Anyone that has been blindly loyal to Elon, they've all got stupidly rich. At the face of it, this is a Rubicon moment in the history of the AI industry. It's the first time that the US has ostensibly regulated an AI model based on capabilities. Good intentions bite you in the ass more than evil deeds. This week, number one on the agenda, SpaceX completes the largest IPO in history. Then, we hit on Anthropic launching Claude Fable on Monday, and the government bans it by Thursday.
What does this mean for sovereignty? Next, Salesforce acquires Finn for $3.6 billion, one of the nicest teams in tech. And then finally, Adobe beats and raises, but the stock falls 6% as the CFO exits. This and much more in an incredible week of news. Outside of China, there are basically no good open source models. Where are the US open source models?
There's a partner here at Benchmark that says any liquidity for pre-AI SaaS companies is top decile performance. Any liquidity at [music] Okay boys, I am so excited for this. We have a very special guest. Ev, thank you so much for joining us, man. Yeah, yeah, Ev. Hey, Rory.
Thank you for having me. Now, where else are we going to start? Uh SpaceX, the largest IPO in history. It was a It was a very successful IPO, and it's held its price really well in the last 24 hours. It's hit 2.7 trillion. Elon Musk has actually earned in 24 hours what Warren Buffett took a lifetime to earn uh in terms of net worth.
Uh and he is now a trillion dollars richer than the next person as a result of that increase. How do we evaluate the SpaceX IPO? Well, with jealousy. It was an amazing outcome. And you said it's traded well. I I mean, arguably it's traded way more than well.
I mean, it's up like you know, I I I I haven't checked today cuz I just got off the car uh after playing, but like it's up 30 40% I mean it's been an astonishing performer. On the day I mean I was trying to decide you know Ev's old benchmark partner Bill Gurley like you know is there a number above which Elon gets into trouble with Bill for leaving money on the table and I was watching it during the day it went up to 30 and like oh Bill's going to be mad and then and then he dialed it perfectly. I think it ended at 19 which is the perfect pop the designer pop. So he delivered so not only has he changed the world built the biggest most valuable company in the world pretty much without any price discovery remember we talked about this last week he didn't do any price discovery he just told everyone the price he's going to take went out and got it and then landed the plane at a 19% day one pop which is kind of at the high end of perfect so I was like this is perfection and then the last two or three days it's just traded up nicely since then so it's just amazing. I mean I don't know what do you say it's really hard to say I made 1.2 trillion dollars but I might have left 50 billion on the table how do I feel? I think he feels okay.
I don't know. Yeah so I I mean that one piece about all these IPOs and we we can't help ourselves because the company starts trading you can do the math on everyone's net worth immediately once it starts trading but I do wish there was like a moratorium on even talking about or even if you own the shares looking at a stock price when when when the shares are still locked up. What I mean by that is is like all of these I mean a traditional lockup means that any of the like venture insiders the CEO the management team the employees they typically can't sell for like 6 months. And what often happens when you have so little of your shares trading so like right now of SpaceX's total share count only about 4% of the shares are being traded. That's like a tiny you know they call it float it's a tiny amount of float and it allows for all sorts of weird things like gamma squeezes which we can talk about or any of these other things that make the share price just insanely volatile over the first few months of trading until the lockup releases and so there are like can Can we just stay on that? What is a gamma squeeze and how does it impact SpaceX price?
Yeah. So a gamma squeeze so so when when people are allowed to trade options on a stock, which opened today, SpaceX options started today. So it's gamma squeeze day. You're exactly right, Ev. Exactly. And so so what a gamma squeeze is is if I buy a call option, I'm buying the right to buy a stock at a certain price.
And so there's some market maker on the other side of that trade writing me the option. And what they need to do on their side in order to hedge their risk is buy some of the stock directly. And so what a gamma squeeze is is when you have a ton of people buying a ton of call options on a stock, you then have a bunch of counterparties, a bunch of market makers that then have to go structurally buy the stock in order to hedge their risk. And then you create this cycle, this like self-reinforcing loop, where the more call options people are buying, the more forced buying there is from market makers, which then forces more or counterparties, which forces what what which then encourages more retail people to buy more call options cuz the stock is going up. And so when there's only 4% of the the float trading, only 4% of the the shares trading, there's just it's so thinly traded that something like a gamma squeeze, where you have this forced buying reinforced loop, can happen very quickly. So that's not to say that the stock's going to collapse or anything, but when you have this sort of situation when a when a company starts trading, especially really hot company, you you the price action, even though it's very fun to talk about because, you know, Elon can make, you know, Warren Buffett's net worth in a day or whatever, you know, nothing matters until the lockup's gone because that's the only time that anyone can actually, you know, it's almost like a private it's like a private mark.
Like it looks good, you love to look at it, you put it in your little spreadsheet, but you can't take it to the bank. And so it it matters much less than than, you know, what what like the the stock price in 6 months from now, like that is what we should be talking about and that's going to be the barometer by which we can grade, you know, investors and insiders. And there's been plenty of IPOs before where, you know, people do the victory lap, you know, on day one of the IPO the stock goes down 60% and then it's a different situation once once the lockup's up. Have you regret joining this show very quickly 6 months time? Will this stock price be above or below where it is today? I'll give you the over or the under.
I I would probably just because of the retail mania um around around the stock in particular, I would personally probably take the under in 6 months. Not because I don't think that the company's going to be valued extremely well and I have a couple funny stories on this, but I think that you know, 4% float, um call options coming online, there's just so many like like engineered things that are going to make the stock price go up over the next month including some of this index inclusion where there's more forced buying. It's just there's no shares available, there's a lot of forced buying, there's a lot of retail activity. It's going to be popular for being for people to be buying call options on this. Um so I think it's going to still be worth a ton. think it's going to trade really well, but if I had to go over under I'd go under from from 6 months from now.
And as you know, that's where I come out when you asked me, but there's just such a lot in that. I mean, and yeah, first of all, I just in passing had a laugh at that you exactly right there. So much room between $2.6 trillion and even the last private round at 400 billion. There is 1.8 trillion of value between this and the last private round. So yeah, there's lots of room to adjust. But I do think you have it right is that, you know, the two comments.
One is yeah, my gut would be lower than higher 6-12 months from now and I think he's also right the short-term comment of you know, in the interim there's just a lot of news that will be strong good news and strong technicals in the face of a low float which means the short-term bet is much harder to call. Uh you know, we can talk in a second about Carvana where I believe Benchmark has a stake. So um I believe they just announced that's going to close. Um but I I the funny thing is when I do the show I always try to avoid having opinions that I don't have the courage to act on. So I started saying to myself, "Okay, Rory, today options became tradeable for the first time, right? If I think it's going to go down, you can make that bet, right?" So, you go out and you price it and you realize how hard it is to make money.
I mean, roughly 6 months 6-month at-the-money puts, the idiot version is you have the right to sell the stock at the same price at the same price 6 months from now, right? It's going to be depending on they're estimating volatility so high, and volatility is what drives the pricing of options. And options, stepping back a million miles, options are the coward's way of shorting the stock. You know, if you short the stock naked, you can lose all your money. If you buy a put option, you just, you know, you you're taking a bet and the worst case is you can you can lose the amount of the consideration. So, it's it's the baby way of shorting, and I'm a baby, right?
So, I look at it and I go, "Oh my god, it's roughly 20% If you wanted to shoot a buy at-the-money put, it's going to be, based on the estimates yesterday, and I haven't seen the updates today, stocks just options just started trading, 20% of the share price. So, if the share price is at 200 bucks, it would be 40 bucks just to buy the right to sell the stock back at par, which means if it goes down to 160, you only break even, right? So, you got to get right down to 120 to make a 2x. And that's a 2x on a security where you can lose all your money, right? So, I'm looking at it and going, "I might have these opinions about the SpaceX price going down. Do I have the nuts to put a million bucks on the line and say I believe it's going down and buy those options?" Decided I didn't have that just yet, right?
And and I will say I mean I I I think the one thing that um people very much underestimate, um I I had a coming-of-age moment as as a young value investor at the time. I think every value investor's gone through this. So, I I was in this value investing club in college, where you basically, you know, you read Benjamin Graham and Howard Marks and think you're smarter than everyone else and buy things at like, you know, five times PE. And um after college, I was still on that kick, and so I I I with all my college savings I shorted Tesla. And I feel like everyone has gone through this experience if they were a value investor at some point in their life where it was like, you know, you just Oh my god, Tesla, maybe it's not a fraud, but it's so overvalued. It's an auto OEM, all these things.
I lost all my college savings shorting Tesla. That was such an unbelievably valuable lesson for me in my life, and I was able to rectify it years later, which many people aren't, but I was able to rectify it when I went to Kleiner Perkins. The very first investment I led in 2022 was actually SpaceX. And when we were going through and when people, you know, um, LPs or anything else, when there was questions around like, well, how much how much upside is there? I think it was at, you know, 120 billion or something. How much upside is there here?
And the way I talked about the investment was like, look, the numbers alone the the numbers alone get you to a solid return, but it would be it would be dumb to not incorporate what Elon can do, which is he sells the market on these incredible long-dated call options, like these tech call options. He's he's made his whole career doing it. And so it's like at the time, whatever it was, 2019 or whatever, you know, Tesla wasn't worth, you know, the 800 billion of its or the 400 billion of its market cap, but he convinced everyone that like, hey, I'm going to figure out full self-driving, and that's going to drive a trillion dollars of value. And it's going to take, you know, 8 to 10 years. And then you get to that point and he's solved it. Tesla on the numbers still probably isn't worth a trillion dollars, but now he has Optimus, um, that that's another like 10-year project that's going to create trillions of dollars of value if he figures it out.
