The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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?
00:28:32 · Harry Stebbings, Jack Altman
[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? [00:28:52] S1: It was very easy when all the sort of Neolabs got started and the trend took off to just say, this is total insanity. And to your point, Harry, we don't yet know what the, like, net balance sheet of the whole thing will be. But we are definitely starting to see data points like World Labs and many others where there is real interest. And I think part of what's so different now than certainly any time I've ever seen, there have been other points in history like this, but there are just a lot of acquirers. There are 10 companies that can do $10,000,000,000 acquisitions and want to. And that's just so different. And it's much easier than going public, and it's quicker, and you don't have all of these long cycles and the hand wringing. And that has really changed things. Obviously, extremely impressive run by Martina. It's just shown that in these infrastructure lab type companies, there's a lot of room to run. So I don't know how it will go obviously any better than anybody else, but I'm definitely... I'm hesitant to be too skeptical at this point given what's happening.
00:29:51 · Rory O'Driscoll, Harry Stebbings
[00:29:51] S0: I agree with that. And I think when you deal with the 100, and yes, there might not be 10 or 20 acquisitions, but it's the... This is where people sniff, they use the word consensus in a negative sense. But there is no doubt that credentialism matters, like you got Fei Fei Li, you know, I could write that press release, originator of the whole AI thing, it's a little like, you know, the quality folks at OpenAI Nootropic. So I think the other part of this is, and then LiaLabs, making sure you have the pristine tech asset versus the gritty team. A lot of the stuff I do in the apps level, I love my gritty teams. I think for something like, you know, building a world model, you need to have proven technical success, because that's both what it needs to deliver, and frankly, it needs to navigate and be the desired acquisition candidate. And then I'm not sure that's not true overall, but it's just something I've observed. [00:30:40] S3: I was talking to one of the best CIOs in the world last night, he just said to me, the honest takeaway, dude, you really think you can play in venture with less than a billion dollar fund now? And I... Candidly, when I look at many of these companies here, the first round for this and Fei Fei was, like, 65. I had my team say to [00:30:55] S0: me the other day, we [00:30:55] S3: can't find anything under a 100,000,000. I said, wow. Seed prices are expensive. They said, no. No. 100,000,000 round size.
00:30:55 · Harry Stebbings, Rory O'Driscoll
[00:30:55] S3: can't find anything under a 100,000,000. I said, wow. Seed prices are expensive. They said, no. No. 100,000,000 round size. [00:31:02] S0: Pushing back a little. I I think the weird thing about this tech is... Because I've I've been thinking about this a lot too as a $900,000,000 fund You've got two kinds of businesses. You've got businesses where you can ship a product on less than 400 or $500,000,000 like huge Neolab raises. But you've also got to admit the following, which is also true. You've got companies that use that Neolab and that OpenAI on Tropic technology that are shipping products on relatively little capital in. You know, you guys are in Higgsfield. You run into a bunch of these guys who are like, well, we took $10,000,000, but we shipped the product for $3,000,000. And then the customers took off and shit, we still got $5,000,000 in the bank, but we're going to raise 50 anyway, because we can. So it's not like everything is $100,000,000 just to, you know, spin up some GPUs. There's a whole bunch of $10,000,000 got us a long way. And then maybe we're raising 100, but for different reasons, because we can. Right? So it's not consistent. It's almost two different worlds. And it kinda makes sense. It's the big technology lift upfront from the guys raising 10,000,000,000 is what's setting everyone else up to do amazing shit on relatively little.
00:31:02 · Rory O'Driscoll, Harry Stebbings
[00:31:02] S0: Pushing back a little. I I think the weird thing about this tech is... Because I've I've been thinking about this a lot too as a $900,000,000 fund You've got two kinds of businesses. You've got businesses where you can ship a product on less than 400 or $500,000,000 like huge Neolab raises. But you've also got to admit the following, which is also true. You've got companies that use that Neolab and that OpenAI on Tropic technology that are shipping products on relatively little capital in. You know, you guys are in Higgsfield. You run into a bunch of these guys who are like, well, we took $10,000,000, but we shipped the product for $3,000,000. And then the customers took off and shit, we still got $5,000,000 in the bank, but we're going to raise 50 anyway, because we can. So it's not like everything is $100,000,000 just to, you know, spin up some GPUs. There's a whole bunch of $10,000,000 got us a long way. And then maybe we're raising 100, but for different reasons, because we can. Right? So it's not consistent. It's almost two different worlds. And it kinda makes sense. It's the big technology lift upfront from the guys raising 10,000,000,000 is what's setting everyone else up to do amazing shit on relatively little. [00:32:03] S3: Yeah. Yes. I would say that just Bunny talent costs are so much higher than they've ever been because of a lot of the alternative options for the talent that you can't do a two to three million dollar round anymore.