SPEAKER_00: I think this is like a moment in time. This shows to me two things, actually three. Number one, Jeremy Allaire is an incredible entrepreneur. He builds real businesses. I've known him through three different businesses, Bright, Pove, et cetera. Number two, it's about crypto regulation. So David Sachs, the czar of crypto and SEC and this administration want to make clear rules. Under Gary Gensler, it was our way or the highway, unclear, I think people were unlikely to go public because they were a little bit nervous. What if it gets unwound? And so in fact, Circle was going to go out via SPAC two years ago, three years ago, they chose not to, I think because of the regulatory environment. So that's number two, is the crypto regulatory environment. Number three is public markets.

SPEAKER_02: There's not enough opportunity for the dollar.

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SPEAKER_00: Hey, everybody. Welcome back to This Week in Startups. I'm your host, Jason Kellacanis. With me again, Alex Wilhelm. We got a huge docket. Yes, sir.

SPEAKER_05: For the press and everybody wanting to aggregate my opinion on recent events on Twitter with some friends of mine and the president. And I am going to demure Alex from commenting because all that's going to do is get aggregated. A friend of says X, Y, and Z. Yeah. My opinion doesn't matter.

SPEAKER_07: This falls under the umbrella though, Jason,

SPEAKER_10: if you're kind of 72-hour trumpet we've talked about on the show a number of times. So wait a little bit and see what happens. I'll just, I said this before we started, but I'll just say this. It was once again a very interesting and fun day on Twitter and I have not had that much fun on social media in some time. So I do appreciate everyone providing the popcorn for us. But Jason, we have a lot to get to in the startup realm and I thought we'd start with a couple of updates from Wednesday's show. Some big things have happened and I just want to make sure we kind of close the loop on a couple of stories. Let's do it. First up, Circle, the American stable coin company, previously a startup, tried to go public via SPAC back in the day, went public this week and I got to say, I am blown away by the results. For folks who don't recall, it was initially looking at a $24 to $26 per share range, Jason. That got bumped up to $27, $28, went out at $31 and then it opened at $69, closed yesterday at $83 per share and then today it closed at $107.70. And what I'm blown away by, Jason, is just the scale of the growth in value here. I mean, I've never seen an IPO of this scale go up so quickly, so much. Like, it's mind-blowing to me. Bullish for IPOs, bullish for stable coins, bullish for crypto. Seems like a big win, but I wanted to ask you, if you were an investor in this company and it listed at $31, how peeved would you be that it didn't price higher?

SPEAKER_00: This is a classic issue. You know, when you do an IPO, you're offering the public to buy shares in the company. The public bought shares in the company at $31 a share and then the market price for the shares is now $100 or apparently $107. So this means, and it was 25x oversubscribed, what this means is they left $70 per share on the table. So if they raised $1 billion, they could have raised roughly three times that, four times that almost, if they had priced at $100 a share. Now, it's hard to know that that was going to happen, but with 25x the demand for the shares, you did know that this was going to really ramp up and this is where having an auction for shares or a direct listing of a small number of shares without raising money is a better option. So what's a direct listing? You put the shares up, but you're not selling any shares at that time. You're just saying, hey, the shares can trade. Then you make an offering, right, Alex? Yeah. And so Spotify, when they went public, they just went public. They started trading the shares and then if they wanted to raise money, they would do it later when they got the market clearing price. If Circle had done that, they probably could have issued their shares at $50 to $100 a share later this week. So they did leave money on the table, but I think this is like a moment in time. This shows to me two things, actually three. Number one, Jeremy Allaire is an incredible entrepreneur. He builds real businesses. I've known him through three different businesses, Bright, Cove, et cetera. And he's just been one of these incredible entrepreneurs with a long track record. So number one, Jeremy Allaire is what this is about. Number two, it's about crypto regulation. So David Sachs, the czar of crypto and SEC and this administration want to make clear rules. Under Gary Gensler, it was our way or the highway, unclear. I think people were unlikely to go public because they were a little bit nervous. What if it gets unwound? And so in fact, Circle was going to go out via SPAC two years ago, three years ago. They chose not to, I think because of the regulatory environment. So that's number two is the crypto regulatory environment. Number three is public markets.

