20VC：Scale的148亿美元交易：Scale是否已成将死之人 / Meta究竟买了什么｜Chime IPO：IPO是否比以往更热｜Ramp估值达160亿美元，仅稀释1%｜Salesforce、Slack和Dropbox掉队：在位者是否正在失守

There's no way Scale AI can recover from losing its founders. I love you, but it's a dead man walking instantly.

Rory

I could imagine an entire IPO cycle where, once again, neither of the 2 names you cited chose to go out, and we get to the end of the year.

I'm starting to lose confidence in the old guard.

Rory

In situations of ambiguity, the person who has the most leverage has the best chance to win. And I would argue Microsoft has quite a lot of leverage because it's not existential for them.

I think they have no leverage, actually, honestly. I'm not trying to be a chaos agent like our prior guest.

It's time for my favorite show of the week where we sit down with Rory O'Driscoll and Jason Lamkin to discuss the biggest news stories from the week. This week we were not short of topics. First, Scale acquired by Meta for 14.8 billion. Then we have the Chime IPO. Then we have Microsoft and OpenAI disagreeing again, and so much more. We're also thrilled to be joined by Garrett from Handshake. I wanted to start with the news of Scale AI and the acquisition there. Obviously, Scale AI, $14.83 billion to Meta. Garrett, how should we read this? You're the expert in the room. How did you take the news?

It's pretty unprecedented to have one of the leading players completely bow out. What we're seeing is many of the labs having to reallocate their spend and trying to diversify away from some of the leading players that they no longer can trust to do work right now.

1. Meta Buys Scale AI

I have a bunch of questions I want to ask Garrett since we have him. At a deal level, it seems pretty clear, right? It's a weird deal. They've put almost $15 billion into Scale AI. Rory may have the details.

Most of it comes out as a dividend, and the CEO leaves to go run a seemingly much broader portfolio at Meta, right? He's not just running training, right? Which is the whole mystery: Meta doesn't even seem to care about the revenue, right? But if only OpenAI is committed to maintaining that as a partial presence, I assume the revenue will decline rapidly. You've already benefited from that, right? I mean, almost overnight you've benefited from that. So, in a way, you are the mole here rather than us.

Yeah. We have seen a huge surge in demand. The primary concern right now is hiring on our team. Demand tripled in the span of a week. I'm running on an average of 3.5 hours of sleep for the last 10 days.

Rory

I think I'm going to zoom out even one level further, just to restate this, in case—we've dived right in because we're so in the details. But zooming out a million miles, Scale AI is an amazing company founded 10 years ago to help companies build great AI models, and they do that by rounding up human experts and initially just doing very simple data labeling.

But increasingly over the last 4 or 5 years, as Garrett had said, as the tasks that the model builders have to attempt to solve get more complex, they've been hiring experts at the PhD level to help with post-training reasoning questions around making the models better. Zoom out and comment: it's an amazing business, a good $800 or $900 million. Think about it as kind of one level below the model providers themselves.

This is a company selling to those 5 or 6 amazing model provider companies a vital service that's probably kind of a pain in the ass if you're OpenAI or Anthropic. You don't want to spend your life rounding up literally thousands of people to answer what were, 10 years ago, very mundane questions like, "Is this a stop sign?" And are now, as the AI has gotten smarter, much more advanced questions, as Garrett knows better than me, right at the level of PhD knowledge.

That's the business Scale AI was in, and it was doing $800 million, and its customers were, in the main—

Mm-hmm.

Rory

—the 5 or 6—

Mm-hmm.

Rory

—large model providers. That's where we were a week ago. It was a highly valued company, just raised at $14 billion. So that's kind of the level set here. And then, as you say, a week ago—in the last week—Facebook/Meta announced a fascinating transaction whereby—

Mm.

Rory

—that definitely is a bit of a head-scratcher, whereby they invested $14 billion into Scale AI, took 49% non-voting control, and allowed the other investors to literally take that money back out as a special dividend. So all those other investors got $14 billion in cold, hard cash.

Some of the key executives at Scale AI moved over to effectively work with Meta. So those are the facts on what happened. And I think the open questions that we're starting to think about are: Why? What's the impact on Meta? What's the impact on the remaining Scale AI business?

And then, as Garrett says, what's the impact on all the other providers who probably, as Garrett just hinted—Facebook, to again state the obvious, is another contender in the AI model wars. So if you're OpenAI, if you're Anthropic, if you're any of the other guys, you now have a key supplier who's selling you a pretty important subsystem of what it takes to build your model, who is now owned, controlled, dominated, infiltrated—pick your word—by one of your direct competitors. It's got to make everyone pause.

Which is exactly what you'll see happen with Windsurf being turned off by Anthropic.

Rory

Agreed. And then back to Garrett. What you're saying is, in the last week, the phone's been ringing off the hook.

Absolutely. And I think, as you talk about the shift from generalists to experts, we haven't even talked about the future, too. The future's going to involve more audio. The future's going to involve more tool use. The future's going to involve more trajectories as some of these agentic systems and step-by-step problem-solving are being improved by all the frontier labs in their pursuit of AGI, right?

So really what that means is that you need experts in the domain. Mostly, right now, we're focused on core science skills, and also skills that you'd imagine, like finance, law, and medicine—the large markets that these frontier labs are chasing after.

Rory

One key question for you, though, Garrett. As you're having these conversations post-announcement, right? If I was running procurement or vendor management for one of the other AI companies—and I've had this happen to me once—how do you think it will impact how they contract with people like you, companies like you, and how much of the process will they let you—

Mm.

Rory

Have visibility into? Because one could argue that—

Matter.

Rory

Scale, the asset that Meta may think it bought, is that Scale AI has a lot of knowledge, just by virtue of the questions that are being asked and the kind of expertise that people are seeking from them. It has a lot of knowledge about where the most advanced LLM companies are going.

If I were procuring Handshake after that experience, I might have some different perspectives on what I can let you see or not see. Is there anything you can comment on about that?

When we're talking to our customers, we're talking about the absolute frontier of what's happening. Our customers really care about 3 things that are always in balance. They care about quality, first and foremost. You have to have high-quality training data, and you have to have a high-quality evaluation set. You have to have high quality.

Then they care about volume. It's really hard to get to scale on volumes if you don't have an audience.

Yeah.

I would say the only durable moat in the entire human data business is access to an audience. Then they care about speed. How fast can you turn them around?

If you're another company in the space, one of our advantages, I would say, is the ability to activate volume and quality quickly, and we don't have to run month-long advertising campaigns to make that happen.

In a year, Garrett, over or under, one word: does Scale have over $100 million or under $100 million in revenue?

Over $100 million.

2. Meta Bought More Than Revenue

Rory

That's a great call, Garrett, and the reason it's a great call is that it was such a savvy thing, because you're probably correct. It takes a long time to go from 800 to 100, so you didn't diss anyone, and you also gave a probably factually correct answer.

If Harry had asked a different question, which I'm now going to ask, do you think revenue goes down? Do you think customers will reallocate significant spend away from Scale AI to other providers of data in light of this acquisition? How would you answer that question?

