Chinese open-source models have peaked and will decline from here. “I think the Chinese open-weight models are pretty much over in the US. I think it is the beginning of the end. DeepSeek is beginning to be banned across all federal agencies.” @jasonlk Love to hear your thoughts @mattsheehan88 @deanwball @jordanschnyc @jjding99

Very few podcasts will actually make you smarter AND make you laugh. No politics, no egos, just tech. The biggest news this week: - Anthropic Files S1 Ahead of $2TRN IPO - Instinct's Rumoured $30BN Fundraise - Microsoft Lays off 27,000 While Meta Taps Equity Markets for $95BN Capex Spending Spree My notes with @jasonlk and @rodriscoll 1. Analysis of Anthropic S1 Anthropic's S1 beat expectations on margins and operating income, even after stock-based compensation, leaving the burden of proof on the naysayers. It also looked strong on customer concentration, compute efficiency and cash. Some questions remain, including the undisclosed Q3 revenue number. 2. Is the Value Extraction Requirement From the Latest Models a Benefit or a Curse of Anthropic? Eighty percent of Anthropic's revenue comes from models less than six months old, and 70 to 80% of compute costs go to training. Models are expensive to build and highly profitable to serve, but only for six to twelve months. Few companies can write a $10 to 12BN compute check, so this short shelf life can favour Anthropic if it stays aggressive. 3. Brutal Reality Is Microsoft Have Just Admitted They Don't Want 27% of Their Workforce Whatever gets said on LinkedIn, Microsoft's move says it does not want 27% of its people. That is a worse scarlet letter than a pure layoff, because the company has told these employees they do not meet its minimum bar. 4. Chinese Open-Source Models Have Peaked and Will Decline From Here Chinese open-weight models are close to finished in the US, and this is the beginning of the end for them. Despite DeepSeek's latest raise, it is starting to be banned across all federal agencies. 5. Why No CIO Will Take a Chance on a Chinese Model Even if confidential data reaches Alibaba servers in Asia only one time in 100,000, without consent, no CIO or CISO will approve the model. If it keeps happening and Alibaba stays silent, anyone using these models will lose their job. 6. Why OpenAI Is an Underappreciated Asset to Invest in Today OpenAI is mispriced at the $1.25 TN round. Brief market panic has created a dislocation like Anthropic's round at around $183BN, even though OpenAI has closed all its competitive gaps. 7. What Is the Upside of OpenAI at $1.25 Trillion? OpenAI and Anthropic are both expected to become $10 to 20TN companies. Anthropic takes only 0.1% of Fortune 500 budgets today, and even conservative estimates put that at 2 to 3%. Because OpenAI is not priced to perfection, the worst case is doubling the money. (links in comments)

Why Steve Jurvetson is my favorite investor meeting “I had a meeting with @FutureJurvetson, and I was nervous as hell because I had heard so many amazing things about this guy. We just started geeking out on numeric representations. I sent him a couple of papers, he marked them up and asked questions. I was like, ‘This is not what I expected from an investor ever.’ We were doing something so new that no one had pitched it yet, and he had been thinking about it himself. It was just like, ‘Boom, let’s go.’” @NaveenGRao Love to hear your thoughts @shaunmmaguire @lpolovets @DavidCahn6

