The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:14:32 · Alex Mashrabov, Harry Stebbings
[00:14:32] S0: Yes. Actually, it took us eighteen months from 1,000,000 to 1,000,000,000. For Corsair, it took twenty four months. So we are probably probably, like, the thirds after OpenAI and Anthropic. Eighteen months from a million to a billion? [00:14:49] S1: Yes. How do you calculate revenue? It's a controversial topic. How do you calculate revenue? [00:14:56] S0: Absolutely. By the way, your cohost, Jason, also asked this question in May. Luckily, answer didn't change. So we are at least consistent. So let me be transparent on that. What we do is we look revenue over the last four weeks and multiply it by 13. From what I know, OpenAI and Thropy Cloud, but all of them use the same methodology. What's very important is that we take revenue, not sales. So if that's annual subscription or annual enterprise contracts, we prorate this across twelve months and only take a piece which corresponds to one month, to twenty eight days to be precise. That's the first piece. And second, it's only live revenue. It's only live revenue. We are not taking three year enterprise deals and baking into 1,000,000,000 figure. No. We don't do that. [00:15:45] S1: If you were to break that billion up today into annual contracts, monthly subscriptions, and then token spend, what would that be?
00:15:45 · Harry Stebbings, Alex Mashrabov
[00:15:45] S1: If you were to break that billion up today into annual contracts, monthly subscriptions, and then token spend, what would that be? [00:15:54] S0: So video AI is still relatively early. It is still probably two years behind coding in terms of adoption. So on demand usage for leading coding companies could be over 50%. And I would be honest, for video, it's substantially less than that. In the same time, what's very interesting for us to observe in the business is that there is some significant revenue expansion. I always love to study stories of the largest customers on the platform. So one customer started six months ago spending just subscription ninety month, and $9 now we just signed a deal over 6,000,000. [00:16:38] S1: 6,000,000? [00:16:38] S0: 6,000,000 a year, right? So this level of acceleration is something which really mind blowing to me. But dude, what are [00:16:46] S1: they getting for 6,000,000 a year? That's like a Hollywood content team almost.
00:16:46 · Harry Stebbings, Alex Mashrabov
[00:16:46] S1: they getting for 6,000,000 a year? That's like a Hollywood content team almost. [00:16:51] S0: So there are multiple trends, and all of them, frankly, coming from Asia. So first, we're seeing a lot of direct to consumer e commerce companies rebuilding their whole go to market to be AI native, where they just make hundreds of ads, if not thousands, a week, where they can AB test what performs well. But we all know about short form dramas. Right? Short form dramas today is an industry over 10,000,000,000, owned primarily by Chinese companies, having huge impact both in China, United States, and Europe, everywhere in the world. And most of new shows there are made with AI end to end. So, look, I think this adoption obviously is coming, like, bottom up, but that's very difficult to refute this new reality. [00:17:38] S1: What percent of revenue is consumer versus enterprise?
00:17:38 · Harry Stebbings, Alex Mashrabov
[00:17:38] S1: What percent of revenue is consumer versus enterprise? [00:17:41] S0: So that that... That's a great question. So business revenue is slightly over 50%. Wow. Yeah. On the consumer sides, it's also very important to break it down. On the consumer sides, out of these 50 is around like 10% is pure consumer use cases, pure consumer. And that's roughly people who use it on mobile. Mobile. So share of our revenue from mobile is less than 10%. We are very different from many other companies. But there are lots of aspiring creators, like basically those people who are freelancers doing social media marketing projects projects and so on, who try to learn video AI so that they can make more money. It's true that their behavior is a little churny. Within a year, most of them actually come back to try again. And we do believe that over the time, most of them are gonna figure stuff out, and they're just gonna become this new AI native workforce. So it's still important for us to educate them. That's why we invest so much in Hixfield Academy, YouTube channel, and so on. But we also are fully cognizant that we will never be able to win in the markets of subscriptions of $20 a month. So Why? Because I think today, Google and OpenAI, they pursue ads so much. But fundamentally, I think they are going to completely demolish all their prosumer subscription markets, which is $20 a month subscriptions.
00:17:41 · Alex Mashrabov, Harry Stebbings
[00:17:41] S0: So that that... That's a great question. So business revenue is slightly over 50%. Wow. Yeah. On the consumer sides, it's also very important to break it down. On the consumer sides, out of these 50 is around like 10% is pure consumer use cases, pure consumer. And that's roughly people who use it on mobile. Mobile. So share of our revenue from mobile is less than 10%. We are very different from many other companies. But there are lots of aspiring creators, like basically those people who are freelancers doing social media marketing projects projects and so on, who try to learn video AI so that they can make more money. It's true that their behavior is a little churny. Within a year, most of them actually come back to try again. And we do believe that over the time, most of them are gonna figure stuff out, and they're just gonna become this new AI native workforce. So it's still important for us to educate them. That's why we invest so much in Hixfield Academy, YouTube channel, and so on. But we also are fully cognizant that we will never be able to win in the markets of subscriptions of $20 a month. So Why? Because I think today, Google and OpenAI, they pursue ads so much. But fundamentally, I think they are going to completely demolish all their prosumer subscription markets, which is $20 a month subscriptions. [00:19:09] S1: Oh, so you're saying that because they provide a horizontal product that's very good, you're just gonna not pay for a lot of the verticalized products that you just pay $20.30 dollars a month for.
00:19:09 · Harry Stebbings, Alex Mashrabov
[00:19:09] S1: Oh, so you're saying that because they provide a horizontal product that's very good, you're just gonna not pay for a lot of the verticalized products that you just pay $20.30 dollars a month for. [00:19:19] S0: Yeah. I do believe that. That's essentially what's gonna happen over the time. I know this is a very contrarian bet, but at least we can see some of that [00:19:27] S1: it cannibalized Canva's growth, if you're honest. A lot of the low hanging fruit on the consumer design side that Canva used to serve can now be done in OpenAI in particular. Is that what you're talking about? [00:19:39] S0: Yeah. And I do believe this is just the most apparent example, but there are a couple more which is which is already happening. And I do believe that's that's why for... At Higgs Field, what what really matters for us is how we... Even if we get someone on, like, $20 a month subscription, how can we show them value? How can we make them to upgrade to over... To spend over thousand dollars a year with us? [00:20:00] S1: Can't believe that's 6,000,000 a year from $99. That's the best ever slide on a fundraising deck. Yeah. [00:20:07] S0: And all of our customers are gonna do the same. Exactly. [00:20:10] S1: Can I ask, you mentioned that kind of churn rates? When you look at