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Patrick Collison’s aesthetics stack: beauty, communities, renewal, innovation
15 hours ago
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3 min read
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144 docs
A high-signal set of four non-commercial reading leads from Patrick Collison, plus one attribution-caveated short-form venture-market recommendation surfaced in a 20VC discussion.
The main signal
In a conversation about whether aesthetics connects to ethics and the good life, Patrick Collison surfaced four concrete resources: a book on shared standards of beauty, an essay on idea communities, a history of quiet renewal, and a René Girard essay on imitation and innovation. Read together, they form a useful sequence for evaluating cultural work: the object itself, the community that carries it, the long arc of renewal, and the social mechanics of novelty.
Source conversation: Patrick Collison at ZOË 2026
Beauty
- Type: Book
- Creator: Stefan Sagmeister is the name associated with the book in the conversation; full bibliographic details were not given.
- Link: Not supplied in the source conversation.
- Recommended by: Patrick Collison
- Key takeaway: Collison calls it a “great book” and says it marshals evidence that people broadly agree about what is beautiful, while experts increasingly favor disharmony and discordance.
- Why it matters: It offers a more substantive starting point than “beauty is subjective”: examine where broad human agreement holds, and where expert taste deliberately departs from it.
Idea Machines
- Type: Essay
- Creator: Nadia; the conversation does not give her surname.
- Link: Not supplied in the source conversation.
- Recommended by: Patrick Collison
- Key takeaway: Collison says Nadia “really gets” how idea communities work in open source and other domains, and that the essay applies to how ideas are incarnated in art.
- Why it matters: This is a useful lens for assessing ideas as ecosystems rather than isolated insights: who gives them a community, infrastructure, and a path into practice?
The Brown Decades
- Type: Book
- Creator: Lewis Mumford
- Link: Not supplied in the source conversation.
- Recommended by: Patrick Collison
- Key takeaway: Mumford’s account covers the United States from 1860 to 1890, a period he viewed as drab and “brown,” yet Collison highlights its quiet renewal, including the Brooklyn Bridge and Central Park.
- Why it matters: It is a corrective to judging a period only by its visible surface or online discourse; important cultural renewal can be accumulating before it becomes legible as a movement.
“Innovation and Repetition”
- Type: Essay
- Creator: René Girard
- Link: Not supplied in the source conversation.
- Recommended by: Patrick Collison
- Key takeaway: Collison explicitly recommends the essay for its treatment of the relationship between imitation and innovation, including the historical fact that innovation was once associated with heresy.
- Why it matters: It supplies a compact way to interrogate novelty: not whether something looks unprecedented, but how imitation, convention, and social permission shape what can count as innovation.
A secondary short-form lead from 20VC
Descriptive title: Dave Samuels’s X post on Air Table’s blended exit
Type: X post
Creator: Dave Samuels of Freestyle; the panelist qualifies the name with “I think.”
Link: Not supplied in the episode.
Recommended by: An unnamed 20VC panelist.
A panelist called it “one of the tweets of the week,” citing Air Table’s $6 billion blended exit and the lesson that investors should sell along the way and be thoughtful about selling in good times. The discussion immediately supplied the counterweight: power-law returns mean the few positions sold too early can contain most of the value. Use it as a debate prompt about liquidity timing, not as a universal sell rule. The surrounding discussion is available in the 20VC episode.
Patrick Collison’s aesthetics stack: beauty, communities, renewal, innovation
Research extraction
20VC with Harry Stebbings
Direct answer: The only genuine, explicit recommendation in the transcript is a social post: a tweet by Dave Samuels (Freestyle) selected as "one of the tweets of the week." No books, articles, or research papers are explicitly recommended; other mentions are passing references or too vague to count.
Genuine recommendation — Dave Samuels tweet: A panelist explicitly selects "one of the tweets of the week was Dave Samuels, I think is his name from Freestyle" (name uncertainty in the original), summarizing that "their blended exit price from Air Table was actually six billion" and attaching the lesson "the importance of selling along the way and being very thoughtful about selling in the good times." The recommending speaker is not identified by name in the transcript text.
Cited but not recommended / too vague to count:
- "The guy from Arizona State, the bookbinder research" on the power-law concentration of capital gains — cited as context, not recommended.
- "A good piece I think in Atlantic or something" on local data-center opposition — uncertain title, no explicit recommendation.
- "Pitchbook had an article this week" on return compression from dilution and high entry prices — passing citation.
- An unnamed book on Palantir introduced with "if you read the book" — no title given.
- "the Maltby book about the deep mind acquisition" — no title given, referenced rather than recommended.
- "Gartner numbers" on enterprise agentic deployment — cited data point, not a recommendation.
20VC with Harry Stebbings
On 20VC, an investor panel organically flagged several resources:
- The Palantir biography — credited for showing how Palantir saw the LLM wave in 2022-23 and committed early to an enterprise AI product; the panelist said the company "grocked" the moment .
- "The Maltby book" on the DeepMind acquisition — cited as evidence that Demis Hassabis's team was perpetually torn between corporate demands and the desire to pursue a Nobel Prize-level scientific mission .
- A recent PitchBook article — returns on outcomes above roughly $500M-$1B are being "massively compressed" by unprecedented dilution and high entry prices .
- Research by an Arizona State professor (referenced as "the bookbinder research") — fewer than 1% of companies generate ~90% of public-market capital gains, making power-law outcomes the norm .
- A piece likely in The Atlantic (panelist unsure: "I think in Atlantic or something") — community opposition to AI data centers is driven more by opacity about local impacts than by anti-AI sentiment; the panelist argues tech must offer communities concrete offsets, such as no electricity increases and payouts .
- A tweet flagged as "tweet of the week" — Dave Samuels of Freestyle noted Airtable's blended exit price was $6B, underscoring the importance of selling along the way in good times .
- Zuckerberg's philosophy on AI — panelist noted Zuckerberg opted against keeping personal control over model-release decisions, making them board-level; called the first piece of "uncontrol" Zuckerberg has done in 20 years .
Patrick Collison
Profile
Patrick Collison (Stripe co-founder/CEO) made these organic book/essay/speech recommendations during a ZOË 2026 conversation on aesthetics:
- Named John Ruskin's The Nature of Gothic "the best thing I've read this year," valuing how Ruskin connected aesthetics with ethics and goodness.
- Said he was "very moved" by Solzhenitsyn's Nobel Prize acceptance speech, especially the idea that beauty "bears within it its own verification" and cannot be faked.
- Called the book Beauty a "great book," crediting Stefan Sagmeister with marshaling evidence that most people agree on what is beautiful, though experts diverge toward disharmony.
- Endorsed the essay Idea Machines by Nadia, saying she really gets how idea communities work (e.g., open source), and that the essay applies to how ideas are incarnated in art.
- Said he was "fascinated" by Lewis Mumford's The Brown Decades (1860–1890 US), which argues quiet aesthetic renewal—Brooklyn Bridge, Central Park—happened even in a drab period.
- Recommended René Girard's essay "Innovation and Repetition" for its analysis of imitation vs. innovation, noting innovation was once associated with heresy.
Brian Armstrong
Brian Armstrong (Coinbase CEO) recommended the short film "After the IDE (2026)" by Linear, which shows how Coinbase builds software with AI agents . He called it "a good look at how we're building products using AI at Coinbase" and used it to argue that adopting AI requires changing how you work: "Trying to adopt AI into the way you used to work is wrong. It may be hard to accept, but the game has changed. You need to update the way that you work" . The film is available at https://video.twimg.com/amplify_video/2087189665497362432/vid/avc1/1920x1080/Y-vzL_ciyJqWMoFA.mp4?tag=29.
Canva Slahes Growth | Talent Exodus at Google | Revolut's $50B CEO Package | Musk's $55B Terrafab
1 of 7
highlights
0:00There's going to be a lot of people paying the bill in 26 and 27 for a certain amount of hesitancy in 23 and 24. The only way you prove that you're not dying is by growing. So, what happened this week that we discussed?
0:12Canva cuts 2026 growth by a third. Ouch. As AI serving costs blow up. Next, Jeff Dean leaves Google after 27 years.
0:21Damisabis, the OG of AI, then steps back from Google Deep Mind. Also, god poor Sundar. That is one bad day at the office. And then Elon Musk, as always, comes out with one of the most ambitious projects with Terraab, where we unpack the jobs that come from it. The first real installment of $16.8 billion and just what it would mean for him in terms of structurally not having to beg at the Tower of TSMC.
0:47I mean, this is such an entitled podcast. Oh, poor anthropic engineer only made 35 million. I mean, go out to the goddamn panhandle. No one's making 50 grand. It must be extraordinary validating if you're Jeff Dean to leave as a non CEO of a two or three trillion dollar market cap public company and have the stock go down by a couple hundred billion dollars. Google's efforts so far are B+ A minus. They're not A+.
1:09Any investment I've made that is not run by a founder. It's going to be a zero in this. Ready to go. Okay, boys. We're going to start with something other than open AI or anthropic today. We're going to start with Canva, baby. We had Cliff on the show before. Now, Canva cuts 2026 growth by a third as AI serving costs blow up.
1:40So right for those that maybe missed this story on Canva, what should they know that they need to know here?
1:46Sure. Yeah, let's start with the facts and then kind of come to the question.
1:48The facts are that Canva, you know, large privately held company in the kind of creative suite space discloses its revenue even though they're private and you know they they were at three billion in gap revenue last year. Going into this year they're growing at 30%. and the CEO Melly Perkins disclosed kind of midyear that they're probably going to be growing 20% by the end of this year.
2:11So, as you say, a one-third slowdown in growth rate, but still a healthy 20%. And then the other half of what she said was interesting, which was that they're obviously adding a ton of AI features.
2:21Those features cost real money. And part of the reason that she claimed for the slowdown in growth, it was just too expensive to effectively be subsidizing um users with kind of cheap AI when in fact they're incurring significant costs. So there was an implication there which I'm actually going to tease out later. I'm not sure I fully buy which was my growth rate slowed but if I was willing to lose more money it mightn't have slowed by as much. So there's an implied statement on elasticity there.
2:48But the big picture and this is kind of I want to zoom out and ask Jason a question. the big picture on this and all three there's three create massive creative software companies. There's Adobe which does 23 billion growing at 12% trading at like three or four times revenue. There's Figma which is also public doing at 1.4 billion uh growing at 40% the fastest and in the middle there's Canva still private around 3.6 billion growing at 20%. Right? And the
3:16big question for all three of them is, and that's why I want to put it back to Jason, who's much more I've used them, but not as much as Jason. Is is AI going to be a feature they can incorporate or is it a new new thing that makes them obsolete? And to me, that's the meta question. It's not about 30% growth versus 20% growth because of a little bit of gross margin compression. If that was the only issue, we could talk about that. That's a kind of second order business model issue. The real question for all these companies, are you 30 on
3:45the way to 20 on the way to 10? Because there's a whole new set of companies doing this and I know Jason, you guys are in Higsfield. Um, or is this something you can incorporate and kind of survive and continue to grow? So, I think that's the question. And Jason, I'd love to get your thoughts.
