20VC：GPT5：Sam Altman 的宏大计划，还是送给 Anthropic 的礼物？| Palantir 与 Shopify 业绩碾压预期 | Monday 与 Datadog 表现亮眼却遭华尔街重击 | Perplexity 是否该以345亿美元收购 Chrome？|

It's like dealing with a deranged madman trying to estimate what the Street will do. I spend no time on it.

Jason Lemkin

You don't need half your company, and Palantir and Shopify are proving it. You don't need half your company. He's ruthless. Zuck is ruthless. Karp is ruthless. And if you think you're going to win in B2B, if you're not ruthless, you're going to lose. Okay, let's look at Shopify for a minute. Their peak employee count was in 2022, at 11,600 employees. Since then, revenue has grown 91%—pretty impressive for a company at $11 billion in revenue—and employees have gone down from 11,600 to 8,100. They've gone down while revenue is up 91%.

Guys, I am so excited for this. We have an amazing schedule in place today. I want to start with GPT-5. I think it's the top story of the week. Consensus is that it's slightly underwhelming. Before I lead the witness, I'd love to hear how you responded to it. Do you agree it was underwhelming, and do you see it differently?

1. GPT-5 Feels Underwhelming

My first experience was certainly underwhelming when it said we had the greatest market crash since the tulip era. That's what I think. But when I look at folks smarter than me, if Aaron Levie is running this through Box and saying redlining, document comparison, and term extraction are materially better, maybe that doesn't make those of us who are using it for therapy excited. But if he thinks it's materially better, and more importantly, if it's materially better at coding and competes with Anthropic, that's $6 billion of revenue that they lost. But I get it—it does feel like it's a worse therapist at the moment, doesn't it?

Howie Liu

My take, similarly, was that underwhelming is great. Let me tell you what I mean by that. Underwhelming took a little bit of the air out of the techno-optimist idea that we're underway to AGI and it's all going to revolutionize everything—all that kind of noise. You definitely felt a little deflated here, which is great, because we're now at the “It's a really great piece of software for doing business; let's make it better” stage of life, right?

I remember the first Windows 95: “Yay, it's amazing,” a big launch, and then there's just a steady growth—or even the iPhone, better example. The early one had a great launch: it's going to change everything. Then you settle into 10 or 15 years of incrementally making it better until you plateau, right?

From a zero-to-one perspective, that's not as interesting. But we're now in the grind-it-out, make-it-better, build-a-business stage of life, which I think is a more normalized world. What's implicit in that is the statement: I don't buy any of this—the idea that they're going to keep on getting better, that there's going to be an exponential takeoff, all that AGI rubbish. I've always assumed it's rubbish, and maybe I'm wrong, but at least right now, the evidence has shifted a little more in favor of perhaps not nearly as quickly as you think.

2. GPT-5 Starts A Business War

Because from a business perspective, there's a lot of interesting shit going on here, and Jason nailed the first big one. The product is good, though I believe it's not as good as the high-end Claude Code models, and it's a damn sight cheaper. It's 10x cheaper than the most expensive token model, based on what I saw—maybe 8x to 10x.

On top of that, it's noticeable that Cursor is now pushing a GPT-5-based product and has free demos of that, pushing it on their user base. From a business perspective, as distinct from the pie-in-the-sky AGI stuff, this is exactly what Jason said. This is OpenAI going after a big-ass pile of revenue that Anthropic has, and maybe Anthropic overplayed their hand a little bit by bullying Windsurf.

As we discussed, if I'm Cursor—or maybe a month ago, I was sitting there going, “My gross margins are set by my worst competitor, Anthropic”—now I'm ecstatic, because the big-ass guy on the block is now another vendor of tokens, significantly cheaper. I'm going to push the hell out of this. So that's a really big business comment. It's not as sexy as AGI making us all unemployed, but if you're trying to build a business and you're Cursor, this is the best damn thing that ever happened. We have a competitive product at 1/4 to 1/10 the price, and I'm happy.

If I were Anthropic, I would be in that room rejoicing. Everyone I speak to on the Anthropic team is bluntly laughing because the demos were terrible. I think it was entirely underwhelming in terms of the presentation of the features. Model consolidation into one and model routing, and we've now taken that away. That's it? Seriously? We waited for GPT-5, and you gave me a better model? This is disappointing.

Jason Lemkin

There's a reason for it. Sam Altman, in his own way, is a marketing mastermind like Elon Musk. He knows what he's doing, okay? We can make fun of this or that. He's everywhere across the globe. He's doing Stargate, Farscape, everything. He's building everything. He is as perceptive as they get. He's dueling with Elon over who manages the X algorithm, right?

The fact that this would come out with a bit of a thud was known to him and the team, right? So there's a reason they did it. Was it timing pressure? Was it to put pressure on the team? I actually don't know. I haven't seen it on the hundreds of Reddits I'm on.

This is like Figma: we said Figma was dumb because they didn't understand the IPO pop from last week. Neither is true. The idea that it would come out with a thud is not a shock.

Rory O'Driscoll

Put me down as not quite buying that. You can be directionally brilliant and entrepreneurially brilliant, and it's hard not to argue that Sam Altman is both. But it's always worth remembering that the most popular product they ever shipped, they didn't know they were shipping a good product at the time.

Rory O'Driscoll

ChatGPT, which is 70–80% of their revenue dollars, when they shipped it, they didn’t even think it was a major release. They were focused on GPT-4 the following March.

So I think one of the bigger ahas on that—not where we want to go, but to go there—is that you see this in venture often. If you’re directionally correct and you have big-ass vision, drive, and the ability to raise money, sometimes that’s enough, and you kind of get the breaks on your side.

But I don’t think he or anyone has complete clarity on every step and the level of forethought that you’re implying, Jason, on that. I actually don’t think it can. I want to go back to what Howie said, because I don’t know the answer.

It’s interesting. You made the comment that you think Anthropic are laughing. They’re definitely laughing at the thud, and it’s hard not to laugh at the funny, stupid graph that was mathematically wrong. Oh my God, they must have burned someone after that at the stake, literally.

I’m not sure I’d laugh quite as much, because I do think a renewed push on code and pricing and trying to get that business would be better. If you’re Anthropic, it would be better to be a monopolist with the best product than to be in an oligopoly where you still have the best product.

The consensus is, token for token, dollar for dollar, the Anthropic products do more and are more efficient. This gets into a very interesting discussion: if the pricing of the other product is low and good enough for companies really wrestling with gross margin, you’re going to have some kind of “use the cheap shit where you can and use the dear stuff where you have to.”

No one ever said, “I’m really delighted my bigger competitor entered my market with a product 5× cheaper than us.” I don’t buy it at that level, Howie, to be really direct.

But I think that’s a very moment-in-time perspective. Everyone is aware that if you’re looking at the cost of tokens today, we’re seeing them reduced so dramatically within a 12-month period.

I don’t think Anthropic are looking at that thinking there’s a permanent chasm in pricing and they’re going to be unable to match it. I think they’re looking at it going, “Fine, they might have a slight efficiency on us today, but if our models are better, we’ll win.”

Rory O'Driscoll

Yes, you’ll win, but it just won’t be quite as easy. That’s my point. We’ve gone from the pie in the sky for everybody—it’s going to be amazing, flowers and sunshine—to, “Okay, it’s a slug-it-out war here. This is the advantage we’ve got; this is the advantage they’ve got.”

We’re dealing now with just business fundamentals. Are you better off with something slightly better but 4× more expensive? That kind of discussion.

Rory, what was your second point? I interrupted you.

Rory O'Driscoll

No problem. I mean, there’s 2 or 3. You have to take seriously that they shipped the open-source models earlier this week—another interesting commercial move.

Again, in the last one, you were sneering at it, but moving away from all those models to the single model selector—yeah, it didn’t work at opening. It’s the kind of thing you do when you’re done with imagining being the next Robert Oppenheimer and now you’re focused on what the product manager tells you will get 5% extra conversion among users.

Someone in product marketing said, “Dude, we have to stop with these 6 different model names that make our users feel stupid and just make it simpler to use.” All those things are okay. It’s time to get business-savvy, not just “AGI’s coming” savvy.

I thought, yeah, that’s what grinding it out looks like. That’s what every iPhone release after the first 1 or 2 looks like. Similarly with every Microsoft Windows release after the first 2 or 3. Once you had tiling in Windows, the next 15 years were just grinding it out.

Same thing with the iPhone. Maybe it’s the same thing here. We’ve got the idea: it’s a chatbot with AI, and now we’re just going to be grinding here.

Howie Liu

I think GPT-5 didn’t achieve what Sam wanted it to achieve by July 31. You’ve got to manage the team, even at the highest-profile company on planet Earth.

Everyone who’s been a founder and shipped software has had to make a decision: do I give the team another month, another quarter? Anytime you do a release and it gets too complicated, your team always wants more time. At some point, as a leader, you’ve got to ship it.

