Hi, I'm Eric Newcomer. And I am Madeline Rinbarger.
And this is the newcomer podcast.
Each week, Eric and I discuss the VC deals and the drama that
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Welcome to the show. I spent my week in uh, crypto
land, talking to a lot of VCs about the Bitcoin Strategic
reserve. Thanks Trump and David Sacks.
Thanks, Cryptozar. They've got even the crypto
skeptics in the crypto weeds this week.
We're recording this on Thursday, but on Friday there
will be a crypto summit at the White House where hopefully
we'll get a little more details about the Bitcoin Strategic
Reserve. But as of right now, it's a
little muddied because Trump kind of blew up a lot of
people's spots on Truth Social saying that we should Add all
these other alt coins into the crypto strategic reserve.
It all feels very thrown at the wind to please some people and
holders and it just makes the whole thing seem even more self
enriching. What the consensus from you
people you talk to is, it shouldn't just be Bitcoin,
right? Yes, the investors I talked to
who are even holders of Solana and all these coins say adding
other coins to this is a bad idea.
Anthony Pompliano had talked, he even said the adding other coins
is a bad idea. Investors I spoke to who are,
you know, more reputable, I'd say we're also in agreement that
it just makes the whole deal look even more self enriching.
And it has, it serves no purpose except to, you know, pay back
coin holders, which I think has been a theme of this
administration's approach to crypto and how it kind of
complicates things for founders in BC's who on the one hand are
super happy about all this boosterism and deregulation in
the space. But it's being used to do Trump
and Melania meme coins and self enriching and makes the space
look shady. With Bitcoin, there's this
sense, I think it maybe this was naval, but it's immaculately
conceived. You know, Bitcoin doesn't have a
founder. There isn't a clear person
that's going to make a bunch of money off of it.
And therefore it's sort of not playing favorites to raise it up
with the government. I don't.
I mean, it's true, but you are just sort of playing favorites
to people who wildly speculated outside of the US government
interests and now sort of reward them with a currency that could
be competitive with the US dollar, which doesn't make any
sense. But putting that aside, yeah,
the idea that like Ripple, which I think some huge percentage is
controlled by like the creators or the company behind it and
Solana, Yeah. I mean, it's very clear that you
are just picking favorites. I think Matt Iglesias or
somebody joked like, Oh yeah, next the government is going to
buy like GameStop. You know, it's just sort of like
what's the buzzy like stock we can hand out to our like crew
and and pump it. It's just crazy.
It hasn't even been that good for the price of Bitcoin, right?
It's. No, the price of Bitcoin has
actually been falling this week and it it really peaked in
December and has been not able to reach that high since, so I
think. People thought, oh, man, you
know, there are expectations, like if Trump and the government
get behind it, then this thing will really take off.
It didn't seem to move the needle that much.
So it'll be interesting. I think it comes down to this
tension between the legitimization of the space like
and people and actors in the crypto industry who want that
and to be more in the financial markets and the scammier parts
of the space that the others kind of feel are bringing down
and hurting the value of their assets with these kind of self
enrichment schemes, which I feel like is frankly a common theme
throughout crypto's rise candidly.
And, you know, I the self enrichment piece, you know, I
have thought it's, you know, the SEC made a mistake clearly in
retrospect, the Democrats by trying to sort of govern through
prosecution, you know, or lawsuits, you know, because now
Trump is dropping them all. I think they just dropped the
one against. Is it Hugo Labs, the NFT?
Yeah, the. Maker of board?
Yeah. The maker of board, Yeah, They
dropped that. They dropped that.
They dropped a couple other NFT suits, Yeah.
Right. And obviously they dropped the
Coinbase 1 pretty early on. I think about, we talked about
that here. So it's just, you know, they
didn't succeed. And also instead of having clear
bright line rules that everybody could operate around, they just
created this mess and and now Trump's undoing it.
And we, the public, don't really have a sense of which of these
lawsuits or cases was about enforcing some rule
interpretation versus which ones seem to be sort of sketchy and
somehow, you know, breaking sort of more classic laws and rules.
So it allows for this perception of corruption that is
unfortunate. I think also another key debate
that sparked in all of this that's related but not directly
tied to policy, The Wall Street Journal had a really good piece
about the sort of disparity between the stable coins Tether
and Circle. There's Tether, the Wild West,
no centralization, and then there's Circle.
