of interviewed, and I think this was right, this was right after, uh, Airbnb's batch. And so one of the Airbnb founders was hanging out the, you know, in the sort of room when, uh, we were sort of waiting to be interviewed, and this was obviously with, uh, with, with PG back then. And, um, yeah, that was one, and then I think the, the first of many [chuckles] , first of many interviews and applications to, to YC. [laughs]
- SPSpeaker
[laughs]
- JVJay V
It took more than a decade to get in, let's just put it that way. [laughs]
- SPSpeaker
[laughs]
- SPSpeaker
And you told me something crazy, which is I assumed that, like, during those years, these were, like, different startups.
- JVJay V
Mm.
- SPSpeaker
But apparently it was literally the same startup, like the same legal entity all of those years.
- JVJay V
Yeah, yeah, yeah.
- SPSpeaker
So this legal entity is almost 20?
- JVJay V
Yeah. Oh, so we, we, we incorporated in, in 2010.
- SPSpeaker
So it's a 16-year-old legal entity.
- JVJay V
Yeah, yeah.
- SPSpeaker
And it-- You've had successful products before, but OpenCode is the most successful.
- JVJay V
Yeah.
- SPSpeaker
And so it took 16 years since you started the company to have, like, a truly runaway success product.
- JVJay V
Yeah, yeah. I, I think part of it is, is also to do with just sort of like your level of maturity, your, your, your level of, I guess, like ability, I guess. We were maybe too young for some of these other waves, like the mobile wave, the cloud wave, whatever, you know. And, and, and we did build things that, that did reasonably well. But, um, but this time around it feels a little bit different in that it is a sum total of our experiences and, and that's maybe made things a lot more easier to navigate e- especially given the chaos in, in the space that we operate and the competition.
- SPSpeaker
I looked at, at the numbers, and you did nine applications from 2016 up to 2021 when you got accepted.
- JVJay V
Oh, wow.
- 41:16 – 44:25
Why Jay Never Gave Up
- JVJay V
being a little stubborn.
- SPSpeaker
[laughs]
- JVJay V
Uh, it's funny. May- maybe we should, we should, we should put a little warning that, you know, it's like don't try this at home. [laughs]
- SPSpeaker
[laughs]
- SPSpeaker
[laughs]
- JVJay V
'Cause I, I think the prudent thing would've been, yeah, shut down your company, go join a high-growth startup, learn a bunch of things. But I think there was something in the back of my mind, uh, Frank is probably the same, in that- We felt like we were learning these different things along the way, and in our heads we were sort of figuring out, okay, here's what it takes to build sort of not just a product, but, you know, do the marketing, to understand sort of the positioning of things, to do sort of the whole thing. And, and that journey felt like just progress, and positive progress. And I think a part of that was obviously, you know, us being fortunate to have the ability to sort of do that, which was basically just living with parents [laughs] for a bunch of time when we ran out of money. But, uh, but yeah. Yeah, may- maybe a little, little... A combination of being a little thick-headed and, and, and seeing positive progress. [laughs]
- SPSpeaker
So I'll, I'll admit, I've been kind of a diehard Claude Code user since Garry Tan became addicted to Claude Code.
- JVJay V
[laughs]
- SPSpeaker
But recently I've been using OpenCode.
- JVJay V
Oh, very cool.
- SPSpeaker
And I dropped a bunch of PRs from OpenCode this week, and I've been really impressed with how well it works with open source models on our existing code base, which is a very large, very complex code base. For folks who are watching who possibly have only used, you know, Claude Code or Codex or Cursor, uh, how should they think about, like, trying OpenCode and, uh, potentially switching to it?
- JVJay V
You know, when you hear about a new model that comes out, especially an open source one, and you, you sort of want to try it out, you could kind of hack your way into using it with Claude Code or, or one of the closed source, uh, alternatives, but OpenCode is, is, is really good for this. You sort of go in, you look at the model picker and GLM 5.2 or, or whatever, uh, the new open source model is, is probably up there, and you can pick it and start sort of using it right away.
- JFJared Friedman
Okay. Well, Jay, I think that's all we have time for today. Um, I actually learned lots of really interesting stuff about your backstory that I didn't know in this episode. [laughs] Um, I mean, I think it's a pretty inspiring story, honestly, for anyone that wants to start a company.
- JVJay V
Or at least entertaining. [laughs]
- JFJared Friedman
[laughs] At least entertaining. Entertaining and inspiring.
- JVJay V
All right. Okay. [laughs]
- JFJared Friedman
It can be. Um, I know it just hits on so many of the, like the classic startup wisdom, right? Like, you should like pursue your interests, have eccentric tastes, like be like living the future a little bit. I would argue that trying to, you know, order coffee through the terminal is... [laughs] So I'm not sure if that's living in the future or the past, but it's like-
- JVJay V
[laughs]
- JFJared Friedman
... it's not living in the current times. [laughs]
- JVJay V
Right. Right.
- JFJared Friedman
Uh, maybe there's something in there. Um, but yeah, no, also just the fact that you kept like building your taste and, and just like to keep building things over a long period of time, and then when lightning strikes, it... Like you're actually in a position to capture it. I think that's the thing that doesn't get mentioned actually, is like to catch lightning in the bottle, you actually like have to sort of position the bottle correctly and be ready for it-
- JVJay V
Yeah
- JFJared Friedman
... and know what to do with it.
- JVJay V
You have to be ready, yeah.
- JFJared Friedman
[laughs] Yeah, and you guys are well positioned to do that. So, so congrats on all your success. I know it's gonna, um, only get more explosive from here.
- JVJay V
Thank you. Thank you for having me. [outro music]
Episode duration: 44:26
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Transcript of episode _O6x4ktK6JA