I think @NaveenGRao is one of the most under-discussed but brilliant entrepreneurs of our time. He is able to consistently see where a market is going and place himself ahead of it. - Founded Nervana and sold to Intel for $400M. - Founded MosaicML and sold to Databricks for $1.3BN. - Raised $450M seed round at $4.5BN valuation for Unconventional. This success has given him license to say things that few people would have the confidence to say. - “Most software investors today are f*****”. - “Agentic coding is overrated and uninvestable”. - “It is completely techno-optimist to assume companies will have their own models and own their own intelligence”. This discussion rallies against some of the conventional beliefs of the valley in a way you have not heard before. My notes from the discussion with Naveen below. (Link in comments). 1. Are Software Investors F**ked? Pure software investors are "kind of f**ked" because SaaS will no longer be where margin is gained. Since around 2010, cloud services let founders spin up products quickly and chase $100M to $200M markets. As applications shift toward the intelligence layer, Naveen does not see software being a huge market in 20 years. Do you agree software investors are f***** in a much more infra/hardware centric landscape @PalmerLuckey @mttgrmm @shaunmmaguire 2. Why Agentic Coding Is Overrated and an Uninvestable Category Agentic coding is overrated as a market because the value moves to the model provider. The harness and the IDE are not very sticky, and people move between tools fluidly. Outside of the model providers, it is a category he would not invest in today. What is the single biggest reason why the coding agent should not sit within the model provider @ScottWu46 @matanSF 3. Is It Completely Techno-Optimist to Assume That Companies Will Own Their Own Intelligence With Their Own Specialized Models? Owning your own intelligence takes scale. A firm like Cooley can invest to make it happen, while a mom-and-pop shop in Nebraska will buy an out-of-the-box service instead. Big players will customize because rivals using AI to supercharge their margins force them to. 4. Where Is the Value in the Robotics Stack? The value in robotics will not sit in the model alone. Naveen invests in companies building robotics models and expects them to end up building end-to-end devices, selling the robot together with a model that does something very well. Where will the most value accrue in the robotics stack? Model? Data? Hardware? @tonyzzhao @joshavata @bercankilic 5. Why Steve Jurvetson Is My Favorite Investor Meeting Of roughly a thousand investor meetings, the one that stood out was with @FutureJurvetson. He geeked out on numeric representations and marked up the papers Naveen sent him like a technical colleague. In 2014, when no one had pitched a hardware startup in 10 years, he was keen to invest because he had been thinking about the space himself. 6. How American Investors Differ From European Investors Founders in the US are given permission to think bigger. In Europe, the investor network is so conservative that a founder with a crazy idea is written off as mad, while in the US the same founder is seen as awesome for thinking big. EF has largely moved focus to the US and SF specifically, would you agree with this @Alicebentinck @matthewclifford? 7. Why the Inference Market Will Be $10 Trillion Within 10 Years AI models alone will be a trillion-dollar market in the next few years, and inference will reach $10 trillion within 10 years. Cutting the cost of delivering a token by one order of magnitude effectively 10Xs the market, since the base of potential uses grows more than 10X, which Naveen ties to Jevons paradox. What does no one see that everyone should see about the inference market @GavinSBaker @lqiao @bernhardsson

What percent of developer salary do you spend on coding tools and how has it changed? “We spend probably roughly 30% of our engineering salary on coding tools. It has actually gone down the last two months, while the number of tokens that we have used has gone up. First is visibility, second is basic cost controls, and third is we control the harness. In that harness, we have done a bunch of work to control costs, things like prompt caching and routing.” @hwchase17 Love to hear your thoughts @bcherny @amasad @HamelHusain @simonw

I did two shows with @max11free and @MattSwulinski and I have never had so many messages from sales and growth leaders in my life. Over 200 after each show. Detailed step by step advice on functional areas is still clearly in short supply. Hope to bring you many more.

