Welcome to the AI draft on the Cerebral Valley Podcast.
I'm Eric newcomer. We've got a probably my favorite
episode of the year coming up for you.
We're about to pick what we think will be the most valuable
AI companies in four years from now.
This is a follow up from our draft a year ago, but we'll
catch you up on everything that happened last year.
We'll be picking a bunch of new companies.
I'm here with the James Will Sturman.
Hey, Eric, happy to be here. Excited for the draft?
James is the the brain behind the draft.
He'll explain it in a second. And Max Child.
Hello. Hello.
Super excited. We a very contentious game of
forecasting the top companies in AI ahead of the Cerebral Valley
AI Summit on November 20th in San Francisco.
This is our way of thinking about all the top companies in
AI before we host the AI Insider event of the year.
All that said, James, do you want to tell everybody the rules
so they know why and how we're operating here?
Buckle in. It's a complicated set of rules,
so I will try to go through them efficiently.
If you recall from last year, some of you may have listened to
that episode, we drafted teams. As Eric said, we drafted the top
private companies in AI. We're all looking to create a
team of companies that by the end of 2028, will have the
highest value on either sort of a private market valuation, an
exit or an IPO. So just to caveat a few
different rules there, last year we each drafted 5 teams.
And in order to get the 1st pick, we agreed that you'd have
to take a big handicap because there was such an outlier pick
with Open AI last year. So we agreed that Eric, by
drafting Open AI first, would have to take a $75 billion
handicap. Auction for that so I I paid the
most the right. How are you feeling about that
decision in retrospect? Excellent genius, I'm dominating
right now. Yeah, Eric's team's looking
really good. We'll get into that in a minute.
A couple other rules. You have to be on this list at
all. To be a one of the companies
that you can draft, you have to have raised over $100 million.
Fortunately, a lot of AI companies have raised well
beyond $100 million. It's a long list.
Very short amount of many. Companies we have never heard
of. It's a quite, quite a long list.
Many of them I haven't heard of, heard from since, but they they,
they have raised over $100 million.
A couple other rules. You have to have had a core use
of generative AI or other generative AI infrastructure use
cases within your product. However, we're excluding certain
industries as well. So if you're purely a bio
healthcare industry, AI provider, a defense provider,
silicon chips infrastructure provider, you know, such as core
Weave or Lambda Labs, we're also excluding you from this draft
robotics and a VS as well. We're not drafting Waymo, we're
not drafting crews and other AV companies.
And we're also excluding a couple companies that are just
purely based in China. We don't seem to know much about
them and and that makes it hard to draft them.
And then, yeah, you have to have been founded within the last 10
years. So before, you know, excluding a
couple companies that maybe have a generative AI story, but they
were founded before 2013 or 2014.
And then lastly, this year there will be a way to add and drop
companies. So you can actually decide in
advance of this podcast recording whether you want to
drop one of your companies of your team.
You can pick up new companies off of waivers.
If you've ever played fantasy football, you'll be familiar
with that concept. And then we also will extend the
teams a little bit this year. So we're keeping our teams from
last year, but we're adding two slots each to the team.
So you'll have opportunity to at least draft two more companies
for your team. How's that sound, guys?
Great, great. I emphasize, and I think you
said this, but like the goal here is to get the highest total
sort of market cap on your team. It's not like a return on your
investment. So there's definitely an
incentive to buy highly marked companies if you think you know
there's still room to grow. But even if there isn't, you
know, they may, it may be strategic to pick a maximally
valued company. The other thing I want to say is
play along at home. Comment on the post with your
picks. Obviously you have the advantage
of not competing with anyone else, but there are still so
many companies that it's a challenge to come up with your
What's going to be the total number of companies we each have
by the end of this, James? Seven.
Yeah, seven each by the end of this.
Yeah, so pick your 7 and let us know which companies you draft.
Or let us know, you know, what were our genius picks and what
were our terrible picks? Who are you reading for,
Allison? All genius.
Newcomer subscribers are probably rooting for Newcomer.
Are they? I don't know.
Maybe they're all rooting against newcomer.
You never know, could be a hate watch.
Revenge for scooping their fundraise.
What else do we need to cover? Anything else?
All right, so a lot of rules, but we know there are a lot of
nerds on here who want to make sure, understand the strategy
behind it and follow along very closely.
So those are the rules. And now we get to the fun part
and make our picks. Give it a listen.
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The draft started out strong with a big pick from Eric Open
AI, but he had to take a handicap on that so he had to
sacrifice 7 to. Guarantee that I would have the
right to pick open AI, and I've been extremely validated by that
already. Yeah.
So you took a $75 billion handicap off of your own total
score. And by the way, this draft ends
on in November 2028. However, you, Eric, have also
had some exits or semi exits, both inflection and character AI
semi exited. We've decided to award you their
valuations at the time of exit. Do you want to talk about that
nuance for the listeners? A key subplot of this year has
been sort of the licensing deals Aqua hire somewhat exit.