What we're seeing right now in the market is that there are hundreds and hundreds of millions of dollars of spend that is trying to be reallocated to leading providers. The primary constraint is the ability to deliver volume and scale.

Rory

What you're saying, basically, is yes: there's a massive spend reallocation away, which gets to the interesting question about the deal: what did they get for their $14 billion? I know what the investors got for their $14 billion. They got $14 billion. It's just interesting to speculate.

I do think this. I think everyone's really confused by this in a way that they shouldn't be. Zuck was behind with Llama. He needed to show the public markets that they were still a front-runner with an AI slant. Bluntly, that was the play.

The price is less than 1% of the market cap. Honestly, he doesn't give a shit, and he gets good talent and some people that he likes. Roll the dice.

Rory

Yes.

I think $27 billion of the $28 billion is on messaging. It is about showing the public markets and the world that he is still a front-runner.

Rory

Yes, and I agree. That is the analysis. So I was asking the question, but you're right, Harry. Implicitly, what you're saying when you make that answer—and, to be clear, I 100% agree with it—is that there's no internal DCF that says why this is a good idea. There's just, “I want to be relevant. It's less than 1% of market cap. I'm doing it. Somebody paper the file.”

If you piece it together logically, you're right. You gave a company $14 billion for half the company. The $14 billion has moved out of the company, so that's now gone. It didn't move out as a repurchase of shares, so you still only own 49% of the company.

The cash is gone, and therefore you now have half ownership in a business that obviously doesn't have that $14 billion and just has whatever revenue it's had, and we just agreed that's declining. The value of that asset isn't nothing, but it's nowhere near $28 billion post-transaction.

We now have an $800 million declining-revenue business with so-so gross margins. The amazing thing you've got is, you're exactly right: the talent of those people that you've brought across.

The talent and the messaging for a company that is—

Rory

Yes, and the messaging—

—this size and—

Rory

—and the knowledge. It's—

Well, I'll tell you, if I had to simplify it, I think the question is: Is Alexander Wang as good or better than Brett Taylor?

Salesforce spent $750 million to buy Quip in 2016, a word processor that barely worked, for 1 dude, right? One of the greatest of all time. You know, CTO of Facebook, right?

And then almost CEO of Salesforce, except he bailed, right? Rory's really good at this math. What is $750 million in 2016, when great exits were—IPOs were lucky to be $1 billion—compared to 2026, 10 years later?

It might be the same as Scale. It might be 20X bigger, so 20X $750 million is almost exactly the deal size.

I don't think he's saying that. I think you're placing emphasis on, bluntly, the talent acquisition.

Yeah.

I think $27 billion of the $28 billion is on messaging. It is about showing the public markets and the world that he is still a front-runner.

Rory

Important, in fairness, to say it's only $14 billion, not $28 billion.

Yeah, $14 billion.

Rory

Right.

So I think the math to Quip is actually pretty good. Rory, you're better at math than me. $750 million in 2016—

Yeah, I mean, I think the—

—$14 billion today for 1 dude. Basically, who uses it? Raise your hand. Garrett, help me. How often do you use Quip for your word processing? Pretty often? Every day?

Don't be mean.

How's he—

Don't be mean.

No, what I'm saying is, it seemed crazy, right?

You're right.

It's gotta be—

No, I—

But if it's the same deal, or Google buying Bebop to get Diane Greene for $400 million, right?

Rory

Right.

That was the generation before Quip. Everything's bigger.

Rory

Everything is bigger now. There are 7 companies who can write stunning checks. And it only costs them a quarter's cash—literally, 1 quarter of free cash flow.

Therefore, if you're in the path of the corporate imperative for one of the top 7 companies, you can just get huge amounts of money, and you're thinking, “Oh, my God, this is the most amazing thing of all time.” And they're literally thinking, “Tick, that's Q2 done. What am I doing in Q3?”

Harry, broadly speaking, we're all saying the same thing. Facebook's market cap is $1.7 trillion, and its free cash flow for a quarter is $15 billion. Even if it's a total write-off, he literally goes away, Mr. Zuckerberg goes away, and in 90 days comes back and says, “Whoops, that was an error, but we earned it back. Keep moving here, people.”

Garrett, with that, Microsoft puts down an offer tomorrow for $4 billion to acquire Handshake. Would you say yes?

What? Absolutely not.

Rory

I love it.

I think the broader opportunity for us is leveraging all of this trust we built with 1 million employers. Yeah.

Well, Jeff at GGV is just calling me. He says—

Yeah.

—fucking sell at $4 billion.

I think there's an opportunity here.

Rory

Okay.

To rebuild—

I tell all founders to sell now, by the way.

Rory

No. I have a different—

Only as a challenge. I'm not saying you shouldn't take this fake offer. This is my life lesson: I tell you to take it, and then if you come back the next day and say what you just said, which is, “Fuck no,” it's the right answer. But I want to—

Rory

I, uh—

As I said, I want to be the one, as crazy as it sounds, I want to be the one guy to tell you to sell—

Rory

My—

—as a challenge.

Rory

My observation is no one's opinion on what they would do at a hypothetical offer is worth a damn, and what people actually do when the money comes into view tends to be very different on both sides.

Listen, Garrett, you're going to get a term sheet from Aurora at a $4 billion price on the back of that, so congratulations. This was a very well-spent market cap. Yeah.

I'll put in $100K, Harry. I believe in Garrett. I'll put in $100K. That's good, especially if I get 10% off.

Rory

Sold on Aurora.

I'm—

And Harry, before—

Rory

Yeah.

—just if we have time, just because it's a meta question for founders out there and VCs struggling: with all this demand that you have now, are you an AI company? Is this a 2-product company?

In a way, listen, you've worked so hard, right? But you also have a little bit of luck. This has bounced for you, right? You've become an AI company. When did you found the company?

9 years ago.

Okay, so you weren't AI-first when you were a network, when you were sort of the network for jobs for university students. How do you think about it yourself? How do you think about taking advantage of these opportunities? What's the meta lesson?

Harry, you're the boss. I just think it's very interesting, because so many founders are trying to become AI startup companies, right?

Right.

But they're not quite hitting it, right? They're launching—

Yeah.

Features and products, but the growth isn't there.

Yeah, I think this just accelerates our mission of democratizing access to opportunity and becoming the number 1 job platform on the internet.

No, that's not the takeaway, Garrett. Sorry. No, no. The takeaway is: stay in the fucking game long enough. Don't burn too much cash and, bluntly, don't get out of business too soon. I've been in a business that was aggregating students, and they just spent the money badly. They bluntly didn't survive.

The business is about being ready to play when you're called on the pitch. Garrett, we're going to let you go, my man. Take care.

Rory

It's been great to meet you, Garrett, and congrats.

Cheers.

Rock on, man. Great job.

Rory

There's a man who's going straight back to the phone to start returning customer calls.

3. LPs Finally Get Liquidity

Now, the thing that I do want to discuss on the back of that, guys, is that $14.8 billion back to LPs is also a lot of money. Do we see a resurgence in LP activity reinvesting that money, given what has been a period of illiquidity and people struggling with liquidity? Do we see LPs return to the game at speed with Chime, Circle, and Scale coming back?