4:01I don't know, man. I found it kind of depressing the Canvas stuff because um Canvas seemed to me one that obviously AI was maming. um every every chat GPT release, every Higsfield release, every L's, you can do more and more of its functionality in core AI, right? This is what we fear as investors is that you can do our investments in chat GBT or claude, right? That's the ultimate fear.
4:25Um but yet it seems somehow Canva was defying that gravity like it it it seemed it was it was a non-issue despite my me having churned and Amelia having churned. We churned um just not because it this is a tough one. Canva and Notion both we churned not because they're not great apps. We just no longer had any need for them in the agentic area. Just no need. Canva and Notion did nothing wrong at all. Nothing. And we didn't need them. But until this it it seems somehow I I was wrong like they were
4:54defying gravity. But 30 to 20 in one year. I know I love Rory's optimism that they're going to bounce off and get back to 30 or 40 next year when they find a few extra tokens under the under the covers. I think it's a ter terrifying and it's a little I was hoping they were defying gravity but it doesn't look like it. It it doesn't defending myself on the optimism charge because no one ever accused me of optimism. I actually didn't say that. I what I said was that's the implication that they're saying. I don't know the answer. genuine comment here, right? And
5:22look, and I'm going to advance the bold case to some extent, just articulate it more because again, what the CEO is saying is look, we can't envelop it in AI because we were using Frontier models and they're just costing us a [ __ ] ton.
5:36And ex and so the first shoe that's clearly going to drop is they're not going to continue to spend a whole bunch of money with entropic or open a probably open AI given its images of course were but um they now bought their own um model and are building their own in-house image focused model which makes absolute sense so let's assume they do that why did they do that last quarter agree agreed and and agreed let's say they even a year or two late because I think I want to push back to the big question the interesting question yeah the interesting question is if let's just say they get it done and in six months
6:06their in-house model which is 90% 80% cheaper is just as good as images at as um you know the frontier models then the question still remains to your point Jason do you think they can c and I hate being vague stuff enough AI functionality into that product that you would have retained or do you as a pretty active user say no I just prefer to go at it a AI native day one because that's the big question you know what's scary is something that
6:34sounds nerdy is becoming mainstream. Our our agents never even suggest these products. That's the danger. And it's not just agents. It could, you know, we talk about AO and GO. What does Claudia and chat GBT say? But it's worse than that. As we become a Gentic, our agents, we can't choose everything ourselves.
6:52And we generate, we have our own, we built our own ad server and ad generating network that builds our own creative and own collateral and serves it to the SAS community. It's all built on our agent. the agent never it never occurred to the agent to use Canva for this. It never it never once occurred to it. And so um even even some sort of openweight parody I I think it listen I at a meta level I think what's scary is that you know the the most exposed part of the market is the proumer market.
7:20Everyone is chat GBT fluent and if it works in chat GPT right or clot you're just going to use it. And you know if you believe these Gartner numbers and I'm out at a big Salesforce event, they have all the data. It may be that less than 10% of the enterprise has even deployed an agentic application successfully. I actually believe that.
7:38Okay, despite what we're seeing in the because all the hot enterprise AI companies are still serving early adopters and outliers to a large extent on the proumer side, everyone's used chat GBT and so there's there's no going back. Um and and my related concern is if you compare it to Figma, well, Figma missed the quarter in a sense. Figma traded down 20%. But they they they they they burned the co the the tokens. They they Dylan was clear, our gross margins are going to be significantly impaired
8:08going forward because our Agentic products are being used. It's it's not identical. Um but um but they took the hit, right? And they're public. It's it's more painful to take the hit when you're public than when you're private. Um, I really don't think Blackbird and Friends are going to beat Canva up if the bottom line is missed slightly.
8:24That's an internal decision, right?
8:26I think you're right and there's a lot buried in I just want to unpack it again for folks. One is you made a distinction. Let's talk about the enterprise versus consumer distinction because you're exactly right is that you know Figma has is much more an enterprise product. It's kind of large groups of people building software coordinating. So even if you automate creativity, you still got bureaucracy and corporate processes that you make money off in terms of managing workflow.
8:50But you're exactly right. Canva is the proumer [ __ ] I want to generate a flyer. I want to generate it cheap website. I want to generate some kind of content. And that's exactly where AI is the most accessible because you can just go on and type in generate me a flyer that says this and there it is. So you're right, they are more exposed in that sense. That's one. So I think you it goes to the fortnightification that Jason often talks about in terms of the shrink cam when you have a dinner invite
9:19that you can do on chat GPT and bundle it into your consumer subscription versus an additional tool.
9:25Yeah. other another vert the nerdier version Amjad said about air tableable not about canva but he said to his quote on the seal of replet's quote for air tableable was no criticism but the era of no code is over and no code was a bunch of tools where without developers or AI we could build stuff and air table was a noode uh uh database disguised as a spreadsheet right it was wonderful product before AI notion is a noode uh
9:53database um disguised as a word processor and Canva was a no code way to design stuff. It was a it was a a a breathtakingly disruptive product. I didn't need a designer anymore. I didn't need to know what how to how to do HTML or anything. It but the era of no code of things that we that we can humans can do without engineering resources, it's it's slowly winding down. And if it's in chat GBT, man, I'm I'm just worried. I'm
10:22just worried. Is it a is it a blessing or a curse that they didn't go public already? Then it depends on who you're asking.
10:30Blessing and a curse for whom? Right?
10:33Cuz I was thinking about this a lot cuz I knew this question would come up because if you think about it, if you're the founders, right? Doing this publicly is just marginally arguably marginally more painful. Right? So maybe you're happy to be doing this in private, right? What you're really saying is this. Let me trans because we we never say this explicitly. When you say is it a should you have gone public early what you're really saying is oh my god if I'm the venture guy who did this thing at a hundred million like blackbird or couple of I think felicus was in early and
11:01matrix was in super early and then even you know the guys who came in at a billion you must be like oh my god if we'd accessed that 50 billion valuation in 2021 I would be so gone now right and that's really what you're talking about and so which is why to be clear some of the CEOs are a little unsympathetic to this line of conversation because this is their lives work cuz really when you say should they have gone public early what you're saying is boy I wish that the fast money had gotten out while the CEO and the the the management team
11:31would still be there just in a different forum. Does that make sense?
11:34No, I think it's a good point. The the the getting out early, it's a critical question for VCs, right? How the hell do I take something? We can talk about IPOs and M&A, but man, our shares are illquid that we buy. we put them in and we we hope we pray we face east that that we'll ever get any cash out. If I'm an employee at Canva or a founder and the founders's already gave away 90% of their shares, right? They've already given it away. They're they're on the mission of their life. Maybe in Sydney, in Australia, it's easier to retain your talent than in the Bay Area, right?
12:04Maybe they're not going to quit and go to Open AI the next day if you don't go public and make them uh you know, a million dollars effective a year in stock. Maybe maybe it is better to hide.
12:13You you've built an iconic company that isn't going anywhere, right? It's it's I mean, I'm just playing the devil's advocate, but Rory's point, if I were the found if the three of us were the founders, I might want to run this thing like Base Camp, right? Uh 37 signals, guys, let's just hunker down. We'll increase profit sharing, right? And um I mean, probably the VCs wouldn't let you get away with it, but if if I hadn't raised a ton on my cap table, I it might not bother me so much.
12:36Yes. And I think one of the totally separate threads is public markets have to be more attractive not just for people exiting like the VCs but also for founders to be able to you know kind of reignite and reopen the window and if if it's rational to say on certain circumstance it's easy to be private then that just probably weighs into the calculus when you decide you know as Canva could have done should you have gone public in 2021 right you know again to repeat for the most important people in the company who are the founders who
13:05own effectively the company from a entrepreneurial oomph perspective regardless of the cap table I don't know if that matters I don't know if public versus private matters nearly as much as this is the platform shift challenge of all times and you know assuming you do get almost free AI via your standalone model you've got to figure out to Jason's point a product in the next 12
13:33months that's as easy and as accessible to your user base because you you know that the the the segment of the market you're addressing at it has to be as easy to that user base as chat GPT is to generate the products they generate with it. That's your challenge and it's a product challenge.
13:49My point is I don't even think it's about easy. I just think it's about the bundling of consumer like real estate of where they spend time. I just interviewed the president of Uber. What is his single biggest fear? It's actually the disagregation of UI or the removal of UI where you say I want a car and chat GPT automatically roots you to Lyft, Uber or another provider based on price.
14:12That's what our agents already do. They just routed us around Canva.
14:15And so my point being there, Rory, is like ease doesn't actually matter. No, you're exactly. Look to be very clear going back to something if the AI models become the univers well in chat GPT let's say who was more consumer focused if that becomes the universal interface for functionality then you're exactly right and all model choices are backend choices then you never even get the chance I don't know if it does I could be wrong I don't know and in fact this is probably an area where I'm still trying to triangulate um I don't know
14:45what things that we do separately in the west because it's interesting China obviously in mobile has a single super app for everything and you do everything through WeChat, right? But just to pick on two what I'd call high cognition tasks that are very different actually the polar opposites. One is creativity building something creative for consumer and the second is doing your taxes.
15:08There is a credible argument in both cases that chat GPT can suck those revenue up which is why intuitit was down. I'm not sure I fully believe it but why intuit are down and it's what can wrestling with. So, it's a super interesting time here, right? As yet, I'm willing to bet, I could be wrong on this. I'm willing to bet, and you guys from Higsfield can say it, there's still a role for a company like Higsfield, which is an aggregator across models, which goes against what you're saying, Harry. That's a company that's saying, "Hey, Mr. Consumer, you could do this
15:35directly on one of the videog companies, but I'll aggregate the models. I'll give you a slightly better UI. I'll help you with billing, and maybe there is a business on top of the models." I I don't know if Jason would agree with me.
15:47I'd say they're serving two different markets. I think the chat GPT cannibalization of Canva is me and my partner doing a dinner invite with chat GPT done in Canva. And then Higsfield is actually a business that uses video as a more primary method of delivering their message. And so it's a slightly more proumer professional I would argue.
16:07Jason, I don't know if you agree with me, but both I think it is. I think you could argue it for sure. and and the almost all that growth 700 million in revenue over today is from this the the the uh video creation complex video creation where you're taking you're you're you're you're creating functionality out of the models that alone is very complicated to harness right um it's a harness that allows you to do something that's very complicated with the models their original model which was just to aggregate models to make short videos it
16:36is cash flow positive to Rory's point but it's not an exciting business right um they they stumbled into the bigger on the the tough one and it it's the is that you know that whole whether that whole business which will shortly be a billion in revenue it you know a lot of it could have been canvas if if if if they aggressively gone into it just like I I firmly believe a big chunk of replet and lovable could have been figas if they done it it's these are the it's easy to to take shots when it's so hard to run your core business but that we're
17:04I think we're starting to see the the outcomes of it being so hard to run your core business in the age of AI and you've added all the AI stuff. Figma's added added great agentic features. Canvas is a little slow, but they've added it. Even that's it's just not enough. And you're seeing gravity weigh you down. And it's it's um it's a tough job today, right? It's a it's a tough job.
