The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:37:13 · Harry Stebbings, Erik Bernhardsson
[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? [00:37:24] S0: I think we should have allocated more resources towards LLM inference like earlier. I think we're a little bit on the sidelines for a while. We didn't realize how big open source inference would be, and we thought it would be kind of a race to the bottom, just a commodity space. And then DeepSeek came out, we're like, fuck. Like, we gotta move very fast. And so we staffed up a team immediately, you know, went from, like, you know, one or two people working on this to, like, 30 people twelve months later, and and now we're one of [00:37:48] S1: the top three providers. Jason Lemkin, a dear friend of mine who I do a show with every Thursday, he always says that now we've reached peak open source LLM inference usage. We're gonna see frontier providers bluntly provide incredibly cheap products that they are now. US enterprises don't wanna use Chinese models. That will continue. And so, actually, with those two core prevailing wins, Frontier will actually research, and we will see a reduction slash plateauing of the OS LLM inference model.
00:37:48 · Harry Stebbings, Erik Bernhardsson
[00:37:48] S1: the top three providers. Jason Lemkin, a dear friend of mine who I do a show with every Thursday, he always says that now we've reached peak open source LLM inference usage. We're gonna see frontier providers bluntly provide incredibly cheap products that they are now. US enterprises don't wanna use Chinese models. That will continue. And so, actually, with those two core prevailing wins, Frontier will actually research, and we will see a reduction slash plateauing of the OS LLM inference model. [00:38:17] S0: I think that's a little bit of a fixed pie size mental... Like, I I I think, you know, with with all due respect, I do think both spaces will grow five x, 10 x, 20 x over the next twelve months and and beyond. Like... And and so, like, it's hard to argue, like, you know, which one's gonna be bigger than the other, but I think both will grow, like, in, you know, orders of magnitude over the next few years. [00:38:35] S1: Five x, 10 x, 20 x over the next twelve months. [00:38:37] S0: Yeah. For sure. [00:38:38] S1: You just hit a billion in revenue. Yep. Well done. [00:38:40] S0: Yeah. Does that feel [00:38:41] S1: pretty cool? [00:38:42] S0: It feels pretty cool. It's, you know, like, I I don't know. Like, I'm just like, you know, Swedish guy that, you know, grew up in a random. For me, it's like these numbers are absurd, but like, yeah, it feels great. It's so much money. [00:38:54] S1: Erik, you're saying, do you know what? I wasn't expecting you to be so likable and cool.
00:38:54 · Harry Stebbings, Erik Bernhardsson
[00:38:54] S1: Erik, you're saying, do you know what? I wasn't expecting you to be so likable and cool. [00:38:59] S0: I don't know. It's like a lot of zeros. How many zeros are in a billion? [00:39:02] S1: It's a lot. Your wealth manager will tell you. When you look at that, where will you be in twelve months? [00:39:09] S0: I don't know. What I can say is we've been growing... We grew 15x in the last twelve months. So you can extrapolate that. I mean, I don't know. Like at some point we start... Markets just get very big and they start to slow down a little bit. But with the growth rate right now, like the growth rates are not slowing down. Like we're growing 30, 40 So you percent a did [00:39:26] S1: 4,000,000,000? I hope to be way beyond that. With the greatest of respects, 15,000,000,000 then feels like quite a cheap price. I'm an investor, so this is now my ballpark. If you think you were gonna be at 4,000,000,000, say dropping, I don't know, a billion 2 to the bottom line, then they actually only paid, what, 14x end of year next year bottom line, 3x top line? [00:39:47] S0: Yeah. It's kinda cheap. [00:39:48] S1: That feels pretty cheap. I think it's cheap. I mean, like, [00:39:50] S0: I wouldn't do this if I didn't think we could grow and become, like, a generational company. I think there's so much upside. I think this is one of the largest markets opportunities that's ever existed. I think that the demand for compute, the demand for AI applications, it's gonna be enormous, and they're all gonna need a place to run. And I hope a lot of them are gonna run a modal.
00:39:50 · Erik Bernhardsson, Harry Stebbings
[00:39:50] S0: I wouldn't do this if I didn't think we could grow and become, like, a generational company. I think there's so much upside. I think this is one of the largest markets opportunities that's ever existed. I think that the demand for compute, the demand for AI applications, it's gonna be enormous, and they're all gonna need a place to run. And I hope a lot of them are gonna run a modal. [00:40:07] S1: What revenue line do you not have today, or is tiny, that you think will be very significant in three years' time, five years' time?
00:40:07 · Harry Stebbings, Erik Bernhardsson
[00:40:07] S1: What revenue line do you not have today, or is tiny, that you think will be very significant in three years' time, five years' time? [00:40:15] S0: That is a good question. I think training is something we just launched. I think that could be very large. I hope that could get to 100,000,000 run rate in the next six to twelve months. Post training, similarly, working on batch jobs. I'm very excited also about a lot of like sort of traditional, like data warehousing stuff, databases, workflow orchestration, feature stores, like vector database. And there's just so many parts of this. And they all kind of fit together very nicely. And that to me is like what I'm so excited about. It's like once you start building in this space, there's so many natural adjacencies. Like this is like a problem with me. It's like I get excited about, I have like no lack of ideas. Like at Modal, like we have so many ideas of things we want to go. I would love to get into continuous integration. That's like a very interesting space. Agent harnesses. Maybe we should train models. Maybe, you know, there's just 5,000 directions, you know, and that's like my ADD brain, like wants to run-in all of those directions. You have to be obviously ruthless with prioritization and only take on, like, one or two things at at the right time, but but there's so many different directions we can go on. [00:41:09] S1: It's amazing that your wife calls you for decisions. She must get a very incoherent answer. [00:41:15] S0: I know. I know. What is this? Is
00:41:15 · Erik Bernhardsson, Harry Stebbings
[00:41:15] S0: I know. I know. What is this? Is [00:41:17] S1: this? Is this? I just wanted some curtains done. [00:41:19] S0: Yeah. You know, with the curtains, I just like you pick one of them. I've seen Simpsons and, like, Rainier Wolfcastle becomes the president, and they're like, which one do you wanna pick? You know, one to seven. He's like, I was born to lead, not to read. Number four. [00:41:33] S1: Yeah. Can I ask, we've seen this real shift, I think, in emphasis, but also in resource allocation from pre training to post training? How do you feel about that, and do you think that is the new normal?