This Week in Startups
00:09:20 · S0, Dave McClure
[00:09:20] S0: This holiday season, don't miss your chance to turn just looking into just bought it. Make it easy for your customers to say yes on the spot. PayPal checkout is a trusted conversion engine fueled by 400,000,000 active PayPal and Venmo accounts. And when you add pay later, you turn holiday shoppers into regulars. 96% of Pay Later shoppers are repeat users. Give them Pay Later flexibility now, and it could help earn their loyalty all year long. PayPal is built for all business. Get started at paypal.com/business. PayPal Later data. Eight markets. March 2025 to February 2026. Repeat users defined as more than one Pay Later purchase in the past year. Yeah. Well, the framing's pretty obviously here. The revenue is surging. [00:10:07] S3: Absolutely. [00:10:08] S0: That's that's something we know, and they're profitable, and they've got a mountain of cash. If I look at those just three factors- [00:10:17] S3: Well, revenue is surging, but not as fast as it was earlier this year. [00:10:21] S0: As the number gets bigger, it slows down a bit. You can't expect a 10x on $16,000,000,000 It's not possible. It has never happened in the history of it. It's going to slow down. The revenue is extraordinary. It's the fastest growing company in the history of business. The cash position is extraordinary. They've barely touched their cash. So I look at this and say, we've got the greatest business in the history of capitalism ever built.
00:10:21 · S0, Dave McClure
[00:10:21] S0: As the number gets bigger, it slows down a bit. You can't expect a 10x on $16,000,000,000 It's not possible. It has never happened in the history of it. It's going to slow down. The revenue is extraordinary. It's the fastest growing company in the history of business. The cash position is extraordinary. They've barely touched their cash. So I look at this and say, we've got the greatest business in the history of capitalism ever built. [00:10:49] S3: Wait a second, Jason. The greatest business I thought you were saying last month was SpaceX. Isn't that still the greatest business? [00:10:55] S0: I don't know if I said that. I mean, I think it's the greatest entrepreneur across a series of different businesses. This is one business selling tokens and one business selling tokens to be profitable in, but this company was formed, I believe in 2021, revenue turned on in 2023. So to go from zero to whatever the annualized run rate will be after Q3 data comes out, 80, 100, etcetera, And to have a ton of cash and to be profitable at this point is just extraordinary. I thought they would have been losing a ton of money. I think this is the greatest business created by humans on planet Earth ever.
00:10:55 · S0, Dave McClure, D.A. Wallach
[00:10:55] S0: I don't know if I said that. I mean, I think it's the greatest entrepreneur across a series of different businesses. This is one business selling tokens and one business selling tokens to be profitable in, but this company was formed, I believe in 2021, revenue turned on in 2023. So to go from zero to whatever the annualized run rate will be after Q3 data comes out, 80, 100, etcetera, And to have a ton of cash and to be profitable at this point is just extraordinary. I thought they would have been losing a ton of money. I think this is the greatest business created by humans on planet Earth ever. [00:11:38] S3: I wonder if we're underestimating some stuff here though. I had dinner with my friend Aaron Battalion. He was formerly the CTO of Living Social. And he was saying, we're not even measuring the right stuff. He's saying with all the potential for you know, breakthroughs in mathematics, in medical, in a whole bunch of areas, there's potentially new lines of revenue that we're not even measuring. Like, what if, you know, either Anthropic or OpenAI solves cancer, like, where is this aging, figures out new breakthroughs in other areas. I I think D. A. Was actually suggesting there's some stuff, coming that people are are showing off their their lack of concern. [00:12:14] S2: We we we can talk about releases later maybe or or now, but I I was saying to Dave before this, the craziest thing that's happening, you guys may have heard about, is the AI engineers are now taking up smoking. And this has become a way of This is a very
00:12:14 · D.A. Wallach, S0, Dave McClure
[00:12:14] S2: We we we can talk about releases later maybe or or now, but I I was saying to Dave before this, the craziest thing that's happening, you guys may have heard about, is the AI engineers are now taking up smoking. And this has become a way of This is a very [00:12:29] S0: positive this is a very... If they're hitting darts, that's a very positive sign. [00:12:34] S2: So they're smoking cigarettes and they are doing so as a way of signaling how confident they are that AI is going cure cancer. So I would view this as a very toppy signal, when people are willing to literally commit suicide because they believe so much in their religion. It's interesting, I'm not [00:12:56] S0: sure No, we've got some medical no, think this is the buy sign. It's the ultimate buy sign. They're literally willing to ski without a helmet. They're like, this is fine. [00:13:08] S2: It's all in the line. Now Jason, it didn't didn't occur to me until you said this is the greatest business in the history of capitalism. The actual greatest business in the history of the stock market over the past one hundred years, as you guys may know, was Altria, Philip Morris. [00:13:24] S3: Yeah.
