Instinct Raising $1B at $10B & Meta Launches Muse | Miro Sells for $1.36B After a $17.5B Valuation

Market moves 1% on news of 10% probability of extinction. Capitalism took on board the risk and said it'll be fine.

$2 billion is just a starter round adventure today. The real problem is that 10 or 15% of founders are sociopaths. They genuinely are. In fact,

I mean, it's been fairly universally panned. I tend to be on the side of the people who are saying that hostile reception is deserved. I mean, what is the problem you're trying to solve? Dario, if you read the note, Dario's definition of the problem was fairly well defined. It was, you know, cyber attacks, it was economics, and then it was we lose control of the AI. So, even though that sounds like a lot, it's fairly controlled. The guy who quit and started this crazy thing, as a Cox or whatever his name is, and then the employee within Anthropic kind of chiming in saying, I think there's a 10% chance of, you know, human extinction in 10 years. That's a very different thing, right? So the problem, let's deal with that first of all, because I'm just going to call such if you, and to be fair, and this is why I'm saying it's complex, is every time Dario makes a comment, you know, a lot of the tweets back, hey, if you're going to blow up the world, you should stop. And they're right. The truth is he didn't actually say that. To be fair, he didn't talk about P(doom), but I'm going to do the same thing as everyone else and I'm just going to throw some rocks first, right? If you really think, if the feds really thought that there was someone in downtown San Francisco building a technology that was going to blow up the world, had a 10% chance of blowing up the world in the next 10 years, they would move in with a SWAT team, kill everyone in the place, and close it down. I mean, replace the word AI with, 'We're building a nuclear reactor. It's totally safe right now, but there's a 10% chance it goes wrong in the next 5 years and blows up the world.' Issue that statement. How many seconds after that before the entire weight of the US military is shutting you down? And what it says is, these kind of 10% P(doom) people, the truth is either the US government is asleep, which I doubt, or B, it's looking at this going, this is a bunch of excited teenagers, we'll step in later if it gets crazy. So my first point is, to be fair to Dario, not Dario, but the oh my god, the world's going to end, we're going to destroy the world, but we're going to keep doing it, people. I cling to the hope that the US government, if it was a real issue, would do something, right? So I think all that's overall right, which is different than saying what Dario said is overall. It's just not realistic. Dario's stuff, on the other hand, it's hard not to disagree that the cyber risk is real, right? So when Dario says that of the three risks he raised, the cyber risk is real, the economic risk, I will all be unemployed, I think it's a little bit, and then the third one, we lose control of the agents, hard to assess. So okay, that's the problem he's trying to solve, and then the solutions range from the unlikely to the impossible. You know, the unlikely is, yeah, we're going to install third-party monitoring agents voluntarily, but then the ask is that it be made a requirement. That's the first thing. Then the second thing is all the democratic governments have to agree, and that'll be easy because we get on so well with Canada and Europe right now. And then the third thing is we have to agree with the Chinese, and that's going to go super great, though it might go greater than the Canadians because we like the Chinese more than the Canadians. We should put in the Russians. We get on great with them, right? So the whole thing, so stepping back from side two and side three, right? Just side one, right? Proposal one, you know, which is we're going to introduce these kind of third-party monitors, and if it's voluntary, knock yourself out. You do whatever you want, Dario, right? If the government decides that they should do something, which is different than Dario thinking they should do something, then it's not going to be your friends regulating. You're not going to get to choose that. It's going to be a law. There's going to be regulators just like bank regulators. And if, and I'm not sure that's a great idea. I'm not sure it'll work really well for innovation, but if it does happen, I mean, a lot of the comments were either this is silly, we don't need it, or if we do need it, who the are you to tell us what we need? We're a government. I'm kind of sympathetic to both responses. Sorry, that was a vent, but I just think it's so overwrought. Sorry. Sorry, Jason. I just launched there.

No, no, no. My very tactical view, and then I'll give you my very tactical view, was this was just a risk factor in an S-1 done live. My tactical view is Anthropic's going public. And he is just, you know, in part because of the employee that worked there four weeks or eight weeks that said there's a 10% risk of destroying humanity, which many agreed with. But he's just getting ahead of a risk factor so that when the $2 trillion IPO happens, it's a non-issue. I honestly think he's enunciating a risk factor and we're ahead of it. We're going to debate it as a society. And so when we go on the road show to New York and everywhere else, no one cares. That was my, it's not even cynical. I think it's your job as CEO. That was less discussed. Words have meaning. If you re-, and again, I'm going to be fair to him, he didn't say 10% chance of blowing up the world. Right.

