This Week in Startups - Databricks' Record Raise, TikTok goes to the Supreme Court, and all about the Grammarly-Coda Deal | E2063

Episode Date: December 19, 2024

This Week in Startups is brought to you by…Coda. Coda empowers your startup by bringing words, tables, and teams together. Strategize, plan, and track goals effectively with all your valuable data in one place. Go to https://www.coda.io/twist to get started for FREE and get 6 free months of the Team plan.Lemon.io - Hire pre-vetted remote developers, get 15% off your first 4 weeks of developer time at https://Lemon.io/twistGusto. Gusto is easy online payroll, benefits, and HR built for modern small businesses. Get three months free when you run your first payroll at ⁠https://www.gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025*Todays show:Alex and Jason discuss Databricks’ record raise, TikTok’s big day at the Supreme Court, Shishir Mehrotra on the Coda-Grammarly merger, and more.*Timestamps:(0:00) Jason and Alex kick off the show(3:38) Insights on Databricks' private fundraise and venture capital trends(8:37) Predictions on unlimited free energy, water, and food(9:41) Coda - Empower your startup with Coda’s Team plan for free—get 6 months at https://www.Coda.io/twist(14:25) The declining costs of cloud computing(17:12) Evaluating growth rate for startup valuations(19:46) Competitive landscape: Databricks vs. Snowflake(20:48) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist22:07 The strategic importance of selecting the right customers26:34 Venture capital communication and the ghosting phenomenon28:43 TikTok's ongoing legal challenges(31:25) Gusto - Get three months free when you run your first payroll at http://gusto.com/twist(32:33) Shashir Mehrotra on the Coda-Grammarly merger(37:16) Vision and applications of the Coda-Grammarly partnership(42:35) Future of AI agents and Grammarly's role(45:13) SaaS industry dynamics and AI's role in upselling(49:10) The impact of AI on job automation and workforce productivity(54:40) Team sizes and AI-driven productivity debate(57:18) The future interaction with AI agents(1:00:40) Efficiency gains from combining Grammarly and Coda(1:02:02) The role of ChatGPT and AI in social media(1:03:46) Tailoring AI tools for business needs(1:06:26) Lessons from mergers and acquisitions in the tech sector(1:08:08) Strategic acquisitions and their importance in the tech industry*Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.com*Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp*Follow Shishir:X: https://x.com/shishirmehrotraLinkedIn: https://www.linkedin.com/in/shishirmehrotra*Follow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm*Follow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanis*Thank you to our partners:(9:41) Coda - Empower your startup with Coda’s Team plan for free—get 6 months at https://www.Coda.io/twist(20:48) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist(31:25) Gusto - Get three months free when you run your first payroll at http://gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025*Great TWIST interviews: Will Guidara,Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta,Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland*Check out Jason’s suite of newsletters: https://substack.com/@calacanis*Follow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com*Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

You're always trying to upsell me on AI. Stop with this upselling. Just put the best out there for everybody. And I'm like, oh, my God, I got to pay another $2,000 a year, Grammally or Cota or Notion or whoever wants this upsell on AI. Just include it. Yeah, sure. Can you fix the entire SaaS industry for Jason, please?

Just talk to everybody. It's enough with the upselling on the AI. I'm going to start with your two favorite products and then I'll work from there. Are you going to do that? Will you promise me right now we'll stop with the two different. They get non-AI ghetto and then the AI elites. This week in startups is brought to you by Coda. Coda empowers your startup by bringing words, tables, and teams together.

Strategize, plan, and track goals effectively with all your valuable data in one place. Go to coda.coma.io slash twist to get started for free and get six free months of the team plan. Lemon.io. Hire pre-vetted remote developers and get 15% off your first 4.4. weeks of developer time at lemon.io slash twist. And Gusto. Gusto is easy online payroll, benefits, and HR built for modern small businesses. Get three free months when you run your first payroll at gustow.com slash twist. All right, everybody, welcome back to this week in startups. I am your host, Jason Calcanus, with me, my co-host, Alex, Wilhelm. How are you, Alex? I'm actually really good.

I'm starting to get into the festive spirit, Jason, although I will say in the Northeast, no snow. yet and I'm kind of jealous of you because if I try to snowboard right now, all I'll do is to scratch up my board and be sad. Oh, well, you got to get out here to Tahoe. I am in Tahoe. Yes, that is a real background. Yes, you're going to see some weird lighting here. Like, there's my lighting right in front of me.

But it is what it is. You know, I like to give people the background. You'll be able to see skiers go by here from lovely Lake Tahoe. And I did get out for my first day of skiing yesterday. How was it? It was great. I mean, I did too much. I came in, I was like, okay, I did my, you know, nice, you know, whatever, six, seven, eight,

I did my six or seven, eight runs. And then I saw my other pair of skis. I have two pairs of skis, one for powder. One that's more for groomers, which means when they make the trails perfectly smooth. So one of them is parabolic. They're very thin, and then they widen, and then the other one's fat. So you float on the snow. And I just took the fatties out for a little bit because there was a little bit of powder

because we had a little dumping this weekend. And it was great. I'm going to try to break my record of 40 days in one year by doing 41 days this year, as a 54-year-old that I'm old. I'm just trying to get those last, that last decade of skiing in. Hopefully, all the science and technology we talk about will result in us skiing into our 70s or 80s. But I'm not taking it for granted.

I want to get my turns in now. And I do what I call the CEO program, the VC program. I work in the mornings. We do the pot. I go out and instead of having like going out to a business lunch, I do two or three hours in the mountain, then I come back and I start working again. Success has its privileges. I get to set my own schedule.

one of the great things you can do. And what I like to do is I do that little, you know, two or three hours in the middle of the day and get out on the slopes. And what I do is I take notes like crazy when I'm on the lift. They get so many great ideas. All my best ideas happen when I'm on the mountain. And so, yeah, I'm really excited, as you can see.

The working class version of the ski lift, though, is I love to take like a 15-minute shower at some point in the middle of the day. Because if I stop staring at my screens, stop reading new notifications, reading new notes, reading new tweets, and I go and I just stare at a wall for 10 minutes. My brain goes, and I figure out titles, ideas, how to lay out an interview.

It's an amazing, like, cleanse for your brain. So, I mean, three hours must be amazing. If I can get it. Sometimes it's just, it sometimes it's just an hour or 90 minutes. Sometimes it winds up being three or four. I saw there was an extraordinary private fundraise. Not for SpaceX, not for Stripe. Those are the other two giant private companies.

But Databricks just raised 10,000. billion in the private markets. I mean, that's like a Masa IPO. That's a large amount of money. It's slightly different than that. And that's the same headline that I saw. That's exactly what I put in the notes. And then I went and I actually read the Databricks announcement.

Here's the thing is the language gets a little weird. So Databricks, series J, they are going to raise $10 billion. Here we go. Jay is in J-Cerve. I mean, you know, we love lots of Jays. They've completed $8.6 billion of this to date. So they've gotten 86% of the $10 billion. They will get the other one point four.

I'll explain why in a second. What tripped me out, though, was that they wrote it as non-dilutive financing, which to you and I means secondary. But when I was reading other reports and coverage of this, and I couldn't get a hold of Ali in time, the city of data bricks, is I'm just trying to figure out what they're doing here. They said it was non-dilutive? When you raise a round of capital, you're selling shares in Dris and Horowitz, DST, you're a

millionaire's amazing firm, insight partners. These are investors who want equity, but maybe there's some kind of weird conversion that happens when the IPO happens. This is like a mezz round of financing, I guess. There used to be this thing called a mezzanine round. The mezzanine round existed when there was just venture capital and IPOs. And a mez round was a year before the IPO or six months before the IPO. People put a slug of cash in and they get first shot. It's almost like preempting the friends and family round or getting an allocation or maybe

get a little extra bonus, a coupon, as they call it in the business, an extra couple of percentage points and extra couple of shares because you took the bat a year before it went public or six months before it went public. But I guess we don't know here the exact details or we're figuring them out. We're going to chase them down. But I want to make a point about the mezzanine rounds because that's a really fun point. One, you don't hear about those anymore because there's infinite private capital. So you don't need something to bridge you from private to public. But Jason, weren't mes rounds like 50 or 100 for companies that were about to list? Like, it's funny how that is now, what, a series C?