17:26Yeah, I I think that's actually super interesting meta point, Jason. You're right. Cuz I tend to be an incrementalist, but there are times when the you the kind of just the world opens up and there's a crevice between the before and the after. And if you make that jump, you got to make it quickly.
17:41And there comes a time when the gap is too big, right? And that's what you're saying here, right? I do I've come to the conclusion that this could be one of those times. And to some extent, there's going to be a lot of we saw air. There's going to be a lot of people paying the bill in 26 and 27 for a certain amount of hesitancy in 23 and 24. Can you give me an example of a Figma or a Canva generation company that has gone, "Hell, I see this coming. I'm going to move fast." and how with it they've done it
18:10and done it well. I mean look the boring one is obviously intercom we've talked about a lot and we were investors so I don't but they they succeeded and did it and I think I'm sure when after the deals own will be the first to say that was a journey and a wild journey and a hard journey and you know he earned every dime let's put it that way you know so I give him credit to that but the it I mean I'm just trying to think here it's a hard one isn't it I mean the thing is because the interesting thing is to some extent and we'll talk about for example Atlassian
18:39in a second one of the big questions is how much of your business is going to change and there are some businesses that just by virtue of the software process they automate there's not going to be as much change I think for I think accounting you know we we're looking we have real interest in the next generation of accounting companies but it's a fairly slower moving market than say create individual proumer creative tools so to some extent the speed at which you have to move is in part a function of the kind of business you
19:08have right and the abil you know what AI's impact will be and you know I'm just thinking aloud they're actually I will give you some because they're right on the head some of the coding tools I think even they didn't have a big business but I think wind surf and even um come on cursor we're doing something else right at the start but because they were super small they pivoted in 22 really fast I don't have a good to your point I take coding as the best apps market right the biggest I don't have a
19:35good example of a 2020 2017 2018 coding company making that pivot.
19:41Well, I have the example, but but I think Replet's an example. It was freaking in the wilderness for 6 years until until it added the models, right?
19:49It was a super nerdy web IDE. I think to answer Harry's question, it's just a t it's a it's a tough question to address as investors and employees, which is the ones that cop the ones that that have accelerated, right? The pre-agentic ones are the ones that were in in the in the could catch the wave. the data dogs, Cloudflare, Powalto Networks from last week. These were guys that were already even, you know, I didn't think Twilio would benefit from this. Jeff Lawson saw it when he was on this pod, right? He's
20:18like, "Agents are going to need more.
20:20They're going to need more voice and more text." So, Twilio, which is your which was which was, you know, the hipster's uh uh uh you know, API for for voice and and data. When when we all met Jeff, it it became your granddad's tool, but it was still well positioned for the wave. He he was holding the boogie board just right and the wave came in and he's flying and freaking chat GBT is just tumbling poor Canva side over side and and I think in the enterprise it's happening it's just slow it's just it's just quarter by quarter it's slowly
20:50happening but I I want to make a distinction here because you know I think the data dog example is an interesting one I think you have to distinguish between it's easier to survive if you're well positioned and don't require a business model change versus if you're not well positioned and I I think the challenge the the comp the toughness of the task facing the CEO of data dog versus say the CEO of Canva are very different because if you think about data dog they sell observability they sell it to infrastructure vendors
21:18nothing in their model has changed except there is now an infrastructure vendor who needs to buy a 100 times more data dog than anyone else has ever bought right so all they had to do is show up and sell more and that's true for all those guys we were lucky enough to be in JFog you can see that cloudflare data all the info providers. It's not like they're inventing a new thing. They're just saying this is the greatest infrastructure boom in history. I sell infrastructure. Time to make out like a bandit. There's some tweaks at the margin on the products. I agree. But
21:47fundamentally, that's it.
21:49There is one there is one that captain obviously just so I don't get flamed in the comments too much that did it. And I think there's I don't know all the reasons, but I can think there's two important reasons. Obviously, Palunteer did it. Palunteer went from 18% growth to 98% growth, right? unprecedented in our lifetimes, right? It maybe the the n the one of and or the n equals one. Um maybe it was well positioned. Um but what it re the the thing was it really leveraged a combination of outcomebased
22:17deals and pricing and true FDs that no one else we talk about FDs all the time with our portfolio companies. It is fair to say they're really solution architects or SES with an FD t-shirt.
22:28Palanteer had people who for a decade and a half were out there deploying business massive change in the field for their customers. So when their customers needed AI, they had the guys to do it, right? And then Alex Karp did the crazy thing which we which the VCs talk about but it's hard for the company. He did outcomebased deals. Give me two billion.
22:51I want a $2 billion contract but I'm going to save you 8 billion or I'm going to give you six more billion of revenue on the commercial. No, no one does that outcome B. They they talk about it, but they just tip they just pretend that they do it. No one puts a $2 billion deal on the line for an outcomebased resolution. And they they they had both these things that can on the proumer side, but in the enterprise, it's very hard to change to true outcomebased pricing and to have a suite of FDES that can deploy AI. I I really wonder if the
23:19average SAP SE is as literate in uh in in the models as they are at Palent.
23:25And I think again I first of all I totally agree because we remember we talked infra and now we moved on to apps and in the apps I think Palunteer is an excellent and possibly unique example of someone who's it's a very interesting because their existing model wasn't that threatened but it was growing slowly very government ccentric and if you read the book the the palanteer the car biography huge credit to them in 23 22 23 they saw the LLMs and they grocked it
23:53immediately and they said, you know, going back to the thing about making your bets in 23 that come good in 26, they basically said, we're going to put all our wood behind this. We're going to build the enterprise version of the product. I can't remember the code name for it now, but we're going to make this bet. And you're right, and it turned out that the combination of, you know, AI knowledge and FTEEs was exactly what enterprises needed. So I agree that's an example of someone who I wouldn't say they had to I mean if I think of it someone like a replet had to rethink
24:23everything and pulled it off. Someone like a canvas still has to rethink everything and has a lot of pressure on it. Palunteer could have chugged along a 20% and been roughly fine with the go but instead they grab the moment. I'd give them the positive grab the moment award. You with me? They and it's one where I would argue unlike a data dog or someone where all you have to do is do the same thing. That's one where you have to give the CEO and team credit.
24:49They said if we turn the crank even slightly on our offering, it will work for a whole suite more customers than we've had. So I agree. I think that's that's a good example of grab the moment. And I think Replet's a good example of doing the even harder thing which is [ __ ] I got to do something else but if I do it I'll win. But there's not many. Ding, ding, ding. If I if I just do a quick fire, I don't want to take it back too much, but just um a lot of LPs listen to the show and they have Canva in their books and they're
25:19going, "What do I do with that? How should they think about that? Given what we've just said, what do you think it's worth? I'd say it's probably worth 12 billion right now. 20% growth at 4 billion ARR in the current public markets and not acceler decelerating. There's some sort of rule of 40 number that's better, but I'd say it's worth about 12 billion.
25:42The odd thing Oh, I held at 50.
25:44I understand. I'm just gonna You might be right, but I'm going to push. What's interesting is I can find you companies like that are in 20 25% gap revenue growth, free cash flow positive are trading significantly above that because they're getting the um because there's no existential question. I mean one of the big things that's happening is like a data dog or I think a cloudflare or JF frog or all those guys they're mid20s growth 20% plus operating margins trading at 15 to 17 times NTM right but
26:14I think the difference is there's no existential question here right which is why maybe I'd answer the question in the following way if the existent if the if it's 20% and the existential risk is there then Jason's right it could be you know it could be 12 less if they can if they can transcend that risk desk then you probably you know you're still top stop by you know you're going to be grounded by reality now because you're not selling Brave New World but it's kind of 12 and up right and a good get up but just listen I hope you're right
26:43again I don't want to be negative I want to be I want Canva to defy gravity but why do you when when every single person on Wall Street uses chat GBD why do you think people won't and I think existential risk is both reality and perception why do you think it won't be perceived as having existential risk if if Monday and HubSpot do I don't see why they won't see the exact same thing for Canva.
27:03I'll tell you exactly why because you're right. In the short term they will.
27:07But if you look at in the short term they will you can't control that though.
27:11You can't control what the 27y old Wall Street thinks. But let's take the example of Atlassian. We had Mike on as well, right? They killed it last quarter. The only way you prove that you're not dying is by growing. To Jason's point, right? The thing that's pleasing about life is if you pull off the important thing, the hard thing itself, then the markets will follow.
27:28You're right. Right now it's a very tough time cuz you're going to for to when the existential risk is posed the only way out is to prove it right so you right now I think there would be a wide variety of perceptions on valuation that something like a proumer company like Canva and it it would be hard to peg value and hard to get liquidity at scale by the way right which is one of the other things about at the margin a difference between a private company and a public company is when the window shuts and private and the appetite dies
27:58it's very hard to get anything done. So the real answer to your LP is it doesn't matter what you think big guy, you're in this journey for the next 12 months. Buckle up, right? Because liquidity will only come at the end of the journey.
28:10It's also important potentially. I mean, I don't want to overkit. I'm not exactly a a public company PR expert, but I do think it's important to get ahead of of the narrative Rory's describing. I do think that once everyone starts saying that chat GPT is killing uh Canva because you can make poster size images for free in with your with your subscription. Every it's just like the dumbest I think the three of us can probably agree one of the dumbest AI memes was that everyone would vibe code their own CRM. Even though Harry's had
28:40guests that do it, this makes no sense for 99.9% of the world. Okay, you can't maintain it. You can't build the integrations. It's more complicated.
28:47Most of the folks that say that have never used a CRM. Um but it but it but it it's so visceral the idea that everyone and and that's Damn 20 VC show has uh has been part of it bringing in all these guests who are trying to hide slowing growth by by talking about how they built their own CRM. But I mean it it is taken hold right and and the shorts have jumped on it and the haters have jumped on it and so be it right but uh if I were a canvas I'd be worried that this would become a meme. I think there's a quote something like the worst
29:16thing in the world to fight is a bad idea whose time has come, right? And you're right, everything's Yes. And you're seeing that in the SAS apocalypse now. And the only way out is true, right? Which is the companies that have produced the revenue growth have seen um you know uptakes and overall worldcloud's up 50% since the bottom of the SAS apocalypse, but the people who struggled are still struggling. So you're right, you will have to prove it.
29:40What do you think the answer to LPS is?
29:41Obviously, I think after Air Table and this Canva quarter, it's probably time to be a little extra skeptical of marks. Just just being realistic. Like, we've had some we've had these are two events that I think have quietly hit old marks. Uh even you should have marked them down last year. But I mean, these are these are events that are difficult to hide.
