YouSaid · the spoken record

Dan Sundheim

lines on the record: 80
first: 2026-02-24
most recent: 2026-02-24
sittings or episodes: 1
sources: podcast

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“I think the only way that would be the case is, and even this, I think that argument wouldn't hold, would be a scaling laws just totally stop. But even if scaling laws stopped, even if these models got no better, I think you probably have three years of people learning how to incorporate AI into their daily life or their companies. Certainly it wouldn't be good for the businesses of scaling laws stopped. But I still think you'd have pretty profound changes within the economy. betting that scaling laws are going to stop is a really low probability assumption. I mean, there's just nothing to suggest that's the case. And so, in fact, everything suggests the opposite. I think it's difficult to really get your arms around what that means. Because we went from like, this is like an interesting chat bot that's like Google to like, oh my God, these are going to be solving problems that humans can't do. We're already almost there.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Really think about what's going to happen. You have to almost not think like investor. You have to think like somebody who's into science fiction.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“If they're At least you're protected at least for a few years. They're not doing it yet. I think systems of record are going to be difficult to displace. I think companies, while it's neat to create software for small productivity enhancements, if you really want to run your entire business on something like an ERP system or a CRM system, I think it's going to be quite a while before people are just going to be vibe coding ERP system. But I don't think that you can just sit back as a software company and say, we're a system of record, we'll be fine. You're going to have to integrate AI and find ways the same way Walmart integrated e-commerce into their business model. I know it was painful for a long time. And probably in the other side of it. But this is like, I'd say fairly low conviction because everything about AI's impact on the economy is inherently low conviction because I think everyone is likely underestimating how much these models are going to improve.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Enormous amount of investment. Their margins took a hit. They had new competitors. I think that'll be the case with software too, where companies that have really great distribution and great business models and their systems of record for companies. One of the things I do is like I asked the LLMs, I said, are you designing your own ERP system? And they said, no, we're buying a new ERP system from this company.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's kind of where people are now. We wrote in our letter in a year, I said, look, the build out is still going to be a thing in terms of like places to invest in the public markets, but it's increasingly going to become which companies are affected. And it's going to become, there haven't been any shorts in AI. There was like basically no shorts prior to 2026, really. Like if you wanted to just say, I'm going to short something because of AI, you didn't make a lot of money. In our letter, I said there are going to be a lot of shorts, some longs because of AI. Software's the first one. I think the market tends to swing to extremes. My guess is that software will have to evolve, will probably be a worse business model going forward. But I think the same way that Walmart evolved with e-commerce and yes, would they have all its equal prefer that e-commerce never happened? Probably, at least at the beginning, required.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“That were arbitraging labor due relative to a developed economy. So there's going to be phases of this where the first phase is software. And that's really because like clog code entered the zeitgeist and it's like all of a sudden people receive clog code and all of a sudden they just see on Twitter that people are saying like, oh, I created a CRM system in like a day. And I was like, oh my God, this isn't good.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“It is incredibly difficult to know. And I don't think that's because I don't have perfect information. I think it's just these models are improving at a rate which is exponential and understanding how that makes its way into the real economy and the implications is difficult. I think that you probably want to use a few frameworks. It really comes down to like which companies do you think will have a moat in most circumstances It's fairly straightforward to identify moats that are protected from digital LLMs like just the proliferation of digital intelligence once you get into robotics and other areas you start to have to question the motes around some other traditional industrial companies and globally how do countries”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think they're going away, like people thought. I think they're better at running GPU clusters than the traditional hyperscalers are. And I think there's a lot of interest from NVIDIA and other chip companies to make sure that their customer base is diversified. NVIDIA is a very big balance sheet. And they want to keep these players in business. So over the next 10 years, I think that these hyperscalers AWS, Azure, will grow fast. I think the margins, my guesses, will be challenged, both because the businesses are getting a lot more capital intensive, because AI is capital intensive, more capital intensive than traditional workloads, and also the customer base is getting more concentrated. Meta is not a hyperscaler, but they insourced all their compute. Why would they pay? I mean, there's too big to use somebody in the outside.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Look at the hyperscalers as more of a financing mechanism. These are well capitalized companies with big balance sheets, but I don't think these companies are better than them at building data centers, like building CPU clusters is different than building GPU clusters, running inference on GPUs is very different than workloads on CPUs. And I think the LLMs are actually better at inference than the hyperscalers. And then you have this whole dynamic of neo clouds. The initial view for most public investors was that this was like pure overflow capacity. There weren't enough GPUs and these things would be dead as soon as Microsoft got their caught up. I certainly would not make the case that they are fantastic businesses.