Rory

I mean, it's got to help. There's no doubt that liquidity this year is going to be way up on the last couple of years. It's got to help.

When you're dealing with a couple of trillion of NAV, terrifyingly, $14 billion—let's call it $20 billion, round up—is 1%. It's a good start. But that's the terrifying thing about big numbers: they're big.

LPs, at least the LPs I interact with, don't get ahead of the distributions. What I mean is, Scale, as near as I can tell, has already distributed cash as a dividend, right?

Rory

Yeah.

It's out.

Rory

Yeah.

They may have already wired the money out to their LPs, right? Have some fun, right? Chime, Circle, and the rest—the 6 or 7 great IPOs—

Rory

Agreed.

A lot of the top VCs are going to be managing those distributions out over 36 months following a lockup, right? So my LPs don't—they're looking at dollars out now—

Rory

Yeah.

This quarter, before they get excited about putting money in, even though they should get excited because they can see it, right? You know the money's coming back over 36 months, and you can do a model and model whether it's going to be more or less than its current price. But I haven't seen that excitement until the cash is—

Rory

Agreed.

Back. Right.

I think that's what's so unbelievable about this deal, though. How rare is it to get cash back this quickly?

Totally.

No lockup, no delays.

Rory

It's actually—

Yeah.

Rory

Totally weird. It's even more unusual in the sense that the deal is already closed. It's such a workaround of the Department of Justice. I'm sure somewhere in the DOJ, someone's head is pounding, and if we were under the prior administration, they'd be trying to do some kind of retroactive restraining order.

It must make everyone's head hurt because it's such an obvious workaround. If the real asset is some combination of the people you hired at Meta—I'll call them Meta—and/or, as Harry said, some kind of market perception, it's very hard to imagine a DOJ rescission that says, “You can't work at Facebook anymore.” This is such a weird transaction. It would be very hard for any kind of judicial review to unwind it, in part because it's so weird.

It's clever if you want nothing. They're buying no revenue—

Rory

Very succinct.

No assets. They bought a—

Rory

No.

As we just discussed, if Handshake has already gotten, say, $50 million ARR from Scale, this is the worst purchase ever of all time as a revenue asset. They don't even own it.

Rory

And the odds here—

For assets, right?

Rory

That was a very succinct summary, Harry. I thought that should be one of the sound bites because you nailed it exactly.

4. Scale's Customer Trust Collapses

The funny thing is, Scale AI is still the same amazing company it was, right? 2 or 3—I don't know how many—talented people have left, and Alex is obviously wildly smart, but you've still got hundreds of really talented folks there. But the issue, as we've said, is that the impact on your customers is so traumatic that it may be very hard to get back from it.

Oh, I love you, but it's a dead man walking instantly. There's no way that Scale can recover from losing its founders. It's like—this is too dynamic a business, and it can manage 200 of its 800 for 24 months, but it's a dead company.

Rory

Agreed.

Yeah.

Rory

First of all, I agree with your conclusion. I'm just being precise. It's not because, quote, “You've lost your founder,” because a company can survive the loss of 1 person. It's the way it happened. It sends such a signal about your ability as a customer of Scale AI to continue doing business with them when 49% of the company is owned by 1 of your competitors in the LLM space.

So I agree with you 100%. Practically speaking—trying to say it nicer—I'm working on being nicer. Practically speaking, it's hard to imagine an independent, viable business selling to the LLMs, who are competitors to your 49% owner, where your founder and charismatic CEO is currently working.

Yeah, it'll be—

Rory

When you think about that—

It'll be fun. In 3 or 4 years, we can do an analysis, or you can help. It'll be the AI startups. What happened to all these characters, Scale?

Rory

Adapt. Yeah.

They were sort of bought, right? We got a big one called OpenAI, which was sort of bought by Microsoft. They're trying to undo that one right now. But the rest of these little startups—

Rory

That's such a good point.

What will they look like in 4 years? We'll pay $14 billion for Scale, but we'll leave $200 million in the bank. Okay, that's what they're doing. They're leaving—

Rory

I—

A little pot of honey in the bank.

Rory

Yeah.

And as folks leave because they're all cashed out, when we're left with 18 employees, the $200 million can last a long time.

Rory

I think the interesting thing for me as a McCaw investor is, how is the spend distributed across the other players, for one? And then, are there additional acquisitions that the others feel they have to make as a result of this acquisition to compete with Meta acquiring Scale?

Yeah.

Rory

I agree that that's the question because, as a good investor, Harry, you're right. The only response to any great outcome is, “That's wonderful, but what does it mean for me?”

Rory, you know me so well at this point.

Rory

No—

Always.

Rory

But I think this is going to be a unique thing. I don't think they'll buy a person like this again. You might see some of them say, “I would prefer to take some of this work in-house, or parts of this work in-house, because I'm giving too much information to a third party.”

Therefore, maybe I continue to do business with Handshake, with Mercor, but maybe more of the process is handled by me, or maybe I buy a small one of these. But I don't think you'll see someone else do a crazy “Let's hire the CEO, buy 49%, give Harry the money, and let Harry divvy it on out and pretend it's still a company.”

The one thing I just want to highlight—I always want to do this. I think it's nice. We hear enough about dunking on people. In terms of bringing people up, Excel made $2.5 billion.

Rory

Auditing.

Well done, Daniel Levine. Amazing seed bet early. Paige Craig led a pre-seed, 1,000x return.

Rory

Awesome.

The dude is well known for passing on Airbnb, which he very humbly always talks about. Awesome news there.

Rory

No, he humbly talks about—

Much deserved.

Rory

Screwing it up. It's an even better story for him.

In terms of CEOs moving around—

Rory

Oh—

As we have with Alex at Scale, Deleon tweeted about Jason at Discord being removed potentially by Benchmark because of a delayed IPO of Discord. I wanted to hear what you guys thought of that.

Rory

If you think about it, I've always been interested in the threads about X—everyone hating Bill Gurley for replacing Travis Kalanick. I always thought you want to strongly bias toward backing the founder the whole way.

I think that's been a really good move in venture in the last 30 years, not because it's morally right, though maybe it is, but because it's savvy. Whenever you have to change out your founder, by definition you're going to lose a couple of years, and it's a pain in the ass. So even apart from the moral issues, it's just not good for investing. But I also feel that sometimes maybe you do have to make a change.

Rory, have you ever fired a founder?

5. Founder Changes Carry Real Risk

Rory

Yes. I believe almost all of the time, even when a founder is struggling, you do a lot better by working with them and saying, “What does success look like? Can you get there?” Agree on what success is, and if you're not getting there, then most of the time people say, “You know, maybe you're right.”

Maybe I can get someone else to do this. So if you walk in and fire a founder or any CEO and they're surprised, you have massively failed as a board member because you didn't have the guts to tell him in advance that you're worried.

Personally, I don't have the capabilities—or, forget about interest, I could say I have no interest, which is true. I just literally don't have the skills. For me, if a founder came to me and said, “I'm out,” right? I don't have a guy.

Rory

One of the deep reasons for not making a change is, “Oh my God, it's such a lot of work.” And you're right, you rarely have the guy. I always tell people, “This is open-heart surgery. Even if the founding CEO wants to make the change, this is open-heart surgery, and you have a 1-in-3 chance of dying.” It's really brutal.