SPEAKER_02: You know, there's not enough opportunity for the dollar. So everybody wants to own the mag seven.

SPEAKER_05: Everybody wants to own, you know, these great companies, you know, that are right behind the mag seven, Coinbase, Robinhood, Uber, DoorDash,

SPEAKER_00: you know, that Airbnb, that whole cohort, let's call it the class of 2010. Sure. And yeah, pent up market demand for, you know, these products. And so we had CoreWeave and CoreWeave has done pretty well post IPO. I believe that their stock has run up as well.

SPEAKER_07: And- eToro as well has done well post IPO price.

SPEAKER_10: So, I mean, the way that I framed this was it's three for three for technology IPOs this year in the US. And they seem to be doing increasingly well, which is very, very bullish. But for the, for the nerds out there, Jason, who are really into crypto, I came up with a new useless metric, which is what percentage of USDC circulating stable coins is, uh, circled now worth. And it turns out they have about 61 billion in circulating USDC stable coins. And their market cap is now about 20 billion,

SPEAKER_26: which means that they're valued at about 0.3 stable coin AUM as a ratio. And that seems a little high.

SPEAKER_00: Yeah, that is actually a very interesting metric because what you're saying is how they, they don't own those, that value, right? The, the value of the stable coins is money that was given to them that they have put on chain that they own treasuries for. But by doing a percentage, the market cap is, hey, how much could we value? What's the value of those stable coins of those deposits essentially? Sure. So the deposits are making four or 5% a year. So that you're giving them credit for six years worth of, you know, revenue coming in, but they split it with some of the markets where they're at. So maybe it's really like net two or three points. So you're giving them, in that case, if it was net two, you're giving them like 10 years or 20 years of revenue credit. Oh yeah, that does seem extremely high. Obviously it's overvalued right now. Like Palantir is all overvalued. You do have these moments. That doesn't mean I would short the stock. It just means this would not be the entry price where I would buy in if I was making a trip.

SPEAKER_32: Yeah.

SPEAKER_00: And, you know, these things happen. Things spike up in value when there's scarcity and there is scarcity. Core Weave is probably another one of those where I don't know what their price to sales ratio is right now or their earnings. But, you know, price to sales is a pretty good way to look at these businesses. And you really do need to look at these crypto businesses with the fresh metrics and fresh eyes. The problem with stable coins or the thing to be aware of is they are dependent on the return rate of treasuries, of bonds, of whatever devices they're putting that money in, very predictable 4% or 5%.

SPEAKER_18: What if it goes down to 1% again? What if it goes down to 2%? Yeah.

SPEAKER_08: Or zero. I mean, we were ZERP for a long time. It's interesting to me, and this is just inside baseball,

SPEAKER_10: but currently Jerome Powell over at the Fed by not cutting rates is really throwing a huge bone over to Jeremy Allaire and Circle. And by the way, if you want more from Jeremy Allaire, we had him on Twist episode 2004, Jason. That was September 6th, 2024. Really fun chat with them in a kind of pre-IPO context if you want to go back a little bit. Well, I think you're dead on though about crypto regulations and regulatory kind of certainty being key here because we also saw today this afternoon that Gemini announced that they have filed privately to go public. If you don't know Gemini, it's kind of like Coinbase, kind of like Kraken. It's a consumer crypto exchange. Does a lot of business. Probably best known, Jason, for having the Winklevoss twins behind it. They're best known for their early Facebook era, but they've really had a crypto second act, if you will. Now, we don't have any numbers here because this is a confidential filing, but they made noise about it, which gives a lot more credence to them actually going out because in March we heard they were preparing a filing privately, but it wasn't really from the company. It was more like, you know, the Journal and Bloomberg and such. But now they're really pushing forward and I'm not shocked to see this drop

SPEAKER_08: right after we saw Circle do so well. Clearly, they were watching this and hoping that it was going to go well to push the button.

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SPEAKER_26: But we could see another pretty big IPO here in the States. So I'm just hyped. Yeah. Feels great.