Like, it's been completely consumed by venture. Two things that happen. One, venture capitalists have become more ambitious because they know the company so well, because they're on the board of it. Because they know the founder, since before the product even launched, they've learned over the last decade or two, well, maybe we should stay involved with these companies. And the key company was Google in this respect.

Google made more money for investors, dollar for dollar, after they went public. then maybe, you know, everybody, but maybe the Series A. In other words, why would you get off the board of a company, as VCs tend to do when they go public, or sell your shares in it? And so Sequoia started staying with these companies longer. They started staying on the boards. And then they started this heritage, or I'm sorry, the Sequoia Fund, where they manage the public equities. And because, and then for the founders, well, wouldn't you like to have Michael Moritz still involved? Wouldn't you like to have Doug Leone still involved or Ruloff or Alfred Lin or these other. the great venture capitalist, you know, and keep that continuity going. That's kind of cool. Like, it would be very cool for me if I had had enough equity in Uber to be a board member right now. I, there would be nothing more glorious than D.K. calling me up one day and saying, hey, would you be on the board of Uber?

And I'd be like, of course I'll be on the board of Uber because I remember having the conversations with, you know, Garrett and T.K., when they started the company, I remember the discussions around tipping. I remember the discussion, you know, it's just, like, kind of cool. right, to have the historical legacy people around. And so, yeah, that was one thing that happened is people kind of realized, hey, there's a big opportunity there. Why not take advantage of that? And then the opportunity set became bigger.

And entrepreneurs became more ambitious. So as people become more ambitious and the products become bigger and the customer base became bigger over the last 20 years, we went from, you know, tens of millions of people having broadband to two or three billion people having broadband in their pocket. Yeah. This is a totally different market size now. There's nobody who's like, I'm not putting my credit card in the internet. There's nobody who doesn't have a mobile phone. Like, if you don't have a mobile phone in 2024, it's because you're a Luddite who specifically doesn't want to participate in technology.

Like even like Frontier, previously known as third world countries, those are the places people are going with mobile phones because it's such a huge opportunity. and they sell a $15 freaking Android phone in India now. $15. It's crazy. So anyway, putting it all aside, that's why we're seeing funding the way it's going, staying private longer, all that stuff. That's the backdrop.

But you brought up, you brought up Google's IPO, which means that I get to bring up my favorite piece of data of all time, which is let's all look at Google's S1 filing. Oh, here we go. And I just love to pull this up every once in a while to remind myself what a company that becomes Google looks like when it's young. And the company's revenue growth went from 220,000 in 1999 to 19 million in 2000 to 86 million in 2001 to 348 million in 2002. And then Jason, 962 million in 2003.

That is just one of the most crazy to double or triple revenue. Growth companies tend to grow what? A growth stock is defined as 15% year over year, 25% something in that range. And so, you know, it's really hard to maintain that. And this speaks to the opportunity. This speaks to how much time people are spending with the supercomputer in their pocket, you know, with infinite storage, infinite bandwidth and infinite network effects. Do you spend too much time tabbing between your team chats, documents, spreadsheets, databases?

Well, it's time to consolidate all the knowledge that has spread out across. your entire organization on one platform. And that platform that we use every day here at this week in startups and launch is called C-O-D-A. If you don't know about C-O-D-A, it is a new category of software. And it's kind of like a collaborative workspace, document, spreadsheet, apps, all put into one. It's really easy to learn how to use it and it's incredibly powerful. We use it for all kinds of applications. One of the applications we've been using it for is something internally we call the whisper network. What the whisper network is, is we like to whisper when we invest in a company and they're getting some traction. We'll whisper it to other investors,

just so they know about the company. Well, we tracked that all in a database. And then we opened it up to our 450 portfolio companies who can request an introduction to another firm. And it's all track Rukoda, including what they want to include in that email. And then who on our 11-person investment team is the designated contact for that other seed fund, or giant, venture fund, and this has changed everything for our organization. We make these mini apps that allow us to be so successful at hitting our goals. And I'm a big fan of having systems as opposed to goals. All the goals we want to set will be done really well if you have a good system. And Coda builds these systems of record for us really quickly. So here's your call to action. Coda empowers your

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We take for granted where we don't recognize exactly what's happened over 25 years. Since 2000, we have seen everybody in the

world get a supercomputer. Everybody in the world have unlimited free bandwidth essentially, and everybody in the world have unlimited free compute, unlimited free storage. For consumers, that's essentially the case. And that just takes a lot to grok. Now, it's been reset with computational power on GPUs, and you do hit max limits, as we've heard from various guests on the program, or over and over again, the cost of using chat GPT or whatever. But even that is going to follow the same trend line. Right now, consumers don't

often worry about storage for photos. If you did worry about storage for photos, you can literally create a second Gmail account and get another free, whatever their limit is, and you know, have 20 accounts with 20 different sets of photos. Why don't people do that?

Because it's so, it's cheap, but it's just paid $5 a month. I pay $2 a month for like an extra $100. It's amazing. It's nothing. It's nothing. I pay for my family plan.

I think we're on the 4 terabyte plan. Like, just to give you an idea, but I don't mind. I got four daughters. I want all these pictures. I want them taking videos. Go crazy. $300 a year. I don't care. Apple earns it. And I would have bought a $1,000 rate array put in my house. I'd rather

just have it in the cloud, easier or easier. I remember those days of buying more hard? I mean, do you remember when people were talking about how big their SD cards were? Like, oh my God, that was four kick-a-bys. You can have like an hour of video. We're so spoiled in the cloud. And you know, I just want to give people even more hope now. Imagine a world in which energy, water, and food follow the same trajectory. That's what we're on the cusp of. We will have free energy for everybody around the world, and it will be a similar de minimis upgrade to have the next tier.

But there'll be enough free energy everywhere with nuclear, if we ever hit, you know, other sources, but between solar, batteries, nuclear, it's going to be bonkers, win. And then that means unlimited free water because water is a function of energy, and then it means unlimited free produce, because produce is largely going to be

a matter of energy to power robots to pick things, in the field. And that's going to be pretty crazy when you can buy a $20,000 robot that tends to your fields at night because that's night vision and it's doing overnight,

it's doing Alex and Jason's farm and planting stuff and bringing fresh fruit to the table and fresh vegetables and getting the chicken eggs from the coop and making you dinner. I can't wait. That's literally happening in our lifetime, folks.

You will have a, not a hybrid or electric car, you will have a robot. I can't wait. And that's actually why I'm still optimistic. But on the point of things getting so cheap, they become free, I actually wrote something back in 2014. Wow. And my argument was that as we watched storage becomes so cheap

that eventually everyone was going to have basically unlimited free storage. I took it one step further. I said cloud computing is going to become eventually cheap. Not forecasting the AI boom and the cost of GPUs, which has ruined by point here. But I think we've seen these curves. Your point is correct about...

for a while. You are correct in your thing that compute is essentially free. It's just not AI computer is free, which is a different category. Yes. So data bricks has how much revenue? Is it $2 or $3 billion? It's the last I remember, something in that between those two numbers? Yes. So to your point about there's so much data, who manages that data? Well, Databrox does. So it's growing quite quickly. Over 60% growth in Q3, which is the October 31 quarter, if you care, will cross. 60% year over year growth. More than 60% year over year. And it's going to cross $3 billion in ARR and reach free. CASTLO positivity inside its current quarter according to its own internal projections.