He responded to it. He was, yes, you're right. He responded to it. I feel like if government was doing its job, we'd have convened a congressional committee. We'd subpoena Dario and say, your head of safety, not the guy who quit, Jason, this is an important point. Not the guy who quit, but your head of safety said, 'Me and many of my people, there's a 10% chance of blowing up the world.' Get a congressional committee, subpoena the guy, and say, 'Mr. Dario, as the head of this organization, do you believe that your safety commissioner is correct and there's a 10% chance that you're going to blow up the world in the next 5 years?' Yes or no? Right. But it's going to happen. This just started. You're acting like the feds aren't going to raid Anthropic. I don't think it's literally going to happen. The feds are going to raid Anthropic conceptually speaking. This just happened last week. How many texts did you guys get from folks outside of tech asking if AI is going to kill ourselves? In the last week, I got texts from people, relatives I haven't heard from in years. Is AI going to kill us? Jason, there will be congressional committee and hearing after ad nauseam for the next 24 months. We have just awoken the sleeping giant here that AI isn't about a bunch of folks in SF becoming, you know, cent millionaires. The public is going to believe it's going to kill us. And I think that's why Trump, I don't want to go too much, I think that's why Trump cut it off so quickly. I actually think he said it's not an issue. We're going full bore. I don't think that was out of nowhere. I think this is because there's going to be two years of every, it's, this is all they're going to talk about.

To be clear, I think you are right. So maybe I should have said the future tense. If this statement, you're right, is that we've kicked off a bolder cascade here now whereby you're right, if I'm an ambitious politician, I would do this, right? And maybe you are right, there's two risk factors in the S-1. What you're saying, it's a really good point. The first risk factor is, by the way, there's a 10% chance we're going to blow up the world. We can discuss that one. That's a fun one. But the other risk factor is because I employ people who believe we have a 10% chance of blowing up the world, and I do this because they're actually very motivated to build great AI, and for whatever reason that motivates them. We can talk about that with our therapists, right? Because I'm running this company where these people say these crazy things. As Jason's just pointed out, I'm probably going to spend the next two years being investigated, and there's a series of bad things that could happen for that, up until including the government shutting me down. You're right, Jason. That's the risk factor. I agree with you. Yes, it's going to be the weirdest risk factor ever. We say dumb things, so we may get shut down.

Look, there's so much going on here. It's hard to track, right? I would just add two things I thought were the best things said. One, maybe a little political, one I think non-political. I think the best thing actually was David Sacks this week who said, 'If it's that bad, Dario, it's your effing job. Whether it's 10% or if there's any material risk, your company is going to exterminate even a subset of humanity.' Right? That is your job. Your job is to fix it. Shut down the company if you can't. Right? And if you're unable to cope, bring in a new CEO. This is your, if there's any company that had these sort of odds, it is your job. Right. This is product liability 10,000,001.

You can't kill. So you only have so many people you're allowed to kill with your product.

And Jason, it has been, first of all, exactly. I got to hand it to David. I think it was spot on 100%. And I think it was really odd to see Lina Khan, who is probably the antitrust regulator most of Silicon Valley hates the most, come out on exactly the same point, right? You know, when you get David Sacks and Lina Khan both on the same and both making excellent points, it's a really fun issue. I agree with you. I think

I'm sorry, I'm naive. If you build recursive self-improvement in the way that people talk about it, it is what it becomes, not relatively unknown. Like I could have good intentions for it,

but it could become something else, or used by malicious actors, could be weaponized to be something else.

And I think, okay, and I'm being really clear here, I agree that is actually the only one of the three risks itemized in the Dario thing that I think is interesting, right? Because the other two, economics, I think it was a foolish thing to say for a whole bunch of reasons. I think you can't say I'm not going to invent technology because it puts people unemployed. We'd still be back on our farm. 73% of work in the farm. That was a dumb point. Just trying to be nice and suck up. The whole cyber thing is real, but that cat's out of the barn. The commies have the cyber, so we're done. The only thing that was a fair point. And then on the other hand, the P(doom) thing he didn't talk about. So the only thing in his letter that was actually simultaneously, yeah, that's a fair point, and I don't have the answer, is exactly that we could, quote, lose control of the things, recursive self-improvement, that kind of stuff. You're right. That is, of the three issues he raised, as I think from the three responses he gave, that was the one that you go, hm, okay, I can't. Jason's point, I think Jason and David's point, spot on. At that point, what you're saying is forget the other two, which are about other people will do with our technology. We come back. What you're saying is you're building something you can't control. If you're building something that you can't control, then maybe you should stop building it, right? Because you're the CEO. And as Jason, I'm going to agree, Jason and David, do you, I mean, the third parties can keep an eye on you, but if there's people cleverer than you who can figure out the problem that you can't figure, you'd have hired them years ago. We should probably assume you're the cleverest people doing this. So, either you think this is a manageable problem, in which case keep building, or you think it's not a manageable problem, in which case you probably should stop. But stop wringing your hands and saying, 'If only the rest of the world could stop me killing humanity.' You're the CEO. I actually think the cacophony of anti was really good there.