SPEAKER_49: Yeah, it's great. You know, I think these marketplaces have shown that there is a market for people who want to trade

SPEAKER_00: stocks, cryptocurrency, other financial devices, shorts, whatever. Obviously, I'm a long-term shareholder of Robinhood, never sold a share in it. And I think it broke $70 a share. It's at an all-time high right now.

SPEAKER_25: $74.88. It's worth $66 billion,

SPEAKER_10: which actually leads me to my question for you because Coinbase is currently worth $64 billion, which sets up a really funny split screen between those two companies. Now, they started off different places. Robinhood was zero-cost consumer trading of equities that moved into crypto. Coinbase, of course, started off with a crypto base and has been moving into other products as well. But they're worth the same now in terms of their market cap. So if you had a dollar,

SPEAKER_54: which one would you pick?

SPEAKER_00: Yeah, I mean, I'm team Robinhood, but these are, you know, great contemporaries. So you might be looking at a, you know, Amazon, Google, Microsoft, Apple, Meta kind of situation here. These are all great companies. I don't know enough about Gemini to know if it's a great company like Robinhood or Coinbase. I don't suspect it's as good as those companies yet. You know, what makes Robinhood very special is Vlad is an incredible product guy who keeps adding products to the mix. And so I think they have, you know, many different products, including their credit card, which now has millions of people on the wait list. I have never sold a share. We distributed those shares from our first fund at, I think, $12 or $14 a share. I probably should have held those shares and distributed them like two years later or distribute half and half because then we would have gotten credit for, you know, on our books. But I, you know, I did tell everybody when we distributed them, I'm not selling just as a one piece of data for you and making your decision. And then people who were LPs in that fund, I talked to a couple of them who didn't sell and, you know, that's a four or 5X difference, right? More, you know, 5X difference, 6X difference. That would have made that fund, which was close to 5X on paper and 1.2 or 3X DPI already. And there's still a bunch of different assets in that first fund of mine. I think it would make the fund like maybe double that, right? Like, and so, you know, this is the nature of venture, but these things going public, when you see all these companies go public, what you're seeing is a bunch of venture capitalists get their wings, you know, and a bunch of LPs get distributions. And then it's up to the people who are LPs in these funds to decide if they keep them or not. I wouldn't sell a share of Robinhood ever. I mean, I think the amount of assets they have under management and the way they keep releasing great features to me makes it a huge winner. Yeah. Stable coins, you probably saw Uber. Dara was talking about maybe having, using stable coins for currency fluctuations between their different markets. So I think the idea would be, you know, if they have dollars in South America, in Europe, in Euros, et cetera, in Japan, wherever,

SPEAKER_44: you know, do you keep them in Yen or do you move them into stable coins? Do you move it into dollars at some point?

SPEAKER_00: And this will reinforce the value of the U.S. dollar. So we're going to see many more IPOs. And I'm hoping the regulatory frameworks around crypto continue to become really tight and regulated tightly so that we don't have people losing their money.

SPEAKER_04: I was just in Singapore, as you know, and I'm talking to a lot of people in Dubai, Singapore, about the possibility

SPEAKER_00: that venture funds will become tokenized.

SPEAKER_54: So Jason, tokenizing a venture capital fund, what would that look like in practice?

SPEAKER_00: Let's say we have a $10 million fund. It's, you know, Alex's first fund. And I decide I'm going to put a million dollars into it. And Mike Savino decides he's going to put a million dollars into it.

SPEAKER_44: David Sachs puts a million in, and Chamath puts a million in, et cetera. So you got 10 people each own a million. Let's say one of those people says, you know what?

