20VC: Meta's Muse Hits No. 1. ChatGPT Finally Has a Rival | Menlo Sounds the AI Bubble Alarm | Factory Triples Its Valuation to $5 Billion | Keith Rabois vs Airwallex: Who is Right? | Crusoe's $3.9 Billion Round. Is the Data Centre Trade Overheating?

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The episode explores the intensifying competition in the AI sector, specifically focusing on Meta's Muse as a potential ChatGPT rival and the

Key takeaways

• Anthropic delayed its IPO to November to ensure a cleaner quarterly narrative for investors.
• OpenAI's projected $278 billion net burn by 2030 highlights the extreme capital intensity of frontier model development.

Main topics

• Anthropic IPO delay
• OpenAI burn rate and CapEx

Notable quotes

Coding is the mother load. It's everything.

Conclusion

The AI landscape is moving from general-purpose model hype to speciali

Transcript preview

Speaker 3 (0:00) It's the first real ChatGPT competitor. Anthropic never really cared about Claude until recently. Amuses many things. It's one of the best pieces of software I've used ever. Speaker 2 (0:10) But it's also a Trojan horse to fight ChatGPT because the LM's pretty good. They've Speaker 3 (0:14) trained on all of our data. Every YouTube, every piece of open source, every piece of Claude's source. Of course they're going to train on Speaker 1 (0:20) your data. Give me a break. There is a zero probability AI will destroy all of humanity. I love the quiet compounders. There's just no market for them anymore. Coding is the mother load. It's everything. This Speaker 2 (0:30) is 20VC with me, Harry Stabbings, and it's the show that we all f***. freaking wait for let's be honest. Jason Lemkin, Rory O'Driscoll the biggest news in tech. What is going down this week? Anthropic baby. They pushed the IPO a la poubelle. We have to wait longer. Maybe it's November. Then we have Meta. Alex Wang is delivering the goods. Muse holds number one spot on the app store. They are crushing and handing it to Instinct. Maybe the AI assistant race really is on. Then we have ChatGPT inventor shipping Jev. One of the most popular tools today becoming Vercel's fastest ever launch. Then we have Lemkin's deep dive with the IC that is Jason Lemkin. Do we put money into Legora at 11 billion? Do we do Crusoe at a 30 billion dollar price? And then do we do Factory at a 5 billion dollar price? Finally, Airwallex versus Keith Raboy. This show goes on and why Sidney Sweeney should come out as the ambassador for Airwallex. But before we dive into the show today, you have the idea, but with most AI tools, you hit a wall. The setup, the config, the gap between what you pictured and what you actually ship. Well, Base44 is where that wall disappears. You describe it? Yeah, Base44 builds it. apps, websites, AI agents, real working products, built in minutes using nothing but plain language. 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As AI agents become more common in customer experience, teams often end up juggling multiple siloed tools for every job. Well, Finn was built to change that. It's a single unified agent that works across your entire customer experience from service to sales to success. and beyond. Finn is the agent making perfect customer experiences possible for thousands of customers. It's powered by custom models, trained on years of real customer interactions, so it understands the nuance and complexity of customer service better than any other agent. That means faster resolutions, more consistent support, and just better experiences for every customer. It's also designed to be fully self-manageable, so you can easily improve and adapt it as your business evolves. No third parties required. Leading customers Speaker 2 (4:33) You have now arrived at your destination. Boys, another week. And I wanted to start with the news that Anthropic pushes its $2 trillion IPO from October to November. Some people are suggesting that it's the first signs of a cracking in the market. It's following the pacing the frontier that we discussed last week. To what extent do you agree with that? Or to what extent do you think it really is just them wanting to have a great Q3 prospectus and needing more time for those numbers to show through? I Speaker 1 (5:03) think that's the answer. I think... the whole crack in the market thing. Let's leave that to one side for now. We'll talk about it later. Ditto the pacing stuff, which clearly has also been shown to be not really believed, even by the people who said it. It really boils down to what you said. They had an amazing Q2. They finally... became bigger than OpenAI. And remember, we talked about this. OpenAI then responded furiously in July, started tweeting all that, my Q3 numbers are amazing story, and really pushing back. And some of the data supports that. So my guess is the banker said, hey, if you want a really clean story, it would be great to incorporate a quarter that reflects this noise. Instead of going out in October, where you won't be able to share your October numbers, it's kind of that weird thing. go out in November where it's clean, you print your October numbers, you drop them in, and you go. So from a programming kind of timing perspective, it just all made sense. It's a cleaner deal. Whether it turns out to be a wise decision or not, we can come back to in a second. But it's always weird to go out after you have your numbers, but before you can share the numbers. So after the end of your quarter, but before you've kind of finalized and audited them, especially for what looks like quite a pivotal quarter. So it totally made sense. If I'm a banker, I'm thinking if we do this in October, it's going to be a lot of explaining. If