But you've also taken it to a level where you've weaponized a Chinese economy to have an open-source ecosystem that's incredibly strong. And now to go, mea culpa, let's put the brakes on. You've weaponized them enough to be a serious cyber threat to all of our institutions. And now you want to put the brakes on. And if you expect us to pay,

First of all, I'm going to push back on the weapon. Basically saying, 'Oh, they wouldn't have had these models without us doing.' I'm not sure that's the case. I mean, you can get into how much of open weight has been distilled. And I can't assess that. So, there's some of it, but, you know, they got smart people, too. I think there's too much attribution of godlike status to individuals. The truth is, independent of probably what Anthropic did, there's probably going to be a bunch of LLM alternatives in China. This technology, the cat's out of the bag. It exists, and you're right. So your main point is correct. It's out of the bag, so you can't, I mean,

but it's out of the bag because you let it out of the bag like that. Sorry to be blunt.

Well, I don't know if you just did. You were the best at it. You are. You are. Yes. It's like it's done.

I mean, again, I hate the atom bomb metaphors because they're like Nazi metaphors. They're just so crude and simplistic, and it actually, in this case, feeds the ego of all involved. But it's a really good metaphor here, Harry. Unfortunately, because you can say if these folks are all the Oppenheimers and the US invented the bomb, there's no doubt that the Russians had the bomb, you know, by not by like four or five years later, three or four years later, and in part because they stole our, right? They had spies in Los Alamos from the UK. Let me remind you, Hans Fuchs, and then they stole our secrets and they built the bomb, too. But, you know, what are you going to do, right? They probably would have got

Elon's been clear on that for three years. He said he wished AI hadn't happened. He said, 'But since it did, I'm going to do it anyway because it's too late.' He didn't just say this last week. He's been saying this for three years that it's gotten too strong, right? Before xAI even got anywhere, he was consistent. We shouldn't, I wish, I don't want to be doing this, but it's already been done. It's too late. I don't think we should have this much. In fairness to the CEO of Anthropic, some, as I said, some of the most kind of hyperbolic stuff he's not saying, but you have the pacing letter that a bunch of scientists signed. There's a lot of hyperbole that's not coming from him, and he's a little more nuanced on what he can, what he is worried about, where the only one that's really meaningful is this kind of losing control of it. Right.

But I think this is where his prior positioning has come back to bite him on the ass. Of course, to Jason's point, previous in episodes where he's so dogmatic about what it's going to do to jobs and employment. Now, when things do come out, it's tied to him sometimes unfairly just because he's had that stance because of his labeling before.

Yes. And yes. And to Jason's point, which I think is spot on. My God, is this unpopular in the rest of the world? I mean, because, yeah, it turns out if you, I mean, you know, we're building a technology. It's going to definitely cause 20 to 30% white-collar unemployment. And my VP of safety, whom I haven't fired, has said on Twitter, there's a 10% chance it blows up the world, right? Hm. I wonder why we're not popular. Well, let me give you a few quick clues. Can I just say what I thought the best thing I read on all of it was on Twitter anywhere? Like, I know it's simplistic, maybe simpler, confluent, acquired by IBM for, I don't know, 12 billion. Just step down. This is the best thing I thought was written on all of it. Said a lot of people have fake, fake and stupid takes. It's a lot of marketing. He said, 'Here's the captain obvious point. Most positive use cases for AI have a corresponding dark version. If you're superhuman at coding, you're superhuman at hacking. If you're superhuman at structural engineering, you're likely superhuman at finding structural flaws to knock buildings down, right? If you're even superhuman at designing drugs, you're superhuman at designing novel, undetectable poisons. If you cure viruses, you can create them. Some of these are not that bad. They're manageable. Others are scary. It is a fact. Like every positive, if you don't get guardrails right, and there are no guardrails in open weights models for all intents and purposes, dark versions can be created, your AI will be just as good, all things being equal, at the dark version as the light version. It's a fact, right? We need to solve these issues. But it is a fact, and it is not even, there's so many opinions and anthropomorphizing and temperaments, but the dark versions will escape into Hugging Face.'

I do agree with what you said, Jason. Absolutely right. When people invented books, when Gutenberg invented printed books, the Catholic Church was pissed because they really liked to have control and all knowledge, and they just didn't like information dissemination. Ditto the internet. There's a reason every totalitarian regime hates it. Right. Every, I think it's great framing. Every technology has a positive side and a negative side. We're going to do what we do every time. We're going to roll out the positive and find a way to manage the negatives. But in the interim, we're not going to sell chips to China, which of course produce a Jensen response like you've never, you know, the usual Jensen response. So on the implementation side, not realistic.

