Anthropic vs The Pentagon: Who Wins? | OpenAI's $110BN Mega Round | Cursor Hits $2BN in ARR

Whatever it is that's in the water at Entropic, it's working and it has created unity. You've got to believe

created unity. You've got to believe that the next round for this Entropic and SpaceX are all public offerings.

Tesla trades at a trillion today. I

think if Elon died tomorrow, the trade at 200 billion. Open AAI trades at 800 billion today. I think if Samman died

billion today. I think if Samman died tomorrow morning, we trade at 600 billion.

>> This week, Anthropic goes to war with the Pentagon. Open AI closes at 110

the Pentagon. Open AI closes at 110 billion round. Block lays off 40% of the

billion round. Block lays off 40% of the workforce. I think we got the SAS

workforce. I think we got the SAS apocalypse all wrong. Every single CEO I talk to doesn't think they need 40% of their team.

>> The lesson is never underestimate big markets and momentum. The knife fight doesn't start until the TAM is like 60 70% saturated. The prize for winning is

70% saturated. The prize for winning is to reinvent the company from scratch and the product from scratch every 6 to9 months. Congratulations. It's a fun

months. Congratulations. It's a fun game. Ready to go.

game. Ready to go.

We are back, Rory. Last week, this man predicted one of the biggest layoff announcements in history before it came.

He is that good at predicting the future. So, this week's going to be even

future. So, this week's going to be even better. We're going to start this week

better. We're going to start this week in Anthropic with uh the Anthropic going to war but being banned. The issue with the Pentagon. Rory, do you want to

the Pentagon. Rory, do you want to provide some context for everyone what's actually happening with the battle between the Pentagon and Anthropic before we dive in?

>> Okay. Yeah. Reminder of context. What

happened is that Antropic actually has a $200 million contract with the Department of War. And in a

negotiation um about that contract that culminated in a rupture last week, Entropic was seeking to impose a couple of conditions on the use of their model that the

Department of War was not willing to sign up for. and specifically the two issues as I understand them. And again,

I want to preface all this by saying unless you're in the room, you should assume that everyone who was in the room is spinning a version of this that makes them look good. So with that caveat, the

two issues appear to be entropic wanting to specify two things. one that you could not use the software their their models for quote unquote mass

surveillance and secondly you could not use their software for autonomous weapons. Those were two restrictions

weapons. Those were two restrictions they wanted to put on the use of their models and the Pentagon's counter was we want to be able to do anything that is

quote legal and that was the bid ask spread and it didn't converge and on Friday afternoon the Pentagon broke off the discussions and effectively

threatened though as yet I understand it hasn't been done to I to to at a minimum cancel the entropic deal but also the supply chain threat such that other vendors selling to the

Pentagon or even to the US government couldn't use them. So depending on how that threat is interpreted, it's either a mild loss of a a contract or something approaching thermonuclear and it's not

yet clear has that happened or if it happened what it means. So that's kind of the facts and circum that's the facts simply put as from the editorial comment.

Was it the right decision by Darion to have these principles and to stand by his beliefs in this way? Because Sam has since swept in and done a deal and we

can get to that repercussions on the consumer side. But Sam has done a deal

consumer side. But Sam has done a deal in replacement. I think he got swept up

in replacement. I think he got swept up in a tough position which is his team, his employees because I think Dar Daario clearly since the day he was lead safety

researcher at open has felt profoundly uh important about safety. In fact, they refused to release Claude before chat GBT because he didn't think it was safe.

They only released Claude under under duress. Finally, he goes to his team and

duress. Finally, he goes to his team and says a while back and says, "Listen, at least we can make weapons safer. Like we

it's going to happen one way or another.

there will be AI in weapons. This is my understanding. And he convinced the team

understanding. And he convinced the team that what we will do is we will make them safer. And that was the

them safer. And that was the justification and uh to a lot of folks in the even Elon said a little while ago, I wish AI hadn't happened, but since it is, I'm all in on X AI, right?

So if these AIs are going to be out there in the military, we'll make the safe one.

And I think it just got pushed to the point where I don't I think he has his personal beliefs, but I don't think he'd go to his team and say it was true anymore. It was just pushed too far to

anymore. It was just pushed too far to say, "At least we'll make it safer than our competitors were. At least this will be safer than XAI or CHB or some tortured open- source thing because at

least the good guys will be in there and we'll make sure we don't do the wrong source of mass surveillance and that when we do target folks, which we've been doing with some form of AI for years, at least we'll minimize the collateral damage." I don't think he

collateral damage." I don't think he could say it with a with a with a straight face. So, he said, "I I I I've

straight face. So, he said, "I I I I've got to step out on this one." like this is I I'll lose my not only do I not believe in it, but I'll lose my team.

>> If that's the framing, then I can answer the question concretely. I think you're right, Jason, which means he was wrong.

I totally agree. One of the organizing principles on Tropic has been this, you know, almost messianic belief in AI, the threat of AI, as yet the willingness to develop AI because they're the only

people who can be trusted with AI, right? I find that weird, but I'd be an

right? I find that weird, but I'd be an idiot not to recognize that this has been an extremely successful unifying principle of this company, right? Which

is why they still have the seven founders when the other guys across the street have lost almost all but one or two of the founders, right? Whatever it

is that's in the water at Entropic, it's working and it has created unity, right?

And he would be a fool in terms of running his business to blow that unity.

And the man is clearly not a fool, right? So, I get it, Jason. You're

right? So, I get it, Jason. You're

right. He had this belief around AI safety that is not just a likely held belief in his company. a core organizing principle and arguably even the engine

that has driven the enthusiasm to build that company. Given that I think it was

that company. Given that I think it was naive to try and sell the government at all at the Department of Defense at all because if because let's cuz they too unlike a lot of us who are just ordinary

people have an organizing principle which in the case of Department of Defense or Department of Wars defending United States of America right and they believe correctly that that's their task that they've been charged with and the

idea that someone's going to wall in and say I want a $200 million contract but I'm going to tell you the safe way to use this is absurd. And I think the deal of department is absolutely right to say

we are not signing up for some bunch of guys in California to tell us what to do. We are the department of defense

do. We are the department of defense empowered by the president and the constitution to defend this country. Go

away little boy. So I think they were entirely right. If you wanted to not

entirely right. If you wanted to not sacrifice your principles, you're probably and if you believe that you know that you have really nuanced

opinions on how AI should be used in war, then you probably shouldn't sell the Department of Defense because they really don't correctly don't give a damn about your principles.

And I know I again I feel weird saying this because I actually think I love Dario's writing and his speaking. He's

some of the clearest best writing I've seen on almost anything. And I happen to know cuz I read as a big believer in Richard Rhodess the making of the atomic bomb as a book they share. Right? And

when you read that book the first conclusion you should come to is General Go didn't give a rat's ass about the scientists. He humored them. He gave

scientists. He humored them. He gave

them what they needed. He let them not wear uniforms cuz it made them happy.

But when it come to the crunch, they weren't even in the room when they decide to use the bomb. and thinking

that you're not thinking that you're going to have the luxury of getting to be part of the decision is unrealistic, naive, and actually constitutionally wrong. I may not love the current

wrong. I may not love the current administration, but they were elected by 80 million people. And as Harry will remember Tony Ben, the English politician, used to say, a cabinet

minister, a lab very left-wing socialist whom I don't like in any dimensions, but he had a great phrase for the civil servants. He'd turn to him and say, "And

servants. He'd turn to him and say, "And who voted for you? And who voted for you guys at Entropic? Cuz 80 million people voted for us and the constitution says we're here to defend the country. So I

think drifting into this situation now drifting into this situation given that that's the core organizing principle is probably a mistake. It

might work from a business and a marketing perspective because you've got a huge bunch of outside lift from it.

And on that basis it's been great. But

this is the big butt.

you're now a little bit at the mercy of how the administration wants to handle this, right? And the thing that's in

this, right? And the thing that's in your favor is they often have a to short attention span and they move on. And the

thing that's against you is they're quite hardnosed sometimes about grinding you down. And if they want to grind you

you down. And if they want to grind you down, they can. I don't think they should. I think they would be wrong. I

should. I think they would be wrong. I

think they should say to Antropic, "You don't want to do business with us?

That's fine. We'll keep our 200 million, but we won't grind you down. We won't

declare your supply chain risk. We won't

try and destroy your business. But

you've drifted into a situation where it's at least plausible they can. I

don't think that's a good idea. If you

were an anthropic shareholder today, would you feel more or less confident today? You mentioned the Lyft. For

today? You mentioned the Lyft. For

context, they are now number one in the app store ahead of uh Chat GPT for the first time. They have a consumer brand

first time. They have a consumer brand which actually consumers care about really at mass for the first time and Dario has presented himself to be a very thoughtful and progressive

leader that cares about safety. As a

shareholder, would you be more or less happy? Same expected return, wider

happy? Same expected return, wider variance. By definition, the risks

variance. By definition, the risks increased and therefore you should be mild you should be unhappy. You were I mean, you know, even despite the lift, you were doing really well a week ago.

You were clearly the dominant company.

You made entire stock indices move at your will, right? You write a blog post and every legal tech company goes down 20%. You had a good thing going, as they

20%. You had a good thing going, as they say in that meme, right? And now you've drifted into this situation where you've got this ongoing fight with the government who has way more power, as

you're suddenly discovering, than you do. I don't think you're happy about the

do. I don't think you're happy about the increased risk in your deal.

>> I I don't I think we're entering an era.

We've entered an era where no one really cares as long as the numbers are there.

No one cares. There's fewer ethical concerns. There's fewer anything

concerns. There's fewer anything concerns. If I just got my March one

concerns. If I just got my March one investor updated Enthropic and we just crossed 16 billion, um, you know, I I, you know, I I I my email back would

probably be great job with three exclamation points and maybe an emoji or two if it were on my phone, right? I mean, this is the world we live

right? I mean, this is the world we live in. So, we don't we don't have the

in. So, we don't we don't have the rights. We don't have I don't think

rights. We don't have I don't think almost none of the money in Enthropic has any rights whatsoever. I would say with most startups, it doesn't no longer matters what I think as an investor. It

literally doesn't matter. Only the

struggling ones doesn't matter what I think >> and then you don't want to care.