we do this in November, the numbers will talk. Speaker 3 (6:24) Having said that, that sounds all right to me, right? But it's said to me, maybe there's just a hint of worry that getting 30x or 20x oversubscribed wherever they want, you know, at the most massive IPO of our lifetimes, maybe there's just a hint of stress on Speaker 1 (6:37) the pre-conversations, right? I agree. And that's why I made a comment earlier about is it a good decision or not? Like if the world goes to hell in a handbasket in November, you'll look back and go, damn, we should have gone when we had the chance. Because you're right, a CFO who said, we're just doing it. I don't care about your messy story. We're going to tell a good story. If the price ends up between 1.5 instead of 2 because it's a messy story, I don't care. I'm willing to live with that. And that's the approach you take if you felt it was hell or high water, I got to get this money. Clearly, the fact that they didn't take that approach means they decided it's not hell or high water. They're confident. Yeah, they're willing to take another month of timing risk, probably for some significant valuation pop, which is what you do when you think you have lots of time and you're in a good commanding position. I mean, if I was on that board, it's 90 % certain that this is a good decision. And a clean story in Q4 is better than a messy story in October. And there's always that 10 % chance the world goes crazy and you look back and you go, damn, should have taken the 100 billion. I Speaker 2 (7:38) was walking with a friend of mine the other day and he said, Harry, and very successful multi-billionaire investor, he said, Harry, how do these frontier model providers go public when no one is willing to provide liability insurance? You have swarms of rogue agents doing whatever you want. How on earth do they go Speaker 1 (7:57) public? Who's liable? Bullshit comment, and I'll tell you why. Once you've said publicly that there's a 10 % risk that your thing can blow up the world, sweating product liabilities in the noise, right? There's Speaker 2 (8:09) a Speaker 1 (8:09) $2 trillion market cap company. It can self-insure. They don't need reinsurance from Munich Re with a market cap of $200 billion to reinsure their $2 trillion market cap. I don't think you need product liability insurance to get an S1 done. Now, separate comment. The fact that no one will insure them is a data point about the dangers of... product, but that's long since been internalized. To be very fair to the anthropic management, anyone who buys that stock and doesn't know that senior management think it's the most dangerous thing since the atomic bomb, rightly or wrongly, by the way, hasn't been reading their tweets. It's a pretty well... In the list of risks disclosed, I'm really looking forward to reading the S1 risks, by the way, but in the list of risks disclosed... Product dangers have been pretty thoroughly discussed for a decade here. So I don't buy that at all. There's a hundred reasons why you can worry about valuation and traction and all that, but product liability insurance isn't Speaker 3 (9:01) a Speaker 1 (9:01) noise. Yeah, they're just going to have a big litigation legal Speaker 3 (9:04) team. It's just they're going to fight this stuff for infinity. Just like tech leaders have always had to fight IP trolls with large teams, they're going to fight liability suits. They're going to have 200 folks in house and all the top law firms fighting this, dragging it out, saying they're not responsible, trying to get legislation passed. But you don't stop the IPO. I can't remember an IPO that this was as so explicitly dangerous to Rory's point and Harry's point. I mean, it is Speaker 1 (9:27) novel, but it's game on, man. I agree. The most important part of securities laws, security laws, is not that you have sell stock that has no risk. It's that you sell stock where you disclose the risk. And provided somewhere in the S-1 they say, At least half of our crazy employee base thinks this thing is going to blow up the world. I don't, for what it's worth, says Dario, but my people think that. Just letting you people know they're out there in S1 land. Provided he discloses that, he's covered. And obviously, state the obvious, he's not covered. If, in fact, it does end humanity, he'll die too. But let's just ignore that for now. By the way, I want to call out Jensen for his big-ass call. I love it. His probability of doom is zero. Finally, an unequivocal statement from a no bullshit investor. There is a zero tech leader. There is a zero probability AI will destroy all of humanity. I love it. That's because his LLMs haven't caught up Speaker 3 (10:19) yet. His open source LLMs haven't caught up yet. That's why. That's why he can Speaker 2 (10:23) say Speaker 3 (10:23) not until 2030 because he knows Speaker 2 (10:25) he needs until then to catch up. Before we move to Meta and Muse, they're open AI to burn $278 billion by 2030, out of cash by 2028. Is this just more noise? And of course, that's to be expected. There's rumors of another round at a $1.5 trillion. I bet it's more. It doesn't have a history of the burn coming in less than planned. They may need 400. We've all had a portfolio Speaker 3 (10:52) company or like that. Top line, great. Love the team. But Byrne, no matter what they say, always comes in 30 to 50 percent higher than Speaker 1 (11:00) the model. Doesn't matter who we put in at CFO. Jason is broadly right. I mean, look, big picture on the forecast. There's actually three numbers that matter, not two. They're forecasting growing from 35 in ARR end of this year to 350, I think, in three or four years. 