Basically, leadership at a company gets bought shareholder,
you know, the acquirer sort of acquirer pays the company that
start up a big licensing fee, then the startup uses that money
to buy out the share, the preferred shareholders,
basically wiping the cap table. So it's a weird, the company
still exists, but the investors got paid out and the
leadership's gone. And so you know, I think the
logic we came to agree on was that these were effectively
exits for the investors and therefore you should be able to
cash out. So the the licensing deals
character which I think we're putting at 2.5 billion
inflection. Around 1:00. .4 what James you
had adept. Yeah, at around a billion.
Yeah. And tech, I don't.
I guess in the abstract you could rebuy those companies,
though. We've also put in the
requirement that companies need to have raised $100 million.
Are we allowing rebuys of these? I'm never going to rebuy any of
them to. Be clear.
I don't think we should. I don't think we should allow
rebuys because like you said to us, the, I believe reported that
the cap tables were kind of completely wiped out.
So these companies haven't, the new shells of the former
companies haven't really raised $100 million yet.
So they're no longer part of the draft.
Your other companies are doing quite well.
So yeah, Open AI reportedly raised $157 billion evaluation.
Glean raised an E round at a $4.5 billion evaluation.
Mistral also raised the B round around $6 billion.
So your total including the $75 billion handicap is roughly
around 100 billion right now, 96.4 So you are way ahead of Max
and I Max had Data Bricks, Pine Cone, Cohere, Modular games, and
Imbue. Using to value Data Bricks by
because it hasn't raised a new round since.
But like Data bricks, is an extremely valuable company, so
Max is worth at least half of what I am by.
There's no way. So.
Thank you. Thank you, Eric.
I appreciate the defense of my honor here because the
spreadsheet says my total value is 5 compared to your 96.
So yeah, it's like I was like, is this just going to be a dump
on Maxfest? Because database still looks
pretty good to me, Yeah. You just, you, you need to get,
you need to get a new fundraise to get to get points on the
board. But I agree you're still still
holding strong. But your only points on the
board would be Cohere, which raised the Series D and came in
at about 5.5 billion. And then my own team, I have
Hugging Face, Anthropic AI 21 Labs, Replit, and Adept.
As we said, Adept kind of exited at that 1 billion mark.
And then Anthropic also did a fundraise in the last year that
valued it at a 18.4 billion post money valuation, putting my
current score around 19.4 billion.
So yeah, I still have some, I think. 30 to 40 so you'll you'll
get a boost. Yeah, I was gonna say James and
I are kind of in this the same category of like we're around 40
probably because I think data bricks is probably around 40 and
in tropics probably around 40. Yeah.
And so Eric is crushing us in 90 for sure.
Yeah, yeah, sure. My my roster is pretty weak.
I went with the stars and scrubs strategy, except I only have one
star and that is data Bricks, something like 40-40 or fifty.
I have Pine cone Cohere which hung in there at A55AS, James
said. I have modular and I have Imbue.
The scrubs are still scrubbing pretty hard, so there may be
some foreshadowing about. You biased towards some.
I may do some dropping. You interviewed on stage, which
was perhaps yes. I did go with a personal
connection vibes based approach it, it may not have panned out,
but I got data bricks. So I'm arguably still in 2nd
place and I will take that, all right.
Let's let's go into the drops. So Eric, you freed up two spaces
already with your inflection and character sales.
Are you dropping any other companies?
I'm not I'm not dropping anything else.
I like obviously open AI clean mistrawl.
I'm keeping. I want to say one thing.
You know, I was very bullish, I think impression Lee on opening.
I just wrote a bear column on open AI at 157.
Max and James are not giving me a way to like somehow like sell
my current markup so there's no I would never drop.
Exit Exeter IPO but. I'm not, I'm not allowed to like
lock in where it is and then sort of be short.
I'm still. So you're saying go up, you
would do it up, Okay. I think it'll get marked up.
Got it. But you're just.
Forty, $50 billion. But I'm skeptical beyond that.
Got it. I would say if with open AI this
may be a future debate, but the every new round is getting
increasingly bizarre in terms of.
Stress. I know, right?
Exactly. I talked to some evaluation,
some investors in the open in open AI round and they're like,
well, we get paid back in two years if they don't grow fast
enough, exactly starting to become like a sort of debt like
structured. I know if I could cash As for
the money it's worth, I'm I would be tempted, but I want to
be able given I'm keeping it, I'm keeping it with pride and
I'm going to pat myself in the back if I if I.
Yeah, all with it. All right.
Well, if if the next opening eye round involves like, you know,
collateralized obligations or something like we need to start
talking about what evaluation even is at this point.
So. There's a lot of nuance in this
VC game, I think is what we've discovered from this draft.
Who knew? I thought it was easy.
