Key Takeaways

  • Jason Lemkin backed AI inference provider fal at a $16 billion valuation on $800 million ARR, projecting a secondary exit at $40 billion within three years.
  • Rory O'Driscoll questioned Zipline at $21.5 billion, noting that 3 million US deliveries generating only $5 to $10 each cannot easily clear venture return hurdles.
  • Harry Stebbings chose Revolut at a $115 billion secondary price, up 53 percent from its prior mark, pointing to its capture of younger European banking cohorts.
  • The core division separates short-term compute tailwinds from durable, regulatory-moated balance sheet expansion.

The Disagreement

Late-stage venture capital has split into two camps: investors chasing raw compute volume and investors hiding in high-margin moats.

Lemkin placed his bet on fal. The company doubled its valuation to $16 billion on the back of more than $800 million in ARR. Lemkin argued that sheer developer demand for AI inference will carry the asset through the next two to three years. In his view, liquidity will follow growth regardless of gross margin erosion: “And if you make me pick, I'm going to pick fal because the underlying trends for the next two to three years. And I know some of the guys at Altimeter and others, I think we can flip this at 40 billion worst case.” (play from 35:58)

Stebbings rejected that thesis entirely. To him, paying 20 times forward revenue for compute orchestration ignores the risk of margin collapse. He backed Revolut's $115 billion secondary valuation instead. Revolut grew its valuation by 53 percent by dominating consumer deposits and cross-border payments across the UK and Europe. Stebbings argued that the fintech giant's shift into lending will build an unassailable financial fortress: “I want security and I want safety and I think Revolut is the best asset by far here with by far the best founder of our generation. Give me Revolut at 115 every day.” (play from 37:02)

Zipline sat in the middle at $21.5 billion. O'Driscoll admired their operational grit with Walmart and their expansion in Dallas, but flagged the unit economics: “The scary thing is you're probably getting they've done 3 million deliveries in the US. You probably only get five 10 bucks a delivery, right?” (play from 37:50)

Who's Right (and When They're Wrong)

Stebbings is right on a five-year horizon. Lemkin is right on an eighteen-month trade.

Lemkin's strategy depends on momentum investing. When an API provider scales from zero to $800 million ARR in record time, crossover funds will pay almost any price to own the growth curve. If your fund has a mandate to distribute capital within three years, buying fal and flipping shares to growth hedge funds makes mechanical sense. But this trade breaks when inference becomes a commoditized utility. If model weights run locally or hyperscalers drop pricing to cost, fal's margins will compress rapidly.

Stebbings wins because customer acquisition in consumer banking creates an enduring lock. Revolut spent a decade acquiring European twenty-somethings who do not use legacy brick-and-mortar banks. As Stebbings observed, “They are obliterating European incumbents. We will see market share for Revolut unlike we've ever seen for any historical incumbent.” (play from 40:26) Once a company controls the primary salary account of an entire generation, expanding into mortgages, auto credit, and wealth management converts low-margin transactions into massive net interest income.

Zipline faces the hardest road. Moving physical atoms requires capital expenditure that software does not. Even with massive delivery volume, small unit margins make it difficult to justify a $21.5 billion price tag without software-level gross margins.

What to Do With This

Audit your revenue quality this week. Pull your revenue figures from the last two quarters and separate temporary tailwinds from true product stickiness. If your growth relies on pass-through API compute or commoditized infrastructure, adjust your pricing model to capture workflow integration or proprietary customer data before your margins shrink.