There was a one-day minor hit on kind of the semi stocks on that first day. Separately, pleasingly, CrowdStrike and all the cyber stocks jumped 10%. So it's actually interesting. I looked at Monday, and we're recording this on Tuesday, it'll appear on Thursday, which is a whole lifetime away in the world we live now. But the instant response was slight markdown on semis and the AI capex, but not a lot, right? So no discern, I mean, maybe which implied some level of slowdown, significant markup on the cyber stocks because it looks like that's where the actual reality of the problem exists. And overall, I always look at Worldcloud, which is the software index, versus SOX, which is the semiconductor index, and it was a great day for Worldcloud relative to SOX. Software up, semi slightly down, but not big. I mean, I loved, I saw a tweet, you know, which was basically market moves 1% on news of 10% probability of extinction. In other words, capitalism took on board the risk and said it'll be fine.

This may be like a much faster version of the 20s. There's no regulation. Everyone just wants to get rich as f in the 20s, right? And what our version of 1929 will be for AI, you know, we don't know yet. But everyone just wants to get rich. The amount of wealth, you know, $2 billion is just a starter round adventure today, right? I was literally thinking that today when I saw Shield raise at 20 or 30 billion, and they had a little chart. I'm like, 'Wow, two billion is a starter round now in today's world.' It's just so much money, and AI is so much money that it's just too easy to take advantage of the dark version if that's how you make money. It's too easy for you to be, because every LLM has a dark version. It's too easy to cut that corner if that's how you can get raised at a billion after demo day. It's too easy.

A different version of the same thing is this. Everyone saying, 'Oh my God, this is evil and bad and could be dangerous.' And as it were, they're purging their conscience by worrying. But Jason, you're exactly right. No one's saying, 'I'm going to push away from the table.' And I don't think the people running some of these companies, especially Anthropic and OpenAI, oddly enough, they're not profit, I mean, you got to defend them a little. They're not profit maximizers. If they were profit maximizers, they would own more than 2% in the case of Dario and 0% in the case of Sam, right? Kind of weird.

It's the other folks that we should be worried about, not the three of them.

Agreed. We actually have half-decent stewards at the top. Sam, Dario, and Elon are about as good as they may be better in theory, but in practice, we can't get three better stewards. They have the right reasons to do what they're doing. They genuinely do. The real problem is that 10 or 15% of founders are sociopaths. They genuinely are. In fact, especially with the successful ones, it lets you drive something out of nothing into existence. The ability to manipulate people, the ability to have that look and do it. And that's where the bad people using AI come from. The sociopaths. If you don't think that's true, you guys have, you really don't think 10% of the founders you've ever invested in are sociopaths. Of course they are. We're going to move on. Next, we have the AI assistant race that we touched on last week, but I was really annoyed because we actually missed Meta releasing Muse, which is Meta's product that is an AI assistant in many ways.

What did you say? We didn't miss it. Did you say we just, well, like it came out after we recorded the show.

Correct. I mean, I'm actually going to give us an A. I'm going to give us an A. We recorded on Tuesday because I, because you used that clip of me on Tuesday. I was like, somewhere there were 20 Meta engineers locked in a room being told to ship something. We said that on Tuesday. On Wednesday, Muse shipped, and on Thursday, the pod shipped. So, I think we nailed it. Man,

you just didn't know it was 500, not 20. That's the only slight thing that was missed. It's 500. You didn't realize that the minute OpenClaw took off, Zuck took a huge chunk of his AI team and said, 'We're building OpenClaw for consumers.' And from that night on, they people work days and nights. I mean, I was logging bugs over the Muse weekend on Twitter for fun. The engineering team was responding in real time Saturday night, Saturday morning, Sunday morning. I mean, they're working 996 on this thing. This is not 20 people. This is a top priority since OpenClaw launched, right? That's, it's interesting. It came out, you know, seemingly oddly after some of the other agents, but this has been a P1 since OpenClaw, right? Let's take, because, you know, people were like lining in the streets with their Mac Minis trying to get figured out how to run an agent. Now I can do it on Facebook.

I'm not able to use it being in the UK, so would love your, Jason.

Uh,

Yeah.

Um, Jason,

I'll get you a VPN.