SPEAKER_00: Alex has done great. He invested in Robinhood. And it's, you know, we think this has, we think the value of his fund went from 10 million and the Robinhood shares have gone up 50X and Robinhood makes up 10% of the fund. Therefore, it's like a 5X fund on paper. I'm willing to sell you my million dollars in that fund, knowing that million represents 10% of the fund's Robinhood holdings. And I'm just going to write down all the rest of the holdings or put those at zero, but there's a winner in the fund. So I'm going to sell my million dollar position, which is going to be worth, you know, whatever you could debate it, but let's say 5 million. I'll sell it to you for four or three. Well, we have that destiny publicly trading open end or closed end fund that has SpaceX in it, right? And every time SpaceX news comes out, if people want to have access to it, they buy that destiny fund, because it's a quick way to instantly get access to it. Well, then it would be a way if I had Uber in that first fund or Robinhood or whatever it is from breakout, those people could, you know, maybe cash in some chips and then people who wanted access to that early stage fund, that early stage startup could get in. And it would then create a market for a market clearing price for a fund, which would then mean I'd have to release a little bit more data or people would have to be more speculative. And then I would have to put some rules on it, like I need to approve who that LP is, or we need to know who that LP is. And they need to, I don't know, be an American citizen or, you know, have a certain net worth, or we have to have their driver's license. We have to know they're not on a terrorist watch list. We have to know our customer KYC, right? So there'd have to be some rules of the road. But if anybody out there is working on this, you know, it's not clear on regulations who can do this in the world, but there are definitely markets where people could do it. So you have to be thoughtful about it is the end of, is the long story.

SPEAKER_10: So interesting to me because I see a couple of things that could get a little silly. Like, for example, let's say that the fund hasn't called all of its LP capital yet, but I'm an LP and I want to sell my theoretical allocation of the total fund. And that only happened after all the capital calls because then I could sell my interest and then not do my later capital calls and wiggle out. And that would get a little dicey. But my question is-

SPEAKER_80: That would have to be in the smart contract, right? That if you haven't completed it,

SPEAKER_44: you could only sell interest in the smart contract of the called capital. So if you had a million and you had 500K called, you could only sell that 500K. You couldn't sell the other 500K.

SPEAKER_10: This to me seems a little bit complex when we have venture capital funds that are already publicly traded, like Molten Ventures over in the UK, which shows that you can have a more liquid valuation set on a venture firm. But what are they selling

SPEAKER_02: when that company's public? Are they selling the management fees and the returns to the GPs? I think that's what they're selling. I think it's actually the assets.

SPEAKER_10: But I'll double check that and get back to us on Monday because I haven't actually looked into Molten for a couple of years. So I'm a little out of date. But that is one way to go about this. I always get a little concerned when people want to tokenize something, Jason, because it sometimes can be a little bit more complexity than value. But if you're talking about it with that many people, I presume someone's thought this through.

SPEAKER_00: I think it's the next big innovation in venture capital would be, you know, if venture funds are going to exist for 15 years as opposed to just like, you know, 10 to 12, because that will, you know, then maybe it would be good that they could trade. So maybe you can't trade them until year five, but, you know, year six on you could. So then you could leave the fund open for 20 years and allow people to trade in and out of it. So if you had Stripe in there and you were a 13-year investor in Stripe, 14-year investor in Stripe, or 12-year investor in Uber, 13-year investor in SpaceX, you wouldn't have to do secondary transactions of selling the shares. You would just sell the share in the fund and people would know the fund has this in it. I think it would also be fun for there to be, like I would take that fund and I would have all of our holdings be public. And I would release like quarterly statements maybe of those companies and what we've invested in. So it would be kind of like an index fund where, you know, I told you I bought that KDEP, the Korean Defense Fund, and boy, that's up like 30%.

SPEAKER_18: And, you know, I bought like a quarter million dollars worth of it just because I bought Korean Defense Fund. That sounds interesting.

SPEAKER_00: Oh, wow. All right, founders. I know you got a lot on your plate. Running a company means

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SPEAKER_52: Yes, it's done.

SPEAKER_04: I think I bought it at $28 a share and it's at 36 or something.

SPEAKER_08: 37. And it's up a total of 74% so far this year if you bought it at January 1st. That's incredible.

SPEAKER_04: Yeah, I bought it like whatever, three or four months ago. I think people are starting to realize

SPEAKER_18: that like defense contractors outside the U.S. are going to do quite well, you know, and there's a bunch of them.

