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…sudden you look more or less profitable even though I was laughing about accounting it's like it's like the cash flow is the same but all these numbers shift around and then on top of you have to have be a great storyteller and bring your employees along with you your investors along with you your your your customers along with you it's formidable I'd say I said you know I think a lot of entrepreneurs are like yeah we're gonna you know disrupt the incumbents that actually sort of funny having sat in that seat for a while I have a ton of empathy and I think some great leaders will come out of this and and just like the reputation such a house for transitioning Microsoft into the Azure cloud era but it is absolutely not a fair going conclusion in fact I think you know for most of these incumbents the defaults will be that they will be disruptive they don't embrace you know where software is going you've talked about this in the past and you kind of alluded to it there but the the business model elements of it seem far harder with all those constituencies you talked about shareholders and employees and customers and just managing expectations and and taking people through all the accounting and EOS secreties it seems like that in your mind is even more challenging than the technological elements without question in my mind actually I don't at there are points where technology is really hard you know in 1995 is really hard to make a scalable website you know and like the modern practices I don't think like you know things like men cash didn't exist and you know just getting databases to scale was a big deal and I was talking to someone who worked at Oracle when Salesforce was starting and they're talking about multi-tenancy in a database was like a novel concept so yeah it's I don't even minimize the technology but you don't need to be a AI researcher to see like making agents that work somewhat effectively will get really easy relatively soon it's really hard right now and just technology will improve so how you actually build a product that's useful for stakeholders one thing but then what is the business model and the the reason why it's hard to make a business model shift is just the change management of that so if you're a any SaaS company in your portfolio I'm probably has the same incentive structure which is you have your annual recurring revenue and sales people get incentivized to increase it and you might have a team that is incentivized to reduce attrition so you're sort of adding to your annuity and you're trying to keep keep attrition down so you don't lose money value in that annuity it's kind of how all all software is a service company's work okay so now think about it from the perspective of on an individual account they're paying you I'll just make it even numbers they're paying you a million dollars a year and you have a disruptive new technology that in 10 years will mean they're paying you 10 million dollars but if you roll that out that year it would go down to two hundred thousand dollars how do you actually do that if you're a public company that's really hard just because like all u 10 million dollars but if you roll that out that year it would go down to two hundred thousand dollars how do you actually do that if you're a public company that's really hard just because like all of a sudden you're going to look like your business is slowing down even though you're just eating your vegetables for a greater you know a brighter future if you're a not unprofitable or not cash low positive start up you know all of a sudden just your burn rate you know go way up if you have let's say none of those applied you're a private company that somehow is ready for all those things all of a sudden to do your employees like you know jump ship in the middle because they're betting on the the come and you just look at the transition from like windows revenue to azure active directory each one of those is a ground game at the customer by customer level to sort of transition people into that new world and it's so easy for you know armchair strategist like of course that's the correct thing to do and then the question is like well if you don't care about the messy middle yeah it's totally obvious but everyone in the world cares about the messy middle so it requires just incredibly exceptional leadership to go through those transitions and I think people don't think about it enough and and I just think in part just because the you know a lot of folks haven't really operated businesses at scale before and I've told this story before but at Google our first campus was sgi silicon graphics and we moved into their campus after they effectively were going out of business and at Facebook we moved into Sun Microsystems campus after they were acquired and sort of like summarily shut down by Oracle and like both of those companies in my relatively short career were successful companies and and build campuses and in my relatively short career at the time had gone out of business and were you know selling their campus for parts you know it was just because their technology and business model was once great and they didn't transition to the next one and that is the default for companies in our industry and there's just a very small handful of companies that have been able to move to multiple products change business models but you can list them on like maybe two hands and I think it's very important as entrepreneurs we keep that in mind because if your ambition is to create a company that outlives you which is certainly my ambition you have to create a culture that's not like a one one trick pony I've heard you talk about like the three different segments of maybe the AI ecosystem today being financial foundation models tools and then applied AI one of the questions that I think we have come up and I'm not just asking diligence questions that are someone an unanswerable but I think you said that a unique lens is where the foundation models pushing up into different applications where that's going to be true and where it might be harder to go do and you look at something like log code which is kind of saddened between being the foundation model and the actual application itself I guess where you said you have an interesting purview of both you have a look at something like log code which is kind of saddened between being the foundation model and the actual application itself I guess where you said you have an interesting purview of both you have a board seat with open AI and then you also have a company is there any way that you you think about that and like where companies can exist as applied AI systems on top of foundation models versus where foundation models are going to capture value I'll give sort of one framework that I think about the technology evolution which is in the early days of a new technology whether it's the smartphone or the web browser in the early days of the technology adoption cycle a lot of the value and as making it just work like it's it's hard to make a website or a database that scales to consumer scale on a website that was true in 1995 it was true in 1998 in 2025 it's absolutely trivial to make a website it's absolutely trivial to make a scalable database you're going to sell or whatever and do it in afternoon so if you're in the early days these technology cycles often startups and incumbents will be selling the vision of what that new platform is and it works and that's the value proposition if that continues to be your value proposition from 1998 through 2025 you're not going to exist as a company because it becomes a commodity because essentially the platform matures and so the entire ecosystem around it matures I assume that will happen with a reasoning agents and action-taking agents and voice agents and all the things that are really really hard today and so as a consequence I think you know for companies that are building applied AI agents they need to focus today on making it work because it's one of the main values that the companies provide but they need to as you think about you know building a product which is like what is our value on top of that and you know what I was joking around about is like every SaaS coming just a database in the cloud well there's it turns out they've created a ton of value on top of that database no one cares about the fact that the database scales anymore that's not like a question you have about your SaaS product and if you do it's got bigger problems right and I think so I think what's going on now is I think people are not in a rational way sort of just literally translating the technology to a domain and the question I would have if I were doing due diligence for your companies like what is the product you know like once once the fact that the technology works is no longer the differentiator what does it become…

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