Well, first of all, as software, it's very, very, very good. It instantly works. This is the definition of great software. Like, you just can't believe how well it works because all the hard work was done that you can't see, right? Um, because it's, and so most of the things you wanted to do, create a reservation, send an email to, I asked Muse to send us a bunch of stories for this show, right? It sent it to me and Harry. I forwarded it to Rory. It did it at the right time. It sent it to us, right? I had it rebuild the entire sastaster.com website for me. Log into WordPress, redo it. It did a pretty good job of it. Um, a lot of the things you wanted to do, it just works. Um, I'll add one more thought and then the meta question. The really interesting thing is, you know, we didn't talk about, but it is something I know a little about. It's not cheap. Okay? You're giving everybody up to a certain point a free VM, right? Which I think two CPUs, two GPUs, 8 GB of RAM, 100 gigs of storage or something. I do know that like the Replit, Lovable, Vercel, and others, it costs about three to four bucks per person to deliver that. Okay. And Muse is at the edge of it. It gives you more than they do. Okay. And those guys are working on it every week because it's such a huge part of their COGS, right? Because every time you spool up a website, not a free one, but a paid one, they've got a three to four dollar nut. You know, Wix before Base44 has a two-cent nut to serve that website. Now it's three to four. So they're very incentivized every day to work that down, right? Meta is lucky. Not only does it already have the infrastructure, right? So we could argue whether it's free, but it has tons of infrastructure. This is running on its own LLM, Muse LLM. So it has a massive infrastructure and LLM benefit that no one else has. And that's why it's fast. That's why it works well. That's why you get more VPUs, more GPUs, more everything. So I think from an infrastructure perspective, it's almost no one can compete. You get all the VM, all the infrastructure, all the storage, and they have their own LLM use. And my learning is for these lay usages like what we're talking about, not frontier drug discovery, Muse LLM is really good for this. So it's a good product, but the question is, does it matter?

What do you mean, does it matter? Sorry. What's the killer app? Another reservation at Cheesecake Factory or TGI Fridays? We need to see the VisiCalc of Muse. We need to see what is the killer app. Every horizontal platform needs a, you know, traditionally needs some sort of killer app, right? I'm just skeptical. I'm just wondering, right? I don't think in this whole thing, I don't think there was a killer app for OpenClaw, you know? And I don't know if there is a killer app for Muse or Instinct because there wasn't one for OpenClaw.

the model's good, but what are his examples? Scheduling his daughter's carpool. Is that really what a trillionaire needs to do with a general? He can't even come up with a good use case of Muse for himself. He's making up consumery things. I had to schedule ballet lessons for my daughter. I mean, you, great, great, great, but what you need to run this thing eight hours a day, I think, like Claude Code or Codex, to really matter. And so if we're in it eight hours a day like a super app, it's cool. If it's a random task, I just don't, I'm just waiting to see what the killer app is. And I've run, and Muse is really fun. Like, it's so beautiful. It gives you all the beauty. It gives you all the ideas. It has an idea tab, and it tells you all the things to do. I've done most of them. Um, and they're great. I just don't know if it's killer.

I don't know if it needs to be. And I know that sounds stupid, but no, but I use Instinct in a similar power user way. I think latency is a real problem with Instinct, by the way, which might not be with Meta. I wait minutes for responses. Minutes. It's like the first days of ChatGPT. It's a real problem, but I don't know if it needs to be. Like, it does all of my bookings, travel, restaurants. It does all of my shopping. It's very good. Does all of my calendar invites. I know there's no killer app, but it's just incrementally better than everything else. I don't know, but is lots of little bits not good enough? I don't know. I have a feeling it might be right. Look, I think, well, I'm skeptical of the category on a standalone basis, but, you know, I always go back to, I always have my three venture questions. Is this a category? Who's the winner? And are we getting paid for the risk, right? And is this a category question? Is do people want, is there a role for AI in a kind of personal assistant messenger type thing? And I will say, having used both Instinct and Muse, I can see it, right? I don't know if I love the word killer app because VisiCalc, a single thing that does everything, that just ignites a platform like VisiCalc. Let's leave the killer app concept out there, right? At the margin, you kind of go, yeah, I'd use this, right? I mean, if you look, we do have the, I mean, if you step back, you do have the example from long ago of WeChat, you know, Chinese messaging systems having very much all a super app. Facebook tried to do that with the Messenger. It didn't take off because the truth is the UI pre-AI, the UI of trying to book things on a chatbot is a pain in the butt, right? It's actually a lot easier to just go to the United website and see all the flights at the same time and book it, right? It is possible that with intelligence at the back end, does this thing from you non-intelligence, you actually have an interaction on a mobile device where enough of the intelligence is in the cloud that it can do a lot more for you, it knows a lot more about you, and it just becomes an easy place to get done, right? And therefore, to your point, how at the margin you can imagine people using this, right? So it just, you know, if you're a Facebook user, you get Muse, you're a happy little camper, you chug along, right? Um, so I do think there's more that's going to happen. Yes. The real, to me, the interesting question is the second one is do you think it's a standalone company that wins here, or do you think it's going to be Facebook with Muse and OpenAI with whatever product they come up with? You know, do you think that the Instincts of this world can build a standalone business here? Giving that to put it out there, having raised at something like 50 pre, less than five months ago, then 400 pre, then a couple of billion pre, they're now, rumor has it, raising at north to 10 billion. Do you think

they raising, they are raising 1 billion at 10 billion? And the most popular segment of the show that we got was Jason's IC. So Jason, ding, we have a billion dollar round for Instinct. Welcome to the partnership meeting, and it's a 10 billion valuation. Will we be putting in $200 million into this billion dollar round at 10 billion?