Earlier on this show, we had a question: “When will GPT-5 ship?” And it was all over the place. I think Sam said, “August is time, boys.” If it’s going to be underwhelming, I’m going to make the call that we’re not going to wait for nirvana.

I don’t have a firm date on what it was supposed to be, and I’m just going to box it up and ship it. We’re going to make some basic stuff better for Aaron Levie, we’re going to cut some costs, and that’s it. Maybe it’s 4.9, right? Or 5.0. But this is just my theory.

He decided there’s so much attrition in this industry, and there are so many resources flowing back and forth to Meta, to here, to there, that I think he just decided: ship it.

I also think aligning to a $500 billion fundraise, it’s actually better to get it out, to continue to press on—

Howie Liu

Yeah.

It’s like the Replit $3 billion round: just get it done.

Howie Liu

Yeah.

Rory, would you do OpenAI at $500 billion, and do you feel more or less confident post-GPT-5 about OpenAI?

3. OpenAI Reaches Half A Trillion

Rory O'Driscoll

I’m going to say more confident, and I’ll tell you why. It goes back to what I said earlier, right? The grandiosity was totally necessary at the start, because if you walked into people and said, “We need to raise $30 billion, $40 billion, and at the end of it we’re going to ship this chat app that, trust me, people will use as a replacement for search,” that mightn’t work as well as, “We’re going to change the known universe. We’re going to exponentially eliminate all labor.”

When you have to raise $30 billion on nothing, you’re selling dreams—the future of humanity. We’re now at, “I’ve got to make a business converge roughly on profitability over the next 3 to 5 years,” so just go run the business.

It’s a combination of a just-ship, run-the-business, make-it-better kind of next step. The interesting thing is—and this is where I’ve evolved a little in the last few months just thinking about it—without any need for AGI or any of that rubbish, I think both of these companies can be, plus or minus, half-a-trillion- to trillion-dollar companies.

The opportunity is just so obvious. Everyone’s going to be paying 20 bucks a month, and people are going to be paying more. You get an interesting discussion of how big the high end will be, which matters more for Anthropic than these guys.

But they have the mass market: everybody paying 20 bucks a month. That’s a big-ass company. From here, the runway is such that you probably can see a 2–3× just on that. Probably some noise along the way; you might be ahead of yourself.

They’re on the destiny that’s now locked in for them, which is to be the go-to place for information for pretty much everyone on the planet.

I always think that AI is a bit like crypto, which is like, “Hey, don’t fucking worry about all the underlying assets. You’ll make money if you just invest in the core, which is Bitcoin.”

And I’m like, the core, unwavering asset here is Nvidia. Do we think OpenAI or Anthropic or Groq, or you name it, are going to win? I don’t freaking know. With each month, the benchmarks change. Humanity’s Last Exam changes; the next Humanity’s Last Exam will come. Nvidia.

Rory O'Driscoll

I mean—

Nvidia.

Rory O'Driscoll

I mean, what you’re saying is true at some point, which is: sometimes just keep the main thing the main thing.

And I often make that mistake. This is going to sound really cynical, but early on you listen to all the proselytization and all the crazy stories, and I’m very much a rationalist, and I try and take them seriously, and I deconstruct them, and I realize, “Oh, these crazy stories are bullshit; therefore, the thing itself is bullshit.” And that’s wrong.

Every single thing that people said they’d use Bitcoin for in 2013, except maybe, finally, stablecoin payments, has been bullshit. But the thing itself totally worked because it’s got this store-of-value idea—the asset independent from everything else.

Bitcoin worked. Everything else—Ether, to some extent, everything else, all those little weird coins—didn’t matter. Same thing here. The main thing is the main thing.

You want to make the chips. You want to be the company that’s— In OpenAI’s case, you want to be the company that’s pretty much selling to every consumer. It looks like its market share is pretty hard to change at this stage.

So you start multiplying. You’ll have a paid tier at 20 bucks times a lot of people. You’ll at some point have an advertising tier, and plus or minus, you’re Google with a subscription business. There you are. It’s $1–$2 trillion. Thanks for coming.

Keep it simple. I am often guilty of overthinking to the point where I’ve now learned to watch myself when I overthink.

I’m very lucky. I don’t have the luxury of the ability to overthink, Rory. And so I’m always a simplistic thinker, which tends to do me quite well.

Rory O'Driscoll

You know those kinds of internet meme graphs where you have, on the left, “total fucking idiot”; in the middle, “overthinking it”; and on the right, “not thinking at all, just like the other guy,” and you win.

Listen, another element that’s just crazy is Perplexity trying to buy Chrome for $34.5 billion.

I spoke to Aravind before. He said, “Legit. It’s in their court.”

Jason Lemkin

Where is he getting the capital? Just to confirm.

That was my question to you.

Jason Lemkin

Elon had his capital secured a while back, didn’t he?

How is this possible, guys? What did you make of this when you read it?

Rory O'Driscoll

You can get tactical and say, “Where would the money come from?” But stepping back, why would Google sell? Just big-picture points to cover it for people: why would Google sell Chrome? Answer: They don’t want to in a million years. The Department of Justice says they have to. If they can appeal, then at some point maybe they have to. They don’t want to sell this thing.

The second interesting question is, what’s the Chrome business worth? The totally interesting thing about that is it’s so dependent on who buys it, right? Because the asset itself doesn’t have—Mozilla has some $100 million, I think, of revenue, right? Reasonable market share. You don’t get paid for owning a browser, to state the obvious.

The reason the DOJ is going after this is that, as well as owning Chrome—which was one of Sundar’s crowning achievements that got him the big job—Google also pays Apple for search placement on Safari, $20 billion a year. The Department of Justice is looking at those 2 things together and saying, “Paying to be in the browser is bad. Owning the browser is bad. It allows you to continue your search monopoly.”

But the question is, from Apple’s perspective, owning Safari on the iPhone, where it’s kind of a pain in the ass to change, is clearly worth $20 billion of profit a year. How much is it worth on Chrome, right? In other words, who would buy it? What would they sell through it? How locked in would the service be?

Ironically, the person for whom Chrome was the most valuable, if it wasn’t owned by Google, would be Google. In other words, if someone else owned Chrome, the company that could most monetize Chrome would be Google because they have a search business. They would probably say, “Harry, if you bought Chrome, you have no revenue source, but we will happily pay you $20 billion a year for all your search service, and you’ll be the richest single-person company ever.”

So it’s a weird asset where intrinsically, in itself, it has no value, but it’s a gateway to some product that does, which now gets to Perplexity. The thought process there is they’re already building a browser. If they had Chrome, they could basically be the AI backend. Instead of having to build their business browser by browser, they would basically jam Perplexity into every Chrome user, and every person who’s using Chrome today, including me, would have some version of Perplexity as their default AI engine.

Great work if you can get it, and I totally get it. Now, is that worth $34.5 billion? Is it worth more? Is it worth less? Do they have the money? All those things, A, are unclear, and B, may not matter yet. To Jason’s point, is it real? But would an AI engine competitor to ChatGPT absolutely kill to own the Chrome user base? Absolutely. So that’s kind of how you get there. Sorry, long-winded answer.

Do you think it’s likely in any way, or is it a complete—

Rory O'Driscoll

I assume Google will litigate this to the end of human time. Which actually gets to step back and say something else. I just have to get it off my chest: The Department of Justice gets around to killing American companies and technology just when they’ve become irrelevant anyway.

No, “irrelevant” is the wrong word. Just when they’re at risk. The idea is, Google—think about it. The whole idea here is that Google is so powerful and almighty that we’ve got to smash their search engine monopoly with legal remedies. When all of us here are talking about whether Google could be screwed because OpenAI and ChatGPT could be a better product, it’s literally not kicking Google in the nuts when they should have, right?

When they were evil bastards for the last 15 years, grinding everyone down like Yelp. Then finally, when their backs are to the wall, now we’re going to kick them—too late—when, in fact, they’re now at risk. At a zoomed-out level, all this is freaking stupid. It’s the Department of Justice. Because they take so long to make decisions, it’s like they only started kicking Microsoft when Google was in the ascendancy and Microsoft was on the defensive. It’s the same thing here.

Leave poor Google alone. They’re just a simple, humble trillion-dollar company trying to survive. So dumb as rocks. Sorry.

Jason Lemkin

Maybe just 2 things. One on marketing. There’s a huge amount of need in AI to do constant marketing, and there’s a huge need to be 1 of the top 2 players. Everyone’s doing a lot of marketing. Lovable—why are you doing these hackathons? Why is Bolt doing a hackathon in every city? Why is Sam Altman everywhere? Why are the Anthropic founders everywhere?

I’m not even sure, even with Nvidia, Jensen’s everywhere, right? And he probably doesn’t need to be. But it’s important for Perplexity to be in that conversation because we can think of a lot of tools that aren’t in the conversation. We talked in the last couple of weeks about Cognition buying Windsurf, right? At least it was in the conversation.

