Jul 10, 2025 · 1h 12m · news
Daniel Gross and Nat Friedman: Acquired by Meta | Microsoft Layoff 9000 People | OpenAI's Bombshell · 20VC with Harry Stebbings
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, Harry Stebbings, Jason Lemkin Lemkin, and Rory O'Driscoll O'Driscoll dissect the monumental shift of top fund managers to Meta, the crushing economic realities of the AI talent war, and the divergent trajectories of venture capital and private equity.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 14.4% of the talking time here. How this is scored →
Harry as informed peer 3.4 Guest teaching 5.1 Guest disagreement 2.8 Harry pushing back 3.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:03:53 Rory calls Harry's question dumb
Rory directly rejects Harry's demand for a binary economic prediction, calling it a dumb question and explaining that Kalshi market odds represent calibrated probabilistic risk rather than point predictions.
Hardest push from Harry ▶ 55:58 Harry rejects corporate AI retraining programsHarry aggressively pushes back against Canva's employee AI retraining week, arguing that workers lacking personal curiosity about AI should be fired immediately.
Biggest teaching moment ▶ 45:42 Jason explains target date fundsWhen Harry asks what a target date fund is, Jason educates him on retail investment glidepaths, asset allocation shifts over a career, and why illiquid PE assets fit poorly into those vehicles.
Harry holds his own ▶ 40:35 Harry argues for non-AI SaaS positioningHarry demonstrates strong venture thesis expertise by pushing guests on why mid-tier funds should focus on high-certainty triple-triple-double-double SaaS deals rather than competing with top-tier firms on overpriced AI moonshots.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Daniel Gross and Nat Friedman's Move to Meta | 3 | 5 | 2 | 4 | Harry questions LP sentiment around Daniel Gross and Nat Friedman abandoning their fund for Meta, prompting Jason and Rory to break down the mechanics of the fund's 49% LP cash-out offer and career incentives. | |
| SSI, Gary Tan, and Meta's AI Talent Mecca | 3 | 4 | 3 | 5 | Harry pushes back on Daniel Gross leaving SSI investors right after leading a round, arguing operators have fiduciary responsibilities, while Rory and Jason reframe it as alignment with market incentives. | |
| The AI Talent War, Compensation, and Dilution | 4 | 6 | 3 | 3 | Harry connects employee stock compensation to venture return dilution, leading Rory to educate the host on how 409A accounting inflates reported GAAP stock compensation relative to actual share dilution. | |
| CoreWeave's Strategic Stock-Based Acquisitions | 3 | 5 | 4 | 6 | Harry directly challenges Rory's suggestion that data center demand could slow down, expressing disbelief while Rory explains balance sheet de-risking and fixed cost management. | |
| Thoma Bravo's Acquisition of Olo and Vertical SaaS PE | 3 | 4 | 1 | 2 | Harry prompts an analysis of Thoma Bravo's Olo acquisition with specific metrics, and the guests detail vertical SaaS private equity roll-up strategies and 6x ARR valuation ceilings. | |
| VC Deals at an 8-Year Low vs. The AI Gold Rush | 5 | 5 | 3 | 5 | Harry asserts an expert thesis that mid-tier VCs should double down on proven SaaS metrics over AI moonshots, prompting Rory to reframe the follow-on funding risks of non-AI deals in the current market. | |
| Vanguard's Private Equity Expansion and Retail PE | 2 | 7 | 2 | 1 | Harry asks what a target date fund is, prompting Jason and Rory to walk him through retail glidepaths, bond-to-equity ratios, and why illiquid private equity assets create structural challenges in those products. | |
| Stanford Layoffs, University Endowments, and the QSBS Tax Break | 2 | 6 | 1 | 1 | Harry listens as Jason explains the intricacies of the US QSBS tax exemption, asset thresholds, and how investors stack multiple trusts to shield tens of millions in capital gains. | |
| Microsoft Sales Layoffs and Canva's AI Retraining Week | 5 | 3 | 4 | 7 | Harry strongly refuses the framing of Canva's AI discovery retraining week, drawing on his board experience to argue that uncurious employees should simply be fired rather than retrained. | |
| Kalshi Quick-Fire SPECULATIVE Market | 4 | 6 | 5 | 4 | Rory calls Harry's question about binary recession predictions dumb, explaining how market odds reflect probabilistic risk rather than point forecasts, though later admits Jason raised a valid structural point. |
Statements from this episode (31)
Lemkin: Talent recruitment will be B2B AI's biggest 2026 issue
“It will be the biggest issue of twenty-twenty-six, I think, in B to B AI is just the inability to recruit talent.”
Lemkin: Current AI tech boom will not implode within 12 months
“This is like, this isn't like, this is like 1999, except it's not going to implode on us in, in 12 months.”
O'Driscoll: Meta is acquiring 49% of Gross and Friedman's NFDG fund
“I believe the terms are that overall, And this is matter will buy 49% of the fund, but each individual LP can put in to sell as much as little as they like, and then it just aggregates.”
Lemkin: VC's only true value is funding otherwise undiscovered talent
“The only value I think you can add in venture in the world really is if you discover talent that would otherwise not get funded.”
