The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:32:43 · Harry Stebbings, Erik Bernhardsson
[00:32:43] S1: No, but it was the customer acquisition flywheel. Yeah. They would go into the office the next day and be like, wow, you know this guy? He'd sent me a message, and like, you should listen to a show. [00:32:50] S0: It's It's pretty smart. I love what you've been doing in terms of building up this media brand. It's fantastic. [00:32:56] S1: Neil Mehta has a great thing, which is like, how can I 10x the customer experience? And actually, let's let's do it. Fuck it. Let's play a game. How do I 10x the current Modal customer experience? [00:33:06] S0: I think the biggest thing we need is we need way more products in in Modal. Like, we wanna create a busy comprehensive experience of everything you need to do in order to build an AI application should be a product inside Modal. The other thing we can do is hire way more FTEs and way more sales reps. I will say we've been behind on that, but we should hire like way more people that reach out to you personally and say, Hey, I saw you get started in Modal. I saw you're working in the bio space. How can we help you? Here's some bio examples, you know, protein folding, whatever. Like, we work with a bunch of other similar companies. You seem skeptical. [00:33:38] S1: No, don't at all. I'm actually just thinking about, like, I like the product ambition, but I go, as a European, who goes, wow. [00:33:46] S0: We're in the B2B space, so I think it's like, you know
00:33:46 · Erik Bernhardsson, Harry Stebbings
[00:33:46] S0: We're in the B2B space, so I think it's like, you know [00:33:49] S1: But do you worry about being stretched too thin? Yeah. To your point on, like, you know, why can't Nebius do what you do so efficiently? Because you're so good and you spend so much time. As you expand into specialties, there are players in each of them who've been doing that for years where I'm like, oh, Erik. [00:34:04] S0: I think that's true. I I don't think they're very good, a lot of them. But but I mean, I I sort of agree with your higher level premise. Like, if there's anything that's, like, super critical and never goes away, it's prioritization and resource allocation. Right? Like you can't boil the water and try to do everything at the same time. You need to be extremely ruthless. And having a multiproduct strategy, think is a very hard balance. Like when do you branch out into a second product or a third product? Right? Like it took us four years to see success with a second product, which was Sandboxes. [00:34:28] S1: Four years to see success with your second product, but you're five years to 1,000,000,000 in revenue.
00:34:28 · Harry Stebbings, Erik Bernhardsson
[00:34:28] S1: Four years to see success with your second product, but you're five years to 1,000,000,000 in revenue. [00:34:33] S0: Yeah. So we launched Sandboxes in 2023. Didn't see a lot of success in the early days. I mean, there was, like, some success. You know, it wasn't horrible, but, you know, it was a relatively insignificant part of our revenue up until summer of twenty twenty five when models, I think, like, Sonnet 4.5, one of those, like, they they just got really good at generating code and building whole apps. And then it just exploded. I mean, Sandbox is today is a 300,000,000 run rate business, about a third of our revenue. And so that's been a kind of a crazy journey. And now we're thinking about, you know, what's the third and the fourth. We just launched a training product. I'm super excited about that. Working on batch products, working on reinforcement learning. We're working on all kinds of other stuff. And so that evolution into becoming a platform, it's actually there. Like if you go back to the very early decks of Modal, you know, I put together some just for my own thinking. It was all there. It's like we had this like market map and all these... You know, it ended up being very different products than we thought, but it's so important for me to create, like, you know, to focus on a category and focus on a set of solutions, not just, be a single single widget vendor. [00:35:30] S1: What do you know about the sandboxes market today that you wish you had known when you started and released the first product?
00:35:30 · Harry Stebbings, Erik Bernhardsson
[00:35:30] S1: What do you know about the sandboxes market today that you wish you had known when you started and released the first product? [00:35:36] S0: It actually is like one of those products. I I think one of the benefits of being in infrastructure, but also one of the drawbacks in a weird way is, like, you kind of just have to trust your gut on, like, what are, like, important primitives and just build, like, amazing building blocks. I think we're in the space of, like, providing building blocks. We try to look at, like, what do engineers need and not, like, listen too carefully because, like, they'll ask for, like, all kinds of random stuff. Distill it down into like, what are some of the building blocks? And we put out a serverless function product in 2021. It saw success in 2023 with GenAI inference. We put out a sandbox product in 2023 because we saw a lot of people using LMS to generate code. And then it saw success in 2025, like I said. So a lot of like how we think about building products has always been kind of like, let's just put out like good building blocks. And then it exploded. But like to answer your question, it was reinforcement learning, it was vibe coding, background agents, and maybe some other stuff too in the future. Those were things we actually didn't anticipate. So I think infrastructure is often like that. Like we didn't anticipate stable fusion when we started building our serverless function product. It just happened to
00:35:36 · Erik Bernhardsson, Harry Stebbings
[00:35:36] S0: It actually is like one of those products. I I think one of the benefits of being in infrastructure, but also one of the drawbacks in a weird way is, like, you kind of just have to trust your gut on, like, what are, like, important primitives and just build, like, amazing building blocks. I think we're in the space of, like, providing building blocks. We try to look at, like, what do engineers need and not, like, listen too carefully because, like, they'll ask for, like, all kinds of random stuff. Distill it down into like, what are some of the building blocks? And we put out a serverless function product in 2021. It saw success in 2023 with GenAI inference. We put out a sandbox product in 2023 because we saw a lot of people using LMS to generate code. And then it saw success in 2025, like I said. So a lot of like how we think about building products has always been kind of like, let's just put out like good building blocks. And then it exploded. But like to answer your question, it was reinforcement learning, it was vibe coding, background agents, and maybe some other stuff too in the future. Those were things we actually didn't anticipate. So I think infrastructure is often like that. Like we didn't anticipate stable fusion when we started building our serverless function product. It just happened to [00:36:38] S1: be the killer app. What's your takeaway from that? The only thing that matters is you've gotta stay in the game long enough for your timing to be right?
00:36:38 · Harry Stebbings, Erik Bernhardsson
[00:36:38] S1: be the killer app. What's your takeaway from that? The only thing that matters is you've gotta stay in the game long enough for your timing to be right? [00:36:46] S0: Sometimes, I think that's right. I mean, we've definitely been extremely lucky in certain ways with timing. Like we put out products like right before we started the company in 2021, and then Stable Diffusion and ChatGPT came out 2022. We had really good timing with that, right? It just created so much demand and we're very well positioned. But some of it is also like with infrastructure, like, again, like, I think it's about like building products that, you know, you anticipate will be useful in the future. And from your own experience are things that you always wanted to see. I think you have to kinda trust your gut in that. [00:37:13] S1: You said that about, you know, resource allocation and that being very, very important as you think about this breadth of products. Where did you allocate resources where with the benefit of hindsight you wish you hadn't, and how do you reflect on that?