We want to work with government. We're this is USDC and we're
we're the good guys. They just found that leaders of
Tether are claiming that, you know, Circle has been bad
mouthing tethered to politicians and whipping up enforcement
actions and been accusing them of doing this to, you know,
further enrich themselves by becoming the friend of
regulators and bringing tether down with them.
And so it's kind of sparked this feud between the two leaders,
but also paints this picture of where they stand in the in the
game right now and where the cryptos future is really tied to
this ultimately super decentralized idea.
Or if staple coins in backing by the US dollar is the move going
forward. And I mean, separate from this
piece, in my conversation with investors this week, they were
all bullish on stable coins, especially ones tied to the US
dollar. That is one thing that they say
has clear value. Stripes acquisition of Bridge
really proved that that was a major deal and a huge crypto
exit for a lot of these folks. And it showed more traditional
finance even within fintech, taking this space very
seriously. And that could be one area for a
lot of value accretion in the future, but.
But it's wonky payments reason to like crypto, not the fun
reason that all your favorite Twitter accounts put laser eyes
or whatever, you know, and not the wild speculation piece that
people find so endearing. We're we're in this moment where
I every investment is now under suspicion.
I mean, this is the problem. It's not just that you don't
want corruption. You don't want the perception of
corruption. And I think hopefully even Trump
partisans can admit he's not doing a good job of avoiding the
perception of corruption in that, you know, David Sacks is
on Twitter being like, I, I don't have conflicts of interest
about my holdings. Like maybe.
But you know, he's like, wait till we have the whole report
And, you know, we're not we haven't disclosed it yet.
And obviously Trump himself feels like he loves conflicts of
interests. I mean, there was a report he's
getting paid to meet with people anyway.
So I, I just that plays into Silicon Valley investments.
I mean, it was interesting that Harry Stebbins, you know, of 20
minute VC tweeted out that founders fund, you know, Peter
Thiel's firm's current growth fund is the most sought after
from limited partners that he's ever seen.
And you know, that is probably partially based on performance.
I mean, it's a good firm, heavily invested in Androl was
an investor in Airbnb, had a good return with STEM.
Centrix has done a lot of great investing, but you have to read
it as Peter Thiel and the Founders Fund guys get Trump
world. They're deep in government
contract, you know. I mean, obviously Anderle is
contracting with the government Department of Defense very
actively and growing and that's Trey Stevens Company.
So, yeah, now they're, it feels like, oh, you have it in with
Trump, like you're going to do great.
And, you know, that's, that's sort of a sad state of affairs.
And more serious traditional finance business news, the IPO
window appears to be opening up. Finally, in 2025, biggest one up
Core Weave dropped its S1 and there were lots of juicy details
in that filing. Growth is the story.
I, I think it's, you know what, 1346% revenue growth and then
that was 22 to 23. And then it's 737% into 2024,
which which gets it to $1.9 billion.
So it is growing a lot. It's not making money.
I mean, it's losing money and it's in a fair amount of debt, I
believe. But yeah, Core Weave, you know,
this is a moment in time where stock investors desperately have
wanted AI stocks to bet on besides NVIDIA and Microsoft to
some degree. And a lesser extent, the general
Magnificent 7 tech stocks. Yeah, exactly.
And you know Core Weave is going to give them one.
It is heavily exposed to everything going in AI.
One thing that really stood out to me in the S1 is core Weave's
severe customer concentration that has led to this rapid
growth. 77% of its revenue has come from its top 2 customers in
2024, and Microsoft alone accounted for 62% of that.
So it is heavily tied to Big Tech's success and bets on
generative AI. And suppliers, you know, yeah,
the customers. And also it's been able to get
access to NVIDIA chips when everybody wanted them.
And so you have this sort of scarce product.
So it's not just your technology, it's people are
desperate to find a way to get GPU's in the 1st place.
So they're willing, they want to contract with you.
That said, they're, they're in the right place, you know, at
the right time. We're talking about crypto.
I mean, this was a company that got its start in crypto world
and leaned heavily into AI at the right time.
Mike, the CEO, was speaking at our Cerebral Valley event in
November. They get it.
They're on the right topic, they're working with the right
partners. They're growing insanely fast.
So if you just say those things, it's great.
It's just like, you know, there's competition.
Can they be a hyper scaler? Can they do this profitably?
And how did these relationships last?
