Jul 24, 2024 · 50m · news
Jason Lemkin: Crowdstrike, WTF Happens From Here? Wiz Rejects Google’s $23BN Acquisition Offer|E1181 · 20VC with Harry Stebbings
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In this episode of 20VC, host Harry Stebbings and SaaS expert Jason Lemkin analyze major shifts in the tech ecosystem, including Wiz rejecting Google's $23 billion acquisition bid, the business fallout from the CrowdStrike global outage, and the broader liquidity crisis in venture capital.
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 17.4% of the talking time here. How this is scored →
Harry as informed peer 5.7 Guest teaching 5.6 Guest disagreement 2.7 Harry pushing back 4.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:20 Jason calling out VCs hiding behind liquidity excuses
Jason forcefully dismisses market liquidity as an excuse for slowing down venture deployment, insisting LPs should relentlessly ask GPs why they missed Wiz.
Hardest push from Harry ▶ 15:52 Harry refusing Jason's forced deployment argumentHarry directly rejects Jason's premise that late-stage funds are forced to deploy capital, arguing LPs do not pressure well-managed funds and fee streams allow patient deployment.
Biggest teaching moment ▶ 1:13 Jason reframing ARR multiples with forward growthJason corrects Harry's static 46x ARR valuation framing, educating him on why backward ARR multiples fail for companies scaling from zero to $500M in four years.
Harry holds his own ▶ 20:15 Harry countering Jason's IPO threshold with Gurley and GerstnerHarry interrupts Jason to challenge his $500M ARR IPO benchmark, using prominent venture capitalists Bill Gurley and Brad Gerstner as authoritative counter-evidence.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Wiz Rejecting Google's $23B Offer & Valuation Analysis | 5 | 5 | 2 | 1 | Harry introduces the segment with precise figures regarding Wiz's offer and valuation multiple. Jason politely reframes the analysis, explaining why static ARR multiples are deceptive for hyper-growth companies and why forward ARR must be used. | |
| Google's Motivation and the Regulatory Hurdles of Big Tech M&A | 5 | 6 | 3 | 4 | Harry prompts with corporate context like Google's past acquisitions and antitrust pressure. Jason draws on his experience as a former big-tech executive to educate on executive deal 'chips' and M&A distraction risks. | |
| The Boardroom Decision: IPO Scrutiny vs. M&A Risk | 6 | 5 | 2 | 6 | Harry uses a vivid medieval witch trial metaphor to challenge whether going public is genuinely better than facing regulatory M&A scrutiny. Jason details board dynamics and explains his shift toward advising founders to take clean exits. | |
| The Venture Capital Illusion: 'Pretending' and the Momentum Trap | 7 | 6 | 5 | 7 | Jason argues VCs are 'pretending' and forced to deploy due to fund clocks. Harry directly pushes back, arguing funds do not have to deploy capital and explaining how 20VC's media moat alters traditional fund dynamics. | |
| The Modern Path to IPO: ARR Standards and Optimization | 7 | 5 | 3 | 7 | Harry interrupts Jason to challenge his $500M ARR IPO benchmark, citing industry figures Bill Gurley and Brad Gerstner. Jason accepts the pushback and clarifies the interplay between growth rates and ARR scale. | |
| CrowdStrike's Outage Management and Business Impact | 5 | 6 | 2 | 2 | Harry asks about CrowdStrike's response video following their outage. Jason breaks down why core security infrastructure takes 3 to 5 years to replace, while upsells and net retention suffer immediately. | |
| The Bull vs. Bear Case for CrowdStrike's Recovery | 5 | 5 | 2 | 4 | Harry structures a bull vs bear case analysis for CrowdStrike, bringing up legal liabilities and threat vectors. Jason argues that non-breach operational outages earn vendors a one-time pass from customers. | |
| CrowdStrike Valuation Analysis and Christmas-Time Stock Predictions | 7 | 5 | 3 | 6 | Harry asks for specific stock price targets by Christmas. Jason predicts an $83B recovery based on guidance buffers, but Harry counters with a $75B target, revealing his own active trade at $74. | |
| The Nightmare of Outages and Personal Founder Trauma | 5 | 6 | 1 | 2 | Jason recounts personal founder trauma from middle-of-the-night server outages. The conversation transitions to Clio's raise, where Jason highlights the 17-year journey to liquidity vs 10-year fund life limits. | |
