I really don't understand how this can be. I have sat in fund raising meetings with VCs in toronto and my experience is that there is shit ton of due diligence at the tech level. a product which has no moat, was already available, was duplicated within a couple of days is valued at 7B - i thought we were past the peak of the hype cycle.

There is a belief that there is going to be at least one more breakout success in startup AI labs - rather than OpenAI and Anthropic being the final word - and so investors want to own a part of whichever companies seem most likely to be that success. If you start from that premise and stack rank what company that might be, you could quite reasonably put TypeSafe toward the top of that list right now, based on the people at the company and the ability they've demonstrated to ship stuff that people care about and cut through the noise in a crowded space.

Also the situation isn't static. Investors know that the act of writing them a $870M check itself increases the chance that they'll be one of the winners, because that will attract more talent, customers, and funding to the company in a self-reinforcing cycle. And investors know that other investors know that, and that someone is going to write them that $870M check, so to some extent they're forced to think of the company as having already been successful at the fundraising and already having that momentum boost.

Only a small number of investors in the world can play the game at this level, because you have to smart enough to be right (often enough), and you have to be established enough to see the deals (be on every CEO's short list - because CEOs are only going to seriously pitch 5-10 VCs on a hot deal, if that). Otherwise you can't pull it off. Martin Casado and his team are among the few that can and I think their results reflect that.

The lack of a “moat” is mostly irrelevant because success is not decided by who can or can’t be cloned. TypeSafe invented[1] a new approach that became wildly popular almost immediately, if they can do that once, they can probably do it again. Venture capital is big bets, of course TypeSafe is going to fail, that’s inevitable, but if it has even a 10% chance of capturing 1/10th the market cap of OpenAI then it is a great investment! Plus, money means nothing any more, they’ve raised less at a lower valuation than Instinct, a personal assistant.

[1] not really but they did some innovative things and popularized a concept

> sat in fund raising meetings with VCs in toronto

There's your problem. The single biggest thing every Canadian VC is trying to figure out is "why are these people asking us for money when if they were any good they'd be in the US" so by simply asking them you're already signalling something bad. A lot of their enthusiasm for process is based on this suspicion and also that the entire industry is just a way for various professional services to extract most of the investment money, since that's the game they're so used to playing with the government.

There are some Canadian VCs earnestly trying to improve but they are overwhelmingly hilariously conservative and focused on unimportant signals over reality. This is one (but not all) of the major factors that drive basically every remotely ambitious Canadian company to run a corp in Delaware and go for funding from the US. The tax situation is the other major contributor.

Its not normal time in SF/Bay Area. For better or worse, VCs in this city/region are thinking very differently on AI bets.

I think the key differentiator was that a team found a whitespace in what ChatGPT was doing, main comes from the same pedigree and team is as conscious of marketing as their product. SF VCs love these out of the box challengers, and people are claiming to replicate doesn't seem to matter.

The amount raised feels surprising but again entire SF/US AI scene is primarily "add moar layers and GPU" one trick ponies at this point.

> was already available

no, it was not

> was duplicated within a couple of days

was it already available or did it become available in a couple of days? it cant be both (neither is true, actually)

This is the difference between a "hot" company in a good ecosystem like SF. Yeah, the funds can take 2-3 months to do their due diligence. By the time it's done, the round has closed, and then what good is the due diligence?

Probably the “nobody ever got fired for buying IBM” effect. If there’s a use case for the tech, buying the most well known implementation of it will always be useful for people who want credit without the threat of blame. This funding is based entirely on the hype and a bet that TypeSafe will have name recognition.

A very major part of Jev is the cost and speed. Yes, classification is/will be a commodity business, just like LLMs are, and similarly there is no moat only production cost and pricing.

Yes, anyone can wrap a decisions API around an LLM, but so what? If you want to compete then you need to compete on price, and it's not clear if OpenAI and/or Anthropic are able or willing to do that without building a custom architecture, and even then if a race to the bottom on pricing is what they really want to pursue.

I'm not sure if OpenAI have announced pricing for their Decisions API, but they have said it's based on Luna which costs $0.10/M input, not even remotely competitive with Jev's $0.04/M input, which I'd expect has some headroom built into it.

Assuming that the architecture behind Jev is not just an LLM, and gives them some inherent efficiency/cost and speed advantage, then the question is whether OpenAI and Anthropic really want to duplicate this and have a race to the bottom on pricing for what may be a large part of the business automation market they are addressing. Is that what they want as their IPO pitch - we're selling potatoes, and think can grow them cheaper than Typesafe ?

They got money and it needs to be put to work!

It might be the people that are being acquired too, at huge inflated ai researchers salaries.

Acquired in the vc sense… not literal exit.

> there is shit ton of due diligence at the tech level

Maybe in some cases. But counterexample, courtesy of The Information:

"It took just 15 minutes for Blue Owl executives to agree to invest up to $10 billion in future projects alongside real estate firm Primary Digital Infrastructure during their first in-person meeting two years ago, said Primary chief investment officer Bill Stein."

https://www.theinformation.com/articles/blue-owl-eyes-new-de...

AI seems to make some people lose their damned minds.

You are used to dealing with companies where the money bags hold the power.

When you are in the middle of a boom cycle, it's the hottest company that has the advantage. Investing in them is a matter of privilege and they get to pick and choose.

Also, Canadian VCs are bottom of the barrel as far as VCs go.

Yeah your problem and my problem and others around here is the word you just said there... "Toronto." Canadian investors are risk averse as hell. And cheap. They can make more money helping sell bitumen or real estate, why bother with arcane tech?

And if you could put the words "Bay Area" or "Stanford" or "San Francisco" next to your name... different story.

The VCs are not buying the idea or the tech, they're investing in the people. And they invest in a formula that has already worked for them before to make big coin. Prop somebody up, let them hire like crazy, and then get them get acquired, and then cash out. They don't care if it fails if they can make it succeed 1/200 times.

Canadian investors want you to have already succeeded before they help you succeed a tiny bit more.

The API was duplicated, the results were not.

That is not how it works in the US.

What was the moat of Dropbox? Of Instagram? Of GitHub? Or of countless other very successful startups when they started?

Anyone know when this "have no moat" meme appeared? Even 5 years ago I don't remember seeing it on every post.

brb gonna wrap claude with a new form of prompting and raise 500 mil