And the final piece, you know, the information ad reporting
that three of the founders together had sold like nearly
500 million collectively. So it's a huge exit ahead of the
IPO, which, you know, makes you feel like they're not as
financially exposed to this thing in the long term as maybe
you'd want. It's kind of the the first big
IPO post, you know, this massive secondary sale wave that we've
had because liquidity has been so locked up.
You're getting these IP OS where founders don't have as much
control and ownership over what they've built because they
wanted to cash out early. And core Reeve, you know, a
notable just purchased weights and biases for $1.7 billion.
Core Reeve is expected, according to the Financial
Times, to raise 4 billion and value it at more than 35
billion. That's a win in this market and
something that investors are probably looking at as, you
know, a really hopeful sign. As you know, we talk about will
generative AI produce these big exits?
And this looks like a positive tell.
Like yes it will. And there's been some non AIIPO
chatter this week. There's reporting that Klarna is
going to file for a $1 billion IPO as soon as next week.
And then Discord is also in talks with bankers to go public
as well, which are, you know, 2 non AI companies on the face of
it, but ones that people have been waiting in the wings to,
you know, hit the market. So maybe they're they're taking
this chance right now. And what chime has been rumored
for a while. It'll be interesting to see if
they go Discord. I mean, that'll be a fun one to
read. It's like we don't see many
consumer companies these days. I feel like they've been sort of
out of the headlines. So yeah, interested to see how
they're monetizing. Yeah, the last big consumer one,
I think was Reddit last year during that tiny window we had
last year. Windows.
I'm sick of Windows. I don't believe in a Windows I
don't know. Good businesses can.
Go I there are people talk about them, but I feel like over
height, you know, the companies need to be good.
I think that's often more the challenge.
It's like there's not a pool of companies that have figured out
how to operate profitably while maintaining growth, and they
they need to figure that out to go public.
Moving on to our deal of the week, Anthropic finally closed
its mega round that had been long reported, but now they
confirmed it a 3.5 billion series E round which raised its
valuation to 61.5 billion and it was led by Lightspeed.
A bunch of other, you know, new and existing investors also
participated, including customer Cisco Investments, D1 Capital
Partners, Fidelity, General Catalyst, Jane St.
Menlo Ventures. They've been back in since the
beginning and uh, Salesforce ventures were also in this
round. So lots of kind of Tier 1 firms
and then more, you know, strategic growthy people in a
growth round, but valuation is a lot smaller than opening eyes
valuation for a similar, you know, frontier lab kind of
company. They're both still very frothy.
I mean, Anthropic, you know, obviously has smart models.
You know, they're one of the top three model providers probably
with Open AI and XAI. And then they're dominating this
code space for now. You know, I think that's been
key. And then Cursor is heavily
dependent on Anthropic and Anthropic is coming out with its
own coding tools. So, you know, if Cursor is one
of the buzziest start-ups in the world, that's certainly accrues
to Anthropic as well. So I think, you know, yeah, it
makes sense. But there's also just the
dynamic, not quite Uber and Lyft, because Anthropic to me is
much more serious than Lyft was relative to Uber.
But, you know, all the VCs are looking for their horse in the
foundation model race. I think there's Anthropic that
might be Lightspeed's biggest holding now that they've done
it. It was already one of their
biggest investments, but it doesn't have its consumer
penetration to the degree that Open AI does.
They don't have the ChatGPT killer consumer product.
They are much more tied up with enterprise sales and sale to
developers with, you know, these coding assistant tools.
And some of the investors in open AI, I think the whole thing
is ChatGPT and the fact that they have a customer
relationship and it's one of the most downloaded apps.
So if that ends up being true, Anthropics valuation is insane.
If it's intelligence and B2B and coders, and maybe they end up
both specializing in different things.
And you, you know, maybe it's possible in five years, you
know, they're both going public and open.
AI's consumer company with an API business and Anthropic is
coding genius or, or maybe AGI is here.
On Thursday, Anthropic reiterated the idea that they
expect powerful AI systems will emerge in late 2026 or early
2027. So, you know, we are limited to
thinking of it as being good at coding, but maybe investors are
betting that, you know, in a year or two we will be thinking
about as a fundamentally different company.
I'm super mixed on this one, by the way.
I, I guess I want to take a second on this like AGI update.
