kvm

Netflix infra to handle a trillion events every day v/s Series A startups with five customers

Venture capital evolved from featuring savvy research analysts like Mary Meeker and Bill Gurley to people who can’t define FCF because technology companies (for better or worse) generally rewarded the latter over the last few decades. Consider the two big waves where VCs made most of their money in the last 15-20 years: mobile-first consumer social/internet and SaaS. Mobile/social companies operated in largely permissionless markets that inherently favored young founders, who naturally are not particularly financially sophisticated. SaaS markets, while they generally favored slightly older and more mature founders, similarly didn’t reward financial sophistication; product and GTM chops were far more important. Both internet and SaaS businesses ran relatively capital-light business models with high gross margins, which gave companies a lot of wiggle room. Financial optimization was just not a key driver of success. And these companies were all built against the backdrop of an enormous bull run and low interest rates post-GFC. Companies could generally raise cheap equity, and most felt like they just didn’t need to think too deeply about how to properly capitalize their businesses. Silicon Valley became a place where engineering/design/product/sales skills were rewarded and finance was not. “Wall Street” was looked down upon, and people who cared about finance were derided as being slow, bureaucratic, extractive, negative-sum, etc. These dynamics have obviously changed. The frontier AI labs are extraordinarily capital-intensive. Some of the hottest applied AI companies have negative gross margins, where optimization on that front over time will make or break their businesses. The asset-heavy aerospace/defense/industrial companies in El Segundo naturally require capital structure sophistication. Technology as a broad industry has matured, and many winning founders are no longer whimsical Stanford types who spent their summers writing code, but Wharton grads who cut their teeth at banks and buyout firms. And, whether companies will admit it or not, the equity capital markets are essentially shut for all but a very small handful of companies, whose success will now depend on their ability to think even slightly outside the box on capitalization. Finance is now a first-class citizen in Silicon Valley.

@lindugong @jhyuxm linda is the 🐐

when msl first started we had 4 researchers, 1 gpu, and @jhyuxm was wearing a facemask all the time from going viral. we’re so back!!

We raised $7.5M to kill AI slop. Introducing Moda: the world's first design agent with taste. RT+ comment “Moda” and we’ll design your brand for FREE.

@anvisha incredible @anvisha and @ravisparikh !!

Bill Gurley’s article doesn’t conclude “paid marketing bad”, just “be very careful”. Big outcomes have clearly come from paid marketing: Monday, Grammarly, Squarespace. He himself concludes that it “has a very important place in business… that requires.. thoroughness in its implementation” His 10 points on the pitfalls of CAC/LTV math (all true) boil down to: - Organic channels are better economics with better user: social, virality and PR - If you can’t track which customers came from LTV, you over count all new customers which you would’ve acquired anyway. Your equation is just wrong. - Current LTV math does not hold in the future as you scale. Costs scale as the business scales. You might acquire worse customers who churn quicker. Raising ARPU can cause churn. Companies use dirty tactics to prevent churn (increase LTV) and you can see ensuing complaints in the BBB - Spending it better on the customer to improve the experience and increase organic growth can be way better for long term business (eg Amazon) - You have to keep running the treadmill to grow and if your balance sheet can’t hold it, your business slows down and the valuation dips from peak (thankfully instruments like GC’s CVF addresses this and many other points here)

@mihikapoor insane

Simile is out of stealth! At Simile, we have built the first AI simulation of society, populated by agents based on real humans. We are building a foundation model that predicts human behavior in any situation, and a product that deploys it at scale. Thrilled to be on this mission.

@bernhardsson might be your best tweet yet

We were discussing how much disk space we needed and of the engineers said his estimate was “conservative”. I don’t want any of that partisan crap so I fired him on the spot.

Bryan Johnson is fighting the ultimate boss. Some people spend 100% of their time or money. He’s spending 100% of his body so the rest of us don’t have to. A noble pursuit, if there ever was one.