| B2B AI Parity and the Sustainability of Harvey AI | 6 | 7 | 4 | 3 | Harry brings up Harvey AI's $100M raise at $1.5B valuation. Jason delivers a detailed thesis declaring 2025 'the year of SaaS AI parity', predicting that feature copying will erode pure AI wrapper advantages. | |
| Quickfire Round: Underperforming VC Funds and Undervalued Klaviyo | 4 | 6 | 3 | 2 | In the quickfire round, Jason makes a contrarian declaration that an entire generation of recent VC funds will end up stuck at 1X returns, and highlights Klaviyo as an underappreciated public company. | |
| Quickfire Round: Snowflake's Mortality and Dream Investments | 6 | 5 | 2 | 7 | Jason critiques Snowflake's mortality after Frank Slootman's exit. Harry playfully corners Jason on why he failed to proactively chase and invest in ServiceTitan and Wiz despite the founders being fans. |
Statements from this episode (39)
Lemkin: VCs are pretending market liquidity has returned to 2021 levels
“In venture, we're all pretending. You know, early-stage folks have never worried about liquidity, and the late-stage guys gotta deploy money. The time's ticking on these funds, so you gotta deploy them. We're praying, we're hoping liquidity comes back. We're i…”
Lemkin: Wiz grew from $0 to $500M ARR in four years
“This is a company that has gone from nothing to five hundred million in four years, ok?”
Lemkin: Modern SaaS companies must be valued on forward revenue multiples
“Look, in the old days of SaaS, we all kind of grew at the same rate, so we used AR multiples, ok? But now you have to use forward AR multiples, forward revenue multiples.”
Lemkin: Wiz will reach $1B ARR within 12 months
“This company will be at a billion in a blink of an eye, so let's, let's just value it at a billion. It's gonna be there in 12 months, 14 months, nine months, it's a billion forward.”
Lemkin: Google's $23B buyout offer for Wiz was not overpriced
“So I don't think, ironically, it's, I don't think it was overpriced. I do think it might have been a good deal for the investors because you avoid so much dilution and risk.”
Lemkin: Canva is directly destroying Adobe Creative Cloud
“Canva is directly destroying creative cloud, ok?”
Lemkin: Figma competed only with an abandoned $30M Adobe product line
“Figma was directly destroying a thirty million dollar product line that Adobe had abandoned, ok, with XD sketch or whatever it's called.”
Lemkin: Wiz acquisition faces greater antitrust hurdles than Adobe-Figma
“If Figma could be blocked, I actually think Wiz is, is more competitive to, there's more antitrust, even though I don't think it should be blocked remotely,”
Lemkin: Startup founders should accept any decent exit offer immediately
“Since 2021. Every founder with a decent exit, I tell them to take it now. A hundred percent. I tell them to take it for this reason.”
Lemkin: Salesforce's revenue growth has decelerated to 7 percent
“It's not that fun to see Salesforce now decelerating to seven percent.”
Lemkin: Wiz could execute a successful IPO within 90 days
“Going IPO for them, I think it, it'll be no big deal. Like, they can go IPO anytime. They can go IPO in 90 days if they're, if their financials are clean and they'll get a good valuation, it'll be fine.”
Lemkin: Venture capital market has faced three years without liquidity
“There's no liquidity in venture today. It's a disaster. It's three years of no liquidity. There's none. It's dried up.”
Lemkin: VC mega-funds derive 40% to 50% of revenue from fees
“Mega funds are all in the business of raising funds every two to three years. And can you stretch it to four? Sure. Right? And these are funds that get 40 to 50% of their revenue from fees”
Stebbings: Content business lets 20VC sustain momentum without dealmaking
“We have a cheat with the content business because actually we're able to sustain momentum without doing deals where our competitors have to do deals to sustain momentum.”
Lemkin: Wiz must IPO within 18 months after rejecting Google bid
“When the CEOs in, in, in, in the letter to the team says, we're going to go public instead, you got to do it in the next 18 months or so.”
Lemkin: OneStream will IPO at $500M revenue growing 34%
“I mean, the new, the next one's one stream, right? They're gonna IPO at five hundred million in revenue, growing 30 some odd percent, 34%.”
