20VC Newsletter - 11th August 2024
Here are the transcripts and top takeaways from 20VC episodes released this last week!
Monday’s episode with David Cahn, Partner @ Sequoia:
Download the full transcript:
My 8 key takeaways:
The Oligopoly That is Blowing Billions on AI
Microsoft, Azure, & Google now represent $7T market cap.
Of course they will spend billions to protect their oligopoly
What is most interesting is Meta is the only incumbent that is financing this not with cloud being their cash cow.
How Startups Could Win with the Cost of Compute Coming Down
Big tech companies are producers of compute & startups are consumers of compute.
Overproduction of compute = lower prices.
This gives startups higher margins & makes them more valuable.
Is Compute the Currency of the Future or Do the Costs Come Down and It Is Commoditised?
We are forgetting “compute” is a euphemism for a $2BN data centre in the middle of nowhere.
They have GPUs & liquid cooling systems that need to be constantly optimized & upgraded.
We cannot simply build 15 years worth of compute all at once. No one's ever going to train a frontier model on the same data center twice.
Data Centre Teams and Model Teams Need to Be Coupled
You cannot have separate teams running data centers & building models.
Elon & Zuck control all their data centres.
It will not work as these models get better & better.
Why the Data Centre Is the Most Important Asset
There is not much difference between these models today.
AI researchers are jumping from one lab to another.
Scaling laws will become more dominant as these models get bigger.
Servers Steel and Power: The Three Bottlenecks of AI
Three things:
Servers: NVIDIA, AMD, Broadcom…
Steel: Construction & real estate developers for data centres.
Power: All the energy required for AI.
More factories will be built in 12 months for AI and we will see another industrial revolution.
You Have to Have a Cash Machine to Play the Big Model Game
Amazon has AWS
Meta has Instagram
Microsoft has Azure
You need a cash machine to compete and it CANNOT be the AI business.
There is One Definition of Success in Venture: Are you a Slugger?
If you are generating billion dollar gains, you are a slugger.
Doug Leone, Pat Grady, Andrew Reed are all sluggers.
You cannot be good at this business without being a slugger.
Wednesday’s episode with Alexis Ohanian, Founder @ Seven Seven Six:
Download the full transcript:
My 8 key takeaways:
Why Sports Becomes More Valuable in a World of AI
We will never want to see robots play football.
The emotions from seeing humans be great is unique.
It is one pillar of entertainment that will never be upended.
If a Sport Cannot Go Viral It Is Not Investable
Media deals today are all based on outdated data.
Having eyeballs on a screen is the only attention that matters today.
If a sport’s highlights cannot go viral on social media, there is something missing.
The Sports Teams of the Future are Media Agencies
Part of a club’s job is to tell the player’s stories every minute they’re off the pitch.
We think about how to create better facilities to do that.
You’re running a media agency as much as you’re running a sports team.
The Largest Front of Shirt Sponsor Deal in Women's Sport
Our Head of Revenue was trying to secure a deal with DoorDash.
I knew Tony Xu from YC and I convinced him to do it.
It was a record-breaking seven-figure deal at the time.
How a Stadium Went Viral Because of....USB Ports
LA Clippers’ new stadium installed USB-C ports at every seat.
This means thousands of fans can be on their phones posting content.
It’s the small things that matter or as Gustav Söderström has taught me, “the details are not the details, they are the product.”
How Reddit Founder Turned $10,000 Into $17.1M
I put $10,000 into the Ethereum pre-launch token sale.
It is currently worth $17.1M
It is the single best investment I’ve made.
The Worst Sports Team Owner Ever Who Made Billions
Dan Snyder @ Washington Commanders mismanaged the team for decades.
He sued fans, sold skunky beer, harassed employees….
He still sold the team for $6.05 billion.
How Serena Williams Kids Made Millions from Sports Ownership
I personally invested $250K into Angel City F.C. from my daughter’s trust fund.
They became the youngest owners in pro sports & it was great for storytelling.
They are now multimillionaires from that investment.
Friday’s episode with Dax Dasilva, CEO @ Lightspeed:
Download the full transcript:
My 5 key takeaways:
Companies That Raise $5M on $25M Pre-PMF Will Not Be Successful
I coded until 4AM every morning in the first 2 years.
When I wasn’t coding I was with customers & iterating on the spot.
We wouldn’t have achieved PMF if we were not so close to customers.
If we had raised $5M on $25M we wouldn’t have needed to be.
How VC is Distorting a Generation of SaaS companies
Founders are shortcutting a lot of product development for attractive metrics for VCs.
You need the slow-burn process to create something truly phenomenal.
Let the business cook a little.
Stay Private or Build in Public?
Going public has been a freeing & independent way of operating.
You get tons of valuable feedback from shareholders.
It’s almost like a graduation process, that is why we went public at $70M ARR.
The Feedback from Shareholders is Direct and Brutal
They said Lightspeed doesn’t need any further distractions with new M&A projects.
Everything we’re doing should be creating value.
Direct feedback is one of the best things about being a public company.
Why I Returned as CEO
We had to do a lot of tough things to tell the story of profitable growth.
We cut teams, reallocated resources, and stopped M&A activities.
We needed to see investor confidence return.
Let us know what your big takeaways from this week’s shows were in the comments below!
Thank you for reading, and don’t miss the great guests we have next week:
Shaun Maguire, Partner @ Sequoia Capital
Kaz Nejatian, COO @ Shopify
Laela Sturdy, Managing Partner @ CapitalG
Thank you for reading 20VC.
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