Anthropic 从 Microsoft 与 NVIDIA 募资300亿美元；NVIDIA核心业务面临TPU威胁

1. Anthropic's $30BN Investment from Microsoft & NVIDIA

We want to start with the news of the day: Anthropic’s mega AI deal. Anthropic secured up to $15 billion from Microsoft and Nvidia, pushing its valuation to $350 billion, with commitments for $30 billion in Azure compute. You can see I’m learning from prior episodes in setting the context. Let’s start there: How did we analyze that? How do we break that down?

Jason

It was pretty funny watching Twitter this week. A week ago, they were saying, “OpenAI is dominant.” Three days ago, it was, “Gemini 3 Pro has Mark Benioff saying, ‘I’ll never go back to ChatGPT again.’” And today, it’s, “Cloud45 has killed—crushed everything.” My point is, there’s just no stability, right? There’s no stability in seed investing. There’s no stability in Anthropic.

So my meta-learning, which I wouldn’t have even had a couple of weeks ago, is: more power to them, because I think you need infinite capital when there’s no stability. You need infinite capital. It’s just so funny. Literally 3 days ago it was Gemini, and today it’s Anthropic. What will it be next week?

Rory

Yeah. I might argue that the stability of the commentators might be a lot weaker than the stability of the actual market share of the incumbents. In other words, we kind of run from guardrail to guardrail on opinions.

There was a bunch of stuff in the announcement. First of all, you glossed over the key fact: it was from Microsoft. This was the Nvidia-Microsoft commitment to Anthropic, and Microsoft was in a monogamous relationship with OpenAI. Then OpenAI wanted an open marriage, and Microsoft said, “Well, if you want an open marriage, I want one too,” right? So this was probably inevitable in that context. That’s probably the first big piece of news from it, which is Microsoft in.

The structure of the deal is the usual thing: You get $15 billion; you promise to spend $30 billion. We’ve seen that structure before. The other interesting thing, which you didn’t mention, is that in the same announcement, I think Anthropic also said they’re going to break ground on a physical data center.

That’s another one of the model companies saying it’s not enough to rely on compute from your service providers, be it Azure or AWS. They’re also looking at doing physical data centers themselves. It’s another chapter in infinite capital.

Have we just decided we don’t care about round-tripping revenue? Like many things in this era, have we just given up caring? There are so many things we used to care about in the past, and now we just want to get rich with AI. We don’t care.

In a bull market, nobody cares about anything, and then in a bear market, everybody discovers why you were meant to care, right? Now we’re in the don’t-care part of this trade.

Don’t care, right? And again, as we said before, provided it works, it’s all fine, right? For what it’s worth, if you’re a chip provider and you had to stick some money in one model provider, this one feels like a pretty good bet.

Zooming out, of all the round-tripping deals, I would argue a Microsoft-Anthropic-Nvidia deal probably has better principles and upside than most. Some of the other round-tripping deals look like they’re already a bit shaky.

Totally get you on what you said about the importance of verticalization in terms of the data center play that’s added onto that deal. I think another very important bit of news was Google training Gemini 3. Obviously, people were very impressed with the quality of Gemini 3, Mark Benioff included, saying that it’s trained on its own TPUs—their own chips, for people who aren’t aware of TPUs.

Elon’s AI company, xAI, is developing its own AI inference chips. On the question of verticalization, as we said, with owning the data center layer, does everyone now need to own the chip layer as well, as we see more and more with TPUs and with Elon? Is that the next phase of verticalization?

Jason

As you guys know, I use Replit 2 hours a day, a little less on my London trip. I’m in the top 1% of users. Lovable’s great, too. They added Gemini 3 Pro the day it came out, as did everybody, right? I instantly used it. It was great. It actually wasn’t so much better.

What everyone said is that it’s better for design. Lovable said it, Replit said it, everyone said it. I would say it was 20% better for design. But that wasn’t the interesting part. I used it, it worked great, and then in my next prompt I rolled back to Claude. It was fine.

So not only are there different models, but abstracting a couple of layers above, we’re switching between TPUs and models, and I don’t care. I’m not saying these aren’t huge issues, but the idea that Nvidia is unstoppable because of the software and hardware connection, because we have to have GPUs—I know there’s a lot of truth to that—but literally, as an end user, I went right back and forth from TPU to GPU. No issue. TPUs, GPUs, LLMs, all in the space of 60 seconds, or maybe 3 minutes.

Rory

I think I want to build a little bit on that. Let’s talk about TPUs first of all, not right at the chip level. The big-picture question you’re asking is: Does every large, vertically integrated company have to do its own chips versus buying from Nvidia?

The reason you posed that question is that Google obviously has its own TPUs—its own chips—which I believe, for what they do, are faster, right? I think the interesting thing here is that you have to separate out 90% by customer count of Nvidia’s customers. If you’re spending $1 million, $2 million, $5 million, or $10 million with Nvidia, it’s in the noise, and you’re not going to design them out and build your own chip. That would be madness.

The odd thing about the Nvidia business, unlike most other businesses, is that 4 or 5 of their customers account for 80% of the revenue—something like that, 70% to 80%. Looking at the other side, if you’re spending what Google is spending—$90 billion this year on capex—the rough rule of thumb is that around 40% of the total dollars are on compute.

If they were buying Nvidia chips, they’d be spending $36 billion on compute, literally just on chips. If you’re spending $36 billion, and that $36 billion is—knowing Nvidia—at 75% or higher gross margins, which means you’re handing Nvidia north of $20 billion a year of profit at the margin, at that point you say to yourself, “Well, it’s hard to build a chip. If I was spending $10 million, I wouldn’t bother. It’s probably going to cost me—back when venture guys did chips, it was $200 million to get to a chip. Probably today it’s $1 billion.”

But if you’re giving someone $20 billion of profit a year, you can say to yourself, “Maybe I can invest $1 billion a year for 5 years and get a compelling chip.” You’ve got to look at that if you’re Google. You’ve got to look at that if you’re Amazon. You definitely have to look at that if you’re Tesla.

The reason all that makes sense is just how concentrated the customers are. It’s the old rule: The more customers you have, the easier it is to charge them a little more and the harder it is for them to take your margin back. When Intel was winning in the CPU wars, they had—pick a number—100 million customers, because we’re all customers. We all gave them $200 for our Pentium. Nobody cared, right?

In this case, Nvidia has 5 or 6 customers that are spending the vast bulk of its revenue. They’re making 75% gross margins, so every one of those big customers should be saying, “It’s damn hard to build a semiconductor.” I probably disagree a little bit with one point John made: I don’t think it’s easy to build a TPU that can also be rolled out to everyone with all the software support that Nvidia has.

But even if it’s just used internally, and I can save that $20 billion of profit, hell, I’ve got to look at that if I’m Google. I’ve got to look at that if I’m Amazon. I definitely have to look at that if I’m Tesla. So, yeah, I think that’s an interesting medium-term pressure point on the Nvidia profitability story.

It’s not going to happen overnight, and it’s not going to make sense for most people. You have to be pretty damn smart technically to ship a comparable chip. But in a world where you only have 6 customers that matter, having one of them say, “I’ve got a better product myself,” is a significant event.

Especially if I’m OpenAI, which is burning even more money, I’ve got to be thinking, “Man, if I could cut two-thirds of the cost of my compute, think about my business.”

I go from one of the biggest cash-hemorrhaging businesses of all time to a profitable business. Maybe two-thirds isn’t quite the number, but I’d be relentless about it. I mean, the bar keeps going up. We talk about it, but ultimately, if I can cut $20 billion or $30 billion, all of it’s a big deal.

2. NVIDIA's Customer Concentration: Bull or Bear

I replay what we’ve just said in the last 5 minutes. It is the most obvious threat to Nvidia’s business. What are Nvidia thinking about this internally? Jensen must see this very clearly. How does he respond, and how do they protect their business in the wake of being so concentrated and losing those customers?

Jason

Yeah. First of all, there’s a reason why they sponsor the CoreWeave-type companies and the next generation of neoclouds, because they’re like, “Those guys aren’t going to build their own chip.” A simple, humble $20 billion market cap company does not have the capacity to build its own chip. So it suits them to have the market for cloud compute and AI be a little more diversified than concentrated. Anything that can make that happen is in their favor to some extent.

That’s all they can do. They don’t have a ton of leverage over Google, and obviously now Google is starting to talk about selling those TPUs to others. So it’s a threat. What they would say—and they would be correct—is that, for most users, because they have such dominance and such validation of the CUDA software layer, it’s going to be too much brain damage to switch from the GPU you know and love to something new. There’s probably significant activation energy, and that’s going to be true for most customers. The long tail of Nvidia customers aren’t going to do it, but you’re right, Harry: all you have to do is peel off 1 or 2 of those big-margin cows and you’re done.

The funny thing is, the only thing that perhaps—and this will be interesting to watch—protects them is that the biggest potential alternative customers for the Google TPU are Google’s sworn enemies. Microsoft, Amazon, and maybe OpenAI, to the extent they want to do data science, would be the obvious next places to go, because they’re the other people doing so much compute that it would be worth their while to try and digest TPUs. That’ll be interesting from Google’s game theory perspective. Do they do that, take the capital, or do they continue to keep it in-house and have a structural cost advantage? I don’t have the answer there, but it’s outside Nvidia’s control.

I think, Harry, I rambled a little, but to your point, there’s only so much you can do if you only have 5 customers and 1 of them wants to diversify away from you. It’s the core risk of Mercor, Surge, Turing, and all of these data providers: They all have 2 customers that are more than 50% of their revenue. The bet you’re taking, or the risk you’re willing to underwrite there, is that it’s not actually a core function of Meta, Amazon, or Microsoft, and they won’t go after the data acquisition market themselves because they can just spend the money with those providers and it’s good enough.

I actually think, going back to the opening of the show, that we’re just ignoring the risk because Nvidia’s numbers are just too good.

