Cursor 会杀死 Figma 吗？Lightspeed 募资90亿美元，OpenAI 获得 Disney 的10亿美元投资，以及 App Store 排名第1的应用

Right. Ready to go, boys. It is great to be back. Jason, you look very smart today. Thank you for joining us from the beach house.

Roy Bahat

Got to have one. Got to have one.

Rory and I are in the office, but we're back.

Roy Bahat

You know, what can I say?

Well, I've just given up based on your tweet because I'm not in OpenAI or Anthropic, so I've decided to call it a day for the rest of the year, I think.

Roy Bahat

Listen, you're smart, dude. What's the point otherwise, right?

What's the point?

Roy Bahat

What's the point? What's the point? Yeah.

1. Lightspeed's $9 Billion Fundraise

Well, what's the point indeed if you don't have megafunds? Lightspeed raises $9 billion across 6 funds.

Roy Bahat

Point number 1, I did the backward math on it just to understand how that's split up. It's about $2 billion for venture and early stage, however that equates, and then $7 billion across other vehicles, mostly growth. So the $9 billion is a bit misleading.

But the question becomes, to my tweet: if you're not playing the big game, do you really matter? I think it's bad for seed VCs. I put “bad” in air quotes, right? Because whether it's $2 billion or $9 billion, you've got to slice these funds up, to Harry's point, to really understand what's going on. It's not all $9 billion for seed.

It really means you don't care what you pay for seed. It just doesn't matter, and you work for speed. Let's do the math. This is why we have $20 million or $30 million pre-seed rounds, because it just doesn't matter at that scale, does it? You just have to get into one $100 billion outcome.

I'm not saying it's bad. It just continues to contribute to the barbell—the barbell side of venture.

Rory O’Driscoll

That's such a funny answer because it's kind of like the classic human thing: the world is ending, but what does it mean for me? You raised $9 billion, but Jason's first comment is, “What does it mean for my business?” It's just a good reminder that everything is personal. But, Harry, what does it mean?

Look, I think, thinking about it—to state the obvious—they earned it. I was just thinking about the last 12 months. If you're evaluating a big multistage manager as an LP in 2025, you probably want to see them do 2 things.

You want to see their early fund have wins 8 or 9 years in, maybe 10 or 12 years in. In the last 2 years, they had Rubrik last year and likely Netskope this year—an early-stage deal where they were seed or Series A that went the distance.

The second thing you want, because you're not just going to give them half a billion for early stage, is to see whether they're picking and concentrating in the late-stage deals. Obviously, in the last 12 to 24 months, Lightspeed put, by all accounts, $1 billion into 2 rounds of Anthropic, and that feels pretty smart right now.

So if you zoom out a million miles, they did the 2 things that a multistage manager has to do: they had great early-stage companies that they built over 10 or 12 years, and they stuffed a ton of money into the hot late-stage deals. Tick, tick—insert $9 billion.

So it all makes sense. If you want to make this bet as an LP, that's the kind of fund you'd be looking at. Those are the success criteria to give someone $9 billion.

Roy Bahat

To raise $9 billion, actually, you can make the math barely work on paper with the exits, but you've got to be in so many huge ones, right? You have to have—I'd even forgotten Lightspeed was in a few of the IPOs we have. Otherwise, the math doesn't pencil out.

You do. But then I just released a show on Monday with David George, and Databricks 7x-ed a billion-dollar fund for them, and Coinbase 5x-ed it. That fund is 15x on a billion-dollar fund.

Roy Bahat

Yes.

Rory O’Driscoll

Yeah, seed's for suckers. If you're in one of, I think, in Coinbase's case, 3 or 4 of the largest exits, and in Databricks, what looks like one of the 4 or 5 largest upcoming exits, then most math works, right?

I'm shocked to discover that if you buy the largest market-cap company on the planet, you probably make money if you buy in early, right? I mean, it's really—so, yes, provided you execute and get in those deals, it can work.

You're exactly right. This is why, though, I'm always so surprised by LPs' unwavering appetite for early-stage managers in San Francisco between $50 million and $100 million fund size because, to your point, Jason, what Lightspeed can pay at seed is completely irrelevant.

They don't give a shit whether it's $30 million, $40 million, or $50 million; it doesn't matter. It's an entry ticket for them to see the A, the B, the C. So I'm just consistently surprised by LP appetite for pure seed plays, given, to me, the destruction of seed economics by multistage.

Roy Bahat

I don't think that's a myth. I don't actually see that appetite. I see that appetite having faded since 2021, and I do not see a resurgence of finding tiny new managers. I don't see it.

They want to find a 20VC or a NEO or whatever, but I don't think it's easy for emerging managers.

Rory O’Driscoll

There's no doubt that the prevalence of this kind of money must make it slightly harder, at the margin, for everyone further down the food chain to make money because you are competing with someone who does have the ability—and the desire—to invest a lot of money in the very best companies.

You cited Netskope and—I'm sorry, Rubrik—and Netskope. That's an amazing job by Lightspeed. One of the most interesting things is the aggregate return, I think, was on one of them—I can't remember which—only a 6 or a 7x, but the real insight was they got $200 million-plus to work.

2. The Impact of Mega Funds on Seed VCs

So that's the game they're playing with their $9 billion, and it's a great game, and they do it bloody well. Your point is right, Harry. I do think—I can't quantify it, and I'm not a seed investor—but there's no doubt that the dynamics of a multistage firm mean that, if they choose to, they can swamp a seed business to some extent and just write it off as marketing.

I totally agree with that, and use it as an acquisition to get into the latest-stage rounds, as we've discussed.

And that's where Dragoneer raising a $4.3 billion venture fund comes in. So there's more than $13 billion across those 2. But have we ever seen late stage as competitive as this?

Roy Bahat

“Competitive” is an interesting word. The better question might be, how do you feel about the capital versus the potential return? Even though—yes, there's a lot of capital now, it's competitive.

One of the attractive things about now, and the reason this money is flowing, is that there are a lot of amazing late-stage companies that look like they're growing very strongly and are places to put that capital, right?

In 2021, it felt like that, but it turned out to be treacherous, and a lot of those companies—their growth just attenuated and indeed went backwards. So it was a very competitive time in 2021 to be in late-stage growth capital, and it turned out to be a very dangerous time.

It is competitive today, but I suppose one of the blessings of having OpenAI and Anthropic in the market is they can soak up $60 billion of your late-stage dollars and just keep on moving, right? So there are places to put that money.

I don't know if it'll be as treacherously competitive today as it was in 2021. We'll see. I mean, the wall of money keeps on climbing up.

Well, look, one thing—and maybe it's not directly to the point—but Rory made this point when we started this pod, and it's become true in spades just not that long later. Maybe he didn't make it this way, but all these leaders not IPOing is the greatest gift to venture in our lifetimes. The greatest gift of venture capital.

The fact that you can flood these top 20 companies with venture capital and keep—maybe it's not venture capital, right? Maybe it's a fusion of private equity. It doesn't matter. The fact that the VCs are able to keep this for themselves.

Of course, Lightspeed should raise $9 billion, because the public markets aren't getting this. And when people used to say that the retail investors were getting ripped off, I used to scoff, because most IPOs don't do well, right?

But this is a supercycle where growth is the big beneficiary of this supercycle. It wasn't true of other supercycles, not of the SaaS era and others. If you're not playing that game, you're losing.

To Harry's point, that's the real game. It's not just being in OpenAI; it's playing the growth supercycle bet today. That's the winning play.

Rory O’Driscoll

There's a combination of reasons for no IPOs, but no doubt one of them was vague consumer protection post-2000. You're right: the good news is the consumer has been protected from a whole load of bad deals where you can lose 1x your money.

The bad news is they've left the entire compounding of Databricks, SpaceX, Anthropic, and OpenAI on the table. I think if these things—if SpaceX goes public north of $1 trillion, if OpenAI goes public at $600–800 billion—it's huge.

All that value has been taken in the private arena, and you're right, it's been great for, in particular, the late-stage firms who've been able to get early-stage venture economics on masses of money and, to all intents and purposes, put it to work fairly profitably.

It’s been great.

Roy Bahat

Yeah. I mean, it’s a different time, but if you just compare Tesla and SpaceX for fun, right? Tesla had to IPO. It was a different time. It really barely had any revenue, but it was the same guy running them.

It IPOed at 1.7 billion, which seemed very expensive—1.7 billion. The sister company will IPO at 1.7 trillion or 1 trillion. I mean, that is the difference in time.

It’s 1,000x more. It’s a stunning difference. And that all went to VCs, Elon, or others. None of that went to the public investors, right?