OK, Max, are you dropping anyone from your team?
I I am dropping some of my scrubs.
Sad. I will yeah.
RIP Max's team. I will.
I was honestly considering dropping everyone except data
breaks, but I decided to dial it back from that approach.
I will stick with Cohere given I'm starting Mark leave it
found. Yeah, the markup Also, I think
foundational models like are becoming like state level assets
and potentially like Canada will want their own foundational
model. You know, like safe super
intelligence might be like Israel's foundation model.
So I'll keep I'll keep Cohere and I will keep modular because
I still ride with my boy Chris Ladner.
You know, it might not workout, but he's trying to create a new
language. Yeah, OK.
Yeah. So I will be dropping pine cone
and Imbue pine cone. I went kind of back and forth
on, but I, yeah, I the whispers in the VC circles.
I, I roll in quite regularly. We're not very positive and
stole volume. So there's a little imbue.
Stole stole Volley's office, which.
You think is a possible sign they've got a lot?
Of kids to go around. Yeah.
Outside of the bad blood on the
office front, Eric, would you agree?
Imbue. Not a lot going on since I
picked up. I haven't heard.
I haven't really heard the radar as much, yeah.
So either they're working on the greatest takeover the world
strategy ever, you know, or there's not a lot going on
there. So I'll go without a lot going
on. I'm dropping those two pine cone
in view it. I wish I could say it was fun,
but it wasn't really. All right.
All right, an upward. My team, I'm feeling good about
Anthropic. As we've said, I think you know,
even in the last year we've seen a lot of kind of progress in
terms of catching up to open AI in the closed model race and a
lot of success with their specifically their coding
capabilities and enterprise adoption.
So very excited about Anthropic Hugging Face as well.
Still I would say core player in the space.
So I'm keeping them. I was decided to drop AI 21
labs. They essentially have an open
source model, but it seems pretty behind other open source
providers And they, you know, their claim to fame is a lot to
do with the context windows and the kind of inference time.
But I think that is getting a little bit commoditized as we've
discussed in in earlier segments here.
So dropping them I was debating reblet but I've decided to keep
them on my team. Reblet.
Keeping Reblet, Yeah, that was an interesting, yeah.
It was. Give us the case for why you're
keeping reblet here. Yeah.
Yeah, so coding, so reblet. Coding is hot reblet.
If I were starting as an engineer again, I would probably
be using them. I think that it is the best way
to get started coding. They have a vision of, you know,
empowering like billions of billions of creators to create
applications. I think it's a little bit of
like a long run or a high upside bet.
And I still think it's the right.
They have product market fit. They have customers that have 20
million users or something. They're working on AI agents.
They're really in the mix. I hear about them a lot, even on
X, so I think there's, yeah, there's still some upside.
To be had there, they're good. It was a tough call out.
There. Prominent FX Yes, I was can.
I is that my take? My contrarian take here, well,
not contrarian at all, but contrarian to you apparently is.
I think what we learned about the first year is we are not in
the Unicorn hunting business. We're in the deck of horn
hunting business because nothing shows up on this chart other
than the the $10 billion plus evaluations right you guys
congratulations you had X like 1234 billion whatever Yeah,
exactly. Well, I think real VC is if
you're a CVC you can be in the Unicorn business.
But we're we appear we're basically gross stage VC is
we're 100 million minimum. So we're.
And we're able to get in like $3 billion.
Yeah, I, I just I'm yeah, right. So I'm not, I'm just not sure.
I don't. I'm not sure I see the path to
deca corn for replit. How?
How would you see that for modular?
Explain the deca. For modular, OK, here's the Deca
corn case for modular. Modular replaces CUDA as the
core language for how you code and gets bought by like, you
know, AMD or ARM or something as like the way you code on non
NVIDIA chips. And there's so much demand for
getting off NVIDIA, not paying Jensen absorbent fees that
there's huge value in having an alternate AI coding ecosystem.
So there you go. That's what I believe.
Look, I think, I think it's a very asymmetric upside bet where
it would probably be worth nothing in 90% of cases.
But I like my 10% upside case and I'd be interested in your
10% upside case for repple. Like give me the deca corn.
Repple it's it's basically that that becomes how everyone learns
to code the number of engineers, the number of engineers in the
world. Seven, I mean, that's there's
no, you know, everyone codes in the world like the.
I think it'd be good. You didn't let me finish.
I think that, I think that, you know, let's say you have
essentially hundreds of millions or billions of engineers in the
world, Like it becomes, you know, the spreadsheet or
something, right, coding. Everyone became like a sort of
an engineer in the PC era through spreadsheets, but maybe
that maybe true built application building becomes
like a core part of people's knowledge workers jobs in the
future. And yeah, maybe it becomes a
true platform for that. Or there's a bit more of like a
consumer take, I guess where, you know, somehow creating these
applications becomes, you know, part of social network type
experience. But yeah, I, I think it's a,
it's a stretch, but it's, it's possible.