No, that’s what we’re all doing. We’re ignoring it. This is systemic risk. Back in the day, Twilio losing Uber as a customer meant 12% of its revenue was gone. This would be much bigger, but when the numbers are there, we’re just ignoring it. We’re just ignoring it. You don’t wish you had invested in Nvidia 5 years ago? Of course you do. You’ve got to play the game on the field. Even public market investors have to play the game on the field.

So, do you think Nvidia is overvalued today?

I mean, no. The amount of compute—I mean, what did Google’s head of infrastructure say this week? Google needs 1,000 times more compute in 5 years than it has today.

A thousand X.

It’s difficult to believe Nvidia won’t be a leader in that time. So, oversimplifying where all the chips will go and what will go where, that’s a lot of growth to invest in: 1,000 X on compute, if not chips, 1,000 X, right? That’s better than most SaaS companies right now. I don’t know many SaaS companies predicting 1,000 X growth at scale.

3. Google vs. OpenAI: Sam Altman's "War Mode" Memo

But I actually want to go back to the first question you asked, the customer concentration, because I often think it’s interesting for people who listen to get a sense of not just the public markets, but how we all think of it as investors. You’re absolutely right, Harry. The big question with all of the AI—and data labeling is a good example, as are any of the AI compute co-attach bets—was that there were only 4 or 5 customers here, right?

The logic you had to use was that, in the hypergrowth period, your customers, whether it’s OpenAI or someone else, aren’t going to have time to optimize for efficiency. They’re going to be running fast, and in that period of time, you can create huge value. We saw Scale AI create huge value, and then you’re right: The fear would be that when things slow down and people start moving from optimizing effectiveness to optimizing efficiency, those businesses get tough.

As an investor, you’re always tempted to do them. I’ll admit, I was scared of the data-labeling companies, and I was wrong. There was a period of a couple of years where they clearly worked and worked really well. The interesting thing will be whether they continue to work for the next 3–4 years if, in fact, dollars get a little more scarce. How do you guys, the 2 of you, think about those kinds of investments—investing in a company that logically only has 4 or 5 big customers?

Specifically on the data-labeling market, this is one where I’ve interviewed the founders of Turing, Scale AI, Mercor, Invisible, and Surge. I’ve pretty much interviewed all of them. The one thing that made me feel incredibly comfortable investing in the category was understanding the specialized data requirements that the large providers need.

I hadn’t quite thought about the very verticalized data requirements, whether it’s surgical data or bookkeeping and accounting data, that all of these different players are going so deep into. It’s so specific and, in some cases, strange and weird that the large customers are never going to churn or pull away from them because they are so verticalized. When I got comfortable with that, I was like, “Oh, I’m okay to take this risk and underwrite it because I don’t think they’re going to churn.”

That’s super helpful and insightful, Harry. You’re right: If you only have a small number of customers, then at some point they’re going to optimize. So then you get into the fact that you have to have something they can optimize around. After that, the next skill you need to have as a CEO is the ability to play extremely good poker, because you’ve got to look them in the eye and say, “I know that your $20 million contract is my biggest contract, but I also know that my data is your most important data.”

You’re right, there’s drama and tension, but you wouldn’t want to be doing a commodity data-labeling play when they start to focus on efficiency. ASML sells primarily to TSMC. It’s the same dynamic: one seller, one buyer, to a rounding error, and it’s manageable. It’s not like you can’t build businesses in that space, but you have to have something really unique to avoid them pounding you all over.

The deciding factor, the swing vote in favor of taking the risk in those kinds of deals, is the speed at which the underlying market is moving. That’s kind of the get-out-of-jail-free card that says, “Yeah, in theory, you could say you’ve only got 3 customers and they will grind you down, but if they’ve just got other shit to do for the next 5 years growing the business, they never get around to it,” right?

Yes. Maybe in some logical world, all of Microsoft, Amazon, and Google should already have had their own TPU equivalent because they should have known to do this. But there are bigger fish to fry for a long time.

In a run-fast world, if you’re Nvidia, you’re saying, “But I have the product now. It’s ready to ship. You want to get your compute rolling, you can make money for a long time, even in a concentrated market.” It’s only when it slows down. That’s why, if I look back on the data-labeling thing, Harry, the earlier you are, with the more hypergrowth you have ahead of you, the easier it is to be undifferentiated. By the time the growth slows down, you better either be differentiated or, as Jason was, you better be exited.

Well, I’ll tell you, just listen: all that matters is growth today, right? Even Palantir is extremely concentrated at its scale compared to what we’re used to. It’s part of the AI world.

But the wonderful thing about triple-digit growth, doesn’t it?

I want to go back, though, to the Nvidia overvalued question. I’ll phrase it differently; it gets to the same thing. If you look at today’s revenue, it’s not overvalued. The P/E on Nvidia—to give that sound bite that I love—is lower than the P/E on Costco. We talked last week about the earnings before they came out, and we recognized it was an odd time because the show had come out after them.

But it all played out exactly as we thought: there was no surprise in the earnings, because all the hyperscalers had announced a quarter, a week, or a month beforehand that they were buying more stuff, that they were constrained by capacity. So there was actually no data in Nvidia’s earnings of any significance.

The question is: Nvidia’s valuation is effectively a function of the end demand for compute. As long as demand continues roughly where it is today, Nvidia is far less aggressively priced than Costco, or than Cisco in 1999, on a P/E basis. The question, effectively, is whether the demand for compute, as it manifests in 2025–2026, represents steady-state demand, or whether it is a cyclical peak.

Two or 3 years from now, we’re not going to be spending $90 billion. That’s the primary question. You’re right, the secondary question is the whole TPU and substitutes question, but I would argue the first one is the primary one. As long as the hyperscalers and the model-provider companies continue to invest massively and aggressively in compute, then, with the exception of the substitute risk, Nvidia’s business is safe.

You’re really saying, at the margin, that the question is: is Microsoft going to increase another 30% next year? Is Anthropic going to invest in compute? Right now, all those answers are yes. My takeaway from the recent convulsions—you can’t call them convulsions when things only move by 5%—is that this is not some kind of great correction.

It’s more that the market is doing a pretty decent job of saying, “All you companies that are investing, who’s doing it well? Google, you can invest more; your stock goes up. Who’s doing it badly? Oracle, your stock goes down.” The market is doing what markets are meant to do, which is send a signal.

Right now, the signal is not saying, “Oh my God, don’t invest in anything,” which obviously would be catastrophic for Nvidia and for all of us, because it’s 7% of everyone’s S&P. The market is sending a signal that says, “Those of you that have good businesses and are investing are doing just fine. Go team. Go Google. Go Microsoft. Those of you that are a bit further out on the risk continuum probably should be thinking about that.”

As a Duolingo shareholder, I’m feeling the pain.

Yeah, it’s been brutal—70%. Brutal. You know, it’s funny, with the hyperscalers pre-announcing NVIDIA, right? You’re right. There shouldn’t be any surprise, because they’ve already said what’s happening.

I remember my first fund. I had a hedge fund invest, and the only reason they invested was to get that data from the portfolio. If you have a portfolio company with direct, linear exposure to NVIDIA, you will know in real time how NVIDIA is going to be doing. If you have one-to-one exposure, that was his only goal. Basically, “I’ll give you infinite money. I just want exposure to public companies through your startups.”

I love that. Before we move on, I do just want to say that this is an interesting question. Rory, you said the word “threat” a couple of minutes ago. Sam Altman did a memo internally within OpenAI, and he said that they were in war mode against Google regarding its increasing capabilities and the increasing competition in the space. Does this declaration of war mode ever work, and how should we feel about Sam catalyzing the troops into this proactive state?

Rory

I don’t think I’ve ever seen it work. I’ve watched folks do this. All the leading public companies say this: “We’ve got to work harder. We’re in war mode. It’s AI.” I’ve always wondered: who are they talking to? There must be a handful of people it works on, but who really cares enough to go into war mode? They’re already working as hard as they want to be.

I’ve just wondered. It’s not to Wall Street that they’re sending the message, I don’t think. Is it to let VPs know they’re going to get fired? It’s just something that CEOs want to say. They want to tell people it’s time and that they’ve got to step up. I’ve almost never seen anybody react to that.

War mode as a metaphor for rallying the troops—I don’t know if it works or not. I always find it a little odd. I’m like, “Have you been in peace mode until now? Did you just suddenly discover there was a war?” It raises all sorts of weird questions.

I also, for what it’s worth, don’t love the metaphor. Let’s be honest: we’re a bunch of pampered West Coast elite computer people. If you want a war, the U.S. Marines are still taking applicants, and you can have a real war. Otherwise, save the metaphor for someone who cares.

I’m not a fan of the “war mode” thing. Whether it works or not, in my view, is independent of the metaphor. Maybe the better question, to Jason’s point, is: forget the metaphor, forget the war, forget “work harder,” because you’re all working hard. What exactly are you going to do today that you weren’t doing yesterday? That would be an interesting question.

Jason

Well, I will say that across every professional experience I’ve had, from startup to scale-up to VP at a Fortune 500 tech company, nothing happens when you’re not in hyperaggressive mode. You think it does, and you get releases out, but it’s only when you find a way to get into what you can call war mode that anything happens.

It seems like things are happening, but you’re just keeping up with the release, with the TPU schedule, with the bug fixes, and with the patches. If you’ve ever worked in a tech company, especially a software company, just fixing the bugs could take all year. The team says, “We can’t do it, Rory. I know you want to launch that feature, but we have 12 years of technical debt.”

“What about the OAuth? It doesn’t work.” You get endless excuses from the team, because they’re true. You have decades of technical debt and 100 features, and you just promised a big customer you’d have this feature that still hasn’t come out. Now your biggest customer is telling you to do even more.

