00:07:03 · Adam Miller, Sachin, Xharmagne Carandang
[00:07:03] S5: Yeah, I think as a [00:07:04] S2: build on that, I did VC during 2021 to 2024 almost, and I saw so many companies that raise their crazy valuations, then do flat rounds or down rounds. And there's nothing that kills a company's momentum more than a down round, right? Because most employees' ESOP is underwater, there's just this lack of momentum, and these companies were promised these massive ongoing funding rounds, and they kind of just dropped and then crashed. I think maybe this is an interesting question for you, Xharmagne, because it's like, as a founding member of Lorikeet, you guys are up against some really, really well funded competitors. How do you guys think about, like, capital efficiency and, like, how much is required to win? I know Steve said this quote when we interviewed him, but saying that, money in doesn't mean good product out. [00:07:54] S0: Mhmm. It's it's the typical problem of just because you throw more engineers at a problem doesn't mean it will solve the problem faster kind of thing. So what we try to focus at at Lorikeet is more efficiency and focus, especially on the customer. Like, what are their actual needs? That way we can focus on the top, I don't know, 20% of what would actually move the needle and not waste all this money and need all this money that might just be wasteful. Yep.
00:07:54 · Xharmagne Carandang, Michelle Gilmore
[00:07:54] S0: Mhmm. It's it's the typical problem of just because you throw more engineers at a problem doesn't mean it will solve the problem faster kind of thing. So what we try to focus at at Lorikeet is more efficiency and focus, especially on the customer. Like, what are their actual needs? That way we can focus on the top, I don't know, 20% of what would actually move the needle and not waste all this money and need all this money that might just be wasteful. Yep. [00:08:25] S1: It's a really good point. I was on a panel a few weeks ago with Steve Yeah. At the AFR Summit, and we were talking about domain expertise as a as a moat and the notion of that. And I think the investment that you raised is a really good example because Mira raised 2,000,000,000, Relevance, pre strategy, pre product, pre plan. Yep. But her herself, like, she's a very good, safe bet if you're an early stage VC. And let's let's be honest, they are betting. Mhmm. Any that say that aren't, they aren't. I'm lying. Right? They are betting, early stage particularly. And so she's a she's a pretty good bet. So her current plan will probably not likely land where they sat in the meetings and defined it to be. But will she do something meaningful? Absolutely. I think the certainty is probably higher. It's a crazy amount of money, but I think that what's interesting is the domain expertise bet. It's the founder bet. It's the pedigree bet in terms of capability and certainty of being able to do something amazing, which is incredibly hard.
00:08:25 · Michelle Gilmore, Sachin
[00:08:25] S1: It's a really good point. I was on a panel a few weeks ago with Steve Yeah. At the AFR Summit, and we were talking about domain expertise as a as a moat and the notion of that. And I think the investment that you raised is a really good example because Mira raised 2,000,000,000, Relevance, pre strategy, pre product, pre plan. Yep. But her herself, like, she's a very good, safe bet if you're an early stage VC. And let's let's be honest, they are betting. Mhmm. Any that say that aren't, they aren't. I'm lying. Right? They are betting, early stage particularly. And so she's a she's a pretty good bet. So her current plan will probably not likely land where they sat in the meetings and defined it to be. But will she do something meaningful? Absolutely. I think the certainty is probably higher. It's a crazy amount of money, but I think that what's interesting is the domain expertise bet. It's the founder bet. It's the pedigree bet in terms of capability and certainty of being able to do something amazing, which is incredibly hard. [00:09:42] S2: And just to build on there, I think it's also a bet on her ability to attract talent. Like, if Zuckerberg is paying anywhere between 10 and 100,000,000 for top AI engineers, I think a lot of them would want to work for Mira regardless. And so like then quickly a billion or 2,000,000,000 doesn't seem like that much money if she has the ability
00:09:42 · Sachin, Adam Miller, Michelle Gilmore
[00:09:42] S2: And just to build on there, I think it's also a bet on her ability to attract talent. Like, if Zuckerberg is paying anywhere between 10 and 100,000,000 for top AI engineers, I think a lot of them would want to work for Mira regardless. And so like then quickly a billion or 2,000,000,000 doesn't seem like that much money if she has the ability [00:09:59] S5: to attract those top researchers. But how I'm really curious, like, how do we justify the economics of these valuations? And I guess my sense is that what people in AI are saying is that AI is going to rebuild whole industries. And so that means the TAM on offer is just incredibly big. It's like the whole economies are being rebuilt. So you can actually imagine like multiple trillion dollar company, multiple trillion dollar companies coming out of this. Like, is is that how you justify? [00:10:26] S1: I... I'm I'm gonna start by saying I'm not sure I accept the premise of the question of that we have to justify it. Early stage VC, like, when have we justified this? So firstly, I'm gonna flip it and say early stage VC isn't justifiable, and that's the very notion of betting, sometimes mostly with other people's money. And they've already said goodbye to that money. And most of them are, statistically speaking, going to fail. And, really, what they're betting on is the possibility. [00:11:01] S5: Mhmm.
00:11:01 · Adam Miller, Michelle Gilmore, Georgie Healy
[00:11:01] S5: Mhmm. [00:11:01] S1: Right? The possibility that there are enough factors that exist here. So I'm not sure we can rationalize or justify valuations that are created for the purpose of a construct that is they see in this context. But perhaps we could talk about the... Is it proportional to the opportunity that exists before us, which is global, which is a different pace than we've ever seen, which is talent being created faster than we've ever seen it before? What do you guys think about that? [00:11:36] S4: Microsoft's a trillion dollar company. It owns OpenAI. I think it could be a trillion dollar company. I think there could be multiple trillion dollar companies from AI. And I was a VC during a similar period. What did we see come through? Crypto? The metaverse? Some other bullshit? I'm not surprised they had down rounds, but AI, I feel that we can all agree on, has already transformed our lives. I would be surprised if we didn't have multiple trillion dollar companies.
00:12:08 · Daniel Palmer
[00:12:08] S3: I also think something we're seeing here that's potentially a little different from other periods of software is that a lot of the things being built now, I have a platform level where the TAM is massive, or they're sort of fundamentally shifting very verticalised industries in ways that make products that are actually way more horizontal, whether intentional or not, and therefore the average market I think these companies are addressing is actually a lot bigger than we're used to in VC and in tech recently. And so I think that makes a really big difference. I also want to add like, I think a really good point about betting on people, like we discussed earlier with Miro, that's particularly unique to AI, is that we're so early in this technology that the use cases are not actually clearly defined yet. I think even in Agencik AI, which my company focuses on entirely and has for multiple years now, still we're very slowly discovering the really key use cases for authentic automation. And so I think it is really important to have a good team, the right company set up that can move and adapt quickly, and you don't know what big new models coming out tomorrow, or new NCP self framework is coming out tomorrow, and so investing in people and investing in companies that have proven their ability to be really good at executing and really good at being nimble, I think is more important than ever in this current period.