Roy Bahat

Yeah. You’re exactly right. Anyone who chose after 2010 could have had a 70% compound IRR for 15 years. That product was not available for SpaceX and Databricks.

And he chose—it’s the same founder, right? Looking at his different situation, I’m sure he wouldn’t have taken Tesla public if he’d had any other choice a long time ago, but he kept SpaceX private.

Roy Bahat

Yeah, exactly, which gets to my point. I think the primary reason you go public or stay private is the relative cost of capital. He’d had that difficult private round in Tesla where he had to, frankly, save the company from some fairly predatory VC behavior, as he at least recounts it. I wasn’t in the room, but it sounds convincing.

At that point, he was like, “The cost of capital from these guys, the VCs, is too damn high. Let me go public.” That’s worked for him, obviously, right? Now the cost of capital in the public market feels higher than the private market, so everyone’s staying private, and we’ll see how that plays out.

3. The Supercycle of Growth and Late-Stage Investments

And speaking of capital-ingestion machines, the biggest of all right now is OpenAI and ChatGPT. As always, this could be called This Week in OpenAI, but there was a lot that happened. ChatGPT was the most-downloaded app in the US, and Disney invested 1 billion dollars in OpenAI.

Roy Bahat

I think it’s one of the least interesting things. First of all, 1 billion is neither here nor there. My understanding is also that it’s a cross-licensing deal: “We’ll get 1 billion in equity; we’ll give you money; we’ll get money back from you as a license on the characters that we give you.” It’s very round-trippy.

I think it allows OpenAI’s image generator to use Disney content to generate images. They’re simultaneously sending a cease-and-desist letter to Google because of unlicensed use of the content, so I don’t think it’s a huge thing at all. I think it’s fairly experimental for Disney to say, “Okay, we better embrace this new thing. Let’s see what happens.”

They’re effectively getting 1 billion dollars in equity in return for allowing these guys to play with their characters. I thought that was interesting in the scheme of things, but there’s no upside.

I thought it was a little more interesting as a content creator, which is that we’re entering the next age beyond just ripping everybody’s content off. I think what Disney is saying—it’s a 3-year deal—is, “Look, in the next era, here’s the template.”

This is like when all the content creators take stuff offline on YouTube or cable. It’s a negotiation. The good news is that OpenAI is the leading consumer player in the space. You’re going to get the leading IP in the world. You’re going to get Disney, and here are the economics.

Now there’s a template, just like there’s a template for ESPN or Disney with YouTube and Google. You may actually have to pay more, because usually the first ones that go in get a slightly better deal, right? Everyone else is going to pay worse, and we’re going to ratchet up the terms to use our IP. Then, in 3 years, we’re going to raise the rates again.

I just think it is an interesting resurgence of the value of IP in the age of AI, when the first instinct was just to rip everybody off. It was great for all of us as consumers, but it may be the revenge of IP.

Roy Bahat

It will be interesting to see in 3 years whether existing, quote-unquote, old-media IP is worth a lot in this new age, whether that’s what consumers want to use, and whether it will be worth ChatGPT’s or any image-generation software’s while licensing that IP.

4. Disney Invests $1BN into OpenAI and What It Means

Will there be an economic return on it versus UGC-type content? But yes, first of all, does it feel good for Disney? Secondly, does it yield an economic return for the model providers? Do you get any extra return from having that content?

Disney’s a big deal in IP, and I think in 3 years no one’s going to be working because of AI. I know this sounds facetious. We’ll be spending all our time at Disneyland because no one’s electively working and the jobs are gone. We’re going to watch Disney and live in Disneyland, right?

I liked what Bob Iger said, even though I’m not sure what it means: “Creativity is the new productivity.” That’s the bet. The creative assets—there’s no long tail. What we said 3 weeks ago doesn’t matter, right? It’s the constant creativity and creation of top-tier assets like 20VC that matter. I think it’s true.

Roy Bahat

Rory, I understand you’re kind of saying it’s not the most interesting, but to our point last week and before, on Marc Benioff talking about the commoditization of models and the ease of switching, IP lock-in, hopefully—I’m sure Sam Altman is thinking like this—is a core element that would retain consumers in a way that maybe other people aren’t thinking about.

The big-picture comment is that in 2025, the most-downloaded app on Apple was ChatGPT. If you look over the last 10 years, it’s interesting to see who the winner has been. It’s been 2 years of TikTok, 2 years of Temu, and 1 year of Zoom. Guess which year, everybody? 2020—the year you realized you needed Zoom.

Going back, there were some of the social media apps. Rory, do you think they’ll retain the consumer over Gemini as the consumer front end?

Rory O’Driscoll

My gut would be yes, because they’re all in on making it happen. Google obviously has a lot of other ways to push Gemini, but it would be a very uninformed opinion.

To me, that’s an interesting horse-race question. For now, the more interesting question is that OpenAI’s mobile app probably has declined in growth because it has to decline—we’ve run out of humans on planet Earth. It’ll be interesting to see whether it Robinhoods, how well it becomes a meta-app.

Robinhood is on fire even though its new customers are only growing 8%. OpenAI is going to have to do that. That’s the whole point of bringing it ahead of apps and all of that. Otherwise, it will inherently stagnate around 1 billion or 1.2 billion users. It’ll just be fun to watch whether a mega-app works for ChatGPT or not.

I don’t know if I buy that.

Rory O’Driscoll

You have to buy it because if you look at the numbers, the growth is down to single digits. It is empirically true on any source. The growth is down to single digits on monthly growth.

I just think that—okay, I buy that sentence. I buy that the facts are true. As Senator Moynihan said, we’re all entitled to our own opinion, but we all have to have the same facts.

Jason, the interesting thing—but just discussing this, you’re right—the question is, do they go from roughly 800 million to what you’re saying? Do they do what Robinhood did and stay at 800 million and just sell them more shit? Or do they do what Meta did and find ways to go to 4 billion out of 5 billion—pretty much every active human on the planet?

That is a big-picture question, right? I’m not sure everyone on the planet wants to do complex AI lookups, so I’m not sure. It’s an interesting question.

Roy Bahat

And if you have no ads, it’s tough, too. They have cheap versions in India and elsewhere. I don’t know that they’ll be as big as Meta in terms of footprint unless they want to go all in on free.

No, that’s excellent. Yes, you’re right. The reason I push on the Robinhood thing is that I think in financial fintech—actually, in financials in general—the movie is always the same: acquire customers and then cross-sell them up the wazoo, right?

That’s what Robinhood is doing. The young, gambling-addicted financial sector—they’re going to give him any product he wants, he or she wants. The interesting question is, I don’t know what the cross-sell would be for a consumer on OpenAI. I suppose the only thing you can do is drive up the percentage of free users who opt to convert to the 20-dollar-a-month plan.

Roy Bahat

Well, there’s shopping, and there are ads—the classic ones, right? Everyone’s tried that. Instagram for e-commerce ads. I’m not smart enough to know, but I know that growth has slowed. There’s no debate.

It’ll be interesting to watch. There’s Google versus Gemini, armchair quarterback. Then there’s maybe one simple reason Anthropic is better: it doesn’t have the same headwinds of already having 800 million users.

Consumer gets you there faster, but maybe Anthropic wins the bigger prize because the enterprise and the back end have just gotten going. I don’t think that’s the case, but to take your point, there is nothing as terrifying as a high-growth bet that slows down.

What happens is you go from being valued on growth to being valued on cash flow, and you really would not want that to happen while you’re still private.

Now, I don't think it is. I'm not sounding the alarm on OpenAI. I think that, look, the one big risk of the staying-private-longer bet is that, at some point, someone is left holding the bag.

And we're seeing a lot of it in the class of 2021. “I'm holding the bag on this thing that I paid 20 or 30 times revenues for because it was growing at 100%, and now it's growing at 8%. It's 5 years later, and I can barely clear the last-round price.” That's the— it would be very bad for a lot of folks if OpenAI's growth slowed.

There's no indication it has. User growth maybe has slowed, to your point, Jason, but they appear to be still finding ways to monetize. But if that were to taper off, it would be a world of pain.

What about the cliff vesting ending entirely? Is that emblematic of just the hiring wars that we're seeing? How do you think about that? And maybe just an explanation for everyone: Typically, when startups hire someone, they universally give stock options. The typical format is 4-year vesting, but with a 1-year cliff.

In other words, if you leave within the first 12 months, you get nothing. At the end of the 12 months, you catch up on a full year's vesting, and then you vest ratably over the remaining 3 years. The idea is that you hire people, you go through a lot of change, they leave, or they don't work out early on. Do you really want to accumulate a whole lot of extra shareholders for 3 months of vesting?

