The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:57:18 · Harry Stebbings, Jason Lemkin
[00:57:18] S2: 10,000,000,000? I thought... Is 10,000,000,000 the round size? [00:57:21] S0: Look. Rory and I are a little more conservative. We're okay with a $10,000,000,000 exit as long as the entry is appropriate. We can't make the numbers for the whole fund work, but we can make our own little slice of the fund. We can we can hit our individual six x goals with those exits. [00:57:34] S2: Guys, what what have I missed? Creandum, I think probably the most exciting fund that Europe's produced in the last three years, raises seven fifty. Physical Intelligence in talks to raise at a $20,000,000,000 valuation. They've had room and acquisition talks in the last six months as well. That's with Avenir and Lux. Dropbox cuts 9% of staff and CTO leaves.
00:57:55 · Rory O'Driscoll
[00:57:55] S1: I wanna think, first of all, I... Unlike the last group of three, these things are like literally a grab bag of shit. Physical intelligence, company with relatively little revenue is worth $20,000,000,000 Dropbox, company with billions of revenue, ain't worth a lot there. It just shows revenue multiples don't get you anywhere. Right? It's all about the future. These are just non comparable things. I mean, look, on the physical intelligence thing, yeah, I think robotics is going through an amazing explosion. We have a small investment in... I think these next generation models are amazing. When you see the demos, I've done a lot in robotics over ten plus years. When you see what the new models can do, it is truly amazing. You go, Wow, the level of dexterity, the old models just don't have that. And I think it's just a real breakthrough moment. So two other comments though, I think deployment of robotics is just way longer than deployment of classic LLMs, and people forget that. I saw someone, somebody's coming to starting to price now on an hourly API basis, which makes sense. So you pay, if you're replacing, maybe pay $3 an hour for access to the model. And then there's only 300,000 robots in The US. So to make the math work at kind of 20,000,000,000, which is where PI is, you got to have a shit ton more robots. So the technology is amazing, the business model's got a lot of developing to do, but I think the last sentence you said is the real one. I think all the big foundation models company buy one of these things. And I think the reason is, either they build one or buy one, I think I've said this before, the really simplistic reason they do it is this: I'm writing my prospectus. There are 81,000,000 knowledge workers in The US, we have an LLM, and we sell to them. It's a great business. There are 87 physical workers in America, not knowledge workers, working in blue collar or physical world jobs. Now we have a robotic foundation model, we can address them. I've doubled my TAM. I mean, it's a bit simplistic, but I think the lure of robotics for the foundation model companies and the desire to say, Oh, we do robotics too, I think means that there could well be some acquisitions in the space. It's one of those markets... It goes back to something Jason said.
00:59:46 · Rory O'Driscoll, Harry Stebbings
It's one of those markets where you can kind of say to yourself, If you just try and be logical about the steps between here and deployment, you probably get caught up in the minutiae, and I'm often guilty of that, where it's going to take a long time, customers are going to be slow, BMW is not going to roll out 100 humanoids in a week. But if you say to yourself, the technology capability is amazing, the teams are amazing, we love our position in generalist, you kind of go, this is going to change the world. Somehow you'll make money out of it. And that's probably the investment thesis. [01:00:15] S2: Jason, any final thoughts to you on those?
01:00:15 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[01:00:15] S2: Jason, any final thoughts to you on those? [01:00:17] S0: The only small... This one's really minor. It's almost not worth bringing up other than it's something I'm tracking. But a tiny amount of anxiety that the Hugging Face has drawn some DOJ scrutiny. I don't think there's been a formal request for information or anything. It just, investors, it would be a bummer for us if M and A isn't really back, right? As we discussed, we need $10,000,000,000 deals to even bring deals to the IC. And if this $12,900,000,000 deal for Hugging Face isn't going to sell through antitrust, it would just be a bummer. It would be politics aside, it seemed like we were able to do normal M and A deals, right, With normal tax benefits and normal this and that. If it doesn't turn out to be the case, then we've got to go back to doing convoluted team and IP deals or slow down deals. It'd be a bummer. Look at the other, I mean, Salesforce is on an epic M and A role. I mean, they've hoovered up everybody this year. And I don't know that they would do that if the antitrust environment, again, no apologies, if the antitrust environment was where it was twenty four months ago, it's good for Venture that they're just hoover. I mean, who did they just buy this week? Cresta, right? [01:01:19] S1: They just bought Cresta for
01:01:19 · Rory O'Driscoll, Jason Lemkin, Harry Stebbings
[01:01:19] S1: They just bought Cresta for [01:01:21] S0: Yeah, 2 point less 7,000,000,000 spending off and friends, right? We need these deals. They happen in every two weeks, right? And for Venture to be like, at least to be de stressful, in my opinion, we need M and A to work like clockwork. Otherwise, we're just stressed over these goddamn IPOs. So I just worry a little bit about this thing because we want the sales forces and the service nows and Microsoft. We would just want them buying companies every couple of days for 1,000,000,000 and up. We need it to get out of our... To liquidate our portfolio. So this one, if something happened here, I'd be bummed, but it's just something to track if it gets anywhere. Salesforce says the opposite. They're game on for M and A, man. [01:01:57] S2: Dude, I agree. [01:01:58] S0: Bless the team there. It's smart too. He's buying his way into the future, into the present. There's some point where it's too much. [01:02:05] S2: Is he with Cresta?
01:02:05 · Harry Stebbings, Jason Lemkin
[01:02:05] S2: Is he with Cresta? [01:02:06] S0: I think what's happening, if you just look at all the deals that have been bought, this, this I saw, I'm dating myself back at Adobe, but obviously there's a little bit changing in the world with AI and B2B, right? So basically everybody's getting a punch card, right? They bought us some defense startup, I don't even know that for a couple $100,000,000, right? And what you do is you go around the table with all your SVPs and they get their best idea. And whoever was in service or support or whatever, Cresta was their best idea. And whoever was trying to get these sort of support and sales agents faster, Fin was their best idea. And you just keep, it's not that complicated. They go down the best idea and then someone goes out and figures out if they'll actually sell because some folks won't sell. And you just make this best idea and then people know their jobs are on the line. And so none of these deals are mark betting the future of the company. They're SVP chips. And I've been in the room when you went around the room. Rory, what's your best idea? Harry, what's your best idea? Come back next week. I want your top three ideas. And it costs you nothing in a sense because it's assumed some will fail, right? But basically they're getting around the table and they're saying, we're going to spend this much of our market cap and cash to do these deals because we to do something.