I think it looks like we all have 4 spots to fill given our
drops and our new slots. So we're gonna pick up exactly
where we left off the snake draft.
I had the last pick of the draft last year with Adept at #15 so
it'll be my pick coming in hot with draft pick #16 and then
we'll snake draft from there to Max and Eric.
So yeah, my, my pick. I don't think this will come as
much of a surprise, but I'm picking Xai, which has been
rumoured to be raising at a $40 billion evaluation, did.
You give it an extra premium for being anti woke AI.
Well, Eric, they told me that they were.
Yeah. They're going to take over the
world. So very, very, very.
Really. Boosted, Yeah.
It's a good figure. Obvious pick.
Yeah, yeah, yeah. Yeah, I think it's a good pick.
I think they spun up I think 100,000 H one hundreds in the
last four month months, which Jensen himself said it wasn't
possible. But but then according to Elon,
they've done it. They're they're they appear to
be like. Trucking in gas powered
generators to power this thing they have, they're just going as
fast as possible I think, which is pretty, pretty compelling and
kind of what you need to do to be a foundation model competitor
in the environment today. So yeah, don't short Elon, I
guess. And they have that Twitter.
In which case you probably should have shorted Elon, but
yeah, yeah. That's.
AI AI does feel like more of a hardware problem and an energy
problem than like a more social. Networking problem so more in
his wheelhouse yeah, right. I think and maybe X AI helps
Twitter yeah, maybe. I don't know yeah.
I think like, I think or vice versa.
I think it's, you know, kind of an interesting.
I, I'm actually very intrigued by how that works from a
business perspective, like because the current only product
of XAI is this Croc chatbot that's available only in X
Twitter. So I I don't know how this looks
as a partnership long term, maybe they become the same
company or something, but this feels like a good pick to me.
I think it's the obvious first pick.
I think the short case is. It's like the third best model
right now, but the long case is Elon's good at bending the laws
of physics, and AI is mostly a laws of physics problem in some
ways with yeah chips. And recruiting and get it
raising fundraising. Yeah, great.
Sure, totally. Yeah, he's.
Yeah. All right.
Max, you're up next with the next pick of the draft.
I will take kind of the obvious second pick set up.
Eric whining about how his open AI first pick screwed him.
For this redraft, I'll take Scale AI, which is far and away
the second most valuable open slot on the board.
They just raised to 14 billion. They provide data labeling
services to a bunch of different AI companies.
I think what's interesting about Scale is they are very
polarizing in Silicon Valley. I would say a lot of people have
joked for many years that they're just a like sort of
random third world worker, like Mechanical Turk business where
they offload a bunch of menial tasks to people in cheap
countries. But on the other hand, they
basically like 4X revenue in the last year, some crazy thing from
like 1 to 4 billion. And so if I'm getting at this at
like 3X revenue, I'm feeling pretty good.
And I, yeah, I mean, the lesson of the last draft is you gotta
gotta ride the horses that are winning.
And this is a clear #2 right now.
So I'll grab scale somewhat conflicted about whether or not
it's a long term multi deca corn, but you know, can't not
take the the only other ten billion.
Plus so the data piece of the AI puzzle, which we talked the
least about but couldn't. Right, yes, there.
Yeah, we haven't really weighed in on the take that data, you
know, quality of data is long run a huge piece of the puzzle
maybe equally or you know, as important as as chips and
compute and scale and energy and so on.
Because there's a lot of garbage data out there and especially we
just scrape the whole Internet and you don't have good stuff,
you maybe won't get a good AI or same with, you know, imagery or
video or whatever. So that's the scale case.
The scale short case, as I said, is that oddly enough it's
business might be very automatable by AI in some ways.
So yeah, that's my take. And we have the CEO joining us
at the conference. Yes, we have CEO and Eric, I'm
sure we'll ask him some hard questions.
So it'll be fun. I'm excited.
It'll be fun. I'm up.
Eric, you're up. Yes.
You get 2 picks. 2 picks, 2 picks.
OK. I think the first one is what
you guys would pick partially hidden on the stock because it's
valuation increase. I think it's only reported and
not locked in, but I'm picking perplexity.
Smart. Yeah, I mean.
Bad. Highest chance of disrupting
Google search. I do think a lot of investors
are very excited about it even though it you know as a reporter
it gets me a little annoyed with their seeming story RIP offs.
I do like the attribution philosophy and excited to see
them continue to develop. I did not realize I was going to
get to back-to-back. Can I get of a genuine
perplexity short case like? Can you give one or?
Can I give one? Yeah.
Can I? Can I actually critique this?
Picks, isn't it? Next week, yeah.
Yeah, I just think if you look at the data, like if you look at
App Annie or you look at any of the open, you know, data
services that tell you how much usage perplexity has, it's like
shockingly small. It's like really, really not
that popular. It's very popular among nerds on
Twitter, which is a perfect overlap with venture capital.
