The Exchanges

Q made a joke when we started that each Claude release is clobbering the markets and erasing hundreds of billions of dollars. Each Claude release is going after different categories of SaaS, and so SaaS has been the pinpoint of the volatility. Do you think SaaS in public markets is going to stabilize to a different premium? Do you think it'll always have a premium? Where do you think it lands?

A Yeah, so I think it's, it's a question that has a lot of different kind of variables, so I'll try and unpack at least my view into them. One of the things I try and explain to companies is you have to think about the opportunity cost and who's the buyer, right? The public market will continuously be comparing the value of your equity and the return of your equity versus others in the market, right? And I think if you look at SAS, part of why SAS was so popular amongst investors for a long period of time is that SAS just grew faster than other sectors. So you could kind of compound, you know, a lot of SAS companies were compounding mid twenties to low thirties for a long period of time. There were no other companies in the market that could offer that kind of growth. And so obviously that was really attractive to investors. I think what's happened now is by and large SaaS companies have significantly decelerated, right? So I was on a, uh, Workday earnings call yesterday, which is an interesting example, a founder kind of stepping back in to kind of help lead this company through its next chapter. It's now growing organically revenues about 13%. So I think now investors are saying, well, you're not growing 30% anymore. You're growing 13%. And if I look at your multiple of earnings, right, and I look at gap earnings, which investors are increasingly turning to gap earnings as the …

AI assessment note: “now investors are saying, well, you're not growing 30% anymore. You're growing 13%.”

Q both the private and the public side of things. So today we have Thomas Lafont partner at KOTU. They manage around seventy billion dollars on the private side. They manage around thirty billion. And most recently, I think this is your first interview since leading Anthropix thirty billion dollar round. So let's start there. Did you expect when you invested into Anthropix that every Claude release would break the market?

A Um, it's been amazing to watch the evolution of the, of the company, even from when we first kind of started discussing this, um, fundraise that just got announced to eventually when it did get announced, which usually in, in most of these, um, processes takes about two or two to three months before a company announces, uh, a, the, the fundraising kind of formally. What was interesting about this one is the, the projections and the scale of the business grew materially. In between the fundraising kind of being discussed to eventually kind of being announced. And I think that speaks to just the incredible adoption of clock code in particular, which we can dive into. Um, no, I don't think we predicted that clock code would take off as quickly as it did. I think it's indicative of a very kind of powerful trend that it's underlying, uh, that we can discuss. I'm actually really proud that the inventor of Claude Code. Boris, who's a friend, worked at Code Two for two and a half years, developing software for us. Um, he's been on an incredible trajectory. So, um, you know, it's funny. I was in a board meeting yesterday, and so I'm just off the cycle of maybe having done six or seven board meetings in the past few weeks. And most companies are now reporting back to their boards, the adoption of these tools inside of their, um, organizations. And I think it's, uh, They, they all want to…

AI assessment note: “no, I don't think we predicted that clock code would take off as quickly”

Q onboarding, HR, IT, ER, benefits, and compliance. So your team can grow without borders. It's why more than 37,000 fast growing companies trust deal to move fast. Visit deel.com slash sorcery. That's deel.com slash S O U R C E R Y. So there's around 400,000 estimated software engineers in the Bay Area. Do you think there's going to be more or less of them in the next five years?

A Yeah, I mean, that's kind of the 64 trillion dollar question, right, of, of today. What I can tell you is not a single one of the companies that we're kind of involved with is saying, wow, we're seeing so much more efficiency. We want to cut our engineering staff in half, right? What they are saying is we hope our engineers are significantly more productive so that we can do way more things, so that we can do features that have never been enabled before, right? And so you could think of companies like, um, a cursor in R&D or, uh, Rippling in, in SG&A, right? Payroll. Well, what if they move actually from Selling you software, which is kind of what they do today, to selling you work. Right? Which is kind of different. In one, you're an HR software company, and in the other, you're saying, I'm actually selling you HR. So what does that mean? Well, that means, well, as you know, companies have to hire HR people that have to handle a lot of incoming requests, right, from employees about, okay, why, why is my payroll different, um, this month and last month? You know, why did my, uh, computer benefits not get, Uh, approve this month, or why was I not reimbursed for this, right? And they're just tons of kind of daily actions, right, that are generated. Well, actually, what if I could have the system kind of, ah, handle most of those for you, right? So now I'm actually not selling you…