30:01They're difficult to say my guy's going to turn it around. Okay. After these these these vents, I think they do kind of shake the ground a little bit.
30:08They definitely do. And it's funny because just taking the air table come we all I used to mentally say to myself I'm sure you did air table and notion you had them in the bucket of being the same and then it I mean I don't know if the sacrons are correct but notion is apparently 800 million growing at you know 70 80%. Right back to the same comment is when I think about valuation stepping back at a minimum you have to look very objectively at the actual growth rates and be brutally honest as you think about valuation relative to that growth and that projected forward
30:37growth. If you got to ground yourself in those facts as step one and then the question the second order question is do you grade up or down for existential versus lift right but at a minimum you yeah it's no longer acceptable to say once upon a time we raised at 42 therefore we're holding for 42 billion right it's we're doing a billion we're growing at 30%. that is this multiple.
31:00We're doing a billion. We're growing at 10. That justifies that multiple. I totally agree, Justin.
31:05For me, I thought actually one of the tweets of the week was Dave Samuels, I think is his name from Freestyle who mentioned that their blended exit price from Air Table was actually six billion and the importance of selling along the way and being very thoughtful about selling in the good times.
31:20Totally.
31:20It's all and it's always true when it goes down and it's never true when it goes up. One of my great friends is a multi-billionaire and he told me, "You know what, Harry? I never regret making millions of dollars." And I say this from my G650. And actually, you know what? I've sold now stuff. And yeah, I've lost on upside, but you know what?
31:40I'm happy that I locked in some wins.
31:43No.
31:43Yeah. But here's the thing. I mean, we can move on. I I get all that that the freestyle argument. It sounds great on Twitter and it's mathematically true, right? But um if you want to have an outlier fund, I don't know, man. You got that that math really only works if you got like six or eight of them in the fund. Listen, maybe maybe at the scale size or bigger, the math's different.
32:03But for a smaller fund, I'm I have I'm lucky to have three fund returners, okay? That's hard. That's hard. And if I start taking early exits on those and and and I don't have a 10x fund returner, okay, and you and my LPS want these freaking five, six, eight, 10x funds, the math gets kind of tricky if you sell too much early. I don't I don't care what X says. Um, you got to you got to keep doubling down. Uh and I literally just did this analysis across
32:31my whole lifetime of all the things I've been involved with personal angel venture who should have sold and who should have who should have sold earlier taken the secondary and for me it broke roughly 50/50 surprising I would have guessed it would I mean statistics would say it probably breaks 70% you should have sold I mean I can tell you what the facts are 70% plus you should have sold 30% or less you should have held but the next sentence is the key the holders compound forever and the ones you don't compound at all from then on in.
33:01So it's the I'm going to pronounce his name wrong. The guy from Arizona State, the bookbinder research that you know sub 1% of all the companies ever give 90% of the cap gains in the public markets. It's the same in the private. It's just it's the nature of power laws.
33:16You'll most of the time you'll regret you won't regret trimming but on the few that you regret trimming it turns out to be most of the value. I'll never forget having uh Jake Sapron from Emergence who I like a lot. I like Emergence a lot.
33:31Brilliant firm, but like you know they sold Salesforce reasonably early in the arc of the Salesforce value accumulation journey. Um and I mean if everything else didn't matter and there was just a hold on that decision, it would dwarf all the other outcomes. We can choose to continue in this vein and discuss Atlassian and HubSpot or should we talk about Jeff Dean Google talent changes? I mean, I'm not an expert on the Jeffing talent chain, but it clearly this is the
33:59time to go off and build, man. Okay, so I mean, Jesus, let me let me leave the comfy coupe where I'm making nine figures a year to just talk about AI in a comfortable conference room with a mug and go out and do it, man.
34:12So, so let me provide some context. Uh, Google had some talent loss. Uh Jeff Dean, one of the godfathers of much of AI, um has left after 27 years, taking three legends with him. Um I'm going to pronounce their names wrong, so I'm going to leave it there. Um and and then Demis um also is like stepping back or whatever elegant marketing message we want to put around
34:40it. is like moving into chairman role. Um power centralizing back really to Silicon Valley as well with that. That was the big news from Google and obviously shares tanked as a result.
34:54I actually think Jason made the best point. Right. Right. So, first first of all, in passing, it must be extraordinary validating if you're Jeff Dean to leave as a non CEO of a2 or three trillion dollar market cap public company and have the stock go down by a couple hundred billion dollars. If you want to increase your sense of self-importance and self worth that that was a good moment that that was what the therapists call validation at a high level, right? Let's move on from that. I actually think
35:22Jason genuine comment here. Jason's take is the correct one. Don't like we can analyze what it means for Google, but think about it. If you're Jeffy and you've done 27 years at Google, you've made gazillions of dollars, right? The mission at Google to around the era, like it or not, is allocate a lot of the compute to the Google cloud business to just be a hyperscaler. Boring as [ __ ] to you. allocate more of that the remaining compute to build a competitive frontier
35:49model mainly focused on the big things of consumer because that's what they care about and coding because that's what they care about at this point after 27 years fairly boring to you and get some time to do a little bit of medical discovery and scientific discovery that's really exciting to you but because of the the relative size of those businesses that's always going to be in third place that's option A B you can go raise all the money you on. I mean, it was really sweet that they even built a PowerPoint. I doubt they needed
36:18to, right? I think hi Jeff Dean on raising money would have sufficed and go away and do exactly what he says, which is, you know, use AI to quote, you know, investigate advanced scientific questions, right? What are you going to do with your late 50s in life? It's it's it's totally natural.
36:36I don't buy that. I'm not being rude. Sorry. If you look at the resources he had available to him at Google, with the data that he had available to him at Google, he could go into Sergey and Larry's office and say, "Hey, I want X." And they would say, "Jeff, you have whatever you want."
36:51I don't think that's what's happening.
36:52With all due respect, I don't think that's what's happening, right? I think what's happening is you know every dollar of every piece of compute that you give to um Google cloud turns into 30% operating margins in a day because they can sell it to entropic. Every bit of compute that you give to building Gemini might turn into a decent coding model if they get their [ __ ] together and maybe you can get some entropic like revenues or some chat GPT like consumer
37:20revenues. Right? Every bit of compute that you give to drug discovery, our materials discovery, our physics discovery turns into a longshot five or sevenyear moonshot that maybe will indulge at the 10% level, but it's not going to be the core thing they do. So, if you're a senior executive in those companies, you're probably expected to do your day job, what was the old thing, 20% kind of fun time. You 80% of the time you're meant to, you know, deal with boring [ __ ] right? So, I think at
37:49some level there's a desire to focus full-time on that. I think people, it's hard for you to understand when you're younger. As you get older, you start saying to yourself, you know, is this it? I optimized ads. This is all I want in life. Maybe I want to be my own boss. Maybe I want to just focus on scientific discovery.
38:06If Rory's right, it makes sense to me. I just don't know if if it if in a sense they they're they have all they have access to all the resources, but but the team's somewhat dep prioritized, right?
38:15because of where the cash flow is. I can just tell you, not to go back in time, but when I was an SVP at Adobe at the number three business unit, it it it sucked.
38:24It sucked. I mean, you don't you go I'd be with the other 50 VPs and we wouldn't even get to talk about what we were working on it when we we were we were we were only doing 800 million at the time, but it didn't like the number three beu is invisible, right? It was just And so if that's the vibe today and for maybe for the first time ever, I could take my team, my whole team, and get all the capital I really need to do what I want to do. I I I would leave if I was number three. Listen, I'm not quite smart enough to know, but if if Rory's right,
38:53that may completely explain it. If you're if you're the number one priority at Google, you're going to stay, right?
38:59Because it's easy and it's a pretty bucolic environment there, right? Or at least it used to be before. I mean, I used to sell to Google all the I was there every three or four weeks. The most bucallic campus ever uh but it maybe today it's a little more stressful but um but if your number if if you've been dep prioritized as important as you are right your team as you and you can get you can raise a billion or so I'd check out man I'd go do it right and the VCs aren't going to put the traditional annoying pressure on you the first 24 months.
39:26Totally the I I that's actually another interesting point. It's worth saying is that the appetite from venture to finance moonshot type type AI will solve science bets has never been higher. I mean the proof is not yet in as a reminder and there's a lot has to happen to make these bets work. But if you're a scientist at your core and if you're a believer in knowledge in discovery, the chance this is a once in a-lifetime
39:56chance to make that on unhedged bet with no corporate BS to deal with and it's a once I mean even two or three years ago you would not have got that kind of money to make that right. It's just these kind of science-based neolabs are really a phenomenon of the last two years and maybe just two small things we can move on but one I think Venode's leading the round right or co-leading the round or something. So he's just redoing he already he already granted open AI hasn't gone public but he's he's already had a a little bit of a win here right that guy Venode right so he's just doing
40:24the playbook again um and then two going back to to Harry's question at LPS you know I think this week it's it's a little murky I'm trying to read the news from Hawaii I'm not quite in the SFA but if Anthropic really is going to IPO for now for real in the next 60 days it's just going to tangibilize all of this once again right hopefully hopefully for the better um maybe slightly for the worse But um it it it will it will it will make these bets seem more more like
40:52the present, right? And the canvas and friends more more like a distant a distant memory a distant memory of a bygone era of software.
40:59Two two questions for you. How significant is it losing this many highcaliber people this quickly? We haven't mentioned Damis obviously Damis founder of deep mind led London AI efforts visionary genius been fortunate to interview him. How significant is it honestly to Google?
41:16On one sense obviously look early on this business has been very individual centric. So losing these two talented people in terms of full-time thing and the three people who left with Deian is obviously really significant right on the other hand just to put it out there whatever was Google was doing wasn't quite working and we've gone through the Google is dead phase 12 months ago. Then we went through the Google's amazing phase six months ago and now we're kind of going to in the middle which is
41:44Google's doing a good job in cloud selling compute to Entropic. They're doing a good job selling the picks and shovels of TPUs to Entropic. They've kind of got a model out there but they haven't made any impact whatsoever in coding which is the mother load that's feeding the entropic beast right now. So you could look at it and say Google's efforts so far are B+ A minus. They're not A+, right? So, I don't think anyone wanted anyone to leave to be really clear, but it's probably bey
42:14because you can imagine you're the CEO.
42:16You're coming in saying, you're saying to your two most talented human beings, one of whom has a Nobel Prize for medicine, just to remind you, why aren't we building a better coding model? And they're sitting there thinking, why haven't we cured Alzheimer's? You know, at the end of the day, that's a really boring eaff meeting because we're just talking past each other, right? I actually in a perfect world a year I mean this is hardly what they got rid of two years ago. In a perfect world if everyone had been self-actualized they'd have put someone like the guy who's running it a a tactical executive in
42:45charge of grinding out this and maybe given these guys more running room more early to do fun things because I think that's been the dynamic all along. If you read the Maltby book about the deep mind acquisition, all along it's been how much corporate [ __ ] do I have to do because what I really want to do is get a Nobel Prize. And who am I to argue?
