YouSaid · the spoken record

Brendan Foody

lines on the record: 84
first: 2026-06-01
most recent: 2026-06-01
sittings or episodes: 1
sources: podcast

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“That really stuck with me is I remember, and I'll probably attribute this to the entire prod community, namely especially a couple of people like Rob Walkin, Ben Spector, and Richard De Haan. But Prad was this nonprofit that got started at MIT in Harvard, and I was sort of a blow-in because I didn't get into those schools, but I went to Georgetown. And for the first year of the business, like they would meet with us every week. Ben became a big customer. Richard would give us like tons of money just to float working capital. And Rob gave incredibly valuable advice. And they had nothing in it for them. They took no equity. I tried to give them equity and they wouldn't accept it. And Mercor wouldn't exist if it weren't for any of those individuals, I would say. I think that that is something that I'll always be grateful for for the rest of my life.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say that there's a decent amount of HR things that get escalated to me. And so we're looking for a really strong head of people that is able to handle a lot of this.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Good question. I admire that Edwin from Surge has done a really good job in staying super close to research. And it's something that we've obviously been doing a lot of as well. But I think that's probably one of the largest things that differentiates both us and Serge is our ability to train models, to hire some of the best researchers in the world. And I admire them for execution on that front.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I really admire Jeff Bezos. I think he's so disciplined about the culture of Amazon. That's one of the things that's always stuck with me. Everyone there just understands the values and is staring in the same direction as such a strategic business leader. I've never met him, but I've always wanted to.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“What have I changed my mind on? I used to have some questions around whether the foundation model labs would be the largest businesses in the world because of the exact things you asked about in the context of how much those models are going to be able to maintain pricing power amidst a competitive environment. But I think that as we've seen the sheer revenue ramp of these businesses, I've gained immense conviction that they will be the most valuable companies in the world.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm always pinching myself, and I feel extremely grateful for the team and Adarsh and Surya and how all of them made it possible because I could have imagined a hundred things that would have gone differently and we'd be in a totally different circumstance.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the reason it's not true is that we've never mandated hours at the company. And obviously, I work extremely hard. Adarsh works extremely hard. We work from when we wake up until we sleep pretty much all the time, aside from maybe working out, but I'm still thinking about work during that time. Most of our leadership team, of course, does as well. But at the same time, majority of my leadership team has kids. And we want them to be able to like go home and see their families and all of that. And so I think that it's some combination of knowing that building a legendary company requires immense dedication to the mission of the business while also recognizing we need to ensure that it's a sustainable environment for the best people in the world to do their life's work.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's so many things ranging from making sure that we keep a really high talent bar to making sure that people are bought into the mission of the company to even the tactical things of making sure that managers are communicating to their team about their performance review and how they're doing so that they're never surprised by performance review. And when we have a young team with a lot of first time managers, that just creates culture challenges of people that aren't used to giving feedback and maintaining all of the values and commitment to the mission of the team. And so I think that to some extent I agree and I think that some of the big tech companies probably go too far on empowering HR, but I also think that it's important in one of the large lessons we've had over the last 18 months or so is that it's critical to really get these foundations in place as you scale headcount. Otherwise, it creates problems.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“The caveat I'll give is that I think it's really important, like we definitely had challenges and scaling culture when we went from 40 people to 400 people.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think so. Like, to give a frame of reference, we were 40 people and 50 million in revenue run rate last year at the start of last year. Since then, we've seven or eight X headcount and we've increased the broader scale of the business by, you know, 25, 30x. It's definitely been very stressful to keep up with the growth along the way. But I think that now we have the supporting functions. Like we have HR, or not really HR, but we have finance and we have legal and we're building out HR and that brings some sense of stability where I don't have to deal with all of these little escalations and I'm able to just spend my time focusing on building great products, research and time with customers. And that I think has made it easier, significantly easier to run the business.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Because of supply and demand, it's just this market where there's 10 times more demand than there is supply, and that makes it very difficult. We've been building out an incredibly strong research team, like Edward Who, the first author on Laura, who was previously at OpenAI, is working with us and a bunch of other top researchers. But the market is definitely getting very hot.