And guess what? He's probably going to figure it out. And so with SpaceX, he's done the exact same thing where at first it was, you know, rocket reusability, and then the second one was Starship's going to work, and now he has orbital data centers, the Mars mission, the moon, you know, the moon, um, mass launcher, all these things. So so he sets up these stories, which he honestly usually accomplishes what he's going to lay out, but they're basically these long-dated call options where he can go to the market, he can go to shareholders and say, "Look, like on the numbers, obviously SpaceX, you can't really look at the numbers of SpaceX. If you were just looking at the numbers in the P&L P&L alone, it'd be very very hard to even get like a $2 trillion uh valuation um as as a fair market value, but he says, "I'm going to figure this massive thing out." And that's where the next trillions of dollars of value are going to come from. And historically, he's had such a track record that the markets willing to believe him.
When we look at the assets that you mentioned, and that big new story from today is that exercising the right to buy Crusoe at $60 billion. Um it's looking like an incredibly prescient deal. I think it's at $4 billion today, it's going to be $6 billion by the end of the year. He's acquired one of the best teams with lockup, and so he's got retention of them baked in. For a price equal to 1/3 of the variability of stock between yesterday and today. It's It's exactly.
It was a great deal when he did it, it's a better deal since then. Yeah, exactly right. Um it And the odd thing is he solved his what am I going to do with this compute problem not once but twice. He solved it first of all with Oh, look, I have Crusoe, right? I forward bought Crusoe to fill the gap in Colossus. And then obviously since then, but before the IPO, he announced the contract with Anthropic for 1.25 and the contract with Google for I think 700 billion.
So roughly 2 billion a month of compute, again, filling the gap in the Colossus revenue stream, and you know, doubling his revenue. So I agree, I think that between yeah, 24 billion a year in kind of CoreWeave-like revenue from Google and Anthropic, and then the $6 billion run rate or $6 billion year end potential Crusoe, yes, he's AI business now as a as a matter of fact, as a statement of reality. As of the minute those contracts kick in in September, the revenue run rate of the quote-unquote AI business across Google, Anthropic, and cursor is larger than the revenue run rate across the entire space X and styling business. So yeah, I mean just great kind of corporate execution. I think it's the move fast company. It's just everyone else has spent two years thinking yeah, we should probably do something in AI.
Maybe we should build a data center. He's like no, I've built two data centers. Didn't get the model working great. So I bought a company to fill it with kind of coding and then that one enough. So I did two huge contracts. Moving right along people.
It's your turn now. I mean it's still it's the execution speed that's just so impressive. 100% And you know I love I just love your comment on the long dated call because the really weird thing is kind of contrasting it the the volatility in the stock is super high and that's the option traders are saying that. But you contrast that the implied on the implied predictability of the long dated call options is actually they're basically saying they're highly predictable. In other words, the stock is moving around like a crazy thing, but the valuation is effectively saying hey, we the equity holders believe as I've believed that this guy has done these things. They're worth whatever.
I was going to say X, but that would be stupid because the thing itself is X. So it would be self-referential. But they're worth 400 billion dollars today. He has ideas to be worth a trillion more and I'm just going to give him 100% credit for it. I I agree that is the secret to the fund raising. I mean if it ever stops, if the time to deliver goes too long, there's a big gap between fundamental value and anything you got here.
But right now, he gets the benefit of the doubt like no one else and the weird thing I cuz I've been thinking obviously anyone who in our business who's not thinking about it this week is a [ __ ] is the competitive advantage that gives him is because his cost of capital is low. That's right. Because no one else could have built I mean if you got into your local bank and said, I think AI is going to take off. I have a crackerjack engineering team. I really can build Colossus one and two in less than a year. Oh, I'd like 24 and I don't have any contracts, but I reckon shit'll will up.
I'd like $24 billion. You'd have got laughed out of there. He gets the chance to roll the dice and it comes up, right? Cuz he's I mean, no one could have done that unless they had the cost of capital. And the cost of capital allows it's kind of a self-reinforcing cycle. It allows him to make these bets that no one else can.
I mean, he's earned he's earned the right to play. I remember both for the X deal and when XAI was fundraising, um there were a lot of people that were that you know, they again on on like on on just the pure dimensions of the companies, both of those investments were hard to look at and think that they were going to be good deals. Um so that the X take out at whatever 45 billion or whatever it was, and then just generally XAI just felt like it was too little, too late um to to keep up. And what people forgot in that moment is that anyone that has been blindly loyal to Elon in terms of anytime he's asked for money, you could just give him money for whatever he wants you to invest in, they've all got stupidly rich. Every single person, there's like a small village of these people, by the way. Like there's all these funds that you've never heard of.
To be clear, it's going to be 95% like 95% of their cumulative invested capital is in SpaceX and or other Elon companies. They all got they've all gotten stupidly rich. And so the the like the amount of surplus. And by the way, you could say that about Tesla shareholders, too. Anyone that's held Tesla for 10 years, anyone that's had anything to do with Elon and just trusted him with their money has gotten unbelievable returns out of it. And so the amount of like surplus goodwill he has to burn down.
Like I think he could I think SpaceX I don't think it will, but I think it could go nowhere operationally for 5 years and people would still be a believer in him because he's basically done it for shareholders every single time that they've gotten involved with him. And to your point, Rory, he has a much lower cost of capital because he has an army of people, like a small village of people that will blindly give him money to do whatever he wants because he's such he's been such an unbelievable steward of capital to anyone who's given him money. Yeah, I I I wrestle I I I you're right and I I wrestle to be honest, I don't know if I could get my head around that belief statement in an investment memo even though I objectively recognize if it's true and you're right. I say you know, I know some of as you said the small village and it may be a small number of people but they're going to have very large houses in that village pretty soon. [snorts] So [laughter] they're going to be and they're going to be an incline village for all the which is just over the border in Nevada for all the obvious tax reasons. So yes, they're going to do it if I I would wrestle with that kind of approach the rational in me says that's not the way capitalism should work even the best person should have all these different deals.
But you right, it's worked and it does mean it's single point of failure in the sense of if it goes wrong, it will go wrong for everything cuz it'll all be cuz he's going to I mean they are going to roll in Tesla and it's all going to be one big happy family. It's going to be awesome, right? But it does mean he's kind of taking on this ever larger burden of making more and more return for more and more people and the whole mystique of it is tied tied up in that sentence. Anyone who's piled in has never lost money and there's a little part of me that goes wow, that's a tough way to live your life versus the we do deal some work some don't but it's worked for him and it's probably going to when people something works that well for someone for 20 years, they don't change it. Will Tesla and X be together in 3 years time? Look, I don't it seems to me that it's the thing that's happening but you know, what I mean I thought um the CEO of Berkshire Hathaway said it's probably easier for Elon if they're together and I I reckon if I was worth a trillion dollars, I would probably solve for things on the basis of oh, it'd be so much easier if I only had one board not two, I had one to to share all this.
It seems to me a thing that could happen very comfortably and again back to what I've said is that and there's ain't going to be a ton of votes saying no. Especially after you've made him 2.2 trillion. I think if you look at the poll market Kelsey odds on a Tesla SpaceX merger again you know, not not that those markets are so big that they're um that indicative, but I think the probability that they have on there is something like 70% in the next 2 years or something like that. And so, the the some free market seems to believe that it's that it's more likely than not, but I've no idea. On the other hand, some poor fool bet felt that it was 95% likely that Spain would beat Cape Verde the last night and put a That's right. I saw this for [laughter] an $85,000 gain.
Yeah, yeah, yeah, yeah. So, yeah. So, close [snorts] to you. Yeah, but Elon is more predictable than a Spanish soccer team. So, keep rolling up. Sorry, I cut you off.
The coffee's kicking in. [laughter] He's not He's not I was done. He's not He's not used to such caffeine. It's okay. Uh the second on the list is Anthropic. Anthropic launched uh Claude Fable on Monday.
Unbelievable reviews. I would actually had a founder on this morning who said it was the ultimate game changer for them. Unparalleled. US government bans it by Thursday, igniting this kind of global sovereignty argument over how uh far should governments reach into private companies. How did we analyze this? [laughter] I'll start with trying to put together the facts cuz I did you know, cuz cuz you got to start with that, right?
I mean, obviously, look, you know, this is the front end model to the Mythos model, which was the I mean, just step by step by Dario. When they announced that, they said, "This is so dangerous for cybersecurity that we're not going to make it available to everyone." So, they kind of prefigured that this was dangerous, right? Then, obviously, they announced this model, which is effectively a front end to that model and quote unquote shouldn't be able to do this kind of cybersecurity stuff, right? So, they pre prefigured that this was problematic. And then, what happened was, again, maybe sticking with the facts first of all, it looks like now it looks like that it Amazon discovered a case whereby you could, in fact, interrogate the model and have it give you some cybersecurity input, right? So, they pick up the phone, they ring the government.
And you know, this could to fact back, I'm sorry, I'm a bit incoherent here, but you know, the two parties in question don't really like each other, right? So, no one's assuming good faith, right? And I look at I read the Dario statement, I read David Sacks's statement, I read all the other stuff, and you could literally everyone according to their rights is correct, right? But there's just zero communication. That's the big there's just zero communication, zero trust. So, something that I you know, I listen I go in terms of the actual facts on the ground, I see Dario's point in terms of what he was saying, why that {quote} "jailbreak" of the model didn't represent a meaningful threat, and it was coherent with why he thought Methuselah in general was threatening.
