The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:20:01 · Harry Stebbings
[00:20:01] S2: The amount of muse and instant competitors right now is pretty astonishing. Okay. Big tech go shopping, baby. We have two rumors that are circulating. Obviously, we don't deal in rumors, so I'd love to start with the first one. Reflection, which for those that don't know, is a fantastic team building open source models in The US backed by Sequoia. I think the last round was at $25,000,000,000 or so, and the rumor is that NVIDIA is buying them at a $30,000,000,000 price. This is on the back of them buying Poolside for $12,000,000,000, which is in the open model game as well. Guys, how do we analyze Janssen further going into the open model space?
00:20:39 · Rory O'Driscoll, Harry Stebbings
[00:20:39] S1: Yeah. And by further, just to be clear, you're you're reminding us that they already bought poolside, they already have their Neematron existing model. And I think the answer is, as we've discussed several times, if you're in the chip business and all you know, and you've got some of your biggest customers are close source model companies zooming out. You've got a pile of money that's going to go into that collective pool, it's in your interest that more of it stay with you and the chips and less of it stay with the model companies, right? So by definition, you love open source model and only one chip provider, just like on the other side of the table, the model companies love closed source models and everyone having their own chip provider. So it's, you know, we're friends, we're the best of friends, we lend each other $100,000,000,000 or so, but we're watching you closely and we want to be able to fight back if you get margin greedy. So it just all makes sense. [00:21:30] S2: Do you think it'll go through, Roy? [00:21:32] S1: When you got $5,000,000,000,000, if you wanna buy something for $30,000,000,000, you can buy something for $30,000,000,000 Whether or not there'll be that whole pushback after the GROC thing, will the structure of an AQUA hire work now, or will there be pushback? Who knows? The world is pretty busy right now. It's not like these next two months are going to be idle time for the US government, so who knows? I think [00:21:53] S2: if you're on the board, would you say sell or would you say reject?
00:21:53 · Harry Stebbings, Rory O'Driscoll
[00:21:53] S2: if you're on the board, would you say sell or would you say reject? [00:21:57] S1: Oh, I'd hit the bid because they're amazing companies, but the standalone business, you know, if you have an open weight model, you know, you're relying a lot on the monetization is inference, are you in that? I've always thought open weight is really exciting. But how does it work monetarily? You know, if you're getting these kind of excess prices, the value to the acquirer is very high. And the market cap of the acquirer is very high. This might be a moment in time that doesn't come back.
00:22:24 · Jason Lemkin
[00:22:24] S0: It's also honestly, I have been on the other side of it. It's very stressful to say no to NVIDIA, knowing that they're gonna directly compete with you and promote your competitor. If you'd we're doing this, we're investing 50,000,000,000, 100,000,000,000 in our own open weights model, U S based open. We're to continue to do it. This isn't a one off and you have a chance to take 7 or 9,000,000, but if you don't, you're going to be a bigger and better competitor. It's not, it's as simple. You can say no, but it is a little scary. It is a little scary when you say no and they're going to buy other people and get bigger and bigger. Doesn't change the game, but as a founder, certainly weighs on you when you get that build by our partner sort of threatened with a smile message, right? Yeah, so I would take it. Unless you're confident. You gotta have the winning hand and we don't know where it's gonna go, but Salesforce announced they've got their own models that are built on Nementron and built with Nvidia. You gotta predict where this is gonna be in '18 with NVIDIA putting all of its software engineers and all of its team behind it. This is a software company, not just a hardware company. You could imagine that the moat here between software, hardware, model is so powerful that in twelve or eighteen months, why would you want to use any other open weight, open model other than NVIDIA? Today, it doesn't seem logical, but I could imagine it being the case in eighteen months. It's such a perfect combination.
00:23:36 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:23:36] S2: Does it make thinking machines more or less attractive at $44,000,000,000 which is the round that they're raising now? [00:23:44] S0: Do you get pro rata rights in the round? Do we have a sense? [00:23:46] S2: Do do we know? It's a very good question. [00:23:47] S0: Now let me just check substantially, to Keith's point. [00:23:51] S1: As long as there's either a large acquirer to get paid more or an obvious clear business model. I mean, there's examples on both sides of the table, those companies who were last and made a ton after all the early guys sold, and those companies where the early guys made a ton of money, and then everyone after that kind of sorry, they're still in it. It's also situation dependent, it's useless to have an ironclad rule. You just got to know which the game here is. And again, I go back to, I believe Thinking Machines has grown nicely in revenue, but you've got to have a lot of clarity on revenue and revenue visibility to make that call. Now, you know, we're just gonna see... I mean, it's interesting with recording on Tuesday, publishing on Thursday, and on Wednesday, Anthropic's doing its investor meeting, and I assume the the Q three revenue numbers will leak within twenty four hours. So, it's not like there aren't big revenues attached to these businesses. They're the biggest revenues ever seen. But the only question is, how will it shake out? How will it shake out for one level down like thinking machines?
00:24:50 · Jason Lemkin, Harry Stebbings
[00:24:50] S0: The sort of pool side, why we're selling Memo that we just couldn't get enough compute, we just couldn't afford it, we could not keep up with the arms race. I mean, does sort of... It's not as simple as 44,000,000,000 versus whatever. Can you even get the compute to be competitive? Like, I don't know. I don't know. I you need someone that's even closer to it than I am, but my gut is no, my gut is you can't get enough compute to be competitive. Everything's being taken, right? Even, Anthropics reaching out to Muse, seeing that fake bet is, can we get some of your computes? Right. Maybe they'll give it to thinking machines. I don't know. But that war has just begun. You can't you can't even get memory, let alone compute. It's not as simple as software. Right? So I don't know. [00:25:28] S2: It's time for investment committee. Jason, on the agenda for today, we have JEV and TypeSafe, the parent company, raises an $870,000,000 Series A at a $7,500,000,000 valuation weeks after launching JEV. Andreessen led Sequoia participating, one of the largest series a rounds ever. Jason, will we be participating in this round at $7,500,000,000?