So that means it's huge. So it's 20 times price to sales ratio. Three times 20 equals 60 billion. So that's pretty insane for a company of that scale to get 20 times top line revenue. What would a company like, I guess their biggest contemporary would be Snowflake? Yep. What is Snowflake worth on an enterprise value, I wonder today? and I wonder what Snowflake's revenue is right now.

General Sleutman is no longer at the helm. He's moved on, but he really drove that company to huge success. Okay. So, Snowflake, to answer Jason's question, according to Bessemer data, they are currently, their enterprise value divided by annualized revenue was 14.3x. Their enterprise value divided by forward revenue is 11.7. And they have 28% growth, 67% gross margins. and their last 12 months free cash flow margin was 22%.

What's their just overall revenue? So it seems like Databricks is trading at a 50% higher premium, I guess it goes to twice the growth, right? So this is where eventually your market cap, the value of your company, the growth rate factors in. So when I see somebody who's got a company doing a million dollars a year and they want, I don't know 20 times at a $20 million valuation, or maybe they want even more than that, a hundred times. They want $100 million valuation for a million. I say, okay, well, what was the number last year? We were revenue like $800,000. I'm like, so $800,000 a million. So you grew 25%. If you grow 25%

again, you'll be out $1.25, we're not closing that valuation gap. So what people looking, just so early stage entrepreneurs know will they'll get eventually, your growth rate is going to matter. This is why sales solves everything, as market would say, sales will drive the valuation. If your growth isn't there, your valuation does not get a premium. It gets a discount. If you're only going from one million a year to two million, if you're going from one million to two million, okay, you're high growth. Great. But if you're going from one million to one point five, one point two five, these are small numbers. It's not high growth anymore to the venture community because they're trying to figure out how do you get to a hundred million in revenue, a billion in revenue.

they don't see the path there. No. Answer to your question, though, just to add this in, Snowflake had $900 million in product revenue in the last quarter, about $940 million, if you include some consulting stuff, that doesn't really matter as much. But that puts it roughly, I'd call it $4 billion a year, Jason. So it's about one third larger than Databricks,

but growing less than a half as quickly in percentage terms, which I think implies that Databricks is going to outstrip it, what, next year, in terms of total revenue scale? That's an insane number, because Snowflake has been one of the fastest growing, best performing most beloved public companies since it listed. I mean, the Sluppman era is known because it was successful. So wait, what was the total? What's the total revenue right now?

What's there a last quarter or? 942.1, which is 900 million in product revenue. And then there's some other stuff mixed in there that they tend to discount because it's lower margin. Okay. So they have about a billion in revenue a quarter. So four billion a year. So they're a third bigger. And their total market cap is versus Databricks.

Databricks is $60 billion at this. 62, and they are worth $55.7. Okay, so this is really interesting, just to do back of the envelope math for folks. Sure. The companies are being valued at essentially the same. One of them has a third more revenue. Mm-hmm.

Right? 33% more revenue, $4 million versus $3 billion. So why would they be valued, you know, Snowflake a little bit less, $55 billion versus $60 billion? Why would they be valued less if they have more revenue? Well, then you look at the growth rate. One's got a 30% growth rate.

one's got a 60% growth rate. That's the reason, because people are looking at it. If you're a financier and you work in capital markets, you're going to look at it and say, well, when do they catch up? When do they pass? Data bricks, if they're growing at 60%, 60%, would be adding 1.8 billion, or if let's say, 50%, they'll be at 4.5 billion. If they're growing a 30, they'll be at 4.2 billion. So they're about to get passed. By Databricks will pass Snowflake at this current speed in the next year. They'll lap them. And so if you were looking at a marathon runner and somebody's got a mile lead and it's mile 20, you know, maybe it's too late to catch up. But if it's mile 10, data bricks could be going whipping past snowflake. And also, I just want to say, and this is a vibes point, which doesn't

show up as much in the multiples and the revenue numbers and kind of the hard facts of this. But when you think about AI today and AI in the next five years, and I offered you one share of snowflake and one share of Databricks, which do you think is better set up right now to capitalize on the AI boom and therefore have more tailwinds. Yeah. So this is where looking at product roadmap and talking to customers is the job of a capital allocator. And so when we do our diligence, even at the early stages, seed stage, kind of crazy,

we do like to talk to customers because we want to have the conversation with the founder. Do you have the right customers? And I constantly have do-gooder entrepreneurs. God bless their hearts. They come to me and they pitch me and they say, J-Cal, respect you, and watching this week in startups. since I was in high school, you always give it to me candid.

Tell me what you think of my idea. And I'm like, I think your idea is great. I think your selection of your beach hit customers is idiotic and terrible. And we're going to have every VC tell you how awesome you are and ghost you. All right, founders,

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They only offer handpicked developers with three years of experience at a minimum, and they have to be in the top 1% of applicants, right? Something goes wrong. Don't sweat it. Lemon.io will find you a replacement developer ASAP. So many of our launch founders have worked with lemon.io, and they've had great experiences. So here's your call to action. go to lemon.io slash twist and find you're a perfect developer or the perfect tech team in 48 hours or less. That's right. And Twist listeners get 15% off the first four weeks. Stop burning money. Higher developers, smarter and faster at lemon.io slash twist. If they think you're going after nonprofits,

that's like going after newspapers in 2010 when they're contracting, non-profits are like run, you know, not super professionally, not super efficiently. And it's just like, why would you pick that market? Because you want virtue signaling points, because you want to feel good. It's not the market to go after. If you were going to build a finance company to help people raise money for their nonprofit, why wouldn't you build a financial tool to let anybody collect payments like Stripe? Yes.

So you've taken the Stripe opportunity, the Apple Pay opportunity, whatever, and you've narrowed it down. To non-profits? Yes. Yeah. So why narrow it down? And if you are going to pick a beachhead customer, which you should, and you should have an ideal customer, why wouldn't you pick the one with the most money who is the least discerning, you know, in terms of like paying for it? You know, in other words, you start, and I give them the example. Travis and Garrett and the team over there, they, Ryan Graves doesn't get a lot of credit. They deserve, they, that he deserves, he deserves some more. They get, in fact, he was going to be CEO. for a big's unknown story. It almost made me pull my investment. Was that the back?

Was that, I remember I went out drinking with one of the Uber founders who was not TK in Chicago when they were just having their first couple of black cars in the city before it was actually live. I think that was Ryan, but that was, I think the event that we eventually labored, later called Chicago Tech Blackout. So details are a little spotty. We used to have fun in technology.

Oh, yeah. Maybe too much of times. Yeah. And so the, the interesting thing was Ryan was going to be CEO. And Travis is like, you know what, I'm not going to take the CEO slot. And I was like, what? I'm investing in you.

You have to take the CEO slot. I get rid of the Ryan Act. And I think Ryan may have taken a person. I think he would be a great CEO. But I think, you know, Travis is obviously, I don't think anybody thinks that there are very, there are very few people. We count them on one hand. It would be better CEO than Travis. So that's not a dick to Ryan.

But Ryan, I think maybe took a person on my investment. And I got really upset, T.K. was going to have him be the CEO. And T.K. To his credit. And was like, okay. if I don't do it. Not because of me. It was his own decision, obviously. Putting all that aside, you know, you have to pick your, who you pick as your first customer is really important. They

picked Lincoln Town car drivers and people who took Lincoln Town cars at the airport. Why? Because they were already spending. Back in the day, it was $3 or $400 to have somebody wait for you at the airport at JFK. You paid for an hour, typically a hundred bucks an hour, for them to arrive early, an hour, a buck 50 for your trip, maybe. So it was like 250 or something. Now, they would come, they would hold the sign, they would get your bags, it was all quite charming. But you would put that versus 40 bucks, 50 bucks for a yellow cab,

and people made a decision, $50 or $250. If you're trying to communicate with the yellow cabs and those customers, they complain, they ask for a refund, they're price sensitive. And if you told the CEO of a company, like, they'll meet you at the curb, you can see them on the map, it's $150, it's $100 less, or it's $100,000, or it's $100 instead of $200, they're like,

yeah, okay, it's cheaper, but it's more convenient and it's easier, it's in my pocket. I don't have to call somebody on the phone. There was like, you know,

better reason. So always the best possible customer you can, don't be a do-gooder. Be a rabid capitalist. If you want to do nonprofit stuff, then go do nonprofit stuff.