Two of my portfolio companies use Devin, their AI tool, and they love it for niche use cases, but we never talk about it. I don’t think it’s cynical. I mean, it is a little bit cynical. Because even if he had $34.5 billion, I’m guessing another suitor might come out of the woodwork. I think Satya would raise his hand and say, “I’ve got $39 billion.” There’d be a few other folks.

To grow at the pace the AI leaders are growing, at this incredible pace, you do need to fuel the marketing engine. You need to fuel it aggressively, and you’re not going to do it on AdWords and a few sponsored blog posts in SEO.

You absolutely have to. I actually interviewed Aravind at an event, and I said, “To what extent do you feel like a politician or a state leader, where you actually don’t do anything in the machine, but you just entirely speak for the machine?”

Jason Lemkin

Yeah.

And he said, “That is completely my job.” That is the job of Dario, that’s the job of Sam, that’s the job of me. We are on the machine—

Jason Lemkin

Super important for them.

—shouting. Then you also look at the poor performers, and I hate to name people, but this is the show that we have: Cohere, Mistral. You also correlate that with who does next to no marketing or speaking publicly. Cohere and Mistral—I have no idea whether their models are good or not, but they are both incredibly quiet and don’t do press, and they are also the ones people have deemed the losers.

Jason Lemkin

You do have to do it. Virality alone isn’t going to do it. I guess the other Captain Obvious point is, one of the things that’s very interesting in the media is, where does Google stand today? Is Search under massive existential threat? Yes, but Search revenue is up, right? It’s confusing.

The Captain Obvious theme is that, no matter what happens, Chrome ends up being this accidental gem. Chrome was built very strategically in the old days, in the desktop-focused days, to counter IE, which it destroyed. Then it was open source, so Safari and Opera and everything are built on Chromium. They gave away the open-source version. They destroyed everything, and then it kind of plateaued, like a lot of software did, right? We had plug-ins; we took it for granted.

Now it’s the crown jewel in the age of AI. It’s the crown jewel. Again, it’s the return of the browser. It’s not just the browser wars; it’s the return of the browser being this core piece of software that we forgot about for the better part of a decade.

Jason Lemkin

First of all, agreed, and I can’t resist the “Chrome wasn’t built in a day” statement. Moving right along, you’re right, and it’s only because, for 10 years, Google won in the sense that no one else could monetize traffic anything like the dollars they could.

You could have niche browsers, but you couldn’t build a humongous business because the only thing you could do with that traffic was monetize it, and the only place to monetize it at scale was Google. The interesting thing now, to your point, Jason, is you can envision a world where someone monetizes Chrome traffic via an ad-supported product.

But ChatGPT is also a consumer subscription product. Like, 700 million free users and 20–30 million paying consumer subscribers, I think, are the numbers. That’s a very profitable business where the rate-limiting constraint looks like your ability to sign people up, which is why Perplexity is smart.

If you could get 1 billion people coming through your door, and if 1 billion of them were free users and you had the same conversion rate as ChatGPT does—which is a leap, obviously; I doubt you would, but any kind of conversion—what’s that, 20 over 700? That’s about 2%, plus or minus, a little under 2%, which is what you see with freemium. If you get 1% or 2% converting into paid users, it’s a compelling business.

Suddenly Chrome matters, not because it got better and not because the browser is uniquely different, but because you can plug it into a machine now that can collect checks.

We’re not talking about AI for normies, and this sounds incredibly condescending and patronizing, but AI for normal people. Normal people are kind of the slow laggards to adopt.

Rory O’Driscoll

Oh.

What I mean by that is—

Jason Lemkin

For the record, “normal people” is not patronizing, but “slow laggards” is. So you might want to work—

Yeah.

Rory O’Driscoll

I’m willing to be normal. I prefer not to be slow, but keep going, Harry.

I’ll keep going with this. A great example of that is Threads, something that we all deem in our circles to be like, “Who the fuck uses Threads?” Threads is actually a massive success. The reason I’m going there is because, yes, we all think ChatGPT is great and a massive hit, and 700 million is amazing, and yes, it is. That’s unbelievably incredible and insane.

I’m not doing a prior guest and saying it’s not. But Gemini is great, actually, and it’s getting better and better and better, and they will plug it into the core engine and the core distribution channel. For AI for normies, there’s a real chance that they don’t lose any market share.

Rory O’Driscoll

You’re right. For a good slug of the population, there are going to be times when AI answers meet your need on Google and you’re done. Gemini as a model is actually apparently pretty damn good, even for coding—someone was walking me through it. So, yeah, they’re going to have market share. They’re not going to roll over and die, and the search revenues will go up.

It’s simply that you’ve gone from a situation where you’re the only game in town to a situation where these other guys have taken a significant slug. So it’s always better to be a monopolist than an oligopolist, but it’s still pretty okay to be an oligopoly.

4. n8n Rides The AI Wave

I do want to move to an insanely hot deal, guys, that really in Europe was a talking point for everyone: n8n. It was done at $3 billion. Reportedly, it was at $40 million ARR, ending the year at $80 million. Accel led the round. Massive. The last round was not too long ago at $300 million or so, give or take.

It’s not a new company. It’s a 2019 company. How did you think about this?

Rory O’Driscoll

With envy. Let’s start with that, because in fact we had talked to them in about 2022 or 2023. What we clearly underestimated was workflow automation. It’s a category. Pre-AI, it’s a category. We’d looked at a lot of players. It’s a noisy one.

You have everything from RPA to process mining to low-code, no-code, and this big indigestible mass of things where every solution blurs into the next one. It was just hard to know what’s what and therefore hard to build a big, compelling business, especially with lots of competition.

Clearly, they did a brilliant job of co-attaching to AI, because when you go from automating workflows for people in a very deterministic way to actually getting more of the work done using AI, the value prop of your software goes way up. Instead of saying, “We’re going to automate a little bit of shit,” now we’re going to literally do the work, and you can get rid of all these people who were doing the boring work.

They clearly did an excellent job of that, and in the space of 6–9 months, they just massively accelerated. Well done them. It just shows you’ve got to stay on top of these things. Good on the guys. Highland Europe, I think, did the last round. Good on them.

Jason Lemkin

As I’ve gotten deep into vibe coding, I’ve reused Zapier so much. I’ve got to hook stuff up without wanting to code it. If n8n is a more developer-focused version of that, I’m having a Zapier renaissance.

But today, with the explosion of applications we’re building and the explosion of things we want to connect with AI, it’s an order of magnitude bigger. Maybe, Rory, when you met them, you couldn’t predict the accelerant that would happen. It was probably in the last 7 months, from the revenue, and then boom.

Rory O’Driscoll

You’re exactly right, and that’s the aha. There are companies that you’ve tracked for a while that you mentally might be writing off. You can either decide it’s not knowable and bet randomly, or you can try to track them just based on metrics. The most logical thing is to sit down and say, “What areas will the model significantly impact in the next 6, 12, 18 months, and what are the companies that could benefit from that?”

The second criterion, and you’ve talked about this before, Jason, is that it’s all very well to say there were probably 10 related workflow-automation companies. Which one of them will get the prize? I tell you, it always comes down to the founder who gets it the most, gets it the quickest, and just puts everyone in the room and says, “No one’s leaving till we’re shipping an LLM-enabled version of this, and we’re going to get it in front of 20 customers by Friday.”

In retrospect, that was the aha here. They clearly had those elements, and if you tracked it, you’d have made a lot of money.

The thing that’s really stuck out to me is Index. Index is making everyone feel like shit right now—in particular, Sequoia and Accel in Europe. Accel has to win, otherwise the gap widens more and more and more. They won Lovable, and now they’re winning n8n at, I think, any price. It’s a well-priced deal.

Jason Lemkin

But they did that with Facebook back in the day, when they were out of the game. They bid—I think they—What did they pay for Facebook, Rory?

Rory O’Driscoll

Five hundred million pre.

Jason Lemkin

They were insane. People said Accel was washed up, and they had to bid up this fledgling social network.

I’m actually praising them. I’m not saying it’s bad.

Rory O’Driscoll

I think you’re saying the same thing. Look, if you pick right, no price is wrong.

I do think there is a retaliatory element from Accel of, “Oh, shit, we have to, and this is the next extension.”

Rory O’Driscoll

Again, you know your European market better than me, and maybe because they’re smaller. Humans are human, so that kind of dynamic is understandable. It’s a bad way to try and make money, and it’s hard, because we’re all prone to regret, FOMO, decision evaluation, and looking back at decisions.

You’d like to think you just make every decision on the basis of whether it’s a good bet or not.

Jason Lemkin

I don’t know what you think, Rory. This is what I was taught. I’m not a growth investor. If you’re writing one of these checks, you believe it’s a winner, and you see a clear path to 5X, and you can deploy enough capital, you do the deal at a certain moment in time.