>> Yeah. Then then I have my board partner.

>> But you cynic. But no, I to be fair, I think the question is not do they care about your opinion. The question is how how would you feel? And I just and I think you're right. If the if numbers go up, you're fine. But I think you just

have to accept the fact that in return for a significant boost in popularity, good. You have a mild existential risk

good. You have a mild existential risk that probably you can beat in the courts, but nonetheless, if the people on the other side of the table decide

they want to be vindictive, can make things very hard for you.

>> Just one thing that I was thinking to highlight if we get to block later, right, we will.

>> The the if we talk about the the power of labor versus management, and I know we don't like these terms, they sound very smithyian and stuff, but it's true.

at Anthropic and and and OpenAI and and we're at the extreme end of power of labor. I mean, people are leaving, you

labor. I mean, people are leaving, you know, eight figures of vesting stock at OpenAI because they they they want to work somewhere else after 13 months or 6 months. I mean, this is unprecedented.

months. I mean, this is unprecedented.

Even at the hottest startups, people used to stay. Okay. On the other hand, for noni folks, for the blocks, we have the least power versus management ever.

Like, you are you're less than fungeible. You're not even wanted,

fungeible. You're not even wanted, right? And so there's a subset of folks,

right? And so there's a subset of folks, and listen, Anthropic's probably at 15 billion. This is an important subset,

billion. This is an important subset, right? There's a subset of folks, it's

right? There's a subset of folks, it's very weird, where labor has all the power, and and Anthropic has done the best job of anybody. A lot of the XAI founders are gone, too, right? This is

like 2021 all over again. You've got to do whatever it takes to retain the team.

Like everything. If they want you to take on the Fox News dude, Peach Hedgeith, you do it. If they want you to tap dance on the roof of the company, you do it to keep those to keep the researchers, right? What Maggie told us,

researchers, right? What Maggie told us, I didn't even know this when we were in London with Harry at OpenA, they don't even let the salespeople talk to the engineers, the researchers. They're not

even allowed, their cards don't work at the building of engineers because they don't want to be bothered by the go to market team. They're not even allowed to

market team. They're not even allowed to attend meetings in in the in the good building. They've got to go to the

building. They've got to go to the building next door.

That's protecting your your talent at all costs, right? So, that's why I think Dario had no choice. I don't think the team would tolerate anything else. First

of all, I love the labor capital distinction and you know, you said it's it's really more marxian than anything else. And I'm going to go with it. You

else. And I'm going to go with it. You

know, capital versus labor and I think you're right. It's super interesting to

you're right. It's super interesting to see in a situation like entropic capital is weak and labor is strong because those are the most talented people on the planet who have the skill that you need the most. And you're right, in many

other organizations it's weak. But I'm

going to remind you if we're going to do political economy, right, not politics, but political economy, There is a third actor. It's called the state. And I think what you're seeing

state. And I think what you're seeing very clearly now I just want to say it very clearly is the state is more powerful than entropic.

And I think that's the lesson you got to learn. You can have I think you Yeah.

learn. You can have I think you Yeah.

And it's interesting if you listen to some of the one thing that some of the folks talking about AI even two or three years ago were hinting at this where they're like will the state intervene

and I think the state has extraordinary powers because it's the state that state has as vor points out the monopoly on violence within a geographical area right

and I think that in terms of appeasing your employment base you got to do what you got to do but drifting into getting into a conflict with the department of war on something where I think logically you're in the wrong cuz you're trying to

interpose yourself over and above the people who are charged with doing this is is just a bad place to be and I would want to tiptoe back out of there and if all it costs you is a $200 million

contract in the context of a $14 billion business you should declare a win and move on because if the state decide I mean for all this talk about AI being so scary let me tell you what we learned in

the last week AI might be scary in the theoretical oh it could be used for this it could be used for that. The state is scary in the real sense of we have laws,

we have men with guns to enforce those laws and we can take your company if we want to. And I bet you even though you

want to. And I bet you even though you look at those laws like the Defense Production Act, you look at those laws like being declared what was it? uh

supply chain risk and you kind of go, I think I could win that one in court.

It's still a sobering moment when you realize, hm, the person in charge of the most powerful military on the planet thinks that you are a supply chain risk, wants to invoke powers granted to him by

Congress to do that and you've picked on them. H I would have preferred to skip

them. H I would have preferred to skip that. And

that. And >> and you've got David and the rest coming straight for you non-stop, right? It

doesn't help. When you're talking about the power that Labor holds, what you're suggesting with that, given Sam sweeping in and taking it, is that he does not

face the same pressure from his employee base?

>> No, he did. His team hated that he did it, right? He had to immediately say

it, right? He had to immediately say they're going to he's going to unilaterally change the terms of the contract the next day. I I mean, he's a very smart guy. He signed a few contracts in his day. That was Numnut's

thing to say. I mean, I I I know he believes it, but oh, we're just going to change the clauses ourselves uh on chat GBT so that they say what we want them to say. I mean, good god. I I agree with

to say. I mean, good god. I I agree with Jason there, Harry. I think what the last four days have shown is the power of labor at OpenAI, too. And it's ironic because the first time we saw the power

of labor at OpenAI was the power of labor to insist that Sam comes back which was you know back in 2023 when you had that magic moment when everyone when when labor basically said we want to

pick our boss and the owner says you're right you should pick your boss.

>> So was Sam so was Sam wrong to then do that deal in your mind you said it was naive of Dario to maybe enter it. Do you

think Sam should have not entered it also?

It's the most entertaining of all possible outcomes.

Um, he's probably right on the merits.

And as often happens in life with a certain kind of person, it's only when you're absolutely right on the merits.

It's the one thing that I mean when you actually believe what you're saying, and I read what he's saying about in a democracy, you know, we as the final arbiter should be the government, not individual people. I actually think he

individual people. I actually think he was right on the merits on that, which of course means pleasingly it's the one thing that's going to bite him in the ass, right? My, you know, if you see

ass, right? My, you know, if you see what I'm saying is that ironically, the one time I think he was like entirely correct in terms of how companies should

interact with the Department of Defense, it's actually going to be and I think actually signing the contract on the merits wasn't awful. But you're right, his labor doesn't want him to do that.

So I think in terms of opening Pandora's box in his company, he was wrong. It's

tough. I think he saw I mean he wasn't even approved at the Department of Defense for this application, right?

Only XAI was and they had lost. They had

lost because Palunteer picked Anthropic.

They'd already lost last summer. They'd

already lost this this this war. And he

saw all of a sudden there was a break, which happens to every founder, right?

That you see there these moments in time when your competitor goes down for a week or screws up a key deal. And he did what most of us in B2B would do. He

pounced on the deal. He immediately shot the email to the CEO. You know, Rory Co was down all weekend. I can have you up on our infrastructure on Monday.

>> I'm actually going to argue something that's going to sound naive. I actually

think it wasn't just a pounce while the other guy is weak. It actually was a roughly trying to do the right thing.

And actually, as I say, I think the odd thing is I think he was right on the merits, right? It's like we should be

merits, right? It's like we should be willing to sign deals like this because the government should decide, but his labor is not going to consent to that, right? I think it's just everything is

right? I think it's just everything is accelerating in the capabilities of these models. Everything has accelerated

these models. Everything has accelerated since December, right? Everything's

gotten better. So, it's just very hard to predict for a military application what these models will be able to do in 12 months. It and it could it could

12 months. It and it could it could literally could be beyond what we could conceive these LLMs could do. And I'm

not saying that that is a bad thing because there's bad actors in the world, but even understanding where it's all going to go, it's hard to predict. Hard

to predict. to ask a political economy question. Who should make those

question. Who should make those decisions on how to use this technology?

A privately held company or someone elected pursuant to the Constitution of the United States of America with 80 million votes in a Congress. Who should

make those decisions if they are quote unquote?

>> Well, it's tough. I mean, I don't want to spend all our time. It's tough

because there's no good answer. We know

the last thing we want is Ro Kana or whoever he the version is on the right making a hyper political decision. We we

don't want that. We don't want it politicized right?

>> No, I disagree. We do want political.

How do you think we make any [ __ ] decisions? It's called a constitution

decisions? It's called a constitution for a reason. We elect

>> I don't think we I don't think most of our political leaders even understand how AI works. I don't I don't think most of most of the folks in general even in on X understand how it works. They don't

they don't understand.

>> Hard nose comment. Again, you're right guys. There's there's logic and there's

guys. There's there's logic and there's rationality. You're logically right, but

rationality. You're logically right, but Jason is rationally correct. The

majority >> I disagree. The majority of governments around the world are not sufficiently versed in artificial intelligence and deployment and evolution of it to make sound decisions. I think we would all

sound decisions. I think we would all agree on that.

>> I wouldn't. Look, by definition, if you're running the government on any individual thing, experts know more, right? Your job is not to be the expert.

right? Your job is not to be the expert.

Your job is to be able to manage the experts, right? And I think it's the

experts, right? And I think it's the same mistake, frankly, that folks made in CO where they they defer to science.

No, it's listen to science and make informed judgments. Now, you might argue

informed judgments. Now, you might argue that the people making those judgments at various times have been mediocre or even bad at judgments. But the way to solve that is to elect different people to make judgments. You can say, "I don't trust the US government, so I don't want

to deal with them." That's a totally rational thing to do up until the moment when they invoke the Defense Production Act, right? Totally rational. But what

Act, right? Totally rational. But what

you cannot do is say, "I'd like my $200 million, but I'd like to tell you what to do as well." Just one interesting thing on the deal just structurally putting aside and then I know we can move on. I don't know exact like it was

move on. I don't know exact like it was being negotiated before it was being signed right by by the nature of any big deal. So it was signed last summer. That

deal. So it was signed last summer. That

means Anthropica was probably closer to a billion dollar run rate and still trying to break it because it was a billion dollars in January of of 2025.

So signing a $200 million deal plus 200 million from Palunteer pullth through.