So, it was a very logical coherent as you'd expect from a world-class scientist who is a very very smart man. At the same time politically, I get why the other guy said [ __ ] this after 90 minutes, I'm pulling the plug, right? And it's going to be really problematic. So, that's kind of the big picture comment, and maybe kind of drilling specifically on the cybersecurity comment, the thing is it so what they've said consistently about Methuselah is really it's not that anyone cybersecurity bug it finds is so terrifying that oh my god, no one else could have done this and now you can, it's that the scale at which they can find bugs and problems is what's terrifying, which is what AI doesn't get tired, it does you know, it can find a thousand, and you can't defend yourself against a thousand. So, when this one thing happened, their comment was some version of hey look, yes, I get that this thing gives cyber advice, and the way the model was released, it wasn't meant to do that, right? Um and and say it wasn't meant to do that.
So, technically it was a foot fault, right? So, but they were saying to Amazon and they were ultimately saying to the government, but the real danger of Methuselah is hey, it's that they can spin up a thousand or 10,000 different instances, all of them finding cybersecurity things that we'd get overwhelmed, and that's not what's happening here, and this fault wouldn't have allowed that to happen. So, they were kind of technically correct. However, if you run around telling everyone that you've got the scariest thing in the last 20 years, and it shouldn't do any cyber, and we're not going to let it do any cyber, and then it does cyber, and they don't like you anyway, they're going to pull the pin on you. So, that's just what happened. They just said after 90 minutes, they're like, "Fuck this.
Um you're not taking us seriously." And you can see it. They'll be very logical. I'm a scientist. I'm a computer scientist. Let me explain why this doesn't matter. You got a bunch of people, I'm the chief of staff for the U.S.
You know, they had a assistant chief of staff on the call, so reporting to Susan Walsh. They're like, "Dude, if you think I'm going to brief the President of the United States on, you know, multiplicative instance of cyber instance, and he's going to get that, you're dreaming, right? We're going to We're pulling the pin here because you are to stop it. They were like, 'You stop it now, or we're going to um declare this export restriction thing, which means you just can't break it.' And it's very restrictive. Um the terms of this are pretty restrictive. So, you can see how it all happened, right?
And both sides to the lights in kind in the context of where they're coming from, it all made sense to each of them individually, but it's just a comms mismatch. And And it's problematic for Anthropic because one of the big sa hard is this export restriction act, which is the thing upon which the ban was put in. Unlike the thing that happened with Hex-Rays, there's no judicial review here. This is clearly within the powers of the administration to make this declaration. Right? So, they're outside, right?
They don't have a ton of leverage in court, right? So, it's a It's a tricky situation. You think that the hardest the hardest part of this story is that it's just that there's a lack of reliable narrators? Yes. You know, like like you mentioned, Rory, there's like there's two parties that clearly don't like each other. There's been a ton of conflicting reports on this.
Yes. Um that there hasn't been I mean, not that journalists get things um 100% right uh most of the time anyway, but there's been like actually contradictory reporting on on the way things went down and and how how it all went through. I actually think what matters most though is what happens next. Like I think um we're going to know a lot more about the significance of all of this um in a few months' time in like 6 to 12 months' time than than now because at the face of it this is a Rubicon moment in the history of the AI industry because it's the first time that the US has ostensibly regulated an AI model based on capabilities. The first thing the first scuffle with Anthropic was due to a disagreement over the basically like the contract that they were signing and what the government could use the models for. They were not regulating it or restricting it based to to you know to non-US citizens based on capability.
They are now saying at least on face that they are regulating an AI model based on the capabilities and what those capabilities could do in foreign adversary hands. And I think that's a huge deal because what we're going to see is if they actually mean that or if this is again just like another battle between Anthropic and the government. But when OpenAI or when Google like that they're going to get to mythos fable quality models very soon within the next 3 to 6 months and then we're going to see. We're going to see if the government actually wants to regulate models based on these capabilities and if we've crossed this Rubicon where now the government is going to gate access to intelligence. And I think the most interesting thing is if we extend the analogy even further and there's been some people on on on on X that have talked about this as a as a possible future. Imagine if we get ASI.
Imagine if we actually get things like recursive self-improvement kicking in and we actually have artificial superintelligence. We have this vision of geniuses in a data center. What happens when the government is gating access to superintelligence? Who gets access to that? Do NATO allies? Do you know just a select few allies of ours get get access and their citizens get access?
If we think about how powerful a lot of people think AI is going to be and the power of the government to either give or restrict access on a country-by-country basis or a citizen-by-citizen basis it gets pretty freaky from a from a like a macro and geopolitical standpoint because imagine if you have like the economic implications of the United States and China having you having access to super intelligence and you know Greece not having it. It's it's that's just like a random random country but like imagine [laughter] if [laughter] Yeah, yeah. any of these you know like if you only have two countries that have super intelligence and everyone else is is is metered or gated, it makes a lot more sense why people are starting to take the idea of sovereign AI much more seriously. The only issue is that you know none of these sovereign AI plays have have amounted to anything yet and so it's it's it's it's sort of a yeah so so I think in in general it's it's it's a Rubicon moment and I think we're going to know a lot more in six to 12 months than we do now about how important this moment in time was. Agreed and yeah I'm sure if I am the Mr. AI shareholders, I am lighting a candle in church at this one and going this is the best thing that happened.
But I want to go back to it it's so the funny thing about this thing is it's so illogical. What I love about some things in politics and crisis is often people end up on surprisingly the wrong sides. And if you look at it Darios, the guy who's been saying this is dangerous, we all need to be careful. He's been funding the pact for regulation, right? Meanwhile on the and you know and some VCs have been on that side. Meanwhile on the other side, you've had the administra David Sacks I might be doing better hard to say but excellent work trying to keep you know the government out of the hairs of AI, right?
You've had a bunch of VC investors giving money to the leave AI alone pact and kind of feeling like they're with the administration and suddenly everything's mixed up. Now Darios in a very tough position of saying when I said it was really dangerous and we should regulate it, what I meant was it's really dangerous and we should regulate it but not regulate me. Oh, it's a tricky one. And then on the other side of the table all the oh leave it alone, we should deregulate this thing. Suddenly this administration as I've said is taking one of the strongest actions we've ever seen against the technology. Right?
So it's it's kind of everyone's like as they piece through what's happening everyone should be looking going, "Hang on, I thought I was on this side of the table and you were on that and we've just switched, right?" Which again makes it hard. Forgive my naivety. If you were internal within Anthropic's research teams, what would you do now? Well, first of all, if you're internal to Anthropic's we we get teams and you're not a naturalized US citizens you step away from the keyboard because otherwise you and your organization is going to be in breach of the Export Restriction Act and I'm willing to bet there's an attorney at Anthropic who knows exactly the penalties for that right up and down the line. So first of all, and let's get frank, a huge percentage of these teams are overseas highly intelligent I think Andre Karpathy is actually one of them. Oh wow, I mean there's a reason my wife on the fifth year that the day we were eligible applied for our green cards cuz at some point they'll turn on you.
Um so yeah, so first of all those guys step away. What do you do if you're an American and you're there you're like I mean the weird thing is I really like what I said cuz you you you trigger the thought we have is that if they don't treat the other labs the same then interest Anthropic may have some kind of due process claim. Because I I I I'm guessing here but yeah if the Export Restriction Act I mean there's probably some it's pretty untrammeled CEO administered power because it's national security thing so it's like delegate but I do think if you don't treat everyone the same it'll be problematic. So sometime within the next I'm just I'd laugh again it could just mix things up. Does does OpenAI go with the we're as good as them but then they don't want to get regulated or do they go with we're not quite as dangerous as Anthropic so you kick those guys in the nuts we're the AI that's not quite clever enough to [ __ ] up your cybersecurity so we can sell to everyone. It's just really zany but if they are comparable and they don't ban all of them then then have a problem you're right cuz they're being illogical but if they start doing it, it's a huge moment.
You are right. It's I'm just struggling here, Vegas, cuz you said that Are we done then? Cuz he said about 6 to 12 months. 6 to 12 months today. It I mean, it's it's years in prior cycles. That's right.
We were planning a an Anthropic IPO. Yeah, this is definitely a downer for the I mean, you [laughter] know, I can tell you that there's someone updating the prospectus. So, so, you know, Titanic on Goa goes seven out of 10 holiday. Yeah, downer. [laughter] So, so, here's So, so, um this is this is a bit of a tangent, but I think I think the um it it's related in that some of the like if you talk to some smart people in AI, they will tell you actually with the right harness and the right amount of test time compute, you can use open models to find all of the vulnerabilities that Fable can find. And so, actually this is sort of a nothingburger because you can actually replicate replicate this um with with non non-mythos level models.
I think again like the the legibility of AI to the administration, I mean, how the the legibility of AI to a lot of people in Silicon Valley, it's just such a fast-moving field that if you're not inside one of the labs, you know, somebody keeps hard to just keep up with everything that's happening all the time. Now, you know, now think about DC and the average age of someone in the administration or a lawmaker in in Congress or or the Senate, the the legibility of these things is very hard. So, I do think that by saying like, "Hey, we're we you know, by by pounding their chest and saying we're you know, we're we've created this god model that's very dangerous." Um Anthropic has painted a a target on its back. I would say the the like the flip the inverse of this whole thing where you could say, "Oh, well, that's like a negative for Anthropic and the labs and and IPO prospects and everything like that." The massive positive from this is this idea that with the right amount of test time compute, basically the right amount of inference thrown at a given query into a model um or or harness with an open source model, you can replicate these results. And Noam Brown [laughter] Sorry, the balloons are blowing up here, guys. Oh my god.
That That just exceeded just time compute, too. Yeah, yeah, yeah, it happens. Okay, keep going. With the right amount of test compute, we can keep this thing on the track. I'm interested. Keep going.