Podcasts frustrate me because they are fluffy and high-level. This is the most in-depth discussion on the framework that @tryramp have used to hire, monitor, and scale their sales team. - Why you should overpay reps - Why you should cancel forecasting calls - Why bankers make the best reps - Why comp plans are BS and you should not have one to start @max11free, SVP of Sales is truly epic here and my notes from the discussion below. -- 1. Why You Should Overpay Your Sales Reps The early bet was to pay SDRs well above market rate and expect output well above market in return. Reps earn 2X a standard SDR but book 40, 50 or 60 meetings, four to six times the usual target, so the unit economics still work. 2. You Have to Treat Hiring a Sales Team Like Moneyball: How to Find Hidden Talent Go-to-market recruiting should follow Billy Beane, targeting top sellers at companies that grew revenue past nine figures despite a low NPS score. Those reps had to create their own demand, work complex cycles with weak third-party reviews and sell at a premium to cheaper rivals. The number one or two seller there can thrive in a system like Ramp. Single biggest advice on finding hidden gem talent @rabois? 3. Why Bankers Make Great Sales Reps Bankers are programmed to work, and a nine-to-five is foreign to them. Before the company had brand recognition, a cold call to a CFO from someone who had just left Goldman TMT IB carried weight. Early sales teams lack time to teach cold call and email basics, so bankers kept the team in pure execution mode. Find this also @PeetsChad 4. Why I Advise Not to Have a Comp Plan Founders are advised to pay 100% OTE for at least the first two quarters instead of setting a comp plan. A quota set too low can be blown out in six months, leaving the company owing a seller multiple six figures. A target picked arbitrarily can also prove unattainable and stall momentum. Haha, interested to hear your thoughts on this one @Carles_Reina 5. Never Hire Sales Reps One at a Time Hiring one seller or SDR at a time leaves no way to benchmark performance, and comparing them against the founder is not reasonable. Onboarding is laborious and expensive, so hiring in pairs is better, bringing competition and collaboration and keeping reps from being lonely. 6. Why the Most Annoying Sales Reps Tend to Be the Most Successful Sellers who constantly ask about account strategy, pipeline and product during onboarding show a direct correlation with being incredible. Quiet reps, or those asking questions an AI or Notion bot could answer, usually give a weak signal, though the inverse is not always true. 7. What Should Sales Talent Focus on When Deciding Which Company to Join? Sellers joining an early-stage company should not index on equity, cash and comp, but on the market, the talent density of the business and the founders. Taking a VP title and lots of equity at a mediocre business growing 20 to 30% a year is the wrong trade. Biggest advice to talent on choosing which company to join @breeves08

What makes a durable company in 2026? “The companies that are more durable are the ones that are creating a data loop where usage creates data that no one else has. The data makes the product better, the product attracts more usage, and you create that virtuous cycle. Someone can copy the features, but they do not have all the interactions that you have.” @dittycheria Love to hear your thoughts @sarahtavel @JamesCurrier @onecaseman @auren

Should we invest in ElevenLabs at 22 billion? “ElevenLabs has done something with a fair amount of intense competition. Its lead keeps widening. It is one of the 10 most important underpinnings of agentic applications, and the rate of growth and margins are very impressive. This could be approaching $1BN in revenue. It is tough to find a better asset today. I say we go all in.” @jasonlk Love to hear your thoughts @mati @andrew__reed @slpierre @kirbyman01

What are you doing Vinod Khosla? “I was totally flummoxed by that tweet because it basically handed a weapon to every other firm competing with Khosla Ventures. Khosla has a great team with Keith and a bunch of other people there. It handed every other firm a weapon when they are competing on deals, saying, ‘Is this the partner you want when things go bad?’” @dittycheria Love to hear your thoughts @matanSF @spenserskates @PalmerLuckey @nathanlands

Why is it wrong for CROs to jump jobs so easily? “CROs also hired other people to work for them, selling them on the company, the vision, and how it is going to be transformative for their family. If that person were to leave, they have basically burnt their reputation with everyone they recruited as well. I have seen a CRO go from one company to another in a different space, but I have never seen a CRO flip from one company to a direct competitor.” @dittycheria Love to hear your thoughts @samfjacobs @svmansuri @scottleese @Kellblog

CROs are promiscuous and this is how they find jobs. “As a CEO, it is going to be profoundly frustrating. Your advisor goes off and joins a competitor. CRO is a risky job. There is a lot of turnover, jobs come in fast, and if it is a hot job, they move very quickly. I think 95% of CROs would say, ‘This is how I found my last job.’” @jasonlk Love to hear your thoughts @samdblond @kylecnorton @Kazanjy @markroberge

