00:44:26 · Brian Neider, CJ Gustafson
It's going to be of the utmost importance to have sources of truth around how to analyze and manage all of that. So absolutely, I feel like there's a tailwind there. Cybersecurity, same type of thing. So much more going on, so much more important to protect yourself. I think that there's gonna be tremendous demand. The place where I think that is the most susceptible for AI risk is around just traditional developer tool systems, frankly, because the way in which software development is done today is just so different than it was done even a year ago, two years ago, that a lot of the tools that were created to produce that software manufacturing engine, they're just not as applicable today. And so it's not to say again that all of them are dead. That's not the point. The point is some of the problems that they were solving are no longer even an issue anymore, not because they've solved it, just because the way in which things are done is just entirely different than the framework under which they were built, and that makes it difficult. That's sort of our framing and how we how we break out the world and how we think about the AI risks, as well as the opportunities. [00:45:34] S1: I think examples go a long way. So I wanna go through a few investments that you've made at Lead Edge because I think they show three different kinds of defensibility, if you will. You willing to play ball in this? [00:45:45] S0: I'm willing to play ball.
00:45:45 · Brian Neider, CJ Gustafson
[00:45:45] S0: I'm willing to play ball. [00:45:46] S1: Yes. First one I got for you, Rentrak. I think it's in the movie industry. So maybe you could give me the t l d r of what do they do and what makes that business hard to recreate.
00:45:55 · Brian Neider
[00:45:55] S0: Absolutely. So Rentrak previously was a business called Comscore Movies, which was owned by Comscore, who's a public company, and it's a data provider within the movie industry. They basically collect data from tens of thousands of movie theaters in regard to box office sales. They become the sole source of truth for the performance of motion pictures. And so what ends up happening is they have long term data sharing agreements with basically every movie theater chain in the in The United States as well as, you know, a lot of the independent movie theaters. And they now know what the sales of each one of the movies are on every single screen, in every single locale, in every single geography, in every single zip, and they can deliver that data. And that's ultimately purchased by a bunch of different stakeholders within the industries, most notably the studios themselves. And that data allows the studios to make better decisions around their movie releases, around marketing budgets. It allows them to do a lot of the accounting, for instance. So when you hear a a headline that says, you know, x y z movie just grossed $50,000,000 in opening weekend, that data is typically gonna be coming from Rentrak. And then on top of that, you have a situation where you might have a movie where, you know, the lead actor is being paid some percentage of the gross sales above and beyond a certain figure. Well, how do they get those numbers? How do they understand exactly what it is? Rentrak is kind of the source of truth. And so it's a really nice business, and what's hard about it is they have unique relationships with thousands and thousands of movie theaters and movie theater companies to be able to receive that data and have it flow in in a in a sort of understandable, legible way. They have unique relationships with all the studios who are willing to have them be kind of the Switzerland in the middle of everything, managing all of the data and putting it out to everyone. It's really a unique asset that's very, very difficult, if not impossible, to recreate. You know, there's a lot of ways for them to leverage AI within their business for sure, but you can't just spin up a company to do this because the amount of theaters that you need to go out to to actually pull the data in, it makes an, you know, effectively an insurmountable challenge.
00:48:16 · CJ Gustafson
[00:48:16] S1: This is great because people always in a hand wavy way are like, oh, well, AI can't replace trust. This this this is a real example of it.
00:48:23 · Brian Neider
[00:48:23] S0: I think that that's exactly right. Next one I got for you, Clearwater Analytics. Clearwater actually is a software business, and I would say that in Clearwater's case, the reason why we got comfortable with it and get excited about it is more from like a compliance and regulatory angle. So they have a couple of different business lines, but their core business is really becoming the sole source of truth ownership on behalf of any type of institution, whether that's a corporate, a financial, whatever it might be. So you could imagine that if you're a corporate treasury department and you have a significant amount of money in the bank and you have all different bonds that you hold and fixed income instruments that are earning you interest, you wanna know exactly down to the penny on a very frequent basis, if not in real time, exactly what you own on that day at that time, what interest you're gonna earn from it, what that's gonna be from your free cash flow forecasting, all that type of stuff. If you're a asset manager and you have a bunch of client accounts, you wanna know exactly what you own, what your client's own, where it's held. And that is really important to get right. And you need that sole source of truth. And so Clearwater Analytics is kind of like the de facto standard for large financial institutions, large corporates to use to manage all of their securities exposure, and it's a very important tool. That one is one where, you know, could somebody theoretically vibe code something similar? Could they come in with some competitive offering? Yeah. I guess theoretically you could do that. But the distribution angle there, the way... The trust that they've built with their customers, the importance around the compliance and management, and, you know, being that sole source of truth, it's a very, very special business and a very unique business and one that we don't think is very easy to replicate.
00:50:16 · CJ Gustafson
[00:50:16] S1: Alright, this is fun. I got one more for you and this is a super fascinating company, Electric.