I know there's this hot take that it's gonna disrupt Google
or whatever, but you know, most people are pretty just used to
typing in the search box that's on their browser, that's either
on their iPhone or on their computer, and that's going to be
Google forever and ever because they have the money to buy that
box from Apple. According to the information, by
the way, they have 20 million ARR.
Is that surprising? Based on what?
You're, no, I mean, I think like, you know, they probably
have a couple million Mau, you know, somewhere between 2:00 and
5:00. And you're monetizing those
people, you know, reasonably effectively, but not crazily
effectively. So that's a ballpark, you know.
Yeah. So let's say they have 5 million
Mau or whatever, Google has like 2 billion Mau or something, or I
don't know. It's it's, you know, it's 1000
times bigger or five and it's free.
Or something I know. Yeah.
And it's free. Yeah.
So I just, I just would say, like, I'm not convinced the
differential against Google's AI summaries or whatever is going
to stay there for very long. A bunch of people gonna RIP off
their interface innovations and I don't really see how they're
going to get a distribution advantage.
So yeah, I'm, I'm definitely short at whatever the what's the
latest valuation like 10 or something?
It's reported 8 billion eight. Yeah, I'm I'm short at 8 for
sure. I'm I'm probably long at like 1
or I don't know but I'm I'm short at. 8 The next Google
we'll see no. I just think that I think that's
an overrated take. Yeah, I'm sorry.
I. Eric, who are you picking you?
Know I went all over the place. I certainly have companies down
bit lower on the valuation list that I'm probably more amped
about. I thought about Sierra, like
customer support being sort of a promising area where I could
actually get deployed. But just looking at my strategy,
like we're going for big ones. You got to go with the guy who
was the genius behind open AI that could either lead research
at another company, could invent AGI, VMS AGI.
I'm going to win like, so I'm going safe super intelligence.
Ilya, I'm betting on you. And then obviously, I mean,
Daniel Gross is, you know, one of the most connected people in
Silicon Valley these days. Music Co founder.
That's what I'm going with. Yeah, Yeah.
For the record, I thought that was where you were going to say
the obvious next pick was because that's definitely I
would have taken injuries. Why would you get?
Why are you guys so excited about this company?
I'm I'm short like. You're short, right?
I guess as an as an owner of XAI you.
You believe in dangerous super intelligence.
You're like, you're like now. I don't know. the Super
intelligence has to be dangerous to be valuable.
Like the safe. The safe is no good.
I have a balanced diversified strategy of having anthropic and
XAI. Save the world, Kill the world,
Who can go to safety? Give us the short case.
Yeah, What's the short case? Yeah.
I just think that, yeah, like I think that he, you're basically
basing this off of, you know, a billion dollar evaluation and he
can create a new foundation model, right?
I think that's the only explanation for why this is
important and and it just feels like he's so far behind.
All right. So my pro safe super
intelligence take here to stand behind Eric is I think that
these foundation models are becoming so expensive that their
borderline have to be nationalized in the next like
two to four years. And I think safe super
intelligence is basically going to be Israel's national model,
at which point, you know, I don't know if that how that
impacts the valuation. And we could debate that a
couple years down the road. But fundamentally, like it's
going to be a nation state level concern to have a really high
quality model. And I think Ilya will probably
be the the flag bearer of Israel, which maybe was the AI
21 case for for James a year ago, but they might have lost
out to SSI. So that would be my pro case.
And that's why, yeah, I'm a fan of the pick.
All right, let's keep moving. All right, Max, you're up with
the next pick. Well, Eric kind of foreshadowed
this that I think, you know, a solid option for next pick is
Sierra, which is X Salesforce CEO Brett Taylor started a AI
kind of customer support AI company.
You know, I find customer support super boring.
There's like 250 of these fucking companies.
I don't really see any obvious reason these guys are going to
win because I haven't seen the actual product or compared them.
But like any good VC, I'm just riding the heat of all the other
hot VCs being in this company. And everyone I talked to in the
biz is like, this Is it baby Sierra?
Yeah, exactly. Benjamar and Sequoia get me
wrong, baby. It's never lost me money before.
So I'm going to freely admit I know almost nothing about why
this is supposed to be the best of these 200 different customer
support companies and say, take me to the top.
Brett Taylor. I love it.
Basically just you're just going with the the VC cred.
Hell. Yeah, OK.
I believe in that philosophy. That was my Glean bet last time,
Kleiner and Sequoia. Totally worked.
All right, I will take the next pick of the draft.
I guess I got 2 picks here. I think this will be maybe a
slight surprise, but so with the next pick, I'm taking 11 Labs.
Yeah, 11 labs. We are already a customer.
They definitely have a lot of product market fit in this voice
cloning and text to speech space.