So so with the the like Noam Brown tweeted about this recently where he said, "The way we think about these benchmark cards, you know, these scorecards where it's like this model has larger numbers than the last model, aka good." He's like, "That's all wrong to think about because the models actually perform very, very differently if you just continue to throw more compute at it at test time at inference time." And so the really, really good thing for I think all the frontier labs and just the inference market in general, companies like ours like Fireworks that run inference platforms for for their enterprise customers on open models, all of these companies that have to do that are in the token path, is that it's very clear that if you just throw more test time compute at any frontier level model, you continue to get results. And it's it's like you you almost like they they haven't found where the wall is where you stop getting better results the more test time compute you throw at it. And so we we've you know, there's been all these like step function increases in how much compute AI models use. You know, we went from like very simple auto regressive, you know, next token completion to these agentic models that, you know, do chain of thought. And like agents use, you know, an order of magnitude more inference. And now you have the this this whole thing around, "Well, if you want to, you know, have mythos-like performance, just spend a lot more compute at you know, do a lot more inference, spend a lot more tokens." And so I think that the the other side of this is that even though we've had such an insane um growth in the amount of tokens processed for the industry over the last 3 years, we actually might see another kink in the curve um as more test time compute creates more and more of these unbelievable results for um for capabilities and and things that you can do with models whether or not they're they're, you know, fable or mythos or whatever OpenAI comes out with, but open source models as well.
But what you're saying on that is and yes and I seen the same statements which is that yes the the mythos can get there quickly, right? And but and it actually is the defense that Dario is offering is that a open source model just given enough time will find many of the same issues, right? Because what it means logically then is you know, if you can't have if we can't have mythos at all for national security reasons then we can't have open source models provide if they have more than X compute. And you're right, what it points to is this is going to be an unsustainable medium term position, right? It's hard to imagine like unless the US government really wants to start regulating AI up and down the board. This is going to be it's going to sound like it was a needed decision one Friday afternoon.
It's going to be a very hard decision to implement it with any degree of coherence across 12 24 months. And for what it's worth, I think that's because the original premise which is that this is dangerous is in of itself incoherent. There are risks, but the idea that I mean I think this is where the kind of the quai wolfism over wrought quai wolfism is biting everyone in the ass and I think we're just going to have to figure out how to That was going to be my question which is like just to what extent is it a model capability question versus a miscommunication question from your marketing? Well, it is a model capability question. They can do the thing that they've said and it's also true that yeah that's my well the open source stuff can do it a non-frontier model can get to the same place. You know, I love this I have used this expression, you know, the Russian army quantity has a quality all its own, right?
And the ability to find a thousand bugs in 10 you know, two hours is more terrifying than the ability to find a thousand bugs in a thousand hours, right? So it was there there was an issue that had to be addressed here. It wasn't just marketing and oddly enough in a weird kind of way they tried to address it but I'm I'm chopping credit, right? One thing in politics I often notice is that good intentions bite you in the ass more than evil deeds. Machiavelli explained it years ago, right? They were trying to do the right thing, and then they got caught in this buzzsaw of we've warned this is dangerous, but now that you have an instance of it, people are coming at me, and the real truth is they're trying to say it's dangerous, but we're the good guys, so trust us.
And I think the stepping back comment is this: Private citizens don't get to run around and say this is really dangerous, this could be awful, this could cause world damage. Oh, but by the way, we're the arbiters of the decision-making. You've made yourself part of the political process cuz you claim to have invented the most dangerous thing since the atomic bomb. You are ipso facto political, and you better get good at politics really [ __ ] quick. Zooming out, I think the the most important thing in all of this is that we step back from from Anthropic [clears throat] and realize that the models are in place now, whether they're from Anthropic or or elsewhere, where they can autonomously find and chain multiple vulnerabilities together, and orchestrate an attack autonomously. And if it's good enough, if they do get good enough where they can take down parts of digital infrastructure that run the US economy or Western economies, then there is some concern about a nation-state adversary, like a North Korea or a China or a Russia having those capabilities.
So so it it it's a real conversation that we're going to have to have as as, you know, Western democracy very, very soon, and we probably should have already had it. And Anthropic right now is is the poster boy for it because of all you know, because of the relationship that they have with the administration and the things that they've said, but it it's just like this is this is true for AI now. This isn't an AI discussion, this isn't an Anthropic discussion anymore. Yeah, yeah, so no, before we move on, I mean, statistically more than 50%, yes, because in a world where this doesn't get solved for 4 or 5 months, there's so many other problems that our heads are going to hurt, right? So you have to say if it probably in in a world where it does get solved then yes, they should go public. So, still statistically but obviously if you're again, I'm just a simple Bayesian.
If your prior before was 90% plus, which it should be because we've just seen a stellar reception to a company that even though it was called SpaceX, turns out that the vast majority of the market is in AI at least as they frame it now. You've just seen that have a stellar reception. You'd be pretty much of an idiot to see SpaceX trading 2.4 trillion and to say as the board of Anthropic, let's hold on for a better market. Of course, so your prior should be they're going public with a 90% certainty. So, this thing is a is a significant wrinkle and they're going to have to work through it. So, it lowers the probability but still way more than 50% cuz they'd be crazy not to.
I I think they will. I I I think they will. I think one one last final anecdote and we can move on is I mean obviously they're already on this incredible trajectory that's been reported on publicly. We had a founder in our portfolio in Fable was was active um that after a day of using it said with Fable, they're not going to get they're not going to hit 100 billion of ARR this year. They're going to hit 150 to 200. Um and that was just an anecdote from their personal use because they thought that the model was so unbelievably powerful and they were going to spend that much more money on it.
Um but so I think with or without Fable, we'll see but I I think it's about as good of a market as any to for them to go out and I think the results and the numbers are just going to be eye-watering. I'm I'm sorry Ave while you were explaining how America has changed you know mortal capabilities um Rory was struggling with European inventions of bottle caps or water bottles. [laughter] I'm aware of the European nanny state. By the way, it's really sweet that as an English person you call it Europe given you're not in Europe anymore but I know what you meant. I know what you meant. Well, speaking of Europe and to to the point that you said there sovereignty and Mr.
Alan Messers rubbing their hands with glee at the potential. Um Mr. Alan talks to raise $3 billion at $20 billion. They've actually been incredible in terms of their kind of FD model. They've scaled to over half a billion dollars some of the biggest enterprises in Europe. Will we have many more sovereign models like a Mistral?
How do you read this? you'll have a push for it, right? And look, even if I mean this is going to sound awful, but even if the European alternative isn't as good as the US alternative, there will be cases where, you know, it's not quite good enough, but you don't have the sovereignty risk. So yes, This is the whole European economy, isn't it? I I I I I was just I was I was I [laughter] was I getting up for doing the swing. I was going to build up to it, but you just took the words Come on, dude.
You took the words [laughter] right out of my mouth. Absolutely. No, I mean you know, I I it's actually yeah, I mean the the there are areas where they're actually genuinely better, but there are a lot of like, you know, you guys are still trying Europe is still trying to do some kind of GPS alternative. The more we exert our sovereignty in the United States and do this kind of thing, the more important it will be to decouple from it, right? And you know, would you prefer to have the second best model that you have access to or the best model that gets cut off once every 6 months on a random basis? So I mean I think you're seeing it in defense procurement.
Yeah, there's still stuff that you can only get from the United States, but more and more if you can get it from either place, you'll do it. And I think Europe to the extent it perceives, you know, this important at the margin, I mean it'll be the it'll be the classic European thing. They'll care enough to fund it, but we won't be able to care enough to find the 100 billion dollars to compete with it, right? So good good for Mistral. They're in a good they're in a good place. I find it plausible that that would continue even if it's not the best model.
You think you think Greece is going to come out with a model soon? They should. Well, I I I don't know I don't know if this is real or not, but I saw on the timeline that Rio the like the city of Rio in Brazil apparently, you know, like post-trained or fine-tuned um, a open source model and created like their own city city model and it was like near frontier or something. I They might They might have been fake, but that's that's what I saw. Um, I I did it like I I I think again, I think everyone um, it it's sort of like what we've seen in defense where as, you know, especially in in Western Europe, you've seen so many um, so so many startups pop up to kind of um, and I'm and I'm sure in comments as well, to um, to to respond to the demand from Western European countries to have their own defense supply chain and manufacturing and all these things. I think we'll see the exact same thing where sovereignty will become much more important.
The thing that's really struck me is just how hard it is to actually build these models and have them actually be good. If you think about it like outside of China, there are basically no good open source models. Um, like Nvidia has one that's pretty solid now with NeMo Tron, but like that like where where are the US open source models? You know, where where like, you know, we don't even have any in the US now. And so, I do think this the talent, the capital, and the focus over a long period of time to actually be best in class at pre-training, at mid-training, at post-training, doing everything that you've done or doing everything that you need to do in order to create a really really good model is an extremely scarce skill set and I don't think it's this fungible thing where everyone's going to um, going to to be able to do it. And so, I don't know if that leaves people where you know, maybe the the answer for a lot of countries is to just take an open weights model from China or elsewhere and and, you know, post-train or fine-tune their version and have that be be what they start from.
Um, but I I also don't think that it's just this trivial thing that every country or every region can have a um, can can have their own sovereign player because most of the sovereign players they've fallen far behind. Like Mistral itself has fallen very far behind on on the actual model side and they've done a very good job becoming this inference platform and the FD model and all these things, but that they're they're outside of China there's there's been no great, you know, model model producers besides people at the frontier. Yeah, and I think, you know, cuz there's there's the question of people beyond open labs and on topic. That's one dimension and then the other dimension is open source closed source. And it's worth pointing out many of the closed soft vendors are I thought the open source vendors are morphing more towards a closed source model. I mean, obviously Facebook at meta did that to some extent.
