The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:44:37 · Jason Lemkin, Dev Ittycheria, Harry Stebbings
[00:44:37] S2: I think you have to be honest if you're trying to build a generational company. I don't think that's a catchphrase. I think it's really important because otherwise you have a terminal value, a terminal state, and if the offer is reasonable, you'll never beat the net present value of these deals. This generational stuff isn't easy. I mean, Deb's back in the seat again. It ain't... This stuff ain't easy, this generational company. [00:44:55] S1: So... And I will tell you the best companies always got offers to sell. Right? So I'll use my example, and I wouldn't say, like, Playlogic was a massive, you know, outlier, but, like, every stage of our growth, we had people who wanted to buy us. I remember sitting, you know, I guess I can share this now, I was in John Chambers' office. We were literally sitting face to face where he wanted to buy the company, and then for some reason, it just didn't work out. Then they came back again. I had EMC at the table, and you just go and go, and then ultimately, you sold a year after we went public. And I think to Jason's point, ultimately, founder has to decide, do I feel good about continuing to build, or should I just hit the exit button? And I felt good about our decision to sell to BMC, but we came really close a number of times to sell the business earlier. And we... And looking back, it was the right decision. [00:45:41] S3: How much did you sell for to BMC? [00:45:43] S1: We sold for about 900,000,000, which which at that time was the highest acquisition paid in 2008.
00:45:43 · Dev Ittycheria, Rory O'Driscoll, Harry Stebbings
[00:45:43] S1: We sold for about 900,000,000, which which at that time was the highest acquisition paid in 2008. [00:45:49] S0: It was a killer deal. I had I had a small company that competed with him. He cleaned our clock. BladeLogic was the winner in that category. Actually, and the number two was a ref who is now at Bain Capital. He was running center view, center point. [00:46:04] S1: Center on here. [00:46:05] S0: Center center. And you walked all over us, damn you. [00:46:07] S3: What revenue were you doing when you sold? [00:46:09] S1: We're doing about a 100, the 9x, which, by the way, was right on the heels of the GFC, so the market was getting quite skittish in 2008. [00:46:18] S3: One that I am interested by is actually one that Jason suggested, which is Versal at 600,000,000 in ARR, with agents being 50% of the new business, up from 3% at the start of the year. Jason, I always find you quite mind expanding for me when you talk about these topics. How do you think about this? How much budget we should give to agents for 2027? What's the takeaway for us from Vercel now getting 50% of new business from agents up from 3%?
00:46:46 · Jason Lemkin
[00:46:46] S2: Well, look, I would say maybe two different things. One, I I think that there's a bunch of companies like Vercel that had the right infrastructure and the right product before AI and agents, right? So Vercel founded in 2020, right? I mean Guillermo did not know that in 2026, the majority of his business would be from agents, right? Spinning up applications on their own, right? Nobody saw that. Some of the most amazing stories, even eleven Labs is a little bit of that. Certainly, Replit founded in 2016 is like a big case study where you just, latch onto that and it just works. They do have the tiger by the tail. There's a lot of competitors, a lot of really strong competitors, but agents pick for sale. It's very strong. And you know, it was interesting. Think what did they say they're growing 170 at 600,000,000 from 20% increase in customers or something. I mean, expansion revenue is astronomical. And it's just the thing is when agents pick you, and I'm sure Deb's thinking a lot about this right on the database side, when agents pick you, it's a force of nature right now. And agents, what I've learned from, well you have 21 agents, we're building all day. Between me and Emile, I'm literally building eight to ten hours a day. And man, my agents have opinions and they're really hard to argue with. And if they want to use a vendor, it's a lot of energy. I know I'm antipromising it, but it's powerful when an agent decides something and Vercel is a major beneficiary of this. Even last year, it looked great, but it never seemed it would be as important as it is today. Oh, that's just that's just where I'm going to stick my code, right important, but back office infrastructure. But man, this is where so many agents and apps are running. I would only want I would I would take this one to the IC too.
00:48:19 · Dev Ittycheria, Harry Stebbings
[00:48:19] S1: I think this is really interesting about the point that Jason made is that agents are picking or making decisions. But for the last twenty five years, every marketing person, every company has optimized how you show up on page one of Google, right? You educate human buyers. Now you have to make sure that agents can find you, understand what you sell, have current accurate information about you across the sources they read. And if you're missing from an AI generated answer, it's like being invisible on Google. Full disclosure, Sequoia is a company called ProFound that helps companies with those helping them. But I will tell you, this is a massive problem, and it's not just in tech. If you're an e commerce site or you're a retail company trying to sell through e commerce and agents are now making the buying decisions, you gotta figure out how to educate those agents, otherwise your business is going to zero. [00:49:06] S3: You know, when I look at this market, we too have a company, Dave Peak, and everyone's like, well, this is like a next generation of SEMRush. Is it just a next generation of kind of SEO analytics providers with your Profounds and your Peaks, or is this actually a much larger category?
00:49:06 · Harry Stebbings, Dev Ittycheria, Jason Lemkin
[00:49:06] S3: You know, when I look at this market, we too have a company, Dave Peak, and everyone's like, well, this is like a next generation of SEMRush. Is it just a next generation of kind of SEO analytics providers with your Profounds and your Peaks, or is this actually a much larger category? [00:49:23] S1: I think the opportunity is more than just analytics, but telling you where you're missing and all that. I think the opportunity for these companies does not just tell you what you're missing, but to help shape the content and create the content to help you solve that problem. If they can close the loop, that becomes a very compelling solution versus just telling you, you're here, you're not here, this is what the other guys are doing. [00:49:44] S2: I'm just looking today, for example, it's smaller, but look at recent. So for example, the first agentic purchase we made was resend for email. Okay, when I was trying to set up a bunch of agents last year, I kept getting recommended SendGrid, but because they need the CO to go, but founders to go back, I just couldn't get the damn SendGrid thing to work. They kind of deprecated free. I couldn't figure out the key. Kept breaking. So I asked my agent what I should use. I said use resend. Resend April 106,000 MCP calls to September 3,000,000. That's agents saying to use products. And I'm not saying ProFound isn't doing that. They may well be. My limited experience is this is different.
00:49:44 · Jason Lemkin, Rory O'Driscoll
[00:49:44] S2: I'm just looking today, for example, it's smaller, but look at recent. So for example, the first agentic purchase we made was resend for email. Okay, when I was trying to set up a bunch of agents last year, I kept getting recommended SendGrid, but because they need the CO to go, but founders to go back, I just couldn't get the damn SendGrid thing to work. They kind of deprecated free. I couldn't figure out the key. Kept breaking. So I asked my agent what I should use. I said use resend. Resend April 106,000 MCP calls to September 3,000,000. That's agents saying to use products. And I'm not saying ProFound isn't doing that. They may well be. My limited experience is this is different. [00:50:19] S0: I want to kind of disagree you all. How did your agent decide? Because I assume some part of it is the general how I show up initially in the answer engines, how I show up on OpenAI. And then what else does your agent look at? Is it just It