A little while ago—I haven't updated it, but I don't think it's going to change—I did an analysis of all the B2B IPOs.

Of the IPOs—

Rory

Yep. We're good.

Ninety percent still had the founder CEO as CEO.

Rory

Yep.

And as near as I can tell, all but 1 had an elective step-down. Like, “We just don't want to do it anymore at scale.” That's the PagerDuty story and a few others.

Let me contrast this a little bit with Discord, because Discord is not a B2B company. It has elements of it. If we're aiming for these great outcomes and nothing else matters today in the B2B world, then if the founder CEO is out, I'm out. There's no hope in B2B. If the founder CEO is out, I'm out.

Rory

If the founder doesn't want to go the distance and works with you to hire someone, great. It's a little riskier, but you can have amazing outcomes because that's what the facts say. Violent change is very hard. I could come up with some examples of where violent change worked, but it's just so hard.

The 1 canonical example, as you say, in consumer is Uber, which is why it attracts such attention. It was a violent change. It was very controversial. But if a board member feels it's his fiduciary obligation—and this is where I do give Bill Gurley credit—if you're on the board of a company that's raised $10 billion in money from third-party investors, I don't think you can just say, “I religiously don't fire founders,” if you come to believe it's your fiduciary obligation to make a change.

Again, we can't run an alternative history. You don't know what Uber would be with or without Travis Kalanick versus with or without Dara. But in particular, in light of the kind of backlash he got from it afterwards, I do give credit to anyone who says, “I'm in the boardroom. There are lots of people's money on the line. I'm going to be a good fiduciary and do the hard thing, not the aesthetically pleasing soft thing. I'm going to step up to my duty.”

I don't know the exact story with Discord, but if I had the choice as a seed investor, you have 2 choices. Jason Citron is clearly 1 of the best founders. I've followed him since the beginning. I'm a superfan from a distance.

If I was the seed investor and you said, “The company's plateauing. Jason doesn't seem to want to go public. We're worried about him,” and you have 2 choices—we've done the math. The last round was at $15 billion. We can either bring someone in and try to go for a $20 billion-plus IPO, or stick with Jason, and we're probably going to have a $10 billion IPO. I'd stick with Jason. In a heartbeat, I would stick with him. I would stick with the risks of the founder.

Okay, we're going to have a somewhat worse outcome.

Rory

I would too.

I'll take my—if I invested at $20 billion pre-money, what's the multiple with dilution? I don't want to do that.

I think what Bill Gurley was doing at Uber was a mental calculation. If they did it with Discord, I'm sure this is what happened. He's clearly a generational founder, but he's not the, the Belton's, he's not the guy running Starbucks from Newport Beach, whatever that guy is, right? I'm okay just making $1 billion, Rory. Or $2 billion—a couple hundred million in carry—and sticking with the founder.

I'll take the bet for less, for less carry.

Rory

No, I understand. I've genuinely had those conversations where I'm on the same side as you. It's not just because I want less; it's often because it's less but with a higher certainty. I go back to my comment: whenever you make a change, you've got a 1-in-3 chance that the person you hire is an empty suit and a freaking disaster.

So I hate making change. But I'm going to say it again just because I can't stop. I do think there are still some times when you say, “The combination of reasons, including fiduciary reasons, means you do.” You just say, “Dear God, I hope that doesn't happen a lot.”

Can I add a question, though? Sorry, Harry. I don't mean to interrupt.

I think this is where you start. If I'm a founder, and let's say Benchmark did push them out, right? Sequoia used to be clear: “We'll find the right CEO, whether it's you or not, but you're going to make a lot of money.” That used to be part of Sequoia's pitch, right? “It may not be you.”

It is an important factor for founders to weigh in. When you sell 3% of your company at Demo Day at $60 million post-money, it's still your company.

It's still your company.

Rory

I agree.

It is, and more and more founders do too.

Yeah, they should.

Rory

Yeah.

First of all, I totally agree with that. It's relevant. And I think, again—we'll talk about Founders Fund in a while—it's pretty clear that early on, part of the reason that Sequoia aren't in Facebook is residual frustration with Mike Moritz over prior situations where they had, in fact, made a CEO change.

That's why I think the pendulum, which was way too far over on the “always make a change” side, has massively moved the other way. So maybe the clear statement is this: if you had to pick 1 default mode, and you could only have 1 button that you always press, you would go for the never-change button because it's statistically the right outcome.

We're going to move on. There are a couple of other rounds that I do want to cover, and I want your wisdom on them, guys. Ramp announced today that they've raised at a $16 billion price. These guys just never stop fundraising. The price just goes through the roof. Amazing—and this is not criticism. It's astonishing.

1, how did you think about that, raising it to $16 billion? And 2, guys, I don't get it. Brex is at, like, $10 billion, $11 billion, and Mercury's at $3.5 billion, with $500 million in revenue and owning the banking relationship, which is more valuable. How do you guys think about this?

Just to frame it, this is 1% dilution. Here's the thing: it's $200 million at $16 billion. Some of these rounds, you look at them, they're great, but they're 20% dilution, 30% dilution. That's an expensive unicorn.

Yeah.

1%—I mean, I know it's a lot, but we're not really going to notice the dilution on our cap tables, are we?

Rory

So you made 2 statements. You compared it to Brex and then Mercury, and you were implicitly saying, Harry, “Why would you do that at $16 billion?” My sense of it is that they have a very nice business that has both card and software, and they've headed more upmarket. Brex has also moved upmarket.

The quote-unquote competitor here is a combination of the card business from Amex and the accounts payable business from the accounts payable suite of SAP and Oracle. So they have a software-plus-transaction business, which is pretty nice. They've got hypergrowth. I get it in terms of just the explosive growth they're seeing in that space, though I think it's slowed down.

I think the million-dollar question on all these fintech companies is how ultimately do they trade if and when the growth slows down. That's probably a question you'd be asking yourself if you were paying $16 billion for that business, for what looks like a $700–800 million-revenue, reasonably high-growth business. It feels lofty, but as we're going to discuss, if we get through our agenda—which I doubt—Founders Fund have shown an uncanny knack for getting these things right. So I'm not going to bet against it.

You're right. Ramp and Brex probably have basically the same amount of revenue. I don't think Mercury's banking relationships are worth anything, Harry. I think they're worth $0.

I can tell you why. But putting that aside, here's the theme that I see in the private markets, which I think is weird: let's assume Ramp is the fastest-growing of the 3, for the sake of argument, because it has the highest valuation.

Rory

Yeah.

It should be, right? It should be. I still feel like, for startups, we're giving revenue valuations that don't have an adjustment for different ways their comps...

Trade in the private markets. And if Ramp is in a space that's 2 to 4 times revenue when it's public—or whatever, you could look at the comps, 3 to 4—that's the part I don't get. A lot of fintech revenue is lower; it's lower margin. Or the public markets value it lower, and that's the part I don't get, even in my own portfolio, when I see valuations that value 80% gross-margin products the same as 20%, 30%, or 40%.