So if they believe 5X with dilution is a lot, it’s got to be worth a $20 billion company, right? Or Lovable’s got to be a $20 billion company; they all have to be $20 billion. But if you genuinely believe it, overpay for it, it keeps you in the game, it’s good for your brand, and it’s not your whole fund, then it might be worth it if you genuinely see a 5X. The growth round doesn’t all have to be 10X or 500X, right?

Rory O’Driscoll

That is definitely true. It’s like—

Jason Lemkin

It’s wise to overpay to get into a good deal where you’re not into the space, but it’s not insanity if you see your way to 5X, right? It just might not be a 5X fund-returner if that investment makes 5X in a growth fund.

Rory O’Driscoll

There are actually 2 things to unpack there. One is the 5X versus fund return. You’re exactly right. Growth investors, when they’re looking at something, can typically say 3–5X. The interesting thing is they’ll say, “Most of the time, it’s hard to go beyond that,” and then, by virtue of the power law, 1 in every 10 does.

It’s factually similar to seed, but when they’re much bigger, it’s harder to envisage, right? But the truth is, I remember an early Facebook investor who said they’d bid on another deal, lost it, and said they could see a 3–5X from there. Obviously, they made 100 times the money.

So, yeah, you basically just operate on the power law, and some of them turn into amazing outcomes, but you want to be able to say your base case is 3–5X. That’s totally, absolutely the business they’re in.

Now, you went from there halfway through the paragraph into some kind of, “We should do it for brand or we need to be relevant.” At that point, what you’re really saying is, “I don’t see a 3–5X, but I’m just going to convince myself to do it because I have to be relevant.”

The sad thing is, sometimes that might be the right thing to do, and I recoil against it, perhaps wrongly, to be perfectly honest. Maybe there are times when you should just do that, but it feels like—I remember when they teach you in Catholic school about sin, and they’d say you start on little things and then it will just get worse and worse. It’s the same. Once you start doing deals not for return, does it just get worse and worse forever?

I don’t love the “I won’t make my return, but it’s good for marketing” school of investing. But I also recognize that sometimes you can say, “Ooh, I can squint and get a 3X and it’ll be good,” and hey, sometimes you do what you do.

The funny thing is, we have a YOLO segment of our fund, which is like $2 million or $3 million, whatever. Basically, we have amazing access because of the shows, and people will give us positions at high prices, but we get into amazing names, and it’s good for marketing and brand. It’s 7X as a pool right now.

Jason Lemkin

No, it makes sense. It makes sense.

When we did it, we were like, “This is total brand.”

Jason Lemkin

Yeah, but then you get later into the fund, and you’re like, “Well, so what? I got 12X.”

I believe it, right? But it returns 5% of the fund, which is the problem, right?

Rory O’Driscoll

I think the other problem with that is the Machiavelli quote which, as you know, I’ve used before: circumstances change and people don’t, and what works in 1 market doesn’t work in another, right? That same strategy, when you look back at 2021, felt really sickly in 2022 and 2023. It felt like, well, that wasn’t the right strategy. Be more careful.

And then obviously, whenever you’re accompanying a boom and you’re leaning in, leaning in is the right strategy, and it’ll be the right strategy until pricing turns.

Jason Lemkin

This is a super narrow niche. It has 1 small advantage to that strategy, though, thinking back, because I accidentally did some of it pre-AI, right? It can get you early DPI in a fund. I accidentally did some of that.

From my 2017 fund, I got about 20% of it back early from these early exits that had a nominally large value, right? It doesn’t matter at the end of the day so much, but you’re going to hold some of your early stuff. It may take 15, 20, 35, 40 years to get liquid these days. So it’s nice if you can get that early DPI, even if it doesn’t matter too much in the long run.

Well, Jason, listen, you and I are both fortunate to have likely Horsley Bridge, who I think are one of the best of the best, and I love them dearly. But they’ve taught me, really, that venture is a very challenging asset class unless you take advantage of very small windows of hyperliquidity.

Jason Lemkin

Yeah.

Where I think about this, I’m absolutely aligned with you. I’m leaning in, being very cognizant of when to lean out and being very aware that this will fall off a cliff, but I need to time it well.

Rory O’Driscoll

Yeah, I buy that. As I say, there’s 1 year in 7 where you make most of your money, and the 1 thing you don’t want to find is that you don’t have assets to sell when that year comes around.

Jason Lemkin

If you want to be a little cynical about venture, right? I do think in your earlier funds, everyone on X talks about DPI, DPI, but you don’t want to sell your winners early. We’ve had that conversation too many times. And Horsley, you know, I had a conversation with Horsley. I had a winner, and I had a chance to sell for north of $1 billion, and they’re like, “Don’t sell it. Don’t sell it at all. It’s not enough of a return.”

But it is nice if you go out to raise your next fund and you’ve got some DPI, right? So if Harry’s little sliver is at 10X, and again, it’s 10% or 20% of the fund, and you go out and it shows that this current fund is making progress versus all markups and no cash, it is cynical, right? Fundraising is just like founder fundraising for folks—for founders who are watching and listening. You’ve got to put some points on the board. It helps to put some points on the board, right?

So it’s not bad to have returned some of your fund at a nominally very high IRR and multiple, even if the absolute number—if you squint and you’re like, “You know, that was only 11% of the fund. All that together is only 11% of the fund, let alone a 1X of the fund,” right? I think it helps.

It also does amazing things for relationship-building with founders. When I look at likely Mercor, when I look at Perplexity, when I look at amazing businesses, honestly, likely Aravind and I chat a lot. Would we chat a lot if I hadn’t put a tiny check into the company? I don’t think so. Not as much. There’s no tie that’s enduring.

Moving on, you guys are going to be exceptional on this, and it was a nuts week in terms of earnings in many respects. I want to start on Datadog. Wow. Best net new ARR quarter in company history: $260 million ARR in the quarter. Initial reaction, pretty positive, and the stock is down 10% today and lower than before results. I just couldn’t get my head around this, guys, honestly. It seemed great, and the market puked.

Rory O’Driscoll

One thing you should do when you talk to CEOs of public companies—other than the obvious major beat or major miss, and we’ll talk about one in a second—is, for all the middling things, talk to a lot of CEOs. I remember we used to play this fun game on some of the boards where you’d know your numbers, and you wouldn’t know the market’s reaction to those numbers, and you’d try to speculate. At least half the time, you’re wrong. It’s actually a very fun game to play on a public board.

You have the earnings call internally, the internal thing. You look at the numbers and you say, “Okay, the stock’s at $32. When we announce these numbers, up or down, and by how much?” The error rate is massive. In other words, perfect information doesn’t tell you shit. Other than the obvious—when you miss by 20% or beat by 30%, it’s pretty obvious what’s going to happen. But in the middle, it’s very hit or miss, which is the odd thing.

I just offer that as a kind of preliminary comment. I remember watching my CEOs internalize that, so I actually stopped worrying about it. Because remember, you know what you did relative to your budget, so you know how you feel as a board member or a CEO running the company. They’re comparing your numbers to 2 things: 1, their internal estimate of what they thought you were going to do, which you have no visibility into; and then, even more zanily, the Keynes quote—what they think everyone else thought you were going to do—to try and figure out what happens.

And if you look at Datadog, the stock went up in the aftermarket. In other words, people looked at it and said, “Oh shit, this is good.” Stock up. The next day it’s like, “Oh, it’s not good. Go down.” My big aha is that it’s like dealing with a deranged madman, trying to estimate what the Street will do. I spend no time on it. It’s utterly unknowable.

Jason Lemkin

There are folks who are directly benefiting from the AI boom. They’re selling AI products—n8n and others. Then there are folks who are benefiting because AI is exploding. Apparently, OpenAI pays Datadog $240 million a year.

What’s happening is—and I’ll give you a very small example—Harry and I are both investors in a company called RevenueCat, which powers 40% of all mobile subscriptions, okay? Its usage has already doubled this year from where it ended last year, even though it’s not an AI company. Neither of these are AI companies. But RevenueCat’s more extreme, because all the AI guys are using their product.

So it’s very exciting, but it also has concentration risk because there are only so many of these large players, right? There’s pricing pressure, and OpenAI has already said they’re going to renegotiate down the Datadog deal, as they should, right? So there are folks that are exploding, not because they’re AI, but because of the AI economy.

But I’m not sure that’s why it’s up. That’s 1 of the reasons it’s up. But obviously, that’s a lot of incremental revenue for Datadog. A $240 million-a-year customer is high. But the incremental revenue and spend is from AI, right? If you’re a B2B company, you’ve got to go get AI revenue, right? Because you’re not getting it from John Deere and the rest. They’re spending the same.

In fact, probably a little less. No, you’re exactly right, because that’s the meta point, zooming out from this. I mean, you’ve seen the data: almost the entire GDP growth is AI CapEx. So if you can co-attach, even if you’re not AI CapEx, if you’re not Nvidia, if you can just co-attach to the money, you’re going to get a pop.