You can’t get anything done unless you’re in hyperaggressive mode, like mobile was for Facebook. I just don’t know if telling the troops works. I’ve never seen it work. But you do have to go into hyperaggressive mode, because I think what he’s saying is that if we evolve at our current pace, we’re going to fall behind. It’s that simple. That’s what he’s saying: we’re going to fall behind.

When I meet with startups, especially when you invest later because your money’s already in, when they’re not in hyperaggressive mode, I lose confidence. You’re just not going to get anywhere. I need to see, especially today when companies are falling behind in AI, that the team is in hyperaggressive mode. When you have companies at scale falling behind, I don’t care about your talk. I don’t want to hear about your pilot. I want to feel that your team is in hyperaggressive mode. If it is, I think you can come back.

What are the signs, or the smells, that suggest hyperaggressive mode to you? Founders will be listening to this and asking themselves that question.

The management team. There’s a tension in the management team to move faster. Every single person on the management team says, “We are shipping product faster. I am selling harder. I am getting on the road more. I am generating more leads.”

Every single person on your management team is sweating it, and they’re executing faster. You can see it. They come to your board meeting, they come to whatever meeting, and there is velocity in every area. How many times do you truly see velocity increase in a board meeting? Not that commonly. That’s hyperaggressive mode.

Everyone is aligned on this somehow. This makes a great company. This is very hard for a company to do. Everything is anti-inertia. Everything slows down, even in an early-stage startup. Then, when you come in and everyone is sweating and saying, “We shipped twice the story points, twice the software, as last quarter, and we’re still falling behind, and I’m pissed,” that’s what you need.

These days, in the area of AI, I just don’t see it enough. You need to make your team hyperaggressive. It is an unnatural state.

If I push you, it’s unnatural. If I push you both, who will win the consumer? Is it OpenAI and the app rollout that they are clearly going to do over the next few years, or will Google retain the consumer, the search layer, and the app layer that it has today?

Jason

I’m going to maybe be trite, but I think Sergey brought hyperaggressiveness back to Google. He’s clear in the interviews. He says, “I came in, and we weren’t even allowed to use our own tools. We weren’t allowed to use our own coding tools. We weren’t allowed to use our own chips.” He says, “I got rid of that in a week. I heard arguments, and I got rid of it in a week.”

That’s what you need. Sergey had to come back. As great as the leadership is, I think Sergey had to come back and make it hyperaggressive. I don’t think it was the only point, but you need that. Most of the startups I see that aren’t founder-run are unable to get back to hyperaggressive mode. It’s just impossible for them.

I’m not saying it hasn’t happened with Satya and Sundar, but look at our portfolio: without a founder, can a company switch into hyperaggressive mode?

Will Google retain the consumer with the app suite it has, or will OpenAI continue to eat more and more of Google’s core business, and will we see a much more shared landscape?

Jason Lemkin

Well, listen, I think the same thing most people on X do. I think the Google products are great. I use them every day. I use AI. In fact, I don't even care whether I use AI Overviews or ChatGPT, but I actually prefer AI Overviews because I don't have to leave Google. That's a great product.

Gemini 3 Pro is a great product. These are great products. There's no reason—you're not giving me any reason—to leave. They're great. They're truly great software.

Rory

I want—I’ll answer this question, and I actually do want to come back to the leadership thing because I want to chat a little bit about that and maybe learn something. But going back to the first question, the Google question, if you listen to the overwrought stuff from a while ago, Google, 6 to 9 months ago, was like, “Oh my God, Google’s dead.”

That was all overwrought, obviously. Google has executed really well in cloud and with the model, and fundamentally, the core search business has not declined nearly as much. There was an interview with—I think, I can’t remember the woman’s name—the head of search, in The Wall Street Journal, and she talked about how search has declined some, but search volume is going up as people ask more questions.

So it was clear that the decline of search isn’t going to be precipitous. That’s my clear takeaway from being wrong.

Rory

Exactly. I got that one wrong. They’re going to be able to get some share. At the same time, I do believe there has emerged a new and separate consumer category of paid subscriptions for advanced AI. I think ChatGPT is well-positioned in that place. They have, what, 800 million users, 5% of them paying.

I don’t see all those users, quote-unquote, going back to Google. I think they’ve carved their niche—a big niche—in the attention economy. I don’t see it as an either-or. Even if the search business slows down growth, I think Google—I think ChatGPT—can build a defensible, large, enormously large consumer business, not to the extent of Google, but to a more macro extent, with a few dollars from everyone.

I do think the advertising dollars—we’re getting close to the point where the digital advertising spend across Google, Facebook, and Amazon, even before ChatGPT existed, is becoming a super-high percentage of total ad spend. So if ChatGPT is going to get its share of that, either we’re going to have to grow the pie overall, or someone’s going to have to lose a little bit.

Net-net, I don’t think it’s an either-or. I think Google has proven that the reports of its death are greatly exaggerated. But I saw in the leaked memo that Altman made a reference to growth falling to 5% in a year or two. Obviously, therapists call that catastrophizing when you postulate something that’s so awful, like this company is growing north of 500% year on year. If it went to 5% year on year, that would be the single most catastrophic growth decline in history.

In terms of likely outcomes, independent of the human dynamic, the likely outcome for me is that ChatGPT continues to build this compelling consumer product and can command a differentiated market, while at the same time Google Search does not, quote-unquote, go to zero. The pie expands. The Magnificent 7 suck more of the world’s profit dollars out of the rest of humanity. Go team.

Okay. Well, speaking of expanding pies, do you want to add anything, or am I—

No, no. Let’s hit pie.

Speaking of expanding—

I’m going to go back. I did like the leadership thing because, for me, I’m not a good rah-rah type leader. I was interested in Jason’s comment, and I’m reflecting on it because I tend to be more the step-back person, which I think is why I’d be a mediocre CEO. I’m okay as an investor.

It was a great question: What are the signs, as an investor? When do I look at my companies and go, “God, this guy’s running hot”? I have 1 or 2 in mind. Are you, Mr. CEO, pushing your team too hard? Even though I don’t love the war metaphor, you are correct. It’s only the hyper-intense ones, the hyper-driven ones, that really have excellence.

I’m reflecting on my very best, excellent companies, and every once in a while the CEO would just lose his shit because he or she would be so exasperated by the lack of progress and the drive they felt to win that you’d have that tension. The bigger the team, the more people you have, the more simply you have to communicate. Therefore, you probably use simpler metaphors, and therefore you probably have to go for some kind of, “It’s a war we’ve got to win,” because that’s what it takes to motivate 5,000 people and point them in the one direction.

Jason

Well, I don’t know if that’s the thinking behind it. You said you sometimes advise your CEOs to go easier on your team. I actually don’t think you have to go easier on anyone great, ever. Every great leader, every great VP, every great executive is going just as hard or, in some ways, harder than the CEO.

The CEO’s job is harder. A lot of executives don’t get how hard it is to be at the top. But in their own domain—the CTO, the CRO—they are going harder than the CEO. If this was 2021, everyone would say I’m being toxic saying this. It’s not, okay? We’re going into 2026.

I do not think you can push your team too hard. I think you should push them as hard as the business needs to go. And if they leave, it’s great. It’s terrific, because they’re not going to get you there. Maybe that’s what Sam’s doing. He’s saying to them, “There is complacency. It has set in. Everyone’s getting to sell 20 million at a time. Turnover is high, and it worked for a while. Now the competition is up.”

Maybe he’s talking to 20 people and saying, “I need you guys to go even harder,” and maybe half will leave and half will do it. I think that may be the whole message. But I honestly think, to founders, my number-one bit of advice is: Do not go easy on your team. Love them. Back them up. Don’t pick at them. Don’t hold them back where they’re good. Let them run where they’re good, but push them even harder.

The best ones will always step up. They might cry or lose it for a couple of days, but they will step up.

Generally, in your best companies, you’re exactly right. Some people crash out because they just can’t take it. My point is, how do you know the motor is running at full speed? The answer is, you hear an occasional gear grind.

Your job as a board member is to check in on the gear grind and go, “Oh, okay. I can live with that gear grind. It’s okay.” Right? They’re doing the right thing. Let them all go for 2026. Let them go. Yeah, because they’re not going to get you anywhere. They’re not going to get you anywhere. The folks for whom it’s too hard—the job’s too hard, right?

Yeah. I think you have to keep in mind my fastest-growing portfolio company. At the last board meeting, the CRO stood up and said, “I want to do more than the stretch plan next year.” Calmly, not in a frenzy of “I want to do more than that,” and gave a data-driven reason why. No one asked him to do it.

You want that out of your team in the age of AI, or you’re just going to fail. You can’t push to the point of delusion. You can push to just 1 level below that, right? I actually think that’s the technique: really drive the team to the point where this is not realistic, and then just take it down 1 notch.

Because, look, it doesn’t work if you lose your entire team. Actually, it could segue off the discussion you made about the war thing. As you point out, in the last 2 years—since ChatGPT, since the OpenAI board change—you have lost an entire team at OpenAI, and you know—

Well, not all of them. You kept Greg.

Yeah, you don’t want to lose your entire team.

4. Sierra Hits $100M ARR: Justify $10BN Price?

You’d rather not create an Anthropic when your team leaves, too, let alone Thinking Machines and all that. You don’t want to force 2 of your best people out and have them build your top competitor. We said something about war mode.

There is no category more competitive today, it would seem, than the customer service and customer support market. Sierra—Bret Taylor, formerly co-CEO of Salesforce, started Sierra—reached $100 million in ARR within 2 years, it announced over the last week. The last round was at a $10 billion valuation. It raised $350 million, led by Greenoaks, in September. It’s at 100× ARR as of today.

How do we analyze this very fast scaling to $100 million in ARR? Does it justify the price paid? And does it show that customer support is going to be so much bigger of a market than any of us previously thought?

Jason Lemkin

Well, I’ll tell you what I can tell you from the street, having a lot of investment in this space. It’s not a criticism of Sierra or Decagon or others, but the whole category, the enterprise side of it, is massively overselling what they can deliver today.