When 3 months of vesting was worth $10,000, you could see that. But clearly what's happened here is market pressure has said to them, “Hires are saying, ‘Even if I don't want to be here 11 months, if you whack me, maybe at the current rate I'm vesting on $2 or $3 million bucks, I want to know I'm going to get that.’”

So I think it is a sign of the times—a sign of the extraordinary sums of money you're dealing with—where even an individual contributor coming in says, “11/48ths, just under 25% of my total vesting package, is real money. If I'm getting $10 million over 4 years, it's $2 million if it's slightly less than 12 months.”

And people will probably say, “For $2 million bucks, I'm going to push back on vesting.” They've clearly decided to give.

[Speaker?]

It is. The one thing that took me just an obvious beat to get is that it obviously makes leaving easier, right? It makes leaving easier because if you're leaving somewhere, you've hit your cliff.

On the one hand, it seems like a dumb idea—you're creating mercenaries, and perhaps you are. But in an age of plenty, you're asking someone that's 18 months into something else to leave and wait 12 months to make a dollar. That can be a tough sell, right?

So they probably also had to make so many exceptions that it stops mattering.

You're exactly right. I'm sure they had a gazillion exceptions, and at some point the VP of HR said, “Guys, I just can't be dealing with this. Let's just accept this is the market today.”

5. Oracle Hit Hard: Is Now the Time to Buy

Listen, Oracle—oh my God. Oracle shares plunged 15% on Friday on disappointing earnings. They've plunged 45% from the September highs, 14% down in a week. They've spent $12 billion in quarterly capex, higher than the $8.2 billion that was expected, with the bulk of it going to data centers dedicated to OpenAI.

Guys, this is above my pay grade. What's going on?

[Speaker?]

Okay. One of the reasons I like to admit I'm wrong is because it then allows me to do “I told you so” when I'm right, right? This one, to me, was the top. Yeah, we talked—I mean, play the tape back. I know what I got wrong this year in our conversations. This one, at the time, when they had that 30% pop, it was absurd, and it's just been unwound, right?

The pop was because, “Oh my God, you signed all this revenue,” and everyone gets really excited about the RPO. That was what, 40, maybe 50—I don't know—60, 90 days ago, probably last quarter's announcement. And now everyone's like, “Oh my God, to meet this revenue obligation, you're going to have to incur a whole lot of expenses.”

Well, shock horror: You just opted to enter a very capital-intensive, physical data-center-building business to service 1 or 2 super-large customers, principally OpenAI. It's a tough business, and now I think people are internalizing that.

The stock probably is now below where it was. In fact, I know it is. It's about, I think, 15% below where it was when they announced—just before they announced—all the quote-unquote good news.

So, to me, it was fun to—I'm actually—my real sentiment here was I knew it, and I should have done those shorts. I should have bought those puts because, in retrospect, 90 days ago, we were right. It's a sugar high, a total sugar high, on a huge contract with someone who may or may not be able to afford to pay for it. That's OpenAI.

And even if they can afford to pay for it, it's not a great business because it's capital-intensive and not nearly as good as your existing free-cash-flow-positive business.

So you'd say that it's returned to a normal level. It's not going to rebound from here?

Roy Bahat

No, that's not what I think.

No? Oh, you do. Go for it.

Roy Bahat

I just—listen, I think it sounds odd, but let's bring Oracle and CoreWeave in together. I think they are very interesting, and if you look at the leaders, they're the weak guys, okay? They don't really own anything themselves. They're at high risk of margin compression.

So the market's going to have jitters between now and an even bigger AI future. We've talked about how it's going to have ups and downs. It's going to have bumps. And it makes sense. Oracle is down 46% since September, right? CoreWeave is down 60% from its high in July.

It makes sense those should see the biggest impact from bumps. And, actually, listen, I'm not saying that these are even the best companies we've ever had, but I think there's every reason they will rebound as the overall trends continue. I think these are just jitters.

The overall trend, I think, is still—we're still anti-gravity here. That's the key question.

First of all, I wouldn't do a naked short. I'd do a put, which is the coward's way out. But yes, you're right. I mean, you're exactly right: These companies become the high-octane bet on AI.

If you think it's going to go up, you buy Google, you get 20% appreciation. But if you buy CoreWeave and you're right, you could get a double. You're right. They're the highly amplified bet because they are the marginal provider of the commodity, and they have no other businesses to diversify their—

No IP. Well, Oracle has others, but they have no IP here, right?

Roy Bahat

I agree with your characterization. The question is, you're right: To take your point, Jason, if you think the capex cycle has 2 more years of strong legs, then you could see these guys rebound.

And if you think we may have found an equilibrium—but they're not going to have much more increase up from here, and the marginal investment rate is going to go down from here—then you're right, then you would be scared of owning them. That's exactly it.

It's an easy way to figure out what's going on at the margin in the AI space, and at the margin is where the money's made.

That's why Jason and I have bigger social media brands than you, my friend, because we're great at binary statements.

You're like the third option—in the middle.

You're so right. The world is full of “in the middle,” and no one wants to hear it. By the way, that might explain a lot of our problems in wider society with social media, but we'll come back to that another time.

6. Broadcom's Market Cap Drop and Anthropic's AI Chip Orders

Broadcom was another one. It lost $300 billion in market cap in 48 hours, with investors concerned that a $21 billion order from Anthropic will drag down margins because of higher costs in the chips business.

Is this a reasonable concern? An order from Anthropic seems like a fairly securitized asset to back. Is this a reasonable concern? And a $300 billion loss in market cap seems like an exaggeration.

Roy Bahat

It depends on where you're starting from. And if you look at it, I mean, I don't think it's unreasonable in the following sense: Broadcom's an amazing story. It's just an amazing story.

You look at what that guy's achieved over the last 10 years. It's stunning. Its current market cap is plus or minus $1.6 trillion. As a reminder, the first trillion-dollar market-cap company was Apple in 2018.

Rory O’Driscoll

And now Broadcom, a company 90% of people couldn't even name or tell you what it does, has a $1.6 trillion market cap even after this correction. I think it's trading at high teens in terms of its sales multiple, so it's not like it's cheap, right? It totally makes sense that the Anthropic order is actually similar to the OpenAI–Oracle discussion. Why is Anthropic buying chips from Broadcom? The answer is, they don't want to pay 75% gross margins to Nvidia.

And so they designed this other chip, and they say, “Hey, dude, I'll buy this chip from you, but I'm not going to give you quite as much money as I'm giving Nvidia, because if I'm going to pay full retail, I might as well go buy the designer brand.” Right? The whole point is this is meant to be wholesale here, dude. You're meant to get lower gross margin, right? It just makes sense that it's a really good business. They'll make good coin at it, but it's not going to have quite the same margins and defensibility that you'd expect Nvidia to have, where they're imposing their architecture on their customers, right?

Broadcom is being kind of a made-to-order business. They're saying, “Mr. Customer, Mr. Anthropic, tell me what kind of chip you want and we'll make it. We'll design it, etc.” But it's not the same as marketing a branded product like the Nvidia Blackwell or whatever it is. So, yeah, it makes sense. I think, again, it's the same thing: the markets have just gotten a little bit ahead of themselves. When you type in the revenue number, you get all excited; when you type in the EPS number, you get a little less excited. It's just this process of discovery.

So, I didn't think it was anything. It's just stunning that you can drop $300 billion in a single day and still be worth $1.6 trillion. Let me tell you what a real crash is like. It's when you're still trading at a high-teens sales multiple. It's not like everything went cheap, Harry. It's just slightly less expensive.

It is interesting. You lose so much over guiding 100 basis points lower. What's really interesting—and I'm not smart enough to fully predict this—is who gets a pass on gross margins and who doesn't? Now, if you're Broadcom or someone, you're not getting any pass. Even though you're getting massive AI spend, we're very worried. All we care about is whether you're going to lose insane profitability in the semiconductor industry due to AI.

Oracle got this great pass until it didn't, right? CoreWeave gets apparently an entire pass. OpenAI does; Meta doesn't. I can't keep up with who gets the gross-margin pass. All I know is we learned in Palantir that some folks deserve the pass, and then we're going to find out some don't deserve a gross-margin pass. I don't know.

Rory, you said it's not a crash, and it can get much worse and go much lower. Markets are at the same P/E peaks as 2000 and 2021. Apollo predicted 0 public-equity returns in the coming years. Always optimistic. How did you read that, Rory?

