AI Bubble, Muse and the New Seed Math: Lemkin & O'Driscoll Weigh In

Key points

Key takeaways from a 20VC roundtable with SaaStr founder Jason Lemkin and Scale Venture Partners GP Rory O'Driscoll (September 2026):

Playing the top of the cycle: Discussing the Menlo "AI bubble" analysis, O'Driscoll argues venture investing is not rules-based — the mix of aggressive and disciplined bets is everything, though staying cognizant of risk is the bare minimum; Lemkin dismisses much of the debate as stating the obvious.

Meta's Muse as ChatGPT Trojan horse: Lemkin calls Muse's #1 App Store launch a genuine ChatGPT competitor — free, with autonomous agents anda solid consumer LLM — noting Meta's stock rose 7–8% and market cap by ~$100bn in a week on the back of it.

Jev and the unbundling of LLM calls: O'Driscoll breaks down OpenAI's Jev "system one" model — which returns classifications rather than text at roughly a hundredth ofthe cost — while Lemkin estimates ~20% of today's LLM calls could shift to such cheap classifiers, though he found model-routing harnesses exhausting to QA.

Agents will maim systems of record: Commercial agents are already routing around closed platforms — Lemkin predicts AI will "maim" not kill systems of record like Resy, while Amazon blocks the agent to protect ad revenue and basket size and Shopify partners with it for demand.

The new seed math: Lemkin observes seed rounds now often launch at $20M+ (citing $40M first raises(, driving investors toward "pre-inception" models like a16z's new university; O'Driscoll adds that nominal GDP growth since 2010 justifies checks ~2.5x bigger, but ownership math still demands hunting $25B+ outcomes.

Coding is the motherlode: O'Driscoll calls coding ~10x everything else in AI value creation — supporting bets up and down the stack, from Factory (approved at $5BN(to Crusoe's data-centre buildout (passed at $30.9BN on valuation; both flag enterprise distrust of OpenAI/Anthropic with proprietary code.

Founders need an army of advocates: On the Keith Rabois–Airwallex row, Lemkin criticises personal attacks on CEO Jack Zhang as overheated — noting allegations shifted from "CCP agent" to claims of >20% Chinese cap-table ownership — urging government (not social media(to set China-commerce rules, and decacorn founders to build a bench of backers.

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