The latest from the 20VC x SaaStr collaboration with Harry Stebbings, Jason Lemkin, and Rory O’Driscoll
Anthropic sued the federal government this week. Oracle and OpenAI scrapped plans to expand their flagship Stargate data center. Meta immediately said “we’ll take it.” CrowdStrike beat expectations and traded down anyway. And we made our public market stock picks for the year.
But the thing that matters most isn’t any one headline. It’s the convergence of three forces that every B2B founder, investor, and operator needs to understand right now: the economics of AI compute are colliding with the reality of who pays for it, the junior employee is being eliminated from every function at the same time, and the public markets have completely abandoned companies that aren’t reaccelerating.
The era of gentle deceleration is dead. Here’s what replaces it.
Top Takeaways
1. Anthropic Will Probably Win the Law. They Won’t Win the Fight.
Anthropic filed two federal lawsuits against the Trump administration after the Pentagon designated the company a “supply chain risk,” a label typically reserved for foreign adversaries. At its core: Anthropic refused to let Claude be used for autonomous weapons or mass domestic surveillance. The Pentagon said that’s not the company’s call to make.
The legal consensus is that the government overreached. Designating one of America’s fastest-growing tech companies as a supply chain risk because it exercised its First Amendment rights is constitutionally shaky. And the most extreme version, where the government told Microsoft and Amazon that using Anthropic at all would disqualify them from government contracts, was so aggressive that the hyperscalers pushed back and it was walked down.
But here’s the B2B reality that matters for founders: the $200 million Pentagon contract is noise. Anthropic is reportedly doing $1.5 billion in run rate and 10x-ing. The DoD revenue is roughly 1% of the business. The real damage is in B2B sales cycles. As Anthropic stated in their own complaint, they’re struggling to close deals because prospects are worried about any federal government exposure. And competitors (read: OpenAI, which signed its own Pentagon deal the same day Anthropic was blacklisted) are using it to steal deals.
This is a textbook B2B sales problem. Risk doesn’t need to be real. It just needs to be ambiguous. If your prospect has any federal government exposure and your competitor can say “we don’t have these problems,” you lose. Period.
The most likely outcome: Anthropic wins on the law, bends the knee on the politics, and the two sides reach a settlement where the company keeps its broader B2B business but gives up on selling directly to the Pentagon. It won’t show up in the numbers at the current growth rate, and the IPO (which Polymarket now says won’t happen this year) probably proceeds whenever the legal overhang clears.
The broader lesson for every B2B founder: your principles can cost you a lot more than the contract they’re attached to. The blast radius of a government dispute extends far beyond government revenue.
2. The Stargate Expansion Died, Meta Immediately Absorbed It, and We’re Definitely Overinvesting. Nobody Cares.
Oracle and OpenAI scrapped plans to expand the Abilene, Texas Stargate data center from 1.2 gigawatts to 2 gigawatts. Financing talks dragged, OpenAI’s needs shifted to next-gen Nvidia Vera Rubin chips, and the power grid wasn’t going to be ready for over a year.
Within hours, Meta moved in to lease the surplus capacity, with Nvidia paying a $150 million deposit to broker the deal.
Is this the beginning of the end of the capex cycle? More no than yes. Because the demand side of this equation is barely getting started.
Here’s the framework: the hyperscalers are betting on a world where your AI runs 24/7, persistent and infinite. Right now, most of us use a couple hours of ChatGPT or Claude per day, maybe some coding compute. But the world where your AI debriefs you after every meeting, coaches you on every decision, and runs 10 to 50 agents in parallel for code review, QA, and outbound sales? That requires orders of magnitude more compute than exists today.
Anthropic’s new Claude Code review feature illustrates this perfectly. It spins up 10+ agents in parallel, runs for 20 minutes, finds every bug in your codebase, and costs $15 to $25. The internet lost its mind at the price. But the response from the team that built it was essentially: we’re giving you automated code review that humans literally cannot do this fast, and you’re complaining about $20?
The real question isn’t whether $20 per code review is expensive. It’s that you’d ideally run this after every single commit, not episodically. That’s orders of magnitude more compute than any developer uses today. And code review is just the beginning. Who’s doing the QA? Who’s doing the security audit? We haven’t even scratched the surface.
The math on overinvestment is simple. $600 billion in capex. 150 million workers in the United States. That’s roughly $4,000 per head. A lot of those workers make coffee and don’t need $4,000 of AI compute. At some point, the chickens come home to roost.