43:03We'll remember the Nobel Prize long after we forget the Google Q2 earnings, right? So, he's entirely right to want to do it. Um, but unfortunately, Google has to make Q2 earnings. And if you're the CEO there, you need an executive who's willing to drive drive what it takes to get a comparable chat model out there to compete with chat GPT and a comparable coding model out there to compete with Entropic. Neither of which you've done now. So if someone comes in and says, I've launched this initiative and I think in 5 years time we'll bring
43:33out a simply amazing drug and it will, you know, cure cancer, cure Alzheimer's, whatever. Your brutal comment is the correct response is if we do that at the expense of a coding model and a chat competitor that's a mistake and our stock will go down by 50%. Cuz the largest drug company in the world is valued at a trillion and Google's valued at three. So the corporate imperative is to get someone who wants to do those things not someone who wants to save the world.
43:59It's super difficult today.
44:01Totally. The best the best the best AI engineers the best AI researchers really want to work on what they want to work on nothing st and they don't want to work on stupid things and they don't want to work on nonob on obvious things they just they really only want to work on ex stuff at the absolute cutting edge that is extremely intellectually interesting to them they don't want to work on anything else they just don't want to do and they don't have to they don't have to anymore which is why you've got to admire the brilliance of the the team at Anthropic
44:29that they have simultaneous ously managed to not convince themselves cuz that sounds judgy. They feel they're on this mission, you know, public benefit corporation, a mission to bring AGI to the world, all that good stuff, while simultaneously making every single correct rational financial move over the last two years, including, to your point, going public first, which I think they will as soon as possible cuz they'd be insane not to.
44:55And the one thing we can stipulate is those guys are not insane. They are right on it. they will go public because this is peak brass ring moment and you know you could argue the trends in 27 are tougher you've pulled ahead of chat GP so just put a nail in the entropic pin right you've pulled ahead of chat GPT comfortably open AI to a point where it's embarrassing it's never going to be better there's just been a trillion dollar IPO that all in all went okay it's back to its offering price you
45:24should go you should go now you should go fast you should be done right if I'm the founder of a an early stage company. Do I just accept that I'm going to have Btier or Ctier AI talent? And I don't mean that den denigratively or rudely or horribly, but they're anthropic and open AI. I mean, Google can't freaking keep.
45:43I think it's the wrong um framing cuz if you think about it, I mean, look, when I was, you know, when you were building a software company in the age of the PC, you had four tier chip talent because you weren't building a chip. All right?
46:00The point is, if you're an AI company and you feel the need to build a frontier model, then yes, you've put yourself in direct competition with someone. And if you don't have the good people, you're toast. So what you got to do is make the model a compliment and have a tier talent at UI A tier talent at you know AI implementation AR talent at the things that you have your competitive advantage in right but yeah you're probably not going to even the very best companies that are taking open- source model open weight models
46:28and fine-tuning them right they should be experts at fine-tuning they should be expert on their data domain but they're probably not going to be as good at kind of building an LLM from scratch as the guys who doing for the last three years but that's okay. One tough thing though that is happening that for sure um is that I think when we started this show there started to be sort of two tracks on compensation right which is I have to have I have to break my salary bands for my AI guys because they're worth so much to anthropic and that's true
46:56now we're seeing three bands of compensation we're seeing the regular human beings then we're seeing the AI guys and then we're seeing the one the one to five superstars that we're talking about right that I have to uh that I have to find a seven figure package for as an early stage startup because they're going to get it right and and they and I have to provide them everything the outsiz equity the outsiz cash and there are especially when you talk for folks that are mature the 100
47:26million and up AR guys 200 million up they all have this this god tier now of compensation and it's and if you have the revenue it's sort of fine right you can afford if you're doing 200 million in revenue you you can have four god tier employees it's not going to break your your your model. Um, but it does it it is a big it is something that folks have had to accept. Um, I I there's a bunch of CEOs I work with informally that I'm not an investor with that I work with at that scale and they've all created god tiers. They're like, I got four guys. I they are the core of my
47:54next generation product. Okay? They're all making seven figures. They all have like they all have equity stakes 10 times what an employee at this late stage would have and the the best investment I've made like this god tier.
48:06And um I it's just but it's tough on the rest of the team, right? Because it's not the way we used to do this Kumbaya style when uh when you've got this god tier. It's tough. But if you you're not going to pull off you're not going to pull off a palunteer or an intercom without a god tier. You need a skunk works and you need a god tier or it ain't going to work. It's just the sire the siren call of the anthropic comp is too high. Openai just did a secondary of seven billion, didn't it? This week something like that.
48:33Yeah. I mean, that sounds pretty good to me, guys.
48:36Markets and prices are all about incentives and signaling, right? It just it's a way of sending real information.
48:42And look, there's no doubt that, you know, I saw the analysis that someone who got a million in stock in Entropic in 23, it's worth 51 million now, right?
48:50That's a signal that just ripples through the hiring environment, you know, across the entire ecosystem. Now, I would remind everyone that that's what's known as a one in a lifetime change. I don't think the person today will be getting 50 times the return but whatever it does have an impact of just distorting what everyone thinks is possible and you know we are naturally attracted to narrative around the outliers that's not the norm but yes
49:18that is the that is the California gold rush part of the story and you're going to see it even more written when the pricing happens the only other thing I would just add um for if you're not how do you compete with them right how do you compete with that there is you I do think you might have to have a god mode compensation package. Um, the only thing is a lot of those job the jobs that you're offered for those jaw dropping they they do going to Rory's earlier point, they do kind of suck. They're not all they're not all Jeff Dean and buddies sitting around in a whiteboard designing the
49:47future of uh of of Fable the 7.2. A lot of these jobs are uh for folks that aren't quite at that tier are not that great. And so that's what that's always been the job of a founder is to find those pirates and romantics at the edge that could get it you know back back when I was a founder you know our test was always what did you get an offer at Google if someone got an offer at Google back in the day you knew that they were top 10 top 5% right you could do the same test today did you get an offer at
50:15anthropic or open AI and what was the offer well you know that that flashing thing in in cloud they want me to work on the the or I'm colorb blind the red or orange thing I'm going to make a million dollars a year I can get that pulse just right or I got to work on watermarking my first 18 months and and so you can find the folks that say, "Yeah, accounting software would be more fun than that. I'd like to do LLMs for accounting there." If you you got to interview everyone on planet Earth and you will find someone that doesn't want that that that job, right? That's the job. But you might have to pay him a lot
50:45more than you had to 24 months ago.
50:47Talent is one bottleneck. Um, another bottleneck that I I did think was a really interesting news story that came out this week was the the backlash um going federal when it comes to new data center creation. Um, Rep. Roana said he will introduce a data center bill of rights that will give local communities the right to say no to AI data centers. Yes, you go Repro. That's exactly what Xi Jinping Silicon Valley.
51:13Yeah, Xi Jinping is going to say, "Stop you deepseen moonshot. We don't want that in this rural community. What a freaking joke. Hey, but I have talked with some folks who truly are experts at this, right?
51:26Including very recently. Mo most folks think that like this is this is pretty lame. This is pretty dumb. This nimism, right? It's bad for it's it's even crazy that Texas is in on it, right? Is in on the nimism. Um and I think Elon pointed out that that the tariff app has already created 3,000 jobs, but it's only it's only 10% capacity. It could be 30,000 to kind of get folks to see the other side of it. But I think folks that are close to it think that there will be enough counties and jurisdictions that want
51:56these data centers that as we push through this and as government gets on the other side, it it will ultimately going to work itself out. Like this will not be one of the great issues of our time. Even though it seems ridiculous today that that you don't want these, but they are, you know, there's only so many people working at these data centers. Um, but it may this one may work itself out. At least that's what folks I've talked to that know it more closely than me.
52:18Do you not think this will do you not think this will be a material blocker in our speed of deployment?
52:24Well, we have 50 states and I don't know how many counties we have. It's a lot of counties like um I'm pretty there there will be some with water and power that want that want this business is is the meta point. And that also this backlash isn't going to last, right? These are not these are not all destroying our water tables. These are real jobs. 300 3,000 jobs for a lot of poor communities. Let's not mock it when the average I mean I mean this is such an entitled podcast. Oh, poor anthropic engineer only made 35 million. I mean go out to the goddamn panhandle and no
52:53one's making 50 grand, right? So these are these are not enough jobs, right, to make up for the but these are real jobs with real money and they're going to last years and years and years and they bring a limited amount of econom real economic benefit. um you know there's enough but it's it it is a bummer for for places where we should be building these data centers for sure it's not a net positive it's just a question of will it work itself out in in in in the US where we we do have compet one we do have a nice set of competition here
53:23regulatory competition between states and counties yeah I mean I think you know the irony of Roana you the Silicon Valley congressman turning into the you know the Marxist wolf in sheep's clothing is is pleasing to me as I would not tend to be on that side of the voting aisle. Just watching all the Dems get suckered into thinking he's a moderate has been worth the price of admission as he starts advocating the billionaires tax.
53:48So there you go. But yeah, who am I?
53:51You mean millionaires tax, I think you missed out.
53:52Yeah, that's exactly right. So that's just funny in and of itself, but you know, once you're elected congressman, your next step is up. And the truth is the way to pop the way to electoral success probably lies to a fair amount of populism for the next period of time.
54:07So on the data sense I think you know I saw a good piece I think in Atlantic or something really just talking to people you know in the areas wrestling with these issues and it was very interesting point it was much less much less even AI is awful and much more I don't know what I'm getting here it's all very opaque what's the deal and I think if tech wants to get this stuff done there's two risks here um you know and they're almost opposite each other because it's you if you want to get local support you
54:35got to figure out what's package that moves it for them. And it definitely isn't, "Oh, by the way, you're going to get a 25% increase in electricity costs." And you're seeing that now.
54:44People are really, and I think the smart people are saying at a bare minimum, if you want to get a data center in here, you got to find a way of making sure people aren't going to pay for electricity and there's probably going to be some kind of dividend. If you tell people that, you know, you're going to get this job business, there's not going to be an increase in electricity and there's going to be, you know, a 5 10 grand distribution per people in the township, you probably go, "Yeah, we should look at this." Right? Um the other thing is do some of these statewide laws just make that impossible to do? Because the truth is at the
55:12moment there is a fair amount of we hate tech bros out there and as we said a million times it turns out if you spend 3 years saying AI is going to kill you all you shouldn't be surprised we hate it. So I I think there are there is some wood to chop technically. But I do agree Jason it's a great point. One of the best things we have over here, unlike, you know, I say the UK, which is one of the most centralized states in Europe in terms of central authority, and Andy Bernham was trying to change that. But we got 50 states. If if North Dakota hates this [ __ ] but South Dakota likes
55:42it, then South Dakota can put something in place and it can happen, right?
