With Harry Stebbings, Jason Lemkin, and Rory O’Driscoll
If Figma—one of the best products in SaaS history—can’t sustain its IPO price, what does that mean for the rest of us? That’s the question that kicked off this week’s episode, and it led somewhere far more interesting than doom and gloom.
The verdict: Tech isn’t doomed. The market is just sorting ruthlessly between companies riding AI tailwinds and everything else. Palantir trades at 70x forward sales as a 45% grower. Figma trades at 10x growing 30%+. But Growth is King, and need an AI Tailwind. The message is brutal but clear.
Meanwhile, Thinking Machines imploded (treat it like a seed round gone wrong), Elon is about to depose everyone at OpenAI for years (and he’s already won no matter what happens), and OpenAI’s coming ad business might generate $25 billion faster than anyone expects.
Oh, and Replit’s product is now “50 times better” than it was a year ago. Jason built a complete startup simulator game over the holidays, Founderscape.ai. It actually works.
Summary
This episode covers the state of public SaaS markets (sorting, not dying), the Thinking Machines implosion, Elon vs. Sam’s nuclear litigation, why OpenAI ads could be transformative, the economics of Click House at $15B and Replit at $9B, and why the traditional Series A/B game might be “the dummies game” right now. The through-line: AI tailwinds separate winners from losers across every category—and venture capital itself.
Top Takeaways
#1. Public Markets Are Sorting, Not Dying
The narrative that “SaaS is dead” misses the point entirely. Markets are doing what they always do: rewarding growth and punishing deceleration—just more violently than before.
“What you’re really seeing is the markets are just basically doing what they always do—they’re sifting,” Rory explained. “Things that look like they’re going ex-growth are getting thrown out at pretty low valuations. Things that are perceived as exciting and on trend are getting very high valuations.”
Figma at $12B and 10x forward sales growing 30%+ is still an awesome company. It’s just not awesome enough to justify what late-stage investors paid. The lesson: “When you pay up for high growth companies and the growth slows even a little and the belief goes out of the multiple, you’re in for a long hard hole.”
#2. “If You’re Going 75-100% at $50M, You’re Fine. Stop.”
Rory pushed back hard on the doom narrative around mid-stage SaaS companies. If you’re at $50M growing 75-100%, the math still works.
“If you’re going 100% at 50, you’re going to be at 100, then your growth decays to 80, you’re at 180, then your growth decays to 40 or 50, you’re at 300. You’re going to get to scale.”
The catch: You may not be able to raise venture capital on attractive terms anymore. Run your business accordingly.
#3. Thinking Machines Is Just a Seed Round With Extra Commas
Mira Murati’s AI startup raised $2B at a $50B valuation. Now two co-founders have left and the company appears to be imploding.
Jason’s take was refreshingly simple: “It happens with seed rounds. This is just seed rounds with extra commas.”
Rory expanded: “The number one cause of failure at the seed stage is founder incompatibility. They discover after a year they don’t want to be doing this and want to go back to the big company.”
The likely outcome? “You give them two billion. They spend 200 million. You take another 200 million to bribe everyone to go along with it. You get 1.6 billion back. You say, ‘That was a risk that didn’t work. I only lost 20 cents on the dollar.’ You can recycle that money into the next OpenAI round. Everything’s fine.”
#4. The Mira “Problem”: Do Technical Companies Need Technical CEOs?
Jason’s broader concern about Thinking Machines reveals a pattern he won’t bet against anymore:
“Her background is not deeply technical—a degree in arts from Colby College, then a PM thereafter. I don’t know how you run a lab if you’re not Ilya in the early days of OpenAI or Greg at least. I don’t know how you get the respect of the team if you’re not on their level as a researcher.”
His new rule: “I’ll never do an investment again where the CEO isn’t one of the greatest technical visionaries in the industry. I’ll never do that investment again.”
#5. Elon Has Already Won the OpenAI Lawsuit
The Sam vs. Elon trial is going to court—and Elon wins regardless of the verdict.
“Elon’s in an asymmetric win-win situation and OpenAI is not,” Rory explained. “He feels shafted. It’s good for Grok if it slows OpenAI down. He might win $100 billion. There’s not a ton of downside other than legal fees.”
The discovery process alone will be devastating: “If I spewed out your last 10 years of emails, I’d find embarrassing stuff. Can you imagine Harry having to get your diary from 8 years ago?”
Greg Brockman’s journals have already come out, showing him asking “What does it take for me to get to a billion dollars?” Jason’s theory: Greg was haunted by leaving Stripe at $3B—recruited away by Sam—and watching it become worth $100B+. “I think that haunted him.”
#6. OpenAI Ads Could Be Transformative—Not Degrading
The panel was surprisingly bullish on OpenAI introducing advertising.
Jason’s logic: “I find Google unusable for discovery. Unusable today. It’s all random ads. I can’t figure out which product to use or buy. Amazon is more valuable but only works for goods Amazon sells.”
LLMs are genuinely better for purchase discovery. If OpenAI runs two well-targeted ads per prompt at a $50 CPM, the math works out to $25B in revenue.
“If the ratio is 10 to 1—a lengthy analysis of what’s best for you and a little ad in a different color—it’s a win-win for everybody. Advertising is not valueless to consumers when it’s perfectly executed.”
Rory agreed: “There was a period when Google ads were awesome. Early on, when there was only a few paid links, that was marginally additive. Right now they’ve swamped it. But this could be the period where one or two ads at the bottom are additive in terms of information.”
