20VC x Saa Str: When the Agents Pick the Models, Open AI Comes Back to Life, and Thoma Bravo Just Wiped Out $5.1B on Medallia | Saa Str

Overview

AI VC AI Mentor: Digital Jason + Amelia AI Startup Benchmarking

AI Agent Playbook Free e Books

	e Book: Hiring a Great VP of Sales
	e Book: Raising Capital
	e Book:  The First $1m ARR

Details

University All Posts Podcasts The Top CROs VC Fundraising Top Videos Q&A Best of Saa Str #1 Bestselling Book Search Everything Join the Community

Free e Books

	e Book: Hiring a Great VP of Sales
	e Book: Raising Capital
	e Book:  The First $1m ARR

AI Annual 2026 Events Overview Sponsors

	Event Sponsorship
	Media Sponsorship

Digital AI Day 2026 (Free) Speaker Submissions Speaker Requirements Overview

20VC x Saa Str: When the Agents Pick the Models, Open AI Comes Back to Life, and Thoma Bravo Just Wiped Out $5.1B on Medallia

With Harry Stebbings, Jason Lemkin, and Rory O’Driscoll

🎤 Breaking!! Rory is joining LIVE at Saa Str AI 2026, May 12-14 in the SF Bay Area for an AMA on Investing In the Age Age and more, along with Amelia and me. Come see the 20VC x Saa Str conversation & meet the team live in person. Get your ticket here.

🎤 Breaking!! Rory is joining LIVE at Saa Str AI 2026, May 12-14 in the SF Bay Area for an AMA on Investing In the Age Age and more, along with Amelia and me. Come see the 20VC x Saa Str conversation & meet the team live in person. Get your ticket here.

Open AI missed Q4 numbers (apparently). Anthropic just took

But the story underneath all of these stories is the same one. The agents are going to pick the models, the vendors, and the workflows. Not humans.

That’s what changes everything. It changes who wins the foundation model wars. It changes which B2B companies have terminal value. It changes whether Canva’s IPO becomes a generational outcome or a sensibly-priced PE deal in disguise. And it explains why the entire PE-for-B2B playbook that powered Thoma Bravo, Vista, and Francisco Partners for a decade may be quietly breaking.

1. The Agents Pick the Models, and That’s Why Open AI Just Got Back in the Game

Last year’s narrative was simple. Anthropic had something special in coding. Claude was the model humans loved. Open AI’s models slipped, market share moved, and Wall Street is just now waking up to numbers that were knowable three months ago.

Jason’s view: that whole story is yesterday’s war. Going forward, the agent picks the model. The agent picks the vendor. And humans become bystanders to those decisions.

“I see no competitive advantage to Claude for most workflows,” Jason said. “Open AI, whether it’s Codex 5.5, was just state-of-the-art of the models. It’s so good for my workflows that I think the advantage that humans get out of Claude and Claude Code… I’m not sure our agents are going to get the same advantages.”

This reframes the entire Anthropic vs. Open AI debate. Claude won 2025 because humans loved it for vibe coding. The 2026 battle is whether agents prefer the same models humans did. Early signal says no.

2. The Three Buckets of B2B Software in the Agent Era

Rory laid out a framework that’s worth pinning to the wall. Every B2B software company now lives in one of three buckets:

Bucket 1: Eroding terminal value. Melting iceberg. Low stock price. If you’re levered, you’re dead. Medallia ended up here.

Bucket 2: System of record. They’ll keep you forever, but no real agentic activity sits on top. Calculable terminal value, fair price, no premium. Workday lives here. Atlassian is being interrogated about whether it lives here.

Bucket 3: Agent-leveraged. The agents are using you. You get increasing returns from AI leveraging your platform. Service Now is being graded daily on whether it can credibly claim this status.

Most of B2B is currently being repriced from bucket 3 (where the market gave Saa S pixie dust credit until 2025) into bucket 2. Some is sliding into bucket 1. The single most important question for any B2B company right now is: do agents want to use this?

3. Canva Will Have a Very Successful IPO. Agents Still Won’t Use It.

This is the cleanest illustration of the new framework. Canva 2.0 is great. The agentic suite is real. The product is shipping. The IPO will price.

“Would an AI agent use it?” Jason asked. “No. An AI agent is not going to go in and move assets around, vibe them. It’s just going to create the assets.”

Same logic applies to Jira, Confluence, and most of the project management category. Agents don’t need project management tools. They have no use for them. The market figured this out before the narrative did. That’s why Atlassian and Monday have struggled while Twilio and Cloudflare (which agents do still use) have outperformed.