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“It'll probably continue to escalate for a smaller group of people, but I also suspect that as more people gain knowledge of how these labs operate and what the capabilities of how to train a frontier model, that means that there's going to be more supply in the market for people that have that skill set and thus a little bit more reasonable pricing. And so I expect there to be some craziness that continues, but hopefully sort of the 99th presental at least within the market will bounce itself up.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, exactly. And we're very young company, right? And I think that it's difficult for a variety of reasons. A lot of people probably don't have a full understanding of just how hard it is to build a company. As you know well, Harry, and how low the probability of success is and how fortunate we were and how lucky we got along the way. And so I think that's definitely one of the large challenges. And even like there was someone I'm hiring the other day and he had an offer for $20 million in cash per year from TBD. And like that's the kind of stuff we run into on a regular basis.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“It's definitely one of the things that's most top of mind, in particular because the markets for people founding companies are so hot, where like we've had three employees that have founded companies worth in excess of $100 million.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe in some cases, like there is value in localization, and I'll give an example, which is that oftentimes labs will come to us and say they need their models not just to be good at American law, but also to be good at British law or good at French law or whatever the jurisdiction is in the world. I think that that is going to be an important last mile in making the models useful in whatever jurisdiction that they're operating in. That said, the labs are just going to hire 10,000 people in France to teach the models how to be better at French law. And I don't think that there's so much that others are going to be able to do to stop that because the transfer learning capabilities from all of the other domains that they're focusing on are just so powerful.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Would accept that. Yeah, I think that maybe it's worth having some post training capabilities because there is going to be value to distillation and some of the work that happens after foundation models are built and there's definitely going to be some value in applications, but I don't know if I would lean aggressively into how do we compete head to head with Anthropic.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that it's going to be difficult to change because there's just so many strong network effects around talent, right? When we have the best talent, even I knew so many brilliant French researchers that go to work at OpenAI in Tropic and DeepMud, right? Because when we have the best talent at those labs, that's where they all aggregate. And then that compounds to them having more capital, more compute, more impact, et cetera. And so I expect that trend to continue and to be one of the largest not only economic but geopolitical advantages that the US has.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, I will say this one thing, which is that I remember when I went to Georgetown, I didn't get into Harvard and I was like, wow, you know, the people at Harvard are probably dramatically smarter than me. And I went to this nonprofit called Prod where it was a bunch of kids from like Harvard and MIT that were all building startups. And they're very smart, don't get me wrong, but I do think that most of us have this very equalizing feeling that like majority of people that accomplish extraordinary things when you spend more time with them, you realize that they're sort of just a normal person to a significant, not all of them, but most of them to a significant extent. And I think that makes you feel like when I saw Ethan Thornton from Mock raising $70 million as a 19 year old, I'm like, wait, Ethan is like a chill guy and a good friend and like maybe I could do something like that one day.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I really like Jensen and I really like Satya. I mean, so many incredible people. Obviously, Dario and Sam are incredible. But if I had to choose one person, I mean, Jensen's so cool, right? Like the jacket, his style, he's always on point. So I would say Jensen is probably one of the coolest.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I probably would. There's probably some value of having good prediction marketplaces for allowing people to have effective predictions of the future and hedge things within their lives and investment portfolios, but it's likely okay to tax. The thing on that point around taxing the bottom 50% is Jeff Bezos retweeted me, which I was ecstatic about.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I agree. I think that there needs to be sensitivity analyses associated with how does the increased amount of taxation cause people to just leave and reduce overall government revenue. But I think that another way of going about it is also taxing consumption of items that probably aren't the best. It's crazy to me that instead of taxing carbon, we tax the bottom half of Americans. But why don't we tax carbon, right? That's like a very clear negative externality in the economy, at least in the US. That's not taxed. And so I feel like there is a lot of low-hanging fruit with respect to things that we could tax without damaging incentives in a perverse way or causing people to flee the country that would be far better than taxing the bottom half of Americans. And the other thing is that it's only 3% of government revenue. Like the fact that it's only 3% feels like it's a very easy decision for policymakers to make.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I agree that the main thing you need to be careful about is if people would move to other geographies, because obviously that creates problems. But I think like capital gains is one option.