The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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.
00:31:41 · Jason Lemkin, Harry Stebbings
[00:31:41] S0: Yeah. Maybe I shouldn't call it code review because Rory's point, it might be construed too narrow, but build to prod is the biggest category. Absolutely. Build to prod. How do you go from it's built, it works, it works in dev, it looks great. How the hell do I get that thing into prod? That's where the big money is going to be made now. We, the money's already been made in frameworks for build, and they're great. And let Sam and Dario and friends duke it out every every every day. We all benefit. But how do I get this crap into production? [00:32:06] S2: I wanna move actually to one of the most interesting rounds I thought was Modal closes at a 15,750,000,000 valuation. Run rate surpasses a billion dollars. It's $750,000,000 series d led by Excel. I just actually interviewed Eric the other day. He was amazing, actually, in the studio. How do we think about this round and what it means in terms of the wider inference market? [00:32:26] S0: I like it better than CoreWeave. I like adding value to the universe rather than just being some some outsourced racks of of GPUs. I like this one better even though the... To Rory's point, the competition appears to be infinite and limitless, right? So you better have some cojones in venture growth to do it. But yeah, I like at least adding value to the universe.
00:32:47 · Rory O'Driscoll
[00:32:47] S1: The interesting thing about Modal is they were six... I mean, were always perceived strong by developers, but I think they were like 60 or under 100,000,000 mid late last year, right? And that level of acceleration is just amazing, right? I mean, it's just, it's stunning when you see it. Yeah. So, I mean, that's the first big picture is, my God, inference is exploding here, Right? And yes, they are very developer friendly. They have a whole bunch of products. So yes, that's the takeaway. The other thing I was just thinking about it is, you know, how big could this market be? I mean, I think you look at the four or five key inference providers, and you add them all up, and maybe they're plus or minus 5 or $6,000,000,000 in run rate revenue, which is a lot. But if you think about it, they're all serving all the open weight models in a world where right now, and it's not like with like, the sum of the OpenAI and Anthropic revenues is probably north of $101,110,000,000,000 right now. So by dollars, it's less than 5%. So it just points to the opportunity here to the... I mean, going back to Jason's Replit guy, think about I'm getting at Replit sitting there going, do I want to give money to Cloud Code and give them a 70% gross margin for this token? Or do I wanna buy it on Modal and give them a 30% gross margin for this token? Well, if the tokens are roughly the same, you know what you wanna do. So, you know, it does point to the upside there.
00:34:02 · Harry Stebbings, Rory O'Driscoll, Jason Lemkin
[00:34:02] S2: Completely agree, does. I'm constantly shocked by, like, the infinite expanding size of the inference market. [00:34:08] S1: Absolutely. No, it's stunning. [00:34:10] S2: It's the one thing that I know today that I wish I'd known twelve months ago, because I would've done things slightly differently twelve months ago had I been more expansive around my mindset here. [00:34:18] S0: Well, also you had to be smarter than me to understand how much this revenue could be captured outside of open air anthropic. A year ago, I wasn't smart enough to really think through this. I didn't think enough of it would be captured outside of it, so I didn't think it was that interesting. [00:34:30] S2: But are these inference providers gonna be worth $304,100, dollars 500,000,000,000? [00:34:34] S1: I would think it's a race between two things. You can put your MBA hat on and say, you know, open weight, going back to Jason's comments on CoreWeave, all the Neo Clouds are saying, oh my God, let me get this straight. We do all the building work. We buy all the compute. We borrow all the capital. And then these bozos come in, buy from us, sell it to developers and make a shit ton. Why don't we do that? So, you know, you put your MBA hat, and you can imagine a lot more competition here, right? And then you say to yourself, I doubt, you know, you get those kinds of valuation. On the other hand, when you have this kind of growth rate, nothing else matters. It covers a multitude of sins. My bet is their margins have crept up this year. Right?
00:34:34 · Rory O'Driscoll, Harry Stebbings, Jason Lemkin
[00:34:34] S1: I would think it's a race between two things. You can put your MBA hat on and say, you know, open weight, going back to Jason's comments on CoreWeave, all the Neo Clouds are saying, oh my God, let me get this straight. We do all the building work. We buy all the compute. We borrow all the capital. And then these bozos come in, buy from us, sell it to developers and make a shit ton. Why don't we do that? So, you know, you put your MBA hat, and you can imagine a lot more competition here, right? And then you say to yourself, I doubt, you know, you get those kinds of valuation. On the other hand, when you have this kind of growth rate, nothing else matters. It covers a multitude of sins. My bet is their margins have crept up this year. Right? [00:35:10] S2: They have. Fireworks are mid thirties now, and they'll be, you know, hitting 50 pretty soon. [00:35:14] S0: Even mid thirties, if it stays there, I mean, the public markets can can tolerate that. It's just the multiple you ultimately get on all of it. Right? There's plenty plenty of folks like that. So it's okay wherever it ends up. Right? I mean, it's important for for Excel, nailing it at 16,000,000,000, but I think it works either way. [00:35:30] S2: Do you think the three kind of hyperscalers of inference are base 10, Fireworks, and Modal? [00:35:34] S1: Probably in some simplistic who's the winner, you're probably right. Those are the three biggest. But maybe the statement is this. I don't think it's like the hyperscalers where no one else mattered.
00:35:34 · Rory O'Driscoll, Harry Stebbings
[00:35:34] S1: Probably in some simplistic who's the winner, you're probably right. Those are the three biggest. But maybe the statement is this. I don't think it's like the hyperscalers where no one else mattered. [00:35:42] S2: Jason, this is a big funding round, but it's too easy for you in the investment committee to decide that you're probably gonna do modal at 15,700,000,000. Yeah. And so if we call an investment committee, there was another round that was announced, which was town at a billion dollars. I think it was a $108,000,000 series b. Are we going to do this from our growth fund, Jason?