Okay. plus blocking your competitor from Palanteer and others. That was a probably a pretty big deal at the time.

That was probably one where like he was honest that he swallowed some of his principles like raising money from sovereign wealth countries, but it was so important to winning in the enterprise and building this cloud. It

probably actually made more sense to take the risk at a billionish, right, than at 15 billion where you're like, oh, you know, everyone's gonna be like, you throw away the 200 400 400 with

Palanteer. Okay, 200 200 less of a

Palanteer. Okay, 200 200 less of a tougher decision at a billion run rate.

Like most of our portfolio companies if they came in and said we can grow an extra 40% this year if we sign a contract we'd kind of rather not sign but it's totally legal and in Rory

instead of growing 60% this year and having no exit we can grow 110%. I think

most investors are going to say take take the deal swallow your pride. Uh

right and so it was a bigger deal at the time than it is today I think. Right.

Agreed. But I actually genuinely now having been harsh, I'm going to compliment. I don't think they did it. I

compliment. I don't think they did it. I

don't think this happened because they needed the money then and they don't need the money now. I think like often happens in life, a bunch of pe people drifted into a situation that

nobody fully thought through and then you know uh you end up at this point even though you didn't plan to be there.

I'm sure I think actually the relationship happened initially via entropic via Palunteer.

They were selling to Palunteer as one would great customer to sell to.

Palanteer sells to the government. You

get dragged in and you probably sit there thinking, "Well, they'll be reasonable. We'll go and talk to them

reasonable. We'll go and talk to them about how we operate." I mean, the Wall Street Journal covered it today. Part of

this, as is always the case, is personality clashes. You're like, "Oh,

personality clashes. You're like, "Oh, this is the way I look at the world, and this guy at the other side of the table looks at the world totally different."

Final thing on on opening anthropic, and then we will move off them. The ultimate

dealmaker that is Sam Alman closes $110 billion round four the size of the largest IPO ever. I mean Jesus you got

to give the man credit. I mean what an absolute machine to anything other than plaudits. Is there

any money left in the world to fund these businesses? The 200400 million in

these businesses? The 200400 million in revenue seems relatively poultry compared to the $110 billion he just raised. Yeah, I mean there's some meta.

raised. Yeah, I mean there's some meta.

I mean, obviously they're they're not public and obviously the benefits are enduring to a relatively modest amount of shareholders, right? All of that stuff. But it does make you wonder if we

stuff. But it does make you wonder if we should even be talking about the IPO window or any of this crap. It does it even matter when OpenAI can raise 110 billion. Oh, we're all worried some B2B

billion. Oh, we're all worried some B2B company can't IPO at 400 million growing 40% at 3 billion. What difference does it? Like, it's so minuscule. I mean, it

it? Like, it's so minuscule. I mean, it matters to the humans that work there, but it's not even relevant to the economy when OpenAI does 110. They're

going to do another one before they IP, you know, probably before they IPO if they can, right? Maybe not. It'll either

be an IPO or another round like this, but it's it's it's a it's a force of nature, right? It's clearly a force and

nature, right? It's clearly a force and it is astonishing. I mean, you know, any way you cut it, it's like, you know, when you add a venture of dollars raised year to invested yearto date, you know,

you kind of go 30 an entropic 110 if you call it VC is 140. you know, it's more than US venture for all of last year.

So, these are astonishing numbers, right? I do wonder, and you're right,

right? I do wonder, and you're right, it's a very odd circumstance to have a private round be 4x the size of the largest IPO ever, right? And it does

make you wonder how that IPO gets done, right? We've talked about this before,

right? We've talked about this before, right? And it's interesting, there's

right? And it's interesting, there's little nuances here. Amazon's, I think, 40 or 50 billion. Some of it's upfront, some of it's commensurate on either an IPO or AGI, which is just one of those

weird things that some of their money only has to go in once the company either achieves AGI or goes public, right? Which to me and Jason, you

right? Which to me and Jason, you mentioned a while back exudes a little bit of the IPO support coming in. In

other words, is this really 15 million now and 35 million as kind of a placeholder for the book on the IPO or something? There are also precedents of

something? There are also precedents of you know Nvidia investing a h 100red billion and then the kind of walk back of up to 100 billion. Is it that again?

I'm I'm genuinely confused.

>> No, it's not quite that because Nvidia talked about investing 100 billion. You

remember I I typed out the I printed out the press release and then they ultimately invested 30 billion. So they

you know folded back slightly. Amazon

came in for 50 but of that 50 it's not like it's a press release. It's actually

a real commitment, but it's commitment on closing conditions that are either an IP or AGI. So there it's not money now, right? If you needed to pay your workers

right? If you needed to pay your workers next week with that 35 million, it billion, it wouldn't be there. When does

this go public?

>> You've got to believe that the next round for this entropic and SpaceX are all public offerings. Articulate who

writes the next check privately and what the investment thesis is. I don't think there's more capital there. I could be wrong but it's hard to imagine another round after this. So you just therefore by a process of elimination at some

point you got to go public and the next round probably is a public round. An

important point on an asterisk that we have a double asterisk to. So it's 110 billion round but 50 billion from Amazon of which only 15 billion's up front right the rest is AGI or IPO but

Amazon's own free cash flow has fallen to 11 billion a year because it's spending so much. So we are literally open had to go to Amazon and they had to go to everybody on planet Nvidia and saw and and they're exhausting all like

Amazon doesn't even real does not it has the resources but it does not have the free cash flow to fund its commit right so it's not that could Amazon do 150 billion 300 billion I mean we're re

there's a limit here where in where the folks that did this round literally cannot do anymore right and this is probably why Jensen walked the hundred billion back was there's a theoretical idea where it sense, but the world has

changed and it's it's that's that's a lot of free cash flow even for Nvidia, 100 billion, right? So, we're reaching their limits. I know this is an

their limits. I know this is an absolutely stupid property suggestion.

You can both fire me for it. Is there a Sam Alman premium? We've spoken about the Elon premium before. If Sam were to say, I don't want to do this anymore.

Is there a Sam Alman premium? I don't

think in the same way his genius has been dealing and the oomph and the hutsp to raise 200 billion plus privately held

the you know and he's obviously technical he's a computer science degree from memory I wouldn't swear to that but but he's but Elon's genius at the margin has been the ability to pull off amazingly complex

engineering pro projects sequentially so I don't think even I don't think there's the same premium there and You could even to to make to to make it a little more pointed as it were against Elon

just for a second. Open AAI trades at 700 billion pre this round but that's cuz it's hyper growing at you know I can't remember the grow from 12 billion last year from 3 or 4 billion in gap revenue to 12 billion 20 billion AR run

rate. It's you know 30 or 40 times

rate. It's you know 30 or 40 times revenues for hyperrowth astonishingly I continue to point out Tesla continues to trade at 10 12 13 times revenue for

declining revenue. Right. the Elon

declining revenue. Right. the Elon

premium is way higher, you know, relative to the performance of the underlying asset. You asked who's got the better premium, Elon or Sam. And

actually, the easiest way to ask that question is to say to yourself, remove the person with the premium, right?

Tesla trades at a trillion today. I

think if Elon died tomorrow, it to trade at 200 billion. Open AI trades at 800 billion today. I think if Sam Alman died

billion today. I think if Sam Alman died tomorrow morning, we trade at 600 billion. They'd go, "We better get

billion. They'd go, "We better get someone else to run the thing." Brett

Taylor would be in charge, right? And

Brett Taylor would be great and he'd figure it all out and they'd build a company and go public. If Elon goes, who's going to make the robots and who's going to make the robo taxi? And if you don't make one of those two things, you've got a car company with a

declining car product line, flat revenue growth in a tough market for electronic vehicles. You'd be down 800 billion

vehicles. You'd be down 800 billion bucks.

>> I think that's bad.

>> Yeah. You if Sam left, you buy you buy um Sierra for 80 billion, 10% of the value. buy out the sharehold, you know,

value. buy out the sharehold, you know, whatever the math works, whoever gets what you do, you just do it overnight for 80 billion and your problem is solved and and possibly the company's stronger afterwards other than the fundraising. It might be better.

fundraising. It might be better.

>> Yeah, agreed.

>> And if you have one of the greatest technical CEOs of of our lifetimes in charge of it um instead of a very brilliant but ultimately non-technical founder. I mean, it's it's tough to beat

founder. I mean, it's it's tough to beat it's tough to beat Brett Taylor's background. It's it's and he's already

background. It's it's and he's already on the board, right?

>> But fundamentally, Jason thought you are right. fundamentally you'd be like, "Oh,

right. fundamentally you'd be like, "Oh, we're just going to build a company now.

We're going to build chat GPT. We're not

going to have distractions. We're just

going to be fine." You're exactly right.

>> I'm going to push you both before we move on. When does it go out and what

move on. When does it go out and what price does it go out at?

>> I think there is now a subtle unspoken rush to the money that is taking place between those three mega cap companies.

Everyone else is kind of to a rounding on the sideline until these deals get done. I personally would say the sooner

done. I personally would say the sooner the better for everyone, right? So, I'd

love them to go public as quick as can and get it over with. The question is not when they want to go public because I think if they could w if they could all wave a magic wand by the end of this year, I think that all all three of those companies would wave the wand and say, "Let's be public." It'll be it'll

be safer.

>> I'm going to say October and I'm going to say it's going to go out at 1.5 trillion >> for Open AI.

>> I think you can trade that in Poly on some of these kind of tokenized bets. I

mean, you know, which probably should be something we should do.