Now, it may not last forever, but the spend is happening there. That’s where all the CapEx is going. So, literally, I always think of: What is the bill of materials to build AI? If I wake up tomorrow morning and say, “I want safe superintelligence. I want to build me 1 of those LLM models,” you just make a list of the things you need. You need chips, you need a data center, you need power, you need some coders, and then you’re right, it’s all the little things.

I need to keep this up and running. I probably need Datadog. I need all the other software tools to make it happen. And if you just co-attach to that, it’s showing up now. The funny thing is, the productivity’s not showing up, the revenue’s not showing up at the app level, but the CapEx is showing up in the GDP numbers. It’s so big.

So you’re exactly right. If you can get your piece of that, then I’d prefer to have it than not. I mean, people are saying, “Oh, it’s a bad $120 million concentrated-risk customer.” It’s a downside better than not having that $120 million customer.

Is this a gift or a curse? And forgive me for my naivety, but the concentrated risk of $260 million—if OpenAI continues its trajectory, it’ll be $520 million in a year’s time.

Jason Lemkin

Yeah, whatever. It’s a gift. I think both of us are saying the same thing, Harry, which is that the people who are worrying about it—that’s why you’re getting into the second-order derivative thing. The people trying to value the stock, they’re not just saying—

If you were the operator, you would be coming into your board and saying, “We killed it this quarter. We signed a $100 million ARR deal with the most exciting company on the planet. It’s freaking amazing.” End of conversation. And no one is going to say, “Oh, I’m really worried that they might reduce the price in 2 years. That’s bad.” They’d be like, “Dude, we’re so happy.” And as a board member, I would be too.

Wall Street, as I say, has this different role, which is not just guessing what you are now, but guessing how you’re going to be compared to what they thought you were going to be. They’re paid to second-guess themselves.

As I say, my best advice is to ignore it. Maybe in 2 years' time, you'll be dealing with a renegotiation. But as you point out, maybe you'll be dealing with the fact that OpenAI is growing so quickly that the contract has doubled and they don't have the engineers to waste. I'm kind of engineering you out, and you just take the check.

Are we just seeing big-ish tech win? Like, just invest in big-ish tech. And what I mean by that is AppLovin crushed. HubSpot gains. Shopify are ripping. Palantir is obviously ripping. These are not Mag 7, quite. They're great companies. They're not Mag 7, but be long big-ish tech. The AI wave is mega.

Rory O'Driscoll

That's true. I'd say there are maybe 2 things going on. One is, yeah, the AI wave is mega, and I think definitely Palantir, probably Datadog—not so much, I would argue, HubSpot and Shopify—are benefiting from that.

But then the second thing is, rather than this whole, "Oh my God, SaaS is dead" thing, I think what you're saying is—and I think it's correct—that these markets are big and huge. If you're the winner, you're public, you've got scale, and you execute well, add a little AI, you can defend your position, grow nicely, and kick off a ton of cash.

I wouldn't like to be a little startup trying to enter the HubSpot space or the Shopify space, but the death of SaaS has been overdone for the public-market winners, which is a very different thing from saying you'd want to invest in, quote, "the next Shopify at a billion in revenue." No, these guys have clear market leadership positions. In every case, they have strong founder CEOs. They have profitability.

And, yeah, the growth reacceleration this quarter has been pretty real across the board. HubSpot and Shopify are in that, yeah, they're using AI, but they're not direct beneficiaries. Datadog is in the middle because they got a big-ass contract from the biggest company in AI, so they kind of caught that. And then, obviously, Palantir is white-hot in terms of its AI story. They've brilliantly become the way large corporate America implements AI at scale. It's a beautiful position.

5. Palantir Reaccelerates At Scale

Can you guys help me on Palantir? I always look at it and I go, "Amazing company," but, oh my God, look at it. It's so overpriced. Every time I do that, I'm proved wrong and it goes up again. How do you think about that and, legitimately, how would you advise me? I love these shows because I learn from you both.

Jason Lemkin

I mean, Jesus. The growth is frigging breathtaking. It goes from 12% growth at about $2 billion in revenue in 2023 to almost 45% growth at $4 billion in ARR. Goodness. I mean, this has never happened.

Forget about the fuel, right? The secular fuel. The contracts are getting bigger, with a record number of $5 million-and-up contracts. They are the AI solution for both commercial and military.

If I didn't even know how to spell Palantir or what it did—which I think most people didn't even know until 12 months ago—when you see it go from 12% growth for a public company at billions in revenue in 2023 to almost 50% today, maybe Rory can come up with an example. I don't think in enterprise software we've ever seen that level of reacceleration, ever.

You can either say it's going to decay like all curves do, or you can say, "Good God, this is my 10-bagger." Everyone in the public markets, they're 10-baggers. That's what my social media is full of. What's your 10-bagger, Rory? What's your 10-bagger? If the chart keeps going, this is unprecedented in enterprise software.

Rory O'Driscoll

Across 20 years, only about 1 in 3 companies reaccelerate for 1 year, and about 1 in 9 or 1 in 10 reaccelerate for 2 years. So that's just the data.

Jason Lemkin

That's daunting.

Rory O'Driscoll

And these guys are reaccelerating significantly at scale for 2-plus years already.

Jason Lemkin

Yeah.

Rory O'Driscoll

I can see how you can build a model. Let's say if you go from 12% to 23% to 45%, you're right. The next question is, do you fill in 55%, or do you fill in decay at that point in time?

The problem is, any exponential curve up can justify almost any valuation. My gut, Harry, is that your instincts are right: it's an amazing company smack in the middle of 2 huge trends. We'll come back to them in a second.

At the same time, 120 times revenues, plus or minus, is probably not sustainable. I saw the data. It looks like it was a good statistic. Someone says 5 years of 40% to 50% growth, and then they'll be valued about the same in terms of a revenue model as Google is today.

And you know, you can have 2 responses to that fact. Part of me says, "Oh my God, 5 years where you've got to pull it off, that's a lot." And then you've got to go, "It's not crazy." I would be terrified of buying it at that price, but the interesting thing about that calculation was you go, "Oh, yeah, it's the beauty of compounding." 5 years times 1.5, you just end up in an amazing place.

Now, I haven't checked that math fully. It does feel incredibly lofty at scale. I mean, there's that great Scott McNealy quote about trading at 10 times revenues, where he walks through how absurd it all is when Sun was trading at 10 times revenues in '99. Every once in a while, you should reread that quote, because he was totally correct, and it went in tiers.

So intuitively, 122 times revenues is not a sustainable place. But, yeah, they've got 3 huge trends on their side. They're the AI solution for large corporates. They are the AI solution for defense, which is having a boom. And they've got the administration on their side.

Jason Lemkin

Just this last quarter, they closed $843 million in US commercial bookings, up 222%. So help me with the math. 222% at $843 million. I mean, this isn't quite Lovable growth, but this is pretty good.

222% at $843 million in their commercial division.

Rory O'Driscoll

And you've got to, again, step back and give credit to the founders and, obviously, Thiel and Karp. In 2003 or '04, with a sense of mission around 9/11, they built this stuff, then moved into commercial. It was a slog for a while. Some of the early commercial customers weren't wildly successful.

But they've ended up now whereby one of the things you think about is, when big companies want to do big things with a project like this, it's not the kind of thing you can give to a little SaaS company just starting out. Big companies need to spend big on initiatives with big vendors.

The point is, all the other big vendors are old and stodgy, like IBM and Accenture. Now you can have these dudes who've been working for the US government, who've got their whole forward-deployed shtick. I see how it's working.

I went through the last earnings and actually went through a bunch of the use cases in corporate, and it's all over the place. Supply chain planning, scheduling for an airline—it's a whole bunch of very different stuff.

A single SaaS app couldn't do that, but what they have is a platform that's been around 10 or 15 years. They have another platform they've added around enabling LLMs. Take that, take the forward-deployed engineers. You can squint and say a lot of it's services, but who the hell cares? The margins are 50%.

And the reason they can get it is they can look the CEO or the CFO of a Fortune 100 company in the eye and say, "We've done 10 of these. You give us $10 million, we'll get this puppy done."

The other 2 competitors are a little SaaS startup that says, "We have a $100,000 product that's way more efficient than Palantir. It'll work, but it'll need a lot of work." And they're like, "Ooh, don't know about that." The other competitor is Accenture, saying, "We're going to build it from scratch."

They're just in that sweet spot. They can make the pain go. You can get your AI initiative as the CEO of a large corporate company. You give them $10 million, you've got your AI initiative, and they'll probably get it done. It's a golden place for the next couple of years.

6. Companies Get Leaner

Jason Lemkin

You know what the other crazy thing about Palantir is? I thought this was fascinating with Alex Karp. So they're a Rule of 94 company today, right? Pretty good.

He's on fire. Just watch his body language. He knows they're going to crush it, right? But he said that when they're 10 times bigger, so at $40 billion, they'll have 10% fewer employees than today, and they're already on the trend to that.