My best advice to people, go make a ton of money and then create a nonprofit what you're passionate about. If you want to save the mountains and trees, Go make a bunch of money in enterprise software, and you'll buy a lot more trees than begging people for a hundred bucks to plant a tree. Or back to the payment example, build the broad payments company and then create an arm inside the company that offers cheap payments for nonprofits.

Oh my God. There you go. Yes. You could do your do good or stuff after you're sustainable and strong and growing. Yes. Just don't do it in reverse. And they're wondering, they're wondering, Jake, why can't I get funding? It's like you literally signaled to venture capitalists who are on edge.

They're on tilt about getting returns that you don't care about returns. Now, you may have done that or, you know, you may not have done that on purpose, but you just have to understand that's what you did. You just said to them, I'm going to burn your money and not get your return, as opposed to, I'm going to print you money and get you a huge return. So just know what you're signaling. I want to do a quick point about the ghosting point because you mentioned how VCs might say you're great

and then not talk to anymore. How common is that? Well, there was a great thread over on the startups forum on Reddit that I saw the other day. I've gone through and I've highlighted every use of the word ghosting from this founder who pitched a great number of VCs. So there's ghosting and then there's ghosting and there's ghosting and then there's ghosting. Yeah.

And then there's even more down here. Oh, you're just on the, wait, how did you? get all the ghosting. Oh, I just did Command F, ghost. Oh, oh, got it. Perfect. But like, look how many people, the ghosting was pretty pandemic for this, this founder. I mean, it's, the reason for this is, is it's a hard conversation to tell somebody, I don't want to date you because you're ugly. And I'll just tell it to you straight. That's the beauty contest here. If you think that men pick women because of beauty, let's just say you pick that, you think that that's how men pick mates. Okay, we can debate it if you want or not. In that dating scenario, are they going to say to you,

I don't want to date you because you're ugly or I don't think you're attractive? Or are they going just say, I'll just want to respond and I'll move on, which is more comfortable to do. That's what VCs do. We take the approach. We say to founders, we have other investments that we have to prioritize that, and we just leave it at that, but we would love to get an update from you. if they ask us, we'll give them more details. But I just brought it up internally for our firm launch. Again, should we be giving founders more details of why we're not investing or not? And I have switched my philosophy back and forth, back and forth, because once you give founders,

hey, we're not investing because of the margins and because of the growth rate and because of the team. They say, well, you're wrong and they argue with you. And then you have another email to do. That's why the best ones say we have other investments we need to prioritize. or this isn't a fit for me. I do want to do a quick news update, though, on TikTok, just so everyone knows. We've been talking a little bit about TikTok and its legal travails.

So today. The ban is in January 19th, right? Isn't it? January 19th. It's coming. We're about a month away. We're 30 days away from this. Absolutely.

Done. Yeah, well, so on December 13th, the DC Court of Appeals said no to them asking for an injunction against the law. Then on the 16th, TikTok filed, Dear God, Spring Court, please come help us. We don't have any time left. today, the Supreme Court said no to their request for an emergency injunction, but what they did was they've squeezed an entire Supreme Court petition in between now and January 19th.

So it's going to be, yes. Wow, the Supreme Court doesn't usually do that, right? Aren't they usually like slower? Slow. Yeah. So slow. Yeah. But the commentary that I saw that made the most sense to me is that they're compressing this.

So that way the current DOJ and the current kind of like set of government, that brought this bill and passed it are going to be the ones defending it, which makes, I think, reasonable sense. So very quickly, everybody. There's going to be an administration change. The new administration might have different feelings about this.

The old administration should get to dispatch justice here as they see fit or the court should. And so they just want to, yeah, wrap this up before, yeah, it gets next or there's a transition of people, I guess. I guess that seems like a good idea. I think it's reasonable.

And then the trouble of them can do it over the world. Congress can pass a different law. You know, they can go back to the drawing table. Oh, right. We live in a democracy. There's a law. We do. And there's a process for passing peace laws, yes.

It turns out there is a process. We don't use it very often anymore, but we do have one that is in reserve in case we ever decide to legislate as a nation. Quickly, opening briefs, December 27th, to write up for Christmas. We'll get the big notes from the government and TikTok and then essentially oral arguments January 10th. So this is going to be bang, bang, bang, we're going for it. No Christmas for people working at the law firms of TikTok or the DOJ.

You got work to do. No skiing for that group. for that group. Jason, this is going to be the biggest. No, what? No. Okay, look, if someone wants to pay me what they're going to pay those lawyers to work over Christmas, I think this is literally the best Christmas ever for the thing. Those families are like, guess what? Christmas is in February wherever you want it to be. Yeah, exactly. Pick a continent. We'll do it there. That's what's going on. Everyone, we have our eyes on it. We'll bring you the briefs when they come out. It's going to be a big deal. It's going to be politically charged, very interesting, and it'll help determine kind of where

things go. But jayvests. I retain my position. Divest, divest, divest, divest. I'm still on that team. Too powerful for the Chinese to have this tool. Yes. Or any country to have this tool, I'll be honest. Especially in our nation. All right. You didn't start your company to run payroll. Did you? Of course not. We all know that. Gusto is here to help. Gusto is going to help you run your payroll and handle all your benefits onboarding and HR all in one place. The market agrees, 300,000 businesses, trust Gusto today and you can too. As your startup scales, Gusto is going to grow with you. You got state and federal taxes handled for your staff around the country. Gusto does all that. And hey, maybe it's finally time for you to offer a 401k plan for your team, right? Gusto's got you on that.

And you might need to get your compliance sorted, right? Well, three out of four employees. say Gusto helps them be government compliant. And even better, Gusto is simple, easy to use software. So you can focus on what matters, building your startup. So here's your quick call to action. Do you want all Gusto has to offer with no hidden fees? Well, how about a discount? Try Gusto and get three months free. Gusto.com slash twist. That's g-u-st-com slash twist. All right, so coming up next, we have a guess that I'm very excited about because Jason, it is rare that I talk to someone who runs not one product that I use day in and day out, but two. And so I want to welcome Shishir Mayrotra to the show. He is the former

CEO of Koda and now also the incoming CEO of Gramerly because news broke this week that Gramerly and Kota have decided to become one entity. They are merger acquiring one another. And so we have him here. Shishir, hey, how you doing? Hey, I'm doing great. I think technically I'm still CEO of Koda. It closes in January. So this is in January. Sure. Nice to see you. As you know, I love Coda.

Coda has changed our company. We use Coda for so many interesting projects internally that you're aware of, but that I have told you you're not allowed to tell people about. We were going to do a case study on some of the stuff. I know. I just, you know what? It's like my secret weapon. We do really interesting projects here.

