The Ledger, every show

“If you look at Anthropic, right, publicly available numbers, nine billion of ARR growing 800%.”

“Yes.”

“For the first time ever with this AI wave, people are questioning the terminal value of SaaS, right? These were supposed to be like insurance companies, you know, annuity streams that just have revenue streams and profit pools forever and ever and ever. And fo…”

“We have this test internally, right? Where it used to be, five years ago, we called it the ten billion dollar public company test. Can this be a ten billion dollar plus public company? That bar has changed, right, in this new world because we are tackling much…”

“And the counterintuitive thing is as you go up those bands, the percentage increases. So from a 10 to a hundred billion dollar valuation, I have a better shot at picking a 10 X, not like a better return, a 10 X than I did in the prior band.”

“If you are a venture fund that is staring down the barrel of having to deploy three billion dollars, I think that is hard because again, at the early stage, it is hard to capture disproportionate ownership in the few companies that actually generate all of tha…”

“But in an AI world, if we actually think that we're augmenting labor, if we think that we can address A lot of these really big markets, if you move from human inputs to tokens, Then you're gonna have much bigger outcomes, and the math works.”

“In today's world, if you have a big fund, I don't think that's where you should be focused. I think you should be focused on the absolute mega outcomes, the platform companies that are going to generate that disproportionate return, and you're actually going t…”

“Now we exist in a world where if you have a product that the market likes, it is going to absolutely yank you into that market, right? It's not going to triple at the earliest stages. It is going to scream, right?”

“Your terminal operating margin may actually be higher in this world than the last world. Your gross margin might be lower, but your operating margin, which is ultimately at the end of the day is really what matters, may end up being higher.”

“I think this is a lesson that at least we've taken about ourselves from 2021 is that is not our business. The pre revenue company at a really high valuation with no product is not our business.”

“In the last strategic decision that they made that I think is really Sort of unappreciated by the market is they built for every cloud and they built for every chip platform, and that gives them incredible optionality and a lot of people want them to win.”

“Margin matters, but early, it can be a misleading indicator.”

“Data is a prerequisite. It is not the answer.”

“Oftentimes the most expensive deals can be the best ones in many ways.”

“And so to get growth, Something that's growing more than 30%, to get durability of that growth, to get access to the future, you have to own privates.”

“The framework that we use internally is we think about valuation. Everybody has to think about valuation, but when a company is growing exponentially, 10 X year and year, 50 X year and year, right? The things that we're seeing now, We think about valuation las…”

“You need to believe that someday you can get to five billion of revenue with 30% margin minimum growing really fast. So what does that mean? I better believe there's fifty billion of revenue to go get.”

“And I think that founder is tied to the market, you know, is tied to that market dynamic, and they're equally important, but market size is always first. A great founder in a small market with a wedge that is not easily able to expand, I think will build an in…”

“Ultimately, price always does matter, right? I think some folks will say, ah, price doesn't matter. I think price does matter, but I think it matters least.”

“And I do think you want to think about it last because, again, these generational companies, it's almost never too late for them, right?”

“If you look at the private markets today, take the whole private market ecosystem, 20 companies have generated 80% of the enterprise value. 20 companies, 80% of the enterprise value. Of all the private companies that exist in the world. And four companies, rig…”

“And the answer is, from our view, you can't do this prey and prey at the early stage or the early growth stage. The reason why is you may be in the wrong horse, or you may be in the wrong market, and you may be investing your time wrong. Because there are very…”

“I think we were the only private investor that was Invested in Snowflake and Databricks when they were both private.”

“And so every investment I make, that is the rigor and the framework that I use is, someday, is my public counterpart going to want to own this stock over everything else in their book?”

“And again, I think it's why, even if you're an early stage fund, you, this is a great style of investing and it's the type of company that you want to be in because it's the only type of company that can get access to liquidity, whether it's private or public.”

“We've just overestimated TAM and we've overestimated the ability for companies to launch multiple products and expand into new TAMs. We're usually not getting things wrong on the basis of metrics or the team being good or it wasn't growing fast enough.”

“There's this notion that like the triple, triple, triple, double, double, double is dead and these companies suck and all this stuff. I don't think that's true. There are great companies. You can drive real margin from them. They make incredible businesses.”

“These companies are structurally lower margin than the last generation because you pay the cloud and you pay the LLM.”

“I don't think the king, the kingmaking concept is a real thing. I think companies some companies attract more capital early. Some companies slingshot from behind, right? Having had somewhat less capital.”

“For the companies that are explosively growing at the growth stage and have real product market fit, real product, real traction, I don't think so, right? You look at these companies that raise really rapid rounds in succession at the growth stage that actuall…”

“Sometimes I think when growth funds in particular chase venture companies, right? We've talked about that delineation point. That's where I think it can get quite dangerous. It can make companies complacent. It can make companies spend too much on things that …”

“I think the thing, the gift that Mamoon hasn't, I think from the SaaS era, Mamoon, my view is he was the best Series A investor in the SaaS era, period.”

“I think Founders Fund's strategy of being ultra concentrated in a few companies has just been this incredible strategy over time.”

“And I think Pat Grady's ability to pick Series B's is like pretty unmatched. Pick and win Series Bs. He's very, very good, and I think Sequoia is very good at that.”

“The bull case on Anthropic is really simple and really straightforward. Their focus on coding has been an unbelievable advantage for them because coding is the first use case in AI that's really taken off. That code, that coding focus has led them to have a be…”

“At the same scale, the three hyperscalers on average, when they were nine billion of ARR, were growing 60%.”

“We had an early stage practice at the time that we were really involved with, and we did lose the A.”

“I think the things that you're going to want to look for, the leading indicators that you're going to want to look for are, is the revenue still continuing to grow sequentially? Is net new AR still continuing to climb? What's happening with the retention dynam…”

“For the next three months, six months, nine months, we're not really going to know what's really happening in the world, right? Because things are happening so fast, and all of the earnings that happen are retroactive. Right? So you can only see into the past …”

“At the top, call it 20, rough just as 20 companies in the private markets. 18 of those would probably be public today, a decade ago.”

“And I think it's not revenue growth that you want to chase. It's that.”

“One thing that Jeff Horing from Insight always says is the, you know, the best round is the double down round. And so by getting access to that company at a certain stage, if I think it has a shot at being a hundred billion dollar company, that round may not a…”

“I think the more simplistic way that we think about it, and again, this is not a hard and fast rule and it's more qualitative than anything is if I invest in this round of this price and the company executes, do I want to put more at a higher price? That's the…”

“If you're a small, if a small venture fund, I think it's super possible in today's world. You don't actually have to be in, you don't have to catch the seed of SpaceX. You'd really like to because those are the only, the platform companies generate liquidity. …”

“Snowflake and Databricks. Very low margin early. A lot of people passed on those early rounds because they're, ah, in SaaS, you have to have 80% gross margin.”

“In this world, businesses tend to be more capital intensive, right? They may be actually more durable at scale because of this. Makes it harder for the next entrant to come in. But the reality is they're harder to start. They take more capital. And that has le…”

“I don't think it's impossible, but I do think it is very hard. And I think that's because the type of frameworks that you use, the types of things that you see are very different at different scales.”