The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:26:36 · Rory O'Driscoll
[00:26:36] S1: I have a feeling it might be. I I think... Well, I'm skeptical of the category on a stand alone basis. But, you know, I always have my three venture questions. Is this a category? Who's the winner? And are we getting paid for the risk? And is this a category question? Is is there a role for AI in a kind of personal assistant messenger type thing? And I will say having used both Instinct and Muse, I can see it. I don't know if I love the word killer app because a single thing that does everything, you know, that that that just ignites a platform like VisiCal... Let's leave let's leave the killer app concept out there. Right? At the margin, you kinda go, yeah, I'd use this. You have the example from long ago of WeChat, you know, Chinese messaging systems having very much a super app. Facebook tried to do that with the messenger. It didn't take off Because the truth is the UI, pre AI, the UI of trying to book things on a chatbot is a pain in the butt. It's actually a lot easier just to go to the United website and see all the flights at the same time and book it. It is possible that with intelligence at the back end as a thing from, you know, non intelligence, you you actually have an interaction on a mobile device where enough of the intelligence is in the cloud that it can do a lot more for you. It knows a lot more about for you, and it just becomes an easy place to get shit done. And therefore, to your point, Howard, at the margin, you can imagine people using this. If you're a Facebook user, you get muse, you're a happy little camper, you chug along. Do I think there's more of this going to happen? Yes. To me, the interesting question is, the second one is, do you think it's a standalone company that wins here, or do you think it's going to be Facebook with Muse and OpenAI with whatever product they come up with? Do you think that the instincts of this world can build a standalone business here, giving that... To put it out there, having raised at something like 50 pre less than five months ago, then 400 pre, then a couple of billion pre, then now rumor has it raising at nought to 10,000,000,000?
00:28:29 · Harry Stebbings
[00:28:29] S0: They are raising 1,000,000,000 at 10,000,000,000, and the most popular segment of the show that we got was Jason's IC. So, Jason, we have a billion dollar round for Instinct. Welcome to the partnership meeting. Thank you. And it's a $10,000,000,000 valuation. Will we be putting in $200,000,000 into this billion dollar round at 10,000,000,000?
00:28:52 · Jason Lemkin
[00:28:52] S2: Well, we we will. And I will... I'll be honest to the team. It's a... This is risky one. I am impressed with what Muse has done. And if we had to compete head on with Meta and that was the only thing, we'd be in trouble. I would not recommend this investment because we can't compete with their servers. We can't compete with the GM. They can't compete with the LLM. However, after having done several reference calls and over a dozen synthetic ones on Claude, I've learned a couple of things. First of all, Meta cannot go cross platform. It cannot go in. It does own WhatsApp, which is a real threat. It won't be worked with all carriers. It won't work across all services. It won't work across. It's highly focused on its own platforms. And so that is only a subset of how we communicate. How many folks between the ages of 18 and 55 are on Facebook all day? Very few, right? It's really your grandmother's application. Now WhatsApp is popular and Instagram, but the fact that it is not going to be interoperable across all these different services means it's got a fairly limited reach. Two, how long will Meta maintain the energy here? Right? When this produces essentially trivial to no revenue. Anyone remember Workplace? Workplace in its own way was probably better than Slack for folks that lived in Facebook. It was probably better. It had a lot of neat use cases. It worked well. It was architected and it was actually the highest NPS of any product in the entire Facebook Meta platform, but they couldn't maintain the energy. My reference checks say when Alex leaves scale, this product will fall apart. If this was the only thing that Meta had to do I wouldn't bet against him, but we're just not going to see the commitment to do the kind of things the Instinct team is going to do. And let me tell you this is one of the greatest teams I've seen in my history of investing. They're great. These kids come and they play World of Warcraft in real time during the pitch. They're top 10 each all... They're both top 15 on league. I recommend leading the round but being cautious with reserves because the next round valuation may hit into realistic IPO limits. So you would do this round? I wouldn't. You asked me to do it. There's no effing way I would do this round.
00:30:51 · Rory O'Driscoll
[00:30:51] S1: Okay. Good. Okay.
00:30:53 · Jason Lemkin
[00:30:53] S2: We've Here's gotta use the whole why I wouldn't do the round. Okay? And you can call me a fuddy duddy for it. Okay? I believe most of that. Okay? For the pitch. I just believe the infra costs here are so high and the incumbents... This is like if... We've been talking since this show started. What if Claude... What if Anthropic and OpenAI actually built apps? And in the higher history of this show, they've only built outside of Codex and Clodco they've really only built half an app. Cloddesign which isn't even really fully an app, okay? Here's Meta building the app. They have the LLM. They have the cost advantages. They have the speed advantages. They have more available compute and GPU in all of it than anybody else in the world and they're building the app. This is the threat that every VC worried about and we all got a hall pass since the start of AI because the LMs didn't build any apps. This is the one that they're building I just don't want to compete against this because I do think for the next twenty four months it's a big priority and it's just Harry already said instinct is slow that's a sign that's a sign of compute costs of other that's why they have to raise a billion and can they subsidize with venture capital 5 to $10 per user per month sure but if they have to over monetize it what if they become poolside they could become the next poolside like it's great but literally I've got 10,000,000 users at $10 a month. Now I've got a $1,200,000,000 nut a year to pay off. I'm struggling to raise the next round. I'm not Databricks. So it's just I worry when the incumbent has infinite all the capabilities here and wants to build the app. That's why I would say, no, but I might be wrong. Right? I I might I might be wrong. I wouldn't bang my fist on the table at the at the meetings.
00:32:27 · Rory O'Driscoll, Jason Lemkin
[00:32:27] S1: I I'm trying to remember was it Socrates, or who was it? One of the ancient Greek philosophers where you could literally say, take one side of the argument, and then halfway through you could say, Now take the other side of the argument, and Jason clearly can do that here. Was a perfect This is why you should write [00:32:42] S2: Harry, put me on the spot. I don't