That remains a mystery to me in the private markets, right, where everyone gets the same ARR valuations, even if the quality of revenue—or even if the public comps—the public comps are different, right?

So I totally agree with you there. I was just like, “Wow.” And the speed—they're always announcing fundraises. It's like every 3 months Ramp has a new round, which is, again, great. I'm just like, wow.

A round every 6 months with a little bit of tender offer thrown inside is no big deal, but I hear your point.

Rory

As a reminder, it is probably, at the margin, a cash-consumptive business because it is, just like Amex, giving people credit cards that they pay for things with. The merchant gets paid the next day, and then someone has to float the card for 15 to 30 days. It's not a lending business in any long-term sense, but on a short-term basis, you are lending money, and you have to fund that capital. So there probably is a capital need.

Now, I don't know how much they're doing that with securitization or receivables, but fundamentally, this is not the kind of company you can run on the cheap. It's not like a software company where you can be down to your last dollar and juggling payroll, as I'm sure Jason did many times when starting out. You have big-ass receivables. I remember doing the math, and you kind of have to make a bunch of assumptions about it.

If you have revenue of $1 billion, then, if you're getting 2% or 3%, you can work out the gross transaction value per year. And then, if you say to yourself, “Settled over 12 months,” you probably, if you're doing $1 billion in revenue, have roughly $4 billion in receivables you're financing. In other words, you're advancing money—maybe 2 to 4, depending on the credit cycle—to your customers that you have to fund on the balance sheet, and that's probably where some of the money goes.

I actually think it's a really interesting way to drive relevance. The most important thing today is to be relevant and to own consumer attention, and I think by having frequent fundraisers and frequent media hits, it's just a great way to continuously keep velocity and momentum ahead of someone like Brex.

It's actually important, Rory. In the nicest way, I would push back on you. You went, “Mm.”

Yeah, no.

But I'm like—

I do think—

Rory

Yeah, you might—

—especially because a lot of consumers don't know which one to pick.

I agree.

It's all brand anyway, right? And Ramp, Brex—what? I don't even know.

No, but Ramp is always on Twitter. They've got Sasquan or whoever this random footballer is, running with Ramp on, and that goes viral.

You gotta do it, man.

They're crushing Brex, man.

Rory

No, you're right, Harry. You called me on it correctly. I did make a little face, but I'm willing to say you're correct. It kind of galls me that you'd be using fundraising as a momentum builder, but you're right. So much of the business in this part of the market is about momentum that, yeah, they're smart. Most of what they do is pretty damn smart, and that's probably smart, too.

Plus, if you're a new customer, you don't want to invest in a loser in the space.

Rory

Yeah.

The beauty of this Ramp, Brex, Mercury et al. business is that everyone needs it, right? They may not need these products, but it's a 100% attach rate, right?

I don't want to be trapped. I don't want to be ripped off. I want someone that's actually going to make my life easier, where the spend management actually works, right? I don't want to see the ones where the energy is seeping out of the company. I just won't sign up for that vendor. Intuitively, it makes no sense, right?

Listen, $16 billion at Ramp. Perplexity is raising again. The first tranche was at $15 billion; the second moved to $18 billion because there was so much demand. Rory, is it the same as you said last time, which is just, “Hey, it's an infinite short at a massive $500 billion outcome. Roll the dice”?

Rory

The 2-step price-uptick thing is weird, but we're seeing some of that now, where I think the first round gives you certainty, and then the people who didn't get in say, “I'll just pay 10% more. I just want in.” It's just a sign of deal heat. It's a sign of the market right now. Rational CEOs take advantage of it.

6. OpenAI's Microsoft Standoff

Listen, we have OpenAI creating more news, as always. We have a $200 million defense contract from the Pentagon, which is actually very sizable. It's, like, the largest contract the Pentagon has given to a single provider. How did you guys read that? It's also OpenAI's first foray into defense in this way.

Rory

Aggregate comment: it's probably good news. I just love the fact that the Pentagon is spending money with all these venture-backed, high-growth, very technically savvy, forward-facing companies. I think it speaks to some level of improvement in the procurement process. Palantir started that, then SpaceX, and now I think it's Anduril and all that.

I think it's great. You look at the news right now, and you know, wars in other places, and you go, “I want to make damn sure that we have the best stuff if we ever go to war.” It looks like that's not being made by the old fuddy-duddy companies. So, big picture, good news. Go, team.

Related to what you said, Rory, for OpenAI to achieve its mission—anyone with this market share—you have to be friends with everybody. Before 2020, there were so many principled CEOs. So many were principled about issues like not working with defense or the government. There are many things folks are principled about—in fact, many things that are very aligned with my values that folks are no longer principled on. You gotta be neutral.

I think, from the limited press I saw on it, Sam said, “This is not material to us. This is only $200 million. This is a small deal.” He probably didn't do a customer call on this one. I mean, maybe he did, but it is immaterial. You can't be Republican or Democrat or anti-this. The threat to OpenAI from being political is so high, right? You gotta be friends with everybody. And so, other than rogue states, I think OpenAI has to sell to everybody. They've got to own it.

Rory

For the record, he may want to be friends with everyone. He doesn't appear to be doing a great job of staying friends with Microsoft.

What happens there with the Microsoft feud?

Listen, I think they're lucky in that Microsoft crossed the line first. It's a weird deal because Microsoft basically bought OpenAI, and they're going to end up being, like, a 33% shareholder of a standalone company. This is the opposite of scale in some ways. They're de-scaling.

Rory

Yeah.

Before ChatGPT exploded, this was, in some ways, a struggling company, right? It was great—

Rory

Yeah.

—but the revenue was, in the grand scheme of things, relatively minor, so they sold 49% to Microsoft, right? Now they're going to de-sell it. But Microsoft does use multiple providers, right? It does compete with ChatGPT, with OpenAI.

Rory

Mm-hmm.

So even if it's allowed under the contract, they did cross the line in terms of, I think, breaking the spirit of the relationship.

Rory

I don't know if, just because Microsoft, quote-unquote, “crossed the line first”—and I'm not sure they did—that will impact how this ends up. I don't know how it ends up, but I'm not sure that it will be determined by who, quote-unquote, “crossed the line first.”

I think it's a very weird contract. It's right up there—a very different version of weird than Scale AI, but very weird. It's not just about ownership, preferred stock, and common stock. It's all sorts of different rights around profit sharing, all sorts of different triggers around AGI.

In situations of ambiguity, the person who has the most leverage has the best chance to win, and I would argue Microsoft has quite a lot of leverage because it's not existential for them, especially now.

I think they have no leverage, actually. Honestly, I'm not trying to be a—

Rory

Wow.

—a chaos agent like our prior guest. Here's why: I'm still a student, right? The reason I think they have no leverage is because I think that whatever AGI is, we're going to be there pretty soon.

So Microsoft loses... What Microsoft wants out of OpenAI is a relationship where as much of it as possible survives this moment in time, obviously tied to profit sharing, right? And listen, I'm sure they'll argue over it, and I don't know the details of the contract—

Rory

Agreed.

But the profit sharing and all the rest ends at AGI, right? So part of this relationship ends at AGI.