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that economically it's highly unlikely that LLMs are not very concentrated in the hands of four or five companies. Those companies right now, they are obviously, as we discussed, they're investing a ton and they are cash flow negative. And therefore they're looking for compute anywhere they can get it. But if we're correct and if anyone who owns these companies is correct at some point in the next five to ten years, they'll be generating enormous amounts of free cash flow. When that happens, I think that they are likely to insource the compute. And every year AI is going to be a bigger percentage of the workloads at any hyperscaler. And so if you roll out 10 years from now, I think that the majority of the workloads will probably be AI. The LLMs will probably be providing a lot of those workloads. And I think that it will make economic sense to take it in-house. Right now, I think that they...”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“I do. I've kind of thought this for probably about a year now. I am more confident in the thesis that the hyperscalers are a worse business model going forward. Now, it's interesting because usually when you say something is a worse business model, you're implying that growth is going to slow, margins are going to contract. I actually think you're going to see the opposite. I think that AWS and Azure, maybe Azure doesn't accelerate. Certainly GCP. I think these businesses are going to accelerate for a while. Just because they are their customer base is anthropic OpenAI are growing at enormous pace. And as they get to be a bigger part of the business, the growth accelerate. The problem is that you went from a dynamic where AWS, Azure, to some extent GCP, their customer base was like every corporation in the world. And therefore, they had fragmentation and they had the benefits, massive economies of scale that no single company could get. And it was very good business. The problem going forward is that”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“And like you see Anthropics Super Bowl commercial. That being said, even the companies that were the most adamant about never getting into ads like Netflix, if you go back and just listen to what Netflix was saying even 15 years ago, it was like getting into ads, even Reed would have been like, you were out of your mind. We would never do that. Ultimately, they did it. And to me, it's like, if you're going to do it ultimately, one, you can't really compete against companies that are using ads if you're not very hard. If you're ultimately going to do it, you might as well start earlier because you have to build a culture around just takes time. I don't think it's a big deal that OpenAI waited, but I was probably, rightly or wrongly, I was pushing for ads sooner than they've chosen to do it. I think now they're probably going to get it right.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“The only thing I early on we invested in OpenAI, this is probably a year and a half ago, I said to them, you have to do ads. I understand I've seen it so many times. People in Silicon Valley, the idea of ads is like, I had this amazing pure technology product and you want me to like.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“But that's hard. I'm sure there are companies I'm not thinking of, but I can't think of many examples where that's been successful. I understand the temptation to do it. And obviously the difference versus history is that the smartest people in the world are all going to work at these companies. So if anyone's going to pull it off, they will. Anthrop took a different approach and just said we are going to focus on enterprise. They tried consumer early on, but it became clear they didn't have tractions. Then they just went all in an enterprise. They've had a lot of success with coding an enterprise because they've now taken a market leading position. Generally, sentiment is that anthropic is winning and they are like now the Uber, if you want to use that analogy. I think this is going to go back and forth over time. And people probably get carried away in both directions. But I think those are the biggest differences. I would probably err on the side of focus, but I do understand the economic rationale for trying to do as many things as one.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Either consumer or enterprise, even Amazon, which you'd say is like the example of a consumer company that got into enterprise, they got into it like seven years later after, even after they went public. So try to do everything at once is tempting because if you're successful, you're effectively just advertising that fixed asset over more revenue streams. At the same time, you risk not being the best at any one thing. So that is the trade-off. And I think that I'm not sure we have the final answer right now. The market has gone through periods where they thought anthropic was lyft and OpenAW was Uber and up until recently the sentiment on OpenAI was more negative. I think OpenAI is taking the strategy of let's do everything. We're going to go after Apple hardware. We're going to go after robotics. We're going to have enterprise, consumer science. They've been very successful in a lot of ways.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“The really interesting thing and challenging aspect of these businesses, the LLMs, The models they are building now and especially in the future can be applied to almost any aspect of the economy. You can take these models and you can make consumers lives more efficient by having them be personal assistants. You could solve physics problems. You could help with drug discovery. You could make enterprises more efficient. The TAM is certainly not the problem. Focus is going to be a question mark. On the one hand, the more and markets you go after with a fixed asset, the better. You're spraying that cost over more and markets and having more revenue, which then can be reinvested. I think the flip side of that is that I rarely have seen any company succeed trying to do, go after multiple end markets at the same time. Usually you have an A-team, an A team is focused on one thing. Your culture as a company is oriented towards.