The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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.
00:10:27 · Harry Stebbings, Jason Lemkin
[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. [00:10:44] S0: I bet it's more. It doesn't have a history of the burn coming in less than plan. They may need 400. We've all had a portfolio company are like that. Top line, great. Love the team. But burn, no matter what they say, always comes in 30 to 50% higher than the model. Doesn't matter who we put in at CFO.
00:11:02 · Rory O'Driscoll
[00:11:02] S1: Jason is broadly right. Mean, big picture on the forecast. There's actually three numbers that matter not to. They're forecasting growing from 35 in ARR end of this year to three fifty, I think, in three or four years. So 10x growth, worth pointing out, by the way, that last year, Anthropic grew 10x in one year. This is a 10x forecast over three or four years. So almost modest. Second thing is the burn. You're they're forecasting a burn, growth, a net burn of $278,000,000,000. And that's like money out their door. They have a 122,000,000,000 of cash on hand, so they got time to raise the extra capital. The amazing number is the other one, which is the CapEx required to do all this, not all of which is on their balance sheet, a lot of it's on other people's balance sheet, is around 700,000,000,000. So it's just a reminder that this is, unlike software, this is an extraordinary capital intensive business. And to kind of bring it back to what you said, Harry, if all that burn, all 700,000,000,000 of it had to appear on the balance sheet, it would be even worse than that. And the only reason they're able to do it only burning $278,000,000,000 is because other companies like Oracle and like Nvidia, of Rev Support and Backstop Insurance, are able to say, we'll do the CapEx and lease it to you. So this is an extraordinarily capital intensive company. It is going to consume, directly or indirectly, 700,000,000,000 worth of CapEx to get there, to get to $350,000,000,000 in revenue. Intelligence is not cheap.