"You ask what was the supercharge over the last couple of years, well it was @GeneralCatalyst that changed the game for us, and their Customer Value Fund. We realized the capital markets aren't funding CAC ... and General Catalyst solved that." (at 51m) youtube.com/watch?v=DcLy_V…

@anvisha Incredible

Finally, AI designs you can edit. Moda - create brand assets on a fully editable canvas. This is not another ChatGPT or nano banana wrapper. We actually taught an agent layout, typography, and color. We gave it taste. Use it for slides, social, infographics, e-books …

This is less a commentary on Harvey and more a commentary on the general phenomenon of best-in-class growth companies raising successive rounds at higher and higher valuations: most of these financings make no sense. Growth equity capital is very expensive. “Dilution is low” is not a good justification for these rounds — dilution is related to but decidedly not the same as cost. To offer a crude example: if you believe your business is worth $5B, and a firm offers you $10M at a $1B valuation, you will tell that firm to pound sand. That dilution is only 1% is irrelevant; the implied cost of equity is simply far too high. Maybe these companies believe their investors’ cost of equity is appropriate. Even still: the money is still expensive relative to the other forms of capital available, meaning it ought to be used for the most ambitious endeavors that present unstructured risks with unbounded upside (read: high-value product R&D and strategic M&A). Instead, companies at this scale typically deploy a substantial majority of their expensive equity dollars into highly predictable, relatively low risk GTM initiatives that offer range-bounded returns (or even worse, do nothing with these dollars, letting them collect dust in treasuries). This is terrible capital allocation. In the worst cases, it’s directly value-destructive, yielding lower returns than the cost of capital. At best, it’s deeply inefficient: these activities consume capital that would be best deployed elsewhere. Sometimes, these rounds involve secondary transactions between shareholders and no primary capital (so no dilution). This doesn’t solve the core issue. Shifting around who owns the most expensive form of capital doesn’t change the fact that this capital is being used inappropriately — and that these companies should finance their GTM investments differently. Moreover, this conversation totally misses the point. The persistent liquidity and DPI issues that Silicon Valley faces aren’t only downstream of an an onerous regulatory/compliance regime or the broken supply/demand mismatch in private markets — they are downstream of busted balance sheets across the entire industry. If companies appropriately capitalized themselves with the right balance sheets, they could actively buy back stock in these transactions rather than simply shifting ownership between parties, offering liquidity with “negative dilution” and allowing shareholders to capture a greater share of value moving forward.

@forwarddeploy @xai legend

It’s my birthday… and it’s my first week at @xai. I have always believed that people are the real multiplier in any company. Technology changes, markets shift, but the right team is what bends the curve. That belief is why I joined @xai. Founders who have shipped to millions. Engineers who stay locked in (even for 36h) until the thing works. Operators who treat impossible like a suggestion. No theatrics. Just execution. My role sits right in the middle of that energy as a talent engineer. I am here to bring in world class people, support them, and build the systems to keep bringing people at full steam.   You need the strongest concentration of talent you can assemble to advance AI in a way that understands the universe… that place is at xAI. 👇If you are a founder or builder who has shipped something people truly love, I would love to meet you and see how we can partner - my DMs are open!

.@generalcatalyst's Customer Value Fund, explained by Managing Director @pranavsinghvi: "What the customer value fund does is it goes to companies and says instead of using your own cash to fund sales and marketing, we will provide you a dedicated balance sheet to fund your ongoing sales and marketing spend." Full episode: thein.fo/4nYS3sN

.@generalcatalyst's @__kvm on growth: "We help putting fuel to the fire. We cannot create the fire ourselves. The best people to create that fire, to figure out how to grow are the founders." "Most companies are massively under spending. What I mean by that is they need to run more experiments." Full episode: thein.fo/48o0s4v

Today on The Information’s TITV: -The VC view of the creator economy | @Caspar_Lee, Co-Founder & Partner at Creator Ventures -@generalcatalyst Managing Directors @pranavsinghvi & @__kvm discuss its CVF fund -Finding margin with AI products | Shaown Nandi, @awscloud Director of Technology -Introducing The Information Finance Newsletter with @kenbrown12

Today on The Information’s TITV: -The VC view of the creator economy | @Caspar_Lee, Co-Founder & Partner at Creator Ventures -@generalcatalyst Managing Directors @pranavsinghvi & @__kvm discuss its CVF fund -Finding margin with AI products | Shaown Nandi, @awscloud Director of Technology -Introducing The Information Finance Newsletter with @kenbrown12 📺 Tune in at 10 am PT / 1 pm ET on X or thein.fo/4nn33AK

Founding Beacon with @nilamg has been the most intense but also fulfilling time of my life. In just a year, we’ve grown to a team of 30+ and acquired dozens of mission-critical software businesses that quietly power everyday life, helping them bring AI to real-world industries. We are deeply thankful to the entrepreneurs who have entrusted us with their life’s work and our partners at General Catalyst, Lightspeed, D1 Capital, MSD & BDT, and Sator Grove, along with our angels and advisors. This $250M Series B fundraise enables us to increase the scale of our ambitions to build a generational AI holding company. We are hiring across many roles! Check out our careers page.