>> It's a logical bet. um they might they might actually seek initially a lower price um to not stretch it for an IPO and then see what happens. Uh the SpaceX

IPO price that Elon is making up 1.75 trillion. I mean it's a crazy number but

trillion. I mean it's a crazy number but it's not 2x the last round, right? So

there may be it may make sense to have a modest step up but that's really just aesthetics. You know it the market will

aesthetics. You know it the market will settle. that would um uh I I do I do

settle. that would um uh I I do I do think thinking on it and listen I could be wrong on this one but thinking on this live now I do think there's risk that they've exhausted some pools of

capital from from from the the the round trippers the soft banks theas and now Amazon like a lot of that money the fact that so much of the money of Amazon isn't in the bank today to me it doesn't count like maybe it sets the IPO up to

Rory's point like that's great to set up to have 35 billion of your IPO pre-sold like that does make the IPO easier like let's let's be clear that like that it's a gift walking in and have half your

book sold, but if they've exhausted the money, then yeah, they should go public in October. I think it's right. Just a

in October. I think it's right. Just a

comment on the valuations. I mean,

I I I'm not in the oh, it'll be fine at 1.5. I I think those are such huge

1.5. I I think those are such huge numbers that they're very much predicated on the overall market continuing extremely strong. I mean, you know, S&P despite all the noise within the system and all the SAS apocalypse,

S&P is plus or minus 2% from an all-time high and trading at an, you know, a 20-year high in terms of any kind of trailing KPE basis. So, this is selling

securities at a time when people are hot to trot and buy securities. So, getting

it done in today's market, who the hell knows how it gets done. It could easily get done at a incredible price. But it

is worth pausing and just looking at the vast distance between the valuation on any kind of fundamentals basis and the amount of leaning into the future you have to do to get to those kind of

valuations. And it's kind of slightly

valuations. And it's kind of slightly different between them cuz open AI is a it's growing fast really fast provided it continues to grow really fast for two

or three more years it all works. So you

can pay you know what 40 50 times revenues. I mean, the fact that I even

revenues. I mean, the fact that I even said that sentence at scale is how that one happens. And if there's an appetite to pay 40 or 50 times revenues, at that point in time, you can

do it. SpaceX is even harder because

do it. SpaceX is even harder because you're basically having to underwrite a fair slug of next generation technical risk. Admittedly, you're underwriting it

risk. Admittedly, you're underwriting it with the with the person who in the last 20 years has proven most able to deliver that technical risk, but you've got the whole Starship risk and then you've got

the next generation um Starlink 20 direct to cellular risk and then you got the data centers and space risk and you need all that TAM because the existing business is 18 billion growing 20%. So,

it's not obvious that it's worth 100 times trailing revenues for 20. If that

was a SAS company doing 18 billion growing at 20% with modest profitability, Jason would be sneering and saying five times.

>> I wouldn't be sneering. I'd be saying five times.

>> Yeah, you would be. Yeah. And the

difference between >> I'd be lamenting it like I'd have my head in my hands, but I would not be sneering. I'd be commiserating. I'd be

sneering. I'd be commiserating. I'd be

like, "Can I just go back to December 2025, please? Could I just roll back

2025, please? Could I just roll back time just a heartbeat? Just till the end of last year."

>> The eternal Oh my god. If I'd known now what I know now, I'd have sold everything. But yeah, but you're right,

everything. But yeah, but you're right, Jason. And it's it's a big gap between

Jason. And it's it's a big gap between that and 1.7 trillion. And that's all about, you know, >> you said if it was a public company doing, you know, 18 at 20%. Jason,

before we started recording, you said something and I wrote it down. You said

you thought every public company would miss their numbers. Can you just >> I think they're just I think all the public's I mean, I don't mean to be negative. I think all almost all the

negative. I think all almost all the public software companies are just going to do worse and worse for the rest of this year. I think you know [ __ ] was

this year. I think you know [ __ ] was down what 20 the largest drop ever after a strong quarter because they they lost they they they had they said they're

going to growth will drop back to the teens, right? Even though they crushed

teens, right? Even though they crushed their quarter. Um, you know, you had

their quarter. Um, you know, you had Iran from Monday on the other 20 VC this week who was great, but the the public markets think that they're going to keep uh uh they're going to keep rerating

growth lower and lower each quarter. I

just don't see any positives for the existing group of B2Bs. I I and Rory's point is we just need more good ones in to raise up the median and the

numbers and and maybe it's that simple, but I I actually think I think we got the SAS apocalypse all wrong. I I I I I I I think that there's it's um it's not

vibe coding that that's killing us. It's

just we we everybody has lost the the the the the way to growth. And I think so and I think because of NR, because of revenue retention, because so many of these numbers are backwards looking. I

think almost everyone is worse than it looks. You know, it's funny. I wrote it

looks. You know, it's funny. I wrote it up this week. You could expand the basket very widely, but for the stocks that I follow, the most successful one is Digital Ocean. Digital Ocean's up 28%

this year. Digital Ocean all these years

this year. Digital Ocean all these years to to a billion in cloud revenue. Like

in some ways very impressive to a billion, right? But in the other hand,

billion, right? But in the other hand, like, you know, it's it's pretty good business to only be doing a billion, right? You're pretty you could be

right? You're pretty you could be critical, but you need to be radically accelerating growth and profitability at the same time. And you're looking at these public guys and you're like, who the hell is going to radically

reacelerate growth?

Who who the hell? And that's why when I have to come up with my four to bet on, I could only find three. Like, I'm still going to do four, but I could only find three because I can make the the the case that this one's undervalued and

that the markets are are don't see the the inherent value in in and but the markets are saying you guys got to reacelerate and they're all going to deacelerate. And so, I just think the

deacelerate. And so, I just think the almost all of these public B2B companies are in worse shape than they look. And

while I wish we didn't have the SAS apocalypse, man, I just I think it's worse than vibe coding. I think vibe coding is one of the most minor threats to software companies in our lifetimes.

And I vibe code constantly. It's a minor threat. And that's why they all have to

threat. And that's why they all have to cut half their teams to our conversation last week. That's I sounded so prey.

last week. That's I sounded so prey.

What are you going to do when for the next two quarters you keep like you may even make the quarter, but you keep having to drop your earnings estimate and rate down at some point of the course of year, you're just going to have to cut half your team because

otherwise you can't make the math work.

I want to talk about the team, but before I just want to put one caveat out there, right? You do have to take I

there, right? You do have to take I mean, you do have to take price into account, right? And well, let me tell

account, right? And well, let me tell you what I mean by that. Yamongo had a very strong quarter, modest delta in terms of future guidance versus

expectations dropped 25%. Why? Answer,

it was trading at 40 times Eb next year's Eba. when you're trading at a

year's Eba. when you're trading at a super high price or eight or nine times um gap revenue right when you're trading at a super high price and you go from

30% growth to even you know I think the guidance is 23 24 clearly assumption would be 24 25 would be actual result when you're trading at 40 times EBDA it doesn't take a lot to knock you off your

pedestal right conversely a whole bunch of these things are now trading at 7 8 and nine times next year's EBIDA where even 8 10 12% growth can probably make

it a at at the very least highly unlikely to decline by 30%. And arguably

more upside than downside, right? So

>> why will they reacel? I just don't believe these.

>> I didn't say they reacelerate, Jason. I

think there's two separate things. And

this gets to your block comment. You've

got to do one of two things. I do agree.

You're right about you got to do one of two things. If you reacelerate enough,

two things. If you reacelerate enough, then they'll cut you slack on EBIDA on profitability, provided you have some either profits or convergence on

profits. If you don't reacelerate, then

profits. If you don't reacelerate, then you're right. All you're selling is a

you're right. All you're selling is a profitability story. And then we're

profitability story. And then we're going to segue straight to block. The

only way to do that is to look at your cost structure and say if I can't if my I mean, I hate the rule of 40, but let's put it out there. If my revenue growth is 10%. I can subtract 10 from 40 and I

is 10%. I can subtract 10 from 40 and I come up with 30% free cash flow required. So you're right, you start

required. So you're right, you start running the math.

>> It's just brutal because there's been the amount of spend that has gone to cloud and LLMs is like nothing we've ever seen before. And if you're a public software company, you've captured none

of that. It's a disaster. Like it's it's

of that. It's a disaster. Like it's it's a titanic. It's worse than it looks

a titanic. It's worse than it looks because you can't figure out any way to take all of that spend and turn it into an agent, an LLM that your your 10,000,

50,000, 100,000 customers want to pay you more for. I mean, it is the biggest fail and own goal in our history. And

it's going to get worse. It's there's so many public folks who were rolling out a beta or we've added a cloud connector this week and it's a disaster at this point in 2026. It is and you can see it

when a lot of these public compan don't have the like I was on the earnings call with Mark Ben off he's got the confidence he believes that there will be a lift from agent force he growth already now some of it is inorganic

growth is up and he believes he has a performing agent he look I was there in the building the dude believes okay but I can smell the lack of belief in other public I know Harry can too when he interviews him you can just smell it out

of the pores and as a human being I have empathy but good god that's why I think it's all work because retention. It's all worse than it looks.

retention. It's all worse than it looks.

It's all worse than it looks because you can hide under multi-year contracts and annual contracts and price increases and but the like you it's too you had so

much time like these three kids from Stanford that figured out how to use Opus. Why couldn't you? It's it's out

Opus. Why couldn't you? It's it's out there. It's not even that expensive. Why

there. It's not even that expensive. Why

can't you figure out how to use Opus?

Why can't you put your 20 best engineers and just freaking clone Harvey or 11 Labs or Loveable? How hard is it to clone those apps, guys? You all deserve to be fired.

>> Hang on. I I actually I thought Owen at Intercom had a really great piece just this week on, you know, what it took >> to get the to take his existing

business, you know, >> gut it and build Finn on top of it. And

and and that's what I meant when I said, "Oh, Jason, it's hard." Not from a technical perspective, that's part of it, but just from a fortitude to make all those changes, to put all your bet on the new thing. There was probably a

year of feeling ridiculous because you're talking about the small thing and the big thing is so much customers are saying, why aren't you focused on the big thing? And he just described very

big thing? And he just described very well what it took to be bloodyminded enough to make that happen. And you're

right, Jason, I do think you are correct. That's the kind of attitude

correct. That's the kind of attitude that any I mean, the opportunity is there. And it's I'm interested to hear

there. And it's I'm interested to hear your take on agent force either this week or next week or whenever. But

that's the kind of bloody mindedness it's going to take to push through.