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“The thing is, when investors are taking very high risks, it's generally in an aggregated way, in a portfolio. And so you would tax the gains on the portfolio overall. And so even if you have a portfolio like, and I know that you don't like to hear the capital gains tax, Harry, but no.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Is going to become extremely problematic. And so I would suggest that we move towards a paradigm where we instead focus on taxes of things that aren't necessarily going to have a negative impact on incentives in the economy. Like one great example is capital gains, where like I'm going to invest money in assets regardless. And so if there's like higher capital gains tax, it's not like I'm just going to like not invest, right? And so I think that taxing capital gains, especially short-term capital gains, which I think is probably not as beneficial for the economy as long-term capital gains, would probably be structurally much better off than taxing income.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I believe this very strongly. I actually wrote this essay as a research paper when I was a freshman in college. It was one of the few productive things I did in college. Essentially, the thesis of this was that the largest positive externality in the economy is jobs, right? People talk about all these economic theory of how we have negative externalities like carbon or like smoking or whatever it is we should tax those. But on one hand, the largest positive externalities jobs, yet on the other hand, the way that most economies structurally collect income is by disincentivizing jobs, both on the income tax side by taxing the individuals, as well as on the payroll tax side of taxing the companies. And as we move towards a world where there's increased job displacement, increased uncertainty around how many jobs are there going to be, especially for the bottom half of Americans, I think that this”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe to some extent, I definitely worry about how do we smooth out the benefits to society, like how do we ensure that every enterprise and every individual is able to reap the full benefits of AI rather than just like a handful of people in San Francisco. But ultimately, I also think that there is some natural dynamic associated with capital allocation where it is going to be more valuable to give the compute to a anthropic where they have the marginal demand and can use that right away versus a less successful company that might not be able to create the most value with that. So I think that it's probably good from a capital allocation and efficiency standpoint. So long as we are able to manage the societal implications.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not a crazy idea. NVIDIA is obviously a phenomenal business that will continue to execute super well. The only caveat is that it feels like we're starting to move towards a multi-chip future where obviously cerebral is executing well. I'm good friends with the Etch guys. Most of the labs are building in-house chips. And so I would guess that in five years it doesn't feel like NVIDIA has quite the same monopoly. But that's okay because even if they only have 30 or 40 percent market share in the largest market in the world by far, that is the world's most valuable company.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I could definitely see one of them being a $10 trillion company, maybe even significantly higher. It feels like the opportunity associated with being the frontier model is so large. It will just like eat up so much of the other demand within the economy because that also means that when you have the frontier model, you can use that as a teacher model to distill your own models, to have the best small models, et cetera. So I would guess at least one of them is worth more than $10 trillion.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I think both are true. Like, there's going to be many orders of magnitude more demand in five years than there are today, maybe four or five orders of magnitude more demand. But there's also going to be increased competition with people just distilling and having fine-tuned open source models that accomplish their workflows. Ultimately, I think OpenAI and Anthropic are incredible investments. And it seems like they're starting to be consensus around that in a way that there wasn't just a couple of years ago. But at the same time, I think that majority of inference in five years is going to be using an open source or custom fine-tuned or distilled model, not using a frontier model.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly the problem, right? Is that we used to have this paradigm of all the academic benchmarks that were totally disconnected from the outcomes that enterprises actually care about, where people were building everything ranging from GPQA for PhD level reasoning to IMO for Olympiad Math to humanities last exam for this long tail of academic problems no one really cares about? And now they're focused on how do we get the model to do this end-to-end workflow coordinating with multiple colleagues for a financial model or a slide deck like we were discussing. How do we get the model to build an entire SaaS application end to end? That's why there's this enormous build out in pushing the frontier of evaluation as a critical research problem for the next frontier of model development.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Model that is performing as well, if not better, for a dramatically lower cost. And so as we see this enormous shift towards compute and significant inference spend across every workflow in the enterprise, they're going to need to have evals that act as a source of truth for whether those workflows are being done correctly and whether they're using the right models to accomplish that.