I think some of the Chinese vendors are starting to do that. So, eight as I said, it's extraordinarily expensive and extraordinarily difficult to do and if you can't command a return at the end of it, you know, what's it all for? It can be done, but it's a brutal struggle. And I don't know if the critical mass of knowledge for a compute task like that exists in Europe in a way that obviously aerospace was a core competency in Europe. So, I agree. I think you'll have a whole bunch of people flailing around and trying.
It'll make Nvidia ever so happy because everyone will feel the need to have their own chips. But fast forward five years, you know, unless the US is ludicrously obnoxious in its sovereignty acts, it should be a small oligopoly like cloud of two to three players in the US with some kind of affiliations in Europe. And that is the likely structure of the industry just given the costs required to play. I have a direct [snorts] question and and the latest Benchmark fund is going to be the I think one of the best Benchmark funds in history. Truly be astonishing. But I I had a GP from USV on the show earlier and I said, "How do you evaluate not being in one of the model providers as USV?" And and can I ask you the same which is like Benchmark one of the best firms.
Do you sit and think it's not our game they're too large? How do you guys sit around the table and reflect on not being early in the model provider? No, it [ __ ] sucks. It's terrible. [laughter] It's a It's a It's a complete and utter failure um on on our part and I think we we'd all say that and I we you know we had we had dinner with with um some of the leadership of another you know what one of the other best funds in the valley that that also you know they they've large position now but they weren't early in in um in the in the model providers either um and you you you can't you can't be in a situation where you have a chance to make you know a 30X on scaled capital as you know if if you think if if you want if you want to claim that you're one of the best firms in the valley and you have a chance to make a 30X on scaled capital in four or five years and you don't do that that's always a failure. So that's always that's always a failure um no matter the way you cut it.
So it sucks. So it's it's great that we did a bunch of other amazing investments. These were all obviously before my time but you know the Sierras and Firework and Lagoras and Recores and Langchains and Hagens of the world in that fund. Um and and many others as well and so the the funds look the funds obviously um look look awesome but um but no it it stings especially when all your friends you you know are are uh are sending you their implied look through ownership of of Anthropic and Open AI and SpaceX. You uh you know those are eye-watering numbers and so it's it's a it's um it it definitely stinks. Have my friend I've told you before attribution is everything in venture.
Those great deals were all you, okay? The amount The amount of Excel [laughter] The amount of Excel GPs I've met that did the Facebook deal [snorts] we could have a series of podcast episodes. Uh we're moving speaking of big wins to a fantastic outcome and a team that I love I know you love Rory. Salesforce acquires Finn formerly known as Intercom for 3.6 billion dollars. I just think that Owen and Des and they're the two that I know from the founding team are just incredible. They've been pounding the pavements at SaaS firms around the world for years.
They've built an amazing company. Rory, you're an ambassador in the company. Love your thoughts. Yeah, it's exactly what you said. I think smart deal. Smart deal for Salesforce.
Because these guys became the canonical example of a old school SaaS company that made the transition and pulled it off. Right? And there's not a lot of that going on. And whatever's in the water, that's what Salesforce needs to do. Right? So, I think it's just smart on that basis alone.
Um you know, I think that the transition you have to transition your products, you have to transition your model. You know, moving from a seat base to an outcomes base, which to me was putting your you know, putting your ass on the line in terms of your performance is what made it real. And they were starting to get you know, they had this you know, you get paid per intervention, 99 cents per intervention. So, you could literally measure value and deliver value. And it forced the company to be very close to the customer cuz And I think if you step back I think the whole history of software has been ever increasing alignment with the end customer need. If you step back 20 years in kind of client server software, you literally you give the customer a license key and they gave you a million dollars and you didn't even care if they deployed it.
And then saw And then SaaS came along and you gave the customer a hundred a hundred dollars a month per seat. And then they you had to care if they deployed it because if they didn't deploy it, they didn't pay you. So, it pushed you closer to the customer. And the next generation, which is where AI has taken us where a lot of these SaaS companies haven't gone is don't just deploy the damn seats. I want the business outcome of resolutions of customer requests. And I will pay you per request with you know, per resolution.
Right? And it forces a whole load of things like it's obvious you know, whatever it is a buck a resolution. But to make that happen, you've got to be in the resolution path. In other words, what percentage of the time is the software set up to solve the answer versus maybe the customer decides I'm not going to have the software do that. You got to be there as the vendor pushing that, "Hey, I can solve your problems." And then you got to get the answer right. And if you do those things, you get money.
And I think what Intercom did was they aligned around that was how value was created. You saw it in Owen's numbers that he blogged of just And it is really increasing gap revenue. And we all know if you run the math, we'll talk about Wix later, it's not easy, but it's plausible to two, three, and five X as a startup. But to take something going at 300 million and So, at 300 million going at 7% and increment it up to being something at 400 million going at 25%. It's literally like pushing a rock uphill. And they pushed that rock uphill for two or three years, made it happen.
Uh uh and I think that it was a it was a smart deal for Salesforce to buy it. And because that's what they need to do. They need to have Agent Force be just as meaningful if they're going to reignite growth. So, I Yeah, good deal. Couldn't be happier for those guys. Great win for our I was actually in Ireland when it happened.
And you know, a great win for those guys. I mean, you know, we're a small country. You don't have a whole ton of 3.6 billion-dollar outcomes. And you know, good for them. Yeah, congrats to you, Rory. Um huge one.
And I think that Owen and the team have laid out the golden path for pre-AI SaaS companies in what they need to do in terms of burning the boats to getting to a great outcome. There's a partner here at Benchmark that says any liquidity for pre-AI SaaS companies is top decile performance. Any liquidity at all. And what Owen did and what the whole team at Intercom did, or Finn did, is they took a situation where the equity of the company was essentially worthless. Um because no no one's going to buy 300 growing seven. Um it just you know, it's just not it's not a SaaS asset viable with with no AI story.
That just That's just a zombie company. Um and And they they transformed it into hard 3.6 billion dollars of cash or Salesforce stock. I don't know if it's cash or stock. Um and that is incredible. And if any boardroom for a pre-AI SaaS company isn't going into their next board meeting and having this as topic number one to see is this relevant for us, how can we, you know, follow us a similar path, it's a failure of of of the board. Totally agree.
And I think they'd be the first to say it. And by the way, it's hard. Right? Cuz they're competing against, you know, one of your very best companies, Sierra. They're competing against They're They're competing against Starlink with a very low cost of capital, right? And you know, and a great new architecture.
So, you know, while success, and they'd be the first to say, you know, congratulations, you've you you made yourself not a dead SaaS company anymore and you've earned the right to punch against, you know, more impressive people who are in this AI-first marketplace. So, yeah, that's what it takes to win. And it's brutal. I like that top desk comment. You're exactly right. It's very true.
It's like being able to do that. And it's brutal. If I am a pre-AI SaaS company founder listening, is there anything other than go in, burn the boats that I should take from this? Be realistic, first of all, about what you can do. Right? Because I I really liked what you said, Everest, that the customer support was a space where you really could obviously add AI, add value with AI, and it was a pretty obvious what you had to do, right?
You know, there's other areas where I I think sometimes they're trying to do a little artificial I'm going to say it almost you know, heretical thing here, like almost trying to do AI for the sake of it versus think what you deliver value for your customer for, right? It may be that you in some of the financial accounting plays, it's going to be a longer journey with AI and you've just maybe got to set your stall on that basis and maybe focus more on profitability and steady growth. It has to be situation dependent, right? Rather than saying, oh, burn your boat. It It's an easy answer to say, burn your boats and do everything. But you should burn your boats only after you've checked where the boats are.
And do you want to stay in cuz the original cliche is from Alexander's invasion of Persia. Do you want to stay in Persia or fight in the Persians? That was more topical than I intended. Sorry, everybody. Um [laughter] I'm going to talk about Alexander the Great here, people. Don't leave up my citizenship.
Um yeah, if you want to stay and fight, then you burn the boats. If you want to you know, do something else, then you you do think differently. So, be very realistic about what AI means for your particular asset and what AI can do and not do. And then once you do it, I think Alex right, execute violently to the new thing cuz you don't want to be the guy in the middle. Yeah, it is true that like you know, I I say that but like the most the most annoying board member ever is is is also going to go into a company where this isn't relevant at all and say, "Why can't you do it Intercom did?" Or why can't you do it Fin did? And like that's also completely unfair to a management team where it's just not realistic.
There's been a lot of you know, sort of VC advice around like, "Oh, if you're a pre-AI SaaS company, you just need to like you know, triple your growth rate or get margins to 30%." Yeah, I'll get right that's really hard, you know? Like that's I'll get Like get right on that. I would yeah, I I would love to grow three times faster or increase our margins by by 30x, but but these things are very hard. And so, I again, all all said with with the with with with the caveat that it's going to be different for like every company is very very different, but the amazing thing that I think Fin proved is that there's there is a market. It's not like I think some people said like, "Oh, well, the only thing that you know, these incumbents are going to buy are these new age startups building AI companies if they want to buy AI companies." And I think you know, I I forget I I don't know when when Intercom was was founded. I think it was 2012 or 2012.
20, yeah. So, it's like that's you know, you're buying a 14-year-old company. And and it's an AI play for them. So, so like it's not that incumbents aren't going to buy older companies to to bolster their AI efforts because you can you know, it turns out in AI you can, you know, teach old dogs new tricks. Nice. More money about for Chamath as well.
So, glad to see that his liquidity is coming this year with Grok and into the Was that a Mamounas? Yes, it was. I looked at the bay. I It got done by Bessemer. I I I went to Hawaii for Christmas and I only did the deal with Bessemer. Sad face, but good for him.
No, it was Mamounas at the AI and then when he was at Social and then Bessemer did the deal. Speaking of turnarounds, that was a turnaround that's been very successful. Speaking of potentially in need of something changing. You mentioned the word Wix. Wix slashes 2026 guidance cutting 20% of staff, 1,000 employees, and cuts outlook by 50 million and revenue by 25 million. What What the [ __ ] do we do here?
