The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:16:39 · Rory O'Driscoll, Harry Stebbings
[00:16:39] S1: You're obviously not the typical user, and I don't think their economics are structured on everyone building their own CRM, or it's going to eat compute. But yes, can... Through that interface, you a sophisticated LLM at the back end, you have your own little sandbox. They have a lot more standalone compute and sandbox for you than I think Instinct does. So, yeah, that makes sense. [00:17:00] S2: Okay. For for those that don't know or haven't used it, a lot of people use it to buy things from different providers. Amazon has, in response, blocked it. Shopify has decided to partner with it. How do we think about those two decisions from Amazon and Shopify, and who do we ultimately think is right?
00:17:18 · Rory O'Driscoll
[00:17:18] S1: I think both could be right for them. For Amazon's perspective... Because it's what they've discovered in other kind of agentic type commas is two things happen when you use this agentic commerce. One, you don't get any revenue from your ad business, and Amazon's ad business is now larger than their e commerce profit. So in other words, it is the entirety of the profit stream for e commerce as a thing from their AWS business. And then the second thing, I didn't know is Walmart did something recently where the basket size gets reduced, because you don't get the chance to shop. You know, when you go on Amazon directly, they're like, you know, people also bought, then you have, yeah, I need to order that. Whereas if I do this, I just order the thing. So from Amazon's perspective, because they're such a big player, they're like, if I let these people do it, then I don't get my ad revenue. I get a smaller basket. And then this is the next sentence is key. And if I block them, they'll probably come to me anyway because I'm Amazon. So I have leverage, and this is kind of tech behemoths bumping into each other. Amazon is now saying, screw you, Muse, Meta. We're gonna have to talk about this before I roll over. And they... At some point, there probably will be a more aligned exchange of value. Shopify, on the other hand, represents lots of little tail merchants. They are very glad of the extra business. They probably don't see that much compression in order value because if you go directly... If if you're buying some obscure thing on a mid tier Shopify merchant, you go buy the thing directly or you buy it via Amazon. No matter what, Shopify is broadly happy. They don't have a big ad business. So from Shopify's perspective, it should be have at it. What Shopify likes is they have the common payment app, so they like to have that go through that. So in each case, yeah, capitalism works. These executives are very logical. They're like, it's great that you have this new source of demand. What matters to me? In Amazon's case, I think I have a lot of leverage. In Shopify's case, provided you let me charge for my payments rail, I'm good with this access. So it all made sense. It's the early days, there will be much negotiation. But it's interesting.
00:19:24 · Rory O'Driscoll
I mean, bigger lesson here is, you know, there was a whole bunch of Google OpenAI blathering on six months ago about various different agent payment mechanisms, right? And it was all your smart people getting in a room and thinking things through. And the truth is in tech, none of that shit ever matters. What really matters is someone aggregates consumer demand, like Instinct and Meta have done, they start pounding on the API, and then now everyone has to focus. I'm willing to bet someone at Resi, even as we speak, and OpenTable, is formulating their agent API policy. I'm willing to bet at Amazon. They're talking to Meta this week. Demand creates urgency to sort all this shit out.
00:20:02 · Jason Lemkin
[00:20:02] S0: They're all gonna lose. I think it's the last stand of the unnecessary system of record. Resi is gonna lose. Amazon is the least losey in the short term because they're they're at the edge of a monopolist for what they sell as a merchant. But the agents will bypass them ultimately. You're going to have to decide. The agents have very clear positions. And you're right, Rory, this benefits Shopify. Of course Shopify leans into this, right? Of course Stripe and PayPal lean into this. It benefits them, right? There's no question. And Amazon losing ads, losing upsell, losing shopping cart sites, all a negative. But to the extent an agent can route around Amazon, to the extent you can, the agents not only will, they will gleefully do so. They will gleefully do so. What would you... Would you like me to call the restaurant directly, Jason? Oh, I found a back end API where OpenTable still works even though they're they're exclusive on Resi. Oh, I found another way to do this on DoorDash that's left open. The agents are wonderful at finding broke APIs that have other surfaces that shouldn't be exposed. This is a... It may be their only choice, but I believe all the systems of record, places of record, they're just battening down the hatches and they're fighting the agents. And net net, it's not a positive for any of them. It's not a positive for it. This is not a positive for Amazon.
00:21:17 · Rory O'Driscoll, Harry Stebbings
[00:21:17] S1: I hear you. The agent, as Jason points out, is tireless. The agent does have the ability to call to hit all 17 websites. It's only compute. They don't care. So you're right, a [00:21:27] S2: lot of [00:21:27] S1: these digital only aggregation businesses, I don't think they'll fall as brutally as you say, Jason, but there definitely will be some end run pressure to go around the kind of demand systems like a Resy or something like that. I'm not sure it's as fatal as you think. Then I...
00:21:43 · Jason Lemkin
[00:21:43] S0: It's not that I think... Well, let me be clear, because I think you'll agree with me. It's not that I think they're gonna be killed. I think they're gonna be maimed. It doesn't matter if this means that Resy's growth falls this much. If this means it impacts 10% of Amazon's advertising revenue. That's just like Meta stocks up 20 some odd percent. If this drives Amazon stock down 20% because it impacts margins, it's a big deal. I can tell you talking to our agents all day, they don't put up with this bullshit. They don't friggin' put up with it, right? Listen, I don't want to name the name or the vendor, please don't make me, but we got a raise this morning from one of our core vendors, massive price increase, massive pricing. Immediately our agent said, I want to work around it. Here are my ideas, dump them. And it actually laid out a twelve month plan to migrate off this vendor on its own. They will not tolerate this crap. Right? And there are so many products you can only buy on Amazon. There's it has so many advantages as warehouse, it has fulfillment, but some of that stuff can be bought on a Shopify store. It could just be enough. It could just be enough. This maiming is a big deal for AI. It's gonna maim the existing folks unless they embrace things they don't want to embrace.