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Salesforce I don't know about 24 months' time, but I would bet that in five years the average enterprise spends more on compute than headcount. The reason for that is that the models are just becoming so capable that it seems like there's just enormous ROI to being able to have models do something for 100K a year that is going to continue compounding at an exponential rate in a way that human intelligence is not going to. And so humans will still play an important role at the things models can't do, but I expect that cost of inference, cost of compute will exceed that. The reason that that's so interesting to me is that having an eval for your specific workflow, like say we take the case of Salesforce, having an eval for how good is a specific model at code generation in their use case is often a 10x lever on the price performance of that model because they can distill the model, they can have an open source”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the switching costs are zero. Like when the switching costs are zero, there's a new frontier model every two months. That means that we very quickly are going to swap them out, right? And ultimately, the decisions that we make boil down to the score on the eval corresponding to that workflow. And so it's very easy to compare model to model one-for-one in a perfectly hot swappable way, which is almost a definition of a commodity.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think the key distinction is that I think the API layer will get commoditized. You can definitely build stickiness and workflows that people have on top of those APIs. Like, for example, I have all of these routines running in cloud code, and I feel like it would probably be difficult, or I at least wouldn't put in the time to move those routines over. And I have a bunch of similar things running in ChatGPT.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Every Fortune 500, where they'll need to have this system of record for evaluating and specifying agent behavior across every workflow in their business, and they're going to use that to commoditize the model layer because they want to enable perfect competition for the models having zero switching costs. And so we've been growing extremely quickly with the enterprise and helping them to populate the system of record and building out those evals for each of the use cases that they have throughout their business.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Correct. It's pretty incredible. And so the way we manage it is that we have a variety of these key workflows throughout the company where we have an AI project manager, as I was describing that manages operations. We have our interview question agent where we've done over 5 million interviews and asked all the questions in the interviews. We have our interview ranking or the broader candidate ranking where it helps to assess all of the candidates and figure out who we should be hiring. We have agents for accounting automation. We have agents for fraud detection, et cetera. And corresponding to each of these agents, we have an eval that tells us which model is best to use for this given use case and what is the proto-frontier of price performance for that specific use case. And that eval allows us to make the decisions around where should we be allocating our inference spend, what provider should we be using, et cetera. And I believe that over time this is going to develop to look very similar across”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's a fascinating case study in Giobon's paradox, similar to what we were talking about in the context of making humans more efficient leading to more jobs, right? When we make models improve by 10x year over year, that has just been causing the total consumption of the models to go up and up and up as the cost performance go down. I think insofar as how it's going to develop is that this trend is going to continue very, very significantly before we start seeing any leveling off of token consumption within the enterprise. Like right now, we're spending more on tokens for our internal agents than we are on employee headcount. And I think most businesses are going to look like that in”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Mile for the customer, but now we have an AI project manager that just completed its first project managing that entire thing end-to-end where it's able to hire the experts, it's able to answer their questions, it's able to build the annotation tool using its coding tools within our platform and produce the end data type. And the experts all had a really good experience on the project reporting to the AI project manager that was running it. And so I think we're seeing in real time that services are getting automated and that that is going to be this extraordinary transformation in the economy.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I think in a large way I do. You do. I think the key thing is that you need to make sure that they're actually going to leverage AI. Like I think there are a lot of companies that are just like building services and not gaining a significant competitive advantage from AI and using that to. That's the thing you've got to be careful about. But I think it's very rational. Like I'll give an example in the context of Mercore, which is that within this process of turning human time from the talent network into building the super rich environments that mirror everything that people could do in their jobs, there is a lot of human coordination of how do we answer people's questions? How do we track the KPIs of the project and manage it effectively? How do we build the bespoke tooling for that project? And we have about 100 people or called 150 people in our delivery organization that do that for deployed work of helping to go the lot.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that the Sequoia article that services are the new software resonated a lot is that these software modes are whittling away and it's the ability to layer services on top of software to meet the customer where they're at and go the last mile that is creating stronger defensibility.