But game theory says it doesn’t matter yet. Every hyperscaler has explicitly said: “This is probably going to go wrong, but I’d rather ante up and have a chance of winning than sit out like Apple and know I’m going to lose.” When six or seven players all articulate that logic, overinvestment is the guaranteed outcome. The question is who folds first. Oracle, with the weakest balance sheet and the least compelling use case, is the obvious candidate. Meta can borrow. Google has a real business. Microsoft is quietly stepping back from the table.
This game goes on for at least another year or two.
3. The Death of the Junior Is Where Data Center Budgets Come From
The enterprise is willing the replacement of humans into existence. And it’s accelerating because they want it to accelerate. The category getting hit hardest and fastest: junior roles.
No one wants to hire junior developers. No one wants to train junior lawyers for two years before they can work on a real case. No one wants junior SDRs who don’t know the tools. And the evidence is everywhere.
At Penn State (not a top-10 school, but a large, well-respected state university), there are essentially zero tech recruiting visits for CS and math grads. Six students in the class have offers, because they’re publishing research on Jensen fine-string theory that most humans can’t comprehend. Everyone else? Nothing. Not even the C-tier companies are showing up.
This isn’t just anecdotal. The “hire no juniors” movement is being willed into existence across every function. Support? You want experienced humans who know the product cold to handle escalations. Everything else gets automated. Marketing? You don’t need junior content writers when agents can generate and optimize campaigns. Sales? SDR teams are being replaced by AI agents that text prospects, pitch the product, and set up meetings that are fully ready to close.
The economic connection to data centers is direct: when you hire no juniors, you suddenly have budget for $200 to $500 per month in AI compute per senior employee. That senior developer doesn’t need a junior to review their code. They need Claude Code at $200/month plus $20 per code review. The junior’s salary becomes the AI budget.
This should worry everyone. History (including the French Revolution) tells us that dispossessed urban poor can exist indefinitely without political consequence. But when you produce masses of college graduates who played by the rules for 20 years, spent $400,000 on education, and face unemployment? That cohort causes trouble. In 2026 this is going to be an economic issue. In 2027, it’s going to be a political issue.
The technology takes longer to diffuse than Silicon Valley allows, and people are more adaptable than we give them credit for. The macro unemployment numbers probably stay contained. But in isolated pockets, for very targeted demographics (entry-level CS, customer support, legal associates, bookkeeping), there is a meaningful impact on employment right now.
4. People Want Agents, Not Humans. And They’ll Pay Whatever It Takes.
Something deeper is happening beneath the junior hiring freeze. People would rather work with agents than humans. Full stop.
CSAT data from every company running a hybrid human-AI support model tells the same story: the AI agent is always in the top 10% for customer satisfaction. Never number one (that’s always a human), but consistently top-tier. And when you can deliver an agent that handles 90% of cases at that satisfaction level, people will line up at the door.
Look at the GTM agent space. One company (built by former Brex head of sales Sam Blond) closed seven figures in their first five days and has 60 days of backlog. Why? Because if you can deliver an agent that talks to prospects, texts them, pitches the product, and sets up a meeting that’s fully ready to close, without any humans involved? The demand is functionally infinite. Companies don’t care if it’s cost-effective. They just want it.
The TAMs for these products don’t make sense by historical standards because the budget materializes from thin air. It comes from the juniors you didn’t hire, the associate you didn’t train, the SDR team you didn’t build. When the alternative to your agent is a $150,000/year employee who takes 6 months to ramp and then leaves, $50,000/year for an AI that compounds its learning and never quits seems like the deal of a lifetime.
This is what B2B founders should be building in 2026: products where customers would rather work with your agent than hire a human. If you can deliver that, people will line up at your door. If you’re still building tools that make humans 8% more efficient, you’re building for a market that’s evaporating.
5. The Era of Gentle Deceleration is Dead. Only Reacceleration Matters.
CrowdStrike beat expectations this quarter but guided to 23% growth (down from 27%). The stock traded down. This pattern is playing out everywhere in public B2B.
From 2022 through late 2025, the market tolerated “gentle deceleration”: slower growth with expanding margins. That playbook was the accepted path for scaled B2B companies. Not anymore. The market has completely abandoned companies that aren’t reaccelerating, and it’s happening at every tier.
At the top end, companies like Cloudflare have figured it out: 27% growth a year ago, 34% growth last quarter, 40% year-over-year increase in net new customers. That’s what the market rewards. At the bottom end, companies trading at 8 to 9x EBITDA have been re-rated to what they’re fundamentally worth with zero growth premium. No pixie dust.