Now, the Twist 500 is a public one, but we built this Twist 500 database here on Coda. What I love about Coda is as a workspace and a tool, you know, it's kind of like the Wikipedia plus a database plus Google Docs plus plus plus plus plus plus Zapier, but we still use Zapier with it because it complements it quite nicely for a lot of the things we're doing. But man, I love the program. Twist 500 is the public facing thing we're doing where we're putting the top 500 private companies, which we're going to include your merged company. So congratulations, you're in the twist 500 as a merged entity.

but also grammarly I love because as you in a 20 person company like we are slightly more, there's usually two or three really great writers and they become. So it's me, Alex and Jackie are the best writers in the company, I think, and people come to us and say, hey, we wrote copy. Hey, I got this memo. Hey, we got an LP update and we read it. I pay not only for everybody to have Coda, but I pay for everybody to have Grammally because Grammarly has helped everybody in the company go from being a bad, okay, or good writer

to a good, great, or excellent writer. both products, but tell us what happened here? Why are these two companies coming together? Because these seem like maybe they're different products, you know, but we know that SaaS has headwinds. You both raise a ton of money, $200, $300 million each. So why are these two companies being put together? Is it a sign of weakness, a sign of strength, a little bit of both, a way to consolidate and to be more efficient? What's the background? How did this all come together? Yeah, first off, Thanks for the glowing review of both products. And I won't reveal all your secret Cota use cases.

Thank you. Someday, someday I'll convince you to let the world know. Maybe we don't have to do that today. Yeah, I'm super excited about this where we, as you mentioned, we announced yesterday, Coda and Garmley are coming together.

I've personally been, like you, a deep personal user of Garmory for years. I was actually an early investor in Garmley as well. So I followed up along the business. as well. And, you know, it's been a huge fan. And I don't think I saw it as an obvious pairing either. But then we got asked to get together.

We have a common investor who put us together and said, you know, you guys. Sorry. General catalysts, right? He came on the general catalyst. You know, amazing person and great connector and so on. And he said, you know, you guys don't realize it, but I've sat through both of your discussions. And you're actually headed to the same place. And it was kind of surprising.

but we took a day, we sat down, and we literally took each other's vision memos for the next year and just went through them line by line. We compared some of the, some of the mocks and graphics, we compared some of the observations and realized coming from two completely different places,

but actually headed to the same spot. And the end of that meeting was basically, are we going to each try to go kind of build each other's approaches, or are we going to do this together? And it was just obvious we should do it together. So that's the... What is the joint vision,

if you were to describe it, Because I use Grammarly as an editor. When I'm writing an important piece, I will write in Grammarly, but I have it installed on everything. So if I do a tweet, it's going to on my desktop at least Grammally. Grammally keyboard, a little bit clunky, needs a little bit of work. I'll give you my notes privately on that because it doesn't do a good job of predicting the next word, putting us on my little tiny insight there. And then code I use for building workflow products, what we used to call workflow in our industry, as you know, things that Lotus Notes used to do. where, you know, hey, we're putting some data in and then we want to have things happen.

Little scripts happen based on, and reporting happens based on what happens with that data. So what is the common vision for the two companies if you had to describe it in a sentence? Yeah. So at the core, we're building a user-centered AI platform of applications and agents. And those two things together are what makes this magical. So maybe I'll just sort of divide them up quickly. So agents first, you know, that words tossed around a lot. days, I think of Gramerly as the original AI agent. The one that, you know, 40 million daily

active users, 200 billion words a day, it's in the middle of everyone's work and follows them everywhere they are. And the real magic of what Gramerly has done, which, as you mentioned, you experience well, as it works everywhere. It doesn't force you to change your behavior. Yes. They've done integration with 500,000 applications. So the Gramerly experience can be like this agent alongside you as you're writing. One analogy they use is it's like an AI superhighway being built into every other product. And the analogy that Max and Alex, the founders here at Gramerley talk about is that they feel like they're only driving one car on that super highway.

There's one agent that comes along and helps you with proofreading your work. Another way to think about that is that super highway, now that we're in the world of AI and there's all of these different types of agents, is it what else could we put? on that. And so this part of the conversation mostly focused on a new product we're building a Coda called Coda Brain, which is basically we've taken all the integration of Cota. It's one of Cota's favorite features. Everybody, everybody

loves to use code to connect other tools. We have about 1,700 or so different integrations, 800 or so that are public, and they connect everything. So it's email and Salesforce and Jira and so on. And you can just picture that all of those now become agents on the same super high-like vision. I understand it.

Right. So this first one is really easy, right? You're going to come along. And rather than this This agent helping you with, hey, you got your grammar wrong. It's also going to tell you, oh, here's the context on that investment. Here's a little bit of what, you know, that customer said last week in their meeting. Here's a little bit about the feature you're talking about, so on. It's like a co-pilot for writing better. But if it was reading everything I'm doing, which it is, and it's thoughtful about it,

it could say, by the way, I know you're responding to this founder in your founder Slack. Exactly. Other conversations with this founder exist in your superhuman, in this other CRM. Oh, by the way, you're not just talking to this startup here. They're also an advertiser in there in the HubSpot where they're in this marketing database. That's like a really interesting observation for sure that Gramerly is following around. And kids love Grammarly. It's one of the thing that I was just talking to somebody and they said,

Gramerly just got banned in their class. their teacher doesn't like grammarly because it's too good. They'll let you use chat GPT, but they said no grammarly. And I said, that's really interesting. Why not? I've been teaching my daughters to use grammarly as they learn to write because it makes you superhuman. It's so powerful that, yeah, interesting. By the way, I have two teenage daughters of 16 and 18, so they're my first test for many of these things.

And of the many wonderful text messages and everything I got yesterday, the ones from my daughter's friends were definitely the most. heartwarming and from their teachers, which is also great. They love it, yes. They do. And actually, the experience you described is, it's usually the opposite, actually. Usually it's grammarly is approved and chat GPT is not. That's what I said, yes. But there was some teacher, was an English teacher who was like, I want you to write

without grammarly. I understand that. I would, if I was a teacher, I would have them write something without grammarly. Then I would put it into grammarly and walk through each correction and then debate each one. Then they would learn how do you. these tools, not, you know, without relying on them, but to use them to augment their brain. We should get to the second half of the vision, but I would say even on just this topic, this idea of an agent that can do everything with you and knows more than grammar.

One way to think about that, just to picture a world is, I actually want that agent to be the teacher's agent. I want the teacher to be actually part of that you should, one of the amazing things about code of PACs is anyone can make them. So a lot of them have been made by many people around the world. Many people build them inside their, their, you can explain what that is at Coda Pack? Yeah,

so a Coda pack is an extension of Coda. So that, most of them are integrations. So they're mostly integrate between Coda and some other product, but they're a way- You can think of them as Zaps for Zapier or if this,

then that. Exactly. Two other great companies. Yeah, so the common ones will be to systems. They connect to Gmail, they connect to sales to one, but you can build ones

that have a particular point of view. And so you can absolutely build one that is, you know, here's the chemistry agent that knows everything about about chemistry and for that student use case, you can really, you know, imagine that AI superhighway having a whole different class of agents,

even for just that audience. It's also, I think, interesting to think about, Gramley obviously grew up, known for students, very core audience, but it is actually, the vast majority of users are actually professionals. And so, yeah, that's right. You can't get to 40 million daily active users without that.

And so there's a huge number of people out there that rely on Gramley. It's market or salespeople, lots of CEOs. I mean, the number of messages I got yesterday from CEOs, who said, this has saved me many, many times as I have tried to communicate with my board, with my team, with whatever it is. I think it's awesome. So one half of what we're doing is that, and that's, you know,

Gramley is a big AI super highway. We're going to use it as a platform for the future of AI agents. The other half is applications. And, you know, this is something the Gramley team's approach to this was, you know, up till now, Gramerly has mostly been the magic is that it works everywhere else. And it's always kind of lacked a home. It's lacked a

destination that feels like your true writing space. There is a Gramerly editor, which is quite good. Yeah, but you know what? It's great, but they don't support it now on iPad and iPhone anymore, I don't think. So they seem to have gone away from trying to compete in the document space and they just want to be agented. They want to be a co-pilot. And it's a, as you might imagine, a common debate inside Gramerley was, do you want to work everywhere else?