And I think there's a meta point. This has been well thought through, and this is a hint of the future in Palantir, right? This efficiency level. Microsoft has already reached peak employee, right? Google has already reached peak employee.

But Alex Karp going on the record saying that at $40 billion in revenue—10 times bigger—we will have 10% fewer employees. I think it's the journey we're all kind of on, but he's out there because he doesn't give a rat's ass what anyone thinks, on his farm in Vermont, in sandals, crushing the numbers, right?

To me, this is the future of B2B companies just trying to get to this massive, massive scale with few humans.

Rory O'Driscoll

Yeah. I wouldn't pencil it into my model, but it doesn't matter because, as you point out, 50% operating margins today. Don't bother getting more efficient, just scale.

Jason Lemkin

He's not doing it, obviously, directly for the margins, right? But it's how to structure the company. This may be where the future is. He's just so far ahead, he can make these visions and bets, right? And not be hiding in 7% growth, as some others.

I just thought that’s the future. I think this age of these bloated companies is just… And the same with what you talk about with Shopify. Shopify is at $1.3 million in revenue per employee now, and it’s reaccelerated.

We can talk about Shopify if you want, but the efficiency at Shopify is not at Palantir levels. It’s breathtaking efficiency. Tobi’s ruthless on this, and founders should be too. Founders should be ruthless on this. You don’t need half your company, and Palantir and Shopify are proving it. You literally don’t need half the people working at your company. You don’t need them today.

I’m glad that half isn’t listening to this show.

Jason Lemkin

Work hard. Work harder. Learn your product. Ask yourself: are you actually valuable to your company? Be honest. Not just, “Are you a people person?” What are you doing at your company where you’re irreplaceable?

It’s not that you’re going to get fired or anything. You may be moved out. It’s just that your future is uncertain if you’re not irreplaceable. It’s just uncertain.

Rory O'Driscoll

You’re not getting fired, Harry. You’re just getting moved out.

Oh, there we are. It might be slightly hard to move me out, Rory. I feel a slight protective layer around me, but it’s good to know that—

Jason Lemkin

Yeah, but your team should be uncertain. You may not need them for investing or content production in 2 years. You may not need anyone else helping you to invest.

Rory O'Driscoll

I was more giving Jason a hard time about the uselessness of it.

Okay, it’s an interesting question. Do you want your team to feel uncertain? Do I want my team to be scared that they might lose their job? On the one hand, it forces them to find the irreplaceability of their roles, and it also can make some people uncomfortable—horribly uncomfortable, scared. It’s not a nice thing.

Jason Lemkin

Yeah. My learning is that it doesn’t matter anymore. There’s so much uncertainty out there. We coddled people from 2020—since the middle of 2020—and then we coddled them like there was no tomorrow until early 2022. Take 3 jobs, work 2 days from home. Life is easy. Take care of yourself, and if you can, come to work, but take care of yourself, everybody.

Shopify had twice as many employees at the peak as it has today. Shopify—forget about them—twice as many. Tobi was telling everybody to relax in late 2020: “Take it easy, guys. The commerce will come.” Now he’s freaking ruthless, isn’t he? He’s ruthless. Zuck’s ruthless. Karp’s ruthless. And if you think you’re going to win in B2B, if you’re not ruthless, you’re going to lose.

So I don’t think you should scare people. I don’t think you should tell people, “Hey, if you don’t step up, your job’s over.” I actually think that’s a dated approach. Just step up and they’ll quit. I’ll give you a small example from this industry. We use 10 AIs now at SaaStr, up from 0 at the start of the year.

One is a niche tool called Momentum.io. It’s a cool startup, Rory. You should do the next round if you can, maybe. It basically mashes up everything—Gong, Granola, everything—so that you have real-time insights into everything your sales team’s doing.

I turned down that pre-seed. Is it good?

Jason Lemkin

It’s a good product. It’s a good product. It’s not perfect, but here’s my point. It’s not that any individual component is all that interesting. It’s how it synthesizes everything elegantly through AI.

I got turned onto it through Kyle Norton at Owner, and I’ve brought it into other companies. Every single time it’s been brought in, someone on the sales team has quit the first day. Quit every single time. They quit the first day, including on our little SaaStr team. Someone quit on the day we brought it in. He quit that afternoon because the gig was up. The gig was up.

That’s why, Harry, I don’t know if it matters whether you prepare the team, because there’s going to be so much AI around us, the gig’s going to be up one way or another. If you’re not productive, if you were too busy to get the podcast out this week, if Harry had to do it himself, if you forgot to do the TikToks, the gig’s going to be up across tech, so you don’t have to coddle people or scare them, I think.

They’re just going to get a report every day that you didn’t push out enough code at Shopify, and you’re going to get pushed out.

Rory O'Driscoll

And I’m going to go back to the scared thing, because I’ve been thinking about it a lot as you mentioned that. It’s always funny, Harry: we start off with a prepared script, and then you just take us so off script by the end. I haven’t spent any time thinking about this until you asked me, but I think there are a couple of different categories.

I don’t think it’s great for society if everybody’s scared all the time. There are jobs where, once upon a time, I ran a manufacturing company, and at that level, the blue-collar jobs are pretty interchangeable. If it doesn’t work out at employer A, you can go down the street to employer B.

I think it’s good that the mass of people don’t live in terror of not being able to put food on the table. There’s a whole bunch of jobs where it might not work out with this employer, but I can get roughly the same wage from another employer. I’ve got to follow the rules and work hard, but I’m not sitting there every day terrified.

So that’s one category, and frankly, most people have those kinds of jobs. I mean, I don’t want my teacher teaching my kids in Nashville to be terrified. They should know that if it doesn’t work out in this school, they can go somewhere else. That’s most jobs.

But there are two categories—well, maybe it’s only one here. If you’re holding down a well-paid to extraordinarily well-paid job in an entrepreneurial company—and let’s be frank, anyone getting paid $100 million over 4 years at Meta is extraordinarily well paid—if you’re pulling down those kinds of salaries in an entrepreneurial company, you should be afraid.

But ironically, this doesn’t affect any of those. This affects the $100K-a-year marketer. This affects the $100K-a-year SDR. I’m not saying $100K isn’t a lot of money—

Jason Lemkin

Yeah, they’re going to be out of jobs, man.

Rory O'Driscoll

And the good thing about the $100K-a-year person is that there are other white-collar jobs at $100K. I’m going to say this: I think I’m a compassionate person. If I thought that person’s next-best option was $20K, I’d feel real empathy for them.

But if you’ve got a $100K-a-year job that’s going to be automated, and your next-best job is $95K doing something else, that’s life. That’s American capitalism. Get over it. You should feel the need to hustle there. I don’t think that’s called fear.

Jason Lemkin

You understand me? You’re putting on a weird face, like as if you disagree. You think that—

Well, no, I just think there’s a generation of 23- to 30-year-olds who aren’t really masters of the craft in any way and don’t really know what they want to do. They’re doing SDRs or marketing, and they’re about to get hit by a train. They’re going to go, “Oh, shit, and I don’t know what else.”

Jason Lemkin

Well, let me give you a quantitative version of it.

Rory O'Driscoll

But they’ll pick themselves up and keep going because you’re young and you’ve gotten a good education. It’ll be a little bit hard, but—

Jason Lemkin

No. No, they’re checking out. Just to pull the numbers, because Tobi did do the night shift—the black and white at Shopify—let’s look at Shopify for a minute.

Peak employment was in 2022: 11,600 employees at Shopify. Since then, revenue has grown 91%. Pretty impressive for a company at $11 billion in revenue. Employees have gone down from 11,600 to 8,100—gone down while revenue’s up 91%.

I’m sorry if Tobi was early on this. He went into beast mode, and he destroyed the competition. BigCommerce doesn’t exist. WooCommerce doesn’t exist anymore. Amazon was never a threat, even though it wasn’t a direct competitor. He went into beast mode, and he just got there earlier than the cracked kids in San Francisco. He just got there earlier.

Shopify is doing 91% more revenue with 30% fewer employees. If you want to fight that, people would say I was toxic or was hurting their feelings a couple of months ago on LinkedIn. I’m like, “I’m trying to help you.” You want to be one of the 8,100 at Shopify or not? You’ve got to decide, because you can’t leave work at 3:00 to get your salad and go work out. It’s just not going to work.

You’re never going to learn the product. Even worse, you’re never going to beat the AI that knows your product cold. This is the coming reckoning for these people: the AI knows every Shopify feature, and every Shopify merchant’s AI knows the products better than the humans.

AI is smarter than most humans. Pre-AGI, it is smarter. Have you ever talked to an SDR who even understands the product they sell? Any 22-year-old? Once in my career have I talked to a 22-year-old SDR who knows the product better than me. It’s worse with AI. These people are gone.

Shopify is going to be at 7,000 employees and 200% bigger.