Rory O’Driscoll

Sure. I think you have to be very precise about what Apollo said. They said the predicted 10-year return is 0%. This is a piece of work that's fairly well understood, and it's actually a very important piece. It's probably one of the things I look at most. Vanguard sends it to you; they're really good about that.

They basically show a correlation between entry P/E and subsequent 10-year return. They show 3 graphs. They show your 1-year return—there's little or no correlation. In other words, when you buy at a high price, it can still go higher. The correlation gets stronger for 5 years, and it's strongest at 10.

In other words, if you buy at a high price, I can't tell you how you'll do next year. Maybe the stocks will keep going up and you'll feel smart, but what I can tell you for sure is the probability of making money over 10 years is very correlated to your entry price. And that's the graph that Apollo showed.

That's because what they're doing—and it's what all the sensible investment houses and asset managers do—is they don't make 1-year predictions because you can look like an idiot and it's hard to know. I mean, it's not just that you look like an idiot; it's actually empirically hard to know. But you can say with a high level of certainty that if you buy at a P/E that's 50%, 60%, 70% higher than the long-term average, your forecast return will be significantly lower.

Going back to 1999–2000, you see the same thing. You could have said things were expensive in 1996, and Greenspan said they were expensive. That's when he gave his “irrational exuberance” speech. But stocks kept going up for 3 more years. You can't predict the short term.

But what was true is, by the time you were piling in in 1999, it took 10 years for the overall stock market to get back. So you did go 0 for 10 years. And even more impressively—and this is a really amazing fact—Cisco, the darling of 1999, just got back this week to its 1999 stock price.

So, in other words, if you buy the hyper-expensive company at just the wrong time, it takes 25 years to earn it back. That's a compelling statistic, and I think it speaks to the same thing as the Apollo comment.

Right now, the interesting thing is: what do you do with that information? I know over the next 10 years you're screwed, but it might go up next year. Do you stay in? Do you go out and risk having a 1996 moment where you leave 3 more years? I think you actually end up just making a decision: you look at your overall asset allocation, but I don't think you go binary on it, because you do have that thing of: it's not predictive in the short term, but it is a warning sign.

There's a reason that nice Mr. Buffett has piled up $300 billion in cash, because he reads these data, too, and he understands them better than most. The meta point to make that kind of goes back to our business, because we're not public-market investors, is when you look at all these private valuations that look attractive relative to the public—and they do—you have to say to yourself, they look attractive relative to a public market that's at an all-time high, and a more normalized public market might well leave some of these private valuations somewhat high and dry.

7. The Biggest Danger for Incumbents: Being Maimed by AI

Now, growth might save you in a nice story if the Apollo graph is correct and you just get 0 return for the next 10 years. And that's not traumatic. That's not the way life and markets work. What tends to happen is, at one point in the next 2 or 3 years, things drop 30%. And then you crawl back slowly over the rest of the decade, right? If that happens, then some of these private valuations that are comped after that could feel lofty.

8. Cursor Competes with Figma: The Convergence of Design & Coding Tools

We mentioned Broadcom's dip, which was on the back of AI in many respects, one of the reasons being Anthropic. Anthropic announced they're launching an AI coding tool for designers. So, it's a UI inside the Cursor browser. It lets you tweak web apps and drag and drop CSS. It's really the first move up the stack, so to speak, for them. Jason, I'm super intrigued to hear your thoughts on this. Is this the first credible threat to Figma's position, where design decisions start?

Roy Bahat

You mean Cursor doing it, right? Not Anthropic, right? Sorry, Cursor. I think what all of us need to be hyper-aware of in 2026 and 2027 is massive convergence of categories. It's not just the old days of 7 years later, Datadog would decide to compete with PagerDuty, which certainly hurt them. That's how we grew up: a couple of years would go by and, all of a sudden, Brex is competing with its partners rather than partnering.

AI is creating convergence where the same products can do more things. I'll give you an example, and then I'll talk about Cursor, because you asked. It's already happened in e-commerce, which I can see: marketing, sales, and support have already converged.

This last week, Andrew Bialecki, the CEO of Klaviyo, brought on the ex-COO of Workday to run most of Klaviyo, which is at $1.3 billion, growing 30%. The entire world of e-commerce software has changed, so he needs to get back to product full-time, because in 2026 and 2027 there will be no such thing as marketing software that got Klaviyo public. Marketing, sales, and support have already converged to one agent.

It's actually surprising it's taking a full 12 months to happen in coding. If you've built any apps like I have, the disconnect between design and the output is the most jarring thing when you get good at something. When you get good at Replit like I am, or Cursor, you can build such cool stuff and you're like, “Man, the design—it all looks like fake Claude artifacts that all look like Claude.”

I can find a vibe-coded site, and 30% of the last YC class looked vibe-coded to me. I could see the Claude artifacts all over their homepage, so it kind of breaks your heart. The fact it honestly took this long is a surprise.

Should Cursor own that, or should Figma own that, or someone new? They're all going to converge. You shouldn't have different tools for design, prototyping, and production. The agents are just too good.

To put it differently, what I've learned is we all want to talk to the same agent: designers, product people, engineers, DevOps. In an ideal world, there's this meta-agent where we all can collaborate and work together as one company, not all of us being on 11 different AIs.

There's a lot of fracturing in AI, and I don't know who will win. It's probably mean to say Figma feels behind, but it is how it feels as we record. It feels like Figma is tiptoeing into vibe coding, just like Canva and others. There is some disruption risk that the tiptoe is too slow.

I think that's awesome, Jason.

I mean, really, that insight on the coding-Figma thing, but also the bigger comment on wanting the single agent for everything—that's just a huge insight because it's only become obvious to me in the last few months as I've been talking to companies. No matter how hard you try, you try and translate your prior experience into this. You have a sales SaaS company, so now you have an AI SaaS sales company. You have a SaaS marketing company, so now is there an AI marketing company?

And I think you're right on a lot of these processes. The reason you have these separate, siloed companies is that the humans were siloed. There was a salesperson and a marketing person. But if the AI is doing everything, let's just take the customer journey. You can have a single AI agent within your company dealing with your customers as you're prospecting them, as you're selling them, and as you're customer-supporting them after they onboard.

I've seen some companies doing that, and I'm like, wow, that's a powerful idea, right? Because if you think about it, one of the shittiest things about dealing with any company is you start off with sales and you build this rapport, and they seem to know exactly what you want. Then you just get transitioned to a totally different person and you start again, and it's like you, as the customer, are being put through that.

Roy Bahat

It's not okay in the age of AI.

And I got to tell you, really, I'm thinking of a couple of deals I sold within the last week where what you expressed is suddenly going—you're exactly right: the single view of the customer on the customer side. So I just think that's a really powerful 2026 theme. I don't even know what it means in terms of what kind of apps are built, and I'm thinking of sales and marketing at this point. We'll come to Figma and Cursor in a second, but I just want to say you nailed it there.

Roy Bahat, can I ask: how does that shape your thoughts when you look at investing in support tools, as you have done in the past?

Roy Bahat

I think all these companies are going to expand their footprint. Going back to the thing, the good news is there's a huge return on ROI on AI, and I do believe there is. The bad news is, I think, to grab that return over time, you're going to have to be more expansive and aggressive, and you're going to be going into adjacencies much more so than in the past.

Again, it's only obvious to me now that I've started to think about it: if you were selling software to automate work, then you probably sold to each department that did that work. But if you're selling AI software to automate an outcome, just sell to the person who wants the outcome, and they'll be like, "Yeah, I'll take all that."

So I think you're right. We have an investment in customer support, and we have a number of investments in the AI sales stack. I just think over the next 1–3 years there's going to be mass convergence.

Just to jump back to Jason's example, the old line is that in any company, you're either selling stuff or making stuff. We just talked about the selling-stuff people, but then Jason was talking about the making-stuff people. Between design and production, I think what he's saying there too is, you could argue that instead of having a separate design function and a coding function, does that all come together over time? Is that right, Jason?

I think we're going to have designers. I don't think we're going to have multiple platforms. It's better if they're the same. It's just so much faster. It's so much more efficient.

I have invested in a small startup called Alloy.app that sort of bridges it. It lets you vibe-code your existing product and change it. It's early, but there's already insane demand, and that's just the first step.

Everyone loves Figma. Every designer—I mean, I'm sure some are grouchy, right?—but I think it's up there with Klaviyo. Everyone in e-commerce, their favorite app is Klaviyo because it just gets you more customers. Klaviyo's radically brought in a COO because their whole business model has changed.