10x growth. We're pointing out, by the way, that last year, Anthropic grew 10x in one year. This is a 10x forecast over three or four years. So almost modest. Second thing is the burn. You're right. They're forecasting a burn, a growth, a net burn of $278 billion. And that's like money out their door. They have $122 billion of cash on hand. So they got time to raise the extra capital. The amazing number is the other one, which is the capex required. to do all this, not all of which is on their balance sheet. A lot of it's on other people's balance sheet is around 700 billion. So it's just a reminder that this is, unlike software, this is an extraordinary capital intensive business. And to kind of bring it back to what you said, Harry, if all that burn, all 700 billion of it had to appear on the balance sheet. it would be even worse than that. And the only reason they're able to do it, only burning $278 billion, is because other companies like Oracle and like NVIDIA with kind of Rev support and backstop insurance are able to say, we'll do the CapEx and lease it to you. So this is an extraordinarily capital-intensive company. It is going to consume, directly or indirectly, $700 billion worth of CapEx to get there, to get to $350 billion in revenue. Intelligence is not cheap. I Speaker 2 (12:33) think that was the most efficient covering we've done of OpenAI and Anthropiq. Yeah, we can move on. So we're going to move to a story of the week, which is going to be a new feature of the show. Jason's IC has been a massive popular segment, and we're going to add a story of the week, which for me is Meta's Muse taking number one spot for days, stock ripping, Alex Y and team absolutely crushing with this launch. Thoughts? Bad for OpenAI. That's a Speaker 3 (13:00) good point. It's the first real chat GPT competitor. Anthropic never really cared about Claude until recently. Amuses many things. It's one of the best pieces of software I've ever, I've used ever, but it's also a Trojan horse to fight chat GPT because the LM's pretty good. Every time you're doing an agent, you're also asking questions. You're not just telling it to get your movies. You're saying, hey, what is plane? How is that latest superhero movie? How was the latest 20 VC? It has opinions. It's a darn good. normal consumer grade LLM, right? I don't think anyone's writing a wet lab biotech software on Muse, but at a lay level, if it's free, it has agents that are truly autonomous, which ChatGPT doesn't, and it can do all the other questions you have. And it writes you cute letters when it makes mistakes. If it's free, why would an ordinary person pay? And the tokens are vastly more than you get from ChatGPT. I just think in addition to everything else, it's a ChatGPT Trojan horse because it does everything it can do and it has autonomous agents. It doesn't have to just be agents. It's doing all of it. So it's pretty cool. Could Speaker 1 (14:01) not agree more. I think it's excellent. It's funny. I think, as I said, two weeks ago, we were saying they got to ship this. And literally between our conversation and release, they shipped it. You know, we've been skeptical and... a little harsh about some of the, you know, meta slash Facebook investments in AI, and it'll determine enterprise model. This is the exact opposite. This is spot on, plays into their distribution leverage. It's intuitively kind of something that you would take. I mean, to the extent that you do trust Facebook with everything else already, longer discussion. At this point, if you're deep in Insta or Facebook, you're in already, you don't care. And it's a good product. Jason, you're exactly right. It's a good UI. It works. It gives me recommendations. And they just have the distribution. So I agree. I thought it was a wow moment. I thought it was a real win. You know, I'm not sure about the economics and if it's worth 100. But it's worth pointing out. It's worth pointing out what it meant for Meta. They're up 7 % or 8%. They made $100 billion in market cap this week because of that product. And that just shows when you, I mean, it's something I have to remind myself, what's possible. When you're dealing with these huge end markets, you can see the value of a play in that space. That's the argument why OpenAI might look at that and bring it back to venture. They made $100 billion. Should we buy Instinct? Do we have to do something in this space like now? And Speaker 3 (15:22) it's up 34 % this month. Some people say it's up more because people in the beta tests were buying, right? Speaker 1 (15:28) That's interesting. I saw that, yes, that the beta testers were buying, which I just love. Because yeah, for the longest time, I was like, it's a great business that's spending a lot of money in a bottomless pit of enterprise AI. Now it's a great business that could have a next act in AI. That's a big change. No, that's worth the rewriting and give them huge credit. So I think it was a big week for Speaker 3 (15:47) Meta, to state the obvious. The thing is, the reason I say it's Trish Norris, it built me an entire CRM. This isn't just reservations. And it's very good. Now, it's very limited two weeks in. It does everything. It built me an entire CRM for every SaaS response. It tracks every email about them, every item in real time. It updates it. And so it is sort of a CRM of one. Now, it's limited because it can't really collaborate. You couldn't use it for a Salesforce, but it's... Imagine yourself, it is some of the first composable software that I've ever actually seen work. This has been a myth since the show started, right? Now I really said, I need a CRM for myself. I need you to track 150 sponsors daily in real time using AI. And it just built it for what it is. It's