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's the case that we would say definitively one will give you a better answer over time. However, the personalization matters. And the first mover advantage is like the more that these models know about you, how you live your life, your health, all the things are important to you. You build up this data history and it becomes very sticky. The music on Spotify is no different than Apple Music or Amazon Music. Theoretically, it's a pure commodity. What makes Spotify have pricing power? What makes it differentiated? Why would people be incredibly upset if you said like you had to not use Spotify anymore? It's because it's personalized. It's because they've tailored the service to take a product which is a commodity and personalize it to the point where you're willing to pay a premium for that commodity.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Flywheel effect of generating more revenue, more content, more revenue, more content. And eventually you get to the point where it's almost impossible to compete because it's just a first mover advantage is too great. Yeah. The difference, if you were to say like, what is an important difference of Netflix versus these models is Netflix's content was differentiated. The models are more similar than they are different at any given time OpenAI may have a better model, anthropic may have a better model. But a lot of the expertise and innovation gets disseminated pretty quickly. So these models are not terribly different. And that's where the Spotify analogy comes in in that I think if you're Google or you are OpenAI, the differentiating factor will not necessarily be that Google gives you a better answer. Like if we were just like to query Gemini or ChatGPT on something.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“When I was speaking to the executives at the LLMs, the way I framed it is I said, look, I think your business is some kind of combination between Netflix and Spotify. Netflix in that, unlike other tech companies, you are spending a ton of money upfront to train these models. Once these models are trained, you go sell them at extremely high incremental margins. You don't know what the revenues are going to be from that fixed asset that you've built. But to the extent that you've built that asset, you want to sell it as much as possible so that you can get the cash flows to build the next model and so on and so forth. That's very similar to Netflix in that they invest in content. And when you're an early mover, this kind of fixed asset business, you invest heavily. You get the capital to invest heavily, you get the revenues, you spread it out over an increasing number of people, you invest more in that fixed asset. And that just kind of has.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“The returns on that capital continue to be attractive, which means that you will be able to attract more capital and build better models. Or are you going to get to a point where everyone looks back and says, we raised too much money, we spent too much training models, we didn't get the economic return, or I think equally likely more likely people would say ultimately you will get the economic return, but it just happens slower than you would have thought. Enterprise adoption just didn't take off as quickly as you thought. And therefore, the problem is when you are this capital intensive as a business, it introduces financial leverage and operating leverage to the degree you don't see in normal businesses. So you don't have the luxury of two or three years of things going slower than you otherwise would expect. I think the scaling laws, the returns on capital and”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Point, you probably have four or five LLMs that will be relevant in the long term. I don't see that changing. Not that there's not sufficient talent out there. It's just that the capital required to get into this business is too great and these companies are too big at this point. And then you kind of get the snowball of more capital you have, the more compute. You get better researchers. It can be very difficult. So the competitive landscape is not really in question. I don't think anyone would say that these business models are commoditized. I think the real debate is these are extremely capital intensive businesses. Capital intensive, to a degree that we've never seen before in the history business. And the question is you're spending a ton of capital and the ultimate return on that capital is unknown. So it's not like a normal business who builds a factory and kind of knows what they're going to sell. You are spending tons of capital to train a model. And the question is, do the scaling laws work such that”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Has had good traction enterprise. Anthropic has been incredibly successful at coding. There was a thesis when we first invested that APIs or the business of having other software companies plug into your other developers, plug into your model would be commoditized. It would just be race to the bottom. I think that debate is more or less irrelevant because you've just seen with cloud code and even OpenAI's API business, these are durable businesses. And yes, can you switch? You can the same way you could switch AWS or Azure, but it's not worth it for a lot of businesses to do it. And there's sufficient differentiation among the models. If you look at the underlying margins of these companies, they are not the margins that you see in a commoditized industry. The gross margins are quite high. The competitive landscape, I think, is not heavily debated.