SPEAKER_96: Anyway, this is my thinking is like there's going to be

SPEAKER_00: some very interesting opportunities and then maybe the ability to tap into markets where, you know, somebody's sitting on a billion dollars of crypto, a hundred million in crypto, but they say, you know what? I want to slowly move my crypto wealth over to startups, over to real estate. I'm not in the real estate game, but if somebody was in the real estate game and they tokenized, you know, there are a thousand apartments they owned across the U.S. in a real estate trust or something and it was tokenized and you could buy in and out of it, that person could then use different coins to buy it or they could get loans against their coins to buy into it. So there could be some very interesting ways that money could flow and even programmatically. Maybe you say, you know, I just, as my crypto wealth grows, I want to move 10% of it into startups. So if my Bitcoin, if I got a hundred million in Bitcoin and I bought it at 50K and now it's a hundred K, it's worth 200 million. Okay. That 10% that was a hundred, 10 million of the hundred million is now 20. I want it to automatically buy into and buy more shares of these venture funds or real estate funds so that I stay in that, you know, private asset,

SPEAKER_104: alternative asset world, more balanced, right? So you can do interesting programmatic things.

SPEAKER_10: Oh, I just want to say I'm so blown away that I've heard you say both tokenization and programmatic on the same show without you casting dispersions on crypto. I've also come around a little bit on crypto in the last 12, 18 months. It does seem to be these companies are maturing. I just glad we're, we're past the NFT boom and kind of some of the silliness where there's utility, there's value where there's value, there's business. I'm fine with that. All right. Let's keep moving on. So on Wednesday, we talked a little bit about Windsurf, the coding service. They got cut off by Anthropic and they threw a very polite public fit about it saying, hey, we want to give them money. We want to use their models. They've cut us off. And what we didn't have at that point in time, Jason, was Anthropic's response. The good news is that we now do. And the gist is that they want to basically work with people for the long term. OpenAI is broadly expected to be purchasing Windsurf. That deal still hasn't closed, oddly. I don't know what's going on there. It's a little weird that everyone's been talking about it for this long and it hasn't reached the sign dotted line yet. But they're basically saying, we're not going to let an OpenAI thief use our stuff. So it is what we thought. It was a competitive point. But I just think that it underscores platform risk for foundation AI model companies in a way that I don't think Anthropic as OpenAI develop their own cloud code and codex tooling. There could come a time when they don't want to serve competing companies that are building on top of them. And I wonder if Anthropic's

SPEAKER_08: going to regret this decision later because it's poisoning the well a little bit for commercial AI models in my view.

SPEAKER_110: I think what's actually happening here is that there was probably an auction and Anthropic had the chance to buy Windsurf and they didn't clear the bid

SPEAKER_00: and they said, okay, well, if we were the home team and we helped you get here and OpenAI is outbidding us, well, we reasonably need to not empower you and we have this like one chance to extract some pain from our suffering that we didn't get to buy the company. So we're going to do it. You know, it's like there may be a little bitterness from Anthropic that they weren't able this is all speculation. Speculation. I, this is, yeah, don't reblog. I don't have inside information here. I'm literally just speculating on what typically happens, right? The board of Windsurf, obviously, would do their diligence and their duty to all shareholders by creating a marketplace. If OpenAI was part of the acquisition marketplace, so was Google, so was Grok, so was, you know, Microsoft and obviously Anthropic and Amazon. So they all had a chance at buying this, I'm certain. And probably Anthropic was like, you know what? This Jared Kaplan, who's the chief science officer, was like, yeah, their value comes from our model

SPEAKER_113: or some significant comes from our model. So what are we doing here? You know?

SPEAKER_10: And another company that does is Cursor. We'll talk about them in detail in a second, but I found it interesting that Anthropic, while talking to TechCrunch at their event about this decision, cited Cursor as a long-term customer of theirs. So I went back through the Cursor, which is the product made by AnySphere, but we call them Cursor because it's easier. They raised some of their earliest capital from OpenAI.

SPEAKER_104: Okay. Which just goes to show

SPEAKER_118: how intertwined everything is here. It's kind of messy.

SPEAKER_104: No conflict, no interest, yeah. I mean,

SPEAKER_00: things grow and people place bets. It happens all the time. You know, I'm an LP in other funds. Those funds might invest in a competitor to a company I'm working on. A company I'm working on might pivot into a business that they're already investing in. Yeah.

SPEAKER_05: Yeah, bad feelings happen and, you know, but all's fair in love and war and startups. So here we are.

