How I Invest with David Weisburd
00:38:46 · David Weisburd, Matthew Harris
[00:38:46] S1: of a short term volatility. [00:38:47] S0: Correct. But these things can have a, actually, I'd say medium term effect if you have a cap table full of weak hands that need liquidity, particularly when the numbers get that big. Because how do you replace, you know, in a theoretical, say you had half of the company were liquidity seeking owners in a period of two years, you know, between IPO and two years after IPO. That means you got to go. If the stock stays flat, you got to go source another $1,000,000,000,000 of liquidity. That's not just a valuation question. That's just a like cash. Where's that coming from? Probably not coming from T bills. So it's coming from somewhere. So there's some like physics of the market that but by the way, that 50% was like total speculation. I have no no intuition that half the cap table is a seller in the first two years. But, you know, we're an unprecedented territory, and so we just don't... We don't really know. [00:39:45] S1: I'm still shocked that the standard of no liquidity for VCs, and then at six months, everybody gets unlocked. That is the dumbest model I've ever heard that that has persisted. Couple companies recently had... Have changed that. Cerrebris, one of our other companies that it did this unlocking over over many tranches. Some tranches were as low... As small as 6% Great. Of the holdings. SpaceX also did tranche. Do you think that this trend could continue, and do you see any of your portfolio companies speculating?
00:39:45 · David Weisburd, Matthew Harris
[00:39:45] S1: I'm still shocked that the standard of no liquidity for VCs, and then at six months, everybody gets unlocked. That is the dumbest model I've ever heard that that has persisted. Couple companies recently had... Have changed that. Cerrebris, one of our other companies that it did this unlocking over over many tranches. Some tranches were as low... As small as 6% Great. Of the holdings. SpaceX also did tranche. Do you think that this trend could continue, and do you see any of your portfolio companies speculating? [00:40:16] S0: For sure. Yeah. I think not only tranching, but price targets. We did an IPO in many IPOs, but one in particular in 2021, where we create a very thoughtful ladder of price targets and liquidity only comes with price targets and price targets that are hit with some duration and some level of volume. And so you you can actually really mitigate the risk of drawdowns when you do that kind of careful titration of how stock gets fed into the market. And there's no doubt that feeding stock in sooner in a titrated, careful way is way better than not feeding it at all and letting it build up. So I think it's actually the underwriters can be a little hard to deal with on this, that the investment banks, you know, who run these IPOs actually from a regulatory perspective, they are the underwriters. And so that that word has some meaning still, and they have to be very careful about this. They're often [00:41:16] S1: They're the counterparties to some of these transactions.
00:41:16 · David Weisburd, Matthew Harris
[00:41:16] S1: They're the counterparties to some of these transactions. [00:41:18] S0: They're the ones who'll get sued if something novel gets tried and doesn't work. So that's actually [00:41:24] S1: I could see how the conversation went with Elon and his team and the banks. Well, this is what we have to do. Well, this is what you're gonna do. Okay. [00:41:31] S0: Yes. And if Dario wants to play [00:41:33] S1: But sometimes that's how standards are set. And then everyone's like, I want I want Elon's deal. Completely. And then the industry changes like magic. [00:41:42] S0: And I think that'll... I mean, it happened for every run of the mill issuer, but surely either Anthropic or OpenAI or both could could get a similar deal. [00:41:51] S1: Going back to Anthropic and Anthropic's evaluation, not just because I selfishly [00:41:57] S0: am You love talking about this.
00:41:57 · Matthew Harris, David Weisburd
[00:41:57] S0: am You love talking about this. [00:41:59] S1: Not because I I need to do some tax planning and portfolio planning, but also because I had... I previously had Lucas Swisher who runs growth for Coatoo, extremely smart investor. And one of the things that he said that I'm still processing and blew my mind, is that despite these revenue numbers at these large labs, OpenAI, Anthropic, and others, He still believes we're extremely early. And the reason he believes that is because the majority of the revenue today is still coming from developers and engineers. And the penetration of those engineers is just so tiny, even in The US. So you're having a small part of a small market, and that's leading the revenue today. Now what happens when just all of engineers are unlocked and then all of other knowledge workers? I think there's only, like, 50,000,000 or so engineers on the planet out of 8,000,000,000. So you just have a small portion of them really doing a lot of token spend. What do you think about that? Could it could it really be that we're really that early in terms of token usage and AI adoption? [00:43:11] S0: I'd say I... The two countervailing things in my mind when I hear that. One is vehement agreement. And at a certain point, increasingly in our companies, there aren't even human users of AI. They're just agents doing stuff. And so it's not 8,000,000,000 that you're going, you know, that 8,000,000,000 humans getting more productive. It's actually 80 or 800,000,000,000 new entities being created.
00:43:11 · Matthew Harris, David Weisburd
[00:43:11] S0: I'd say I... The two countervailing things in my mind when I hear that. One is vehement agreement. And at a certain point, increasingly in our companies, there aren't even human users of AI. They're just agents doing stuff. And so it's not 8,000,000,000 that you're going, you know, that 8,000,000,000 humans getting more productive. It's actually 80 or 800,000,000,000 new entities being created. [00:43:38] S1: And then they're doing deals with each other. [00:43:40] S0: And they're doing and they're using tools [00:43:41] S1: and creating new agents.
00:43:43 · Matthew Harris
[00:43:43] S0: Yeah. Right. So I actually think that, you know, this this artificial cap of 8,000,000,000 as we think about market size is for the first time lifted because of agents that have proven they can do long running tasks with great efficacy. So I agree with Lucas and I would amplify it. And then the one caveat is open weight models. So intelligence is becoming more abundant. It's also becoming cheaper. Those who are related, it's abundance and people's desire and ability to access it gets greater as the price comes down. So there is this beautiful expansionary quality to open weight models and even just the token cost of old anthropic models being so much less expensive than new anthropic models. But that mix shift and exactly how that mix shift happens for what applications is the $2,000,000,000,000 question. I think there's no doubt that demand is going to expand and that will have a benefit to pricing as demand expands. It helps pricing, but supply is massively expanding as well. And so the value of a frontier model is what we don't know. If the 2027 frontier models are as transformational relative to the 26 models as the 26 models were to 2025, then I think 2,000,000,000,000 is surely just a starting point. We basically went in '25 until about November, December 2025. You know, it's still chatbot territory and kind of like finish your line of code but not independent long running reasoning agents doing their own coding. That was really sort of winter twenty five, twenty six And that led to SaaSpocalypse and that led to all of these advances in agentic workflows the course of 2026. So I don't know what the next leg up is. I don't know when it comes and if it's as dramatic as chatbot to agent. But if it is, then open weight models that don't have the frontier capabilities yet will be a pale substitute for those high priced tokens.