The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:22:00 · Rory O'Driscoll, Jack Altman, Harry Stebbings
[00:22:00] S0: I wouldn't have the guts to do that at all. I wouldn't want to let it ride. No, I think that I can see I would come out. I mean, 5%, Tiffany 20 deals in the fund, 5% is a full whack deal. [00:22:10] S1: I think the other thing that I was going to say, know, that sort of like in support of kind of Harry's view on this is we're in a moment in time where a lot of investments are shaped like this, where, like, relative to other times, I think it is much more dispersion on these investments. And things are both really expensive and then the upsides apparently look very high. And so one of the things that we think about, and I scratch my head about a lot, is we're in a moment in time where valuations are extraordinarily high. And then traction and outcomes and all these other things are extraordinarily high. And so people are like, do you think we're... Are we investing the right speed? And I'm like, we're definitely not investing at the right speed. We are either investing way too fast or way too slow. But when both sides of the equation are this out of whack, the odds of having it right are zero. [00:23:00] S3: I'm really sorry. Every venture investor is in a WhatsApp group right now saying the market is totally fucked, just to be super clear.
00:23:06 · Rory O'Driscoll
[00:23:06] S0: Yeah. But then then those would be the same... And to to Jack's point the and schizophrenia, those will be the same investors who get out of the WhatsApp group and then wire another check for $50,000,000 to nail that. Right? So yeah, look at what you do, not at what you say, as Harry Holderbyn said about Watergate. But to your point, Jack, funny, we actually just did an annual meet and we had Tyler Cowen, The Economist speak, and he was great. Just great. But we saw... And one of my partners who was doing the meeting asked just a tangential question on venture, what's gonna happen in venture? And he just quietly said, as economists do, you know, returns are going to be highly skewed, variance is gonna go up with AI, and many of you will fail. And then just moved on to the next question. Some of you will get rich, and many of you will fail. Well, thank you for clarifying that, Tyler. Jack, you're right. It's like the highest variance time, which which speaks to even when you're doing these bets with the upside, having enough to do 20 is key, which is why I don't get the... We've talked about this before. It's why you write about instinct being an early stage bet despite the price. It's not yet at the stage where you can have the concentration discussion. You know, the folks having the concentration discussion are really talking about OpenAI and Tropic at the last two pre IPO rounds. But you're right, even at 10,000,000,000 pre, if it's where it is today, you don't wanna put 30% in.
00:24:17 · Harry Stebbings, Rory O'Driscoll
[00:24:17] S3: I I also think, like, this is not the round that worries me. If you would look at the instinct cohorts, which I haven't seen, but I imagine incredible. I imagine the depth of usage is like we've never seen before. What worries me is when you have three rounds in three weeks with no material movement in between and no data suggests there's been anything different. That's what worries me. Like, the the people who say, oh, 10,000,000,000, 14 people, it's just like people who said, you know, a billion for what... For Instagram was stupid. It's like, yep. You don't know if that's smart today. [00:24:43] S0: 16,000,000,000 for WhatsApp. [00:24:45] S3: Exact... Exactly. But you know what [00:24:46] S0: I love? I love the [00:24:47] S3: fact that I actually had your partner, Ev Randall, on the show, and he said, oh, we're gonna look back at Andreessen and General Catalyst and Lightspeed. And he retweeted it, which is so humble and, like, non VC like. Well, he was like, maybe I was wrong to say that Andreessen won't do a five x in this vintage because mister Martin Casado is making us look bad because the man has had Openruder. Obviously, last night had Fei Fei with World Labs, and then he had Cursor. So for the new story of the day, AMD buys Fei Fei Li's World Labs for 8,200,000,000 in stock at first big neo lab exit two and a half years into the company's journey.
00:25:28 · Rory O'Driscoll, Jason Lemkin
[00:25:28] S0: Let's focus on the entrepreneur first. I think it's great for Fei Fei and the team. I I mean, I've only met her once. I thought she was awesome, very humble. I love her book, if you read it. A very moving book about being an immigrant to The US. I was myself, so I know it, and kind of came up from nothing. As someone pointed out, it's not an overnight success. Cranked through ImageNet, kicked off the whole damn thing, cause the entire AI resurgence was really kicked off when that ImageNet project that she built, when the winner of that was Ilya and two or three other people, I think in 2012, where their model using neural net just kicked ass and blew past everyone else. And it was the first hint that this technology, this deep learning technology was going to blow everyone away. And she kind of set that up, didn't monetize that has, you know, worked at Stanford, worked at Google. And then you know, midlife quit, did this two and a half years ago and nailed it. So I think it's just an awesome story. Just a reminder yet another wildly successful immigrant story coming to The US making a ton of money. So I'm stoked for her, We can come to the venture money later, but it's just a great story. And it would be pretty criminal if we had the biggest boom in AI history and Fei Fei Li didn't get a big ass check. So I think common justice has been restored and it's good. Right? Cash the check. [00:26:44] S2: Well, just one thing, you know, AMD was like one of your grandpa's investments. Right? You know, he and his buddies from Fairchild or I don't know
00:26:44 · Jason Lemkin, Rory O'Driscoll
[00:26:44] S2: Well, just one thing, you know, AMD was like one of your grandpa's investments. Right? You know, he and his buddies from Fairchild or I don't know [00:26:49] S0: what the exact... But this [00:26:50] S2: is an oldie moldie. It's up 279% this year to 1,000,000,000,000. So I don't even know whether they're gonna continue the three d world models or they're they're they're just gonna be their counterpart to NVIDIA's model team. But whatever it is for 8% of that market, 8%. Yeah. Getting a world class team to make sure that 279% run continues like it's cheap if it's the right team, right? It's a moment in time to Jack's point. Right? If AMD was up 3% this year, they they ain't gonna be spending $88.08 8,000,000,000, but this is a run that you've... You know, it's epic, but you gotta maintain it. Right? They've gotta be number two to Nvidia or whatever the goal is, and it's a habit trail that keeps going faster. So I'd certainly invest 8% of my market cap to keep the good times going.
00:27:31 · Rory O'Driscoll, Harry Stebbings
[00:27:31] S0: And I think it's the first of a few. We've talked about this a couple of times. You look at these investments. And candidly, I don't think the World Lab companies, not the World Lab in particular, but the kind of those World Lab type companies would on a standalone basis have anything like the trajectory of Entropic and OpenAI, where there was a very quick path from here's an amazing AI technology to here's chat and that can monetize, and then, my God, here's coding and that can monetize like a mother, right? I don't think the path would have been as clear, which is why I've been a bit nervous about those deals over the last couple of years. But in retrospect, the thing I think that's now become obvious is, I think all the big foundation model companies are probably in the market to acquire some kind of robotic foundation model story. I think that, as you say, AMD just wants to be relevant to NVIDIA. So I think that wouldn't surprise me if there was a ton of acquisition interest. I mean, there's still a 100 NeoLabs, so you gotta be in the 10 that win, but I think there will be a bunch of these big ass acquisitions over the next six, twelve months if the market continues to hold. [00:28:32] S3: Do you? Because I invest with a brilliant French partner, Paul, who is, you know, incredibly cynical just by nature of being French, And he wrote this report on a 102 Neolabs, $70,000,000,000 plus raised. And my question is just, like, just how many of them can get acquired? When there were 10 to 12, like, yeah, it'll be okay. 102? We all gonna have downside protection?