The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:05:03 · Rory O'Driscoll
[00:05:03] S1: I think that's the answer. I think the whole crack in the market thing, let's leave that to one side for now. We'll talk about it later. Ditto the pacing stuff, which clearly has also been shown to be not really believed even by the people who said it. It really boils down to what you said. They had an amazing q two. They finally became bigger than OpenAI. And remember, we talked about this. OpenAI then responded furiously in July, started tweeting all that my Q3 numbers are amazing story and really pushing back. And some of the data supports that. So my guess is the banker said, hey, if you want a really clean story, it would be great to incorporate a quarter that reflects this noise instead of going out in October where you won't be able to share your October numbers. It's kind of that weird thing, go out in November where it's clean, you print your October numbers, you drop them in and you go. So from a programming kind of timing perspective, it just all makes sense. It's a cleaner deal. Whether it turns out to be a wise decision or not, we can come back to in a second, but just from a... It's always weird to go out after you have your numbers, but before you can share the numbers. So after the end of your quarter, but before you've kind of finalized and audited them, especially for what looks like quite a pivotal quarter. So it totally made sense. If I'm a banker, I'm thinking, we do this in October, it's going to be a lot of explaining. If we do this in November, the numbers will talk.
00:06:24 · Jason Lemkin, Rory O'Driscoll
[00:06:24] S0: Having said that, that sounds alright to me. Right? But it's said to me, maybe there's just a hint of worry that getting 30x or 20x oversubscribed or whoever they want it, you know, at the most massive IPO of our lifetimes. Maybe there's just a hint of stress on the pre on the pre conversations. Right? [00:06:39] S1: I agree. And that's why I made a comment earlier about is it a good decision or not? Like, if the world goes to hell in a handbasket in November, you'll look back and go, damn. We should have gone when we had the chance. Because you are a CFO who said, we're just doing it. I don't care about your messy story. We're gonna tell a good story. If the price ends up between 1.5 instead of two because it's a messy story, I don't care. I'm willing to live with that. And that's the approach you take if you felt it was hell or high water. I gotta get this money. Clearly, the fact that they didn't take that approach means they decided it's not hell or high water. They're confident. Yeah. They're willing to take another month of timing risk, probably for some significant valuation pop, which is what you do when you think you have lots of time and you're in a good commanding position. I mean, if I was on that board, it's 90% certain that this is a good decision, and a clean story in Q four is better than a messy story in October. And there's always that 10% chance the world goes crazy, and you look back and you go, damn. Should've taken the 100,000,000,000.
00:06:39 · Rory O'Driscoll, Harry Stebbings
[00:06:39] S1: I agree. And that's why I made a comment earlier about is it a good decision or not? Like, if the world goes to hell in a handbasket in November, you'll look back and go, damn. We should have gone when we had the chance. Because you are a CFO who said, we're just doing it. I don't care about your messy story. We're gonna tell a good story. If the price ends up between 1.5 instead of two because it's a messy story, I don't care. I'm willing to live with that. And that's the approach you take if you felt it was hell or high water. I gotta get this money. Clearly, the fact that they didn't take that approach means they decided it's not hell or high water. They're confident. Yeah. They're willing to take another month of timing risk, probably for some significant valuation pop, which is what you do when you think you have lots of time and you're in a good commanding position. I mean, if I was on that board, it's 90% certain that this is a good decision, and a clean story in Q four is better than a messy story in October. And there's always that 10% chance the world goes crazy, and you look back and you go, damn. Should've taken the 100,000,000,000. [00:07:38] S2: I was walking with a friend of mine the other day, and he said, Harry... And a very successful multibillionaire investor. He said, Harry, how the do these frontier model providers go public when no one is willing to provide liability insurance? You have swarms of rogue agents doing whatever you want. How how on earth do they go public? Who's liable?
00:07:59 · Rory O'Driscoll
[00:07:59] S1: Bullshit comment. And I'll tell you why. Once you've said publicly that there's a 10% risk that your thing can blow up the world, sweating product liabilities and the noise. Right? There's a $2,000,000,000,000 market cap company can self insure. Right? They don't need reinsurance for Munich Re with a market cap of 200,000,000,000 to reinsure their $2,000,000,000,000 market cap. You know? I don't think you need product liability insurance to get an S-one done. Now, separate comment. The fact that no one will insure them is a data point about the dangers of the product, but that's long since been internalized. To be very fair to the anthropic management, anyone who buys that stock and doesn't know that senior management think it's the most dangerous thing since the atomic bomb has rightly around me, by the way, hasn't been reading their tweets. It's a pretty well... In the list of risks disclosed, I'm really looking forward to reading the S1 risks, by the way, but in the list of risks disclosed, product dangers have been pretty thoroughly discussed for a decade here. So I don't buy that at all. There's a 100 reasons why you can worry about valuation and traction and all that, but product liability insurance isn't the noise.
00:09:02 · Jason Lemkin, Rory O'Driscoll
[00:09:02] S0: Yeah, they're just gonna have a big litigation legal team. It's just they're gonna fight this stuff for infinity. Just like tech leaders have always had to fight IP trolls with large teams. They're gonna fight liability suits. They're gonna have 200 folks in house and all the top law firms fighting this, dragging it out, saying they're not responsible, trying to get legislation passed, but you don't stop the IPO. I can't remember an IPO that this was as so explicitly dangerous to Rory's point and Harry's point. I mean, it is novel, but it's game on, man. [00:09:29] S1: Mean Agree. The most important part of securities laws... Security laws is not that you have... Sell stock that has no risk. It's that you sell stock where you disclose the risk. And provided somewhere in the s one they say, at least half of our crazy employee base thinks this thing is gonna blow up the world. I don't, for what it's worth, says Dario, but my people think that. Just letting you people know they're out there in s one land. Provided he discloses that, he's covered. And obviously state the obvious, he's not covered. If in fact it does end humanity, he'll die too. But let's just ignore that for now. And and it's... By the way, I wanna call out Jensen for his big ass call. I love it. For the p z... His probability of doom is zero. Finally, unequivocal statement from a no bullshit investor. There is a zero... Tech leader. There is a zero probability AI will destroy all of humanity. I love it.
00:09:29 · Rory O'Driscoll, Jason Lemkin, Harry Stebbings
[00:09:29] S1: Mean Agree. The most important part of securities laws... Security laws is not that you have... Sell stock that has no risk. It's that you sell stock where you disclose the risk. And provided somewhere in the s one they say, at least half of our crazy employee base thinks this thing is gonna blow up the world. I don't, for what it's worth, says Dario, but my people think that. Just letting you people know they're out there in s one land. Provided he discloses that, he's covered. And obviously state the obvious, he's not covered. If in fact it does end humanity, he'll die too. But let's just ignore that for now. And and it's... By the way, I wanna call out Jensen for his big ass call. I love it. For the p z... His probability of doom is zero. Finally, unequivocal statement from a no bullshit investor. There is a zero... Tech leader. There is a zero probability AI will destroy all of humanity. I love it. [00:10:18] S0: That's because his LMs haven't caught up yet. His open source LMs haven't caught up yet. That's why. That's why he can say not until 2030 because he knows he needs until then to catch up. [00:10:27] S2: Before we move to Meta and Muse, their OpenAI to burn $278,000,000,000 by 2030 out of cash by 2028. Is this just more noise? And, of course, that's to be expected. There's rumors of another round at a 1,500,000,000,000.