#7. Replit at $9B: “50x Better” Than a Year Ago
Harry noted Replit and Lovable are neck-and-neck on revenue at roughly similar valuations. Jason’s response was emphatic:
“This product is like 50 times better than at the $2.5 billion round. It’s not a little bit better.”
The proof? “Over the holidays, for fun, I built an incredibly complicated game—a startup simulator that simulates everything from going through YC to IPOing to controlling all the global power and GPUs and tokens in the world. People love this game. What’s interesting isn’t that I built it—it’s that it works.”
A year ago, everyone joked about their 80% finished Replit/Lovable projects. “They couldn’t finish it. And it was a joke because they thought they 80% finished it, but there was no chance to go from 80. Now? It’s magic.”
#8. Click House at $15B: The OLAP Bet
Click House raised at $15B despite being an analytics database—a category historically smaller than transactional databases.
Rory broke down the bet: “You’re basically underwriting growth persistence. You’re saying this is a category, they’re the winner, and it’s big enough to keep going 2-3 more years at this growth rate.”
The AI angle: “Demand has gone up because AI eats that shit up. If Databricks and Snowflake are worth $100-200B, maybe you get a $30-40B outcome here.”
#9. The AEO Market Is Real—And Adobe Just Bought In
Jason has been skeptical of the GEO/AEO (Answer Engine Optimization) startups, calling some “snake oil.” But the Adobe acquisition of SEMrush signals something important.
“That acquisition only makes sense if their plan is—as quickly as humanly possible—to introduce an answer engine optimization product. That’s why they bought it.”
Rory’s take on why Adobe chose SEMrush over a smaller, more focused AI startup: “When you want to make a big move as a big company, if you buy something small you’ll just smother it. You want something with enough critical mass that it can go do its thing and not get swallowed by the machine.”
#10. The “Dummies Game” in Venture Right Now
Harry provoked the panel: Is traditional Series A/B investing “the dummies game” right now?
“I’d way rather have 15-20% of a pitch deck and two people, or pile into Airwallex at $5B with a little bit of something that’s really working, than play the super competitive Series A/Bs—paying up super early for little signs of product market fit in intensely competitive markets at 100x ARR.”
Rory pushed back: “Over the long term, markets have to tend to rational equilibrium. As you take less risk, you get less return. There can’t be ‘bad stages.'”
But he acknowledged the anomaly: “The new space that didn’t exist before was ultra-late—and people have found a way to profitably fill that.”
Key Takeaways
- Public SaaS isn’t dying—it’s sorting. High growth still gets absurd multiples. Decelerating growth gets punished ruthlessly.
- At $50M growing 75-100%, you’re fine. Just don’t expect venture capital on attractive terms anymore.
- Thinking Machines is a seed failure at scale. The playbook: return 80 cents on the dollar quickly and recycle the capital.
- Technical companies need technical CEOs. If your company is competing for S-tier AI talent, they need to respect the person at the top.
- Elon wins the OpenAI lawsuit no matter what. It’s asymmetric—all upside, minimal downside, and years of painful discovery for Sam.
- OpenAI ads could be $25B. LLMs are genuinely better for purchase discovery, and well-targeted ads add value.
- Replit’s product is 50x better than a year ago. The vibe coding joke about 80% finished projects is over—things actually work now.
- OLAP databases like Click House are an AI play. The bet is growth persistence as AI consumption explodes.
- AEO is real. Adobe’s SEMrush acquisition validates the market.
- Ultra-late stage is now a real game. Getting .3% of Anthropic for $1B might be rational if you have no information rights anyway.
Quotable Moments
Jason Lemkin
“If Figma isn’t good enough, what hope is there for the rest of us in software? I look at my portfolio. What the hell am I going to say at board meetings this week?”
“In some ways, venture and tech is a bit of a scam. Our job is to convert very high revenue multiples into cash almost unnaturally through M&A, through public offerings when they haven’t earned it in free cash flow. If we have to go to an EPS world, we’re dead.”
“I’ll never do an investment again where the CEO isn’t one of the greatest technical visionaries in the industry. I’ll never do it. Like Databricks—Ali Ghodsi as CEO. I just won’t do it any other way.”
Rory O’Driscoll
“The winner in this case—I know it’s ridiculous to say—but the winner laughing with popcorn is Dario. ‘This is going great.'”
“Those kids at YC built an agent for your space. Why the f*** wasn’t that you? There’s no excuse. We all use the same LLMs. There is no excuse for you to not have an agent as good as the new kids.”
“At heart, venture is a capital allocation business. You are trying to stuff your money into the place where it will grow the fastest. Once companies start going down, the rational thing to do is reallocate to success and away from failure. It’s brutal, but that’s the game.”
Harry Stebbings
“I feel like the dummies game right now is playing the super competitive Series A/Bs—paying up super early for little signs of product market fit in intensely competitive markets at 100x ARR.”
“How would 99% of humans feel when you’re like, ‘F***, if I just stayed at Stripe and just played Minesweeper, I could be worth $10 billion?’ And I think that haunted Greg.”
“Do you think OpenAI ads will be a massively significant needle mover in terms of revenue very quickly? I think this clip will be used in three years when they’re at $100 billion in revenue and we’ll look back and go, ‘Wow, we underestimated this.'”
This post is part of the ongoing 20VC x SaaStr collaboration with Harry Stebbings, Rory O’Driscoll, and Jason Lemkin