They seem to have been making moves, I think I alluded to
earlier, buying companies that provide consumer applications so
that you could, you know, read articles with these generated
voices. They have been, they've released
a lot of new technologies, including more.
Most recently they announced kind of a new agent framework
for voice AI applications. They also have a sound effects
API. Yeah, they ship a lot of
product. They have a lot of fans in the
developer community. They're taking an eye towards
some consumer applications. So I'm going with 11 lamps.
I I'm short 11 lamps. I I just as a customer, I like
the product. It also seems immensely
replicable by the large cloud services.
I think once Lena Khan is no longer blocking acquisitions, it
will get bought by AWS or Google or Amazon or Microsoft.
All right, And with my next pick of the draft, I'm going to take
runway so all. Right, that was my next.
Pick. Really, I would.
I love them. Wow, fascinating.
OK, You think that's a bad pick, Eric?
Yeah, I mean, he was the one at Cerebral Valley New York making
promises that our own AI crowd didn't even believe.
I don't know. And now they're now they're sort
of saying they're in like the video production business
themselves. I don't, I I'm very bullish on
Adobe figuring out what creatives want and monetizing
it. Well, yeah, so no, I'm not.
I just think what we're in the business of the DECA corn
hunting runway, the the hype train is why I'm investing in
them here. They said, you know, we'd be
creating Oscar winning fully feature length movies, you know,
in two years or something. They told Max that on stage.
I think there is a lot of high upside scenarios where video
Gen. tools become like a much more interactive medium also,
right. So if you could really generate
video that's photorealistic and and sort of in that low latency,
you can create almost gaming use cases.
There's a lot of like simulation type products they could build
and then there's consumer use cases, just, you know, creator
tools. So they do seem to be the leader
in this important AI video space.
We also haven't seen, you know, open AI launch Sora, even though
that received a lot of, you know, attention when they
announced it. So I don't know super.
Expensive. Yeah.
Do you think Runway is just burning burning capital then or?
I don't know that specifically, I'm just saying if all these
models cost a ton, like video models sound like they're going
to be like, you know, so, so cost in terms of.
Yes. And right now, I think, you
know, the main customers of Runway are like a feature length
Hollywood, you know, production studios or maybe like doing, you
know, a few like one second clip generations or something to like
fill in part of their films. But I think that, you know, as
cost curves come down, it just opens up a lot of use cases.
But yeah, if cost doesn't come down then maybe it's a bad pick.
I like I like the asymmetric upside bed to take over the
world plan. So I'm kind of in.
Should I take the next pick? Yeah, go for it.
All right? We're definitely getting into
the harder part of the draft where I think you have to go a
little more wild with a little crazier pick.
I'm gonna take Sakana AI from one of my VC referrals here.
Said this is the hot thing. You should check it out.
Apparently, they're literally trying to use AI to automate
fundamental scientific discoveries.
Essentially, they're huge in Japan.
I believe in basically the core mission that it is possible to
make scientific breakthroughs with AI.
And so I don't know, that sounded like an asymmetric high
upside bet. And I'm getting good buzz from
the VC networks. And at this point, it's pretty
hard to kind of dig through the draft.
So Sakana, welcome to the team. Is it OK if I show my hand and
sort of talk through the four and then picture?
Yeah, sure. I mean, yeah.
You're just giving you guys Intel leak.
Ideas to us, so it's. All good?
Yeah, maybe I won't. No.
No, no, come on. Is it a podcast first or is it
winning first? Do it for the content baby.
All right, I'm debating Thesis 1 is like man, we keep saying it's
all about applications. We're bullish on coding and the
other big hyped application category is legal.
So Codium is coding, Harvey is legal.
Those are the applications. Cursor is very buzzy, but I'm
not allowed to take it. They haven't raised $100
million. I met an interesting services
legal startup whose name on blank.
Yeah, I'm sorry guy, but I don't think they've raised enough
money. So so that would leave Harvey
and Codium weights and biases. I think is a company that's
that's done well in serving a lot of like the infrastructure
layer and could be like a solid company.
Listening to myself, I'm clearly excited about getting hits on
coding and law. So I'm gonna take Codium.
I'm gonna take Codium first and then Harvey second.
All right. All right, actions.
What do you think of the Harvey controversy that?
What do you think of the Harvey controversy that.
Well, there's that random tweet that is like vaporware.
You talk to some of the legal startups and they're like, we
don't see them out there, but. Well, I, I've, I've talked to a
couple lawyers and they're like, it's not that great right now.
Now maybe you're like, I'm long models getting better, so it
doesn't matter. They have a better sales force,
yadda yadda yadda. But.
Both of them I'm betting on the category without knowing a lot
about the culture. You're just basically trying to
grab the leader in a category you believe in.
All right. Exactly.
Fair enough. Yeah, I, I think that's a
reasonable thesis. I I do think the buzz that
Harvey is not that great is it seems to have some where there's
smoke, there's fire kind of element to it from from my
research. What makes you so sure that
Kodium is the leader in this category?