I really like the Wix team. They're really good people. What do we do here? It's hard cuz, you know, you look at the Let me just make the the the pro case. By the way, for some reason that This is one of the two or three corpses and not corpses, that's not fair. This is one of the two or three businesses we seem to love to dissect, especially when Jason's here cuz he's really good at the Replit lovable versus Wix discussion.
So, I feel we give Wix more air to cover than more grief than perhaps they deserve. But, I think the two things here I mean but there are some things irrelevant here. One is They did do the right thing. They made an acquisition. Right? The acquisition is growing nicely.
It's kind of that next generation website. It was at 100 million, but of course lovable and Replit are 4 500 million. And I have just decided to walk away. He's not interested in Wix. Um but I've given you [ __ ] man. It's good idea cuz it's pretty toasty in here.
Um but um the interesting thing is the stock is now I mean they did a buyback. Yeah, they did I think the acquisition was a great idea. The buyback was obviously a bad idea because the stock is now I think well below half that point and trading at one times revenues. To A's point, if you don't have a compelling AI story, it's just really hard, right? And they're just In my view, they're just going through the same journey in a common. I don't think it's done and I think at one times revenue I actually made a mental note to think what would I have to do to buy at that price, right?
You know, the the the bear case is that the website building market what they did is going to become a subset of the lovable web player just build me a website and they just don't have any relevance there because they're just not far enough along. If they can create any kind of leverage then at one times revenue that's actually a very cheap stock. But obviously you know, it's hard to say things are great when you got down, you bought your stock back and now it's at half the price. So it's been a tough period. I'm not I wouldn't be giving up but I'd say this is this is one where to Ed's point earlier, there's clearly a relevant AI story. Not only is there a relevant AI story, there probably isn't a story without AI.
They are definitely in the burn the boats because you're stuck in Persia because you got to figure this out. So there should be a doable answer but you know You think um the the SAS market in general obviously took a huge bath um sort of over the last year and until recently you know, every you know, every SAS stock was getting you know, cut in half, cut by 60%, cut by 40%. It seemed very indiscriminate. And I think the the nice thing that's happened for the SAS market in in the public markets for software over the last like three to four months is that there's now at least a filtering mechanism. And it seems like there were like clear scales. And so you I mean you you have I mean Palo Alto, CrowdStrike, Cloudflare, DataDog, Palantir, all these companies trade above 15 times NTM revenue again.
And so the the premium stuff is is still being priced at a premium um which is nice because for a while it just seemed like wow, like I guess this this category is just dead. And I think now there's like very clear um kind of scales at at play. And we actually going through with with a founder and and trying to like actually collate well like what do what do public markets want to see? Like what are the good attributes and bad attributes of any of these companies that impact their multiple? And so um I I'll I'll I'll just go through a few of them. So, um, on the good side, I think, you know, all these companies that are trading well, they have a usage-based uh component that scales in relation to tokens or correlated AI.
Like DataDog and and Snowflake are good examples of this. Um, two is that there's a clear AI tailwind for the use case. So, cybersecurity is is is a big one there. And then, um, a third good one is that you can actually leverage AI to accelerate share gains. So, maybe you're not the market leader or you're a faster-growing smaller company, and if you are a newer company that has better AI than an incumbent, you can actually accelerate your share gains um share gains from that. On the bad side of of the of the T-chart, you have um the first one obviously is perceived business model exposure.
So, like you're a perceived model um in an economy going down this AI outcome-oriented or token-oriented business model path. Two, you have an easily replicable product or easily replicable value with coding agents or something else like it. So, this is obviously where where Wix gets really dinged. Obviously, Intuit as well. I think a ton of Intuit's um profit comes from TurboTax, and everyone's scared now that TurboTax um you know, will become um extremely easily replicable in the future. Um, a third bad thing is like if you're already the market leader and you only have share to lose, um if you're already the incumbent, that's a really tough place to be because there's not really share to gain, there's only share to lose, and AI is a great way to um for for startups to take share from you.
And then, the fourth is like if your product's just lame, um ultimately, like enterprises have an IT budget. There's like a there's a pie that equates to 100%. And right now, I'd say, on average, you know, that pie is 10% AI spend and 90% IT other like software, people probably want to make it more [clears throat] weighted to AI, like maybe even 50/50. So, that 40% from 90% down to 50% has got to come from anywhere so or from somewhere. So, if you just have like a lame product that was already on the fringe fringes anyway, um you're going to get dinged and your your retention's going to go way down. So, if if we take like Wix through this, and and I think like, you know, everyone has some mix of these good and bad and what the market is doing is weighing, do I believe the bad is worse than the good or the good is better than the than the bad.
And right now for Wix, it's like massive replicability problem. Um they were an incumbent that perceived uh that is perceived to to have a lot of share to lose to AI um players that are that are um coming up in in the market. Um it some of their um product does have business model exposure uh and like the product is you know, at least relative to the product experiences of LevelUp and others is sort of lame. On the good side, you know, they they did the Base acquisition, they have a usage-based component, there's an AI tailwind for what they're doing. But the net of the scale is people are saying way way like there's way more credence to the bad than there is the good. And I think you you know, it's like Figma also has Figma Make, like they're also in this market, they have this usage-based component now and people aren't giving them credit for that because they think the bad outweighs the good right now.
You're essentially getting the core business for free there. When you look at Base 44 at 150 million of ARR and you look at them Rapid being priced at 10 billion, you're pricing Base 44 if you agreed, but if you step back on that, I would if you step and and the two the two of you, what I outlined was your pros and cons of a business, right? And you didn't mention the stock price once. You basically said these are good things to have, these are bad things to have, right? And then what happens is the stock market is basically taking all that and saying, "Okay, you've got six good things and only two bad things, I'm going to give you 10 times. And Wix, you've got two good things and six bad things, I'm going to give you one time." So I And what it means is at one times versus 10 times, at a shitty enough price, you can be a value investor.
We'll talk about Adobe in a second. Um you know, maybe at 1x Wix is now priced to the point where the I mean, logically, the expected return at that point should be equivalent to the 10x, right? But what it what you're saying is exactly, you If you're on the bad side of the T accounts, the only forcing function left is price. And you know, price has its wicked way. I'm sorry, if you're a founder, price has its wicked way. I'd be lining up the debt providers and the finances to take this [ __ ] I told you if I was this is I'm going private.
I agree more. If I was running Wix, right? Instead of having wasted that money like actually maybe the buyback because you if you're going to break your pick for the next five years and they're willing to give you the company at one times revenue now, well, screw it. Or Michael Dell, find your Silver Lake, take the company private. that's exactly that was the sweetheart deal of all sweetheart deals, which is why he's you know, top 10 on the billionaire list. Exactly.
If I'm going to grind through if the market doesn't like me, well, I like me. All right, and I fancy my chances. So, you're right actually maybe we need to go do a PE roll up of Wix with the boys and just call them and say you know, cuz at one times Don't give Harry ideas. I see him writing down a note. I'm excited to have Avishai on the show in the next few weeks. Yeah, good.
I I mean yeah, again Yes, yeah, that's true. Yeah, you should be look. I mean genuine, you know, I have a ton of empathy and respect for you know, you build this thing. I mean she's capitalism is but you build this thing, you're doing a couple billion dollars in revenue. The architectural crank turns and suddenly you're oh my god, I got to do it again. Right?
And I have a ton of respect for anyone who says damn it, I'll strap in and do it again. What could be worse? I could be Weebly. I mean that's Well, I think the genuine comment on that is if you're going to be in this situation, I actually think it's interesting is that being private, late stage with a lot of venture and high valuation. I'm not commenting on Weebly in particular, but you wait. That's even tougher cuz at least these guys have capital and they're profitable, but yeah, it's it's a hole if you're Or or like Squarespace sorry, I'm not picking on Squarespace.
You haven't got the Base 44 acquisition and just have the legacy business. Yeah, it'll be hard. They had they had a takeout. They were private. I can't remember who bought them, one of the PE guys. Francisco or someone.
Yeah, yeah. No, that's that's a tough There's There's There's no price at which you want to have six times revenue and death. [laughter] And that's also that's also why I laugh you know whenever you hear like, "Where are the PE firms? Like why aren't they buying all these things?" I'm like they are they they bought them all in 2021 and 2022. And now they're dealing with you know, companies that are probably worth 30% of what they bought them for. Agreed.
You know, you bought again and I'm just going to say this. Just cuz you were willing to pay a 10 times in 21 doesn't mean you'd be wrong to pay one and a half times in 26. But you have to have a real strong stomach to say, you know, "I know this hurts like hell guys, but what we really need to do is that well maybe, you know, but yeah." And just the opportunity cost. You're going to have to grind it out. PE guys are good at grinding. That's what they do.
Yeah. Dude, I'm a poor guy. [ __ ] They love the pain. I want to have they love the Remember here's a value invest We got a value investor Benchmark. That alone makes me happy. He he he knows how painful it is which is why he switched.
Well, if you're a value investor and you were X no. And you were saying about the bad on the kind of negative side. Adobe beats and raises. Mhm. But the stock falls 6% and the CFO announces he's leaving. I think you should reverse that order.
What? The CFO announces he's leaving. [laughter] Let me give you a clue. When you have a turnaround story and a complex story and the first sentence is the CFO is leaving, no one was on that call for the second sentence. They were pressing the sell button, right? Yeah, I mean but yes.
Keep going. Sorry I interrupted. No no no, you're absolutely right in terms of the chronology of that. Um but CFO leaving for Marvel um they have a lot of the characteristics that you mentioned on the negative side in terms of seat base, large dominant share of market. Could be perceived as a slightly lame product with regards to a a lot of the generative AI that we're seeing. Um is it just to your point it takes a lot of negatives and not a huge amount of the positives?