Lemkin: $200M ARR startups need 50% to 60% growth to IPO today
“I absolutely think you can IPO in today's world at two hundred million, but you probably have to be growing north of 50 to 60%, and there's just not enough of those Candidates.”
Lemkin: CrowdStrike is growing 33% at nearly $4B revenue
“Amazing, growing 33% at almost four billion in revenue.”
Lemkin: Replacing CrowdStrike infrastructure will take enterprises three to five years
“Because the amount of energy and time it takes to deploy CrowdStrike is so huge that it would take three to five years to churn out for real, ok? You have to test Sentinel one or whatever you're going to do in a small group. You have to do it on stage and you …”
Lemkin: CrowdStrike product upsells will be put on hold for three quarters
“So I think almost upsells are going to have to go on hold for like, you know, three quarters.”
Lemkin: Software customers forgive vendors one major outage every five years
“You gotta let your vendors screw up once every five years.”
Lemkin: July 2024 global outage will not destroy CrowdStrike
“It's, it has, it is a service and we'll give them one pass. I don't think it will bring them down.”
Lemkin: CrowdStrike market cap will rebound to $83B by Christmas 2024
“I'm going to guess it bridges 50% of the gap. So was it a hundred? Today it's at 66. So I'm going to guess it makes back 17%, half of that. So what does that bring us up to 80? 83? I'll go 83.”
Stebbings bought CrowdStrike stock when its market cap was $74B
“I mean, I bought when it was at 74.”
Stebbings: CrowdStrike market cap will only reach $75B by Christmas 2024
“So I would go I'm gonna go for 75. I don't think it'll take such a rebound. I don't think it's gonna take such a rebound, but I think legals and fines are gonna be real, and I think it's gonna be an interesting enough story. It's touched enough consumer lives …”
Lemkin: Public markets shrug off legal fines as non-forward impacts
“The legal and fines, you take a reserve, and the truth is it doesn't really matter because it's not a forward impact. It doesn't really tell you where CrowdStrike's gonna be in five years, so the markets usually shrug it off, even though Again, it's a lot of d…”
Lemkin says product outages were the main reason he sold his startup
“You know, Harry, it was the number one thing, reason I wanted to sell my startup was for these issues.”
Lemkin: Clio reached $200M ARR prior to $900M raise
“And they're at two hundred million in revenue and accelerating, two hundred million ARR. So it's a 10 X ARR deal, two billion-ish pre, right? Two something B. High for today's world, but not, not out of line.”
Lemkin: Traditional 10-year VC fund lives fail to fit liquidity realities
“17 years for liquidity. How long is the nominal fund life? 10 years. It doesn't match up. Doesn't match up. Yeah, you get two one year extensions.”
Lemkin: 70% of Shopify's revenue comes from payments, not SaaS
“I mean, 70% of Spotify, Shopify's revenue is from payments and merchant services, not from SaaS, 70%.”
Lemkin: 2025 will be the year of SaaS AI feature parity
“I think 2025 will be the year of SaaS AI parity. Everything's gonna be parity in 2025. Not total parity, but close to parity, right?”
Lemkin: B2B AI market hype will calm down within a year
“And that's why I think in B to B AI is going to really calm down in a year, right?”
Lemkin: A whole generation of recent VC funds will only return 1X
“This one isn't like epic, but I just think we're sitting on a ton of one X funds in venture. Just so many one X funds. They'll never get out of one X. A whole generation. And listen, I barely saw I, when I was, when I first joined venture, I could see the tail…”
Lemkin: Klaviyo generates more marketing revenue than HubSpot
“In fact, they are bigger in marketing revenue than HubSpot. They're actually bigger.”
Lemkin: Klaviyo is undervalued and should be worth at least $12B
“This is still a top five percent public company, and it's only worth 6.9 billion. These are the kind of stories that whiz obscures. In my mind, should be 12 to thirteen billion dollar company at minimum.”
Lemkin: Databricks is outpacing Snowflake at $2.5B revenue
“It seemed like Snowflake was going to be the next great platform, but it is Databricks. I know it's not completely fungible product, but it's growing even faster at 2.5 billion, right? It's just mortal. Databricks, I think proves Snowflake was mortal.”
Stebbings says Revolut is his top private company investment target
“I would most like to be in Revolut. Of all private companies right now.”