Well, we will, and I will, I'll be honest to the team. It's a, this is a risky one. I am impressed with what Muse has done, and if we had to compete head-on with Meta, and that was the only thing, we'd be in trouble. I would not recommend this investment because we can't compete with their balance. We can't compete with their servers. We can't compete with their GM. They can't compete with the LLM. However, after having done several reference calls and over a dozen synthetic ones on Claude, I've learned a couple things. First of all, Meta cannot go cross-platform. It cannot go in it. It does own WhatsApp, which is a real threat. It won't work with all carriers. It won't work across all services. It won't work across. It's highly focused on its own platforms. And so that is only a subset of how we communicate. How many folks between the ages of 18 and 55 are on Facebook all day? Very few, right? It's really your grandmother's application. Now, WhatsApp is popular in Instagram, but the fact that it is not going to be interoperable across all these different services means it's got a fairly limited reach. Two, how long will Meta maintain the energy here, right? When this produces essentially trivial to no revenue. Anyone remember Workplace? Workplace in its own way was probably better than Slack for folks that lived in Facebook. It was probably better. It had a lot of neat use cases. It worked well. It was architected, and it was actually the highest NPS of any product in the entire Facebook Meta platform, but they couldn't maintain the energy. My reference checks say when Alex leaves scale, this product will fall apart. If this was the only thing that Meta had to do, I wouldn't bet against him, but we're just not going to see the commitment to do the kind of things the Instinct team is going to do. And let me tell you, this is one of the greatest teams I've seen in my history of investing, right? They're great. These kids come and they play World of Warcraft in real time during the pitch. They're both top 15 on League. I recommend leading the round, but being cautious with reserves because the next round valuation may hit into realistic IPO limits.

I wouldn't. You asked me to do it. There's no effing way I would do this round.

What the

I believe here's why I wouldn't do the round. Okay, and you can call me a fuddy-duddy for it. Okay, I believe most of that, okay, for the pitch. I just believe the infra costs here are so high, and the incumbents, this is like if we've been talking since this show started, what if Anthropic and OpenAI actually built apps, okay? And in the entire history of the show, they've only built, outside of Codex and Claude Code, they've really only built half an app, Claude Design, which isn't even really fully an app, okay? Here is Meta building the app. They have the LLM, they have the cost advantages, they have the speed advantages. They have more available compute and GPU and all of it than anybody else in the world. And they're building the app. This is the threat that every VC worried about. And we all got a hall pass since the start of AI because the LLM didn't build any apps. This is the one that they're building, and that's why I would not, I just don't want to compete against this because I do think for the next 24 months it's a big priority. And it's just, if it's, Harry already said Instinct is slow. That's a sign. That's a sign of compute cost of other. That's why they have to raise a billion. And can they subsidize with venture capital $5 to $10 per user per month? Sure. But if they have to over-monetize it, what if they become Poolside? They could become the next Poolside. Like, it's great, but literally I've got 10 million users at 10 bucks a month. Now I've got a $1.2 billion nut a year to pay off. And I'm struggling to raise the next round. I'm not Databricks. So just, I worry when the incumbent has infinite, all the capabilities here and wants to build the app. That's why I would say no, but I might be wrong, right? I might be wrong. I wouldn't bang my fist on the table at the

I'm trying to remember, was it Socrates or who was it, one of the ancient Greek philosophers where you could literally say take one side of the argument and then halfway through you could say now take the other side of the argument, and Jason clearly can do that here, right? That was a perfect, this is why you should write 200

put me on the spot. I don't put you on the spot, but I'm just impressed with the mental facility which you can do both sides. It's terrifying. It's like a human LLM. You can be convincing on whatever you want me to be. It was pulling the boat together. I actually think, and I want to take the post out on that. It said what you basically said is this is core to Meta, and it feels like something that they would want to do. And despite your comments on cross-platform, you know, today Muse is a standalone app, so it's not a cross-platform issue. But to the extent that they fold it into, I've just got to assume they're going to make it accessible in Messenger, make it accessible on, you know, iMessage, etc. But it seems to me if there was one thing that Meta should do within the world of AI, it would be this. It's hard to imagine spending, you know, 100 billion plus on AI, saying that we're going to build the personal AI, and then not putting all your effort on this. So, I agree with you, Jason. I think this has to be an all-in Meta bet in a way that, frankly, I reject the comparison with Slack. You know, the Facebook for Work product was like a toy. It was not a core issue to them. This is a core issue. So I think you're right. They go for hook, line, and sinker. Now, the interesting thing about the Poolside analogy in