It's going to be there in software in a year. It just doesn't make sense to have to wait days for designs to change, and then they only sort of work in my codebase, and then I've got to integrate it. All these guys added a design mode with Gemini 3 Pro or whatever it is. They all add a design mode. It's pretty good, but it's still recycled stuff. You could see a hint of it where now you can make a somewhat beautiful website while you vibe-code. 2026 is going to be 50x better.

Jason, you're so well informed on this. If we take that view, then, of the collapsing of it all into one platform and one location—if that is the outcome—

Roy Bahat

Yeah.

If I pressed you on who the winner of that will be, then who will that be? Will that be Cursor? Will that be Claude Code? Will that be Figma?

Roy Bahat

Honestly, and I know this sounds Captain Obvious, I honestly think it's going to be who wants it the most. You almost have to work so hard. You have to work 10x as hard as we're working at Cursor, and it's been great. We might have to work even harder, but maybe Figma works even harder.

I know this sounds silly, but everyone can copy each other in weeks now, not in months or years or quarters. It's who really, really wills it into existence. I don't think we can sit back as VCs and just—even with our great king-making checkbooks—I don't think we can fully control the outcome.

I think the ones that work and produce 10x more output are honestly the ones that are going to win—the leaders. I don't think we can predict. It's easy to bet in favor of Cursor over Figma because Figma took, what, a decade to get to $1 billion, and Cursor took a year.

So if we're momentum bettors, we have to bet Cursor, right? Even though there are reasons to bet against it, right? They're not designers. They don't have the base. They don't have the customers. But if I had to pick, I would bet on that rapidity today. Is this the interim step to Cursor moving down further—or up, whichever way you want to take it—into consumers and into Lovable and Replit?

It could be. I think the only reason Cursor didn't build Replit or Lovable is that it wasn't worth their time because they're in an even bigger, better market for the moment.

Agreed.

I honestly think it was just a distraction. As big as that market is, as exciting as those guys together will be—they'll go to almost $500 million in a year—Cursor got there in 9 months.

So you're taking your eye off the ball to invest in a high-churn, frictionful space when they probably have 160% effective NRR at a revenue level because nobody leaves Cursor, right? Why would you invest in a smaller, high-churn space when you have insane retention and you're growing even faster? You'd have to, and you want to have a team in the triple-digit number of employees.

Yeah. And just intrinsically, the budget for software teams building professional, enterprise-grade software is logically larger than for demo apps or consumer apps. So maybe there are more individual users of a Lovable or a Replit, but the reality is you're accessing the big-dollar spend of every software company and every enterprise company when you're Cursor.

I don't think all of the Figma market and the Cursor market fully converge. The equivalent now of a Figma design is, in fact, someone using Replit or Lovable to do a direct mockup—an interactive mockup versus just a design mockup. But clearly, between them all, there's this kind of smooshing together, and that's really significant because what were separate markets are all going to be competing with each other because the prize is just so big.

I thought, Jason, you did a nice blog post—I don't know if you did it or your AI machine did it—making the point, citing the Menlo work, that 50–60% of all the end-user spend on AI right now is coding and coding-related. This is the big kahuna, right? Everything else, even customer support and all the other stuff, is around 45%, and software- and coding-related stuff is 55% of all enterprise end-user spend. This is where the epicenter of the enterprise AI revolution is right now.

What will 55% of AI spend on coding be in 3 years?

Roy Bahat

Well, that was the point of my post. I don't know. You hope the other categories are just behind, in a sense, right? But maybe it's intrinsic to the extreme value in a very large category of software. Maybe—we don't know.

Yeah, I don't know. But how about this answer? I can give you a quick answer to an adjacent question, which is fun. The total spend is kind of $15–16 billion on apps, and another $15 billion, plus or minus, on enterprise infrastructure. I don't fully understand what that category is, but leave that by the by.

The big aha, again, is that end users in enterprises are spending, fundamentally, $15–16 billion on AI, and the people who make AI are spending $400 billion on making AI. If that $16 billion grew 3–4x last year, it's got to 3–4x a bunch more times before it can cover the nut on the capex spend, right?

To me, that's the most important thing. I'm less clear on what the mix will be, but somehow enterprises have to find not $15 billion but $150 billion of budget. Otherwise, the people investing $150 billion in capex are going to have a sad day when their capex is greater than the revenue line. So I think the overall growth is the key question.

Could I just go back to one point on Cursor versus Figma? I do think it's so important to founders and investors. I think one risk is that Cursor completely displaces Figma—we don't need it. That's unlikely for a lot of reasons.

Roy Bahat

I think the bigger risk for so many vendors is that it maims Figma.

What does that mean, J?

Roy Bahat

The old customers don't leave. HubSpot and Box, and even Anthropic using it, don't leave. They renew. They don't buy as many seats because the team is also using Cursor. But, of course, they don't churn. The logo retention remains good, but NRR drifts down.

New customers, the next generation—the kids from Y Combinator—defer that purchase because they're doing enough in Cursor. I'm seeing this across my older portfolio: folks are maimed. The existing retention is good, but the new guys are taking enough of the new budget that your growth materially decreases.

I think this is a risk for almost everyone that's established: you just get maimed. You don't get killed; you get maimed. Cursor could easily maim this market. It's so big.

I do think of Monty Python and the Holy Grail, where it's just a flesh wound.

Roy Bahat

Sorry.

It's a deep one, though. It's the one that never quite heals.

Roy Bahat

And you sit in the board meeting and you're like, “Well, we had 15,000 customers last quarter, Harry. Now we have 15,200. Hooray.” Kudos.

No growth is miserable. Agreed. But it's this maiming that I think a lot of founders aren't being honest about—how they're being maimed by AI leaders. They're being maimed. They're not being crushed. That's the narrative we talk about, but maiming is worse.

Who else is being maimed?

Roy Bahat

Well, I mean, Atlassian is slowing down, right? GitLab is arguably being maimed. Many public companies are being maimed. You've got to be Datadog and have so many leading products in market almost not to be maimed.

It looked like MongoDB was being maimed until they fought back, right? It really looked like MongoDB was being maimed by all the new Postgres and other competitors. They're back, although maybe they're maimed in the sense that they should be growing faster, given the growth of AI.

MongoDB should be this great, Broadcom-like AI beneficiary, and they are, but they're not. They have so many competitors now. There are so many Supabases and others taking pockets of market share away from them that you might not even see some of them being maimed, right?

Maybe MongoDB should be growing 50%. Why shouldn't it be? It was the leading platform, and the explosion of apps that we're building today is unprecedented. Why isn't MongoDB growing 50%?

The way you see it is, you see those CIO surveys where they rank their priorities, and what happens is, as AI has gone up in the zeitgeist, it's gone up the priority list. Something that was number 3 goes to number 6, and then it doesn't get funded.

I think that's part of the SaaS slowdown that we've seen across the board in the public companies. You're not selling the new-new thing. I'm kind of with you, Jason.

Even at the infrastructure level, at the GitHubs and things like that, you have to co-attach to where the budget is. If you're selling infrastructure to people who aren't doing AI, then you're going to be dealing with a slow-growth, secular story. If you're selling that infrastructure to Anthropic, OpenAI, and the JPMorgan AI initiative, you're probably not going to be an AI company, but you're going to have some of that growth rate.

Maybe the most maimed that I can think of—it may not be fair—is UiPath. We can say, “Hey, UiPath, until Daniel came back, we missed the AI wave.” But it's not that simple. UiPath is not hemorrhaging customers; it's growing. It's back to 16% growth. The stock's up 27% this year. Go, Daniel, right?

It just got maimed because RPA, in part, got replaced with agents and AI. It got maimed.

You would just do—I think it's a great example, genuinely, Jason, because if you were starting now to automate, you would do it in a different way. You'd start with an agent. What do you do if you're Daniel?

Roy Bahat

Well, he has stabilized the ship, right? His growth has come back a bit. He basically checked out, like a lot of folks did when times were easy, when products didn't change. He called it a day, and how long did that last? 8 months, until he had to kick out the CEO he brought in. It didn't even make it to a year.

I think what you have to do is say to yourself: there's a way you do automations in 2025. They're agentic. UiPath's automations were very deterministic and brittle. You do exactly these 3 steps in exactly this order, and then it works, and you can automate away humans. Now, you can have a 10-step automation where you have some decisions.

The good news is there's a bunch of companies from Y Combinator onward that are doing this kind of stuff, and you should buy or build enough to take the pain and insert yourself into relevance. That's it, and I'm sure he's on it. This is a very smart man who knows what it has to take.

But, as we've discussed before, the hard thing isn't intellectually knowing what you have to do. The hard thing is driving it through an organization that will invariably say, “Our stuff already does that.”

