The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:51:27 · Jason Lemkin, Rory O'Driscoll
[00:51:27] S2: I'm not saying that they're destroyed to Jack's point. I just think they've peaked. They've peaked in market share. I think it will come down, and I do not... I don't even think it's gonna main modal or base 10 or others, but I think these market share charts that have seemed crazy this year, there's been a lot of sources, but but I think there's a lot of structural benefits that OpenAI and Anthropic have here, and they're they're gonna take take advantage of it in the coming months. Right? And OpenAI just hit 70,000,000,000, they said, enterprise. Like, it's it's it's a lot of traction there. [00:51:51] S0: Pushing on that, and again, I don't know the answer is that provided you have opportunity at the frontier, you won't waste time with the second string stuff. To some extent, you're probably more likely to spend time on, as you say, doing the tax return, if you feel you're asymptotic on some of the frontier stuff, because the thing that you're allocating at the margin is your compute. And if you're open AI on Tropic, I'd love to know what the math is like on, do you take this next chunk of GPU and build a model for biology that can, know, cure cancer? Or do you take it and do, you know, Jack's tax return, which is a pretty finite, probably not a pretty finite task, actually, your benchmark partner, it's pretty infinite task. But within the context of AI, it's pretty finite, And super interesting set of trade offs there.
00:52:35 · Jack Altman, Rory O'Driscoll
[00:52:35] S1: Yeah, mean, I think a couple other reactions are one is that to the point of, you know, non American models, I do think that there's a lot of anxiety there. I also think we are starting to see and will continue to see a lot of enterprises post train their own models and draft off of open weights and use inference companies to make their own models and then run them themselves. And so I think... I I don't know how that will factor in, but I do think we will start to see more of that in The US. And I think that will have some amount of impact. The other thing is you can kind of... I often try to just kind of step back, blur my eyes, and what's the one thing here. And I think one of the things you could look at here in general, it's kind of all just gonna come down to like who's got the compute. If you look across all of the inference clouds, I think it's on the order of like a gigawatt or something like that. And I think open ion and tropic, high single digits each. And so you could say maybe one's a little bit more efficient than the other. Maybe one's got better token efficiency, one prices a little bit differently. But on some level, this will also just come down to all of the compute is firing all the time and who owns it, I think is gonna turn out to just be a dominantly important part of the equation. [00:53:46] S0: Yes. Compute share probably proxies to your token share, probably proxies with a little adjustment to your revenue share. [00:53:52] S1: At least within two x or something like that.
00:53:52 · Jack Altman, Rory O'Driscoll, Harry Stebbings
[00:53:52] S1: At least within two x or something like that. [00:53:54] S0: Yeah. Yeah. Yeah. Within... Yeah. Got it. That that that does make sense. [00:53:57] S3: Speaking of tweaking the levers, OpenAI reopens its $200 plan that it paused because it ran out of compute for the latest Azure model, but halves what $200 buys. [00:54:09] S1: So, Harry, you're right. So this is getting at the same topic, which I think is, like, kind of on some level, the fundamental equation of all of this. I think it's extremely important. The other parts of it that we just don't know that are also updating variables continually are how many tokens do you need per task? And so it's like as the models get better, they get much smarter at consuming a token. And then the other is like what is the utility per token? So it is true that there are more tokens being consumed. They cost less dollars. And what we just don't know on the other side of it is like, how many do you need to, like, file the tax return, for example? And that's just like an open... It's an open question to all of it. So can you get more intelligence out of a gigawatt?
00:54:49 · Rory O'Driscoll
[00:54:49] S0: Yeah. And when you try and get to grips with that, you realize how hard it is. Because, you know, I'm a geek, I went away and tried to figure out, know, token costs going down, number tokens going up, token efficiency. And the truth is you're multiplying three numbers, each of which has an error bar, that's pretty damn large. And if you're if you're any intellectual honesty, at the end, you kind of go, I just don't really know. The only thing you can observe that's actually actionable is the buying decisions of people who are allocating their money. Because I can't figure out, you know, multiplying three big numbers together what it means. But you know, some buyers spent $500,000,000 last year on Tropic, You got to assume they were in the numbers and are getting value from it, which is why in the end, I go back to what I said, the proxy for all this, and Jack, you're where the rubber hits the road is people allocating budgets saying at the margin, automating this task makes sense, and it's worth spending, you know, $500,000,000, $500,000, whatever it is to do. Because other than that, it's just super hard to really convince yourself you've done the math well enough to understand it, or more importantly, to predict it twelve months out. And that's why if I could know one thing and go back to my comment over and over again, I would know the Q3 numbers for those two companies. And you, I guess, long term, it doesn't matter. But short term, it matters a shit ton is my opinion, just from a momentum perspective. And how those budgets are continuing to expand.
00:56:06 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
[00:56:06] S2: You know what it's worth for just for fun, there's an app I'm trying to finish called SasterConnect, and I just ran an eval my own. I don't know if you can call them evals, but I ran it on Sonnet 5.5, which just came out. Right? Input tokens, 42% higher than before. Output tokens, 44% higher. So who knows if Jack's tax returns getting all that cheaper? Now there's benefits from it, right? It passed more of the blind test, right? Quality went up, which is what you'd expect. Cost went down about 10%, not 30% because more Jews, but plus 40% more tokens. I just think the stuff's hard to predict, 42% is a lot from to go from 5.5, right? [00:56:41] S0: And that's at the level of granularity of Jason doing this Jason's task. And it's 10 x, a 100 x harder to say tasks in general from people I don't know where I don't see their token spend, which is why you just gotta look at what the Josephs are doing. [00:56:54] S3: Today, have news. On on the flip side of, like, the incredible multi trillion dollar IPOs, have Aura pulling their IPO, which was planned for a $16,000,000,000. Jack, I I have to... Whenever I basically say a new topic, I read Rory's face. And it's always miserable, but it's just the extent of misery that I have to judge. [00:57:13] S0: I'll own it. I'll own it. You're right. We actually have some [00:57:17] S3: of Aura, don't you? Sorry. Yeah. Oh, I'm so sorry. We'll we'll we'll set up a GoFundMe page just for you, Aura, just so you can get some shackles in your pot to make up for it.
00:57:27 · Rory O'Driscoll
[00:57:27] S0: You're all sweet, Harry. I know you care so deeply. But no, just comment. Yes, I'm in the position of having an ownership interest, but not in any way being actively involved. So not having any insider information. But I will admit this surprised me. I mean, it super surprised me. Aura had planned to do an IPO. They were a long way down, meant to price this week Wednesday. Right? They went into it feeling very strong. In fact, for the record, they had Morgan Stanley, Goldman Sachs, and JPMorgan. I mean, all the people. Mean, I there was no people left that you couldn't have. Right? So it's not that they had the dummies here, people. And then the second thing is, you know, it's a profitable, it's a big company, consumers know it, it's a kind of thing that should be very doable. And the third interesting thing is when they first filed, one of the largest investor Forerunner, who I think are super smart, said they're going to sell all their position, which I've been doing a long time. I'd never seen someone in an IPO being able to sell all their position. Right? So I was like, ballsy call and give you credit because consumer electronics is hard. But the fact that a priori they'd said, we're going to do this. To me, you wouldn't say that unless you are highly confident the deal is getting done. Because it's always harder to get a deal done when there's secondary action. And when the more secondary action there is, the harder is to get a deal done. Do you understand me? So having leaned in upfront to say, effectively, we're doing this with a primary and a bunch of secondary, right? And we think we're getting a lot of secondary off the table to have to walk it back to we're gonna downsize the deal, and now we don't like the price.