It's funny I actually had um uh knowing that we would talk probably about the SAS apocalypse, I looked at Adobe and I was like this thing trades for eight times LTM free cash flow. Yes. I'm like oh my god. Deep in his heart, he that's yeah, Yeah. Totally. It's stunning.
It's it's absolutely stunning. At the same time, again like one, yeah we I mean we we don't need to go down the list again, but but again it's like they have they have basically every single one of the bad attributes. They're already like the 80% share winner in all of their markets that they compete in. Um they only have share to lose. The product is getting increasingly replicable. A terrible business model it for it's been amazing for so so long and is now the wrong one for the given moment for what the market for the market wants.
And then just very few of the of the upsides that no real kind of usage based components to the business. Um hard to argue that their products get any ideal when that they can capture because they don't have the talent internally. I think the other so the other big vector on this that is I think somewhat under discussed is that if you talk to hedge fund managers right now and you talk to them you know like if you talk to like a TMT hedge fund manager what a lot of them will say, I think Brad, you know, from from Altimeter has said this publicly on on podcast where he's like look like I can yeah I can go buy Adobe for eight times free cash flow with all of these problems that we don't know how they're going to resolve or I can go buy Nvidia for 16 times earnings. So like who who's like the poster child of every single tailwind that we were talking about in AI that has that has you know you know 80% share themselves of the most important piece of the compute tech stack. And so the the what what I've heard from a lot of um public managers is that SAS, you know, maybe maybe it's oversold. Maybe it's too cheap.
But why does it matter? Like what it's just too hard. Like uh like you can buy these memory stocks for very cheap multiples. You can buy and like if you look and like again all these all these guys all these guys and gals in in the hedge fund industry, they're graded on how they do versus the index. If If at the SOX index this year, I think it's up like 45 to 50% this year, whereas like the SaaS index is probably down 20 to 25%. So, like even if you're an expert in SaaS and you got the good ones, you've underperformed the semis index.
And so, their job isn't to be smart, you know, on SaaS. Their job is to make money and they can just invest in semis right now and play that Yeah, let me give you that number for 5 years I cuz I I I don't have it with me cuz I'm on the road today, but when I do this show I have my ETF list and the 5-year return from World Cloud, which is the definitive ETF for the SaaS, is down 30% and the 5-year return from semis is 2.7x up. Right? It's just been a great trade every time. And there was 1 month where the SaaS there was 1 month just recently where the SaaS thing bounced off the bottom and outperformed for a month. And then even the last 2 weeks it's down it's kind of relative underperformer.
And with the trend this guys the trend is your friend is the first thing that momentum traders learn, right? And I just pulled it up really quick worry just for for since you mentioned it. So, the the Bessemer Nasdaq Emerging Cloud Index over the last 5 years is down 44% and the um the socks the iShares Semiconductor ETF is up 325%. Yeah. And so, it's just like you just like you know, go short SaaS and go long semis and you've made, you know, better money than than any other hedge fund manager in the world, you know, besides Leopold. There's a point there why the trade makes sense.
is, but I think that it has to be a it's one of So, each of them So, you ask yourself and I in in each case you have to say ask yourself what breaks that trend and it's a different thing for each of what breaks the trend on the semis. Yeah, the catalyst on the semiconductor capex trend is a flattening out in capex. If that happens, then all bets are off and those things are going to go down so fast and hard. So, that's a call you can make. That's one call you can make. The the trade on the SaaS the the thing that breaks the cattle the catalyst on the software trend, I don't think there was a single thing.
It's I have said, there's a bunch of sorting going on cuz this is the winnowing of the week, right? It's never pretty, right? And the guys who are individuals get through the gates to be winners, right? And you know, the data dogs you know, I kind of on the positive side. And you know, I watched Don't Outperform. And for the other for something like Adobe, I actually think there has to be an institutional catalyst before there can be a pricing catalyst, right?
In other words What is that? I think you need someone like Owen running it. Cuz I'll tell you, I'm now going to vent. The one thing I I I and I don't like to pick on amazing companies. I mean, I was around when you know, one of my partners years ago was early at Adobe and she recounted, you know, it's to your point. They had 90% market share and were stuck just below a billion dollars for 4 years, right?
Turns out when you sold everyone PDF, you know, you get stuck, right? My vent on that company is they have milked their users for so long that it just feels a piece of financial engineering. Interacting with the product, it's always the login are crap. The I don't even understand the licensing model. I don't even know what I can use and not use. It's just constant.
So, my sense is they've ex- It's like being a PE owned without ever being PE owned. They've extracted every piece of value, right? And someone's going to have to go in there and kind of rethink through what it takes to make their users love them. Right? And that's a bit And until they do that, I would have maybe at 10 times or 8 times it's cheap and shocker it might go to 10 times. So, you might get a one-off 20% pop.
But to Ed's point, it's just a lot easier to own Nvidia and have it go up 30%, right? Cuz there's no such Are you Are you calling your shot as as Owen as the next Salesforce CEO? Is that where Is that where you're going? spent my experience having sold companies to Adobe and Salesforce and many things like that. I've sold companies in the past where I kind of go, that person could easily run the acquired company. Most times it doesn't happen.
It's just too hard. You've been your own boss. It's too long. I mean, you know, Brett you guys know so much better than me. Brett Taylor could comfortably have run Salesforce. But it turns out there's someone running Salesforce appears to like running Salesforce and has done it well enough to keep running Salesforce.
So no, for that reason alone, no. I just I just know Benioff, there's no [ __ ] way he's leaving unless he's 80 and 90 in a coffin. Like this guy's loving life more than ever in the AI world. True. But yeah, but as as a comment, I don't know if you see this here, but we're seeing it. Kind of taking that fun One of the smarter things we've seen some of our good companies do is some small acquisitions, building in founder teams.
And one of the best ways to F point to do a little bit of a cultural change can be picking up some of these founder-led early AI companies, and you should be doing that. And so I I think that is one way to get really good talent in. I'm thinking of one of my companies, really well-run company, it's an AI company, but kind of pre-gen AI. They've done a magnificent job of hiring, doing two or three small acquisitions, and you fast-forward a year and each of those guys is running a $20 million BU, and you're like, "Wow, that works." Going back to the Adobe comment, I don't know how they do it. But they need to It's not more of the same. If they hire more financial engineering, you need to shoot it in the head, right?
They need to hire someone who says, "I know where this thing needs to go." I think I think this is where this is you know, this will be my last comment on this, but like this is where it gets really where this cycle becomes really insidious to these incumbents Yes. because I think in 2021 you know, when your currency as stock is worth so much, you can do a lot of these really ambitious product acquisition things. So like you can have the Square Cash App deal. Um and it's fine because even though the stock goes down later, it's like, "Well, at least you paid for expensive stock with this expensive stock." The really tough thing is when the like pair trade where like all of the AI valuations or like are going like thermonuclear up and your valuation's getting cut by 60%. Your cur- you can't buy anything. Like you want to know what would make Adobe stock price go down another 30%?
If they paid like 15 billion, you know, if they paid a quarter of their equity for some AI company that like public shareholders might not even want to buy. And so all of the the really amazing AI like what they should have done this two years ago. They should have robbed the cradle of all these AI companies before and and overpaid when they were still like seed or A companies and like gotten an AI product suite. They failed to do any of that. And you know, of course they sort of attempted with with Figma even though that that was kind of before Yeah, yeah, yeah. It was it was pre-chat GPT.
But like they failed to do any of that. And now every single good AI company that they could acquire is too big for them to acquire and they can't do it. And so then it's like well, we don't have the talent internally. We can't build a good AI product portfolio because we don't have the talent. The talent is very scarce. And now we can't acquire the talent because all those teams are too expensive.
I'm not you know, you can't pay $10 million for a company that's at 200 ARR because it'll just nuke your stock price more. Which is why going back to the first principles, the the people running the company have to be good enough and close enough to the metal to themselves know what to do at least well enough to yeah, have a product vision, hire people as I said maybe smaller acquisitions. If you're trying to do it from a McKinsey management perspective, you're doomed because you know, I I love what you said. You've no buttons left to press. You had buttons to press in 21. Now you don't have buttons because the kind of things that you can do like obviously if Adobe bought Runway or Higgs field or pick your beloved thing, great.
But I think you're right. They'd have a [ __ ] fit. Cuz the the only people who own this damn stock now own it because it's trading at eight times cash flow. And if you tell them I've taken you eight times cash flow and now we're trading at 47 times cash flow cuz we've just spent flow and bought this last making thing, they're going to have a conniption. So you just you're right. You can't do that.
It's it's a tough place to be. So you've got to fix it's why again I want the Wix guys to make it cuz they strike me as knowing what they have to do. They did the small acquisition. Just got to grind it through. The hell is Adobe a phenomenal acquisition machine? That's the MI that's amazing.
Um Any any that I have missed? Any that you think we should discuss that we haven't? Well, there's lots. I mean You can you can pick, right? I'll pick. I mean, you know, I I I I think I I I pick out just one random one.
I think I saw Standard Bots ways, which is a company raised $200 million. I do a lot in robotics, and I just like those guys. I mean, I spent a lot of time talking about it. I had some talking with them. I had something else going on, and they wrote a really good piece that Packy McCormick published, right? And it was just right and what I liked about it, it was very it was calling a shot against humanoids.
It was basically saying for a lot of these use cases and the humanoid is a mistake because the humanoid is putting a whole bunch of money into legs, which maybe you don't need for most industrial manufacturing. And what these guys do is they built a next-generation robotic. The bet they're making is is that on the other So, you have the humanoids, which is a lot, and then robotic foundation models. You're putting a lot of money into a lot of enabling technology that maybe you don't need for the task at hand. In fact, you're you're over scoping it. And then on the other extreme, you have the old-school robotic arm manufacturers who are doing all of the current, you know, robotic work.