00:13:24 · D.A. Wallach
[00:13:24] S2: And, you know, well, why was that such a great business? Well, enormous gross margins and an incredibly addictive product with virtually unlimited demand. So no churn. Least ten years ago, the the number I heard was still today, a billion cigarette six sold every day around the world. 1,000,000,000. So I think the fundamental question for Anthropic and all the players in this market is basically is intelligence the new cigarettes. Right? So far, a little free sample. The drug dealer's given a free sample to every company in the world. And everyone's trying it, and they're trying to figure out, is this is this something that I'm gonna be using for the rest of my life and how my... How many packs a day. Right? And I thought the most interesting number in the in the s one was this point 1% figure. You know, they basically said, I don't know if it was their top customers or all of corporate America, but they said basically, the users of our intelligence are spending roughly a tenth of a percent of their total operating expenditures on AI today. So you can think of that, I think in two different ways. View number one, which is the one Anthropic was trying to present was it barely scratched the surface. Think about how much headroom there is on that number. I mean, if you just double it or triple it, you can easily start to see how we get to a couple trillion dollars a year of spend. On the other hand, it does to me complicate this sort of Jevons paradox framing of this whole thing, because I would ask, well, why aren't they already today spending 1% or a half percent? And, you know, is what's keeping them from spending at that level that the cost is too high, or is it still a utility question? And I guess my hypothesis would be it's mainly a utility question. And I'm gonna say the thing that everyone has to say before they ever defame AI, which is, oh, but I use it all day, and I love it, and it's so changed my life and my business. You have to say that so you don't sound like a Luddite. But why aren't they spending two tenths of a percent today? Because it seems pretty obvious that this is something you have to be experimenting with extensively no matter
00:15:44 · S0, D.A. Wallach
[00:15:44] S0: what your business is. Why aren't they spending 2% on [00:15:47] S2: On on on AI quad, on intelligence broadly. Know, mean, if they're spending a tenth of a percent on quad, [00:15:53] S0: you need the right people to implement. Right? And then you need the right projects. So I... And 2% of a company making... I don't know. [00:16:05] S2: I'm sorry. Sorry. A 10%. Right now, they're saying one tenth of a percent of total budget going to AI. [00:16:11] S0: At which companies? Fortune 500? [00:16:14] S2: Fortune... You know, whatever. Corporate America. [00:16:15] S0: Got it. So I think it's because there's a... I think the number is 2% AI spend at the top companies. So I think we... If we chop off the laggards and we say one or 2% is the right amount of spend for today, I just think it's probably the Fortune one hundreds, Fortune five hundreds are actually spending tens of millions. I would say hundreds of millions in tokens a year. That's like what we saw Uber spending. [00:16:42] S2: Well, that... That's the... Yeah. [00:16:44] S0: It's still it's still a small number. [00:16:46] S2: It's it's a... I I mean, I think there are a couple questions. One, is the addressable market what they're spending on SaaS? Right? Is this just gonna Bigger. Their SaaS budget? [00:16:55] S0: It's gotta be double SaaS.