We've looked at a lot of the next-generation companies, and you do the research and the reference calls, and the UiPath team will say they have something like this—and they do. But in the eyes of the customer, it's not perceived as the new thing, and you've got to change that perception.

It just requires a supreme act of CEO will. I didn't like the “founder mode” cliché, but I've come to the conclusion that it's what you're dealing with here. You've just got to say, “We are refounding the company in the age of AI. We are not going to lose any of these AI-first deals, and we're going to make it happen.”

You know, in a way, though, I agree with all that. I think Daniel, as hard a job as it is, has an easier job than some.

Let me just step back to the numbers. Here's what I would do: he's got $1.8 billion in ARR, but he's got 98% GRR and 107% NRR. One problem mathematically is that his NRR has fallen from the 140% peak at the IPO because people aren't buying that much more from UiPath.

But he's got 98% GRR—98% retention. He has enough time, as one of the greatest B2B founders out there, to build the agentic products that his $2 billion customer base wants to buy, and they aren't leaving.

It's the same opportunity likely Benioff has. I would argue that Mark, with his megaphone, is actually, like Aaron Levie, doing a better job publicly of bridging the gap. But they have the same job. We have extremely high revenue retention. People aren't leaving.

Roy Bahat

The entire—no matter what anybody says, we're in the first inning for AI B2B. I can tell you why: we're in the first inning. It's brutal, but you have time. You've got 6, 12, 18, 24 months to roll out high-ROI agentic products, and you just have to get enough of your $2 billion base to buy them, and you're back to 30% growth.

He goes from 107% NRR to 110%. Databricks has 150% NRR at $5 billion ARR. Get it up 10. I know it's easy to say, but that's the job. Make those happy customers buy more of your agentic product. It doesn't have to be all of them tomorrow. It has to be more of them each quarter, and you're back in the game.

Isn't it as simple as the Alex Rampell quote, which I love: “Can the incumbent acquire innovation before the startup acquires distribution?” Exactly this point.

Roy Bahat

Yes. But listen, you don't have infinite time, but I think everyone has time with 98% GRR. In 2026 and 2027, you don't have infinite time, but don't, like, get rid of the CEO you brought in so you could relax, like, go into Sergey Brin mode. You do have time. The game is not over.

To take that quote, I think it's a good quote, and to some extent, it is that simple. But actually, I'm going to find myself surprisingly agreeing again with Jason on the human factor.

I think the hard part of doing it is this: can a big company acquire innovation faster than a new company can acquire distribution? Let's take that as a construct. That's actually not the issue, because they can acquire innovation if they can push it through.

And if you're a technical founder, the really hard part is that there's going to be about 2 or 3 years where you're lifting the growth rate from 9% to 11%, and the stock doesn't give a shit; then 11% to 13%, and the stock gives a shit; and then you're at 15%, and it doesn't give a shit, and the activists whine.

Because the problem is, we talked about this with Salesforce: the physics. If I have a $0-revenue company and I can go to $100 million, that looks amazing. If I have a $2 billion-revenue company and I sell them $200 million of the new thing, I'm twice as big as this little sexy startup, but I've only got 10% growth. So I'm valued at 5 times revenue, right?

You've got to push that Sisyphean rock up the hill for 4 or 5 years, keep everyone motivated, and just accept that it's a grind. That actually is the hard part.

9. Would You Rather…

That's why I admire the CEOs. I admire Benioff for turning up and keeping doing it. I admire Dylan Field. I admire Aaron enormously for that. They're just saying, “We're not going to roll over and die. We're—because we can be relevant, and we're just going to do what it takes.”

But the point I'm trying to make is that there's not a moment of, “Oh, I've invented the magic thing. We're cool, too.” No, the market will say, “No, you're not cool. You're a $2 billion boring old company.” You've got to make yourself cool, because 30% growth—that's what's cool.

Roy Bahat

And it's just that journey.

30% growth, that's what's cool. I love it. Daniel is also one of the biggest warrior CEOs. You know, the UiPath cockroach founder, just relentless. I mean, Daniel is just extraordinary. A man survived on a dollar a day in Romania for years.

Roy Bahat

You mean he was—it’s a Romanian pre-'89 joke.

10. Boom Supersonic Raising $300M to… Power Data Centres… WTF

A pre-'89 joke. Listen, you said about co-attaching to budget and AI budget. There are 2 that you could pick on for that from this week: Boom Supersonic, the plane builder that gets an order from Crusoe and is raising $300 million on the back of this to fund it and open up this new line of business, or Harness, which raised $240 million at $5.5 billion to automate AI's after-code gap. Which one do you want to take? Because both of them are—

Roy Bahat

Harry, anyone who chooses between a supersonic plane and a software infrastructure provider and chooses anyone other than option A has no soul, right? Of course you've got to talk about the supersonic plane, for God's sake, man. This isn't even a choice.

So, just for context for everyone, Boom is an awesome company. They are building a supersonic airplane from scratch, and they're designing both the plane and the engines. This is a hard, hard task, even for existing plane manufacturers. Typically, Boeing builds planes, and GE or Rolls-Royce builds engines. They're taking on the full enchilada.

I love it. It's a Y Combinator company. They've got a prototype out with fewer than 100 people. Everything in your heart wants that to work, right? A, because it would be great to have supersonic flight other than from Concorde, and B, just because it's an awesome entrepreneurial story. When I saw this, I admit I was like, “Huh?”

But then you do a little research, and I'd forgotten this, but Rolls-Royce—it's not as crazy as it looks because of what Boom said. Boom said they're also going to sell their engines to data centers for power generation, right? When you say it like that, it's like, “Ha, you were making planes, and now you're selling turbines.” But, in fact, all the airplane-engine manufacturers—you know, GE in the United States and Rolls-Royce in Derby in the UK—I used to run a manufacturing company near there—they all do the same thing. It turns out the bulk of what it takes to build an airplane engine, other than the last bit of propulsion, is very similar to what it takes to build a generator.

My guess is this is, Jason, Captain Obvious: it's a lot easier to take an engine, plop it on the ground, and have it generate electricity than it is to put the same damn thing in a plane and have it generate propulsion. So, it was actually not crazy at all. I don't know if it's defensive because the plane itself has a huge regulatory hurdle, or if it's offensive because they can make more money there now. But, genuine comment, I wish them literally all the best of luck.

Roy Bahat

Well, hold on. Boom comes out of YC. Cool company, right? It quickly raised an arguably fake $1 billion round from airlines with no revenue in December 2024, then crashed to maybe a $500 million valuation or worse in a cramdown. Now AI booms and it's back up to $1.5 billion. If I were an investor, I might still have whiplash. Crazy story. We all have them—ones in our portfolios that got a big AI lift this year. But it's one thing to get an AI lift because your cool little network-monitoring tool is selling to Anthropic; it's another to walk into the factory and say, “Strip those engines off those planes, slap them on a trailer, and make them generate electricity for a data center down in Texas.”

I don't lump Boom into the reacceleration. I think the real interesting distinction is that Boom, in its old and new incarnation, is an ultra-high-risk, very ambitious company, versus the software-centric, known-business-model reacceleration. I wouldn't lump Boom in with some SaaS company that's reaccelerating to 30%. They're just such dramatic risk profiles.

I think the interesting question—and I'm going to tie it into the forthcoming biggest IPO ever—is how do you think, as a growth investor, about ambitious, hard-engineering projects like Boom, where, as we've seen, the risk of it going horribly wrong and not building a plane is quite high, and maybe you get saved by building an engine? You go, “Oh my God, that is way more risky than anything in even LLM land,” right?

But, on the other hand, we're about to cover the big story of 2026, which is possibly the largest IPO in history: it's going to be a rocket company. So, I think the aha is, when those hard-tech problems work, and when you solve the technology problem, and if you pick the right problem, you have a wildly compelling business. But, as the Boom plane part of the story makes clear, they're damn hard problems.

Well, they've sold 0 of either. They've sold no planes and no jet turbines for AI power. So, it's a big bet.

Roy Bahat

It is a big bet.

It's a big bet.

11. Will SpaceX IPO at $1.5TRN and The Elon Option Value

Roy Bahat

And 3 launches in 2007 and 2008. That's probably what SpaceX looked like, too. You're right. And if it works, you're a genius.

Speaking of the trillion-dollar outcome and the big IPO for next year, we chatted about it. We chatted about the $800 billion secondary. Following that pretty quickly, there were rumors around the $1.5 trillion IPO.