the Poolside analogy and Instinct is you could have the same outcome here, which is Poolside said we ran out of capital to keep playing, but we had an excellent outcome because there was a company with an even bigger market cap who wanted the assets that Poolside has assembled. Nvidia wanted access to the model, access to the talent. I mean, let's put it out here. Same thing could happen here, which is that Instinct executes, build a huge user base, and OpenAI steps up. And it's interesting, I think that the founder of Instinct either worked at Sierra or Brett Taylor's a big fan of, so you can fast. And Brett Taylor is obviously among the many other things that man does is the chairman of OpenAI. It may well be that Instinct builds a lot of traction, doesn't have a cash flow positive IPO potential, but has a very attractive upside exit. I don't discount that. Maybe 10 billion's a little lofty, but you got to believe if it got meaningful differentiated attraction that it would be interesting to someone who wants to build a business in this space.

it's possible. It just, as it, I just think if, as a, listen, we all have different experiences. The way I was raised to invest in venture was don't take bets that 100% require an M&A outcome to be successful, right? They're just too, they're just too unpredictable. I've been on the other side and know how capricious it, like, you know, you could be Clem's best friend. He brings you in to meet with Jensen and then he quits the next day, right? I mean, you just, you literally, you literally just can't predict it. So, it's just, you need some real something to steal to make a bet where an arbitrary super high value outcome is the only plausible exit. I'm not saying it's not a bet. Like, it is definitely a bet, right? It's just

I agree.

It's a big one.

And just to come back on that, because I've been thinking about that. You're right. It's not what I do either, but I look at this and I do, you know, you always question yourself. Is there anything you can learn? There is an argument. I'm not yet making it, but I'm just acknowledging that the expected value of a number of those bets could be strongly positive. Admittedly, the variance is high. In other words, it's a risky way to make money. You should ask yourself as you're building a portfolio of 30 bets, is it okay to have three of those bets in your portfolio? Probably not at 10 billion, but right, it wasn't reckless. I think Kleiner did the round at 500. Mimoon's overshrew. It's not reckless to do a round at 500, even if you believe the expected, the payout profile is, you know, two in 10 chance of a 20x positive multiple, right? And if you don't get the positive multiple, you're going to build a company that just can't cash flow and doesn't make it. You know, it has, you got the right portfolio and you can take the risk.

It's not the way I will run my business, but I actually, in a bull market, or as Harry said, there's a whole bunch of upside acquirers with frankly free market caps that are fairly unthered themselves and have a massive need to move quickly. It's actually not a crazy way to make money. Now, when a

you don't even need much. You've got a billion and a half profit to reach. So like your downside is relatively capped on an incredible team that everyone acknowledges is industry-leading. If you look at, I mean, this is the classic Silicon Valley thing is that if you look, examine that risk-return profile at 50 pre, which was as far a go back as April, I think that's a wonderful pre-profile at 500 pre, which I think was the May or June round. That's interesting. Yeah, that's a good bet because a little further along, the interesting thing is in the space of two or three more months, you've had a round. Was the other round the 2 billion, Harry, from memory? I

2.5 billion. Now you're getting into the, it's a 4x if you get out of the billion, and now you're raising a 10. Now you really need that 50, or you know, you need a reminder. The largest M&A outcome ever was Cursor doing 4 billion, got 60 billion, right? I don't know if you get a $40 billion outcome without a ton of revenue. My point is the risk-return profile was wildly attractive in April and decreasingly unattractive fairly quickly.

Right, by the time you come to September. So that is the problem with those kind of bets. But

you know, one interesting thing though is just like the consumer product market fit of this product is so wild. I did an

Instagram reel on it. I had over a thousand DMs asking for invite codes. I've never had a thousand DMs on the back of a reel.

It's awesome. No. Um um and I got to say I've been... Can I just add one interesting thing?