55:46Dude, the UK is like the size of South Dakota.
55:50But yes, but my point is is that we've got diversity here in terms of so hope hopefully it won't be a huge block. I mean right now the practical point is it's actually the availability of power rather than pure data center blocks. But there's definitely a whole series of things slowing things down between power availability, compute availability and then political avail willingness to turn the stuff on.
56:13Now the the main man himself always lacking in ambition, Mr. Elon Musk unveiling Terra Fab, which we touched on there. $16.8 billion. Um, I think it's going to be the most expensive buildout of like a real estate project. I think I read. Um, it's, as we said, in terms of jobs, extraordinary in terms of how many jobs will be delivered, different numbers, but between 2 to 3,000. Um, really it's him saying that he wants to
56:40sidestep TSMC's que and obviously build out his own fab capabilities. How did we think about this news both in terms of the strategic decision and the scale of it? This is someone with boundless ambition plus success at delivering on this boundless ambition plus access to capital at an unprecedented rate. So he's probably going to try and do all these things. It feels wildly ambitious to you know you have to build the gas
57:10turbines to build the fab to build the robots to build you know like it's like vertically integrated on every level but he has a piece of vertical integration that's been superb which is satellite launching integrated into Starlink has been superb vertically integrated right um so you can join the dots in the past and say it all makes sense I continue to think the scale of ambition if there's any slowdown down in the AI spend, then
57:39the all-in bet is the one that slows down the most the fastest, and this is the all-in bet. So, you know, watch this space. But right now, he's got the capital and he wants to do it.
57:49I just think at the end of the day, it it he's beyond all that, he's just saying, listen, there's a decade of supply chain limitations that's going to damage my my ambitions. I I got to do it, right? I have to do it. It's just it's this is this is also unprecedented, right? It's not just the investment that is unprecedented. It is this you can't get RAM, you can't get chip, you can't get what you want. Right? It we've had limited issues in the past, but I don't think we've ever looked forward and said for a decade I'm not going to be able to get what I need or on a cost effective basis. I can't even get I can't even get TSMC on the phone because Jensen's out
58:18there all the time. Um I just don't I could be wrong, but in my career I I you know I have a limited amount of experience here in the old days. I don't think it's ever been like this where it's you you could for it almost feels like infinite time before I can get the capacity I need at any tolerable price.
58:32Which is why it's super interesting to tie in something. Intel has come into the consort. Intel is part of the terra fab consortium in such way and I just saw it today. I did not know this. Intel completed an equity round which I read somewhere I haven't verified it. It was the first time they raised equity since like they went public in 79. In other words, they've been profitable from cash flow and returning capital like a real company is meant to for the 80s, the 90s, the 2000s, the 2010s, right? And now the AI capex boom plus obviously
59:01their deteriorating performance has said it's time to access the capital markets again. While we're on Elon Musk, Elon Musk did have a very unusual incentive package where his obviously expanded with the expansion of company valuation.
59:16Revolute announced an incentive package to the CEO or it was leaked um whereby it basically ratcheted it up with different um prices of the company um he'd get another I think 5 to 7% at 200 billion and then he ultimately at 500 billion would have circa 39 to 40%.
59:36Is this the new norm and should every CEO be asking for rated incentive packages alongside valuation bumps? It's not going to be the new norm and if it is logically stock prices should go down by 10 or 15%. Because I mean what you're basically saying I mean I I read the I saw the I read what's available about the package and you know the first question is multi-year packages and you know with incentives around market cap and you know in other words
1:00:04significantly beyond the normal um CEO comp that's been a thing it obviously worked for Elon in the first the 2018 Tesla package and obviously after a lot of twoing and throwing he got another package just recently finally approved after they moved to Texas. So they're not quote the norm, but they do h they are put in place for reasons we'll come back to for a small number typically of founders who fully vested in all their shares and who feel who want to be
1:00:32incented again by boards who feel that they have to be incented again. Right?
1:00:36By definition, that's not quote the norm. Right? 90% of public companies aren't run by the founder. And frankly, the number of people willing to run a public company for 10 or$20 million a year turns out to be remarkably high.
1:00:49Right. So, no, they're not the norm, Harry. Right. Are they the norm for founders? We're we're seeing some of them. I mean, common most of the time, I think, especially if they're badly designed and focused on market stock price only, they typically they often fail. We saw a whole bunch of them in 21 that gone unwound in 23 24 because they weren't based on operating performance.
1:01:12They were based just on, hey, if the stock is at 200 bucks, we'll give you more shares. And then what happens is the CEO executes brilliantly but the market is down so he doesn't get his shares and he comes back and he says look I've done my job right forgetting that he would not have made the same argument on the other side he or she right so the the record is fairly mixed but at the same time I'm going to acknowledge something for that special thoroughbred CEO who thrives on challenge you can put them in place if the incentives are right and maybe you
1:01:40do get extraordinary performance in return for extraordinary comp so it's not utterly crazy. They're they're a very not blunt, they're a very high cost focused instrument and I think boards have to be fairly careful when doing I'm not, for example, a fan of the purely stock price based ones. And to be fair to Elon's 25 package, we went over this before. It was a great package because it had you have to do Mars, you have to do Optimus, you have to do lots of cars at that
1:02:09point. Give them the damn money people, right? So, so there can be way now interesting comment. And I saw I think in the journal today there is a clause that says if there's an M&A above a certain value you do get a lot you might see some acceleration of that package. I haven't read the detail but it would be interesting if SpaceX and Tesla merge does he hit the big kaching on Tesla as well. That's what it implied is that he might hit it just merging the companies. Right.
1:02:34Totally.
1:02:35Before the details worry just one question to you or to you and Harry. I didn't mean to interrupt, but this when I read this, I thought it was more about control than just money. I also just read a story that the CEO of Revolute just tried to get out of paying a $20 million broker fee on a $400 million yacht bot. So clearly, he enjoys the good life, right? As well as working hard, right? This is not this is not a CEO that does not care about money. But to me, and I think that Elon was very clear on this, I need to control these companies or I'm walking is what he said
1:03:03when the first one failed, right? So if Nick owns 40% of Revolute, he controls like especially with I'm sure a super majority board and all that. It's his company. That's what he wants. He wants the the money, I'm sure, is part of it. But this is not going from two four 2% to 6%. This is going to 40% ownership.
1:03:20That's a lot. If he made that argument to me, it's about control. And I was a chair of the comp committee, I'd say, you're exactly right, Nick. So I'll tell you what, we'll give you three votes on each of your existing shares. Now you don't need control, and you don't need any more shares. and he would come back an hour later and say, "I also want the money." Right? Having No, you're right. But I will say I think we've both all learned that um no matter we've all learned that there are limits to supermajority shares. We all have learned that there are other sources of pressure whether they're VCs,
1:03:48shareholder activists, other issues that there are levels here of control. And you can control a 99 out of a 100red board seats, but if you own 6% you you may get pushed out of your company. It is entirely possible unless you'll go to the mat on it.
1:04:03I could talk for hours on that, but you know, I do think Zuckerberg will be an example of someone who whose control is you can ride ironclad control as a public company if you want to. And as I said, you can be pushed so hard with 40%, you know, goodbye guys. Like I I would just end the end the zoom with Wall Street if they didn't like what I was doing at Revolute. I would just push the button and say goodbye guys. Go short me. I'll see you later.
1:04:26You you you say that, but actually it turns out your problem Yeah. You can ignore people but you can also they can choose also not to buy your stock. It was interest super interesting thing happened today on the control thing right un this sound unrelated but humor me Zuckerberg's philosophy on AI right if you read it one of the things remember this is a person who controls his board absolutely you are just literally you you know you can show up you can tell me what you think but in the end I control right it was super interesting and he's pretty much had
1:04:55that sole control he said as part of kind of AI kind of how they think about governance he didn't want personal control over the decision to release new models. It should be a board level decision. I will admit I'm like hm and that to me was an example of yes Jason you can have control over everything but then you own everything and at some point even if you if you say you own 20% of your company but you have 10x voting control you can't make them buy the other 80% so you can't keep your stock
1:05:24up and you own every problem. And this might be a very smart man saying I'm not sure I want to be the sole person releasing the ship. So it was super interesting. It was the first piece of uncontrol that Zuckerberg's done in 20 years. So I did note that in passing, right? Cuz control is interesting cuz even when you have it, you know, and I actually have changed my opinion because burn public is so shitty because of all the problems going public. I've actually come to the conclusion that giving
1:05:53founders more control over their life's work, which is what it is, is an acceptable price to pay to incentive to go public. Right? So, I've actually changed my opinion on that. I actually think even though some of these control things are weird, and I do think they probably shouldn't be in passive indexes as much. There should be some discount for that. I've come to the conclusion that weird control terms are an acceptable part because otherwise, everyone just does what the Collison do and stays private. They're like, "I don't need your shit." In the words of I
1:06:22think Senator Dale Bumpers in the Clinton impeachment trial, when they say it's not about the money, it's about the money.
1:06:29I think it's about the incentive. I don't think it's about the money. I think your point was so good, Rory. I don't think I don't think I've heard it expressed enough that way. Going public sucks so bad today. Look at Look at the public company CEOs we've had on this show or Harry has. It sucks to be public today. Okay. Yeah, it was fun during lockdown when you know you could grow 90% without a new feature. It's not fun.
1:06:50And and I can't imagine being having been a founder twice, I can't imagine a helpless feeling as a public company CEO. I'd want to quit. I I would just hate it, right? Um having control and and equity has to somewhat tie to it or it's it's a partial fiction would would make it worth it, right? I I just would I I might leave the keys on the table if I had no control of the company I founded. I'd already made plenty of money. I was deluded to nothing. I had a board that didn't understand my product telling me how I run my company. I might just sort of leave the keys for you
1:07:19guys. You know, you take them.
1:07:22Agreed. And I say that not because I like it to be clear. I say that because I'm just looking at people staying private. I mean, I think the real solution will be when the private capital markets evaporate deteriorate and then they will go public because they have to. But that's by the buy. But so I agree with Jason on that. But on the other hand, let me take the other side of it. Now on these kind of deals the thing you look at is the participation rate which is how much of the total creation and value is going to the CEO right in other words and the way
1:07:51this deal was announced and to be clear it's not been put in the revolute deal going back to that it's not been put in place yet it was something like you know for his existing thing he gets it to 200 he gets to 30% and then if he gets from 200 to 500 in value which is 300 million in delta cap he gets an extra 10% of the company which would be 50 million billion right which would mean that for 300 million in value creation he's
1:08:18getting 16% of that right which would be abnormally high to be clear right I think 16% abnormally high right that's less than our carry checks those are 20 this sounds low but I can tell yes but if you're if you're getting it on you think I deserve 20% of what my portfolio does after a certain point. Nick's only get poor Nick's only getting 16%.