Most of them are most software vendors are using one of those old ones. And they're basically saying that somewhere in the middle, you can build this next-generation kind of the the analogy they use, like, you know, you have an integrated hardware software stack like Apple. They're going to do the same thing for a robotic arm that can be integrated, and they think they can take a lot of revenue that way. And it's it's What I liked about it, it's a pragmatic play, right? I think so I think the the the the case they articulated against humanoids in the short I think it's more correct than not, which is it's overkill for many industrial practices. And what you really want is a thing that can see, that can pick things out, can flexibly be trained very quickly, and then can pick things up and it kind of do [clears throat] discrete tasks pretty efficiently.
So, I think it's a good play. Uh to US-based arm manufacturer, and we don't have many of those at scale. So, I I I like I like that deal. I like that team, and I wish them luck. Have the Benchmark have a robotics investment? We do.
So, uh my partner Eric Vishria led the series A of Sunday Robotics, which is um I would say pseudo humanoid. It doesn't have legs. Um you you um Sunday AI, I think is the URL, but it has sort of like a platform that can help it go up and down. And then it it almost looks like Ness from uh Super Smash Bros. It has like a little hat and these long arms. So, it's it's like pseudo pseudo humanoid for um for the home.
But but I mean but Roy is totally correct that I think the two opposing views on on robotics writ large, at least on on the vector of humanoid or non-humanoid, the the pro-humanoid argument is like the world is human-shaped. Like everything, our homes, our factories, you know, our workplaces, they're shaped for humans. Like we've built them so that humans can use them. And so therefore, humanoid robots are going to be able to most naturally um interact with the environment because they interact the environment is designed to be interacted with by humans. Um the pro-non-humanoid argument is a lot of what Roy articulated, which is like look like, you know, robots are expensive. Like these parts are expensive.
Like actuators, which are like the engines that that, you know, provide torque for a robot, they're expensive. And so like for a lot of these use cases, um depending on what the use case is, you know, it might be gratuitous or vain for there to be like these expensive legs that are like running around when you can just wheel the thing up to, you know, a warehouse where you're doing pick and pack for logistics, which is like, you know, you take the packages and you sort them. Um like you might as well just have the arm that's doing that. And so I I think there's like I think in general, we as a team, I mean we talked about robotics a lot. A a thought experiment I love asking people is like in the year 2060, so take like a really far out view to to allow the supply chain to catch up, how many um what what would the ratio be of digital agents to humans? And then what would the ratio be of physical agents like robots to humans?
And I think there's like some argument that by 2060 in in some places like the US, I mean obviously like you know, that there is no ceiling to the digital agents one, maybe it's like 10,000 or maybe even more depending on um how the how the agent landscape evolves. But by 2060 you might have like a one-to-one ratio of of like useful robots to humans or it could be like much greater um depending on on how how fast we go. So, obviously it takes longer to scale robotics AI than it does ChatGPT because you know, a robot is not accessed through a website or an API. Um you have to buy it and put it together and put it to use. Um but I think that we we think it's in terms of the things that are still in the first inning that are going to become um trillion-dollar you know, what what what trillion-dollar companies are going to be produced, we think it's one of the prime candidates for sure. It's interesting cuz look, I I'm I'm on the board of Locus Robotics.
We have 15,000 robots in the field. We do kind of $180 million a year, right? And but it's stunning how long it all takes. I mean, you know, I remind people that the total number of robots in the world today, like in total, about 3 million. Right? And there's, you know, there's a billion people doing real work, right?
So, you know, and those robots have been around for yeah, arms have been around for 20 or 30 years. So, in 20 or 30 years we've replaced less than 1% of the humans doing manual work. It's a long journey, right? And what you see is when you get to the front line where these companies are actually kind of trying to do the work, you just see frankly how good humans are, right? How flexible they are, how for anything other than very repetitive tasks with a large kind of thing, you know, the human the and and the buyers, the funny thing is I think in software industries the buyer is typically a buyer of a industry that themselves had high gross margins. So, they're kind of a bit loosey-goosey on the ROI.
Yeah, you are you are a high-value knowledge worker, you we're paying you 300 grand, [ __ ] it, we can give you a 20 grand piece of software. Let me tell you, when you're running a warehouse with 400 employees, each of whom is getting paid minimum wage for pick and place, right? You know to the penny how much labor costs, and if the robot doesn't cost half that, you're not going to switch. Right? So, it just takes longer to adapt. I do agree.
I love the long That's why we did four five I have four five different robot deals. I love the long-term trend, but I've been sobered I I've internalized that it's a long journey, right? Not I don't think there would be I could be wrong on this. And that's why I'm interested in standard bots. I mean, those guys made a very compelling or this could be the sweet spot. I'm watching it like a hawk, right?
But where you go from what we have now, which is steady adoption to some kind of takeoff. I mean, Optimus Tesla's that bet. If Optimus takes off, for example, that could be it. But, you know, what you see when you get out on the factory floor is finicky little stuff that you wouldn't think takes time and kind of go you go, "Ooh, that was the issue. I didn't have that in my investment memo." I have one robot company now where the biggest impediment to them getting a very large order is something to deal with when the poly bags aren't flat, the label reader can't read the barcode, so the whole thing goes pear-shaped cuz you have to people smooth them out. And if you need people to smooth them out, you don't need the robot.
I'm like, "Wow, I did not have that in my memo. The whole [snorts] poly the poly bag problem. Who knew?" The poly bag problem. But, you know, but it's So, love the trend and love the deals and I But yeah, I thought Standard Bots was super and I I hope those guys make it. I really liked it. It was a well-designed US I mean, the arms today, going back to sovereignty, uh the big manufacturers is German, the Japanese, and the Chinese.
I think it's a good thing if we can make a hardware arm in the US that's cost-effective and probably will be less not as cheap as the Chinese robot, but probably have way better software. And that's that's a credible bet. Cuz I mean, I know I'm riffing on this now, but someone did a translation the Unitree There's a humanoid company Unitree that's going public in China, and it's doing 500 million. It's a real company. It's profitable. Most of the humanoids are still being used for demonstration purposes, but there is a trend there where you go, "You got to keep an eye on that." Because that could be where I'm like you see that take off and I'm wrong.
So, I'm just, you know, watching that space. There's a blog post I really love um or it's like a little mini essay called reality has a surprising amount of detail. Um and you know, it's it's like ostensibly about like, you know, making a set of stairs, but the whole point is like in the real world, in the physical world, stuff is just really complex. And like you think it's like, "Oh, I'm just going to like nail the stairs up there." But then you kind of decompose all the steps, all the complexity, all the edge cases. Um and and reality just has a surprising amount of detail. It's It's a very complex place.
So, I I think that that that is what makes us so excited about this moment in AI for robotics so because for the first time you can actually have an edge LLM on a robot even though the LLMs have to be much much um smaller than we'd have for um you know, you know, like a frontier um digital LLM because they have to be on the robot itself. Um there's these really really, you know, like you can If you think about talking with things. You can do things. And and like and and they can be very versatile. Like they can learn from very few examples that like, "Oh, I actually need to smooth out this label." Before it goes like it's it's it's easy to to begin teaching robots these things to be dynamic and to be as versatile. Um maybe not as a human for for a little while, but but probably approaching that asymptote um which makes these things generally useful versus historically they've been very useful for like an extremely brittle narrow scope of responsibilities.
Totally. No, I would have but we also put some money into John recently and I I was just wild by the demo. It's like, "Wow, you can Cuz again, I I have bigger robotics companies in the field and I know I I I know they're exactly right. The good news is they can do stuff, you know, um and they can do it at speed and scale. The bad news is it's fairly brittle. In other words, if the process drifts even slightly, there's a little more program.
Well, you the next generation of LL uh of of AI of software, which is LLM based, the bots are way more flexible. Instead of telling it what to do at the individual you know move your hand here it's like put this thing in that thing and they can figure it out and what and the way you see that manifest itself in a demo is you know you you do three of them in a row and then the next one you push it you move it to a different place and the machine stops and it thinks like the Raptors in Jurassic Park and then it goes I see it and it reaches over there and pick and then you're like that's a you know that's when you see that is the brain working and that is the future so robot companies are pretty good to Sunday and the you know in the basement all the robots they they're all folding laundry on beds and it was like you know it was like a ton of these things all like full and and like and and the Sunday employees were purposely messing you know they'd be in the middle of folding jeans and they'd rip the jeans out and like crumple them and throw them and the robot would sit there and be like you know I almost started feeling bad for the robots I'm like let them let them finish the laundry you know like I started to cuz they have these cute faces I was like gosh let them let them finish folding the laundry but they're very patient that's the other beautiful thing about robots they don't get mad they don't skip work they don't do it you know they just they sit there and they just keep folding and and that's going to be In 90 minutes of hanging out with us we've turned him into Jason Lampkin. Yeah yeah yeah. Yeah yeah yeah cuz they don't complain. They don't complain. [laughter] Jason just wants no people.
Yeah yeah yeah. We just we just want robots. Dude I cannot thank you enough it's so great to have you join us you've been a fantastic guest really you've been a star. Thank you good to see you man. You were there I wish I was there celebrating Rory's in person appearance but you know maybe next time. No no no we're going to celebrate we're going to watch We're going to celebrate dude bring the tequila You're so wrong I got to go to a board down on a board meeting in the morning.
Oh so much. tell me about it but then tomorrow we'll watch England play Croatia and pray you win. Dude thank you so much. Take care of that's me. so much for that dude.