Wix is the perfect case study. They acquired Base44 (which hit $100 million ARR), a legitimate vibe coding product. But Wix’s core paid customer base declined 1-2% last year. Even with $100 million of AI revenue, it’s not enough to move the needle on a $2 billion revenue base. For Base44 to save Wix, it needs to follow the Lovable/Replit trajectory: $100 million to $300 million this year, $300 million to $600 million+ next year. Inside a larger company with institutional drag? That’s a very high bar.
But Wix has 6.1 million customers to cross-sell into, and vibe-coded websites are a perfect replacement for crappy drag-and-drop templates. If Wix can’t frack and cross-sell AI to 6.1 million customers who already want to build websites, what hope is there for Squarespace, Webflow, or anyone else?
Figma Make was even more sobering. Tested it this week and it was the worst vibe coding experience in six months. It didn’t scrape website context, didn’t produce original design, and shipped what looked like Claude artifacts from 6 months ago. For a company with Figma’s design DNA and engineering talent, that’s a red flag. If you’re doing quarterly-release, best-efforts product development in 2026, you’re dead. That world no longer exists.
For startups, the implication is equally stark: if the public markets won’t tolerate gentle deceleration, the private markets certainly won’t. At what point do you give up on portfolio companies that aren’t accelerating? Because the bar has changed permanently.
6. Stock Picks: Betting on Momentum, Value, and the AI-Proof
All three hosts made their public market bets, each from a different angle.
Jason’s thesis is simple: only reacceleration can save you. Palantir (overpriced but reaccelerating with government tailwinds), Cloudflare (27% to 34% growth acceleration, benefiting from AI), Shopify (gaining market share), and CrowdStrike (AI-proof, essential infrastructure). Founder-led is a hard requirement, which eliminated Snowflake. Atlassian was a close call (reaccelerating, but the risk that the entire software development lifecycle changes so dramatically that their coordination layer becomes obsolete gives pause).
Harry went broader: CrowdStrike (shared pick), Nubank (underappreciated, 28% growth, entering the US), Nvidia (boring but if inference skyrockets, Jensen wins), and Reddit (down 40%, a data layer for LLMs, good risk/reward at current prices).
Rory built a barbell. The value bucket: Salesforce at 8-9x EBITDA and Toast (software with transaction revenue that AI can’t replace). The GARP bucket: CrowdStrike (pricey at 50x EBITDA, but enduring). And reluctantly, Palantir (one more year of growth away from being normalized, and this administration will spend for two years).
The common thread across all three: if you’re going to pay a premium, the company had better be growing 30%+. Everything below that line has been re-rated to fundamentals, and there’s no getting it back without acceleration. The average B2B company used to trade at 6x revenue with 30% growth. Now the low-end trades at 8x EBITDA. If the high-end (companies at 12-14x revenue with 20% growth) gets re-rated the same way, there’s 50% capital risk.
Growth solves all. It always has. It just matters more now than it ever did before.
Quotable Moments
Jason Lemkin
- On the death of juniors and data center budgets: “I think getting rid of juniors is where we get budget for these data centers in part. We’re just getting there. They’re dying faster than we ever thought. The death of the junior. I think bad for society, but it’s a reality.”
- On what B2B founders should build: “People will line up at your door for this stuff. Whatever category you’re in, you want to build this agent that is sufficiently better than 90% of humans that everyone will pick it. And the budget magically comes out of nowhere.”
- On the end of gentle deceleration: “If the public markets won’t tolerate gentle deceleration, how will the private markets tolerate it? The era of gentle deceleration has ended. It’s dead.”
Rory O’Driscoll
- On Anthropic’s legal fight: “The consensus is in law, Anthropic will probably win a good slug of this case, which is different than saying they’re going to win the fight.”
- On AI economics and the $20 code review: “The idea that you can just have all this for free is at some point going to stop because someone’s going to have to cover their nut.”
- On displaced college graduates: “This goes really cold. You can have dispossessed urban poor forever and nothing happens. But if you piss off the 20-something year old middle class, the overeducated elites, they tend to cause trouble.”
Harry Stebbings
- On the AI overinvestment question: “A technology that’s so important that it’s consuming 50% of the capital investment of the entire United States probably should have a significant number of pretty significant societal changes.”
- On the challenge facing every B2B company at scale: “There are literally two to three trillion dollars worth of public companies and another trillion dollars worth of private companies for whom this is the existential crisis.”
- On why incumbents struggle to ship AI fast enough: “If you’re doing quarterly-release, best-efforts product development, that world does not exist any longer. The team down the road is delivering a new version every week.”
