The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:48:02 · Jason Lemkin, Rory O'Driscoll
So for me, these two plus JEV, the first time we've seen deflation. And yeah, you're going to have your Jevan's paradox, so we're going to use even more of course, but this is the first time you could literally go in swap out models and have much more speed and pay a lot less, like in a week. It's exciting. And I think it's most exciting for like B2B stuff where we're all still making these trade offs for a lot of B2B apps, right? We're making it how much, how good can we make the resolution? How good can we resolve this issue? How good can we do this workflow? If it's twice as fast and in some cases attempt the price, we sure better see a lot of results at the next board meeting. No more excuses, boys. It's the first one at a practical level I've seen this deflationary. [00:48:42] S1: And I think the next interesting thing will be, you know, college... You haven't called it price elasticity because price elasticity simply says, you know, for a proportion reduction in prices, does the net dollar spend go up or down? The bet obviously they're making is it's highly elastic and it goes down and you end up spending more and we'll see. That's obviously the bet. I mean, you would not want to be cutting prices in a demand inelastic product, because then you'd have the classic problem of high fixed costs, low demand expansion and lower prices, which is terribly horribly bad. So the bet here, as you see these price cuts, is in fact that this stuff is very elastic in terms of demand.
00:49:21 · Jason Lemkin, Rory O'Driscoll
[00:49:21] S0: Yeah. And I assume we'll see it in the in the s one soon enough. Assume... Listen. All the accounting for these LMs is gonna be interesting. Right? But I assume you can, when you're using Haiku or Sana, when you're using essentially the N minus one or N model, the only cogs is going to be inference, right? You can basically write off the training costs because you can assign that all to the frontier models, to Fable and Opus, right? Assuming that's the case, it's sort of a win win all around, right? Because I believe that Anthropics inference margins are quite high, right? Before I believe it, but I believe their real world gross margins are still pretty crappy because of training costs, right? So I think it'll be interesting to see how they break this out. Right. But I think it's, I think it's exciting, but yeah, we'll just use more. There's going to be a lot of stuff where it's, it's like, you know, taking a twenty minute shower when you don't have to pay for the hot water, you never get out. Right. [00:50:07] S1: Just as a reminder, and I agree with Will, and I agree with that assessment, but when you cut prices by 90%, we're going to use more, it doesn't cut it. We got to use 10 times more. Otherwise, demand elasticity is less than one and you actually revenue goes down. [00:50:18] S0: I do think we'll use 10 times as much because what's going to happen instead of sampling something, you'll just do it all. [00:50:23] S1: That was what my colleague said on using JEV. You'll use it in every row of the database.
00:50:23 · Rory O'Driscoll, Jason Lemkin, Harry Stebbings
[00:50:23] S1: That was what my colleague said on using JEV. You'll use it in every row of the database. [00:50:27] S0: Everything. And the key is speed, Matt. We don't discuss speed as much. JEV is so fast, right? And, Haiku 5.5 is actually slower than the one before, but it's not even comparable. It sounds twice as fast. You could just use more of it because it's faster. If it's slower, it doesn't it doesn't really... You can only use so much in parallel. But, yeah, I agree with your part. You just use it for everything. [00:50:44] S2: What does this mean for open source in US enterprises? Does this make it inherently less attractive where you're like, hell, I can get Haiku and Anthropic for 90% less? That really reduces the attractiveness of open source.
00:50:44 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:50:44] S2: What does this mean for open source in US enterprises? Does this make it inherently less attractive where you're like, hell, I can get Haiku and Anthropic for 90% less? That really reduces the attractiveness of open source. [00:50:56] S0: That's why I thought... I said on the... Well, I don't know whether it Dev or or Jack, but I said you could imagine it would all flip around next year. And then the whole open router thing would change and people are not loyal. No one wants to use right or wrong. No one wants to use at least China based open weights models. No one in the enterprise wants to use them. So when you have a domestic solution, ideally from a vendor that's already been qualified and trusted, I'm not saying it will happen because there's a lot of smart people working at DeepSeek at all, right? I mean, some of the best of the best, but you could imagine that this being a moment in time and in twelve months from now, they're niche models that are used by some companies we invest in, but really in the enterprise are almost nonexistent. Again, I think Salesforce making Finn rip it out before the deal closed is telling. It's a moment in time, maybe that won't happen. I just, don't people don't want these China open weight models. They just don't want them. [00:51:45] S1: But but they'll have reflection.
00:51:45 · Rory O'Driscoll, Jason Lemkin, Harry Stebbings
[00:51:45] S1: But but they'll have reflection. [00:51:47] S0: Yeah. They may... That's why the open router could... Maybe if NVIDIA buys reflection, then reflection plus poolside plus everything ends up being, you know, 50% of the usage and 15% of the revenue. It would... It wouldn't wouldn't surprise me at all. Right? [00:51:59] S2: Jason, what else tickled your fancy from this schedule?
00:51:59 · Harry Stebbings, Jason Lemkin
[00:51:59] S2: Jason, what else tickled your fancy from this schedule? [00:52:02] S0: You know, I mean, I almost don't wanna bring it up, but, bending spoons laying off basically all of Airtable. Not a surprise. Right? But, man, I mean, I wrote this when it happened and no one cared. I'm like, guys, everyone's talking about the money and the ARR revenue and the D and I'm like, you realize almost everyone's losing their job. I didn't see anyone care, give a, give a rat's arse about the fact everyone's going to lose their job. I'm like, everyone lost their job at Vimeo. Everyone lost their job at Evernote. Everyone's going to lose their job at Miro. And I barely saw a tweet about anyone giving a rat's ass. And I'm not even judging because this is capitalism, but man, when you sell your company to Benning Spoons, you just gotta realize your entire team's gonna be gone. And do founders owe anything to their teams? Do boards of directors own anything to their teams? Or do they just owe the best returns to Cedars Sinai? Do you have any moral obligation to sell to someone that's going to lay off 80% of your team within weeks? They are stakeholders, especially if you're cash flow positive and growing like Miro and Airtable. Right? They both have hundreds of millions in the bank and growing. Do they matter? Do they matter legally? Do they matter ethically? Do they matter at all? Or is this just part of the startup game? I wouldn't do it. There's no way I would sell my company and have 80% of my team laid off. I just never But