So did Replit and Lovable at the start of this year. Everyone—Replit, Microsoft, everyone—said, “Give us 1 line and we will build you Salesforce.” That is much closer to the truth today than it was earlier this year. It bordered on fraud; now it’s becoming reality.

Many folks I know have bought next-generation AI support tools and have not deployed them at all, or have barely deployed them, or there’s no AI working, or they’re half there, untrained, or broken. It’s not that it can’t happen—it will. I believe in it, and there are few categories AI can disrupt more than support.

But I will tell you, if you dig deeper, you’ll find a lot of deployments haven’t even happened, or they’re half there, untrained, or broken. It’s a lot about getting CEOs and others excited. This is as oversold today as vibe coding was earlier this year. I’m not saying it won’t catch up.

Jason Lemkin

I’m not being cynical. It’s just—man, it’s oversold.

Rory O’Driscoll

It is clear that support, alongside coding, is one of the 2 largest and most obvious markets for LLMs. This is a big, huge category that can totally work, right? You start with that. Bret Taylor is obviously wildly talented, and Sierra has a great name, especially at the high end.

I actually think the category is working, and I literally did a reference call with someone and they said, “Look, we evaluated Sierra; we evaluated all these other names.” Before LLMs, I had an investment in a company that was pre-LLM customer support. Our resolution rate was around 23%. In other words, we could solve 23% of calls, maybe up to 30%. With LLMs, with these new modern things, you can solve 60%, which means, on a number-of-call basis, you can significantly reduce your customer support.

So I think there is some meaningful value there. I’m sure at times it’s overstated, but if this isn’t the market for LLMs in the enterprise, then nothing is, right? So let’s leave that to one side. The real question, I think, is: How does the math work from here?

It’s $100 million, and it’s trading at $10 billion. What would it take? I just kind of laid it out in my head. You went from $10 million to $100 million in the last year, so you 10x-ed. Say you 5x next year, that’s $500 million; 3x the year after, $1.5 billion; 2x the year after, $3 billion, you know—

If you get to $3 billion, Rory—again, slow down.

Rory O’Driscoll

Yeah, hang on. And then you go $4.5 billion, and then $5 billion. So over the next 5 years, you’ve got a 10x, 5x, 3x, 2x, 50% growth, and then slow down a little to 20% growth, and you’re at $5 billion in 5 years.

For context, Service Cloud today, which is the largest cloud within Salesforce, is $8 billion. So you’re getting $5 billion out of that marketplace. At that point, if you’re valued at the Salesforce multiple of 5 or 6 times, you’re worth $25 billion. So it’s a 2.5x.

What it highlights is the amount of growth you have to underwrite to make the math work, right? Then you zoom out a level. It’s something we said last week: I believe when you’re dealing with hypergrowth markets, it’s all about the TAM.

The crude math I just did—which is, if this company goes faster than any other enterprise software company in 5 years, it’s doing $5 billion, which passes the sanity test of Service Cloud doing $8 billion today—what that says to me is, if all you are is a next-generation software play, you’re probably not going to get that growth, because that would have to come dollar for dollar from Service Cloud.

It goes back to what Jason says: the only way this math works is if you eat a huge slug of the labor. Because you eat the labor, instead of the $20 billion software market for services, you eat the $200 billion-a-year services market for customer support agents.

It’s got to go from $100 million to a billion to justify the valuation on its face, right? It’s got to go from $100 million to a billion a year. Will that happen? Can you even deploy in the enterprise at that pace, right, versus self-serve? We’ll see, right? But we’ll see if they go from $100 million now to a billion at the end of next year. We can make a spreadsheet.

Has any company done $100 million to a billion?

Rory O’Driscoll

I think yes. Anthropic, easy.

Yeah.

Rory O’Driscoll

Cursor and Anthropic.

What?

Rory O’Driscoll

Cursor would be one.

How much? But how much of that revenue is self-serve, too?

Rory O’Driscoll

There’s a certain amount of human capital you also need to deliver this amount of revenue in the enterprise, right? Because let me tell you, if Bret Taylor walks into a Fortune 500 company and says, “Give me $10 million and I can replace half your support team,” trust me, he will leave the building with a $10 million contract.

Mark Benioff was great at this too. He would go in back in the day, when enterprise SaaS was booming. He would go to a big company and say, “What’s your number one problem, Harry?” And Harry would say, “Well, I can’t get this website and this e-commerce.” And Mark would say, “Just give me $10 million and I will get this for you.” That was the price. And he was magical at it.

Bret’s going to be even better, even though Mark’s the best there ever is, because Bret was the CTO of Facebook and the co-CEO of Salesforce. There’s no one who’s got a better package than Bret. So he can get $10 million checks, but can he get $100 million next year and deliver training and FTEs? It’ll just be interesting to watch, right? It’s a lot to deliver.

I think, Jason, you’re exactly right. Going from $100 million to a billion on an API business is very different than going from $100 million to a billion in a business where each $10 million contract is a huge amount of change management in a large corporation in America.

And I think the physics of diffusing this technology into the enterprise will be the rate limiter on how fast this company can grow. It won’t be raw demand. It won’t be the talent of the CEO. It won’t be the product. It will literally be: Can you really roll out 10 $10 million customers or 1,000 $1 million customers in a year, where each one of them has their own special sauce, their own dynamics, their own integrations?

I think there’s a physics to how fast you can grow in enterprise software, even with huge demand, when this amount of change management has to happen. So I think that would be the rate limiter here, right? Nothing else.

People who haven’t sold to the enterprise might not realize how true that is. I mean, literally, I think if Bret Taylor could sell $10 million to anybody—

Rory O’Driscoll

Agreed.

It’s not just that he’s so smart or charismatic. It’s that literally enterprises are complex to change. They’re looking for the best person in the world who can solve their problem. What’s my big problem? And if you can dramatically increase the KPIs in support for me, and Bret is the guy, I will give you the $10 million bucks.

It’s not for you and me. It’d be hard to get $10 million. You and I might have to start with a $10K contract or $100K, but literally, I’m not being facetious. Bret can get multiple $10 million checks.

As goofy as this sounds—and I know this sounds goofy, and this is with total respect—the $100 million almost, to me, isn’t impressive. It’s not impressive because I think he can will it out of the ether with his background.

A billion next year with 1,000 FTEs, somehow he’s got to go higher and deploy that. To me, that will be magic. That will be magic because they will give him $100 million. He might even be able to walk into one of the biggest Fortune 50 companies and get a $100 million contract from one like Palantir. They would give it to Bret. If he promised the moon, they would give him $100 million bucks.

Rory O’Driscoll

I think the zoom-out comment, you’re right about, and it’s something you kind of learn as you see a lot of enterprise software over time: big companies and big leaders have big problems, and there’s only a small number of people they can take their problems to.

If you look at large technology companies over the last 40 or 50 years, the ones that become dominant in an enterprise wave are the ones who, one way or the other, project to the CEOs and CIOs of the largest companies in America: “If you have a problem in this sector, we will make it go away.”

Like Cisco

they started off with routers, but over the next 10 or 15 years, they bought pretty much anything you needed for the network. And I think when John Chambers was running this thing, the big-picture value proposition was, “Hey, Mr. CIO, if you have any networking problems, we’ll just buy whatever we need and make it go away. Therefore, you can safely give me $50 or $100 million.” IBM, back in the day, same thing.

And you’re right, Jason. I think someone as talented as Bret Taylor in the new world of AI can do what I think C3.ai tried to do and failed, and Palantir is doing, which is walk into a CEO and say, “Dude, you told your board that a top-2 initiative for 2026 is to make XYZ Corporation AI-enabled, and I can help you with that. Give me a $20 million check.”

I absolutely agree. I think that is a thing. And it’s frustrating because all the little companies who are run by ordinary folks can’t do that. But that’s the magic of being a successful, proven enterprise leader for 20 years, right? So I agree. I think you can access that kind of business, and it’s a very powerful positioning. I think it’s all about the physics.

To me, the assumption you have to make as an investor with this goes back to a very wise statement that you said, Rory, many shows ago, which I think literally every single day: Will we see the transition from human labor to software spend? And if we see that, and we see costs in call centers go—and all of the call center costs go—then it will go to these players. And then we have $100 billion in ARR.

Rory O’Driscoll

5. Implementation is the Biggest Barrier to Enterprise AI Growth

The question is, as is always the case, when something is obviously true, valuation expands to recreate risk. In other words, you do any of these deals all day every day, right? The real question is: At 100 times run-rate revenues, can you make the math work? And that, I think, is a lot harder.

Are you ready for an uncomfortable question for Rory? He can throw it back at me when we move to Lovable.

Rory O’Driscoll

Okay.

You mentioned Intercom there. Intercom is doing, say, $300–$400 million in revenue at $2.5–$3 billion in price, versus Sierra doing $100 million at a $10 billion price, but the growth rates are wildly different. How do you think about which one you’d rather be in?

Rory

I think both can make a ton of money, and I’m very happy with my bet in that company.

I think they've done an amazing job, in a way that very few SaaS companies have, of transitioning to an AI-first world. The growth rate of their AI product is, frankly, comparable to Sierra's, without revealing details that the company should choose to reveal.

So I'm not sitting here—in fact, I feel, frankly, broadly speaking, pretty smart to have gotten some very nice AI growth rate alongside an existing SaaS business at a very attractive price. I feel pretty damn good here.

Thank you. I think the meta point is that all these companies can do well. Multiple companies—not all; that's a stupid statement, Rory. Not all of them can do well, but there will be more than 1 winner as this market segments.

I will say, at a higher level, nothing against this bet, but today, having to support an installed base versus getting to invest just in AI-native customers, it's a drag. It is a drag. It is a drag.

I was literally with a portfolio company that's got $45 million of AI revenue growing about 100%. Now, listen, that's not Lovable, but it's pretty good. Then it's got $50 million of pre-AI revenue growing at 0%.