Rory

That’s a good reminder of that term, because if you recollect, a few weeks ago in one of our quick questions, someone asked you, “When are we going to hit AGI?” I think my answer—which now I feel smart about, because Jason confirmed it—was, “We’re going to hit AGI when Microsoft and OpenAI litigate what OpenAI’s AGI is.” Everyone else is using that term loosey-goosey. It could be now; it could be 2045. Who the fuck knows?

Half a trillion dollars of value depends on that word, I can tell you. You’re right, Jason. That is the only part of the contract where you go, “Ooh, that is a bit…” because it’s ambiguous. So you’re right, that will be a fun vector of this discussion.

I’ve talked with several of the smartest folks I know in AI about what they think about AGI, and they basically all say variants of the same thing. At this point in time, it’s something Sam Altman made up to simplify a lot of concepts. He’s the one pushing the narrative, and none of us really believe there’s a magic point for AGI, right? At a lay level, I think we’re close to being there already. That’s the risk to Microsoft, right? So I think my only point is—

Rory

It is fair.

Since they both have something to lose in this, and Sam is signaling early—

Rory

Do I?

He always signals early. He’s like, “You know, Microsoft will end up with 33% of a new entity,” and he’s just trying to create the outline of a deal so that it lands there, right? They own a third. He owns 6% or 7%. It gets reorganized in some weird, new way, right?

Rory

Yeah.

And what does Microsoft get out of it? They get a longer tail. They’re going to get a longer tail in this agreement, but it’s going to be a different one because the cash alone is not important to them, per your point, right? The IP and the relationship are more important than the cash. What are they going to do with the cash, dividend it out?

Rory

Agree.

Buy Scale AI Prime? They don’t actually need the cash, do they?

Rory

I think we can agree that they don’t need the cash.

Yeah.

Rory

Agree.

Scale AI Prime coming to you soon, clearly. We’ve talked about Chime in 2 separate episodes, and this went out. It went public, and it popped 50%. All IPOs are up in 2025 except for SalePoint. Is this a sign that IPO markets are roaring? There hasn’t been a better time in years. And how did you analyze Chime specifically?

Rory

Yes. They clearly are roaring now, right? There hasn’t been a better time in years, yes, because there have been none, and some is better than none. It’s not a complex question.

So you think it’s pent-up demand that’s just latching onto available supply, not necessarily the quality of the companies coming out?

Rory

No, I think they’re great companies. I did not say that at all. No. Traditionally, good companies go out at attractive prices. If you’ve had the window shut, the only way you open it is with good-quality assets and at prices where it’s attractive.

The way it manifests is, unfortunately, you get these pops, where effectively the company going public has bribed the buying public to like IPOs again. Investors were all fairly Pavlovian. If you were an IPO buyer in 2022, your searing memory is, “I bought them all in ’21. I lost 30% or 40% on average, 90% in some cases. I’m never doing that again.” So you take a long time to come back.

Now, in the last month, your narrative has changed. It’s, “Oh my God, I piled into the last 5 IPOs. I’m up 70% on average. I’m up 250% in the case of Chime, in the case of Circle. This has been a huge boost to my fund performance. I’ve got to do me some more.” The pop helps the window open. It’s not ideal. There should be a better way, but there’s clearly positive momentum now from good companies, and there’s going to be more of an appetite.

Will this lead to Databricks or Stripe or one of the big boys going out?

Rory

Even if they go out, the sentence is wrong, Harry. It doesn’t lead. You see, “lead”—you’re implying that they couldn’t go out and now they can. They can whenever they want. They could have gone in 2022. They could go in 2023. Because they’re so big and so good, they can go whenever they want. That’s an idiosyncratic decision they’re going to make, and I don’t have a ton of visibility into it.

No.

Rory

I think what—

No. They can go out whenever they want, but now they have data to suggest that if they were to go out at this point in time, it’s highly likely that they would be priced at a premium with a huge amount of demand. They did not have that historical data beforehand. So this data is leading—

Rory

Okay.

I’ll give you that. It’s not clear to me that the only angst was on pricing. I think it’s much more true for the whole flotilla of companies in the $200 million to $500 million range who have been trying to figure out where to go and can now see some kind of exit. For those folks, everyone is dusting off their plans.

For the big 4 or 5 companies like Databricks and Stripe, you’re right: at the margin, it’s a more favorable time. Why not? I think their reasons for doing it or not doing it are more about the whole question of when they want to do it and whether they really want to deal with it. I could imagine an entire IPO cycle where, once again, neither of the 2 names you cited chose to go out, and we get to the end of the year.

Was Chime mispriced, or is that pent-up demand?

Rory

Well, by definition, pent-up demand—the whole point of pricing is to pick up pent-up demand—so by definition, it was mispriced.

My limited understanding, from folks who have been involved in some of these recent IPOs—and it’s limited, Harry; you probably have had more—is that the advice was just to be conservative. It’s a slow market. Will the advice be to be less conservative now after these IPOs? Probably. I think you’re still going to tell everybody to be conservative, right?

It was to be conservative, and yes, we could talk about how much money people really left on the table versus in theory. You can’t sell every share at the highest possible price, right? That’s the fiction in the Circle math.

Rory

Yeah.

But even if the company leaves money on the table, the investors distributing over the coming years may have only lost a little bit from the incremental dilution. Dilution aside, the IPO price is almost irrelevant for the VCs. It’s when you get out, and getting out strong may be worth the incremental dilution.

That’s the one that Bill Gurley, I guess, disagrees with, right? There’s a trade-off. Going out strong doesn’t matter, right? You’d rather go out and limp along. That’s the advice. The other thing I would say on Databricks—and I don’t know anything about Databricks; I literally know nothing—is that the fact that this last week they had an analyst summit where they went through all their metrics, their revenue, and their growth rate with an entire group of investors and analysts says to me they will decide one day to file, and it will just happen.

They’re not only running their company as if they’re going to IPO; they’re actually managing to Wall Street. They’re at the edge of managing as if they’re already public, right? So I wouldn’t be shocked if we opened up the news tomorrow and they filed, because they’re already completely ready. They’re already halfway there.

So I think we’ll be shocked by Databricks because we think we’ll see these signs, but the signs are already there. It’s like the Sam Altman narrative: the signs were already there. They literally could file next week, and no one should be shocked.

Yeah.

They’re already in.

Totally agree with you on Databricks. I actually interviewed their head of sales, Ron[?]—

Yeah.

—who was unbelievable and spoke in detail about how they structure and run the company like a public company.

Crazy. He’s been there since almost the beginning.

I mean, really crazy.

Crazy.

One of the companies in the portfolio that you, I think, very wisely described, Rory, is Gusto, which announced a tender at $9.3 billion and $900 million in ARR. I was actually surprised they were at $900 million in ARR. Amazing. Congrats to Tomer and Josh and the team. That’s awesome. I don’t know if you guys had a take or a read on that coming out at $900 million and $9.3 billion.

Rory

Yes, you underestimated them. We had talked to them way back when and obviously should have done the deal, so I share your pain. Payroll is one of the biggest markets out there. Sometimes the obvious shit is the most important shit, right? It’s a huge market, because everyone gets paid, and you get $5 a month per U.S. worker that you’re paying. ADP and Paychex are 2 old-school companies that are worth approximately $100 billion.