Just seen @SetterVC's latest report on the most in-demand secondaries for private companies in Q3 My 3 takeaways: 1. AI is dominating, but more money is moving to the picks and shovels. - @AnthropicAI at #1# for the 3rd quarter in a row. - @OpenAI rises 1 to #2# - @Etched is the highest ranking newcomer, debuting at #13# - @baseten debuts at #19#, and @FireworksAI_HQ comes in at #16# 2. Defence is having a moment: - @HadrianInc is the biggest riser in the list jumping 9 spots to #11# - @shieldaitech #7# & @Saronic #9# both jump 5 spots 3. Prediction markets are cooling down but they aren't struggling: - Kalshi #24# drops 16 spots - Polymarket falls 24 spots to #30# See the full list here 👇

What a nuts week it has been in tech! - Factory vs Cognition: The Battle Continues - Vinod Khosla Tweets a Storm - OpenAI Hits $70BN Run Rate - Salesforce Buys Listen Labs for $2B More heat in this than a Sequoia tranched round!!! 😉 My notes below with @jasonlk, @rodriscoll, and @dittycheria 1. Why Is It Wrong for CROs to Jump Jobs So Easily? CROs recruit their teams by selling them on the company, the vision and how the role could transform their families' finances. A CRO who leaves for a direct competitor burns their reputation with everyone they recruited. Moving to a company in a different space for a better opportunity is common, but flipping straight to a direct rival is far rarer. 2. CROs Are Promiscuous and This Is How They Find Jobs The CRO role carries high risk and heavy turnover, and when a hot job opens up, CROs tend to move very quickly. Roughly 95% of CROs would likely see a jump to a competitor as normal, since that is how many of them found their last job. For CEOs, watching an advisor leave to join a competitor is still profoundly frustrating. 3. What Are You Doing Vinod Khosla? Vinod Khosla's tweet handed every firm competing with Khosla Ventures a weapon on deals. Rival investors can now ask founders, "Is this the partner you want when things go bad?" The reaction was shocking, given that Khosla Ventures has a great team. 4. Should We Invest in ElevenLabs at 22 Billion? At a $22B valuation, ElevenLabs merits up to 10% of the fund. Its lead keeps widening despite intense competition, backed by strong growth, surprisingly impressive margins and sub-millisecond voice response times. Voice is one of the 10 most important underpinnings of agentic applications, and ElevenLabs could soon be approaching $1B in revenue. 5. What Makes a Durable Company in 2026? Durable companies create a data loop where users generate data no one else has, that data improves the product, and a better product attracts more usage. Competitors can copy the features, but they cannot copy the user interactions behind them. 6. When Agents Pick You, It's a Force of Nature Vercel has reached $600M in ARR, with agents now driving 50% of its new business, up from 3% at the start of the year. Agents form strong opinions about which vendors to use, and those choices are hard to argue with. Companies now need agents to find them and understand what they sell, because missing from an AI-generated answer is like being invisible on Google. (links in comments)

This Cabinet is a Cabinet of people who have never had jobs. They do not understand the impact of their actions on small businesses and entrepreneurs. We need a leader who has lived it, felt the pain of every energy price hike and has a plan to improve. Not a sticker on Google Maps. We need to do better, this is not acceptable leadership.

I am fortunate to have been mentored by some of the greatest people in our industry. However one quote from one of my dearest friends (@shak) rings true in my ears every day. “Everyone is fighting a battle you know nothing about. Be kind.”

“Sometimes people pay up to be able to win the deal. Sometimes people pay up because they are able to see a bigger TAM than the other investor. In those cases, you are not actually paying a higher market price. You are able to see that the opportunity is bigger.” @venkyganesan What percent of rounds that are paid up today is due to unique insight vs fomo @m2jr @nbt @hunterwalk @plaffont

Are tranched rounds a sign of a bubble? “In every cycle, you get the innovators, then you get the imitators, and then you eventually get the idiots. The innovation of the tranche financing was the notion that I can get ‘build with me’ money at a lower valuation, then use that to get money at a higher valuation. Now everyone is doing it, and it is not tied to the quality of the company anymore. It has become another technique for people to do.” @venkyganesan How do you feel about tranched rounds? Lessons/observations? @dafrankel @nbt @Alfred_Lin @chetanp @PhilipJohnston