The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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.
00:26:20 · Rory O'Driscoll, Harry Stebbings
[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. [00:26:37] S2: Jason, you are the best user and analyzer of these tools under the anthropic what happened this week. Claude code review is out. We saw Boris Shearney tweet about it. I'd love your thoughts. Which startups are destroyed by this? What did you think of it?
00:26:52 · Jason Lemkin
[00:26:52] S0: You know, I don't wanna talk out of my rear because it's so much change. Right? I mean, you know, GREPTL is super hot. They just raised whatever this week, right, 75,000,000,000. I think Rory's and CodeRabbit, or I could be wrong. They're an epic player, right? There's all these great folks. They all have benefits. They all have the benefit of being, I think in many cases of being able to run on LLMs, which is very valuable, right? Having one LLM check another LLMs work, having OpenAI check Claude or vice versa. So there's a lot of it, just like there have been since the dawn of time in software, there's a lot of benefits to having pure plays, right? But it's also always scary because this is the core of Anthropic. Claude code is the core of Anthropic's engine we've talked about. And making code review, making all of this process, it's actually arguably much more important than building code today. You know how much time we spend now reviewing the code because the LMs are so good at getting you 95% of the way there. You talk to any engineer, they're like, Oh, I'm out at dinner and I built the feature for Harry. I'm a barbecue and my phone is building the feature for Harry. And you did build the feature that Harry asked, but you're gonna have to spend the whole next fucking three days testing it and fixing it. So it's a big deal. How big a deal is? I have to imagine it's a bigger deal than the Nothing Burger, which was, you know, Claude Design or whatever the heck it's called, right? Which didn't kill Figma, but how much? It's so hard to predict. It's scary if you're working at a competitor. It's always scary, right? It just has no matter what you say on Twitter, it's always scary. Even if it maims you 30 or 40%, you just got to be better.
00:28:21 · Rory O'Driscoll
[00:28:21] S1: One of things we said last week, I stand by it, the best markets for standalone AI apps and I put coding as effectively an app, the ones with the highest growth rates have also been closest to the sun, they've been closest to the foundation of mind. In fact, I just did a tweet on that today. But you know, it's the Icarus moment. Icarus had no choice. He wanted to get warm. He got to fly close to the sun. I think these big use cases are interesting. You know, it's like cogeneration, code review, legal. They're all very close to the foundation models. And every six months, you have the terror moment of Oh my god, they're going to do it, right? And that's the downside of being in that real estate. But the upside in being in that real estate is they are marquee, they are superb use cases for the technology. And as a result of that, you know, CodeRabbit, all these companies are growing faster than we've ever seen. If you want to avoid that risk carry, then you go back to your like dull little 3x year on year software companies that you were bullshitting on about earlier, right? That no one wants to invest in, right? You can't have it both ways. You know, you can't sit there and go, oh, I want infinitely fast growth rate, utterly undifferentiated from foundation models, even though the only reason we're getting the fucking growth rate is because the foundation models have unlocked new capabilities. It just doesn't make sense. That's not a thing. I mean, I'd like to be, you know, a lot of things in my life, but it ain't gonna happen.
00:29:37 · Jason Lemkin
[00:29:37] S0: I don't know if this is true from a venture outcome or revenue, but I actually think code review is the single most important category today in software. By far the most important category. It does not mean it will make the largest fortunes. It does not mean there'll be a 600,000,000,000 code review cursor. But what I mean is you cannot vibe code your own SAP and Salesforce, but the rate at which we're building code is unprecedented. And the code now is pretty darn good, but it's never production intent. This what everyone misses. It's never production ready or production intent. And so if we step back a minute and define code review more broadly, it is the most important category in building. It is so important. Everyone is building ten, twelve, fourteen hours a day in Claude code or cursor, whatever. But the amount of time it takes to review and process that and make it production intent is still an order of magnitude more than building. And we have not figured out, we're pretending that this work is complete. It's not. If I could find the best next generation true code review, brother, the best team, I'd make 10 bets because we need it. And they may all get killed by Anthropic. We'll see. But it's much more important than code generation. This is back to Amjad's point. I can rotate between Astra and Fable and whatever. They're all great. Right? And maybe Kimmy if it catches up, but how am I going get into production?
00:30:52 · Rory O'Driscoll
[00:30:52] S1: Agreed. Big picture. It's pretty clear that we're making way more software than we've ever made by probably orders of magnitude. I mean, just looking at the Anthropic thing they did on unemployment and recent that paper they did on unemployment. So given that the whole software development life cycle is going to change, right? Because how that gets deployed successfully, it's probably going to be very different in an agentic world. So I agree, I think there's a whole bunch of compelling related opportunities, not just around code review, but the end to end memory management, testing, sandboxes, Harry, where you and I have an investment. So yeah, I just think, you know, I said it last week, I said, again, coding is the mother lode of LLM value, right? It's where it all happens. And therefore, there's going to be a whole bunch of ancillary opportunities around that. And, you know, there might be 25,000,000,000 so you guys might pass, but if there are $10,000,000 outcome, I will take my humble check and be very glad.