There’s a bunch of other companies at the $10 billion to $30 billion level of public comps in the space. So it’s a huge-ass market with a lot of attach, and it was pretty stodgy. At one level, I’m not surprised, given the TAM. They’ve clearly executed really well to get to that size and scale.

But their deal is to have a modern, SMB-focused payroll solution. Half of the workers in the United States work in SMBs, so you’re probably at 60 million people on which you can get—I’m just doing the math in my head—$5 or $60. Hold on. But yeah, I mean, you add it up and get to a huge market very quickly: a $60 billion market.

You know, and they’re also lucky. I think all these guys are lucky in that they have a great comp. Paychex, again, I think was founded in the 1870s, Rory. We could look it up. I mean, Paychex is an old one.

It’s trading at 10× revenue at a $55 billion market cap. So it’s very easy. And look, look it up: it’s at an all-time high. It’s not just trading at 10×; it’s at an all-time high today.

Rory

Yeah.

So if you’re a VC, it’s very easy to say, “Well, look, okay, Gusto’s at $1 billion. Paychex is at five, okay? Gusto is growing a little bit faster. It’s newer, it’s better, it’s founder-led.” You can back into Gusto, all of the payroll folks.

Rory

Yeah.

You can, with a $55 billion ancient public company trading at 10×, justify any of these deals. People don’t realize Paychex, Toast, and a few others—there are some great comps out there.

Rory

Well, ADP as well. I mean, you have to put in ADP. The 2 big dogs in payroll are ADP and Paychex. Paychex, I think, was founded in the 1960s or 1970s, because the original founder went on to run for governor of New York as a Republican all day weeks.

ADP’s almost at an all-time high too.

Rory

But fundamentally—

They’re both at—yeah.

Rory

They’re 2 big businesses, so provided you can make the economics of replacement work, you can build a big company.

Actually, ADP—I didn’t realize—ADP’s trading at 15× revenue.

Rory

Yeah.

Why didn’t we just put the fund into ADP, Rory? Forget about putting the fund into these newer kids. We should have put the fund into ADP and Paychex.

Rory

Yeah.

ADP and Paychex. I mean, that’s what my grandpa’s startup used. They used Paychex, right?

Rory, what’s your reflection on turning down an early Gusto round, and did it change your mindset or teach you anything?

Rory

Yeah, that I can occasionally be very stupid. We talked to them in between rounds, so it wasn’t actually an engagement. But yeah, I think I underestimated both the founder and the openness of the market to switch.

Well, 2 things: 1, the founder; 2, the openness of the market to switch. And I’ll say something else: the willingness of investors to pay up quickly for that, such that it got outside my price range very quickly. Stuff happens. I mean, I was wrong on that decision. Being wrong sucks.

7. The Old Guard Faces AI

Final one before we do a quick-fire. We mentioned the old guard competing with the new. Glean is a $7.2 billion company today, moving very fast. Dropbox is still working to get Dash out, which I’m sure is a good product, but it’s separate from their core product and core business. Can the old guard compete with a very, very fast, well-funded new guard?

I’m starting to lose confidence in the old guard. Listen, I think because the LLMs are open, anyone can use the API. Most of the work is done by third parties. Use an open-source framework for your chat, and then you can use an LLM, and then you can— It’s pretty simple to RAG a bunch of data and stick it in, and I just figured that, at the software level, the big guys would catch up, right?

Rory

I think—

They’re still too slow. I just don’t see it. I don’t see it.

Rory

Yeah.

I’m worried.

Rory

First, the minor comment: I do believe the so-called “old guard” can compete in certain circumstances, if the situation is right and they have leadership to just push it through. But I don’t think that’s the issue here. It’s a different issue.

The real truth about whether Dropbox ships whatever the product is actually doesn’t matter. Let me tell you what I mean by that. Typically, the old-guard play is some version of, “I’m the system of record. I’m already in there. I can add this stuff on top.” That’s the pitch every time: “I’m ServiceNow, I can add an agent. I’m Zendesk, I can add an agent. I’m Salesforce, I can add an agent.”

And the new guys’ pitch is, “We have this agent, and we can run on any system of record, so you can buy us and you don’t have to change out your old guy.” That’s the vector of competition.

What it means is you can only be an old system-of-record provider. Your right to win is predominantly in your existing customer base. ServiceNow has a big one, and Salesforce has a big one. Brutally, in the enterprise, Dropbox doesn’t.

So even though we threw out Dropbox and Glean, they’re not in the same quadrant. It’s not a relevant question, with all due respect, Harry. Glean is out there competing with all the people on enterprise-wide deployments for big-ass companies, and they’re going to have a whole bunch of competitors in that space that we could talk about.

Even if Dropbox had pitched a perfect, functionally equivalent product to Glean, it would mean that, for their existing business customers—which is a smallish percentage of their total business—they would win all that business. But then, when they moved on to customers who didn’t have Dropbox, they would be at ground zero competing against Glean for that.

And that, I think, is the real issue—not whether they’re powerful, whether they’re good enough engineers, or whether they’re strong enough founders. I think, situationally, starting where they are, it’s just hard to get there.

The joy of me is that I have very few feelings, and so you can always say it’s a wrong or moronic question. My retort to you would be: you’re very wise. What would be the right question to ask with regard to the new versus the old guard, then?

Rory

Hmm. Whenever you’re dealing with the old guard, by definition they’re not going to bring oomph to the table. They’re going to bring the asset of what they have.

So the interesting questions are things like Salesforce, ServiceNow, and people like that. And, you know, we had a mention there of the whole Salesforce throttling Slack. It seems pathetically lame and irritating to customers.

I was asking someone about this, and they had a good take on it. They said it probably doesn’t survive in that form, but it probably survives because if I’m a customer and you’re telling me I can’t access my Salesforce records when I want to run them through Glean, that’s not going to survive. I’m sure that’s not going to survive.

But the question is, is there some kind of API connectivity fee? Are they going to try to monetize that? But it definitely felt a little lame. I mean, you’d really want them to say, “Of course you shouldn’t use Glean, because our product is so much better.”

Has Slack had its best days, and is it now in decline?

Rory

I mean, almost by definition, your best days are as a startup. And going public and then selling for 20 cents seven times revenues, I don't think it would get 27 times revenues today. So yes, by definition, it’s on the downward slope of excitement.

Which isn’t to say that, if it was well-run and integrated well, it couldn’t be a perfectly good and successful part of the Salesforce ecosystem. And we’re small in size but big Salesforce users. So it’s not like—

Do you think it—

Rory

—it’s doomed, but they’ve got to make it happen.

Do you think it will be a good and successful part of the ecosystem if it continues as it is?

Well, look, first of all, it’s probably doing $2.5 billion in revenue today, somewhere around that. Just as an aside, I don’t think Salesforce got a terrible deal in the end. You just have to view it by where it ended up as a revenue multiple.

And Salesforce is growing single digits, so I don’t think Mark would want to give up that $2.5 billion today. And, in fact, what’s interesting for Salesforce is that all of their—not all of them, but so many of their acquisitions, Slack and even Tableau, which I think was founded in the '50s, are actually all growing faster than core Salesforce.

