The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:13:59 · Jason Lemkin, Harry Stebbings
[00:13:59] S0: Never has such a successful startup named itself so poorly that I can think of as OpenAI. I mean, it would have killed almost any other startup what they went through, right? With the CEO drama, all the other nonprofit to profit drama, despite Startup doing better than them, they basically let Anthropic control part of the market for almost a which is like five years or ten years in AI time, right? There is a certain amount of parity with Astra and the open weights models today, best, but Anthropic own the fucking own the playbook for the chessboard for almost twelve months. There's no point in using any other coding solution and coding is the killer app as we already said 100 times. The math is true. They literally letting Dario walk out the door rather than build it in house and then firing the CEO and bringing them back over the night of long knives. I mean, my God, I mean, it's all going to be okay. But talk about own goals, I mean, every start up's full of them. This is just... These are some epic ones. [00:14:50] S1: I had the joy of having Satya Nadella on TwentyVC earlier this week. Wow. Great show. It was a fantastic guest to have on. What an honor. Microsoft had some pretty big news that they were offering voluntary buyouts to 60,000 of its 223,000 employee base. It's an enormous amount of the employee base to get this offer, roughly 27%. Jason, you've spoken before quite vociferously about this topic. What are your thoughts?
00:14:50 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:14:50] S1: I had the joy of having Satya Nadella on TwentyVC earlier this week. Wow. Great show. It was a fantastic guest to have on. What an honor. Microsoft had some pretty big news that they were offering voluntary buyouts to 60,000 of its 223,000 employee base. It's an enormous amount of the employee base to get this offer, roughly 27%. Jason, you've spoken before quite vociferously about this topic. What are your thoughts? [00:15:16] S0: First of all, Rory may have observed more more of these than I have. Maybe he hasn't. Hope he hasn't. But it's not like all 27% are gonna take it. Right. And they've already been through... I think they already went through a 10% layoff round. Right? So they've done... It's it's it's some sort of interesting game theory here where you want to offer it to everybody you don't want to have. Right? And then you've got to figure out what the yield's going to be. Right? But it's brutal because it says one thing no matter what people are going to say on LinkedIn. These 27%, we don't want them. [00:15:44] S2: Yes. I could... [00:15:45] S0: That's Whether not 7% take it or two point... We don't... And you... It is... This is a worse Scarlet letter than a lay... Than a pure layoff. At least a layoff, you can kinda wave your hands. This is 27% of the country they said did not meet our minimum, we we don't want you. [00:15:58] S2: And I bet it could have [00:15:59] S0: been higher, but but I bet they got this done in a week. It's it's so damning that Microsoft doesn't want 27% of its people. That that is the age of AI. They don't want them.
00:15:59 · Jason Lemkin, Harry Stebbings
[00:15:59] S0: been higher, but but I bet they got this done in a week. It's it's so damning that Microsoft doesn't want 27% of its people. That that is the age of AI. They don't want them. [00:16:07] S1: Why would you do that if you're Microsoft? What a culture could they... What? So you stay and then know that you're not wanted? Isn't that awful?
00:16:14 · Jason Lemkin
[00:16:14] S0: I think we're trying... I wanna get Rory to say... I think we're... You're trying to do this in a humane way, and I think what we learned is there's no... You know, when layoffs started, like, in late twenty two or so, right, everyone was fried for doing them on Slack or by email. Oh, it's so inhumane. Go meet with people, right? Everyone was... It's not that more humane to meet... Have you seen Office Space? Like, it's not more humane to meet with someone in HR and get fired. And then they were like, Don't do it over the holidays. So they fired people on January 1. That was no better. So this is a way to like make it more humane. It's great for folks that were thinking of leaving anyway. It's great for them, It is great for the folks that are at the either at the tail end of their career or they want to check out of the workforce. And that's why this is so hard to do from a game theory perspective because you might get all the folks that were going to leave anyway, right? But Microsoft has so much cash, who cares? But it's an attempt to be humane and I just... I've been on the other side... It's been a long time since I've been on the other side of a layoff. It's just hard to... It's hard... You try to be a good person, but you can't... It's hard to make it humane. It sucks no matter how you do it. And I think this is the suckiest way because 27% of the company has just been issued a scarlet letter. I think this is the... In attempting to be humane, this is the least humane way to do it. Just fire another 9% in one day, do it on teams, and move on. It's rough.
00:17:25 · Rory O'Driscoll
[00:17:25] S2: It is rough. No. I I think you're right. I I I process the same thing. You've been told to go, but you decide to stay. The only winners are, as you say, the people who've got another job lined up and now have a called option on the severance package. But, you know, it is interesting they think they can do without. If their take rate is 10,000 or 20,000 people, it's clear, it's interesting they can do withthey have around 200,000 employees, so they think they can do without another 10 or 15%, which possibly is true. I mean, you wonder how much it will be AI efficiency, how much of it is just you never needed them. It would be fun to find out. These large companies, as the depreciation bill for the CapEx comes due, you're going to have to find it somewhere else. And we've talked about this. Frankly, earnings this year, 2026, are in that golden period where the people who are selling the semiconductors are booking the gains, but the people who are buying the CapEx aren't booking the depreciation. So everybody's winning. But I think as you start to look to '27, that depreciation is going to start hitting in Microsoft and Google and Meta and places like that. And to keep the operating income up, you're going to be really pushing on headcount. And this is when the bill for AI comes due, and this is how it'll be paid.
00:18:34 · Jason Lemkin, Harry Stebbings, Rory O'Driscoll
[00:18:34] S0: It's brutal. In a sense, it may feed the anti AI frenzy because it's the direct narrative of the story, right? We're going to pay for all this infra, to pay for all these GPUs and infra and inference, we've to get rid of the people. Is you think [00:18:47] S1: 2027 we're going to see that really crystallize even more? [00:18:50] S2: Yes. Intuitively, as time goes by, everyone's trying to call when the hyperscalers start kind of going down the other side of this. So yes, as the depreciation bill mounts up, so far, even though free cash flow has been kind of going the wrong way, everyone's operating income has been going up. And yes, that 'll get harder now. So yes, this will be the problem. This will be the issue.