The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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?
00:25:55 · Jason Lemkin
[00:25:55] S0: Well, listen. Obviously, we're lucky to get into the second close because there's plenty of money that wants to get in at ten, twelve, and even fifteen today. So I recommend we can't even get our full allocation. I recommend we put in the maximum amount we can out of the fund because it's already valued more than this, That valuation is several weeks stale. And JEV usage has quadrupled just since Andreessen actually shook hands on the deal. So we have no choice. We have to be all in and get every share we can. I'm asking that we can get all the early investors to waive their pro rata. That's my only requirement, but we want to put in every share we can. Are we worried about competition? Are we worried that it appears that Cloudflare already has a competitive product? Are we worried that OpenAI appears to be having a competitive product? Are we worried that Anthropic could even give this away for free? Are we worried that Amazon has suggested they're building their own version of JEV? We are, but growth like this is the point of venture boys. And if we don't do this, we should just stay home. We're raising new funds every twelve to thirteen months. These are massive funds we have to deploy into winners. And to be clear, and we have years of data on this, not every winner wins, but you can only win by being in the winners. This is a winner. Will it be a winner in a year? I don't know. It is one of the massive breakout winners today. We're still getting to invest at 7,500,000,000. We can probably do a paper markup to 15 and tell our LPs we're geniuses. I say we buy every share, block the pro rata, and do as much founder secondary as we can.
00:27:11 · Harry Stebbings, Rory O'Driscoll
[00:27:11] S2: The terrible thing about that parody is it's accurate as hell. [00:27:15] S1: Totally. It's not a parody at all. It makes you realize, yes, you can do this job in three minutes' handbites. [00:27:21] S2: Can you paint the upside for me on Jeff? How does this become a wildly successful, massive company? Where's the $500,000,000,000
00:27:29 · Jason Lemkin
[00:27:29] S0: I'll tell you though, just at a tactical level, at a builder level, right, which is that, you know, no no models are particularly... Going back to the evals and the meta, whatever, the Muse Turbo, none of these hit 90s or 100. All these models make many errors and many issues, okay? They're not reliable. I can tell you endless issues from this week. I, you know, JEV is a classifier, which we're now in classifier 2.0. We're like an AI and it works and it's maybe it gets 70% to 80% of carefully prompted matches right. Will the Cloudflare team keep putting as much effort in as a standalone team? Will Amazon, will OpenRooter, will all these people try as hard, or will these be niche products with not enough revenue that they don't have time to invest in, and that these guys at JEV just make classifiers do something they couldn't do before. Get incredibly high resolution rates, and then they can expand it. You know, right now you can ask relatively complicated questions, but you only get binary outputs. That's why it works so well. Right? Rory or Harry? Who's my better investor? Rory, Harry, Rory, Rory, Rory. They're going to get better and better and better. And I don't know that even if the Cloudflare Amazon teams can catch up today when it's easy, it's easy to build what OpenRouter was six months ago today, right? But are they going to maintain that investment? I think as VCs, we have to make this stressful investment that a core team that is very strong out of open eye that is doing nothing else will pull ahead from the seeming parody you can achieve today. I'm actually willing to make that bet because I'm using JEV a lot and I can already see that if it never changed maybe I would swap it out. Right? But if it gets better than the rest, there's no way I would change. Even just somewhat better on its evals, you would never use anything else. So I would still make that bet today that this team will do nothing else. And I don't think the inference costs are going to destroy them. I think this seven fifty, this, this is, this is a low inference model. I don't know the training costs. I think seven fifty gets you pretty far in this space for real. Think it gets you further than it gets you to thinking machine. So might get you two or three years of runway.