I like to say, Bermenly spent the last 15 years enabling every other blinking cursor. Coda spent the last 10 years trying to build a new one. And so there was this big question about does Grahamly want to be in that market. And so as Alex and Max walked me through their vision, they said, we've made a decision. We really want to be in that market too. And the reasoning really resonated with me. Their view was that, you know, we're going through this change and how people think about their tools. And they sort of see it as three phases.

There was a phase of the PC phase. And all the tools came out. And they just felt like digitized versions of our physical tools. And that was the office days and so on. And then the second phase happened with the web. And all of a sudden, tools became about collaborating with people. And so it was Google Docs and Slack. And it was all about communicating with all these other places with all these other people.

And then this phase is AI. And all of a sudden, the applications work like people themselves. And they're sort of working alongside you. And that's the sort of role of the agent. And what they said that I thought was really interesting is they get a lot of pressure from users of do I have a home for my work. But more importantly, what is that first class place to understand an AI native collaboration surface? And they had this plan for how to go build that. And we sat down and looked at what we built.

And the plan was your roadmap notion and what other people are doing. So, hey, now the two of you come together, peanut butter chocolate. It's such a great combination. Yeah, I'll use that one. I've been using Lego pieces and puzzle pieces, but I like peanut butter chocolate. You know, like you guy, and this is a thing that makes me crazy about the whole lot of you in SaaS is that you're always trying to upsell me on AI. Stop with this upselling.

Just put the best out there for everybody because what I'll tell you what happens with AI is 1% of your or maybe 5% of the people at your company use it. But then you guys demand that I pay 100% of my users pay for it. Now you put in this cognitive dissonance. I got the top performer saying I need this tool. And then you guys are saying, like, everybody's got to pay for it. And I'm like, oh, my God, I got to pay another $2,000 a year, Gramerly or Cota or Notion or whoever wants this upsell on AI. Just include it.

Yeah, sure. Can you fix the entire SaaS industry for Jason, please? Please. Just go ahead. Just talk to everybody. It's enough with the upselling on the AI. I'm going to start with your two favorite products and then I'll work from there. Are you going to do that?

Will you promise me right now. We'll stop with the two different. Well, just me put a non-AI ghetto and then the AI elites. That is the Cota approach. Code AI is included for everybody. Thank you. Thank you. I mean, generally, it's the obvious approach because the whole product is AI. So how we bring that together, we'll get to.

I agree with the sentiment. I understand very much the haves and have-nots of the creates a weird choice for the buyer. Alex, you have any questions? Oh, I got a bunch. I mean, we have two ways to go with this. There's product, which I've taken up all the product discussion, but you love markets and you love M&A. So I think you probably have some M&A questions or some business architecture questions.

Oh, hell, yes, I do. So one thing that blew my mind when I was reading about the deal was that it was done in stock according to Axios and was done, I believe, at the last kind of valuation marks for the companies. And Gramerly was valued Jason back up like $13 billion. And I think Coda was valued at like 1.3 last time. So Dan Premak writes that it's about 90% Gramerly stock and like 10% CODA stock. I'm curious why you guys went with those prices

to set the rate to consummate the deal. Because to me, those are older numbers. Are those numbers correct or ballpark correct? Let's start there. I can't comment on those numbers. The numbers are correct on the last valuations. Our last round was done at 1.3, 1.4 post. And the Gramaly last round was done at $13 billion.

So I can't really verify anything about the actual numbers. You can draw your own conclusions on that. maybe I can comment on the process of coming to a decision like that because I think it's always hard. I think there are different ways to approach these situations. So sometimes you do it based on revaluing companies and you sit down and you try to come up with, you know, the metrics and you come with cash flows and so on. And sometimes you take the approach of we're about to build something new and it feels a little bit more like I'm sure you've coached founders on this before. A little bit like when the founders are coming on and saying like, hey, we're going to, going to kind of split things up here. What's a reasonable way to split things up based on the

future? And this was definitely a case of us saying, we're going to build this together. We have these two vision memos that are quite similar. And we came up with what we felt was a reasonable split between them that I think is appropriately fair for everybody. But I think that's, it's much more looking to the future than it is looking to the past. To profitability, I assume. I mean, you're in investment mode right now. I would also assume that. But apparently has been profitable for a long time. Oh, wow. That's fantastic. So, you know, there is a big discussion. I don't know if you saw the Satya Nadella comment the other day that, like, on the BG2 pod, they had this like interesting thing where I said, listen, there's databases on the back end and there's just going to be AI agents. That actually kind of aligns with your vision. So, but these companies are going to take less and less in terms of infrastructure and people to run them as an, you know, entrepreneur for a while now. Like, what do you think about how many people it takes to grow, these companies, another CEO, I don't know, was the Clarno CEO or somebody, you know,

said a flip and comment, like, why would I hire anybody? I can just build agents. I can just build, use AI. And, you know, he said that and people are like, he's lying. It's not true. I think he said the quiet part out loud is that the next hire is harder than hiring somebody is sometimes, oftentimes. I don't know. Is it all the time, most times? I don't know if it's most times or often, I would say often, perhaps somewhere between often and most times. The most, the best use of your resources is to automate something and use technology than to hire and throw a human at it where it hasn't always been that way. How do you feel about that? So I really like Sebastian. I think he's done an amazing job with Klarna and spent a bunch of time

with him on this topic. I think they, and he does, he makes actually a couple different observations. One is that he thinks, say, I can rebuild all the solaceousy. software you need to run the business, and the other one is about hiring, as you mentioned. Those are sort of two separate observations. And I think I count myself as an AI optimist. My view is it's going to be a net added into the world. I mean, there's definitely a view of the world that is, as technology advances, every wave of it, as you both know, there's been this fear of, will it replace jobs, will it make it impot. And obviously it does in some in some cases. Technology over the last 100 years has shifted jobs. But I think in almost every case, it creates them instead of

removing them. And I don't think it's, I think it uplevels people. I mean, the idea of I'm going to have agents to go and, you know, help me do my research and help me prep for my day or or help me write code or so on. It's great. What does that allow me to do? It allows me to up level. And it allows every person to up level what they're doing. It changes the jobs. And I, yeah. So I think, yes, it's going to change the nature of jobs. I think it's going to create jobs. maybe on the second part of it, the will it replace applications? I think that's slightly misguided. And the reason, maybe just give you analogy,

imagine I came and told you AI can write great assembly code. Can automatically generate as much assembly code as you want. And you'd say, who gives a shit about that? Yeah. Writes assembly code. I mean, there are people who do, but there's not a lot of them. Yeah, that's not. And so, yes, of course, can AI, it's a magic trick, can it generate this thing.

But I actually think AI working in a surface with building blocks that I understand is very important. The fact that AI can go and create something that I understand that I can still work with. And I think this is the idea of AI should feel, we call this user-centric AI, but the idea that AI should feel like something that's working with you in a surface you understand and doesn't produce a bunch of, you know, I think one of Sebastian's statements was we can just generate Salesforce or Workday or so on. I'm sure you could. I'm not, I'm not, but then what do you do with it? What does it go next? I got a double click on this one again. I'm so glad you came on. I appreciate you coming on. I know you're very busy. It's the holiday season and you're in the middle of this,

but it's such an important discussion for us to have. And I have to say, you know, I have found young people who are what I'll call AI first people. They use chat GPT first before a Google search, or just a search because Google now has Gemini. So they'll do a Gemini deep research. Have you played with deep research, by the way? One point five yet? Oh my God. Literally the second you get off this, pay for $20 on your Gmail account to get Gemini 1.5 with deep research.

It's scary. Scary, good. Putting that aside, I have people on my team now. We have 20 people. We're paying you, what, 20 bucks a month for a Coda? 30 bucks?