So we can say, “Oh, Slack isn’t what it was,” which it isn’t, but growing in the teens when the core is growing 7% or 8%—and you have billions in revenue—that’s material, right? It’s just hard stuff to do.

Rory

Right.

So I think Slack today is pretty successful. Like LinkedIn, it’s not as good, but like LinkedIn and Microsoft, it’s just a different Slack.

Will it be a hub for developers that people build their ecosystem around? Those days—the hub, Slack as our hub—are far behind us, right?

But here’s the irony of it: my view is that Slack getting acquired was an even better deal than it looked. You know why? It only had 1 product.

My view, Stewart is a generational founder, right? He did it multiple times and was the kind of CEO we’d all love to work for. But I think deep down in his heart, he didn’t want to do multiproduct, or they would have been multiproduct. Slack had an existential ticking time bomb because it could only be so big as a single-product company. So it had to evolve.

And so this is a new enterprise Slack. It is what it is. You all use it. Just like Workday and LinkedIn are locked down, it’s going to be locked down. The 3 of us can complain, but if Allstate, State Farm, and those folks don’t complain, it ain’t going to change. We don’t matter. The small Slack and Salesforce customers don’t matter at $30 billion ARR. We just don’t matter, right? We don’t matter.

Chaps, we’re going to do a Cowshi quick fire. We’ve got 3 to go through. Again, Cowshi, essentially a prediction marketplace where different people bet on different things.

Rory

Yeah.

Will Apple announce iPhone assembly operations in the U.S. this year? I’m sitting outside the U.S., and I hear constantly, “Oh, we want to bring back manufacturing, starting with phones.” Will they bring it back? Yes or no?

Based on the news today, I don’t know what the odds are. I don’t have them in front of me. I’m going to say they’re going to announce it, yes, because Trump announced a Trump phone at $499 to be built in the U.S. yesterday.

It’s gold.

It’s gold. It is gold.

You guys are so classy.

I like all gold. You haven’t seen our new office. It’s all gold as well.

Rory

That’s because your prime minister couldn’t build one.

Look at you, Rory.

Rory

It’s nice.

You’ve got a coin and a gold phone. Not nice.

Rory

It’s nice.

No, I think, listen, it’s not possible, right? It’s close to impossible, but announcing it and beginning a process, you might have to do it. You just might have to do it. So I’m going to go yes.

I’ll take it. Announcing: yes. Rory, announcing and doing: yes or no?

Rory

Politically, it would be smart to announce it, even though it’s impossible. I think Tim Cook is such a straight shooter that he just couldn’t pull it off with a straight face because everyone would know it’s absolutely bullshit. But yes, in a cynical world, I would make 1 phone in the United States of America just to confirm that we, too, can do the low-margin, commoditized parts of the electronics value chain and end this question.

Will the S&P finish positive this year, yes or no?

Rory

The record of analysts predicting the S&P at the start of the year is universally wrong. They do this exercise as analysts, predicting the S&P at the end of the year, and the error rate is huge. There’s nothing to it.

A much more interesting question is, okay, now let’s talk about a bet, because then you have odds and you can actually make an economic decision. Because the odds here are: will the S&P finish positive this year? I’m reading it as 70% likely yes. Is that correct? Given that, I would take the no. I think you would make more money betting no than yes at that kind of ratio.

I’m all in. I have no more cash, so I’m all in on this bet already. I think it’s an easy bet.

Rory

So yes.

Rory’s right about the 70%. When it’s my own money, I don’t get the benefit of the 70%, right? I get the benefit of the 50%.

Rory

Yeah.

Personally, I’m 100% in, so I already made the bet.

Yes.

Rory

I want to build on that. I think when people ask, especially investors, their opinion on shit, the correct answer is, “Don’t even answer that question.” The real question is, where is your position?

I’m with Jason. I’m about 75% equity, mildly terrified, almost nothing in bonds, and then I invest in short-term and weird stuff.

I’m back where I was in 2008.

Rory

Plus a lot of Tableau.

100% equity in my personal position. 100%. Back, just like 2008. It was great.

Rory

Yeah.

Wow.

Rory

You want to do it in the right part of 2008.

It was great. It was great.

Final one. Will a Chinese AI model reach number 1 this year? My bet is yes, but it’s not published, so no.

Rory

Oh, easy call. In other words, I’m right, but no one will ever know.

I’m going to try to get back to China this year. Obviously, we’ve all been shocked over the last 8 months by the performance, right? I don’t mean to date myself, but outside of pockets of San Francisco and areas of London, I've never seen folks work remotely like they do in China. It’s just insane. Maybe it’s changed because I haven’t made it back in a while, but I plan to go back this year.

I don’t think they’re working less.

Yeah. If the government’s behind you in China, there’s so much energy in that culture. I just don’t want to take the under on this bet because I feel like this is Bay Area hubris. There’s a lot of Bay Area hubris, and this is one of them.

Rory

I agree.

They can’t access our internet. It’s a different world over there. But, man, the power when everyone’s aligned.

Rory

You’re right, Jason. I’m coming around to you. The bet has to be yes.

There’s all sorts of noise about how it’s modeled and moderated. But the idea that there’s a less than 1-in-5 chance, which is what the odds are saying, that at some point this year 1 of 5 or 6 really aggressive, well-run Chinese tech companies can’t achieve even temporary parity with one of the leading models just feels to me like a stupid bet. So you’re exactly right. The bet at these odds has to be a yes, which is different from saying they’re, quote-unquote, going to displace OpenAI. Probably not.

It’s just like at various times when 1 of the other models sneaks ahead of OpenAI for a month in the various measures. You kind of go, “That’s interesting as a state of the art, but that’s not actually how the business value is created.” At that level, I come around to it: I’m with Jason. The answer is yes. There’s no world where we’ve got all the smart people and they don’t. It’s silly the minute you say it. So, of course, they will.

There we go. Well done, Jason. That was a very definitive answer, Rory.

Rory

Yeah, Jason convinced me. He’s exactly right.

No, I love it. Guys—

Rory

I mean, I hadn’t spent a second thinking about it beforehand. I’ve never invested in China.

I plan for a trip to Beijing and Shanghai later this year.

Well, now you’re a true venture investor, Rory. You should be proud. You say things with little thought, but great confidence.

Rory

See, that’s what I was afraid would happen if I did this. So, actually, never have you said anything more likely to cause me to fade.

Don’t worry. Did you have such a visceral reaction to Jason saying about Tableau in the 50s because you turned that one down, too?

Rory

No, no, I didn’t, but it was, I want to say, the early 2000s.

2003.

Rory

I remember the deal.

2003.

Rory

Yeah.

Yeah.

Rory

Exactly. And I’m sure the poor Tableau guy is screaming, like, “Please don’t say that about me. I’m relevant. I got $14 billion. I am somebody.”

Oh, dear. Well, guys, listen, I always love my time with you. Thank you so much for doing this with me. You’ve been fantastic.

Rock and roll.

I mean, those shows are the highlight of my week. Jason, Rory, I so appreciate the time there.