SPEAKER_10: On that point, one last final question about this because I've been trying to figure out what the advice for founders here should be because on one hand, you're not going to get cut off by Anthropic unless you're a big name and something goes awry. But at the same time, if you were picking a way to go about building your startup and you have closed models and open source models, would this Anthropic WindSurf beef push you more towards the open source side?

SPEAKER_124: Of course, of course. Yeah.

SPEAKER_123: Or being multi-model. Ah.

SPEAKER_00: So, you know, if you were building, you know, a product, you would want to just be multi-model for sure. Absolutely.

SPEAKER_126: And then we can swap out models as needed as they improve. That makes a lot of sense to me. So essentially,

SPEAKER_25: you just don't want to be have, you don't want to have a platform lock-in effectively. Correct. Okay. Yeah. That makes a lot of sense to me.

SPEAKER_63: Yeah. And I think they probably have the ability to move it over, but, you know, who knows if they're

SPEAKER_00: ready to do that under what time frame. And this is why you have an agreement and a long-term agreement. So if Windsurf was being built off of Anthropics products, you would probably want to have a two-year contract, a three-year contract to avoid this kind of thing happening. So who knows if they're on a month-to-month contract, a quarterly contract, but that's what a two-year contract would do. If this was a two-year contract, they couldn't be cut off, right?

SPEAKER_10: Snipped and then having to go tell their users sorry. All right, moving on. One last update from some recent news. Jason, we've been covering the Rippling Spying Saga. Alleged spine. Sorry,

SPEAKER_141: the alleged Rippling Spines. Thank you. Rippling is an American. Go on, Alex.

SPEAKER_142: To get sued.

SPEAKER_141: What logo is right there, man? That's the... I'm not Alex. I'm this week in startups. Yes, okay.

SPEAKER_10: Yeah, sue Jason, not me. Rippling is an HR tech and payroll giant. They raised a Series G at about a $17 billion valuation. Deal in the same space was worth at $12 billion. Just giving people context about the companies. The background here is that earlier this week, Deal tried to create two bits of news, Jason. They said that one Rippling former contractor now employee had done something slightly untoward. Fair enough. And also that they'd reached the $1 billion AR milestone. Rippling came right over the top of that with new allegations. And I want to get your take on a couple of things. There's some stuff in here that I would say is not surprising. Rippling writes in its new suit that Deal was regularly bragging about new hires bringing secrets from other companies. That I think the CFO said that he maintains quote spies at other companies and that Rippling was behaving poorly. None of that's kind of a shock given the other allegations that they have said. But something that did catch my eye was this. And I'm going to quote from the suit here. So again, I'm not saying this. This is what Rippling has said. Around April 23rd, 2025, just two days before the financing was scheduled to close, this is their Series G, a quote, tier one investor quote, in a position to know about Deal's response to Rippling contacted a very senior partner at Rippling's Series G investor. That person claimed Deal would quote, soon be hitting back with material information against Rippling

SPEAKER_08: in this litigation and urged the investor to delay until Deal's response came out.

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SPEAKER_10: Which to me is a bit of a surprise because if I was an investor in deal and this had gone down, I would be trying to back away from the company to a degree just given the ethical lapses that are alleged to have happened. I was surprised that an investor would try to scupper Rippling's own round and then perhaps hope that that wouldn't get out. So question for you is that sort of skulduggery

SPEAKER_47: skulduggery normal in venture circles? Because this seemed more underhanded than I could I mean

SPEAKER_86: if it was two friends and we worked together and we went to business school

SPEAKER_00: together and I was helping them out and just giving them a heads up like hey deal's got their own response coming you might want to just hear that because it's coming out tomorrow

SPEAKER_63: that wouldn't be dirty that would be helping your friend out right

SPEAKER_25: so there's a possible that would be

SPEAKER_63: maybe how yeah that person might explain it now if you had met at a trade show

SPEAKER_00: and you've been at conferences and you knew each other and you know you were at I don't know Andreessen and I was at Sequoia or Spark or Kotu or YC you know all these shared backers whatever and I said hey you know