The problem is they are—and I think this is probably true at Fin and Intercom—inextricably linked, but they're not the same product. It kind of sucks. We may change our mind in a year and say, “My God, that installed base was the greatest thing ever to leverage for AI.” But right now, it feels like a drag to have a couple thousand paying customers to make happy. It feels like a drag.

Rory

Recording my profound opposition to that. I disagree, and I'll tell you why. I actually think every incumbent in these markets has 1 huge advantage and 1 huge disadvantage, and I'm going to say it clearly here.

I think the advantage is the customer base, the data structures, and the access to the data on what your existing company is doing. For something like sales or customer support, the truth is it's going to be a combo package for a long time to come: some automation and then some human agents. Being able to move seamlessly between them both has huge advantages, right?

I think the disadvantage that every large existing incumbent has is they can't get out of their own freaking way. Therefore, they can't leverage the asset that they have while, at the same time, embracing the AI technology. I think that's, frankly, something that Intercom did really well.

I hear your point. In theory, it's an asset, right? In theory, it's great to have an installed base, all of its data, rather than being a new AI company hoping to have that data. All of that is true in theory. The problem isn't that. That is an asset, and that's why I might change my mind in 12 months.

The problem is all the technical debt, all the feature debt, and all the features you've promised those 1,000 or 5,000 customers that don't give a rat's ass about your shiny new AI feature. You have to keep them happy and not let them deteriorate. That can consume the majority of your engineering development time. It really can.

I'd love to hear Owen's honest thoughts. I suspect what they did at Intercom—you would know better than me—is what you have to do, which is that you don't give so much to the old customers. No matter what, there's only so many engineers. If your existing customers can consume all of your story points and all of your engineering time, all of it, you have 10 years of debt.

If you're a new AI company, you don't have the data. It's a huge negative, don't get me wrong, but that's the ability to run. That's when we talk—when VCs talk endlessly—about how native AI customers are better. I want to gag with a spoon, but I think sometimes they're better because they're for really smart people. Sometimes they're just better because they don't have 1,000 complaining customers to support.

I'm just saying, right now, I feel like it's a liability, but in a year I may think it's the greatest thing. Looking at Agentforce right now, it's early, right? But Salesforce could be the next Google. In 18 to 24 months, we could be like, “Oh my God, Agentforce crushed it. All these startups—we didn't need them because Agentforce is so good.”

I know it sounds crazy, right? I may change my mind, but right now, the startups I've invested in with large install bases feel like they're wearing freaking cement shoes.

Rory

But again, I would disagree. I think the great advantage, like you made a comment on, is that you have a company that has $45 million of AI revenue and then a whole bunch of customers who don't care about the AI revenue at all. That was the revealing sentence.

I don't think that's the experience you're seeing in some of these cases. When you have an obvious opportunity—anyone who is running a customer support organization knows they're going to be embracing AI, right?—a successful company goes in and says, “We're going to help you on that journey.”

It's unimaginable to me to think of a customer support executive who's running their business and saying, “No, I'm not going to do any of this AI stuff. I just really like paying people in the Philippines to answer phones.”

But the debt is real, right? How much you can do for them is real. I did an interview for G2 with the CEO of Zendesk. Every customer has AI at Zendesk. I'm not an expert in Zendesk, but he was very direct because they're private now. He's right.

The base version of Zendesk, which you get with AI, is about 20% automated. That's about as well as you can do without training. To get this Fin-level experience—or better, Decagon, or Sierra—you've got to train the thing for a month or 3 weeks with FTEs and the rest.

It's not that they both don't benefit. It's just that I think it's an asset and a hindrance. If we look at some of our fastest-growing companies, they don't have cement shoes. I'm not saying Intercom is the exception to the rule, but they just don't have cement shoes.

Rory

I agree. I think it takes, frankly, really excellent management and a certain—going back to the, oh God, I can't believe it, going back to the “war mode” comment, which, again, I didn't love, but I'm changing my mind—it takes a lot of product leadership and clarity of vision to make it happen, right?

I think you're seeing Benioff trying to figure out how to do that. The bigger the organization, the harder it is. I think the team at Intercom has done a really nice job of doing that. It's hard.

Well, let me put it differently: Intercom did it. Let's stipulate Owen did it, and it's great. This is why I think most of our unicorns will fail, because you've got to be as good as or better than Owen to make this transition. Most of them are going to fail.

When I look at so many of these B2B unicorns, it's so hard to do both. It's so hard. I've got $200 million of ARR, Rory. I'm growing 20%. I know I have to do AI, but I can barely get the team to do what I'm doing.

Unless you have this aggressiveness, war mode, and a great CEO, there's just no way you can do both. There's no way. Your typical private-equity company can barely get a release out a year.

Rory

Agreed. I think there are 2 things that stop you. As is usual when you and I talk, Jason, you emphasize 1 and I emphasize the other, which is okay, right?

The 2 challenges you typically have are, 1, what I call the management challenge, which is what you emphasize. You've got all this old stuff, and you've got to do this new stuff. It's hard to do both. You just have to be a good manager.

But then the second thing—I would argue the product thing—is that there's got to be some obvious linkage between the 2. If you've got this SaaS company in the old world that does X and there's no obvious X-plus-AI equivalent, you're just on an island. Deciding, “I'm going to do something new in SaaS,” means you're screwed. You're screwed, right?

If all you have is customers who might want to buy SaaS in the future or AI in the future, and they buy SaaS today, you're screwed. The only time you have even a chance to do it is when both organically go together.

I'll give you another example of that. I think Gong is a very interesting company that was, you know, pre-GPT AI—call recording—and I think they're doing a decent job of navigating that terrain and adding all the LLM stuff on top.

But it's not because they're management geniuses. Maybe they are. It's more fundamentally because there was an obvious path from here to there, right? In some other areas where the SaaS thing doesn't have an AI equivalent, you're on an island and then you're right—there's nothing you can do.

6. Lovable Hits $200M ARR & Rumoured $6BN Round

You could be God's gift to management and you're screwed. I'm trying to think of examples of that without throwing anyone under the bus. But there are deals where you look and you just go, “I'm not sure we need you in this AI-first world, baby.” And that's not good.

You said the fastest-growing companies and how it's tied to AI-native customers. One that's really tied to this—Sierra hit a revenue milestone. Does it justify the price?

Lovable hit $200 million in ARR, 2 times what it was in just 4 months, with a rumored $6.3 billion round—in terms of a new price valuation, being $6.3 billion. Is that justified when you see the growth rate hitting $200 million in ARR for Lovable?

I don't know. But I will tell you, for folks who are critics, I don't have the numbers right. I can tell you this: it's like an old SaaS lesson that I really think we have to apply in the age of AI. You've got to segment your customer base.

What I mean is, I assume at the low end the churn approaches 50% or higher. But the Menlo—the one Menlo just did in music. What's it called? We use it.

Suno, right? They just said they only retain 20% of their customers in a year at that level.

But I just did a presentation at Replit that showed all my apps at an all-hands. When I was there, they closed a pretty large seven-figure deal. My point is, there’s no way that’s going to turn into a multi-year, seven-figure deal in anything less than a couple of years, mathematically, is it?

What I would almost want to do is take Lovable and Replit and segment them and say, listen, there’s a high end here that’s probably got 140% to 160% NRR. I’m pretty confident of it. There’s a classic mid-pack that, my guess is, with upsells and stuff, is approaching 100% retention. Then there’s the part at the bottom that’s worse than we’re used to.

It may have 40% retention or 30%, but that’s not unprecedented. Almost every mobile subscription app has, as we know from revenue, 20% or 30% retention. I would almost want to put a stacked bar chart in my mind and draw a black line through the bottom, if I were them, and just call that marketing spend.

That bottom is just marketers. They’re just folks to get the word out, and they’re all over social media. I’m betting in the next 2 years, the 100% to 160% NRR—even if that’s half of Lovable—is a decent bet, right? I also think that’s why, as these guys grow, their NRR will go up and the churn will go down, just because of classic enterprise reasons. Those big customers are going to be stickier. They’re just going to be stickier.

I’m always thinking about the opportunity cost of cash and where I put my money to make the most money. To Rory’s brilliant point, that’s great, but what about me? It’s now worth more than Wix: $2 billion in ARR. Admittedly, Wix’s growth rate is 14% year over year, but they have Base44, which is growing very, very fast, and they just announced it hit $50 million in ARR. So you have to believe that either Wix is very undervalued or Lovable is very overvalued.

It’s a tough one. You know what the tough part is for all public company leaders? It shows you’re not getting credit for checking the AI box. Hooray to Wix: you went from nothing to $50 million in vibe coding. If that means you’re at this percentage of Wix—or, I mean, at Replit’s level—you should be worth a couple of extra billion. The market’s saying no; it’s not enough.

You’re being judged as a public company. You’re not being judged as Sierra. It’s tough because every public company is out there hustling its AI story, and I’m not sure it’s working at all. I think it’s necessary but not sufficient. You need to be Palantir. That’s what the public markets want. They’re saying Wix ain’t Palantir. Fifty million is not enough. Show me $500 million.

But I would caveat that all you can conclude is that right now the public markets aren’t giving it full credit, which is different from saying the strategy is right or wrong. As we just discussed, everyone was dumping on Google 9 months ago, and now the stock’s up 2.something times. Markets are fickle things. They change their mind.

The question is, is it the right strategy for Wix? Do you have to add some kind of AI if you’re in the website-building business, which is what they have been? It seems almost inevitable that you have to add this; otherwise, you’re not relevant. Agreed? That’s step 1.

Then the question is, directionally, they’re doing the right thing. Let’s start with that. You can measure how well they’re doing it in terms of adoption. What percentage of their customers are using this product? Is it off to the side and just a game, or is it a core part of their product?

You’re measuring, with industrial logic, not financial logic, how well they’re doing. Then you can start saying, how do you compare that bet to the Lovable bet? That’s the way you have to do it.