You’ve got to adjust. The Shopify numbers are stunning if you think about it, aren’t they? 30% employee reduction, 91% revenue growth, and it’s just starting. It’s just starting. And that is before all the AI mandates went out, right? It’s concurrent, but it started before everyone.

Everyone in tech is now saying, “Before you replace someone, find an AI first,” aren’t they? It’s become the mantra, so it’s going to accelerate.

Rory O'Driscoll

I’m going back to the scared comment. It’s funny, I sound like I’m arguing, but I’m actually agreeing. My guess is that person’s paying $100,000. Maybe they only get $80,000, but whatever.

The thing you should be scared about is that if you’re on board at something like Shopify, what you’ve really lost there is the opportunity to participate in 4 years of equity that could have made you $4 million, right? That’s where the fear is. Anyone who’s in that kind of job—I’m scared every day because you should never take your job for granted, especially if you’re in the kind of job where you can make millions of dollars if you do it well. I think that’s the level at which you can be scared.

Those folks should have been scared, I think, not because they went for the $100,000-a-year job. I’m just trying to think of the equity thing.

I get you, Rory. The opportunity cost on the upside of the equity is insanely real. But having come from a family that’s lost everything, I worry about the downside. Quite frankly, I don’t think there are a ton of employers queuing up for a 23- to 30-year-old graduate from a mid-tier university who isn’t a specialist in anything, in a world of AI, cost-cutting, and economic questionability.

Jason Lemkin

No one wants to hire them.

Rory O'Driscoll

They’ll have to suck it up and learn to do different things, but to a rounding error, they’ll be fine. The anecdotes are there, and unemployment is higher than it’s been, but I’m not going to cry for someone in their 20s who has to adapt.

It’s a very different feeling from the kind of fear someone feels at 55, when their job as a fill-in-the-blank could go and they’ve got nothing ahead of them for 10 years. That’s fear, right? I’ve seen that kind of fear too.

Jason Lemkin

It’s going to grow.

Rory O'Driscoll

With all due respect, I think we’re actually ending by saying the same thing. You are slightly overpaid. You could probably get another job. It won’t be as good, and it won’t have the same equity upside.

Jason Lemkin

You’re not even going to get another job.

Rory O'Driscoll

They will. They’ll be fine.

Jason Lemkin

Until maybe 18 months ago, if any seasoned B2B executive I knew reasonably well needed a job, I’d get him a job with an email. I could reach out to someone in my extended network—not even in my portfolio—founders I knew, people I met on 20VC, and I could get them the job. Today, the odds are like 10% that I can get them a job.

First, the fire’s not there. Second, they’re not willing to be cracked. Third, they’re not willing to come to the office. Fourth, they don’t know the AI tools. I can’t get them a job anymore.

Rory O'Driscoll

You’re interesting, but you’re jumping. Are you talking about the 50-year-old guy or the 20-year-old?

Jason Lemkin

Yeah, now I’m talking about people in their 30s, 35 to 55 to 65.

Rory O'Driscoll

Got it.

Jason Lemkin

I can’t find the veterans any jobs.

Rory O'Driscoll

Well, got it. And I totally get—

Jason Lemkin

Not a single job. I say go to Cisco before Cisco realizes they don’t need you.

7. Monday Misses The Market

The thing I love about these shows is learning from you. I learn from you on Palantir. I don’t fricking get Monday.com. It has a good quarter, and it’s down 30%. What?

Jason Lemkin

Rory may have a more nuanced view on this one. I know the Shopify data and the Palantir data. I think Monday is actually the one that should worry us more as investors.

Monday was priced to perfection but growing to perfection. I don’t think it’s this quarter; it’s that they came in a little soft relative to where they thought growth would be. But it’s still elite.

The bar is 50% growth at $500 million ARR, never missing a quarter, and keeping it going. We throw around all these numbers at Shmuvable [?], Lovable, and n8n, but, man, the bar’s high. That’s the only reminder to me: the expectations are so high today for the top performers that, for the ones with those outlier revenue multiples, it’s just so high.

Rory, I’ll give you an unfair question because you love unfair questions. Datadog, HubSpot, Palantir, and Shopify—ranked 1 through 4 in what you’d buy.

Rory O'Driscoll

I hate giving advice when I don’t feel informed.

Jason Lemkin

I can give you a guess if you want while Harry thinks about it.

That’s what I love, Jason.

Jason Lemkin

I’m going to take Shopify. It is gaining market share at scale. Palantir is growing at scale, and maybe it’s gaining a certain type of market share. It’s dominating government contracts—don’t get me wrong.

Some people could criticize me for being simplistic, but e-commerce is the biggest part of our economy, right? Even bigger than enterprise. Rory’s got the numbers. The fact that Shopify continues to gain share is breathtaking.

What if Shopify has 80% market share and the economy is 80% e-commerce? Help me do the math, right? Thirteen percent of all commerce already goes through Shopify, right? It has essentially 90% of the platform market share, so platform lock-in, even in today’s AI world, is kind of exciting, isn’t it? It’s kind of exciting to have lock-in.

Rory O'Driscoll

Jason, I buy your decision; I don’t buy your logic. Let me tell you what I mean by that. If they’re all being bought on the same revenue multiple, I think the Palantir opportunity in terms of gross margin dollars is way bigger.

Jason Lemkin

Yeah, I was comparing 108x ARR to 17.9.

Rory O'Driscoll

Exactly right. That’s what I was going to say.

Jason Lemkin

That was implicit in my analysis.

Rory O'Driscoll

That’s exactly right, because you have to say to yourself—and that’s why I apologize—a VC would say, and this is perhaps the difference between the question and the answer: if you were to rank the size of the opportunity from here, I think it would probably be Palantir, Shopify, and then the other two, which are really top-tier SaaS companies. That’s pretty obvious and straightforward.

You’d have Palantir 1, even with the enterprise?

Rory O'Driscoll

I said size of the opportunity, not valuation, and please don’t misquote me. But yes, because commerce is huge. Gross margin dollars and the ability to sell $5 million projects to enterprise to, quote-unquote, “implement AI” strikes me as a wonderful place to be for the next 5 or 10 years.

While Shopify is huge, it is a more mature market. Palantir is at the white heat of this: this is new, this is exciting, and we have it; no one else does. That’s where Shopify, Datadog, and HubSpot were 5 or 10 years ago.

What I can’t do in my head—and I’m not going to do—is, as Jason says, how do you adjust that for the fact that the market is well aware of this issue and it’s trading at 120 versus 18? What are the other two trading at? I know Datadog is 15x revenue, and I haven’t checked HubSpot in a while.

Jason Lemkin

Here’s the brutal one. Monday, which we talked about, was off the charts good, right? After the correction, 8.4x ARR.

Dude, I bought the shit out of it, I’m going to be honest.

Jason Lemkin

I know. But think about how many companies we have in our portfolios that are not as good as Monday, which may be priced higher than 8.4x ARR. Monday’s the one that’s kind of soul-crushing. It’s like, are you sure your portfolio’s so good if it’s trading at 8.4x? That’s a tough compression to go down there, isn’t it?

Rory O'Driscoll

When the growth dies, all these businesses become very uncompelling in terms of valuation. You’re exactly right, Jason. That’s why you have to be growth bigots all the way on these deals, because once they flatten out, it’s 4 to 5 times if you’re lucky.

Jason Lemkin

Rory, well done.

Rory O'Driscoll

Yeah, but even though they’re still at almost 30% growth, it’s just that we’re too optimistic about our portfolio companies compared to Monday. For 20 years, up until 2019, the median SaaS multiple was 6.3-ish, and the median growth rate was almost 30%.

Now the median multiple is closer to 6 again. The growth rate is 20%, but the profitability is higher. For the longest time, you only got 6x for 30% growth.

Well done, Rory. I think you did an amazing job articulating the four. You have Palantir 1, Shopify 2, Datadog 3, and HubSpot 4.

Rory O'Driscoll

That’s not what I said.

Well, I think it is.

Rory O'Driscoll

I said in terms of opportunity. You’re such an unprintable—just a jerk. You keep doing that, dude. I did not say that.

I think it is.

Rory O'Driscoll

I did not say that.

I think you did.

Rory O'Driscoll

I did not say that. I said in terms of—

We’re going to title this “Rory’s Public Leaderboard,” with your face and my face.

Rory O'Driscoll

I look forward to seeing the new guests on your next show, Harry.

Mark Benioff is coming, and he wants to hang out with you, Rory, okay?

Rory O'Driscoll

Well, then you have to be nicer to me.

Oh, I'm gonna be nice to you.

Rory O'Driscoll

Okay.

Do you know what's amazing? After last show, Cliff from Canva—done.

Jason Lemkin

Yeah.

What did you call him? Aravind from Perplexity, done. Jeff from Twilio, done. Mark Benioff, done. All wanting to come on the show. All fans. Nice.

Jason Lemkin

Little do they know that when you come on, you just get asked stinker questions where you have one of your most successful CEOs in the mix, and you're just a jerk, Harry.