>> I think more I just don't see it. I just

don't see it across startups and I don't see it in the public companies. I don't

see and Owen's been and now listen Owen had to come back as CEO. There's

complexity there too, right? But he's

been brutal that this is a founder market and it's hard. Um and yes, it was harder for them because they had an institutional base. He had to partially

institutional base. He had to partially retain but also partially abandon a lot of complexity. But woe is me. Like his

of complexity. But woe is me. Like his

points are all were all really good. But

you know what? Maybe maybe he got there a quarter or two earlier than others because it was in CX and support. Okay.

So he could see the change earlier than every it wasn't just going allin. It was

that also he was in one of the two categories that changed the most quickly, right? Um so uh but what about

quickly, right? Um so uh but what about the rest of the world? You've had time.

You you you can go out there and say on Twitter LLMs are fungeible and that systems of record should benefit because uh because uh we own what matters and

and LLMs are commodity. I mean give me a break. You've where's your show me 100

break. You've where's your show me 100 million. Show me 200 million. Show me

million. Show me 200 million. Show me

500 million. You've had you've had 16 months now.

>> I had I think like Toby at Shopify is one of the most brilliant CEOs and technical minds. Uh, I think Gustav at

technical minds. Uh, I think Gustav at Spotify is too. I'm genuinely naive here. Are you telling me they've missed

here. Are you telling me they've missed a beat as CEOs?

>> No, Toby is dragging his company mercilessly into the Agentic era era, rolling out their Agentic Commerce. I

don't know how successful it will be, but it will it'll be front and center of Shopify, right? It's becoming front of

Shopify, right? It's becoming front of center. So, but he feels to me roughly

center. So, but he feels to me roughly at the pace of Salesforce. He probably

should be faster, right? because it's a more agile organization, but they're they're dragging their companies with real product into the future. And I

think everyone else, they're going to they're already starting to fall into the the event horizon into a state of terminal decline that their teams don't want to do the work and that they

they're losing they don't have the ideas. They don't have the ideas. Oh,

ideas. They don't have the ideas. Oh,

Jason, I rolled out AI SDRs. Great, but

you're a software company. Where's your

agent?

Where's your agent that goes out and does all the work for your customer base, right? Um they're just heading the

base, right? Um they're just heading the event horizon and they're trying to put on the jets, but it's it's it's getting tougher each day to recover. Yeah.

>> Well, Rory, we're going to do a Christmas party, the three of us, and and Jason's our our bringer uper. Yeah.

He's the movie.

>> It's going to be Yeah. He's going to be the fluffer uper.

>> I listen, if you're really in the game, No, seriously. If you are in the game, I

No, seriously. If you are in the game, I will be your biggest interrupter. I will

use your product. I will support your product. I will say it's great. That's

product. I will say it's great. That's

why that honestly to for a long time to know benefit that's why it was so supportive agent force cuz we started using it and it works. So I'm like I'm going to take this example and it is not perfect. Like I can tell you all about

perfect. Like I can tell you all about it more than almost I don't think there's that many people that use 28 five different 10 different GTM agents including agent force. We might be n of one and I can tell you the flaws and the issues and the challenges but at least

they're in the game. armies of FDEEs, armies of folks deploying custom agents and it will get better and and I will tell you it is still changing. Agent

Force is constantly changing. It is not static, but like a real AI company, it gets better every month or two. It keeps

getting better and better and better like our AI tools are rather than be sticking in beta. So that I'm not saying Salesforce is going to turn into 50% growth next year. But I want to see this

or better from any anyone anyone in software. You got to be doing as good or

software. You got to be doing as good or better than Salesforce. But I think you're hopeless. You're hopeless. Oh,

you're hopeless. You're hopeless. Oh,

our industry doesn't really like AI. Oh,

you know, our c Well, good luck to you.

Good luck. Good luck to you. I will

bring the holiday cheer. I mean, I just want to reiterate my position in the boring middle here, which is I think the strawman of these public company CEOs

are ignoring it totally. It isn't really true or fair. I think that yeah I do believe that most of these SAS companies I I don't think they evaporate or go

away. I think it's I I I think provided

away. I think it's I I I think provided they get with the program depending on the industry and market. You know

there's a markets where you've got plenty of time where AI is not going to be widely disruptive from a topline perspective. I'll talk about OPEX next.

perspective. I'll talk about OPEX next.

All the way to where it's obviously disruptive. I think it's well within the

disruptive. I think it's well within the capabilities of highly compensated executives who have their ass on the line to figure this out. Most of the companies that already have scale should not be vanished from this, which is a

different statement than saying they will ever regain their, you know, 20 30x um ebida multiples, still less, god forgive us, 20x revenue multiples, which they got in 2021. Here's the thing that I don't understand about the SAS

apocalypse, but this is what I think makes these companies terminal. Okay,

what happened through December 2025 is basically the public markets said, "Listen, we're actually going to give you a growth premium for ever lower growth." like the top tier in 2025 was

growth." like the top tier in 2025 was if you grew 30% or higher you were I think on average valued at 25 times

revenues okay and this held even through 2024 our growth slowed and the markets were like for whatever reason the markets would say listen it's cool as long as we will we will ratchet down

what we expect from public software companies we'll ratchet and then at some point in January the market said no longer no longer will we ascribe high growth premiums And it came out of a

shot in the blue. And this is why everyone is still stunned now because it wor this like this guiding this this deceleration but multiples staying

strong. If you were in the top cile it

strong. If you were in the top cile it worked for three years 20 2022 23 24 not the stunt cuz you're right zooming out 20 years. I

20 years. I >> I see them stunned. I think Harry sees them stunned too.

>> But then they just didn't look at the chart. Right. If you look at the chart

chart. Right. If you look at the chart it's really simple.

>> No it's your st price fell. It's just

hang on stop but for what I agree you on the conclusion I where you were at right is there was 15 or 16 years of the bucket growing at an average of 30% valued an average of six times revenues

then there was two years of co bucket growing 40% average of 20 times revenues and then you're exactly right what happened is we deacelerated not just back to 30% but down to 15 and then

market said something stupid like well we're back to six times revenues it's okay like it used to be. And you're

right, Jason, he was wrong. It was six time once upon a time, you were six times revenues and growing at 30%. Now

you're at six times revenues growing at 15. And you sat there for 2 years where

15. And you sat there for 2 years where it was like when you do a chart that just shows revenue multiples over time.

It's a stupid chart because it looked like it had gone back to normal. But

you're right, Jason, the the growth had gone out the bottom. And then all that happened last year is people's eyes were opened and they were like, "It's not a temporary growth decline because of X,

Y, or Z. It's now permanent because of AI. Oh my god, what are we thinking? You

AI. Oh my god, what are we thinking? You

should be at four times." That's the movie. It's now permanent because of AI.

movie. It's now permanent because of AI.

That's a really interesting statement.

We obviously saw following Jason's statement. I I don't know if Jack was

statement. I I don't know if Jack was listening. I'd like to think that he is

listening. I'd like to think that he is and took Jason's, you know, guidance as instructions and announced obviously laying off 40%. It's kind of all under

the hood of AI efficiency improvement.

Is it truly that or is it a very bloated organization that needed resizing?

Jack's continuously overstaffed his companies and it was just a resizing with a mask of AI.

>> Jason, you should go first cuz you called this last week. didn't name the company, but you called the catastrophe.

>> Well, look, I I I think people missed the on on block in particular. I know

that their profitability was way up, but I think their top line is only growing like 3%. Something like that, right? So,

like 3%. Something like that, right? So,

this story misses everyone missed this.

Everyone got suckered in by the press release that said uh profit per share, gross profit was up 27%. Okay? And

that's true, but you only lead with that when you're not growing, right? When

you're growing, you lead with revenue growth, right? So what are you going to

growth, right? So what are you going to do? I think I think this story is

do? I think I think this story is simpler than it looks. Jack, they're

going 3% and he's given up on return.

This is my point. He's completely given up on returning to growth, which I think most public software companies will get to during the course of this year. They

will give up. The cos will give up. This

is my point. They will give up on returning to growth. They will give up.

And he gave up. And what what's your next play? You got to get more

next play? You got to get more profitable, right? There's a limit where

profitable, right? There's a limit where you where it's not worth more than 50% operating margins isn't worth it unless you're an IP licensing shop, right? But

it's it's the get it done because I got to get to my next state which is hyper profitable. And so my only point is

profitable. And so my only point is people reacted to this like this was a high growth tech company. It has been many years or at least years since it's been a high growth tech company. 3% is

pretty tough. I mean a SAS company at least can raise prices 4%. At least at least we have that in SAS. We just go out to our customers. Due to the incredible features we've added this year, including changing the colors of

our buttons, we're raising prices 6% this year.

>> Totally. So, I think there's a lot in that. And I first of all, I big picture

that. And I first of all, I big picture agree. You mid20s billion dollar revenue

agree. You mid20s billion dollar revenue company, 10% growth a year ago, down to almost no growth last year. You've given

up on the revenue growth. So, there's

only one button to press. You're exactly

right. If you want to make the stock go up. So, a couple comments though. One is

up. So, a couple comments though. One is

on employee count. You're right. it had

ballooned up. You there been a couple years where going 50%. And you've got to calibrate that because interesting you if you look at revenue per employee or gross margin per employee compared to

SAS companies it actually wasn't that far off but of course it's not a SAS company it's a financial services company and when you look at it on that basis where obviously revenue you know you have all these interchange and pass

through costs you relative to best-in-class financial services companies there there was clearly fat to cut there and that's why and Jason you're exactly right that's why they did it but talking about AI you ever use the

AI AI word and there's two separate uses of the word AI right are you talking about AI on your topline or just AI on your opex and it's worth pointing out here this is not an AI topline story

right Salesforce is an AI topline story AI is either going to increase your topline if you deliver agent force or it's going to reduce your topline if someone else delivers agent force and

you don't it's an AI topline story right this is not an AI topline story I'm not going to use more at the margin maybe a middle. I'm not going to say no, but

middle. I'm not going to say no, but because Jason will correct me like he did entirely correctly on um YouTube. Um

but it's cash app at the margin of BN buy now pay later or Square. AI is not going to fundamentally change the topline offering here. So this is not an AI positive or negative transformation

story. All they're saying when they use

story. All they're saying when they use the word AI is they're saying, "Dude, we don't make or sell AI to our customers, but maybe we can use AI to cut some OPEX, right? Is that true or not? I

OPEX, right? Is that true or not? I

doubt it's true at the 40% level. So

when you look at it at that basis, it's not a growth story. It's not an AI growth story. It's a we need to make the

growth story. It's a we need to make the profits go up and therefore cut all these expenses and

plan hope that some combination of people working harder and AI can allow me to service the customers at a much lower headcount. Entirely. Yeah. And get

lower headcount. Entirely. Yeah. And get

the stock go up 20%. The other thing, Jason, you're right, is it is implicitly an abandonment of revenue growth as the plan out of here, at least in the short term.