AI assessment note: “not a single one of the companies that we're kind of involved with is saying”

Q months back, and he was saying, and I'll clip this and it'll go viral, but he said that. 85% of his job could be automated. He could get AI agents to automate that work. How are you and Kotu thinking about experimenting with autonomous agents? If you are, if you have a ton of Mac minis around, I'm not sure. How are you thinking about that within your own organization?

A We do. So we, we brought in someone that, uh, recently from Goldman Sachs, who's, uh, cloud native and is really pushing us everywhere in the organization to kind of adopt, um, you know, coding first kind of approaches. So we're definitely spending a lot of time on that. I do think there's an element, especially to big idea investing, which is something that I spent a lot of my time on and frankly enjoy the most that I do think is creative and ultimately how machines will do that, we'll see. Are they just assisting the creative process or are they replacing the creative process? Um, to me, big idea investing is, uh, both the creative and actually reflective of someone's kind of taste at the end of the day, right? Um, I remember when the iPhone first came out, right? Um, you know, some people liked it, and some people thought, no, it needs a keyboard, or it doesn't support flash, or it doesn't have three G, right? These are all the things that were pitched against the iPhone in 2007, and obviously we kind of know how that kind of turned out. So, um, I see it definitely for myself as It enables me to express myself in much more interesting, coherent ways. I use all of these tools every single day for different purposes, whether it's communicating an idea, whether it's replying to an email, whether it's thinking through a difficult situation, right? If you don't use these tools fo…

AI assessment note: “we brought in someone that, uh, recently from Goldman Sachs, who's, uh, cloud native”

Q Since we are in a room full of LPs and institutions, how do you think, as a pretty famous crossover fund from both sides, value and capital shifting in the private markets in the next five years?

A Look, my, my default has been a public market investor. That's where we started. We started the fund in December of 1999. Um, from when we started to about two and a half years later, the market was down 80% over that time frame. And so I do have to remind some of my colleagues who weren't there, even maybe in OA, that markets can go down kind of that much, right? So my default view has always been that the public market is the best kind of valuation mechanism, and it offers transparency, it offers liquidity, it offers opportunity of access, right? Which in a world where, um, we now have Trump accounts, this was Kind of discussed on the, on the State of the Union yesterday, right, which are essentially accounts that are given to, to children when they're born, and hopefully that can grow over a long period of time. I do think giving access to the broader public, to all of these companies is incredibly important. So I think that's either going to happen one of two ways, right? It's either going to have to happen where companies create and have incentives to go public, or we're going to have to create more methods To democratize access to private companies. So I think it'll probably come from both ends, right? But regardless, if you think about the innovation of these late stage private companies or. You know, one thing we kind of look at is the Mac seven, which has been a signif…

AI assessment note: “create more methods To democratize access to private companies.”

Q There's some quite viral charts about their growth. So when you invested, what were those metrics like?

A I mean, it's one of those companies where you can't even pin, depending on which day you're picking, you're going to kind of have a different metric, right? But they, they publicly released as kind of part of the, um, as part of this announcement, kind of where the revenue was, right? And I think they disclosed like in excess of 13 or fourteen billion or something like that. I mean, it was definitely materially lowered when we started. I think also the fact is like these companies do live in a bit of a, especially these very late stage companies in kind of a quasi public or private environment, right? People do tend to know the revenue scales. Um, Stripe, right, publishes an annual letter, which they just did kind of yesterday. They go on CNBC. They disclose a lot of their metrics, not all the metrics the way a public company does, but they did disclose in Stripe's case as an example, accelerating year over year.

AI assessment note: “it was definitely materially lowered when we started. I think also the fact is”