The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:36:20 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:36:20] S3: 10% of the fund goes to 11 laps? [00:36:23] S2: Wow. I just don't wanna do it over two rounds. You know? I don't I don't need to see it at 50 or a 100. Dev knows what I mean. Okay? I don't need to see it a second time. I just wanna put all the chips in now, get the ownership I can, and move on. Right? And I've got a friend of mine that's a CRO I wanna put on as a board adviser. I think he'll he'll be able to help out and give him some insight. [00:36:41] S3: Okay. Moving from one Square company to another Square company. Sorry, Dave. We... It's not intentional. Rory once said a quote, which is like, what was the quote? Like, whatever game you're playing, just be Sequoia. Remember the one I'm [00:36:52] S0: talking about? There's so many quotes. I mean, you know, look. I've been doing this thirty years. And when I came in, Sequoia were top and give them huge credit. Thirty years later, they're still there. You know? So I... Yes. I I gave the Gary Linick a football quote, if you recollect. [00:37:06] S3: So with great surprise, Sequoia made hundreds and hundreds of million dollars with Salesforce buying Listen Labs for $2,000,000,000. Now apparently, they had offers at 1,500,000,000, a major win for Brian Schrier at Sequoia, about $850,000,000 back to investors on 96 invested. Sequoia did the best. They led the c. They led the a, making about a 25 x. Ribbit led the b, which four x in eight months. So well done, Mickey. What did we think of this, guys?
00:37:35 · Rory O'Driscoll
[00:37:35] S0: I think it was a great outcome for a very clear category in a sense of it's pretty obvious that mark... Stepping back, listen up. Market research is a very large, fragmented, almost pretechnical industry. There's a bunch of consulting type companies, and then there's three last generation companies, Qualtrics, Medallia, and what was SurveyMonkey, all that got to kind of high single digit, low double digit billions of dollars in terms of market cap outcome. So it's a really good category, is an existing category with a big ass spend, and LLMs just do it so much better because what are you doing in market research? You're kind of asking questions of people and aggregating and assimilating the answers. And the two things LLMs do well, we just talked about voice. Voice as a modality is a solved LLM problem. And then asking questions and knowing how to end, not just kind of these canned, stupid, last generation surveys, where no matter what you say, the survey just asked the next dumb question. You know, it's like, did you like your stay? No, I didn't even check-in. And then the next question is, was the bed comfy? That's the last generation. Whereas now with LLMs, can adjust the questions based on what the respondent is saying. All that means market research can be done so much better with LLMs, and I think ListenLabs was one of the early contenders that did it well and executed brilliantly and, you know, got the real revenue. Great outcome. I mean, it is kind of one of those the list of use cases for AI and LLMs at the app layer that comes out like a top five, top 10 use case, and there it is.
00:39:06 · Jason Lemkin
[00:39:06] S2: But you know what? I would love to get devs thoughts to this. I'm a pretty much a fan of a lot of Salesforce's acquisitions, and I've been champions of anyone. This one I don't really get. It's not that I think it's a bad idea, but I mean Salesforce is coming up on $60,000,000,000 their target $60,000,000,000 for, you know, they're almost at 50. I just don't, I don't know how 20,000,000 of revenue of next generation AI survey moves the needle. And I'm not saying it doesn't. I mean, Mongo scale, got to move, it either has to tuck in or move the needle, right? Maybe you think about it differently, but to move the needle, it's got to be big. Salesforce even... So this is the one where I'm... I get the theoretical appeal, but I wonder if this one will just be kind of forgotten in a couple of years.
00:39:43 · Dev Ittycheria, Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:39:43] S1: What I will say is that I think we're going to probably see more of these deals, right? Because I think there's starting to be a difference between are you building a feature that's masking as a company or a franchise, right? And I think a lot of AI application companies will sell because a clever product on top of someone else's platform is frankly a feature. And if they can use the distribution of that larger company, have the cash and distribution, they're going to take advantage of it. I think the companies that are more durable are the ones that essentially are creating a data loop where the usage creates data that no one else has, the data makes the product better, the product attracts more usage, and you kind of create that virtuous cycle. So if someone tries to copy you, they can copy the features, but they don't have all the interactions that you have. And so I think the difference here is when you look at these kind of standalone AI app companies, is are they really feature masking as a company or are they really building a franchise? And I think the founders of ListenLab decided that this was an offer that made sense for them. [00:40:42] S3: I mean, you'd be pretty pissed off if you're into comm, wouldn't you? Sorry. You're just like, you've gone through, like, fifteen years of shit and struggle and building this business. And then, you know, Abba's answer to Justin Bieber comes along and three years later sells for a comparable number. And you're like, fuck. [00:41:02] S2: Sorry. So I know I know [00:41:04] S0: they all made money, you'd be
00:41:04 · Rory O'Driscoll, Harry Stebbings, Jason Lemkin, Dev Ittycheria
[00:41:04] S0: they all made money, you'd be [00:41:05] S3: like, oh, bugger. That was an easier route, wasn't there? [00:41:08] S2: Of course you think that as a founder. I mean, I don't mean to... There's always someone that had the easier route, and you do think about it. Yeah. Of course you think... Even at Mongo, I bet Dev thinks about once in a while, God, those... I mean, we've done great at Mongo, but those guys, they had an easier easier way with it. [00:41:24] S1: The lesson I tell my boys is comparison is the thief of joy. You start comparing yourself to everyone else, and you're gonna be very miserable for the rest of your life. [00:41:32] S3: Yeah, Rory. [00:41:33] S0: Yeah. Hey. I I I didn't do it how you you know. [00:41:36] S3: Yeah. Comparison's the thief of joy. Okay?
00:41:36 · Harry Stebbings, Rory O'Driscoll, Jason Lemkin
[00:41:36] S3: Yeah. Comparison's the thief of joy. Okay? [00:41:38] S0: Good good good to know, Harry, but that's why you're wrong to mention that because in the end, I think both companies made money. And to Dale's point, you'll step back and say both of them will go, yeah. I feel good about what I did. And you're right. It's a lot easier to do it in three years than ten or fifteen. Duh. We get that. But life ain't fair and venture outcomes are very random. More than anything, what it says is timing and the cycle is just so interesting because look, you know, we put some money in Intercom recently. Intercom achieved that valuation. It could have happened for Intercom had they sold in twenty eighteen, nineteen in the SaaS boom. And to that point, maybe we will look back. In five years from now, maybe 10% of these apps companies will have sold early. They'll have got their 30X revenue and the rest of them will be grinding it out for six times revenue at 300,000,000 with 3,000 employees and the head exploding. But you just, to some extent, you can't control the outcomes. You just got to like the process. Right. And if you end up doing well, you know, both of them have done just fine. [00:42:36] S2: I will say one thing from the Powell was Listen Labs. When was it founded? [00:42:38] S0: Three years old.