1:08:40I disagree. I think that the mark I mean I I I You're working harder for your portfolio than Nick is working for Revolute.
1:08:50No, I don't think it's about working harder. I think the nurses in the [ __ ] emergency room are working harder than both of us. Jason, I I I could not agree with you more. I could not agree with you more.
1:08:59Okay, let's go for it. Right. The question is two and a halfx. Taking something from 200 to 500 billion gives you $50 billion, right?
1:09:07Yeah.
1:09:08Do you think you could get a Jamie Diamond level CEO for 10 billion? I mean, he's only made a billion taking It's too I think it's too I I I'll let me tie it back to a different point and you can challenge me on this all you want, right?
1:09:19Gary asked, "What should LPS do looking at this, right? I'll tell you what I'm doing. Any investment I've made that is not run by a founder is a zero. It's going to be a zero in this age. It's going to be a zero. I look across. Now you we have different portfolios, but the ones I have that are not run by founders, whether they're at 20 million or 200 million, they're all going to be zeros. And so if the price of me not having a zero is getting Nick to 40% in my be I wish I was a shareholder. If I'm Balderton, whoever, this is my best name and that's the price. I'm gonna pay it
1:09:49in a heartbeat because all my I do not believe Jaime Diamond's uh lieutenant with his starch shirt and his blue and white collars and his and his cuff links can run Revolute. It's not that mature.
1:10:00The space is not that stable. I don't buy it. And I'm not a I'm not a banking expert, but I don't buy it. It's possible. I believe he will run that company into the ground just like every non-founder has run my portfolio companies.
1:10:11Let me ask another hardnosed comment probably, but running into the ground. when you're Yeah. See, by the way, I'm going to get killed if I don't say one thing here, which is our former guest, Nick Ash.
1:10:22Yeah. But when did he join? Two years ago. I just know my portfolio will be zeros without this without the founders.
1:10:30I'm not saying there aren't examples out there you can find. I just know for me to the LPs, they're zero. They're all going to be zeros. No matter how much ARS they have, they're going to be zeros. And this is the question is and that's totally true at 1 million 10 million 100 million maybe a billion. The question is I think Revolute's doing five bill I used to know it 5 billion in revenue and a billion or two in profit right it's an extraordinarily big and very impressive company at some point it becomes not true right or maybe the
1:10:59better statement is this and this is the interesting one cuz and I know this sounds really negative but when you're on remember going back to interest it's a corporate governance question and I you know having just come out in favor of founder control all the things I said earlier and I stand by them right you still need a dynamic to protect the other shareholders, right? Because if you take the logic to extreme, I saw Nick at Revolute made a comment. It's a very interesting comment that I think is [ __ ] He said, and it's it doesn't
1:11:27sound [ __ ] but it is when you think about it. He said, quote, I deserve more because the investors after they give capital, they do nothing else. And that statement is the first the second half of that statement is true. After investors give you capital, they deserve not they do nothing else. That's the world of capital, right? But just cuz that's true doesn't mean the founder can I mean what's the limit then right? Or to put it another way fast forward 30 years
1:11:57what what's the limit?
1:11:58I think I think the world has changed. I don't think most founders care anymore.
1:12:02And so I think you got to adjust. I think I think Nick is what is saying I think half the class at most accelerators agrees. I'm just going to raise it 50 and if it doesn't work I'll just I'll just do whatever. It's but but you're not addressing the issue that what you're saying there is the cost to run a company from 200 billion to 500 billion is 10% delusion is the cost from 500 billion to a trillion another 10%. Is the cost from a trillion to two trillion another I'm just trying to get a sense of it.
1:12:30Well listen I think your point's a really good one.
1:12:33If it is then two things are true. One is you should pay less for that stock because you're going to get way more dilution, right? It, you know, well, Pitchbook had an article this week saying how how much massively returns are being compressed on outcomes north of 500 million to a billion. That outcomes are being massively compressed by by unprecedented dilution and high entry prices. So, this is just the world we have to live in. Like, as a seed investor, I've only been doing this so long, but I've been doing it for a
1:13:01while. When I started, my model was um I'm actually paying twice my entry price. Okay, that's how I model. Now it's 4x. Now I'm play now I'm paying I'm going to suffer 75% dilution and it's not and that really means my entry price is 4x what it looks like on that 50 50 post you want. It's really effectively 200 if we if we hit it, right? And I could complain about it just like the Nick thing, right? But Nick Nick going to do it like like the the the baby
1:13:29Elons are going to get these packages and it don't really matter what I think or any of us think because enough investors are going to go along with it um that they're going to get these packages. But to your I think Rory the the more important point you make is is how elite will this be will this be reserved for? We could debate whether Nick deserves this, but this is this is a this is a generational company, right?
1:13:50The question is do subg generational companies get these packages and how does it impact things? Um but uh yeah the our del I think all pitchbook said this week all of our delusions undermodled. It's all under modeled right. So and look as I I hate the role I've adopted in the last 10 minutes because I'm gen I tell people I'm generally the softy on the comp committee. I love writing big comp checks for successful equity packages.
1:14:16But at some you do have to have some kind of linkage and at some someone has to sit there and say okay what are we getting for this and you're right and you know for what it's worth on this particular one I'd probably do it but I'd insist on non-market comp non-market stock performance metrics if you build the biggest bank in Europe operationally not just on stock price value then I would totally say you're worth the $50 billion. That's why I'm saying a lot of it's in it's really boring but a lot of it's in the details. So you can if you're going to pay, let me be very
1:14:45clear here. If you're going to give someone $50 billion, 50 [ __ ] billion dollars, you ought to spell to self to spend more time thinking about what you're getting for your $50 billion than, hey, I'll give you 50 billion if it's valued at 500 billion in a few years. You probably need to think about it a little more carefully.
1:15:04I think you're right. For what it's we go on forever. I think that's what you should do. In my limited experience with my portfolio, these mini these mini Elon packages, they're basically all focused on 10x what the last guy paid.
1:15:16Yes, that's what all the latest stage investors do. Whatever I paid $20, $200 and I just want $200 for you to get it. I don't care whether there's a little do like I want to make 10x post delution and then you get your piece, right? So, it's what you ate, but uh but I think it's what a lot of late stage investors want.
1:15:33Again, go back. I actually think you're right. In which case, given the last rounds at 100 or 200, like that's my comment here is that 10x that would be a trillion. In other words, the participation rate is just a little high. I think these are fine packages.
1:15:46This one looked a if the numbers bruted about are real, it's probably that's a lot for maybe you could pay a little less and get a little more. But yeah, it's a thing.
1:15:55The one thing I will say is I've interviewed a thousand founders.
1:15:58I know you love them.
1:15:59Sam Alman, Damis included. I've never interviewed anyone like Nick. I look remember last week I you asked which stock I like re I think it's an amazing stock and amazing potential and market cap and I just want to be sure I got it in operational performance before I pointed up the 50 bill. I know it's Captain Obvious, but um Revolute's Revolute's all all green, right?
1:16:19Everything seem at least externally. I'm sure there's stuff under the surface that's struggling. You got to you got to you do these packages too late, it's too late.
1:16:27I think that's right.
1:16:29And that also means you have to overpay and pay up because you have to do these packages at the right time, right? You try to do this when the company's growing 4%. I mean, sure, but I mean, it's, you know, you you've missed your window there.
1:16:41Yes. I actually think that this is the second package that the that particular CEO got. But yes, I agree.
1:16:46Team, where do we want to go from here?
1:16:48You we have whatn not, which obviously raised a very large round, 545 billion at 20 billion. Sorry, 545 million at 20 billion. We've got Deepseek raising an 8 billion at reported 74 billion.
1:17:03Um, Bite Dance Band's distillation of US models. Um, which I thought was interesting. I think we should talk about whatn not if for no other reason that it's such a relief that there's more to life than AI shopping. So there's more to life than AI shopping really.
1:17:22Yeah. Yeah. I mean I think it's a great story background for people whatnot raised at about half a billion at 20 billion in valuation right and it's a live shopping company and you know in the in the internet equivalent of QVC.
1:17:36The minute I heard that story, my response is that'll work. You know why?
1:17:39I mean, if you look at QVC, if you look at the home shopping network, these were the equivalent in pre- internet days on TV, you know, live sales, right? People enjoy that [ __ ] right? And someone explained to me what not did a couple years back and I'm, oh my god, it's a great idea, right? Not my space, not what I do, but like that's going to work. You're going to have people live selling [ __ ] It's going to be a little bit of retail, a little bit of commerce.
1:18:02Look, it's going to work. I mean, if you think about it, the the big three of this space have been QVC. Interesting enough, by the way, that's now bankrupt, probably cuz all those people died and now they're replaced by whatn not people, right? And then eBay, you know, we forget it, but eBay is the other quirky way to sell [ __ ] from the 1990s and that's, you know, got a 40 or 50 billion market cap. So, what's interesting here is something where you look at and go, that's going to work and fast forward two years and it's 20
1:18:29billion. Now you know it's growing 2x year on year 8 bill I mean you know you have to measure I think it's you measure GMV which is about 8 billion last year going to 16 billion this year and then they get a 12% take it's a great business that's all I mean so I'm just like yeah go team it is useful listen if I'm not an expert on on whatnot uh I could speak more to Shopify which blew out quarter two right um it's it's it's rough roughly related missed a beta but I do think it's worth I do think
1:18:59everyone one should at least study what isn't being destroyed by AI, right?
1:19:05What's going to happen with with online shopping, online commerce, what's going to happen with restaurants, what's going to happen with with uh cars and and it's just it's there are there will be many good opportunities and spaces that aren't going to be destroyed by folks creating a poster in chat GBT for free.
1:19:21Um, and we should just uh study it more, right? There there's there's gold in the things that aren't going to be destroyed by AI as well as the things that are being decimated by AI. That to me that's the only interesting part, right?
1:19:33I totally agree because look, Revolute's another example. It's just work, you know, just trying to ground. I agree there are two compelling large businesses catering for real, you know, universal human needs, finance, shopping that, you know, are building huge outcomes. I agree. You know, the AI is most of what's going on, but not all.
1:19:51And but if you know it as an AI story, it could be worth like 50x GMV. That's the only miss. Like let's say they could pretend the GMV was was rev. So what would what's 50x times 16 billion? Rory, help me with the math. This what what LLM would be the next trillion dollar AI startup.
1:20:09Pleasingly enough, 50x times 16 billion is roughly on topics market cap.
1:20:13Yeah, that's what I'm saying. We need another trillion dollar. This one's a bargain at the iconic investment committee. We're getting this for 20.
1:20:19Yeah, I do think there's plenty of that out there. I think whether it's literally GMV or not, I think there are plenty of folks getting benefits of revenue that make no sense. It's not it's not even just lying or cynical. I think there's a lot of I think investors to some extent don't care as long as the growth's there.
