AI Revenue Hides Margin Problems

Using ElevenLabs and Cursor as examples, the panel says ARR can mislead when token costs, compute bills, and accounting quirks erode true software-like margins.

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The top 5 U.S. venture firms captured 73% of all LP commits in Q1, and three veteran VCs say the math may have officially broken. Aleph's Michael Eisenberg argues we may be witnessing the end of a 60-year run for venture capital as a craft business. Maniv's Mike Granoff and Oxcart's Larry Covert push back, arguing it's merely splitting into two asset classes: "Consensus VC" and traditional VC. Either way, the implications for founders, LPs, and the next decade of innovation are enormous.

TWiST is back on the beat with a venture round table discussing investment concentration, the IPO drought, "bullshit ARR" in the AI era, AI gross margins, the U.S.-China chip war, the Iran conflict's impact on defense tech, the death of NATO and the rise of allied supply chains, why Tel Aviv's stock exchange could become the next NASDAQ, and a lightning round on each VC's favorite portfolio company. Let’s go!

Timestamps:

0:00 Intro + sponsor reads (Grasshopper Bank, PaperOS, LinkedIn Jobs)

0:58 Plaud: If your work depends on conversations — interviews, meetings, calls — you need a Plaud NotePin. You can check it out at https://Plaud.ai/twist and use code TWIST for 10% off!

2:13 Introductions: Eisenberg (Aleph), Granoff (Maniv), Covert (Oxcart)

3:57 The impact of rising venture capital concentration

6:43 "We may be witnessing the end of venture capital"

9:17 Consensus VC vs. Traditional VC

10:01 LinkedIn Jobs - Hire right, the first time. Post your first job and get $100 off towards your job post at https://LinkedIn.com/twist

11:48 Why mid-size firms beat the behemoths on founder access

19:35 Coining "Consensus Colossal Collaborative Capital" (CCCC)

20:03 AngelList's USVC retail VC fund — does it help mid-size funds?

20:18 PaperOS - Whether you're raising a round, launching a fund, or managing a venture portfolio, PaperOS can unlock simplicity and scale across your empire of capital, contracts, and companies. Claim your $10,000 credit at https://paperos.com/twist

23:27 Are there more breakout startups today than 5 years ago?

28:36 The "bullshit ARR" problem and AI gross margins

30:03 Grasshopper Bank - Time is money. Don't waste either. Go to https://grasshopper.bank/twist and get an exclusive $500 cash bonus just for opening an account.

32:08 Cursor's negative gross margins and the hyperscaler funding flywheel

33:06 Are we all electron constrained?

35:35 Are we headed for surge pricing on compute?

40:22 Will anything replace NVIDIA? NextSilicon, Hailo & Israel's chip stack

43:33 Distillation, small models, and Apple's edge advantage

46:38 Public trust in AI: should government mandate Waymo & FSD?

1:02:58 Defense tech: Saronic, Anduril & the coming defense M&A wave

1:06:35 The Iran war timeline & supply chain impact

1:18:52 Lightning round: Jiga, Divergent, Volaback, Firehawk, Harbinger

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