The lesson for IPO-stage companies: scale plus profitability gets you a real-company multiple. The 30x revenue premium of 2021 is not coming back. Saa S pixie dust credit expired in 2025. As Rory put it, “good Saa S companies that aren’t AI-first are going to trade at fair value, which means if you’ve created value, you’ll get value. But what they won’t get is that stupid 30 times revenue premium.”

4. The Compute Equals Revenue Thesis Just Got Its First Crack

Sam Altman’s framing has been: compute equals revenue. Build the data centers, the demand will come.

Open AI just printed a quarter that suggests this isn’t always true. They had the compute. They didn’t have the model. Demand softened. Anthropic ran the opposite play, built better models, ran out of compute, and is now scrambling to catch up via the $45 billion Google and Amazon deals.

Rory’s read: “It’s a stupid statement by Sam. It implies causation. It’s just correlation. No compute equals no revenue. But compute and a shitty model also equals no revenue. See Grok for details.”

The real version of the thesis is harder. You need enough compute to meet demand AND a good enough model to generate demand. Both at the same time. Both two years out. The capital intensity makes this a four-to-one ratio: every

Get it wrong on the high side, you’re capacity-stranded. Get it wrong on the low side, you can’t serve the demand. There is no version of this where the bet is small.

The under-appreciated story in the Anthropic raise is what it does for Google. Google now wins three different ways: if Gemini wins, if Anthropic wins (because Anthropic is now deeply tied to GCP and TPUs), and if neither wins (because Google has the spare capacity to redirect from internal workloads to whichever foundation model needs it).

The chip economics matter here. GPU spend is roughly 50-55% of total capex on any new buildout. Nvidia’s gross margins are 70%, which means roughly $14 billion of profit per gigawatt of data center built. Google and Amazon are bundling their custom chips, their capital, and their equity to shift that gross margin away from Nvidia and into themselves.

Asked which to buy at maximum upside, Nvidia at

6. Thoma Bravo Just Handed $5.1B of Medallia to Creditors

This is the story most people will sleep on. It shouldn’t be.

Thoma Bravo bought Medallia in 2021 for roughly

The brutal insight: it wasn’t the leverage that killed it. It was the price. As Jason put it, “You can’t service 2 billion plus of debt on a 1 billion low growth company with a pre-AI story that has to transform to AI.”

Customer survey software is exactly the kind of category CIOs cut first. Vendor consolidation is taking 30-50% of new AI dollars. Medallia’s net retention had reportedly dropped to 21%. There’s no AI story, and writing one would require a full rewrite to compete with much better AI-first products.

Watch the names sitting in adjacent positions: Coupa, New Relic, Anaplan, Avalara, Cornerstone, Smart Sheet. Several of those term loans are already trading well below par. Some are reportedly already underperforming on covenants. The horsemen of this particular apocalypse arrive in a specific order: debt trades down, payment-in-kind toggles activate, refinancing cliff hits.

Medallia Is Just the Opening Act: 12+ PE Saa S Deals With $50B+ in Debt at Risk of Blowing Up

Medallia Is Just the Opening Act: 12+ PE Saa S Deals With $50B+ in Debt at Risk of Blowing Up

The bigger question: is this a Medallia problem or a thesis problem?

Thoma Bravo, Vista, EQT, Francisco Partners. Every one has the same playbook. Buy mature B2B software at multiples that assume durable revenue. Service the debt with operating leverage. Refinance. Distribute.

That entire playbook depends on B2B software being durable. If AI has rendered classic B2B marketing software, customer engagement software, and large swaths of mid-tier infrastructure software non-durable, there is no PE playbook that works on those assets. Even the AI-first ventures may not be durable. If they aren’t, debt on top of equity is suicide.

“There’s a chance it’s all broken,” Jason said, “because AI has rendered it all non-durable. That would be what the yahoos that think Claude destroys everything would say. None of it’s durable. Doesn’t matter if you’re great or grinding or struggling. Doesn’t matter if you’re Legora or Medallia.”

Rory’s read: PE firms don’t have a reason to exist if B2B software is unstable. They’ll find new categories or they’ll shrink. Capital flows to where it earns returns.

8. The Exit Funnel for B2B Just Collapsed to One Door

Three traditional exit paths existed: sell to a strategic, IPO, or sell to PE.

Strategic M&A volume is way down. The big incumbents are extremely targeted in what they buy. IPOs require $400M+ in revenue minimum, and even Figma, Klaviyo, Service Titan, Net Scope are trading as broken IPOs at scale. PE just demonstrated, with Medallia, what happens when the buyer of last resort steps back.

