Bill Gurley

Yeah, well, I mean, they announced the long-rumored investment that was led by SoftBank, which many people described in the headline as a $40 billion investment round. I think if you read the breakdown of it, it comes in a couple tranches, the first tranche being closer to $10 billion, the second tranche being closer to $30 billion. And it's an extraordinary amount of money.

Yeah, well, I mean, they announced the long-rumored investment that was led by SoftBank, which many people described in the headline as a $40 billion investment round. I think if you read the breakdown of it, it comes in a couple tranches, the first tranche being closer to $10 billion, the second tranche being closer to $30 billion. And it's an extraordinary amount of money.

Yeah, well, I mean, they announced the long-rumored investment that was led by SoftBank, which many people described in the headline as a $40 billion investment round. I think if you read the breakdown of it, it comes in a couple tranches, the first tranche being closer to $10 billion, the second tranche being closer to $30 billion. And it's an extraordinary amount of money.

It's bigger than I think the largest IPO sans maybe one or two that has ever been done. I've often described these as private IPOs. Altimeter participated along with several others who were reported. And the valuation was like 260 pre, which would make it, if all the money were to come in, a 300 post valuation. And so it certainly got a lot of attention this week.

It's bigger than I think the largest IPO sans maybe one or two that has ever been done. I've often described these as private IPOs. Altimeter participated along with several others who were reported. And the valuation was like 260 pre, which would make it, if all the money were to come in, a 300 post valuation. And so it certainly got a lot of attention this week.

It's bigger than I think the largest IPO sans maybe one or two that has ever been done. I've often described these as private IPOs. Altimeter participated along with several others who were reported. And the valuation was like 260 pre, which would make it, if all the money were to come in, a 300 post valuation. And so it certainly got a lot of attention this week.

And, you know, you asked me the question, I think, Bill, just around kind of valuation, right? How did we think about valuation? The first thing I would say is market leaders never look cheap.

And, you know, you asked me the question, I think, Bill, just around kind of valuation, right? How did we think about valuation? The first thing I would say is market leaders never look cheap.

And, you know, you asked me the question, I think, Bill, just around kind of valuation, right? How did we think about valuation? The first thing I would say is market leaders never look cheap.

When I invested in Google in 2005, when I invested in, you know, Meta, when the IPO broke and we looked at those late stage private rounds, I certainly remember the Microsoft round in a Meta at $15 billion that was roundly criticized as being incredibly expensive. None of these things, you're certainly not going to buy a market leader on the cheap.

When I invested in Google in 2005, when I invested in, you know, Meta, when the IPO broke and we looked at those late stage private rounds, I certainly remember the Microsoft round in a Meta at $15 billion that was roundly criticized as being incredibly expensive. None of these things, you're certainly not going to buy a market leader on the cheap.

When I invested in Google in 2005, when I invested in, you know, Meta, when the IPO broke and we looked at those late stage private rounds, I certainly remember the Microsoft round in a Meta at $15 billion that was roundly criticized as being incredibly expensive. None of these things, you're certainly not going to buy a market leader on the cheap.

But if you really look at this, I think that they've said publicly they expect their revenues this year to be around $13 billion, right? To do $13 billion in revenue, it probably means you have to exit the year closer to $15 to $18 billion in run rate revenue. So as I look at this on a forward run rate for this year, you're paying something like, you know, 20 times revenue for the business, okay?

But if you really look at this, I think that they've said publicly they expect their revenues this year to be around $13 billion, right? To do $13 billion in revenue, it probably means you have to exit the year closer to $15 to $18 billion in run rate revenue. So as I look at this on a forward run rate for this year, you're paying something like, you know, 20 times revenue for the business, okay?

But if you really look at this, I think that they've said publicly they expect their revenues this year to be around $13 billion, right? To do $13 billion in revenue, it probably means you have to exit the year closer to $15 to $18 billion in run rate revenue. So as I look at this on a forward run rate for this year, you're paying something like, you know, 20 times revenue for the business, okay?

Now, we also had a couple other announcements this week. There's the Anthropic funding round, and there's talk that they're doing a billion to $2 billion in revenue, a $60 billion funding round. So that, to me, looks like something like 50 times revenue. So again, you've got OpenAI at 20 times, Anthropic at 50 times. And then we had the merger of X and X.AI. Correct.

Now, we also had a couple other announcements this week. There's the Anthropic funding round, and there's talk that they're doing a billion to $2 billion in revenue, a $60 billion funding round. So that, to me, looks like something like 50 times revenue. So again, you've got OpenAI at 20 times, Anthropic at 50 times. And then we had the merger of X and X.AI. Correct.

Now, we also had a couple other announcements this week. There's the Anthropic funding round, and there's talk that they're doing a billion to $2 billion in revenue, a $60 billion funding round. So that, to me, looks like something like 50 times revenue. So again, you've got OpenAI at 20 times, Anthropic at 50 times. And then we had the merger of X and X.AI. Correct.

which are rumored to have around, let's call it 3 billion in revenue. And the combined market cap there is like 125 billion. So that looks like closer to 80 times revenue. So the market leader here, which usually trades at a premium, not at a discount, To me, again, we can argue about the sustainability and could somebody disrupt them? And is 20 times a good valuation in this environment?

which are rumored to have around, let's call it 3 billion in revenue. And the combined market cap there is like 125 billion. So that looks like closer to 80 times revenue. So the market leader here, which usually trades at a premium, not at a discount, To me, again, we can argue about the sustainability and could somebody disrupt them? And is 20 times a good valuation in this environment?