It’s a $2 billion business versus a $200 million business. It’s probably got better churn retention, but only a small percentage of it is AI. On the other hand, you have Lovable: it’s all AI, but you have massive churn. It could well be that the public markets are undervaluing one and the private markets are overvaluing the other.

In the end, it’ll true up. In the short term, it’s the old cliché: in the short term, markets are a voting machine, and in the long term, they’re a weighing machine. If Wix pulls off its strategy, it’ll get value for it in the end. Ditto for Lovable.

If they don’t—this is the Jason comment—if you can’t overcome the inertia, if you just tick the AI box but don’t actually make it core to what you’re doing, then you’re right. Fast-forward 5 years and it’ll be Lovable is the king of website generation. Who was Wix? They didn’t make it through the turn.

I think that, in the end, interim marks are just interim marks.

For Wix.

Yeah. So generally, once you descend into low growth—and that’s different for public companies than private companies—you’re worth, I mean, if you’re worth anything, you might be worth nothing. As a startup, you’re worth in the 3-to-5x ARR range, and this isn’t even that. This is less than 3x. It’s a tough world.

Semrush just got acquired by Adobe for $1.9 billion.

Yeah, that was 3 times revenue with a 50% premium or 100% premium. I think 100% premium, right? It doubled. That’s with a massive premium because Adobe paid up.

It’s now a bootstrap company, so it’s a fun story, but brutal. It’s just a reminder to founders that are hiding or think they got the 2023 message that all that matters is getting profitable. It’s a brutal world when growth slows. It’s a brutal world.

Even if you inject AI and even if you add Base44, Rory’s right: it may be a great story in 2027. You can draw the math, but it’s not a magical solution today. It’s brutal. It’s brutal across our portfolios that have a little bit of AI that hasn’t led to Lovable growth. It’s brutal.

Because what are they doing? I mean, Wix is doing about $2 billion a year, and it’s $50 million of Base44. So, yeah, it’s 2% of revenue. It’s a rounding error. The odd thing is, at that point, you discard it.

Now, the interesting thing is, if they could upsell 10% to 15% of their business to that, where they’re adding $200 million to $300 million, you’re right, Jason: the multiple for companies doing 10% or 15% is pitiful; the multiple for public companies doing north of 25% is compelling, right? Yeah, it could double if they do $250 million next year, right? It could double their market cap—more than double.

More than double your market cap. They have to be saying to themselves, can I drive 15% penetration of this AI product across my customer base? If I can make that happen, it’s great.

Let’s be clear to our public traders, Harry: if Base44 really can ape Lovable and Replit, everyone should pile into Wix. All things being equal, the multiple should radically inflate if it can do $250 million of ARR next year. That’s massive over growing 14% of $2 billion, right? It’s massive. You should pile in. You should put as much of your 401(k) into Wix as you can. This is the great undiscovered public company.

It is, unless the public markets continue not to give you credit for it, as they’ve not given you credit for the $0 to $50 million in Base44 that you’ve just done.

Jason

No, no. We’re always making the point that you go into the interim tier. If you look at multiples, you go from the 3-to-4x tier, and then, actually, in public companies, you get a really good deal if you’re in the middle tier.

If you’re in the top tier, like Rubrik and Palantir, you get the deal that Cliff from Canva wanted. He wanted that deal because it’s better than the private market. But I think that middle one is still around 8x to 12x ARR. This middle group is in the 20s, right?

Getting above 20 as a public company is easier said than done, but it’s so worth it. You should buy anything you can to get yourself into the 20s. Anything you can.

I agree because, Harry, I reject the whole “give you credit” framing. In the short term, maybe the public markets, quote unquote, don’t give you credit, but I dislike that expression because it implies that it’s some merit thing.

In the end, everyone’s just a set of discounted future cash flows. If you point the revenue line up and the P&L line goes up with it, in the end the market will re-rate you and give you value. I believe that because that’s just the way capitalism works.

But sorry, if you look at something like Palantir, which is detached from rationality and detached from a DCF model, then it proves you wrong.

No. In the short term, things can be wildly wrong, and 1 of 2 things will happen.

Rory

It’ll continue to grow at 70% for the next 15 years and grow into its market cap, or the price will correct, right? No, in the short term, prices are often wildly wrong in capitalism, but in the end, the truth’s out.

My point is this: You can’t chase the pricing. You have to run your business and, in the end, the markets will catch up with what you’re doing.

Jason

Well, I think, to go to Harry’s point, Rory, and I think you’d agree, I just don’t think the market believes Base44 is going to accelerate with this, right? They’re just waiting. If I pull them up in my little tier on SaaStr, if you’re growing less than 20%, a cherry-picked basket is 5.1x ARR. Wix is lower; it’s not in my basket.

Twenty to 30% is 11.8x ARR, and then 30% plus—which is Rubrik, Palantir, and Figma—averages 23.7x ARR, but Palantir and Rubrik push that up. You want to go from 5x to 11.8x—8x—but the markets are saying, “We don’t buy it.” We don’t either. We don’t buy it, or possibly they don’t care. It’s, “Show me the money. I don’t care.”

Rory

Are they just saying, “When are they?”

Jason Lemkin

Yeah, they’re saying, “When you do, call me and we’ll give it to you.”

Rory

Call me when I see it. Call me next year.

But again, I totally agree. I think markets pay up for growth, and that’s why all these people who, in 2022, were like, “Just get profitable” are wrong. It’s a necessary but not sufficient condition, and, in the end, we’re in the growth business and you’ve got to be growing, right?

7. Is LLM Search Optimisation (GEO) Selling Snake Oil? What AI is a Fraud vs Real?

The question gets back to: Can they make that happen? It’s funny you mentioned Semrush there, which, for the listeners, is a company that does search engine optimization. It’s a bootstrap company, has been around a long time, was public, and was pretty much a sleepy company. Adobe just recently bought them for what was about $2 billion, Jason, right?

Jason Lemkin

Yeah, $1.9 billion.

Rory O’Driscoll

And my guess is—and it’s funny, it’s top of mind—my guess is that was because there’s this whole new emerging market now for LLMs.

Jason Lemkin

Yeah, exactly. GEO, basically optimizing the equivalent of your search results, but on LLMs, which I think is a great market and one we’ve looked at. Clearly, Adobe said, “Let’s buy the old-school player and maybe allow us to parlay entry into that new market,” which was super interesting.

I remember thinking that because I’d been looking at that market and hadn’t ultimately been able to get an investment done. If I were a public investor, I’d look at Semrush, I’d buy one of those GEO products, and I’d try to do the same trick of jamming it through the channel. At 2x run-rate revenue, it wouldn’t take a lot to make a pop. But lo and behold, Adobe got there first and said, “No, we’ll take that.”

Rory O’Driscoll

Well, the interesting thing is that what they said publicly was that they didn’t buy it to jam it through the channel. They bought it because it was the number-one thing their customers were asking them for.

Jason Lemkin

Yes, agreed.

Rory O’Driscoll

And, obviously, Adobe Marketing Cloud is a huge amount of revenue, and their typical customer is not a 20VC portfolio-company startup. It’s a pretty mature CMO who is trusting Adobe to execute their marketing strategy, and they’re worried about LLMs and GEO. They don’t know what to do.

I know Harry’s invested in it, and I love Harry. I actually think this is a horrible category, but the demand at this moment is off the charts. It’s just like a lot of things in AI: “I need an SDR. I need a GEO solution.” So the demand is off the charts. Adobe needed a solution today, and they bought what they could get, right? But I think it’s a horrible category.

I’m actually totally with you. My bet is that Peec is a complete founder bet, and, to be fair, the traction’s insane. It’s like 15x in 3.

Jason Lemkin

Yeah, the demand is off the charts.

Rory O’Driscoll

The demand is off the charts, but what you’re seeing is the commoditization of the pure discovery and analysis segment, because there are really 2 segments. There’s discovery and analysis, where you rank, and then there’s, “Here’s what you should do as a result, how you can improve it, and then we’ll do that for you.” You’re seeing the commoditization of the first segment, where you’ve seen Spenser at Amplitude release their product, which is now the same.

Jason Lemkin

Yeah, they vibe-coded it.

And so my question to you, actually, Rory—which is weird, given that I’m an investor in this, but Jason and I agree—is, why do you not think we’re going to see the commoditization of this category, and why do you like it?

Rory O’Driscoll

I think commoditization is, with all due respect, not a useful word, right? It’s an implied statement of wrongness or economic badness about it. As I remind people, oil is a commodity, but, as the film series “Landman” tells me, we make $3 billion of profit every damn day making oil, right? So I don’t think “commoditization” conveys something negative.

I like that market because what you see in markets that really work is a wedge product that has high urgency to spend, which means that, in the near term, you get explosive growth. Then, over the medium term, there’s a set of expansion opportunities beyond the original point product that allows you to grow with your customers and expand.

I think that’s exactly the case here. Discovery upfront is the core need, and you’ve got a bunch of companies like Profound, EverTrace, and all those guys doing that. Then you’re going to add on, over time, content generation and everything it takes to make sure you show up. I think there’s a lot to be built on here.

Well, I’ll tell you, for what it’s worth, this is the whole thing. What’s your portfolio company called?

Rory O’Driscoll

Peec AI.

Jason Lemkin

Peec, I love it. It’s an exception to the rule. I view the category of snake-oil AI, of which GEO is one of them, as snake oil, and it’s going to die in 2026 or 2027. I’ll tell you why it’s snake oil; just bear with me.

SaaStr is multichannel. We’re not as big as 20VC, but we’re multichannel. We get about 5 million views a year to our blog from SEO. Our traffic is up 50% this year, and our SEO is down 8%. I’ve tried all the tools. I don’t have time, and I don’t have a team like Harry’s. My team is all agents now; it’s shrunk. But I care enough about SEO that I’ll try the tools, right?

