The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:32:56 · Jason Lemkin
[00:32:56] S0: I think that Anthropic and OpenAI have made a very strategic decision. They will not play in this market for now. They have... OpenAI and Anthropic each have the two worst models that exist. They're called OpenAI Mini and Haiku. They're terrible. They're terrible. Now, if you ask Claude, what should I use for simple workflows? Haiku. And if you ask ChatGPT, it will tell you Mini is great. It's so cheap. And at least my little evals, they fail a 100% of the time. Should Rory and Jason have coffee? Yes. Send them to London. Worst answer... I mean, I'm exaggerating. These are the worst models I've ever used, Mini and Haiku. And so they've decided to launch crippled models that they can lightly promote, but they don't want to play in these low margin businesses for now. They could build this, right? They could build, I think they could build a version of Java in an hour or over the weekend, but they've intentionally decided to cripple the low end of the market. And I think they're puckered about the open weights models that just got a little bit closer earlier than they planned. Right. Because that is more of a threat than abandoning the bottom of the market. This is just my view, but I don't think they've ever taken the bottom of the market seriously. They have checked the box offerings that no serious developer uses, I don't think. Go on Claude and switch to Haiku if you can and ask it a question. You... It it it doesn't remember anything since 2023, and it doesn't know know where anything is. And that
00:34:10 · Rory O'Driscoll, Harry Stebbings, Jason Lemkin
[00:34:10] S1: in a nutshell, it is the JEV opportunity. It's not quite one for one, but, yeah, you're right. [00:34:15] S2: I'm I'm going slightly off on a tangent on this, but people do like it when we talk about Venture. It was a $40,000,000 seed round for JEV. And, you know, I just had a conversation with my team right before this, and they're like, dude, we never see anything less than a $20,000,000 first raise for anything anymore. The seed rounds, minimum are, like, eight to 10 with someone spinning out of a good company. Are we seeing the evaporating of traditional seed? [00:34:39] S0: Why do you think Andreessen just did a university? They need to go pre inception. You think I'm kidding? No. Mean, finally someone figured out that Peter Thiel got this right eighteen years ago at the Thiel Fellowship and the dorm room fund, which sort of did cursor. You got to go pre inception if you want to do seed now. Inception Inception's too expensive. You got to go pre inception. But Andreessen Horowitz did launch Horowitz Andreessen University today with $40,000,000 to do pre inception investing, right? To do the Thiel Fellowship on steroids. I think it's a very rational response to your point. But I do think Peter Thiel saw this space before anybody did and executed. The only thing he didn't want to do was scale it up. He didn't want to build a Thiel Rabois University like Horowitz and Dreeson. He just didn't want to scale it It could have been. I mean, they have the best people in the Thiel fellowship. They get the best... Today too, they get the best people.
00:34:39 · Jason Lemkin, Harry Stebbings
[00:34:39] S0: Why do you think Andreessen just did a university? They need to go pre inception. You think I'm kidding? No. Mean, finally someone figured out that Peter Thiel got this right eighteen years ago at the Thiel Fellowship and the dorm room fund, which sort of did cursor. You got to go pre inception if you want to do seed now. Inception Inception's too expensive. You got to go pre inception. But Andreessen Horowitz did launch Horowitz Andreessen University today with $40,000,000 to do pre inception investing, right? To do the Thiel Fellowship on steroids. I think it's a very rational response to your point. But I do think Peter Thiel saw this space before anybody did and executed. The only thing he didn't want to do was scale it up. He didn't want to build a Thiel Rabois University like Horowitz and Dreeson. He just didn't want to scale it It could have been. I mean, they have the best people in the Thiel fellowship. They get the best... Today too, they get the best people. [00:35:32] S2: Do you know what? I I I don't think they do anymore. Think Z fellows get the best today, actually. [00:35:36] S0: Okay. Maybe. [00:35:37] S2: Z fellows gets unbelievably good people.
00:35:37 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:35:37] S2: Z fellows gets unbelievably good people. [00:35:39] S0: At the end of day, idea, right? The problem with these things is if you don't put enough people into them, they don't scale. Right? That's why Z Fellows maybe is more interesting than the Thiel Fellowship, and why Horowitz and Dreesen is more... If it's the same as Marching, because you're just putting more resources and things that, you you used to be able to run a fund with a blog. Like that would give you all the deal flow in the world you needed for like five unicorns in a row, but you gotta scale this stuff up, you know? [00:36:01] S2: Now you're on a podcast with a professor. [00:36:03] S1: Yeah, used [00:36:04] S0: be able to just do with a podcast and one dude in a in a in a closet and do just fine. [00:36:08] S2: We haven't answered my question, though, which is I [00:36:10] S1: will go back to your point, Harry. Right? You are correct. Once you go beyond the vigil to even an individual an idea, you're right. You're seeing bigger checks. You you are seeing 20... Look. Think I the TypeScript was... I think it was even bigger. I could be wrong. I think I thought it's almost 40, but I could be wrong. But yes, people are writing bigger checks now up and down the stack.
00:36:10 · Rory O'Driscoll, Jason Lemkin
[00:36:10] S1: will go back to your point, Harry. Right? You are correct. Once you go beyond the vigil to even an individual an idea, you're right. You're seeing bigger checks. You you are seeing 20... Look. Think I the TypeScript was... I think it was even bigger. I could be wrong. I think I thought it's almost 40, but I could be wrong. But yes, people are writing bigger checks now up and down the stack. [00:36:27] S0: Or if you wanna do traditional seed checks, right, you have to tolerate far low... Lower ownership in many cases, not all cases. You can still hunt your own deals, right? And then when you do the math, you got to hunt $25,000,000,000 outcomes. If I'm going to do four into JEV or three into JEV, if JEV exits north of 25,000,000,000 after dilution, I can still do my 100X, right, that I need to do or my 50x, right? But the low ownership for seed works, but man, you need the big outcomes.
00:36:27 · Jason Lemkin, Rory O'Driscoll
[00:36:27] S0: Or if you wanna do traditional seed checks, right, you have to tolerate far low... Lower ownership in many cases, not all cases. You can still hunt your own deals, right? And then when you do the math, you got to hunt $25,000,000,000 outcomes. If I'm going to do four into JEV or three into JEV, if JEV exits north of 25,000,000,000 after dilution, I can still do my 100X, right, that I need to do or my 50x, right? But the low ownership for seed works, but man, you need the big outcomes. [00:36:54] S1: And then the other thing just to take into account that I always feel everyone forgets, right, is discuss on really dorky economics common, but nominal GDP, in other words, just inflation, but inflation plus growth from 2010 to the day is about two and a half x. So, you know, what that means is a $100,000,000 in 2010 is $250,000,000 today. You know, just in terms of your ability to command with money is an ability to command resources, because obviously, software salaries have at least kept up with nominal GDP growth. So what it means is if you were writing five... $3,000,000 checks in 2010, let's do $4,000,000 checks, you should be writing $10,000,000 checks in 2026. That's just math before anything else has changed. Then on top of that, you take into account the fact that in 2010, the world wasn't a shitter, and in 2026, everything in tech looks amazing. You get to 20,000,000 before you blink.