Why is there? Here's my other option on this
list. Well, I don't know.
I'm just, I'm just wondering like what's the evidence of
that? I guess they're.
Just raised enough money to get on the list I guess.
Isn't isn't sure. Isn't magic the same thing?
Kind of or similar. Magic.
Yeah, there's. And obviously cursor hasn't
raised enough, but Magic was like Daniel Gross's play into
that space, right? Yeah, yeah, I've heard of
Kodium. Fair enough.
The end of the draft is tough, man.
I think you're just grabbing ideas here.
I mean, cognition is also codium, to be clear.
Yeah, I could have taken. Yeah.
Exactly. Cognition.
Yeah. Poolside is coding source, Scrap
is somewhat code related. There's just a lot of coding
companies up here. So I was just curious.
But yeah, yeah, why you went with Codium specifically?
But it's all good. It's all good.
It's done. It's done.
Is done. All right, I will.
It's done. What's done is done.
The bottom of the draft is tough.
Max your last. My final pick, I will take
Hebia, which is sort of like Eric's legal thesis, but for
Excel. In some ways it's sort of like
the finance, like private equity, you know, investment
banking to some degree, whatever.
Excel, Jackie, AI, basically, I've heard very good things
about the products. It has a, you know, super elite
investor list with Peter Thiel and Andreessen and everything.
And I actually talked to someone who worked there and they were
like, this is a pretty sick product.
And I don't think they were just talking their own book.
So yeah, Hebia AI for Excel jockeys, which I was an Excel
jockey 12 years ago. So that that sounds pretty good
to me. Would never have considered that
in my life. It's.
The bottom of the draft. It's the bottom of the draft.
You got to take some sleepers, you got to, you got to, you got
to have a dream. All right, last pick of the
draft, James. Last pick of the draft, a lot of
companies still on the board. Yeah.
So I'll walk you through some that I'm considering kind of a
debate between I guess three companies here.
Poolside, which I mentioned is another AI powered software
development platform. They raised $500 million in a
Series B this month, which I thought was pretty interesting
quantity of. Money.
For clear purposes first, theoretically for a foundation
model around trained around coding.
The other one on my list. Still, I think Eric mentioned
them earlier, they do seem to be kind of a leader in this
developer space where if you wanted to, you know, use open
source models and do fine tuning and host them and and have the
infrastructure for that, they seem to be one of the leaders in
that space. And then the last one would be
very much a flyer, which is just World Labs, which is Fei Fei
Li's startup, which just raised about 100 million in July at a
$5 billion valuation. So yeah, there's some
opportunity there. But I think similar to my bear
case on Safe Super Intelligence, I think I will be rolling that
one out. And in terms of going after that
sort of the software space, I think I'm gonna have to pick
poolside. Wow.
Lots of money they could sell. They could sell for a billion,
you know. Exactly just based.
On the money just. For the cash just to get to.
Lock in the money, you know. I mean, yeah, I don't know.
I don't know what they're, what they're working on.
I hope it's worth. A lot, yeah.
I upset I upset I. Upset yeah should we do some
bring out your dead any picks that we.
We think you should have picked you.
Should have picked. Yeah.
I mean, I don't know. I'm shocked you didn't pick
Suno, James. You're just banging on Suno like
every weekend. Suno's a great product.
Grab some SUNO stock. I just, I'm very nervous about
the music industry, having worked with the movie.
Yeah, you. Worked with the music industry.
You. You have some?
Yeah. When do we get sort of picking
volley in this? Like no, you haven't raised.
Next round, we haven't raised. Next round.
Yeah, Yeah, that'd be good. Yeah.
I think Magic is interesting. I like that as another coding
pick, my VC Whisper source. Hated together.
Oh yeah, OK, I didn't go it
together then. Yeah, it's like, I think
Together's A0 Max, you're behind, so you're doing more.
High up. Research now I've no yeah I see
like last time I did a lot of research and this time I sort of
just like. Just for it, yeah.
I'm coasting. I'm winning.
You. Know I'm not yeah, I'm not sure,
but these also ran kind of models we have here.
I think, you know, Pika is, is you know, the third best video
model. So I'm a little, I'm a little
concerned about that. Cognition's interesting with
Devon, but I guess like seems to be less of a foundation model
play and more of this agentic play, but maybe the hype has
died down a little bit. It is amazing how just like in
six months, the hype cycles are just changing so rapidly.
That stuff, it was just like crazy hot, you know, at our last
conference or two conferences ago now feels like, oh, that's
tired. You know, they haven't done
anything in eight months or something.
And it's. Like.
OK, well, yeah, the cycle time in the AI industry is just
ludicrously short right now. Yeah, cool.
Should we wrap? Should we wrap up our text?