I mean, you know, Ezra Klein wrote, I think did a podcast and
it ran as a piece in New York Times basically saying everybody
he talks to thinks AGI is right on the horizon.
And, and I think I've said on this podcast that it could very
well be the case that we look back on all this Trump stuff and
what really mattered right now is actually the rise of AI and
AGI and like Trump is going to oversee this insane trend.
And what's that all mean? That will be the most
significant thing. So hard to forecast out.
You know, I lived through self driving cars and I was like, no
way this bullshit going to take way longer.
And it was really a case where all the companies and all the
engineers sort of had a vested interest in saying, any day now,
you know, and then you get a lot of money and you get a lot of
excitement. And so it's good for them.
And they keep saying it. And reporters, we sort of have
an incentive to say a tube as you make these bold
declarations. And we're like, oh, my God, any
day now. And, you know, people like to
read it. And so on the one hand, you
know, that whole system would point to this being overhyped.
The thing that is been different is that you can see how smart it
is yourself by interacting with the chat bots.
It has a level of consumer familiarity that we haven't had
with a lot of these technology waves before.
You can talk to it as if it is a person and you can feel that
near human equivalent in a way that we've never.
Felt feel the AGI like say like Sam is always saying.
Are you feeling it? No, you know, I, I've been using
4.5, you know, it's good, but until AI, like, I mean, I mean,
I'm not a coder. So I think coders do feel
somewhat differently, though maybe it turns out coding is a
lot more copying, pasting than we ever appreciated.
But until it has like an innovation, develops a drug,
comes up with an idea, you know, writes a book like it's new.
I think the difference between new and a better and better
regurgitator is, you know, really different.
And if the standard for AGI is that it does most things better
than a human being, I don't know, to me there has to be some
novel capacity there anyway. Yeah, I mean, with self driving
cars, you know, was pretty impressive, but you could at
least see humans intervene. So you're sort of like, how much
are the edge cases going to matter?
And my belief then was a lot. And now with AGII, think there's
a similar like will they continue scaling and that
benefit or have we basically learned everything we can from
the Internet? Will they come up with new
techniques? I don't know.
What's your take? Do you have a prediction
20262027 believe it or not? I mean, maybe it's the skeptical
reporter in me, but I think that it depends on what you classify
as AGI. And I think like to your point,
becoming a better regurgitator is different than coming up with
something novel. And when I see something novel
created, maybe that's the threshold I'm waiting for.
Yeah, I mean, I've, I think what AI can do now, what these models
can do is insane. And tons of companies will be
built directing consumers to figure out how to use it.
So you know, regurgitator, you know my word.
But I don't want to super downplay what they're capable
of. You refuse to slander the AGI.
I appreciate that. For my own longevity, you know,
Bokos, Basilisk, etcetera. I think in 2027 we will not have
something where we're like running around, Oh my God, it's
like out on the streets, like it's, it's this new being has
been invented. Like it's possible that yeah,
like it beats a PhD on most tests or whatever.
The fact is we're looking for like the PhD that comes up with
the novel research. And can you really claim that
you're like smarter than a PhD if you can't like deliver, you
know, some percentage of them have novel papers.
And if it's not coming up with something novel just because it
tests better on existing information.
Yep. So I guess on this sort of
ability to do have novel intelligence, I'm skeptical.
By 2027, will it take better tests than a typical PhD student
in 2027? Yeah, sure.
Honorable mention to our deal list, we have to say something
about Ramps Killer secondary sale that raised its valuation
to 13 billion. They sold 150 million in
secondaries to a bunch of buyers like Stripes, GIC Ave., Growth,
Thrive Capital, Coastal Ventures, General Catalyst, Lux
137 Ventures, and Definition Capital.
If you see a high valuation deal, you'll T thrive Capital.
I mean, they're they're doubling down on the winners And it's as
we've reported, it seems to be a good strategy so far.
I've heard from investors who are envious of their investments
and they're also they're getting in good companies early.
But yeah, they're they're a lot of these high flying deals.
I think Logan Barlow was joking that, you know, he'd invested in
ramp at, I don't know, 6 or 6.5 billion during the pandemic.
And it was like one of those wild pandemic deals and at least
here that's getting validated with a $13 billion valuation.
Excited for the ramp deal rippling inevitable like
collision, right? They've got a these companies
are so valuable. They're going to continue to
sort of go after one each other. That's our show.
Yep. Thanks for listening, see you
next week.