1:20:33Final one, if I want to sher us, Shopify, we mentioned blowing out the quarter. Atlassian blowing out the But biggest jump since 2015 for Atlassian crushed it. any takeaways from some of the big results that came out?
1:20:51Yeah, it just as I said if you produce you'll get rewarded, right? I was I was delighted because um you know when you pinned me to the wall a few months back and said name names my first bet you know what stock would you buy and my first answer was the best one which is just buy worldcloud and it's up 50%. But then you kind of pushed me and I named some names and one of them I named was Atlassian and honestly two months ago I felt like an idiot. It was still not I I thought he'd pull it off but it wasn't there. And then obviously they nailed it. They got the growth and the stock
1:21:19jumped. I think if you look at overall it was kind of because you know some people like data dog were down a little right but those are and you kind of lump them together in the agenda but those are different stories. I mean data dog story was just everything's amazing but our biggest customer and everybody knows it's open AI and no one says it right is suddenly realized they maybe don't need to spend $150 million and are spending less. So grow was down a little but that's cuz you know data was trading at 18 times forward revenues and now it's
1:21:4615 right that's one phenomenon of the a of the AI adjacent winners which is very different than what Atlassian was going through which was existential [ __ ] and we're trading at three times and suddenly you know we nail the quarter and it's an easy pop the five times something like that right those are different you know those are different movies at the same time what the Atlassian story says is the sales forces the hubspot That's the your canvas if it was public is you know if you get it
1:22:16back on track in the with the fundamentals the stock will follow right but if you don't and some of the others that you mentioned didn't then you know you're stuck in two and 3x land forever more until you get as Jason said last week until you get bent spooned I still think these are hard companies to run to your earlier point I mean yes Atlassian Alass but Atlassian also did something which Canada did too which I as which I always find a bad sign um a sign of stress. Not a bad not Michael
1:22:44Mike's great but um they got rid of most of the free loom seats and this is what you do in times of stress like the other thing that Canva did because they're because the revenue is down is they pushed all a lot of features into the higher paid editions. Okay. And after and then it's just it's not the end of the world. Loom is not the breakout success of Atlassian, right? It it is not. But getting rid of collaborative free seats which is how we all grew up using Zoom, right? we could share and work on these together. That's a sign of just how hard even if you beat the
1:23:13quarter guys like Shopify or Alassian, man, they're leaving nothing on the table. These are not easy beats. This is not Anton lovable turning around and he added 100 million last week without realizing why. Um these are the even the beats are hard, man. So uh uh and um so the loom one it sounds minor but whenever I look at whenever I see uh the the base getting overly monetized or harvested if nothing else it's a sign of
1:23:42stress in the organization because no one really no founder wants to do that.
1:23:46You've you you've said that consider and I've totally come to conclusion you're right. And you know when you talk to people one level in at some of these big software companies and you know they're doing a seven or eight% quarter and then you talk to a director of sales that you know you suddenly discover it's we're jamming them on price, we're jamming them on overages and you realize it's just not sustainable. So I I do hear you on that one. I mean overall I thought it was a great quarter but yeah maybe yeah it's sorry to lose your preloom seat. I
1:24:15still I still just worry if the agents need all these products, but I hope so.
1:24:19Just like I I I don't want to be negative on Lassie. I'm a super fan of Mike. We all are. I want it to win. But I also worry a little bit. It's a canvas story coming that it seems to be define some trends. Now, you can answer you can say at lasting is very enterprise, right? Let's not look at the developer side of things. It's not look at how how how how we used to use Jira and other tools but um our our agents really don't need these seats and it is in a lot of their revenue is still developer focused which where I think the seed is under
1:24:47assault a permanent assault the seed is I've got a provocative question for you HubSpot today is sitting at 10 billion how long will it be until HubSpot is bought by Bending Spoons?
1:24:59I'm not going to dunk on HubSpot. We were lucky enough to be Yeah. We did the series C investment in Huntsville. It was at We did it at 47 million pre. So, we're still up. Um Harry, I will admit Series C 47 million.
1:25:15I'm wrong. It was 70. I'm wrong. It was 70. I was thinking a box. Box was Yeah.
1:25:19Hard to get done, too.
1:25:20Yeah. It was hard to get done. I mean, I'm sure Brian, if he could have got one of the glamour people who turned him down and then did him later, he'd have taken them over us.
1:25:28Well, I wouldn't go that far, but yeah. Oh, I would. Um, but you're a podcaster, Rory. You stand up for yourself.
1:25:34I'll tell you why. I don't think they're going to get bending spooned for what it's I don't know. Right. There's so many things in the Air Table story that are scarier than they sounded, but I think um one of them is that they only got one offer and Bending Spoons is is going to look at everything. Um, and it's got to be perfect. Um, and maybe they will buy them. I first of all, it's a lot. That would be a lot for Betting Spoons to bite off, but they could do it, right? I guess I guess you can always line up the financing. Um I I think the tough like HubSpot I assume
1:26:03assuming they would sell. Let's just assume they would even sell, right? And there's a lot of fiduciary questions here. There should be offers at 12. If it's at 10 today, there should be. But I don't believe there are. I don't believe there's many. I will tell you at a meta level if we want to break on it. Just there is an issue here and it is it's a it's a structural issue in the world today in the AI world. Just like if you're Canva, the proumer folks are threatened by chat. If it can be done in chat GBT, even accidentally, you're
1:26:30hyperthreatened. Um the SMBs, the the the HubSpots and Mondays and others, um they're not really threatened by doing it yourself. Okay, that is that is that is a short myth. What they are threatened by is the fact that low-end competitors in SMB are really good. The low-end CRM competitors are exploding.
1:26:52The revenue growth from Monaco, Lightfield, Oracel, and others, they are like nothing we've seen before. You know, my first venture investment was Pipe Drive. It would have taken 40 years to get competitive with Salesforce, right? It was just slow and that was the number one like simple to use CRM.
1:27:07Exited for a billion and something my first investment. The the problem across my portfolio is you used to walk into a board meeting and the competition would be the guy's bigger than you, right?
1:27:16here's what the big guys are doing. Now, if you walk into a board meeting and it's SMB, they're all guys that weren't on the slide 24 months ago and they're really good and their agents are good and their LMS are good. And so, the pro the tough hand HubSpot has is it spent the last 5 years beating Salesforce at the low end, right? It's a CRM company now. It's not a marketing automation company when now the low end is so good.
1:27:39It's so so good with AI. these low the the new entrance are so good in SMB and so and the amount of founders that want to compete even in niche categories they didn't used to want to and so this is the bare case on everyone at this SMB space because it's just there's too many good competitors exactly right on that and it's very well articulated I remember that the years of was we're we're doing CRM we're competing on so forth and now you're exact it's it's those there's just myriads of because you can build really
1:28:08excellent software really quickly with a different twist using AI. It's why I I tell I was telling this to someone who runs a big PE shop in tech. If I was if I owned one of these companies as a PE owner, if I was I would just be at every Y Combinator demo day, I would be like, you need to hire you need to buy some of these. You need to infuse some of that DNA quickly while you still have breath, right? And figure out what you can build. You [ __ ] kidding me with the loyalty that they have today, you think they're going to stick? Let's give a
1:28:38load of young people from YC a big push work at this [ __ ] heap. They're gonna be chime.
1:28:46Obviously, if you think it's a [ __ ] heap, no.
1:28:48But all the PE companies respectfully are [ __ ] heaps.
1:28:51You want to know the serious reason why it won't work? Rory's right, Harry. You know why it won't work? Because all the hot startups have this model. They're all picking off everybody.
1:28:59Agreed. ever. I I I mean I think one of my investments owner I I think they've acquired like 20 companies and they they get to go work for a for a reasonably hot company, right? And so how are you going to compete with that when when Rippling is hoovered up 30 and owners hoovered up 20 and Revolute's hoovered up 10? You just that strategy worked three years ago like it's too late. Like everyone is just sitting there hitting refresh hoping these smart YC companies fail so they can hoover them up in an aqua hire. I'm not I'm not kidding. It is a core strategy of many of many
1:29:28leaders. Boys, thank you so much. That was awesome. I loved that.
Insights
Research extraction
20VC with Harry Stebbings
https://www.youtube.com/channel/UCf0PBRjhf0rF8fWBIxTuoWA
Direct answer: The only genuine, explicit recommendation in the transcript is a social post: a tweet by Dave Samuels (Freestyle) selected as "one of the tweets of the week." No books, articles, or research papers are explicitly recommended; other mentions are passing references or too vague to count.
Genuine recommendation — Dave Samuels tweet: A panelist explicitly selects "one of the tweets of the week was Dave Samuels, I think is his name from Freestyle" (name uncertainty in the original), summarizing that "their blended exit price from Air Table was actually six billion" and attaching the lesson "the importance of selling along the way and being very thoughtful about selling in the good times." The recommending speaker is not identified by name in the transcript text.
Cited but not recommended / too vague to count:
- "The guy from Arizona State, the bookbinder research" on the power-law concentration of capital gains — cited as context, not recommended.
- "A good piece I think in Atlantic or something" on local data-center opposition — uncertain title, no explicit recommendation.
- "Pitchbook had an article this week" on return compression from dilution and high entry prices — passing citation.
- An unnamed book on Palantir introduced with "if you read the book" — no title given.
- "the Maltby book about the deep mind acquisition" — no title given, referenced rather than recommended.
- "Gartner numbers" on enterprise agentic deployment — cited data point, not a recommendation.
20VC with Harry Stebbings
https://www.youtube.com/channel/UCf0PBRjhf0rF8fWBIxTuoWA
On 20VC, an investor panel organically flagged several resources:
- The Palantir biography — credited for showing how Palantir saw the LLM wave in 2022-23 and committed early to an enterprise AI product; the panelist said the company "grocked" the moment .
- "The Maltby book" on the DeepMind acquisition — cited as evidence that Demis Hassabis's team was perpetually torn between corporate demands and the desire to pursue a Nobel Prize-level scientific mission .
- A recent PitchBook article — returns on outcomes above roughly $500M-$1B are being "massively compressed" by unprecedented dilution and high entry prices .
- Research by an Arizona State professor (referenced as "the bookbinder research") — fewer than 1% of companies generate ~90% of public-market capital gains, making power-law outcomes the norm .
- A piece likely in The Atlantic (panelist unsure: "I think in Atlantic or something") — community opposition to AI data centers is driven more by opacity about local impacts than by anti-AI sentiment; the panelist argues tech must offer communities concrete offsets, such as no electricity increases and payouts .
- A tweet flagged as "tweet of the week" — Dave Samuels of Freestyle noted Airtable's blended exit price was $6B, underscoring the importance of selling along the way in good times .
- Zuckerberg's philosophy on AI — panelist noted Zuckerberg opted against keeping personal control over model-release decisions, making them board-level; called the first piece of "uncontrol" Zuckerberg has done in 20 years .