Yeah, yeah, yeah, yeah. OK, just let's let's compile
this quickly. So Eric, your team now consists
of open AI. You banked some money from
inflection and character and you you continued to ride with Glean
and Mistral and then you added two pick or 4 picks to to your
team. Perplexity.
Great pick I think, but you know, risky as Max said.
Safe, Super intelligence safe Pick safe.
Safe. Safe pick safe.
And super intelligent. Pick safe, super pick Kodium and
Harvey. How are you feeling, Eric, about
your team? I'm I'm happy, honestly, I
think, you know, I wish I could have gotten X AI, but given what
was available, I'm I'm happy with my picks.
Max, you dropped a few folks from your team.
You have you kept data bricks cohere and modular and then you
added scale AI high valuation play there you added let's see,
sorry. Sierra.
S s Sakana Sakana and Hebbia yes, I like things that.
End in a apparently. And start with S.
Yes.
And then how are you feeling about your team?
I mean, I'm feeling better than last year.
I'm glad I banked scale. So I've got some, some valuation
games. I still have data breaks.
I still have scale. I've got some valuation.
You know, I, I, I still think I'm basically running the stars
and scrubs play here, which which didn't really work last
time. So other than other than again,
just data breaks. So we'll, we'll see.
We'll see. Yeah.
I'm I'm a little less optimistic perhaps than I was last time
around. And then my team, I have Hugging
Face, Anthropic Replit, I banked some cash from the Adept Amazon
deal and I'm adding XAI with the highest valuation on the board
right now, adding runway, adding 11 labs and adding poolside a
lot of like sort of foundation models, developer tools.
I think with Anthropic and poolside getting that kind of
coding play. But also Anthropic has one of
the best, I would say coding LMS right now with Claude, But I am
a very bullish on that. That is, you know, valuable use
case of this technology. So riding, riding the developer
tooling ecosystem. You're you're like, you're
running like the murderer's row of companies I think are
overrated, basically, which probably means I'm wrong.
And one of them will be like a $200 billion company.
So yeah. You only did one necessarily
right? You're just like, you're just
naming them off. You're like, you're like
poolside Rep lid 11 Labs. Like, what was the other one
like? You know, Hugging Face.
Anthropic is great. For the record.
You know, Anthropic is Immaculate, but you're you.
You. Yeah, you just got a lineup of
like, Twitter memes that I hate, basically.
Just because you feel like they're overvalued or?
Yeah. I just like, I don't yeah, I
think overvalued or or just, you know raise too much money in the
case of poolside with no product or or I think the product has a
sort of lack of, you know, large market.
Would either of you pick what Kodium or Harvey?
Were they on your list anywhere? Well, Harvey was on.
My. Harvey was on my list.
Harvey on your hater list? Yeah, yeah, yeah, Harvey was
probably on my hater list. Yeah, so.
In some ways you have. The company to be a little
polarizing you want. People to be thinking about,
right? Exactly.
Yeah, There's a top of mind.
I bet the Max anti portfolio is better than my actual portfolio.
So don't worry it's like I need I need the the inverse of my
hater list. We'll probably.
Do better than my. My actual list, I mean, at the
end of the day, I'm still like, really exposed to open AI more
than anything. It's like, yeah.
Yeah, yeah, maybe. Maybe the whole industry is,
yeah. I mean that.
That's been the question for. Lt. events just is it really all
just about open AI and still to be seen right?
One update from our overrated, underrated episode.
Minor correction on one of the revenue figures, Max.
Yeah, I would say a major correction.
A major correction, but we got the source, we relate what the
source said accurately, all right, it relates outdated.
All right. To make this clear, the
Information Special Pro subscription told us that
Anthropic was making around 100 million in revenue per year.
Apparently CNBC reported that Anthropic is in fact closing in
on making a billion dollars in revenue a year, which is quite
quite a bit larger and is growing its revenue at basically
10X year on year. So that hundred may have been
accurate, you know, 910 eleven months ago.
Luckily for James and Eric, they both already look super smart
and they say Anthropic was. Unrelated, much smaller revenue
than it actually has, yes. Max luckily gets to look super
dumb when he said Anthropic was very overrated because I would
say 10X you're on your revenue growth absolutely justifies a
crazy 1/3 of open AI valuation. Interestingly, I stand by my
take that their consumer app growth is not that impressive.
I think it was 20% in the last quarter because it looks like
basically all the revenue comes from their API and their sort of
developer tools. All right, So that's a minor
update on our overrated, underrated episode, keeping
ourselves honest, and we'll let you know if there's any new
information that comes to light after these episodes.
And yeah, reach out to us. You know, you can what?
e-mail Eric at newcomer.co, probably that's me personally.
And send me your takes Comment. We want more comments.
Yeah, comment on the post with your own opinions.
And certainly happy to. We have very smart listeners, so
would love to hear where we got it wrong.
Reach out anytime. Thanks so much.