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I agree with this in part, but the caveat I would give is I think it's arguably more the forward deployed motion rather than the go-to-market. And forward deployed motion being the post-ales, go-to-market being the pre-sales, because ultimately, say you're just really good at sales and then you provide a SaaS product and you have a savvy customer who's spending a million dollars a year on the SaaS product and they realize they could just like tell Claude to copy it and they'll get the same exact thing. It feels very difficult to maintain your pricing power even if you're the best in the world at sales. Whereas on the other hand, if you have a great forward deployed motion where you're going deep with a customer, you're training the agents based on all of this tacit knowledge within the company so that it understands how to perform effectively, that feels incredibly differentiated and hard to recreate. And that's also the reason that we see obviously the labs, OpenAID Anthropic investing so much in this forward deployed motion.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“In the pure software associated with the products that they build. And so to me, that is the litmus test that determines whether this company is going to become worthless or whether this company is going to gain dramatic value from their ability to 10x product velocity.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“I generally agree. I think that the caveat is when those companies have network effects, there's probably a significant moat that isn't being priced in fully. For example, Salesforce has tons of companies that are building integrations on top of their platform that creates this almost marketplace and network effect around it or Slack has Slack Connect, right? And I think even Cart is another great example of this whole network effect of the people that use it and one use the same platform across all of their companies. I think that the companies that have network effects will be able to in some ways generate more value because they can iterate 10 times faster while leveraging those network effects to create more value for their customers and therefore build more valuable products, charge more money, et cetera, and increase revenue. The companies that don't have network effects are going to struggle very significantly. Because then there's not really a defensible mode.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Got the model to clone Slack end to end. Those capabilities are going to exist in the models in the next 12 months. That means very significant things for companies that are betting on software modes sustaining their businesses.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe I would say two things. First is that I think over the last two years, everyone has increasingly realized that the model is the product, that like we can build so many of these different abstractions of trying to stitch together API calls and having all this patchwork logic where people used to have all these drag and drop agent builders. And then they just realized that if we give the model the end goal and we train it to accomplish that end goal, it has outperformed every other solution in almost every case that we go after. That bodes incredibly well for those that are training models end-to-end. The second thing to consider is that software layers are able to get recreated very quickly now. We're building out an eval set that measures how effectively agents can build end-to-end SaaS applications where 2025 was the year of how do you get a model to make a PR in a code base. And 2026 is the year of how”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“We maybe can't double prices. We could double capacity. We could probably increase prices by 30% without much of an impact. But the other thing you need to consider is that pricing is not merely a question of optimizing for the next six months. It's optimizing for a structure that wins the market over the next decade. For that reason, we're very focused on how do we do what's best for customers? How do we do what's best for experts? And how do we build a sustainable business while we're doing it, but make sure that we're not leaving oxygen in the market because high margins invite competition.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“It's probably the same for us, honestly. We have the demand to double overnight. We just don't have the capacity. And so it's mainly a question of how effectively can we scale to mobilize people to build out these environments much more quickly.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“The infrastructure layer and sort of sustainable, profitable businesses in a way that it's less immediately clear at the application layer.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“The reason I believe that is that the application layer companies' businesses are not far removed from the foundation model companies' businesses. Like it is not a far leap for cloud co-work to add capabilities across medical and legal. Obviously they did it with software engineering and can do that across finance. And so I feel like building defensibility in the software layer on top of the models is going to be incredibly difficult. Whereas on the other side of things, in the infrastructure side, it feels like there are meaningful modes that are getting built. Like we're compounding enormous network effects in the business in a pretty significant data moat as we build out the inventory for our customers, compute companies obviously are able to build modes through these very long R&D cycles. And so I think that there are going to be high margins that get achieved.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source
“See, probably a much higher valuation. We're getting a lot of offers at meaningfully higher valuations, but the company is fairly profitable, and so we're taking our time to see who the right partner is.”
2026-06-01 · The Twenty Minute VC · 20VC: Mercor CEO on Why Application Layer Companies Have No Defensibility, The Model is the Product | Token Spend Will Exceed Headcount Spend in 5 Years | The True Cost of Hiring AI Researchers in the Valley Today with Brendan Foody · IDENTIFIED FROM THE TRANSCRIPT · source