SPEAKER_05: you might not want to drop that wire and sign that term sheet until you hear the full story because you know I've seen it and it's pretty gnarly brother and you were doing it to sink the funding you would be there are some legal concepts around trying to

SPEAKER_00: impede the other person's ability to do business but it would be very hard to prove I think I'm not a lawyer it would feel like it all feels a little dirty and backhanded and backroom unless it was like hey we were fraternity brothers and sorority sisters and I was just trying to let you know hey just heads up here you make your own decision as to what level of risk you want to take because obviously the person who is doing the Series G knows about this lawsuit they know all about it they just don't know the response so he's just saying hey the response is coming yeah but it does feel like yeah maybe this has gotten so bitter that we're just going to have a hundred of these little updates until they settle and then I think the big winner here is that both of these companies now are probably going after something very significant so there's the big prize therefore people are behaving badly allegedly and sometimes when there's a big prize people get petty or they lose their ethics and morals and do crazy things so I've

SPEAKER_110: seen this kind of thing before when you have two competitors who are dogged and aggressively going after each other and yeah I've gotten emails you I've had one time somebody calling me trying to character assassinate oh this person is a bad person for these reasons and

SPEAKER_44: you know it's like literally another VC calling me to sort of bad mouth the founder that we were investors in and I think we were it was during a

SPEAKER_110: funding round because we were going to invest more so yeah these kind of shenanigans can happen

SPEAKER_10: so the way that I'm about quote hit pieces is just them projecting contained guilt for them bad channeling on the back channels versus doing it in public one more little detail from this case though Jason because this can be true

SPEAKER_173: so

SPEAKER_10: apparently deal had an agreement with a startup accelerator not named but there's only so many out there and I know it describes as it's trade secret customer database

SPEAKER_25: containing confidential and valuable non-public information about customers they just took it

SPEAKER_175: they took the accelerator CRM

SPEAKER_10: yeah so part of the part of the new allegations from Rippling is that there's

SPEAKER_08: other companies that have been harmed in similar ways

SPEAKER_00: so if DL went to YC or Techstars the allegation would be they downloaded their CRM but it could

SPEAKER_08: but that's why it says what are you stealing confidential and valuable non-public information is the key bit from so that means

SPEAKER_49: on the internal on bookface which is YC's internal they

SPEAKER_00: scraped bookface is going to be the allegation if it in fact is YC if it is YC yeah if it's YC then it would

SPEAKER_44: be that they scrape bookface which might have the email addresses and you know whatever yeah

SPEAKER_184: what's the board's responsibility here in terms of if they

SPEAKER_96: find out about it they have to investigate it

SPEAKER_184: okay yeah

SPEAKER_185: and that's where it stops or what would you investigate

SPEAKER_96: it and then depending on what the investigation shows you have to take action

SPEAKER_00: so you do an investigation you hire an outside counsel they investigate did you steal this what happened they find out who stole it and they say okay that person has to go and we have to inform the company that we took the data from that we've deleted it and come to some settlement with them so you can have all kinds of crazy things that occur you know in a case you would have something similar they would do an investigation oh this person harassed another person in the company or fired them for no reason and yeah or this person stole something or they were putting personal stuff on their corporate credit card I've seen that one happen where

SPEAKER_04: somebody was putting stuff on their personal credit card they shouldn't a little investigation occurs and then you say to the person okay yeah

SPEAKER_00: you're being fired or you're being demoted you can take whatever action the outside counsel says you should do so that's where lawyers make a lot of money because these investigations tend to

SPEAKER_10: if they are proven I would hope that the board would move to

SPEAKER_08: replace leadership to rebuild the moral integrity of the company all

SPEAKER_25: right tell me about what's going on recursive fastest growing startup of all time maybe fastest growing startup of all time we have talked about this

SPEAKER_10: impending funding round several times on twist I'm glad to bring it to a thrive led and recent excel and dst were in there all that blah blah blah who cares it's another AI round what matters is this cursor says that it's now not at 300 million ARR as was reported it's now above 500 million in annual recurring revenue going from essentially 100 to 500 in

SPEAKER_60: 50% a month from 100 to 150 to 25 to 325 yeah it's it's like 50% growth month over month it's crazy