8. Venture Capital Concentrates

Guys, we mentioned that. Where is the upside, and where's the opportunity? likely Carta's State of VC Q2 2025 came out. A couple of things I want to dig in on, and then we'll wrap. We have the highest valuations ever for seed and Series A, and it goes back to what we said there about actually comparing to Monday. How do we feel about risk-adjusted returns and where dollars are best? How do you feel when you see the highest valuations ever for seed and Series A? Do you see that reflected in your daily work?

Jason Lemkin

The Carta data and everyone else's data also says there have been fewer seed rounds done than 12 months ago and 24 months ago. Everyone that doesn't read the stuff, founders especially, be cognizant: there are fewer deals being done. And it's worse than that because the deals are very specific.

Forget about the breathtaking growth of AI-native leaders. It makes sense if you're concentrating into winners that this would happen. We're also just concentrating into winners across the board. It's not just 10 deals for 40% of dollars; it's everywhere we're seeing concentration.

Rory O'Driscoll

Agreed, and to me that was the much more interesting point: the concentration in late-stage rounds—

It's called Revenge Rory. Don't worry, it's fine. The leaderboard comments.

Rory O'Driscoll

And the concentration in late-stage rounds is just amazing. We run an internal process. We look at every deal done, and we look at the total dollars. We do it every quarter. For the last couple of quarters, we've literally had to back out 1 or 2 deals because they just make the statistics so weird.

In Q1, the deals we forecast in total—you know, deals in our sweet spot, enterprise B2B—totaled, I think, $12 billion in total dollars raised. OpenAI raised $40 billion in the same period. It's like twice our entire addressable market for us and 100 other A and B firms was done in 1 deal. That's a huge level of concentration.

Same thing in Q2. Interestingly enough, in some deals, Meta gets reported as an investment in Scale AI because they, quote, “put the money in,” you know? So, in theory, it's a venture investment, which is absurd. But you have big rounds for Anthropic and xAI where, literally, your entire sector is smaller than 1 round at the super-late stage. I've seen concentration, but never to that extent.

Jason Lemkin

Concentration's unprecedented. It just is what it is.

Is that a momentary element of time where we are in the cycle, or is that going to be a continuing feature of a new age of venture and technology?

Rory O'Driscoll

It's probably not going to completely—look, it's not going to go back completely to where it was. Do I think there's going to be a $40 billion round every second Monday? No. But there's no doubt that there are a couple of industries now that appear to be venture-accessible that are fairly capital-intensive. Obviously, LLM model creation and obviously a lot of defense. So there does appear to be a higher propensity to do more capital-intensive industries.

That's 1 thing. The second thing is, the more you stay private for longer, the more this becomes a phenomenon. The effect of holding them longer means they become bigger companies. Bigger companies, just to run their balance sheet, you can have $20 million on your balance sheet if you're running a $100 million revenue company. You're cash-flow positive, and you're fine. If you're running a $10 billion company, even if you're profitable, you probably need a couple of billion bucks on the balance sheet just to manage fluctuations.

As these companies stay private for longer, there's going to continue to be this steady stream of fairly humongous later-stage financings. As I say, add to that the nature of the businesses. The model companies and the defense companies are capital hounds in a way that SaaS or consumer internet even wasn't. So, yeah, I think it's maybe not as pronounced as now, but it ain't going back to everything being As, Bs, and Cs and nothing being more than a $100 million raise.

Jason Lemkin

It ain't going back, and everyone that wants to go back or give that dated advice—Brian Halligan was so good. If folks that got this far and haven't watched him, that was S-tier. Go watch that one. His point was, when he's talking with Sku[?], he's like, “At best, half of what I learned at HubSpot matters today.”

It's true in venture, right? We're not going back. AI is so much bigger than cloud and so different, and unless the LPs cut off the valve, we're not going back to the old venture.

Rory O'Driscoll

You know, this has been a good fact for the large firms. The synchronicity of people having a lot of money, putting it out in lots of deals in 2021, and that not working—I might even have guessed that the next stage of the move was kind of real retrenchment on those firms. You'd seen that doing 100 deals at $10 billion pre didn't work, and maybe you can't deploy that much capital.

But along came this crop of extraordinarily good companies like OpenAI and Anthropic, where you can deploy large amounts of capital. I think it really provided justification for the opportunity for those larger funds to say, “Hey, look, you can put a billion dollars to work in 2 or 3 model companies.” And you all in venture would have thought, “Oh my God, there's no diversification. That's terrifying, and it's not our business.”

But I can totally see talking to an LP and saying, “This is the only way to access that risk. If you want to access that risk, you need this vehicle.” And that's why they exist. It's been marvelous for them.

Palantir

over or under a 5-year market cap of $2 trillion? Its current market cap is circa $450 billion. Five years from today, so that would be in 2030.

Rory O'Driscoll

I love the company, and they've exceeded all expectations. I just think compounding to $2 trillion from here is pretty damn hard. So I'm a no.

Jason?

Jason Lemkin

I'm pretty decisive. I'm just comparing that to Salesforce. Salesforce at $40 billion was worth $222 billion, and now I'm feeling gravity when I'm looking at the number 1 and number 2 by market cap. Palantir's worth almost twice as much as Salesforce as we write this, and Salesforce is number 2, right, at $40 billion.

AI is bigger than cloud, so that's the reason it's going to happen. But I'm worried about gravity when Salesforce is only worth $222 billion as we record this. So I want to take this bet, but I'm going to go the under.

When will Stripe officially announce an IPO: before June 1, 2027, or after?

Rory O'Driscoll

The correct response is, does it matter anymore? Aren't they so post-public? I mean, it trades all the time. I'm sorry. They're cash-flow positive, wildly so. They're just doing their thing.

But do you think they will go public in the next 2 years?

Rory O'Driscoll

If the cost of capital gets markedly cheaper in the public markets, then maybe. But they seem to be more resistant than most, and there's nothing going to make them do it because they're strongly cash-flow positive at huge scale, and there's liquidity. So the truth is, it's an idiosyncratic bet, and the Collisons haven't shared their opinion with me, so hell, I don't know.

Very honest. Thank you, Rory. You're not chatting to them in an Irish WhatsApp group.

Jason Lemkin

Over a beer in the studio.

Over a cheeky pint with Dario. That was a very, very important sign, I thought. One of the best fintech founders in the world is a mentor to Dario. I just thought it was ironic. Ten years ago, people were like, “Harry, media will never work for you, dude, just to let you know. It's not a thing.”

Rory O'Driscoll

True. For 1, I think Stripe does a super interesting job in media with the publishing and all that. More than most companies, there's an intellectual curiosity there, which I find the most attractive thing about that company. Unlike the one that—

Totally agree.

Rory O'Driscoll

—is not public, which is—

No, I meant it as a compliment. I didn't mean it badly.

Rory O'Driscoll

No, I think—I know. I just wanted to pile on to that one. Yeah, it's 2 smart people talking to each other.

Will xAI sue Apple? There are odds for this one, and I know you like your odds, Rory.

Rory O'Driscoll

I like suing.

So, yes, $100 gets you $209. No, $100 gets you $151. Elon has made it pretty clear he's very unhappy with Apple.

Jason Lemkin

And he's already sued OpenAI. There's a precedent there, right?

Rory O'Driscoll

Yes. Not. A, because he appears to have a propensity to pick fights with everyone, which is just fun to watch. B, because it's all about the dispute with ChatGPT, and to some extent you could—I saw a good tweet that basically said Elon's wrong because the whole idea that Apple is going to favor anyone—they don't need ChatGPT to be wildly successful.

So it’s a marriage of convenience. Maybe the better answer is this: if Apple continues to be, quote, “aligned with ChatGPT,” then probably they get drawn into it. Because the ChatGPT versus xAI fight is going to be existential for a long time, because that’s both personal and business, because you have the old xAI business.

So that fight ain’t going away. Anyone getting sucked into that could get pulled into the mess. To the extent they are, then, yes, probably not a bad bet. It’s like getting named in the lawsuit: I didn’t do anything wrong; you didn’t do anything wrong, but you’re dealing with someone that did something wrong to me, so I’m just going to pull you into this mess and depose all your executives anyway.

Jason?

Jason Lemkin

I think it makes sense. Epic suing them was worth it, right, at the margin. He’s incensed, and he’s got a lot of money in xAI. He’s the richest man in the world, but he doesn’t have unlimited capital. I think it happens.

Guys, as always, I so appreciate this. I want one final question from you. You gave me a target of someone to get for the show. I think I delivered with the people that I’ve lined up. If you were to add one more name, who would you say it is?

Jason Lemkin

Well, look, for what it’s worth, Alex Karp’s always been my dream since the beginning of SaaStr. I’ve asked every single year since 2015. So personally, if he has the energy to do it from his farm, that would be my dream.

I love that. I agree. Alex would be amazing.