Especially with the self-serve tools, nothing is actionable. Nothing is useful to me. When I was at Adobe, marketers would come into these meetings and say, “Let me tell you how we did this year at Adobe. We had 7 trillion impressions on Facebook,” and it was all performative metrics. I get why everyone’s going to buy a GEO tool. I get why you can sell $50 million or $100 million of this, because you need to walk into the meeting and show what’s going on. But I cannot find a single thing that is actionable. Putting more things on Reddit doesn’t help me.

An AI tool to write content? I have 10,000 pieces of content. Your crappy AI content is not going to help. I’m not saying—and I know maybe I’m an extreme example—but I’ve literally tried all the tools that let me. I cannot find one thing that’s actionable.

I’ll tell you the really bad sign with this category, with AI: If you have to put in your credit card immediately, this is a bad sign—a terrible sign today. If your AI is good and you don’t need FDEs and a massive army, let me try it. Give me a few credits. Let me do a song. Let me try ChatGPT for free.

What’s the music one again? Suno?

Jason Lemkin

We used it all at SaaStr. I forgot, so I went to use it again today. I forgot I’d used it, and they gave me another 50 credits. I upgraded, but I did 3 songs for free. How come I can’t GEO for free if it’s so great?

I disagree that it’s a terrible sign if I can’t try your AI app for free. You’re a fraud. You’re trying to get my credit card before you can provide any value. If you look at all the ones that are exploding, half of them—not Peec, but half of the ones we talk about—are massive PLG plays. You can’t take their credit card in 60 seconds and grow this way. You have to let them do a couple of Lovable prompts. You have to let me do a song. You have to let me try ChatGPT for free.

I think all these scams are going to make a lot of revenue. It’s like the old SDRs pre-Claude 4. They were all terrible too, as you know. They didn’t work. We’re going to see a bunch of things that have massive budgets and don’t work, and they’re just going to churn. That was a scam.

I’m going to make a bet here, Rory. I’m going to put a $5,000 bet on Peec being the one. Okay, five grand.

Rory O’Driscoll

Okay.

I’ll even help them if I can help them. I’ll help them. I want to learn. There might be one. There might be one.

Jason Lemkin

I have introduced them to the biggest CMOs, the biggest, hardest companies. They love Peec.

Do they even know what they’re talking about? I find a lot of CMOs don’t even know what they’re talking about in AI.

Rory O’Driscoll

I disagree, Jace. I genuinely do think I understand your point about how actionable the information is. But look, you were at Adobe Marketing. Stepping back another decade, before you were there, I was an investor in Omniture, which is the company that became the Adobe Marketing Cloud when they bought it in 2008 or 2009, right? So, way back—

Jason Lemkin

Oil there too.

Rory O’Driscoll

And you call it snake oil. Let me encapsulate the point you’re making, because there’s some truth to it, but then let me make the counterargument. What you’re basically saying is, at some level, these tools just tell you how you’re showing up on the LLMs, just like, way back in the day, analytics told you what was going on on your website.

You're like, “What do I do with this information?” The thing is, you have to know the information, especially in a larger corporation, even if initially you can't do anything with it. Step 1 is, if you're this VP of marketing at a large corporation and your CEO comes in and says, “I typed in L'Oréal into ChatGPT last night, and they said 10 mean things about us. What the fuck?” Right? You better have an answer to that, right? Simply—and initially, for that first year—just giving that high-priced VP of marketing an answer is worth $30,000.

Because the world—I mean, because the one thing I've internalized about all these media types is every advertiser, every marketer knows, in the end, you just have to go where the people are and you have to show up where the people are. When the people went to Yahoo from TV, you had to show up there, or when they went to Google from Yahoo, you had to go there. When they went to Facebook, you had to go there, right? And the people are going to use—they're using answer engines, they're using LLMs, and you have to know how you show up there. It's different; it's not like you can advertise. So there's going to be a market for—

There'll still be people selling snake oil when it's unactionable. But you're right: I have no doubt you can do $50 million here very quickly.

But you're right. What's going to have to happen—and all these companies are going to do it, I think—is that you have to figure out: What do you do with that information? How do you make it actionable?

Because let me tell you what they're not going to do, John. No marketer on the planet is going to say, “I now know I show up shitty on LLMs, but it's not actionable, Mr. CEO, so we're just fucked. Settle in and die.” Right? No, because the CEO is going to come in, and he's going to say, “I don't give a damn how you do it. You figure out how to get us on the front page of ChatGPT saying L'Oréal, or whatever the product is, is awesome, right? Are you going to lose your job?”

So, I mean, again, one point and we move on. I think there is a billion-dollar opportunity here. I think there's a billion-dollar opportunity in AI sales. I just—in marketing, I haven't seen it yet. If you do all of this for real, I'll give you $100,000, okay? If you actually increase the number of qualified visitors to my website by 50%, everyone in the world will give you $100,000.

If you can do the Cursor of marketing—I know we all hate the “Cursor of whatever” pitch, but a lot of folks say they built the Cursor of marketing—I will buy it. I have not seen it yet. As soon as they do, this will be a billion-dollar ARR opportunity in 36 months, but the snake oil isn't going to do it. Little tiny point solutions that get you 5% of the way there—Amplitude clones—aren't going to do it. But there is so much money for actually making it actionable. Everyone's SEO is down.

There's going to be, in my opinion, 2 levels of actionability. There'll be actionability right now, where it's like, “Oh my gosh, this is what the LLMs are saying about you.” Figure out where they're deriving that information, which is typically via the search that the LLM does, and then figure out how to get nice things said there. That's kind of the actionability today. And you're right, that's loosely coupled at best, right?

But look, the big shoe that's going to drop—and it goes back to the first conversation—is when ChatGPT starts allowing advertising, right? Then the dynamics of this business change a lot, right? If there's going to be advertising, there's going to be monitoring of advertising, and then the wall of money is going to hit here. People are going to want to know how to measure it, how to track it, and how to influence it. So I think that's the big-picture bet here. Again, I like the space. I take on board your comments on the product, but go—

Just when ChatGPT allows advertising, John, what happens to the players in this market? Are they hurt or are they helped?

You can imagine in a world where you could go either way. I mean, if you look at one of the interesting things—we talked about Semrush. The outcomes in search engine optimization haven't been amazing. Semrush is actually the biggest outcome at $2 billion, in a way that all the other stuff, like website analytics and email analytics, all had much bigger outcomes. So you could argue that if the ChatGPT version of advertising is similar to Google, then the platform gets all the money and doesn't allow a ton of ancillary products to thrive, and maybe it's only a so-so outcome, right?

Maybe that's the case. A lot depends on what ChatGPT implements between advertising and commerce. How much of a role is left for ancillary players? That's what you're right—you don't quite know at this stage, right? You can argue that the midterm question on these companies is there's some element of platform risk, and will they allow enough?

But on the other hand, it's a complex enough problem that if you're a large corporation spending a lot of money to improve how you, quote unquote, show up in AI, intuitively there's going to be spend. Will it be $200,000 per company or $2 million per large corporation? I don't know. That's the risk in the deal, and obviously you can tell from the way I'm muttering I don't have clarity on that.

But intuitively I go back to my first principles. If all the people are showing up in the LLMs, then all the advertisers are going to want to show up in the LLMs. And if you can help them get there, you can probably clip some of that money. That's the very unsubtle thesis.

8. Figma Market Cap: Is the IPO Market F****** for 2026

Final one before we do a would-you-rather, John, because I know you love that. Where do we want to go? We've got Figma, obviously—IPO price and where they are now. Oracle down 40%. We can do Kalshi's new round. Any preference there?

We could talk about Figma's. Definitely. Maybe we should talk about it—I just feel like it's a Debbie Downer. I mean, Figma's IPO was so exciting, right? Everyone was captivated by it, almost beyond what it deserved, right? Almost at a consumer level, almost at a Google or Facebook level.

To be a broken IPO, at least for a while, it's just a bummer, because we talked a little bit last week about the feeling that liquidity was back and IPOs were back. It's just a bummer. Maybe Bill Gurley thinks it's great because they got a good deal, but a super-active IPO market is great for everyone from VC down to founder. It's just a big plus. Having a meh IPO market is not going to help any of us.

I don't think it's meh. I mean, look, I would argue that it goes back to what I said earlier: voting versus a weighing machine, right? The professionals all looked at the stock and said we should transact at $35, which is roughly the same valuation Adobe offered 2 years ago, which totally makes sense. You generally bid forward 1 or 2 years in an M&A.

And then all the retail madness took over, and it was valued at $10-something. Now, over time, the voting stops and the weighing begins, and it's pretty much priced exactly what they thought it was worth 6 months ago. I would argue that, in the end, the markets are efficient and it's a great outcome. Lighten up, everybody. It's a $17–18 billion market cap for an awesome company.

You're right, the process has been a bit of a Debbie Downer, to your point, John. But intrinsic valuation wins out in the end. Capitalism works.

It is. It is a reminder, though: if you turn down a deal, you better want it to go public, because it's not just down from Adobe. You've got to take in dilution and time value of money, right? I tried to write it up on SaaStr. I think it's like 30% or 40% lower than the Adobe deal, adjusted for time, dilution, and risk. 30% to 40% lower.

So when you say no, you better want it—and granted, they didn't say no. They said yes.

They said yes and yes and yes.

So who knows what really is going through everybody's minds? But it's tough to not be above that number. We've already forgotten about Wiz—it seems like 3 generations ago, right? It seems almost quaint compared to Cursor. Maybe it ends up being one of the greatest, smartest deals of all time, right?

To be clear, you're talking about the Wiz decision to sell for $32 billion, which deal is still pending, but it's got U.S.—

It's got U.S. regulatory clearance now, unlike poor Figma, who didn't—

Or indeed, much worse, poor little iRobot, who didn't get clearance and then pretty much went bankrupt because they couldn't sell their company.

