The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:33:28 · Rory O'Driscoll
[00:33:28] S1: Kalshi is a money deal. Let's be really clear here. The thing is working. It's growing like a weed. Deep in their heart, everyone knows that we started off thinking we were doing prediction markets, which had some social utility, and we've long since converted into sports gambling markets to feed people's addiction for gambling. Right? So we're all over the doing good. We're all over the higher purpose. You know, we're pushing through a whole bunch of local regulation, which is why Utah is suing them because sports betting is regulated on a state by state basis, And these guys are plowing through on a national basis. So there's nothing to see in this other than VCs will put a lot of money into shit that's working. That's the takeaway, right? And if it's at 40,000,000,000, it's had momentum, it raised like three or four months ago at 22,000,000,000. So this is one of those classic momentum plays, right? I mean, that, clearly it's very different. I mean, it's almost not a momentum play. It's a, we need our sovereign AI play in Canada because you are nasty people and you've threatened to invade us multiple times. And we've got this product and it's one of the original four or five LLMs to be fair. Mean, back in 2023, you had Cohere, obviously OpenAI and Anthropic, and then all the other ones like the one that Microsoft bought, Adept and Amazon bought, all the others folded. So give Cohere a huge credit. They are one of the survivors of that first group of LLMs before NeoLabs was even a thing. And now they didn't release revenue numbers, but you can see how you can make a sovereign AI story. It's almost the exact opposite. In the case of Kalshi, the government is saying, I want to stop you now and put you in prison. In the case of cohere, the government's saying, I'm going to make this work no matter what, even if the economics don't work. So they're almost like the yin and yang of investments in terms of their relationship with the government.
00:35:02 · Harry Stebbings, Jason Lemkin
[00:35:02] S2: Does that work? Can the government just do that? Do what? Well, hey. We we wanna make you work, and so we're gonna inject you with 1,164,000,000. Isn't that [00:35:12] S0: what our governments do all the time? They subsidize everything. [00:35:15] S2: Yeah. You can do it once. You can do it twice. But, ultimately, if enterprise adoption isn't there, doesn't work. [00:35:20] S0: Sometimes it's worth just being in the game. It's like putting a few chips into Anthropic in the d round. Sometimes it's worth just being in the game. And sometimes it bounces your way, and you've always got the lick prep. [00:35:30] S2: Jason, the d round was 16,000,000,000, so I'd take the d round. [00:35:34] S0: Yeah. In all seriousness, I don't know how like Canadian got... Like national governments work. When you talk to folks that run at the top companies with large corp dev portfolios, public companies, really they just want it not to go down in the aggregate. They'd love the gains. Right? But you only get so many credits as a public company for gains from your portfolio. And the losses really suck, right? Because they swing your EPS in really weird ways and you have to put asterisks and daggers next to it. So as long as they don't lose too much money on the investment, I don't know they care.
00:35:34 · Jason Lemkin, Rory O'Driscoll
[00:35:34] S0: Yeah. In all seriousness, I don't know how like Canadian got... Like national governments work. When you talk to folks that run at the top companies with large corp dev portfolios, public companies, really they just want it not to go down in the aggregate. They'd love the gains. Right? But you only get so many credits as a public company for gains from your portfolio. And the losses really suck, right? Because they swing your EPS in really weird ways and you have to put asterisks and daggers next to it. So as long as they don't lose too much money on the investment, I don't know they care. [00:36:02] S1: I mean, but I think there's two separate things. You're right. The motivation for anyone doing this isn't purely financial gain if you're the government. Right? Agreed. But Harry asked a separate question is, can it work? And I think the answer there is, yeah, you can keep it... Yeah. Governments can make things happen for a fair while, but what they can't do is make the private sector use the product. So you see it with Mistral too. To the extent that there's a willingness to spend Canadian government tax dollars on a Canadian government AI solution, or maybe if Canada goes on with its kind of affiliating with the EU, these guys in this trial may be the You're Not America LLM options. And there probably is some spend to that. But do you think it'll be a compelling business that will go public at 3x this round? Not as obvious to me at all.