What is the rack rate? Probably a 30, I guess. So I'm paying you $360. I'm spending $7,000 a year with you, maybe $10,000, whatever. They just did a function. I'm not going to say what it is, but this is something

that's time-consuming an venture firm that processes a lot of applications. And they said, you know, we save this amount of time. And I said, this amount of time per what? And they said, well, per like transaction or whatever, or per processing thing. And I said, well, how many of those do we do a year?

And they said, 20,000. 20,000 times five minutes, you saved 100,000 minutes. So yeah, we saved 100,000 minutes. And I was like, okay, people work 2,000 hours a year. Like, I can literally put numbers on what's being saved now. And I can tell you having high performers, bar raisers in your organization, who are AI first, who use CODA first, who have grammarily turned on everywhere and they took the time to turn it on. These people are 50 times more valuable from my organization than the people who are not doing it.

I'm not saying that to scare everybody inside my organization. Please clip this and send it to the people who aren't using it. Like, you're not long for this earth if you're not doing this. In my organization or others, because there's a group of people behind you who are making applications that say, a hundred thousand minutes and you're thinking in those terms. What this means to me is, you've got a great future, by the way. I mean, I do think like people building apps as the future and the agent following you along. But I'm going to disagree. I think static team size is going to be the future. If you are an elite CEO, elite leader, Alex, I think you're going

to look first at automating with the existing team rather than throwing a body at it, hiring more people. it's just too much work. And having the same team size, like you're the Navy SEALs, you're like the same team size, but everybody got a little bit better. Everybody's a medic. Everybody knows how to use the defibrillator.

Everybody knows how to use CODA. Everybody knows how to use a sniper rifle. Everybody knows how to fly the Apache, whatever. Like, if you can actually do that, and every Navy SEALs in Apache, sniper, and medic, which are three distinct fields in, you know, the military, then all of a sudden you got like a really killer team I'm taking the other side.

Well, no, you also do away with middle management. I mean, what's the bloke problem at every single major tech company? They always say, we have too many layers. Where did all these layers come from? I'm like, you literally made them. Out the door. Just to be super clear, I'm in the productivity business. I've been trying to help people be more productive for years.

So I'm not averse to the idea that using the right tools can make you individually and your teams and your companies 100 times,000 times. Obviously, that's my whole business. and maybe to give you one, you were mentioning earlier about things people do with CODA and you can kind of use as a workflow tool and you can do automations and so on. I think last year we automated something like $4 billion, just on CODA. So I mean, you know, go multiply that by how much time you would have spent and every one of those emails sent or every one of the notifications or the updates of Salesforce or whatever,

whatever it might be. So I'm definitely aligned with you on that. My statement isn't so much the, you know, any of that's going to stay static. It's my job to go make that thousand times 100,000. sometimes better. My point is more that I think the human imagination is really high. And the, the idea that my company size is going to stay static because I can do the same thing with the same amount of people. Yes, if you're just trying to do the same thing, I think that's true. But then you're going to sit down and you're going to dream up to like what I could do something else.

Okay, fair enough. Yeah. That's true. But, man, see, this is the natural tension. I think you're going to look at that and say, yeah, you know, we want to start this new year. You're not, I'm thinking, okay, I'm taking, I'm going to pluck these two people out of this unit, and they're going to start, and then these people are going to pick up their slack and automate whatever they did. But Jake and I, maybe I'll use you as the example. Like, it's nuts to go run an investment fund and multiple podcasts and so on. You could have stopped. You could have said, I've got this fun. I've got this magical code thing.

I'm trying to stop. You didn't. Now, because of Zoom, we don't, like, this took no time to go get this set up. Technology made it possible. You know, because of CODA, you know, because of CODA, you know. now can invest with like so much less of your attention than you used to be able to invest. That's all true. What did you do?

You filled your time with new productive things to go do. That was my, that's my AIA optimism view. Productivity, I think, produces humans of full imagination. Alex, who's right here? Neither of you. I'm right. Critically, I want to ask about the agent point, because I know we have to go in a second, but in your discussion of the plan for the combined company, you said you're going to

weave the best of Koda and Gramerly together. Of course. You're going to combine company knowledge, gen AI, chat features, full productivity suite, and hundreds of agents. Now, the thing that I struggle with is, what does hundreds of agents mean and how do I touch them? Because I feel like people have their own view of what agentic AI means. And so in your future vision, where do the agents live and how do I know to call them? How do I know to interact with them? How do I know to interact with them? How do I know to interact with them? How do I know what does that really look like in your view?

Yeah, I mean, it's a great question. I don't know if touch them is quite the right phrase I would use with it. Interact with them very politely with concern. Yes. Absolutely. Yeah. I mean, I think that, and I think this is like defining this word is really important. So we spend a lot of time on once an agent. I think of an agent is a mix of a few different things.

An agent, if you sort of analogize it to human, an agent is something that has context, so it has a certain set of knowledge. It knows certain things. The Grammarly agent knows the entirety of everything about grammar. The Gmail PAC on Koda knows everything in your email. So there's context first. Second, skills. There's things that this agent can do.

Right? The grammarly agent can go and revise your work. It can go and answer questions about it. You know, the code of Gmail pack can go and send emails on your behalf. I think there's jobs. There's things you've asked it to do all the time. You've said, hey, auto send emails out to my investors. You said, please correct my grammar in these places. And then finally, I call it the instructions. I'm going to talk to this thing. I'm going to say, hey, right now I'd like you to do this. Right now, I'd like you to answer this question. So you take all those pieces together. And in my mind, that's what agent ends up me. It's something that's context, skills, jobs, and instructions. And so I'm working on how to... Context, we understand, right? In the skills, yeah, the knowledge. Okay, yes. Skills and actions. Skills are like the buttons you can press.

These are the acupdent emails, got it. Updated database, whatever it is. Send something to Slack, yeah. Jobs are your work list. Jobs are, hey, I hired this person. I said, this is what I'd like to get done. And then instructions I think of as one level up is kind of the personality. It's the current thing I'm trying to get.

done and how I want you to behave with with me. And at that point, I expect to interact with an agent in many ways like I interact with humans. I want to be able to assign task to agents. I want, you know, what one magical thing about the, the, the, the grammar experience is it kind of feels like somebody came along, this really good proof of it. Like, the way you were talking about earlier, of like, hey, I'm sick of reviewing all my team's writing. Right. What does Gramerly do? It does what I would done. I come through and uses, you know, red and blue marker and says good, bad, and then teaches you, by the way, this is why you're using then and then wrong. That's right. Yeah. Time and yeah. Yeah. So that, I think, and I know you have to squint a little

bit to see how these things all come together. And I know the term is going to feel slightly unfamiliar. But if you start, if you think about it like applications act like people, I think it's the easiest way to think about it. I like that. Apps acting like people. Yeah. It makes total sense. But the substance is. And if you're, and grapick, primarily studying all this. So it reminds me of what Apple intelligence is doing. Alex, we talked about this on a previous episode. In Apple intelligence, you can go in and you can say, let Apple intelligence study what you're doing in this app, essentially. And it's on an app by app basis. So people are turning it off for things like Signal or Telegram or I message, because

they don't want Apple intelligence listening in on those conversations for obvious reasons. you know, but they do want it watching I use Spotify or Kobuz another high-res music service because Kobuz hasn't written Siri integrations yet, but if Apple Intelligence is studying how you use Kobuz, when I'm on the ski

slope and I say, play this song in Kobuz or play me, you know, whatever, it should know how to do that. It doesn't because it hasn't been written. So you have grammarly studying how people do things. You have Koda explicitly having people write apps. So this

is like a pretty awesome combination. And Athena, Alex, is also down this path. Everybody go to Athenawow.com to get a month of, I'm an investor. Athena has a virtual assistance and they're studying and watching them work and then using that to back into agents and technology. So a lot of people are on to this business process studying and applications. I think it is the future. I think you guys are perfectly positioned. But the thing that we're getting to here is that it's not going to look like one single thing. So there's ambient agents, like grammarly, which follows you around everywhere you go. There's things that you sure mentioned that you would have to prompt directly. And then there's other things that might look more like a to do list or a task list that you assign to it.