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Back then it was like are these businesses going to ever generate an economic return? I think one analogy was AI will be huge, so was air travel. Airlines were not a good business. There's nothing differentiating about one airline from the other and so therefore the returns go down to the cost of capital. Obviously we took a different view, but that was like a 65 35 70 30 degree of confidence in that at that point. It was more about the skew if things played out like we thought in the business models were actually moded would be huge. I think at this point we're in a different place in terms of the debate that's important. The debate that's important now, if you want to look through a positive lens, which we do, you'd say that the businesses have taken slightly different lanes and have excelled at different things within AI. So OpenAI has been great at consumer.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Struck me like that. It wasn't at the models at that point were so differentiated. I think they were considered to be one of probably maybe that 0.5, 6, 7 players that could ultimately be. There's still a lot of debate around LLMs as a business model. But I felt like he was incredibly skilled and extremely focused. And I place a lot of weight, rightly or wrongly, on clarity of thought and the ability to communicate as a CEO, like what you want to achieve and how you're going to achieve it, especially in written form, because taking the time to write something down, you actually really have to go through everything you plan to do and express it in a way that makes sense to everybody else. And Daro just did that better than almost any CEO I've seen since Bezos.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“The way I viewed it was it was incredibly difficult at that stage to say who was going to be first and who was going to be second. The pattern recognition to answer your question for me. was Reading Dario's essays and listening to him on podcasts. When I look back at my career and look back at the companies we missed, Amazon in the early days. Think what could I have seen if you look at their income statement, you would just see a sea of red. The only telltale sign was reading Jeff Bezos' 1997 shareholder letter, which was like the clarity of thought, his understanding of what he wanted to achieve and how to create value for shareholders was greater than almost any public CEO I dealt with. If I had read that and almost ignored everything else, it would have been really important sign and very profitable.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Very different in that when we first invested in open AI, I wouldn't say it was contrary at all. To some extent, we invested originally the $125 billion round. So I don't think people were entirely sold on LLMs as a business model. But if you want to invest in LLMs as a business model, OpenAI was the one. Whether you invest in LLMs or didn't invest in LLMs was debated quite a bit. I mean, I think there was a lot of uncertainty about the ultimate business model of these companies. So that was what we had to figure out. Anthropic was a different situation. in that when we first invested in Anthropic, a number of people that I spoke to who I think are very smart drew the analogy of Uber versus Lyft or why are you going to invest in the second player in most industries investing in the second player is not the path to glory”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“As long as I've been doing private and public investing, at some points in time there is synergy. But I'd say if you go back to when we founded the firm, 25% of the time we looked at a private company, there was some synergy with what we were doing in the public side. Because of AI and because of there's so much innovation happening in the private markets, the synergies are just greater than I've ever seen before in that I think if you're going to take a view on public companies that are deeply impacted by AI, which eventually will be almost every public company. You should have an opinion on where's the technology now, where is the technology going? What are the implications of it? Investing in those companies gives you that perspective in a way that I've never seen greater synergy.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's very different than the public markets. So there's fewer people competing, but they're all doing the same thing, whereas the public markets, there's tons of people competing, but they're all playing a different sport.”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“Returns by assessing companies. I'd say the public markets are the most competitive in the world, even though they are less efficient than they were before. It's still you have more people in more places looking at information in companies where the private side just by definition fewer people looking at every situation and less capital. I would say that one difference that equalizes a bit is that you don't have this dynamic on the private side of people doing things that are economically irrational because they're focused in the short term or they're just their business model is not consistent with investing based on long-term insurance value where you have in the public market in the private market every time we're looking at a business everybody's doing the same thing we could talk to other firms that are investing in the same company their research may be different than ours but it is all trying to get at same”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source
“It changes over time. It depends where you are in a cycle. I'd say right now, I think that there's a lot of interesting opportunities in late stage privates. Some of the largest companies in the world by MarketCap are private right now. And not only are they large and private, they are innovating in a way that's going to change the world. This moment is particularly interesting. I think that in general, private markets are less competitive. There's obviously the core skill set of analyzing businesses is the majority of what creates value, but there's other aspects of it too. Oftentimes, there's no disagreement among private investors that a certain company is excellent. That company has to want you to be an investor in the company. So it's competitive from the standpoint of being able to create a situation where you can invest in the best companies. But in terms of how difficult is it to generate”
2026-02-24 · Invest Like the Best · Dan Sundheim - The Art of Public and Private Market Investing - [Invest Like the Best, EP.460] · IDENTIFIED FROM THE TRANSCRIPT · source