Just on your on your thing. You know, Alex Kurlin just uh left to go to Menlo Ventures, right, from TechCrunch. He was on the board of owner with me. Known him since the very beginning. It's OG Saster when he started the industry. And he wrote a little presentation about how Menlo thought about this and and not that this is so profound, but he said kind of that they're targeting 25 billion plus tech tech exits. They're they're targeting a hundred of them. That's how Menlo's modeling the world. And that's when he went to join to find you know some of these hundred not all hundred they don't have to be in all 100 of the $25 billion plus exits right um that's the model we we can say wow Cursor was at 60 but Cognition just raised at 48 right so if this is your world model that there are a total of 81 billion 8125 billion tech companies now but that's up from 23 10 years ago and that that trend is going to continue in the age of AI um you know I wrote that the new decacorn is 25 billion these these instinct grounds make sense like if if the if the if the if the good exits are all north of 25 billion then at least I can make three acts on instinct right um it was just interesting to see that's their model right is that we're targeting $25 billion plus exits uh in any investment that we do and we see there to be another hundred of these now how that all math works out with GDP and the market caps of trillion dollar companies I need to defer to to Dr. Rory O'Driscoll next to me because I can't make it work in my head without an LLM. But I assume there was some thought behind the memo math here of $125 billion exits.

Inevitable and not bad, right? Inevitable because, you know, funny I have a little report on our Salesforce that literally lists every unicorn, right? And I can do it a bunch of different ways. One of them being literally by post money, right? So you and I'm I'm I just eyeball down and you see what's going on and you know it, you and you just rank them and it jumped out of you like a sore thumb. The last round was in 21 at 17 billion. And when you eyeball, you know, you you you start to see the Lori, you start to see the levels, you start to see all the cognitions just above them and just below them, you know, new rounds at you 1020 billion. You see we track headcount grow at the same time. Oh my god, headcount's exploding. And then you have the thing stuck at 17 billion and it was really the largest utterly stale valuation from that period, right? So you look and you go ah almost inevitably you're high and dry because you're a personal productivity a productivity tool in a world that just doesn't work that way and can I it's it's obviously way ahead on valuation I mean of where its actual market size or traction can be. So this is just an inevitable that at some point it would get done. I mean Andrew Reed from SEO had a really cute tweet. it like a little graphic of you know that picture of the the death with the with the the sickle knocking on every door and it knocks on the um Evernote door and then it knocks on the air table door and then in this case it's knocking on the mirror door and instead of a sickle it has a bending spoon right you know death comes for us all in SAS land right and it was exactly right it was just an inevitable cleanup operation because it was just so far wrong in terms of pricing and it was a good outcome for everyone. And I and I you kind of snidely said something about the latest stage guys. But I'm going to say something. The great thing about the latest stage business is this. If your losers give you a 1x then you'll die rich, right? So Iconic, I think Iconic had a ton of money in that deal, right? So that's a bad deal. A bad deal is when they get a 1x. You know, if you're playing the venture game and because you're playing late and your preference gives you 1x and everything on on the worst case outcome, by definition, I mean, just using simple math, the overall distribution is net positive. So, it was a good outcome for everybody. It needed to happen. It's now part of a liquid asset. I think interesting. I didn't know this until today, so I'm winging it a little. I did see some portion of the consideration rolled. In other words, some people said, I'll take I'll take stock and bending spoons for that. which is interesting choice. Yeah, I don't know whether it was required or whether it was a way to juice the outcome, right, by rolling it over. You could see it being either way, right? Bending Spoons needed the C, you know, they don't have they don't have an unlimited balance sheet. There's only so many murals they can do, right? Um but it could have also been to roll it could have been a rollover into uh a company on a positive run, right? The cynic in me says it's interesting if you do roll. It's like basically saying we couldn't do what it takes to turn this company into a cash flow positive machine. So I'm selling it at three 2.7 times to guys who are trading at 14 times cuz they are tough enough to do what it takes, right? Cuz that's really what's happening. And to some extent, even though that sounds it's true. Venture syndicates, I've been in boards where the company just flattens out and it needs to get ruthlessly efficient. Venture, it's just not our DNA. It's not how we roll. It's a syndicate of five different people. Often times these assets are better owned by a single owner who said, "Look, this is the way it's going to be, right? This is what we're going to do." I mean, I don't know if you saw the CEO of Bending Spoons, he made a wonderfully controversial take, right? Where he said something to the tune of, you know, we don't really like to, you know, we don't basically get all excited about the title founder, right? We don't want to know what you did. His basic comment is, we don't want you to know what you did 10 years ago when you founded this. We want to know what you're doing now, right? And what it's basically saying is we can't do what it takes to fix this thing at 3x revenues. So we'll sell it to you for 12 times revenues and you'll be val we'll sell it to you. Take your stock at 12 times revenue cuz you'll be hardnosed enough to cut extraneous cost, raise prices, accept a fair amount of churn and plow through. Right? Just interesting but also not qu. It's kind of an interesting comment on how institutions can determine outcomes. It's not all rational economics and it probably makes sense. Bending spoons will probably do a better job than a venture syndicate at making that thing cash flow positive. And if you're a customer of any of these companies, just be ready for the 40% price increase.