The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:22:46 · Harry Stebbings, Rory O'Driscoll, Jason Lemkin
[00:22:46] S2: Well, I admit that that seems relatively paradoxical to believe that it's more than $20 a month and to want to do it. It's a very good argument from you there. But my thing for the power users, it's very significant. And I think for people that use it once or twice a day with limited automations, it's very, very cheap. And so I think your blended is probably much cheaper. But like for me, I will be terrible as an economic profile for them. I mean, the worst. [00:23:07] S1: Look, I think the real truth is just like every digital product, it always takes off at a point in time when the economics don't quite work. I remember when Facebook was ramping early on and people like, oh my God, the server bill, it was using scads of servers, and it was maybe gonna have CapEx of a $100,000,000, and people are like, that's the end of the world. And the bet you take over and over again is digital goods get reduced in price 50, 60% year on year. If people like the shit and they get hooked on it, over two or three years, the math gets better. And that's really what's going on here. [00:23:39] S2: YouTube, one of the best businesses in the world. [00:23:41] S0: Or maybe we're gonna see these waves where for all but a handful of folks, the subsidies just can't last. We've also seen this in AI. The subsidies just can't last. It's too expensive, right? I don't know whether Grok is on that side or not. Crosby barely pulled it out. The Crosby V2 would have died reselling Anthropic tokens.
00:23:41 · Jason Lemkin, Rory O'Driscoll
[00:23:41] S0: Or maybe we're gonna see these waves where for all but a handful of folks, the subsidies just can't last. We've also seen this in AI. The subsidies just can't last. It's too expensive, right? I don't know whether Grok is on that side or not. Crosby barely pulled it out. The Crosby V2 would have died reselling Anthropic tokens. [00:24:00] S1: If you're going to regard Crosby as a failure, then yeah, you can win the argument. I'd take the 60,000,000,000 and call it a win myself. [00:24:06] S0: I said the V2 version of Cursor would have died just selling Anthropic tokens at a loss perpetually. If that's all they were able to do, they would have died. Great teams figure it out. I get the venture thing. I wouldn't mind being Sequoia and investing in Instacart at fifty or 100. Like, I wouldn't bother me too. Wouldn't be too bent out of shape about the business model if I invested at fifty Post. Don't get me wrong. Okay? Wouldn't bother me a lick. But I just don't know which side... Mean, I'm Judd from Replit said yesterday, like the era of these free subsidies for the agents are coming to an end. If Elon can't afford it, Musk can afford it for now. But what's the scale of the Musk subsidy? Right? This is the second fastest growing product that they've ever had. If they're... If if if it's 10 or $15 a month for them, who knows? Maybe Amjad's right. Maybe it will come before they can raise that 6,000,000,000 at 30.
00:24:06 · Jason Lemkin, Rory O'Driscoll
[00:24:06] S0: I said the V2 version of Cursor would have died just selling Anthropic tokens at a loss perpetually. If that's all they were able to do, they would have died. Great teams figure it out. I get the venture thing. I wouldn't mind being Sequoia and investing in Instacart at fifty or 100. Like, I wouldn't bother me too. Wouldn't be too bent out of shape about the business model if I invested at fifty Post. Don't get me wrong. Okay? Wouldn't bother me a lick. But I just don't know which side... Mean, I'm Judd from Replit said yesterday, like the era of these free subsidies for the agents are coming to an end. If Elon can't afford it, Musk can afford it for now. But what's the scale of the Musk subsidy? Right? This is the second fastest growing product that they've ever had. If they're... If if if it's 10 or $15 a month for them, who knows? Maybe Amjad's right. Maybe it will come before they can raise that 6,000,000,000 at 30. [00:24:51] S1: Just for context here, if it's $10 a month from using a subsidizing... We call it a $100 a year. Right? For every million users, that's a $100,000,000. This is a guy who's spending $70,000,000,000 on CapEx. He ain't gonna blink because, you know, the compute bill goes up by a couple of billion dollars. Right? [00:25:08] S0: And I... So I I do have a...... Can afford it. Musk can
00:25:10 · Rory O'Driscoll
[00:25:10] S1: afford it. Wanna go back to your comment because it is interesting. Because Look, I tend to be the boring guy who says that the numbers have to work in the end. And yeah, gross margin, cursor, blah, blah, blah. But when things are moving so quickly, you can't wait until the economics work perfectly to launch a product because someone else, armed with venture dollars, will launch that product twelve months earlier when the economics don't quite work, grab all the mindshare, and then they'll basically lean into the cost curve and and hope that the improvement economics builds them out. And that's the bet you're taking. And to take the curse, for example, I mean, they're doing some version of, hey, look, if you don't get a big acquisition for 60,000,000,000, well, if what you said earlier, if I can get my own model and my costs come down and make out like a bandit, if I'm still stuck on Anthropic in 2027, I'll probably get fucked over. But it's still a better bet than waiting until 2027 and saying, Oh, now that there are lots of open source alternatives for state of the art coding models, I should launch a coding company, because it doesn't matter, it's done, right? The truth is the capital markets and the venture markets are just so aggressive that waiting until everything makes sense is not an option. So what that means is kind of by the reciprocal property, almost everything that's new and digital will look crazy for a while in terms of economics. And the only question is, can the economics get better before the money runs out?
00:26:24 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
[00:26:24] S0: Look, no question, and we can move on. But it's interesting that Elon had to cap it. It is. They have resources. They had a pretty good IPO. He has reached. He's going long. He has bet his company on AI and subsidizing this thing. He subsidizes everything round trip, right? And even with his personal fortune, he subsidizes everything. This is a man that would not want to cap Grok bot if he did not have to. [00:26:45] S1: He's also the man who's getting so many dollars per unit of compute from Anthropic that he's like, yeah, I could do some free Grok bots and these people could make cute cartoons and send pictures of sexy anime girls to each other. On the other hand, I could get like $50 an hour from Anthropic. Screw it. I'll do that. [00:27:01] S0: Well, they're not doing that. They're building applications. They're building code. Grok is fairly technical, unlike the Instacart and Muses. Right? [00:27:07] S2: Okay, boys. We had another pretty big transaction which went down that in a normal world would have dominated news. In today's news, it kind of lasts for a couple of hours, but DoorDash buys Instacart for $17,000,000,000 under half its 2021 private price. D1 still owns 9.7%. Sequoia owns 8.1%. Before we talk about agents, which was a disclosure, and the thing of note here, an inevitable ending to a clear second place provider to DoorDash. [00:27:37] S1: I mean, inevitable is a bit strong, but, yes, they clearly tried to do it before. It clearly makes sense. There's also probably an element of do it now while you can if you do DoorDash. All makes sense.
00:27:37 · Rory O'Driscoll, Jason Lemkin
[00:27:37] S1: I mean, inevitable is a bit strong, but, yes, they clearly tried to do it before. It clearly makes sense. There's also probably an element of do it now while you can if you do DoorDash. All makes sense. [00:27:45] S0: Listen, some of this is not my strength, but the fact that the Postmates acquisition worked was a surprise for me. I assume you buy... When Uber Eats bought Postmate, I assume you get a little bit of a brand and a list and you basically shut the thing down and that I didn't really believe these deals would be accretive, right? But they appear to be, right? So if Instacart's got 20% of the market and DoorDash has 60 of the delivery market and you can get through antitrust, which you probably shouldn't if you think about the numbers that I just said. [00:28:11] S1: Of course.