00:36:02 · Rory O'Driscoll, Jason Lemkin
[00:36:02] S1: I mean, but I think there's two separate things. You're right. The motivation for anyone doing this isn't purely financial gain if you're the government. Right? Agreed. But Harry asked a separate question is, can it work? And I think the answer there is, yeah, you can keep it... Yeah. Governments can make things happen for a fair while, but what they can't do is make the private sector use the product. So you see it with Mistral too. To the extent that there's a willingness to spend Canadian government tax dollars on a Canadian government AI solution, or maybe if Canada goes on with its kind of affiliating with the EU, these guys in this trial may be the You're Not America LLM options. And there probably is some spend to that. But do you think it'll be a compelling business that will go public at 3x this round? Not as obvious to me at all. [00:36:44] S0: Well, in today's world, today's day and age, Cohere not disclosing revenue is hardly a flex. No. It's a pretty bad sign. I love it. It's like ARR grew more than 165%. You're like... Since inception? [00:36:57] S1: Yeah, know.
00:36:57 · Rory O'Driscoll, Jason Lemkin, Harry Stebbings
[00:36:57] S1: Yeah, know. [00:36:58] S0: You know, one thing I was thinking on the Kalshi thing before we leave. So Sequoia led the last round, right? At a billion... They put in 1,000,000,000 right after felony charges were against the founders. Right? And, I get that it's just a state. And and then we have Binance, right? 6,600,000,000 taken by apparently North Korea in a matter of hours. I had to wonder between Sequoia and Binance, if the ball had bounced just a little differently, would FTX still be around today and would it still be a winner? Same VC, same risks. FTX got... Listen, you obviously can't take money from one sister company and put it in another, But I think Binance barely survived this 6,600,000,000. They don't have a transparent balance sheet. We don't know how much money they had. What if it was 13,000,000,000? Where would they have repaid it? I think they were one step away from an FTX type situation. Luckily, he got pardoned CZ, right? But I just wondered if it made me think of since you have the same investor and the felony, we've just all changed the way we take risks because it's game on, right? It just made think about Apparel Universe where FTX was a was a shining portfolio company today. [00:37:59] S2: Do know what mean? The fascinating thing is FTX's $500,000,000 position from Anthropic [00:38:03] S0: would say we know. Yeah. [00:38:05] S2: Would be worth 39,000,000,000 at the 1,500,000,000,000. So timing is important, is the takeaway, kids.
00:38:05 · Harry Stebbings, Rory O'Driscoll, Jason Lemkin
[00:38:05] S2: Would be worth 39,000,000,000 at the 1,500,000,000,000. So timing is important, is the takeaway, kids. [00:38:11] S1: The most compelling fact about the Binance thing was, was that they could pony up $6,000,000,000 to replace the money that was taken. That... What a good business. I mean, assuming that you're not doing an FTX and swiping it from someone else. As I understand that, and I did not spend a lot of time on this Binance were able to make good the crypto loss, which implicitly means Binance makes enough money to be able to make good the crypto loss, which means it's an amazing freaking business. [00:38:34] S0: I think so. I just think... And again, I'm not a crypto guy, but when CZ said they could cover it, but it would be tough, suggested to me they didn't have 13,000,000,000. And what I really thought was ridiculous is how many folks said that their balance sheet was all the crypto they hold as a trustee, as a custodian. That's not true. That's why Sam's in jail and CZ is out. I don't think they had $13,000,000,000 I think they got out in Black October. [00:38:58] S1: Yeah, you can't take my crypto dollars and give them to Harry and say, Sorry, your stuff was stolen. Agreed. [00:39:03] S0: Yeah, their balance sheet. Mean, think how much still happened in Black October. And then we have this... The one that I think is craziest, I don't mean to get off track, this... I know it sounds minor, but it's not this ARDEX thing that breached WorkOS and a bunch of others. This is just... Since we did the last one, this one is insane, this ARDEX thing.