The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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.
00:29:26 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
So I'm cautiously bullish that a focused team rather than four smart kids at Cloudflare can maintain its lead and get to accuracy levels to summarize that were never possible before. That's the unlock. JEV is super fast and super cheap, okay? And it is accurate enough to use for maybe 10% of your AI use cases. If they make it hyper accurate, it changes the game. [00:29:44] S1: And that's the theory on the, just to get back to the numbers, if it's 20% of your total, we decided this, I think two weeks ago, if total AI frontier inference is a $200,000,000,000 market, which it's better be in a year or two, we're all in trouble, then 20% of that is 40,000,000,000. And if the price of that goes down by, you know, 80%, you're still at $8,000,000,000 and billion dollars And if they get half of it, that's a 4,000,000,005 billion dollars revenue company, which is probably worth $50,000,000,000 That's the case. Every one of those sentences is credible. I think the biggest question is the other competition, but to Jason's point, the business is there. [00:30:18] S2: What worries me in every justification for a lot of these prices is, wow. The lake pref's only 1,000,000,001, and it's such a strategic asset with a good team that the downside protection is they'll just get bought by a great acquirer. I just hear this every single time, and maybe that's true, but not everything has a downside protection [00:30:36] S0: of being acquired, does it?
00:30:36 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
[00:30:36] S0: of being acquired, does it? [00:30:38] S1: I mean, does until it doesn't. And that's meant to be glib, but in a world where you've got 12 companies above a trillion dollars, all of them are acquisitive, all of them are in a wild, tearing hurry to build companies where time is money. And especially if the legal window is open, then there's going to be a lot of acquisitions. And the logic is true. If the market slows down, then all this stuff will go in a bad place at the same time. So, you know, it'll be true until it's not. [00:31:03] S0: I think it's overstated. I will say today it feels like a liquidation preference in, in JEV is much more valuable than a thousand liquidation preferences than a thousand twenty twenty one unicorns. Many of those will end up being worthless. So we overstate the value of the liquidation preference, right, to get the deal through the committee, but they have real value today, right? It's just I'd rather have this lick preference than quite a few from 2021. [00:31:28] S2: Okay. You said 2021 there, Jason. 2021, there were 34 Decacorns. We now have a record 42 startups that have become Decacorns in 2026.