The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:19:21 · Harry Stebbings, Rory O'Driscoll
[00:19:21] S2: should tell your voice that, Rory. [00:19:23] S1: Sorry. Long day. I mean, look. Growth is clearly slowing fairly quickly. But from an unsustainably high number, I mean, 10x for the last three years, it's highly unlikely to 10x, you know, what was it one way coming into the year 10,000,000,000, if it you know, if two more 10x is and why would I say 100,000,000,000, you'd be at a trillion. So growth was going to decline. This is all about how quickly is the growth going to slow, right? And honestly, I thought, I'm sure people are sitting there going, if you add linearly, if you did five in Q1, 11 in Q2, 16 in Q3, you kind of lean in and you're at 20, 21 in Q4, if you keep adding $5,000,000,000 a quarter, I'm not saying they will, but right, and you do that. So you start next year, which is, which would be when you go public the future year, if you're at a $20,000,000,000 run rate, adding five a quarter, then you do 105, 110. And now you're saying it's 12, 13 times forward revenues for the most exciting company in the world. It doesn't feel crazy. It doesn't take a lot of squinting to make that work.
00:20:23 · Jason Lemkin, Rory O'Driscoll
[00:20:23] S0: I just one thing for, for, for what it's worth just tactically. I thought, I think where you'd agree. I mean, Chamath's tweet was just raise whatever you need at 1,500,000,000,000 to move on. When the day, like, you're, if you can raise it 2,000,000,000,000, but it's going to stress your capital needs, like it's just evaluation. So in absolute terms, it's everything's great, right? This is unprecedented on all levels. Great team, great application. What I suspect will a reminder is it's going to be very choppy after the IPO because going to Deb's point when he was on the show, developers are not loyal And the amount of market share since this show started, the amount of change in Anthropic versus OpenAI versus OpenWeights versus JEV, right? Which didn't even exist, what, It wouldn't surprise me if at the end of next year, Anthropix market share is down 10% from where it is today. And it still could be great on an absolute basis, but down percent wouldn't be a shocker at all, not just in tokens, but in revenue easily could happen. Look at despite whether open airs at 70 or 50, it's a lot. [00:21:38] S1: When you say the, you mean the share is down. [00:21:40] S0: Yeah, market share could be down, right? And so when you're building your models, Not just DCF models, but your top line models, you could be materially off from your good best case. And it should be expected. It should be expected.
00:21:40 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
[00:21:40] S0: Yeah, market share could be down, right? And so when you're building your models, Not just DCF models, but your top line models, you could be materially off from your good best case. And it should be expected. It should be expected. [00:21:54] S1: To state the banal is a little scarier than the average recurring revenue business. Right? And that's what people are wrestling with. How do I think about, I mean, if you have continued market share shifts between the key players, then the next shoe to drop is typically, well, I want to keep my market share, so I'll look at price. And I think, you know, everyone's trying to work out from a game theory perspective. You know what? You're right. What does that look like as a P and L going forward? Which is why going back to the boring thing I keep saying is provided the end user demand at the top is there, can, you know, everybody can win. And we all love businesses where everybody can win, right? If that starts to slow down, and then price competition becomes not, know, literally the thing you gotta do to take it from the other guy to keep a growth rate going, then it could get pretty tougher. [00:22:36] S2: Do you think Sam was super strategic raising his supposed round at 1.4, just in terms of some form of anchoring and message to market?
00:22:36 · Harry Stebbings, Rory O'Driscoll
[00:22:36] S2: Do you think Sam was super strategic raising his supposed round at 1.4, just in terms of some form of anchoring and message to market? [00:22:45] S1: I think when you need money, you take money. And I don't know if there's a big sophisticated, oh, 1.4 is a messaging versus 1.5. I think it's as simple as, you know, we spent a lot of money in compute. We didn't get our IPO done. Been good. We spent all of Massasan's money. Better get another 40 at a price. I mean, you know, what are the constraints? It's got to be up on the last round. Otherwise, the messaging is shit, and it's got to be down below reality to leave room for the upside. You know, there's only a finite number of digits between... Well, there's infinite number of digits, but there's only a finite number of one decimal plus digits between one and two. [00:23:18] S2: There are a couple of elements beneath this story, one of which... Or beneath Anthropic is a week, was Replit made OpenAI its default. Jason, I am intrigued here. Anything from you on that, especially given your Replit power user status?
00:23:33 · Jason Lemkin
[00:23:33] S0: I think it was a stupid media story. I I mean, we do use Replit about fourteen to fifteen hours a day. Basically Replit has its own router in it, right? Its own model selector. It can be invisible or visible to you depending on what category you're in. And OpenAI models are just cheaper for the same rough quality output in Replit. So they just made it the default. And TechCrunch miswrote an article saying they were no longer working with OpenAI, which wasn't true. They just flipped the default from Opus and Fable to Astra. That's just the default. And it's what we're all routing, right? We're all open routing one way or the other. It's just if you're replet or lovable or base 44 of these, you have these extra incentives because your average user just wants to have a high quality output. And they're very incented to get this quality price thing just right for you. Right. Unlike, you know, the average idiot pre configuring open router themselves, hoping they get it right. These guys are act, it's more interesting to watch what rep at lovable base forty four V zero do because they have an incentive to nail the routing, Right. They have a very strong incentive. They can only partially pass it on to the end user. Right. So we can actually squint and see the future based on what these, these guys are doing. And what they're saying is, what I'm John saying is the quality is sufficiently peer level here. And the price is 30 to 40% better for us today. Why would we use Fable and Opus? And you know what? Next week, he may be at a different event and get on stage and just go into this market share thing with Anthropic. It may change. It may change. They may not have fully thought through how to use Sonic 5.5 and Haiku 5.5 and they have Kimi and others. But if Kimi actually was so great, you know what? All those guys, Repla would be using it entirely, which is maybe the more interesting learning that was under discuss. Because it will route through them too, and it doesn't. Amjad didn't get up on stage and say, we'll route everyone through Kimi, did he? He said, we're going from Claude to OpenAI because it's just as good and materially cheaper.
00:25:24 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:25:24] S2: What's the takeaway from that? That Kimi is not as good as people think? [00:25:28] S0: In practice, not seeing the benefits for his billion dollar of revenue for his customers. He's not seeing the benefits. Or he would just auto route it. The customers are very cost sensitive at Replit and level. Not just the SMBs are very cost sensitive because they want to get everything for like $25 a month or even a free LLMs. But the enterprise customers are very cost sensitive because they don't want these massive variable bills for the product teams going off and building prototypes. It's a super cost sensitive model, right? Hosting database, LLMs, if you slow down and see what they're doing and they're each at like 1,000,000,000 in revenue, right? It's like a little lab that we should be paying more attention to. It's a more interesting lab than the idiots spending all the money and misallocating it and hoping it works. That's a great business model, but we learn much more from the massive investment these guys are making in optimizing high quality output for low cost. Maybe others are doing this each at 1,000,000,000 in revenue, but don't think that many people are doing it for end users. [00:26:20] S1: I think it's a great point because yes, it is a very objective calculating test or what value, how do you think about the value you're leaving on the table by by paying top tier prices for, you know, less than top tier intelligence, and what do you actually need? Because with a billion dollars, you've got enough time to really think about it.