>> Yeah. I'm not saying that this doesn't give folks cover to make similar cuts, and I and I and I'm also not saying AI is exaggerated as the root cause, but um but this isn't quite the play people

think it is. When growth is decelerated to 10 to three, I mean, it's you're in a tough spot. And um and uh I just think

tough spot. And um and uh I just think where it may inform other cos is folks in the in the in the the mid to low teens may may adopt this that they may

throw in the towel not at 3% growth but at 12 or 13% growth if there's no accel if they if by the end of this year they're like you know what this AI is such a force of nature but I haven't

found a path to acceleration by the end of this year you may see people copy it just for that reason because they're out of they're out of ideas and I want to ask a question to you, Jason, and I'm going to deliberately do it in a way to

separate two things. AI on the top line and AI on OPEX. Let's assume there's no AI impact on the top line. It's some

financial services business that um yeah, it just has no AI revenue lift, right?

>> Yeah.

>> And let's assume they're efficient beforehand, which I think Block wasn't, right? You could definitely argue there

right? You could definitely argue there was some. What's your mental model of if

was some. What's your mental model of if I have a 100 people doing X this doing whatever revenue this year, how many per year do you think a well-run company

should be trimming based on AI? Do you

have a mental model for that? Cuz I

doubt it's 40 in one year. What what's

your mental model?

>> Well, look, just one thing first, then I'll answer the the question directly. I

do think that even if you don't think that a company like Block is threatened by AI, um the re I'm not saying it's like YouTube, but here's the thing. I

know even just from my own portfolio, folks are building agentic applications that do what Block and others do and therefore are displacing them because

that's where the energy is. There's a

lot of products at Block, right? There's

a lot of products, but if you go back to some of the more simplistic products like Square, right? um as agentic products process point of sale and other

transactions and add more value you do you can lose even if you say the atomic version of my product doesn't really need AI that the the it it doesn't but when these agents are doing everything

in your industry so I I think the agents are capturing so much value that they are there is just limited budget in every space and they're going to take budget away from you so I don't think

even folks that are immune immune I don't think are immune because the new entrances will find ways to tap into that budget and add more value in terms of cutting the team. Honestly, Rory, I think everyone thinks 40% of their team

they don't need today. Every single CEO I talk to doesn't think they need 40% of their team. And so I think I think that

their team. And so I think I think that the the the block number will become the default. I don't need 40%. It's it's a

default. I don't need 40%. It's it's a gift.

>> I got in a bit of trouble, but I tweeted over the weekend. I spoke to three CEOs between 500 and a,000 people and all three said to me that they were cutting by a minimum of 20%. And I think this

does create more acceptability around layoffs.

>> It's the Orbertton window argument.

>> Yeah, I was at the time.

>> Yeah, I was stunned to learn that in recent memory this was the largest percentage headcount cut. Like I mean I saw bunch of data on that where you know there's a few 15 or 20% cuts that were

bigger because when someone like Amazon cuts 15 or 20% it can be 30 or 40,000 people and this was I think from 10,000 to 6,000. No from 14 to 10,000 I think.

to 6,000. No from 14 to 10,000 I think.

>> No 10,000 to 6,000.

>> 10,000 to 6,000. You're exactly I've been looking at the before and after headcount numbers cuz obviously look in venture back deals there are occasional horrible moments when you cut by 50 or 60%. But that's typically when you have

60%. But that's typically when you have 40 people and you lose product market fit. You know, this is the biggest

fit. You know, this is the biggest percentage change for a publicly held tech company in the last 20 years, which is just an astonishing certificate statistic. So I think Jason, to your

statistic. So I think Jason, to your point, it definitely expands the Overton window of what's doable if it works.

Well, let me give give me just a simple example for fun. So I was helping a a very hot AI company think about growing their GTM team. And we get called into this stuff all the time now,

right? And they're going from 10 folks

right? And they're going from 10 folks in sales last year to 250 this year.

Okay. Let me just ask you, how many of them you think are going to be great?

>> Great.

>> 20.

>> 20 out of the 250.

>> Yeah. Maybe. Maybe a few more.

A few years down the road, if you have to cut, this is going to be so easy. I

mean, I I know the human impacts are horrible, but any I I can't think of any company I've ever worked with north of 500 people where 80% of the people were great. It's just managers of man. It

great. It's just managers of man. It

doesn't matter in the age of AI. Now,

what's changing is companies are going to be permanently smaller to start. That

is utterly change. And that's why in some ways block is is a window to the past. It's like looking out to the the

past. It's like looking out to the the galaxies out in the sky because I don't think we'll build for the most part companies like Block the same way today.

We may stumble into them in times of plenty like this guy them going from 10 to 250 in sales in one year but um when you get that bloated I know we all want to say we don't lower the bar but

managers and managers always lower the bar first-time managers always lower the bar. It always becomes headcount driven

bar. It always becomes headcount driven and hegemony driven and 40% of these people we just have no even in AI companies have no idea what they're doing. They don't even know what my team

doing. They don't even know what my team 500 800 people what are they what are these 28 people doing in marketing again they don't know. Yeah, I it it's funny

cuz whenever you are like this ext I always want to argue with you because it's you're so extreme on it but you know sometimes I find myself realizing that you're correct right I mean cuz I was just reflecting on this like you

know going back to capital versus labor you know in the 1950s 1960s the biggest companies were you know 3 400,000 employees like General Motors like Walmart had a billion at one point in

time you amazing thing now is you know Apple has 160,000 you know Amazon on sorry Google has 190,000 the trend says you're right because even before AI the valuable

companies have been the high IP low headcount people and you look at the trend today you look at the revenue per employee at someone like a cursor it's you know it's about the same already as

Apple maybe even a little higher than Apple's about 2.6 6 million revenue per employee. Um, you know, Google is 2.1.

employee. Um, you know, Google is 2.1.

So, these guys are already at that level at a much smaller scale. So, I don't know if it's as extreme as you say, but the trend is definitely proven you're right, which is more and more valuable

companies with less and less people. I

don't think it trends to one. I don't

think it trends to the billion dollar single person company, but the direction of travel is on your side of the table.

I do think we'll see an acceleration of layoffs though with founders appreciating this kind of acceptability of doing large layoffs in the wake of this. That's what I hear.

this. That's what I hear.

>> I always hate the word accept. I think

the more common the harsher comment is necessity.

You know, in other words, acceptability sounds like it's a social thing. I

wouldn't like to get rid of people's career just cuz it suddenly quote became acceptable. If you are subscale

acceptable. If you are subscale growing sub 10 and kicking off 10% if you don't take the actions and someone there's a remember price clears all

markets as I repeat myself over and over again if you're only doing 10% less than 10% revenue growth and 10% free cash flow you'll be trading at four or five times and three or four times perhaps

and someone will know how to come in and buy you and make those changes and then a month later they'll be worth eight times.

>> I think you do have a choice. I think

Harry's point's an important one and I don't even think it even ma matters at some level of because it's the past but I think the block thing frees cos to make what they believe is the right decision for the company without

overanalyzing the horrific human impacts they they are now freed to sit in the board meeting next week probably these meetings will probably all happen in March and they'll be like guys let's just talk about

blockcom I'm not saying we should do this but what is given that we missed the quarter again for the fourth quarter in a row guys we missed You said we were coming back and I get but but we're at

110 million in revenue. We missed or whatever 400 we missed the fourth quarter in a row. What could we do like block? It's at least going to be a

block? It's at least going to be a conversation right?

>> I think also the extent allows them to cut deeper. The 40% is a big number and

cut deeper. The 40% is a big number and I think it allows them to also these companies are in the past. I think the future companies are just not going to hire this way. And I and the weird thing

to think about there's a chance we look back at 20 years of brute forcing revenue growth with sales humanled sales and marketing as an anomaly in the era of software. In the old days of software

of software. In the old days of software when I was a kid software was wildly profitable right and then for for two decades B2B software didn't was grew like like nobody knew until AI but it

was never really profitable. And we may look back and you know it's just jaw-dropping the efficiency of AI leaders. And we may just not go back to

leaders. And we may just not go back to that old era. We may not we may not go back. And we may also say listen those

back. And we may also say listen those we may double or triple sales quotas for traditional software companies and just let the chips fall where they may. Just

let them fall where they may.

>> Like I'm not going to do the 400k quotas anymore that you wanted the 500k. I'm

done.

>> Yeah. Why do why do we why do we talk about one of the future companies that we mentioned on the revenue headcount because I'm confused chaps. I speak to everyone about their product teams and their engineering teams and everyone has

moved off cursor and moved to claw code.

I tweeted about this the other day and thousands of people comment this and then and everyone is in universal cursor's dad claw code rules all and

then cursor announces their movement from a billion to two billion in revenue in in three months. Um rumors of

secondary round being done at 50 billion. Um, maybe in my favorite saying

billion. Um, maybe in my favorite saying that Rory often said about benchmark, reports of my death have been greatly exaggerated and I thought of that here.