SPEAKER_18: it's absolutely insane that would be like 10% growth every week something in that mean week over week 10% growth is crazy

SPEAKER_200: but from a nine figure base I

SPEAKER_16: like wildfire it's kind of like slack spread like wildfire

SPEAKER_10: yeah but I wanted to go back and get some historical context on how fast is this growth because one of the best IPOs ever and going back to different ways to go public Google went out via a reverse auction and that went so well

SPEAKER_204: but

SPEAKER_10: that still so much slower than what we're seeing from cursor here so I think this goes to show one that AI driven tooling for highly paid professionals is something that companies will just pay for and also I think it

SPEAKER_00: this is combining the virality of consumer with a subscription model which it's kind of like Netflix or Disney plus when we saw Disney plus come out it really grew fast for that first couple

SPEAKER_18: of years in terms of the membership especially at $8 a month so

SPEAKER_00: yeah it's awesome and this company could be going public so cursor you know if it does this again

SPEAKER_18: if it gets to a billion in revenue like they should go public

SPEAKER_126: I mean I think so there was an interesting story in I think it was Reuters a couple days back that said that

SPEAKER_10: Winsurf and cursor have negative gross margins I don't know if they actually meant negative gross margins or negative operating margins I would be shocked if they actually had negative gross margins but there's an interesting split screen here that we can draw so we've talked about Anthropic the foundation A model company 60 billion dollars reportedly at a 3 billion dollar rent right now 20x recurring revenue more or less what's interesting is cursor 10 billion 500 million also 20x yeah that's a trend just seems so cheap to me

SPEAKER_110: if you're growing if you're doubling year over year tripling year over year etc so you're getting a big premium there because when it becomes a public company it will be 20x earnings as

SPEAKER_00: opposed to top line right so you know sometimes people conflate the profit with the top line you know sales so sales here is 20x sales not you know like YouTube or other businesses you know they were in a J curve or Uber where they were selling rides for less than the right cost and they losing money every ride you know that J curve could be what's driving some of this revenue growth they could be selling hundred dollar bills for 50 bucks right now and they need to fill in that gap and that gap would get filled in by people becoming addicted the price of compute going down and maybe their ability to charge going up and that's the J curve right you invest and you lose money lose money lose money then you stop having to invest money and you're growing growing growing and then wildly profitable because the cost stay fixed yep and you're raising your prices and what cursor is because the other four developers that they know are like saying to the two developers you don't use cursor are you an idiot and they get pulled in without an advertisement whereas the first couple might have needed to get hit with an advertisement yeah so these are

SPEAKER_49: going to be incredible businesses the business is strong venture has a bright future the wrath of con is over and

SPEAKER_00: I think DPI are going to spread through the heavens and America is going to win again

SPEAKER_228: all right now I know we have to go but before we do let's just take one quick look at polymarket now

SPEAKER_10: I have pulled what I think is the juiciest single chart I've ever seen on polymarket for us there's a the labor market and the price of money and if you take a look at this chart here this is about the Fed decision in September now we're at the furthest edge of this particular market on polymarket so the dollar volume here is much lower than for the June decision or drop report if you will saying that employment growth was very low and so people said that hey there's a higher chance of a decrease by September in the federal rate as a response to that then today the BLS dropped a different data that was much more positive about the labor market and you can see how it swapped yet

SPEAKER_23: second

SPEAKER_00: most expected outcome is a 25% decrease 39% no change 57% so most people believe the Fed's not going to do anything in September and like the July and June numbers are even lower it's like 98% and 80% so basically with the GDP report there's some projections that GDP is going to be like 4% 3.8% in the second quarter far from a recession which is two negative quarters of GDP so what this means is no rate cuts there's not going to be free money so stocks are not going to go crazy because the economy is healthy and GDP strong so in one case you get cheaper money because the economy is weaker in the other case you get consumers and enterprises that are strong rippling and they're adding employees because the economy is strong on the other side you get free money which means you can invest in starting new companies because you're in a ZERP environment so I think what we're looking at is the former we have a strong economy therefore don't expect the rates to come down we're not going back to that which means homes and

SPEAKER_63: mortgages and car

SPEAKER_10: it's going to be a blast bye everybody