It's funny, the exact chronology last week. We recorded on a Tuesday. We talked about $800 billion being a high price for that secondary round, and I was like, “That feels like a high price based on the numbers.” I'd looked at the numbers and the growth rate, and there was some deceleration going on. I'm like, “Ooh, $800 billion feels high.” Then, on Wednesday, before we even released the damn podcast, we saw the leak that said they plan to go public at $1.5 trillion.

So, I'm sure everyone piled into the $800 billion round thinking, “Oh my God, it's cheap,” right? You can be wrong by $800 billion in a day. I've obviously been thinking about that a lot, and it's just: how do you get your head around that?

The company's doing $156 billion this year, in 2025. Starlink is the growth driver. The growth rate was down a little this year over last year. Maybe they do early-to-mid-20s next year. So, you're talking 70–80 times 2026 revenues, right? What's the thought process? I was genuinely thinking, how do you talk constructively about that?

What I realized is you have to factor in what I'm now going to refer to as the EOV—the Elon option value—because, on all his public companies, you just run the math. You value what it's worth as a business, with the TAM taking it all into account, and then you look at the difference between that and what it's trading at. That's basically the Elon option value.

If you look at Tesla, it's trading north of $1 trillion. It's roughly $100-and-something billion in revenue, and earnings are down. You apply a normal multiple, maybe you get $300 billion. The rest is the EOV. It will be the same thing on SpaceX, and he's earned that EOV because he pulled the Starlink rabbit out of the hat. It was a rocket company, and then it became a communications company.

So, he's earned it. It is credible to say, in his case—as in almost no one else's case—this is one of the few people on the planet who literally might find you another trillion-dollar market that you weren't in, that wasn't in the original plan. So, roll the dice. If that premium ever evaporates—oh dear God, if he were ever to die, the stock gap would be something horrific, right?

I just recognize that you can't run the numbers on SpaceX and come up with $1.5 trillion. You just can't. But what you can say is, someone who's founded, let's be clear, the most successful car company ever, Tesla, and, let's not forget, also a founder of OpenAI, which looks like the most successful AI company ever, and the most successful rocket company ever—once you're lucky, twice you're good, 3 times you're freaking amazing.

So, I just have let go of valuation. I'm like, “I can't figure out how it's worth $1.5 trillion, but you just apply the EOV on top of the TAM, on top of the 10x multiple, and away you go.” It's awesome.

Roy Bahat

You have to manifest it.

That's what you're missing. This is what he's doing. Even Harry's manifested almost a billion dollars under management. You can laugh, but if you have enough behind you, if you have enough magic in proof points, totally—

Roy Bahat

I think he's manifesting a $1.5 trillion company. I don't know if all the kids can manifest it, but he's doing it.

I can teach him. I've learned a lot.

Roy Bahat

Teach him how to manifest it.

I'm manifesting a beach house in Laguna Beach.

Roy Bahat

You're a manifestor, Harry. You are. People don't get it. You are an S-tier manifestor. Elon would definitely be an S-squared, S-cubed, S-to-the-10th. I mean, it just—

Breaks. You just have this other thing up. Yeah.

Roy Bahat

It’s just not even playing the same game.

As I say, I was really thinking about this. As you look at the numbers, you go, $15 billion, plus or minus $2 billion to $5 billion of space revenues, which is wonderful but capped. You’ve got these customers, there’s a certain amount of volume, and they already have 90% of the volume. Then you start estimating: how big can Starlink be?

Dear God, let it be on every United flight soon. If anyone from United is listening, I actively avoid your planes because they don’t have enough Starlink, so please fix that. Then you get all the rural broadband, but you still struggle to get to anywhere close to $1.5 trillion.

Then you just have to say, you’re buying a share in probably the only person since the demise of Steve Jobs to not do it once, but do it three times. Jobs did it with Apple, Pixar, and then Apple again, right? Elon’s done it with—you forget the small ones like PayPal—and then, on top of that, Tesla, SpaceX as a rocket company, SpaceX as a communications company, and then, of course, OpenAI as the leading AI company.

Roy Bahat

He did SolarCity as well, didn’t he?

He did, but that didn’t matter as much. I mean, it was just a simple, humble $2 billion or $3 billion outcome—nothing among friends. So, even rounding out the little ones, you’re left with the most entrepreneurial record possibly of the last 30 or 40 years, with, as I say, the exception of Steve Jobs. At the margin, you lean in.

Now, I can’t get the math to work either, right? But the one thing is, I do think Elon’s all over the place, unlike Sam Altman, where every single thing I think Sam says, as off-the-cuff as it looks, is very thoughtful. But I think Elon talking about space-based data centers is potentially his next big play.

I think there’s a reason he’s communicating this well ahead of the IPO. I think this is one of the big plays. It is an incredible business as it already is. I have 3 Starlinks. I don’t know what I’m paying—a lot, right?—and it’s great.

But if all of that, starting at the beginning of the conversation, if all that Oracle, CoreWeave, and Nebius revenue goes up in the sky, deep, far in the sky, that is a lot of money. And he’s the only one that can do it. He’s the only one that can build data centers in space, and I don’t think he’s joking.

It’s easier than going to Mars—or at least it’s easier than getting back from Mars. Going to Mars is not a huge challenge; it’s getting back. So, we might be underestimating the data centers in space. It’s possible. Would it be a successful IPO at $1.5 trillion?

Roy Bahat

That’s an interesting question for the buyers or the sellers. It will be the most successful IPO in human history for the sellers. I just think what Founders Fund is going to record on this is going to boggle the imagination. Will it be a good stock to buy at $1.5 trillion? Is that what you’re asking, Harry?

I’m saying, will there be investor demand at $1.5 trillion sufficient to satisfy it, followed by a stabilized period where it doesn’t tangle afterward?

Roy Bahat

I can’t say, because you’re asking me to assess something that’s not within the bounds of logic, right? I don’t understand the Tesla market cap relative to the financials or even the TAM. I don’t think people get there by running the numbers. You’re trying to assess the nonquantifiable, so I don’t know how you can come to an informed conclusion.

I don’t understand the mindset of someone who would buy based on the intangible at that kind of price. As a rational buyer, you look at the upside-downside risk and you get very nervous. But I think the same has been true of Tesla for the last 5 years. The financial performance has been fairly mediocre for 4 years, but the stock has stayed up.

So, you’re asking me to speculate on the propensity of the marginal Elon believer to buy the stock at $1.5 trillion, and I have no way of assessing that. I think it’ll be a tricky one to get done. I would not envy the bankers pitching this week; I would not envy them their task.

He does seem to have an ability that maybe no one other than Bezos in his prime has, which is, “Give me 5 years.” All of Elon’s dates are wrong. Everything is full self-driving. Everything’s behind, from the Model S to the Model 3 to Starlink, and everyone gives him another 4 or 5 years.

The day traders are going to enjoy this stock. It’s just hard to predict when everyone gives you another 4 or 5 years. They’re really not trading on today’s revenue or today’s anything. It’s a gift, but he’s very good at that. He’s very good at overpredicting but ultimately delivering.

You’re exactly right, Jason. And that is true. Maybe going back to the question on a technical level, for lack of a better word, I can’t speculate, but it is a daunting task. Are you going to raise $30 billion, which is only 2% dilution, meaning it’s still widely traded, or are you going to do the typical IPO 8% dilution?

That would be, do the math here, about $120 billion. Is there $120 billion of raw risk capital that says, “What I really need in my portfolio in 2026 is a 70× run-rate-revenue SpaceX investment”? Again, some poor banker is going to have to get on his PowerPoint, get on his private jet, and start flying around the world saying, “How much of this do you want?”

I don’t know. I don’t know how to assess who that investor is. Do the index funds buy it? Do the sovereign wealth funds buy it? I think there’ll be a lot of consumer and retail appetite. I just don’t know how that all comes together.

It will be fun to watch because it will probably be the most challenging IPO story if it’s anything like that valuation. The other thing you might see is the valuation gets walked back to the merely outrageous. The most impressive thing is the entrepreneurial oomph behind it. I heard Peter Thiel speak about this years ago.

When you have a big enough vision, you do get a buy on the little stuff. Elon, by having that big vision, has been able to paper over the cracks that would have killed many a lesser man. Good luck to him. It’s great in the end. I like my Starlink, too.

Roy Bahat

I mean, here’s one scenario, for what it’s worth: Google anchors them with $10 billion. They’re already a 10% shareholder.

In for a penny, in for a pound.

Roy Bahat

They may have—maybe it’s a Gemini partnership in space that’s part of it. They get first access to the TPUs in space. It’s not—no. So, they put in $10 billion.