What the Well, just one comment maybe Rory has deeper insights second. I will say it's it's funny because um this is this is one of those situations clearly where VCs judging the world based on their

portfolio versus the real world are out of sync. Okay, literally right before

of sync. Okay, literally right before this all came out and blew up, I had two board meetings of my fastest growing portfolio companies. One of and they all

portfolio companies. One of and they all joked about how folks weren't using cursor and one said um mostly it's only grandpa's at the company that still use it. And the CTO stood up who's pretty

it. And the CTO stood up who's pretty young and said grandpa over here I still enjoy it and he's like there's a couple of us that still use cursor. And then I was with another company that has blown

up all of their uh AI and like and you know there were two people that used cursor. So you heard these stories all

cursor. So you heard these stories all the time and you just assumed that every everyone had mainly moved to cloud code directly, right? And product teams had

directly, right? And product teams had said too and you just assumed that's the way the rest of the world works and that's why cursor was smart to to to slip this uh news release to Bloomberg

that they they'd happened to double in the last 90 days. So our portfolios are not representative. I think the listen

not representative. I think the listen this is as much as I know other than we all made the same jump to the conclusion based on our 40 portfolio companies but if six you know they said 60% of our

revenue is enterprise and probably the answer is right there right is that this is a this is a trusted tool with a lot of things including guardrails that can that can manage agentic swarms and

others um they're pointing out how banks use them and other conservative enterprises and are just rolling them out and I don't know this to be true but if purser is the more conservative choice. That's not the worst place in

choice. That's not the worst place in the world to be, especially if you can pick your model. Maybe that's the answer, but it's not it's not my five fastest growing investments. That's not

where they're crushing it today versus 6 months ago. Um, but it's so funny. We

months ago. Um, but it's so funny. We

got it wrong. Like numbers don't lie.

>> The feedback that I got from the tweet was was very simple from insiders was twofold. was one that you have

twofold. was one that you have enterprise crushing it exactly as you said and then two actually just annual subscriptions and their cycles not being complete yet and so there will be a wave

of unsubscriptions and that churn will be real on the consumer side >> but that can't Rory's the expert here but that that that even if that's true and it's a really interesting topic in general we we we maybe it's worth

talking about you don't go from 1 to two billion in 90 days uh if you're having massive ch like deferred churn at the end of the contract That's a different issue that's going to come down the

road. I mean that is a that is growth

road. I mean that is a that is growth that is just massive market pull like epic market pull to grow that quickly right just to sign the deals takes so much energy

and that's exactly and I think the lesson is never underestimate big markets and momentum right you know you you know if you come into last year with the momentum they had or the middle of

last year even if you things are slowing at the margin even if at the marginal startup you're losing to claude code you You've built your name, you've built your brand, every enterprise is trying

to adopt coding. The adoption cycle there isn't, oh, I tried um cursor yesterday, I'm going to try clawed code tomorrow. It's like corporate's got to

tomorrow. It's like corporate's got to approve. Purchase orders got to be

approve. Purchase orders got to be raised. We got to have security review

raised. We got to have security review it. Legals reviewed the contract. We

it. Legals reviewed the contract. We

signed a deal. You're not going to run in next day and say we should switch to Claude now. It's like, no, we're going

Claude now. It's like, no, we're going to use this for the year. We'll do an eval mid year and we'll think about it next year. I mean, Jason knows better

next year. I mean, Jason knows better than me. So I the big aha here is when

than me. So I the big aha here is when you're in a great big market with a massive trend of adoption in the course of your two three years if you've got

your share of that you know you're you going to do just fine I mean you know at the margin are you probably losing share relative to claude at least in the last three months since the last set of

models probably but it still means a big outcome I mean you know we talked about this two or three months back it's clear that they're going to be one of the two or three players at scale and scale gives you a lot here. I would add you're

right Harry numbers don't lie but I haven't seen the numbers right and I haven't seen the revenue and I haven't seen the gross margin but you know you can easily see how someone with an early

lead would be able to maintain that lead even when you know you got a super credible competitor who can bundle a product into an agency taking some of that space because the market's expanding enough to cover a multitude of

sins. The knife fight, maybe this is the

sins. The knife fight, maybe this is the real sentence, Harry. The knife fight doesn't start until the TAM is like 60 70% saturated, which by the way happened to SAS in 2021. And that's when the

knife fight started, right? Suddenly,

you're like, you know, one in two of every new customers is a switch. Now

it's time to kill the other guy. Until

then, let's all grow one big happy family. We all have a win rate of 60%,

family. We all have a win rate of 60%, we don't compete against each other. All

those happy things that you hear in the board when the market is so big that we're not overlapping once things get saturated then it gets uglier.

>> Yeah, there was I think there was a tweet I think there was a quote or something from someone a cursor. I might

be wrong who said it but I think it fits it's an interesting point which is that Barclays had just rolled them out. Okay.

There was the first agentic coding product that was approved at Barclays.

Okay. And banks are a big deal because they have the biggest budgets but they are conservative at the same time. It's

an odd dichotomy, right? They're super

aggressive and super conservative. And

you know, we might have gotten cursor wrong. I mean, cursor is more

wrong. I mean, cursor is more enterprise. You can run it without data

enterprise. You can run it without data retention. You have full SSO. You have

retention. You have full SSO. You have

role-based access controls and all these things that you just got to build in the enterprise the right audit logs, the right hooks, and to a to a CISO or CIO, as long as the product works, that could

be 10 times more important than what someone in the other building wants.

Okay. And I think as and the other thing that's happening right now, good god, is you know it's been in in all of these products for a while, but in Claude 4

Opus, these swarms of agents got really good. Okay, these swarms of autonomous

good. Okay, these swarms of autonomous agents and Michael from Curser wrote this. Not only did they leak the two

this. Not only did they leak the two billion, but he wrote a post which you know a tweet article which seemed kind of weird but talking about how the whole future of Curser is sort of safely managing these autonomous agents, not

you know the early days were were clicking tab to finish to finish a line of code which was what Kodium and Windsurf got going with. And if the and and when you have swarms of autonomous agents, good god, they're not totally

safe. much as we all love our open

safe. much as we all love our open claws, they're not totally safe. And the

more of them you have that are autonomous and the more they can touch your data, they're they're not safe. And

and you know, and so if cursor can do both, if it can unlock the power of swarms of autonomous agents running in

real time, running uh concurrently, and make it safer, I would got to think 95% of CISOs want that one. and and and and in a lot of conservative organizations,

the cranky CTO doesn't get to make all the decisions like at our startups, you know, you at our startups, the CTO decides, you know, what the team's going to use, right? Uh but good god, at a

bank, what if you repeatedly leak everybody's confidential data? I mean,

it's exhausting to have to go through that. This is not a joke. Like, every

that. This is not a joke. Like, every

agent will leak data if it's allowed to.

Like, every single agent will. That's

how goal seeeking works. being the most like being the most enterprise leader in these mature spaces you can you can win because 99% of the world is not like us.

No, by the way that's >> Mark is not like us Jason sold I mean all you have to do is look at Azure's market share in cloud >> where for 20 years the value proposition

having said in millions of board not millions but tens of board meetings where we've talked about you know we're running on AWS should we run on Azure our customers want to run on Azure and

the value proposition of Azure for 20 years was it's not nearly as it's not as good but it's getting there and Microsoft um have great relationships with every CTO, so it'll be fine. You're

exactly right. You know, there's a large amount of software selling that can be done on the basis of safety and integration and selling all those boring bits. What you're dealing with is a

bits. What you're dealing with is a massive market where everyone's making adoption decisions in an extraordinary short period of time. And let me repeat what I said earlier is they're both going to crank as fast as they can. And

they're going to and as the mark as people make initial decisions and more and more that market has an initial buy decision made, you're going to start running into each other. Is that going to be later? You the competition is just

going to intensify. They're not from I mean let's just do it. If cursor went from one to two I think in the same period this year I saw some entropic statement about you know we've added $2

billion in ARR year to date. So both of them are exploding. This is a huge this is the biggest freaking market and those are the two most viable players in it.

>> Look, it's it's going back to last week.

It's the Fortnite effect. Like Claude

will code will keep doing more and cursor has to keep ahead. That's the

job, right? I you know, apparently 60 to 70% of cursor model calls are still using anthropics API. Okay. So even of that 2 billion, a lot is flowing back through to to mom and dad. This was the

point Michael Cannon Brooks made the other day. and and Claude, even if they

other day. and and Claude, even if they they may not even care about Curser as a team, but they will inherently build all these features as an enterprise play.

And so that so and so the bubble will shrink and then Curser just has to do more. But and what we've learned this

more. But and what we've learned this week is they've kept ahead. They've kept

ahead of the Fortnite storm. They've

kept and every every CEO out there crying in saying how hard it is uh that hasn't kept ahead, they're going to be that Fortnite storm is going to shrink to a pixel and they're going to die.

>> Jason, I think you're right. That is the soundbite. I mean the the correct

soundbite. I mean the the correct response that is congratulations in the grace in the great race for what looks like a 50 to hundred billion dollar minimum coding prize. You have gra, you

know, you have conquered level three, which means unlike a whole bunch of people who are stuck in a back in level two, you now get to go to level four and play again, right? It turns out it's hard to make a hundred billion dollars,

but you deserve they deserve all the credit for, you know, being the early winner, cranking, and keeping graving the story. I mean it also just again

the story. I mean it also just again back to the swarms of age it's just worth stating and again this is obvious but just to say it how if you look at the cursor story I mean he spelled it

out in that kind of post which I thought was very good if you're not this is back to Jason's point if your story is not changing significantly every 6 to9 months you are probably falling behind in fact not probably you are falling

behind you know you were autocomplete then you were an IDE now you're agents now you're swarms of agents these models are moving so quickly that the Technology is moving so quickly that if

you think you can rest on every every six months you get you get to re the prize for winning is to reinvent the company from scratch and the product from scratch every six to nine months.