So I think the things I struggle with is agentic AI seems to be everything that's not chat GPT. No, here's an idea. I would include chat GPT. Why? I think of chat GPT is, and go back to mine, the apps acting like people. What did it we all love about chat GPT? What was the thing that blew our minds about Chad Chabit is that I could go to this thing. We've all had the experience. You're sitting at dinner, somebody to answer the question. What would you do?

You turn to your smart friend and say, what do you think? And that's good. I can go talk to this thing and it acts like a person. It's an amazing person. It's a person that read the entire internet. What's the context for chat chbtee? It's the entire internet. Yeah, it's all with human knowledge.

You know, I do see the vision here pretty clearly. You know, of grammarly, you know, one of the concepts that people always need is, give me an idea of what to write next, right? the blank sheet of paper. What Grammally and Coda should do next is they should say social media. You know, I use my Athena assistant to go find everybody talking about Founder University or Accelerator, yada, yada, and then they share that in a Slack group. It's a manual process, but it's well worth the $33,000 a month I pay for it. It's about one thing the person does.

Instead of having a social media manager, they just put, here's a list of the people on LinkedIn, Twitter, Instagram, talking about us, our friends. firm and our companies, go engage. And then they go and say, who hasn't engaged, who did engage? And they just remind everyone in the team very gently, these people have engaged, you know, if everybody else could engage, that'd be great. It just means go find the founder. If you were one of our founders and you were talking about this merger. I did this exercise yesterday.

Yeah. But now you do it. How do you do it? You have somebody prepare it for you and give you several links. Oh, you have a code of dock, right? Yeah, people just dump them into there. So now, social media monitoring as an app with Grammally, Plus you combine what should you write next?

So here's everything. These are people that you should engage with. This person from com.com. Alex from com.com tweeted about a new feature. Would you like to engage? Here are possible responses. Click one and edit it and then post it. So a social media agent should be the next one you do.

And it should just be built into Grammlee. It should just follow you around, but it should all be documented in the single source of truth in the database should be on Coda. I would have people build that right now, but I think it's probably your next best, use of time because everybody needs help with that. Yeah, so those are great ideas.

This is the way I get myself to the top of the product around that. But somebody is it got to be a startup doing this too. Like a social media, where is the social media monitoring startup? I think part of the reason there are, I mean, there's a bunch of them. But the problem I think is most applications built that way, they're forced to be rigid, cookie-crutter things. So they'll build a version of it that is designed to run a very specific kind of company. Why do you guys use Coda?

Because nobody builds software for your unique way of investing. So the thing you want, I think, and the fact that Sebastian and Klarna and so on is, I think he's right. You don't know, not everybody needs exactly the same Salesforce. And I do think you should, you should have your own version. Like you guys have your magic Coda doc that runs everything. We did not specifically use any of the CRMs out there. And there are CRMs now, verticalized ones for venture. We looked at them and we're like, but that's not how we were.

That's how the average. It's not my business. I need something that does these customizations. Yeah. And I looked at it and I was like, you know what people were going to charge us for that stuff? 100,000, 200,000 a year. Because you're like, well, you're a VC firm.

We'll just take a 1% tax on your whatever. We'll just tack to you 1% or 2%. I was like, fuck that. I'll just build it in code or a notion. I'll use Zapier, if this, then that. You know, and I'll have it done. It may take me two or three weeks to get this done, but I'll just have some of the young guns on my team,

build it. and by the time they built it would have been us debating the price with you. Ah. Okay. And training and creating logins for everybody going to say, I would rather just go into Coder and notion and just do it. And just to be clear, I think, I think that's a good example. I mean, if you think about what we're trying to get done here, agents and applications, what do you really want? You want a social media agent that really feels like a human that does all the things that you, you know, would you actually hire a million people to go do that? Probably not. No.

But now, now you have this thing. They can do it. And you want an application that feels like your unique perspective on how to do it. You don't want the one everybody else does, everybody else uses. You want your unique way to do it because that's your strength. That's what you do. Superpower. Putting those together, that's the heart of what we're doing here, the combined family and Koda.

All right, listen, I am a super fan of yours and the products. Why don't you come on in six months? We'll book it right now. Welcome to the twist 500.com. Powered by Koda. You're not a sponsor of it, but we give you the plug anyway because it's such a great tool. twist 500.com built on Coda. It is what it is, folks.

It's a great product. You can always tell, you can always tell which products I love, because I'm just like, if I use it, we love it. Authentic, yeah. Yeah, it's pretty authentic. Like, we're using it.

And so maybe in six months, let's talk about how the integration work, because I would love to hear, is this the first time you've done an M&A kind of a deal like this? I mean, I was, I per code, obviously, but, you know, I was at Google for a long time.

I was YouTube Google was, you know, a different version, the same thing. I bought many companies. So definitely been through them. This one's unique. Every one of them is unique. But the definitely. I want you to just, if you could be thoughtful when you're doing this and maybe write down the lessons you learn in this merger in this time period,

would you be willing to maybe in three, six months, come back and just tell everybody what you learned about doing this kind of M&A. Because I do believe we're going to be in a new M&A moment where companies like yours and other companies, like I can't imagine Zapier, if this, then that, yourselves, etc., that we might not see more of these guys. get-togethers. And these products can remain independent. You can buy them that way, but they could also be deeply integrated and come together. Just a great vision. So, congratulations to your general catalyst partner who, who is that that came up with his idea? Give them an home. Haymuth brokered it. Yeah, he's an agent. Yeah. So he's your agent. He's your, he's in it, he's agentically looking at the portfolio and saying, hey, sometimes one plus one equals three. And I think that's how VCs look at this. Great job. And we'll talk to you in three to six months when

you're out of the weeds. Sounds great. Thanks for having me. Appreciate it, brother. And that's, you know, that's what you get here, Alex, on the short term is we're able to pull the guests who are breaking news. This is all news that happened in the last 48 hours, and we got the first on this week in startups for founders, by founders, getting it done. Absolutely. Also, this just reminds me of my favorite headline of all time, which was from 2014, entitled Pure Storage CEO. Acquisitions always suck. Worse than you think. So I'm looking forward to seen how that was wrong 10 years ago. No, no. It's, you know, M&A's hard. For every YouTube deal or Instagram deal, you know, you got another 20 that just return nothing. But if you look at

those two deals and you use them as a proxy, those two deals define the modern Google and the modern Facebook. Facebook didn't buy Instagram. Facebook would be in decline right now, I predict. Oh, oh, massively. And it would have been, I think, for the last three, four, five years. years. I mean, seriously, we're the last time you fired on Facebook on purpose? Never, never. I go, I mean, I, the only reason my Facebook's being updated right now is because once in a while I'll do something on Instagram and it gets syndicated there. Another great guest. All right, everybody. What an amazing episode. We'll see you again on the next one. Remember 2025, we're Monday, Wednesday, Friday at 10 a.m. Pacific, noon in Texas time. And then Alex time,

Pacific Coast. One p.m. We're live. Live, live, live on YouTube and X, X.com slash Alex, X.com slash Jason, X.com slash TWA startups. And YouTube, just search for this week as startups. Hit subscribe. Hit the bell. Subscribe to Alex's amazing newsletter. Cautiously optimistic. Cautious optimism. Cautious optimism. And that's, uh, on substack where you just type in cautious optimism, Alex Wilhelm. Thank you to our partners. And we'll see you all next time.