It’s good timing with AI, and as soon as that happens, we’re running out of space in the IPO and the banks run around. Google’s in for $10 billion. Everyone else is in for another—Fidelity is in for $2 billion—and all of a sudden, you start to panic that you’re not going to get your shares.

Maybe if you get a call in 10 minutes from Goldman Sachs or Morgan Stanley, you’ll be signed up as a banker by Friday. I love it. You’re exactly right. That’s a narrative. Maybe the best company is a narrative story, and Jason’s just shown how easily a narrative can change.

It’s not a story like a PE-backed public IPO, where it’s, “At 8× ARR, you can get 6× coverage, and at 10× ARR, you can only get 3×, so the deal gets done at 8.” This is a totally different thing, and this is in tune with the SaaS game: it’s all narrative, all the time. You’re right; that would be a very clever way to do it.

Jason, that was fantastic. He should be a banker. He’s right; he’s exactly right.

Roy Bahat

Well, Google almost bailed out Tesla at the last hour, when it almost went bankrupt. It’s already happened, and Sergey’s back running Google. It’s just $10 billion.

I can tell you, we do work closely with a lot of the folks at Google Cloud with SaaStr. They are feeling strong. We work with a lot of folks in marketing and product. I’ve never seen a team feel more energized in the entire decade I’ve worked with them. They’re on; they feel that they are winning.

So, why not put in $10 billion to get my TPUs in space? It’s a good deal.

It’s nothing. It’s a couple of percentage points of market cap. Not crazy. What else are they going to do with the cash?

Roy Bahat

They can’t spend it like Meta does. They can’t spend it that way. No, they already have engineers. They don’t need to spend it on that.

And Jensen’s doing buybacks, so maybe he can stick a couple of billion in, and there you are.

Roy Bahat

Maybe NVIDIA could put in $5 billion. If they do $15 billion together—Google and NVIDIA, and $2 billion from Fidelity—there’s no room for retail. We’re sold out. The round is sold out.

And the genuine comment and the genuine learning is, as I said, the power of a big story. At one level, there’s a little part of me, the boring comms guy, that screams, “This is all madness. You’re all insane.” Then there’s another little part of you that just gets inspired by the fact that we’re sending rockets to Mars, for God’s sake, and we’re a telecom company that connects the whole world. This has got to matter.

Just because you brought up Founders Fund owning 10%, I know it’s just a story people forget: Peter Thiel fired Elon Musk.

Roy Bahat

Yes. He fired him, but he treated him like a human being. He fully vested all his stock, took nothing out of his pocket, thanked him for it, and told him that was the way it was going to be.

He treated him pretty damn well. And so, when Elon was going to die, when SpaceX was going to die, he went to Founders Fund, and Peter Thiel gave him the money in an hour, right? Or whatever the exact story is, it’s a reminder in today’s age of extreme greed to be kind.

Rory O’Driscoll

Yeah.

To be kind. He didn’t just—wasn’t just nice to him. He accelerated all of his stock and made sure that it wasn’t about money; he was appreciated. He walked him out the door. I don’t see this happening often enough.

I’ve seen 2 CEOs at the end of this year just quit their startups that I invested in. Be kinder. Go the extra yard like Peter did with Elon. It just may pay off, like owning 10% of a $1.5 trillion IPO. Even for a billionaire, it might pay off. It might pay off being kind.

Roy Bahat

I reserve the right to say I’m not sure how much of it was kindness versus Elon also being a big paid-in stockholder. I think the meta point you’re making is right. Two things are wildly impressive. One is the density of talent at PayPal—it blows the mind. You have Sacks, et cetera; you have Reid Hoffman. It’s just amazing.

You have Elon. And then the second thing is, you’re right, they clearly had their bumps, and the fact that they were able to be rational business people is about to pay off to the tune of $100 billion. It’s a great story. It’s kind of one of those wow moments, and good for them.

It’s like Harry tweeted today something about people who aren’t in the very biggest deals feeling totally irrelevant, and you correctly got a whole bunch of pushback on it, Harry, because it was a bit obnoxious. But there’s no doubt in a world where 1 investment might return $50 billion to $100 billion, everyone else has to feel just a teeny, tiny tad irrelevant compared to that return for Founders Fund. Good on them. It’s a 20-year compounder at 50%, plus or minus.

Okay, we’re going to do a would-you-rather, Rory. You love this. You’ve got Figma at $17 billion or Cursor at $29 billion.

Rory O’Driscoll

Cursor.

Roy Bahat

I’m going to take Figma, only because I don’t believe Cursor’s future is assured. I think Cursor is magical. I think it’s a gift to humanity for folks that have built software.

But I think if we keep doing this podcast long enough, we’re going to see I’m right about something else, which is everything’s much less stable than we thought this year. The categories, the Harveys, the Cursors—these are incredible companies. I wish I invested in all of them, don’t get me wrong.

We’re going to look back in 24 months and see there was a lot less stability in these so-called leaders than we thought. It’s not that they’re going to go to 0, but we are so early in AI that I’m going to take Figma on this one. But it’s a tough one. It’s a tough one.

Rory, you don’t—

Rory O’Driscoll

No, I don’t feel the need to argue. I think that’s the beauty of money. You just make your bet, and then you don’t have to justify your position with English. In the end, you’re right or wrong on the numbers.

Yeah, Jason doesn’t need to argue. God, I don’t like to argue.

Roy Bahat

Let’s shit on Harry’s tweet and then just not argue.

I was a little obnoxious last week. I hope it doesn’t happen again. But yeah, keep going. Next one.

OpenAI at $500 billion, Anthropic at $360 billion, or Google at $2 trillion?

Roy Bahat

I have to take Google. The reason is just the level of—I don’t mean arrogance; I mean confidence in where they’re going—that I see across the team we work with. I know it sounds small, but it’s not. When I see everything’s going right, and the team feels it and the team knows it, how often does that happen at this scale?

Not that I don’t think everyone at Meta is cheering that they’re crushing it, right? I’ve got to just, odds-risk-adjusted, take Google. Wouldn’t have been true a year ago. Got to take it.

Rory O’Driscoll

But the point that I’m going to give you—okay, I don’t know my answer yet—but actually, the point is, a year ago it should have been time to take Google because the stock’s up 60%. You may now be on the wrong side of that trade. You should have taken the quick pop.

Roy Bahat

I’m not a trader.

Rory O’Driscoll

I know.

Roy Bahat

True enough.

Rory O’Driscoll

I mean, they make north of $100 billion a year. So, you’re buying in at 20 times, plus or minus, EBITDA. It clocks in north of $100 billion of profit a year. Everything else was a positive when we talked about it 9 months ago, and the risk was erosion of search. All the positives have kind of gotten better, and the erosion of search hasn’t happened. So yeah, you do have to give it consideration.

This is hard. At $170 billion, I’d have taken Anthropic. Do you think I’m actually right? Because, yeah, interesting comment here: Anthropic, you’re giving me the future round. Has it happened at $300 billion? But the future round at OpenAI is rumored. Is there another round coming on OpenAI?

Roy Bahat

I mean, they’re always continuously raising, but if you were to do live pricing on them, Anthropic would be $360 billion unless you were getting grandfathered into a prior round. The real live price is $360 billion.

Rory O’Driscoll

At $170 billion, I take Anthropic all day, every day, because I think they’re being way more sensible than OpenAI, and I think they will go public. Yes, at $170 billion—at $300 billion—you might be fully valued.

I think the difference between Anthropic and OpenAI is OpenAI has more ambition, perhaps, but it’s more likely to just get caught in the middle with commitments it can’t meet, whereas I think Anthropic is very sensibly and boringly converging on profitability, will go public, and will be a very nice public company.

So, of the 2, I’d take Anthropic. I’m passing on Google, and it just feels lame. I mean, you could argue they’re all almost public already. You—

Come on, Rory.

Rory O’Driscoll

Shut your face. I think I’d go with Anthropic. I think I’d go with 1 of the pure plays. Even though I do agree on Google, I think I’d go with 1 of the pure plays.

Roy Bahat

Boys, he’s a slow burner.

Rory O’Driscoll

A slow burner. You know, I like to think before I comment, so call me strange.

Don’t worry, we edit anyway. It’s all good.

Roy Bahat

Yeah, yeah, yeah. Get rid of that one.

Boys, thank you so much. You continuously make me more and more questioning of my own questions. You know, I’ve done this for 10 to 11 years, Rory. I never questioned my own interviewing ability until I started doing this with you, and now I’m deeply forensic on the quality of my questions.

Rory O’Driscoll

I’m just a dick. What can I tell you? No, this is great.