Lemkin: Initialized Capital's Fund II will achieve a 10x return
“Their fund two is going to be a 10 X fund, I think with flock safety rippling and others.”
Lemkin: Slowing unicorns face death spiral due to talent drain
“That's why so many struggling unicorns are in an existential death spiral because they can't attract anyone great. Not a single great person is going to join an ex, you know, unless the founders are great.”
Lemkin: Hiring a VP of AI is a signal to sell shares
“If a startup says I want to hire a VP of AI, I'd like to sell all my shares on any secondary market that exists. If you think your answer is to go hire a VP of AI that wears a tie and is studying things, like, just shut the startup down.”
Stebbings: Heavy AI equity dilution will damage venture returns
“That's partly why this wave I think will be highly damaging to venture returns because the employee stock based comp dilution is going to be so significant and so much more significant than in prior generations of venture.”
Lemkin: OpenAI's stock compensation reached $4.4B, exceeding revenue
“Last year, according to the information open AI had 4.4 billion in stock compensation. That was 119% of its gap revenue.”
Lemkin: OpenAI's stock compensation will remain above 100% of revenue this year
“Now that's a lot, but it projected it would fall to 45% this year. It's not going to happen. Now it's going to still be in the triple digits.”
O'Driscoll: Data center demand may slow within four years
“I would put that bet at least on the table as being plausible at some point in time in the next three or four years that people find they're ahead of their investment schedules and just want to slow down.”
Lemkin: Unprofitable high-multiple public companies must aggressively buy assets with stock
“If you have a public company trading at a crazy high, high multiple, right? 20 X revenues that has existential losses. You got to use your stock as your currency ASAP. You gotta buy everything you can that can address the bottom line or other challenges you ha…”
Lemkin: Circle generated $156 million in net income last year
“Circle had net income of a hundred and fifty six million last year.”
Stebbings: Thoma Bravo bought Olo for $2B at $320M ARR
“Three hundred and twenty million of ARR Gap profitable, business that is decent, and it's bought for two billion dollars by Toma Bravo.”
O'Driscoll: Olo went public at $25 and was bought for $10
“I think it went for 10 bucks a share. I think the damn thing went public for 25.”
O'Driscoll: Private equity buyouts won't save 500 to 700 unicorns
“It's not going to, you know, it's a start, but it's not going to save 500 to 700 unicorns single handedly, right?”
Lemkin: Only 25% of Shopify's revenue is enterprise
“Even today, Shopify is very enterprise. Only 25% of their revenue is, is an enterprise.”
O'Driscoll: VCs are repeating 2021 SaaS mistakes by over-extrapolating AI growth
“The industry as a whole is probably making the same mistake with AI deals that it made in 2021 with a range of other SaaS fields, which is the extrapolation of the current growth rate to the sky.”
O'Driscoll: Retail PE expansion will add roughly 20% more capital
“This is a category. This is a trend that's going to happen. You know, I don't think it's going to be the same wall of money as, you know, sovereigns or pension funds. It's just another source of capital, another pick a number, 20% more.”
O'Driscoll: Venture capital cannot fit into liquid target-date retail funds
“One thing we know about venture is you can't target your return date, right? If you could, it would be easier. So it's a hard asset to fit into a liquid Individual portfolio, and I think they'll try. I think it'll be hard.”
Lemkin: Retail investors should not have exposure to private assets
“To Terry's point, if Vanguard has 10 trillion, putting 10% of that into venture would move the needle, but I just don't think ordinary investors should be doing this stuff. I don't know. There's just I just, I, it's just part of greed. Too much greed.”
O'Driscoll: University endowments will reduce venture capital investments
“If you're asking the impact on venture investing as a venture, as a source of capital, that's an easy question to answer. They're obviously going to be a lot less active.”
Lemkin: Stacking trusts shields up to $50M per exit from federal taxes
“And frankly, you can stack it with trusts, like for me, it's probably 40 to fifty million per, because I have five trusts on this, so that means for each exit I get, fifty million has no taxes.”
Lemkin: QSBS tax exemption is key motivator for early-stage investing
“For me, this is my quiet motivator to do early stage investing. At least I can avoid, you know, fifteen million of taxes per deal.”
Lemkin: AI will replace 30% to 40% of short-cycle sales reps
“My rough sense is it's 30 to 40% of, like, one to two call sales reps are gonna be replaced by AI. It won't be the same as with support, but it'll approach it. It'll be relatively small in the enterprise, ok?”
Lemkin: Corporate employee re-skilling programs do not work
“I think re-skilling doesn't work, and I think Canva's basically saying, shit or get off the can, guys.”
Stebbings: Public companies should fire employees who refuse to embrace AI
“I'm on the board of a public company and I got asked the other day, well, Harry, what do we do with employees who are not embracing it because they are fearful of it and don't want it? And I said, you fire them.”
O'Driscoll: Non-AI tech workers will be phased out within four years
“Two, three, four years from now, you know, you, you're not going to have people who say I'm too busy to use AI. They're going to be long since God, right? You're going to have people who've been automated away, and then you're going to have people who be, who …”
Lemkin: Shaun Maguire will leave Sequoia Capital in 2025
“I'll take the bet that he leaves this year.”