So yes, antitrust has had an insidious influence. It just would be nice if everyone who needs to IPO could IPO next year. I'm not being facetious. It would be nice if the market was overheated, if it didn't quite make sense, if Figma was trading at twice its IPO price, and it could actually lift some folks that were a layer below Figma.

It would be nice if folks at $200 million, growing 30%, that are still in that second tier, nominally, right, that we talked about right there, could calmly IPO next year with oversubscribed IPOs and just free up liquidity in our portfolios. I'm not being facetious. It would be great if we just had a little more froth in the market.

Do you think we're going to see any opening of the IPO markets next year?

I don't think we're going to see—I don't think we earned it this year. I don't think we earned it.

Jason Lemkin

I don't think we have so many. You're better than Figma. You're better than Netskope. It's a high bar.

Rory

In IPOs, it tends to be Pavlovian. People do things when the last thing they did felt good. Jason's right that these IPOs don't feel good, so it won't be easy to have more.

The way you make things easy is price. Price is one way to make things easy. The other is the kind of companies that go public. If the overall equity markets stay roughly okay, then there are lots of companies that can choose to go public if they want to because they're above the bar. The question is, will they want to? That's more a function of individual company decisions about whether they want to or not.

But I'm with you, Jason. A more wide-open window would be good for many people on many different dimensions.

Jason

I just feel like, in venture, we're acting as if these liquidity windows are wide open. I get challenged, but I don't see it. I don't see the IPO market wide open. I don't see billion-dollar M&A deals from private-equity firms happening every week.

The limited visibility I have on billion-dollar M&A, in my portfolio or with friends, is that it's happening, but it's stressful. No one's sitting there just throwing billion-dollar chips into the middle of the table because it's the age of AI, the way they did in 2021. So there is more stress in liquidity in the system than we think with these OpenAI and Stripe secondaries.

I think it's a bummer we didn't destress it this year, but that's our job. We still have our fees to get us through these rough patches, right?

But I'm not going to let that happen. No, I mean, I take fees.

Jason Lemkin

You don't. We don't take fees.

It's good. It's success-only at 20%. We're a zero-30 fund. We go big on the carry.

Jason Lemkin

Rory's the same. Rory told me they don't do fees either, so I just—

It seems dated, doesn't it?

Jason

Yeah. No fees. Look, in the end, for most normal fund sizes, despite the cynicism, the truth is you make your big money on carry for all the obvious reasons, and it's tax-advantaged.

So, yes, it would be really great if the window opened. The scary thing, going back to linking it to the AI thing, is that with every year that goes by, the probability is that the next crop of IPOs will be AI-first companies from 2022, or pre-AI, pre-2022 companies that clawed their way into AI land.

The probability goes down that those 300 or 400 companies that are unicorns from before 2022, and aren't making the transition, will ever get out, right? Every year that goes by, as the tech debt mounts and the new world order becomes clearer, the probability of most of those companies getting out has to decline. That's the scary thing.

We're going to have to maintain a 2021 mark if you haven't seen massive AI progress. How are you thinking about that as we come to the end of the year at Scale?

Rory O'Driscoll

I don't think so. It's very hard to imagine any 2021 mark that's been maintained that hasn't been validated or come anywhere close to being validated, and we wouldn't and haven't.

Jason Lemkin

I think everyone ever—they've all been marked down.

Rory O'Driscoll

I think they have. I regularly eyeball the list of unicorns by year as part of my bedtime reading, and you just look at it and go, “Oh, that's good. That's good. Oh, no, no, no.” It's not even close.

I think there's enough data that says—well, the various surveys suggest it. The secondaries mightn't be representative, but I don't think that if you have a 2021 mark that hasn't been validated since then, and you're trading at 6 times revenues because you've grown into it, then yay, you. If you're still trading at 20 times revenues, you might want to think about it.

I'm asking for myself: do you think 6 times is okay if you've grown into 5 or 6 times? Do you think this is—

Rory O'Driscoll

Look, it's growth-adjusted. It's all the things you talk about. The truth is, if you're in a boring company—we've seen it with Semrush at 3 or 4 times, and you cited Wix at 3 or 4 times. On the other hand, with 25% growth, you get to 12 times.

The interesting thing is how fine-grained it is. Small percentage points of revenue growth between 15% and 25% have massive consequences in terms of value, which is a whole theme as you talk to CEOs: how easy it is to move from not great to awesome with just a little bit of reacceleration.

You're right. But do you know why it's so much harder than it looks? Because if you're growing 15% or so, or in the teens, probably the majority is from price increases today. That's fake growth. It's price increases or stuff jammed down the channel. Maybe it's a couple of percent from new logos, but if you're increasing effective pricing 8% to 9% a year, even with some retention issues, the truth is it could be half the growth, right?

That doesn't mean it doesn't count. It just makes it much harder to get into the 20s.

Rory O'Driscoll

No, in the end, exactly. You're not going to get into the 20s on price increases. You're probably not even going to get into the 20s on NDR. You're going to get into the 20s because new people want your product.

9. Quick-Fire Round

Which is why, going right back to Andy Grove and all, if you cut R&D in the downturn, you're probably screwed. If you don't have that compelling second product that you built in 2022, 2023, or 2024, you're just in a tough place.

Okay, we're going to do a quick-fire. Rory, this is your favorite. Would you rather? Yeah, okay. Would you rather be in Wix or would you rather be in Lovable?

Rory O'Driscoll

From a venture perspective, that's a good question.

This is from a make-money perspective.

Rory O'Driscoll

I'll go with Lovable at the margin. I board companies, interestingly. I don't have clarity on how Wix's vibe-coding product will roll out across the rest of the organization. If I had clarity on that, I would take Wix all day, every day, because I think you can make a 4 or 5 times return that would be liquid. But I don't have a thesis on it.

You saw my investment. I had a clear thesis there. I don't have one on Wix. If I spent the time, maybe I would, but in the absence of data, it's presumed innocent. In the absence of data to the contrary, the prior is that the AI-first company has the edge in terms of growth.

I'll go with Lovable at the margin, but I'm a bit nervous at $6 billion, just to be clear. A bit.

Jason

Well, listen, I watched your interview with the Base44 guy. He's pretty good. We knew he was good, right?

Did you think it was good?

Jason Lemkin

Yeah, he's pretty good. I feel like I know this space pretty well now. Of course, he's a founder, so he should know all this stuff, but his fluidity in the space and his knowledge of where it's going to go and how to play it were pretty impressive.

So here's my question, Harry: is he going to stay? If he's going to stay—because it felt like he's going to stay—okay. But if he's really going to stay for 24 months, I'm going Wix just on financial engineering. Nothing against Lovable. If he's going to leave, I'm putting my money in Lovable if I have to pick.

You're unwavering that he may well stay.

Jason Lemkin

Yeah, so I'm not sure I'm going to do it. If you promise me he'll stay for 24 months, I'll go with Wix, because that arbitrage to that second bucket is so palpable. But he's got to stay.

Yeah, it's really good. I didn't know when they bought it. I've used Base44, but he's—

Rory O'Driscoll

If I were on his compensation committee—as I've done with some of my existing companies—I would have that guy on an accelerated equity-grant program based on upsell of the new AI product across the existing customer base. That would make him wildly wealthy—double or treble what he's already made—if he got that penetration up to 20%.

If he's as good as you say, that's the mission here. If you can get penetration of his product up to 20%, you probably jump 2 buckets, Jason. You probably jump to the 25 bucket.

Yeah. The problem is he could probably raise $1 billion now for a new startup. That's the problem. You have to compete with that. Now, that's not liquid, right? But if you're running Wix, how do you compete with the fact that he, in a sense, sold really cheap?

Looking back on it, at the time it seemed like a fair deal. In internet time, it seemed like a fair deal, right?

Rory O'Driscoll

It did. The only thing I'll say—and I'm not sharing anything, because I don't know anything—is that I do know from him directly that there is a variable package.

Yeah.

Rory O'Driscoll

So he unquestionably has upside if he hits the targets.

Instead of starting over, in the old days—like 24 months ago—a guy like him would start over. Instead of raising it at $10 million pre-money, he'd raise it at $50 million pre-money for his next company, or $60 million. Now he can raise it at $1 billion pre-money for his next startup.

I'm not saying it's liquid, but it's a siren call if he's aggressive. A billion? Yeah, and we'll give you $150 million to start from Andreessen. That's a tough one to say no to if you're ambitious.

Rory O'Driscoll

Keep going.

$150 million to start Base44. I don't know a lot about a lot, but I know how to design compensation.

Rory O'Driscoll

You could give that guy a package at Wix that makes it worth his while. Absolutely.

Because there's only one thing that matters in that damn thing: get that penetration to 20% or 30%. Then you have a thing. If not, you have a 2-times-revenue-growth or 4-times-revenue-growth thing.

So, going back to where we started: mission clarity. Call it war mode, call it what you like. Mission clarity is worth a lot, right? The mission clarity for that company is to take this existing customer base who should be using vibe coding to build their stuff. You have the product, you've bought the product, you have the founder—make it happen.

But here's the question. If they're worth $2 billion today, and if he does $250 million next year, then let's say they're worth $5 billion because of multiple inflation, which it's worth, right? You've got to pay him $300 million because he's added $3 billion to your market cap. You've got to give him an Elon package to stay. You've got to give them 10% of it. You've got to give them $300 million. I'm not going to devolve down to numbers that'll get thrown back in my face by every one of my CEOs.

Rory O'Driscoll

Honestly, I would quit if you didn't give me $300 million.

Rory, we miss you in London, my friend. You need to make it out here next year. There's still time for next week. There's still time.

Rory O'Driscoll

There's still time.

Okay, guys. We'll fly you out on our nickel.

Rory O'Driscoll

I will join early next week so we can make sure this stuff works. It'll be crazy.

You're a star, dude. Have fun.

Rory O'Driscoll

Bye.

Later. Enjoy London.