Congratulations. It's a fun game. But

the prizes are great. You know the fun the one thing I'd still love to know about cursor and it is incredible the growth is and and and not to be very 2025 about it but the cloud API is

expensive. You know I I've measured our

expensive. You know I I've measured our API calls. It's so much cheaper to run

API calls. It's so much cheaper to run something inside of Claude. My god. So

like I mean I'm on Claude Max. I I

Amelia runs out of credits using Claude desktop and everything or she she runs out of time. She doesn't even run out of credits but what I get for 100 bucks a month and then I track what some of our

API calls cost and and for for a good prompt a good call it can be well over a dollar. Okay. And maybe for code it

dollar. Okay. And maybe for code it could be more. like that adds up really quickly and it is whether you think it is subsidized whether you think anthropic is subsidizing its own native

use or not it their margins are strong it doesn't really matter so that is still the more like hoay you hit the top line but when you're still paying probably rack like I can't imagine

anthropic is so desperate for cursor's business they're giving them a massive discount right Harry may find that out through his network his imper but if they're paying close to rack rates which I think they are because they also say

you can bring your your your key with you like bring if it's cheaper bring your own API key with you. It says

there's not much of a discount. That

remains your adthropics whim because they're already subsidizing their own product.

>> Totally we're lucky people are not that no matter what anybody says we're not that price sensitive today.

>> Yeah, it was super interesting. I got to give a shout out to Tamas who who we had on here a few months back did an interesting post just today is you know basically would you buy I can't remember. It was a good metaphor I

remember. It was a good metaphor I should remember and I can basically just looking at the pricing of you know top-of-the-line Frontier models versus sixmon-old open- source Chinese um open

source models and you know the 10 15 20x difference in cost per token was a good piece and you're right right now people are paying full rack rate for the new stuff because the new stuff is so great

but if the pace of I mean his point he was making is it's only 6 months from so new that it's amazing to oh my god you can get it open source for 120 at the ice and it just really again brings home

pace of change and the need to be on top of it. I think OpenClaw confused things,

of it. I think OpenClaw confused things, but the power of running swarms of agents autonomously to build software.

The rate of change, we think the rate of change is like I know you didn't literally mean it, but that the way you describe Tomas's thing suggested change might be slowing down, right? And we

might get a benefit of these cheaper models. It just I know you didn't

models. It just I know you didn't suggest it, but there was a hint of it.

I think it's going to radically accelerate this year. Radically.

>> Can you help me understand why, Jason?

Cuz I actually don't What changed in December? What? So, like listen, I've

December? What? So, like listen, I've been on Replet, not to talk about forever about rep level, but I've been on it since June. And when I started, you couldn't finish anything. You'd ask

repler lovable to build an app. You

remember in the early days, Harry, and you get a lot of buttons that didn't work. Okay? Nothing worked. They'd be

work. Okay? Nothing worked. They'd be

fake buttons. Everything was fake, right? And then to then it got better

right? And then to then it got better and better. And then by December,

and better. And then by December, especially with Opus45, all of a sudden it could fit. It wasn't just you could have a code for hours, whatever. That

doesn't really matter for a lot of use cases. it could act these it could

cases. it could act these it could finish apps that worked like really worked right and then on our team Ameilia took it over and she built an entire AIVP of marketing that is better than anything on the market and she

finished it without the any drama like it took work but she just completed it.

It's in production every day doing all of our marketing not just execution but it has all the ideas. It's like halal.

It wakes up every morning and tells us what to do with data. It's a little freaky and and one of the reasons was one of the many reasons was these multiple agents running in swarm and working on the software together. An

architect, a security expert, a back-end expert, a database expert and replet just did one thing early which is and maybe cursor did this too. They built a framework so you could use these

multiple agents together efficiently before you could in Claude, right? You

could do it earlier. And so it it it now that someone that's just very smart can birth an AIVPM that marketing that literally works in six months the applications will be able to build our

jaws will just drop. We'll just will just drop and already I don't even know what to do with demo day. We literally

got a sponsor that that that that just raised 50 million. Their their website was all built and lovable. We just we were just laughing about it. But maybe

that's not funny anymore. Maybe maybe

these apps are so good.

>> What do you mean you don't know what to do for demo day? I think I I think I guess >> because you can because if it's you know um what's his face from Angel said software is uninvestable. It should have been on the show. It should have been a

topic. Okay. I agree. And I and I'm

topic. Okay. I agree. And I and I'm struggling with it and and and what I mean is you can show up to a demo day and build anything you [ __ ] want now in in in in in in any of these coding

tools that's really good. that is so much better than anyone would show up to a demo day 24 months ago. 24 months ago, half the folks would show up, they didn't have a product. It was barely working. You could make fun of it. Um,

working. You could make fun of it. Um,

it went through it and now you go and like there's no excuse to not have something that's like great. Hey, I mean I could take what we built. A million

and I could show up to YC and say we built this AI VP of marketing. It's

managed a million marketing transactions show. It would blow your mind. Like I'm

show. It would blow your mind. Like I'm

raising an 80 pre post post >> just to be precise. Jason, I mean cuz the sentence software is uninvestable. I

mean, if software is uninvestable, why bother making the demo at all because it's not investable. So, clearly saying is you don't invest on a demo anymore because a demo simply means 24 or 48

hours earlier you did you kicked off um a coding project and you got it done.

So, there's no information in the demo anymore right?

>> I don't think there I think for most cases I don't think there's any signal or information in a demo anymore. Yeah,

>> agreed. So I think at the early stages there's no that that so that's what you mean by demo there because the software is investable obviously it turns out Microsoft stock is holding up pretty well. So software is in is uninvestable.

well. So software is in is uninvestable.

It's one of those hyperboly statements right? Well what I mean is listen I had

right? Well what I mean is listen I had one of the reasons I was modestly successful when I started investing is I was a founder that turned into an investor. Okay. And one of the

investor. Okay. And one of the superpowers you get when you make that transition is you know what's better than you. You know the cos that are

than you. You know the cos that are better than you and you also know who's better at building software. So, when I would meet a founder that uh week for week, pound-for-pound, had shipped

better software than I did, um I knew they had a decent chance. Like, if the demo blew me away and the CTO blew me away, even if they're even if they had a couple thousand in revenue, I'm like,

these kids can't lose. They they can't lose.

>> Jason, can you name one founder one founder who is able to create, architect, maintain agents in the way that you have done? And I'm not blowing smoke up your ass, but Rory, I think

this is where Jason's like, "Oh, it's gonna accelerate so fast, so so fast." I

don't know one founder who has built an AI VP of marketing in the way that Jason has done.

>> I do think I'm ahead of most the Listen, there's obviously hyper there folks just building agents that are so far ahead of me, I can't even they mock me on X and I

deserve it. I don't take, you know, if

deserve it. I don't take, you know, if you're better. But I would say for your

you're better. But I would say for your for your average AI focused B2B founder, I am ahead of them on this stuff, right?

Because I've been doing it for for six months longer. They'll eclipse me later

months longer. They'll eclipse me later in this year. But but but but they don't get it. They're they're most you I'm

get it. They're they're most you I'm sure you're getting investor updates in March which even talk about how they're stunned with how much more productive their team is, right? We're all getting these like they're just they're just stunned. Like I know we've been talking

stunned. Like I know we've been talking about this, but now it's finally hap like it's not just a few more poll requests and this and that. literally

their jaws are starting to drop in March because of what they built in February and late January with these tools now because they can finish stuff like they can finish stuff and when that 10xes

this year's thing like your the rate at which your product has to accelerate will be like nothing we've ever seen before. Nothing we've ever seen before.

before. Nothing we've ever seen before.

Right? That's the real version of software is not investable. The real

version is there's going to be infinitely more software.

So your ability to carve out this little discrete. So software alone will not be

discrete. So software alone will not be a competitive advantage. So there will still be extremely large demand for software and there as a result of that will be very big software companies but

they will have to do something more than hey I wrote a bit of code for this particular vertical and this particular use case. That's not just going to get

use case. That's not just going to get you there. It's going to be it's going

you there. It's going to be it's going to be some other elements of competitive advantage around network around distribution around moat around vertical knowledge. I mean I think that's the

knowledge. I mean I think that's the that's the true version of the statement. I think yeah I think it may

statement. I think yeah I think it may and then listen at the later you know investing in 11 labs today is you know it's a very coherent bet right it just makes this idea that you could judge

early if you had the right background that you could judge early stage experience better than many and write a check very diff and even more so listen I had two investments they weren't huge investments but they weren't tiny

recently that did a million or more their first week in market AI investments because the demand was so strong it's not but but let me one of them literally 45 days before, 50 days

before they were showing me a demo. I'm

like, "Guys, I love you, BUT THIS I know all the vendors in the market. I like I I put it back in the

market. I like I I put it back in the oven for a little while. I don't think it's competitive." And then and and and

it's competitive." And then and and and then it, you know, you roll out and you dominate the market. There's a lot of reasons, but that that level of pace we just didn't see before is going to

accelerate. So, how the hell do you pick

accelerate. So, how the hell do you pick favorites? How the hell do you pick

favorites? How the hell do you pick favorites unless they had what's his name? Frankle from um what's his name?

name? Frankle from um what's his name?

Harry that did >> Yeah.

>> Yeah. He was the He said he he he had his one of his never too braggy ones. I

was the only preed investor in Sono which is 300 million in two years, right? Um and he's like why did I invest

right? Um and he's like why did I invest in it? He's like well PhD from this

in it? He's like well PhD from this masters in that understood the whole space. I met him everyone said he was

space. I met him everyone said he was the smartest guy in the world. I mean

that signal still exists in 2026.

>> Do you do you want to hear a joke?

What's the joke?

>> He tried to bring me into that round.

>> Well, you should have done it. Should

have done it.

>> Oh, no. Boys,

>> he probably saw that that you couldn't see quickly though. That That's a You know that that level of depth, right?

That you couldn't see, right?

>> Rory, are you going to have your bets ready for next week?

>> I will have them for next week, Harry. I

will have >> There we go. I'll give you an allowance because it's 10:00 in London and uh >> No, I I appreciate that though and I will. I genuely will, but I'm still up

will. I genuely will, but I'm still up on my worldcloud. I'm up about six I think six or seven. I was up six% at one point in time. I'm not which is the wisdom tree index of all SAS. I just

Yes, as the idiot version of that. So,

worth remembering. Now, I don't I haven't looked at today and it's been pretty grim. So, who knows? But yes, I

pretty grim. So, who knows? But yes, I will have my act together for next week because it is late in the day there in London.