very good. And it costs zero. You need all the pieces. You need database. You need LLM. You need intelligence. You need access to email. Speaker 1 (16:37) You need all of this for that to work. You're obviously not the typical user. And I don't think their economics are structured on everyone building their own CRM or it's going to eat compute. But yes, you can, through that interface, you have a sophisticated LLM at the back end. You have your own little sandbox. They have a lot more standalone compute and sandbox for you than I think Instinct does. So yeah, that makes sense. Speaker 2 (17:00) Okay, for those that don't know or haven't used it, a lot of people use it to buy things from different providers. Amazon has, in response, blocked it. Shopify has decided to partner with it. How do we think about those two decisions from Amazon and Shopify? And who do we ultimately think is right? I Speaker 1 (17:18) think both could be right for them. For Amazon's perspective, because what they've discovered in other kind of agentic type commerce is... Two things happen when you use this agenda commerce. One, you don't get any revenue from your ad business. And Amazon's ad business is now larger than their e-commerce profits. So in other words, it is the entirety of the... profit stream for e-commerce, as distinct from the AWS business. And then the second thing which I didn't know is Walmart did something where the basket size gets reduced because you don't get the chance to shop. When you go on Amazon directly, they're like, people also bought. Then you have, oh, yeah, I need to order that. Whereas if I do this, I just order the thing. So from Amazon's perspective, because they're such a big... player. They're like, if I let these people do it, then I don't get my ad revenue. I get a smaller basket. And then this is the next sentence's key. And if I block them, they'll probably come to me anyway, because I'm Amazon. So I have leverage. And this is kind of tech behemoths bumping into each other. Amazon is now saying, screw your Muse meta. We're going to have to talk about this before I roll over. And at some point, there probably will be a more... aligned exchange of value. Shopify, on the other hand, represents lots of little tail merchants. They are very glad of the extra business. They probably don't see that much compression in order value because if you go directly, if you're buying some obscure thing on a mid-tier Shopify merchant, you go buy the thing directly or you buy it via Amazon, no matter what, Shopify is broadly happy. They don't have a big ad business. So from Shopify's perspective, it should be have at it. What Shopify likes is they have the common payment app. So they like to have that go through that. So in each case, capitalism works. These executives are very logical. They're like, it's great that you have this new source of demand. What matters to me? In Amazon's case, I think I have a lot of leverage. In Shopify's case, provided you let me charge for my payments rail, I'm good with this access. So it all made sense. It's the early days. There will be much negotiation. But it's interesting. I mean, the bigger lesson here is, you know, there was a whole bunch of Google. OpenAI blathering on six months ago about various different agent payment mechanisms. And it was all your smart people getting in a room and thinking things through. And the truth is, in tech, none of that shit ever matters. What really matters is someone aggregates consumer demand, like Instinct and Meta have done. They start pounding on the API. And then now everyone has to focus. I'm willing to bet someone at Resi even as we speak, and OpenTable, is formulating their agent API policy. I'm willing to bet at Amazon they're talking to Meta this week. Demand creates urgency to sort all this shit out. Speaker 3 (20:02) They're all going to lose. I think it's the last stand of the unnecessary system of record. Rezzy's going to lose. Amazon is the least losey in the short term because they're at the edge of a monopolist for what they sell as a merchant. But the agents will bypass them ultimately. You're going to have to decide. The agents have very clear positions. And you're right. Rory, this benefits Shopify. Of course, Shopify leans into this, right? Of course, Stripe and PayPal lean into this. It benefits them, right? There's no question. And Amazon losing ads, losing upsell, losing shopping cart sites, all the negative. But to the extent an agent can route around Amazon, to the extent you can, the agents not only will, they will gleefully do so. They will gleefully do so. What would you, would you like me to call the restaurant directly, Jason? Oh, I found a backend API where OpenTable still works, even though they're exclusive on Resi. Oh, I found another way to do this on DoorDash that's left open. The agents are wonderful at finding broke APIs that have other surfaces that shouldn't be exposed. This is a, it may be their only choice, but I believe all the systems of record, places of record, they're just battening down the hatches and they're fighting the agents. And it's net, net, it's not a positive. for any of them. It's not a positive for it. This is not a positive for Amazon. I Speaker 1 (21:17) hear you. The agent, as Jason points out, is tireless. The agent does have the ability to call, to hit all 17 websites. It's only compute. They don't care. So you're right. A lot of these digital only aggregation businesses, I don't think they'll fall as brutally as you say, Jason, but there definitely will be some end run pressure to go around. the kind of demand systems like a Rezzy or something like that. I'm not sure it's as fatal as you think. And then I feel the need-