Jason’s prediction: founders giving the keys to their friends. Not selling. Not merging in any traditional sense. Just handing the company to a friend at 2-3x your scale. The 100M ARR company giving itself to the 200M ARR company in exchange for some equity and an exit door.

“Give the keys to my friend that’s bigger and better than me,” Jason said. “I think we’re going to see this happen all the time. I’m at 40 million, 50 million, 20 million, 100 million. I’m not going to get there, guys.”

For early-stage venture, the implication is fewer-but-bigger winners. As Rory put it, the portfolio construction at early stage now needs more bets, not fewer, because the probability of any one company hitting the new exit bar is lower. At late stage, concentration makes sense because there are only forty companies you even need to think about.

9. Gary Tan Just Made YC the Steel of Approval for Revenue

Gary Tan published five rules on how seed-stage companies should report revenue. The trigger was a YC startup booking inflated ARR numbers. The result is the closest thing the seed market has to GAAP.

Jason’s example from his own portfolio: one nine-figure ARR company sends three different ARR numbers each month. Core software ARR. Software plus variable usage. Committed revenue. The deltas are massive.

Two things were true about Gary’s post. It was good and necessary. It was also extremely shrewd.

YC has 25% market share in seed. The value of that market depends on trust. If founders are systematically inflating revenue and seed investors stop trusting the category, YC’s franchise erodes. Setting the standard makes YC the arbiter. As Rory framed it: “the shorthand version of the seed stages will be: does this conform to the Y Combinator revenue guidelines?”

It’s the equivalent of De Beers policing the diamond market. Good for the market and good for the company that runs the market.

China blocked Meta’s $2 billion acquisition of Manus. The investors got their money out. Some of the team is reportedly still stuck in China.

The message wasn’t really aimed at the venture investors. They have their distributions and aren’t giving them back. The message was to Meta and to the next ten US strategics that might try the same playbook with a Chinese-origin AI company. As Rory framed it from the Chinese perspective: “If you won’t give us your chips, I’ll be damned if we’re going to give you our researchers.”

This won’t be the last expression of the China-US AI conflict, but it’s a useful marker. If you do significant business in China, this ruling triggers a new conversation. If you don’t, the venture investors are uncatchable but the technology transfer playbook just got harder.

While the rest of the conversation was happening, Harry sold his Figma and Duolingo positions. Down 40% on Figma.

The reasoning was clean and worth repeating: agents don’t need either of them. The thesis broke. Sitting in the position waiting for it to come back is just pre-commitment to losing more money.

Rory’s framing of the underlying lesson: “If you don’t have an active reason for holding the stock and a belief it can outperform the S&P 500, why are you holding it?”

This is one of the biggest behavioral differences between public and private investing. Private investors get attached to working through problems with management. Public investors leave when the thesis breaks. Most venture investors are mediocre public investors for exactly this reason.

The interpretation of the entire episode comes down to one question: are agents going to use your software, or aren’t they?

If yes, you’re in bucket 3 and you have terminal value plus growth. If you’re a system of record agents have to plug into, you’re in bucket 2 and you’ll trade at fair value with no premium. If neither, you’re in bucket 1, and the only question is whether the leverage kills you fast or the customer churn kills you slow.

The PE thesis, the IPO bar, the exit funnel, the capital intensity at the foundation models, even Gary Tan’s revenue accounting all reduce to that same question. Bet accordingly.

“You can’t service 2 billion plus of debt on a 1 billion low growth company with a pre-AI story that has to transform to AI. You simply can’t.”

“You can’t service 2 billion plus of debt on a 1 billion low growth company with a pre-AI story that has to transform to AI. You simply can’t.”

“Whenever someone says you can’t lose, you’re just about to lose money.”

“Whenever someone says you can’t lose, you’re just about to lose money.”

“While you guys were talking about Skyio, I just sold Figma 40% down. The agents don’t need either of them.”

“While you guys were talking about Skyio, I just sold Figma 40% down. The agents don’t need either of them.”

“Do we place no value then on large multi-year enterprise deals? Allah Service Now.”

“Do we place no value then on large multi-year enterprise deals? Allah Service Now.”

“Is the ultimate loser here when I read this, not Nvidia?”

“Is the ultimate loser here when I read this, not Nvidia?”

“It’s a stupid statement by Sam. It implies causation. It’s just correlation. No compute equals no revenue. But compute and a shitty model also equals no revenue. See Grok for details.”

“It’s a stupid statement by Sam. It implies causation. It’s just correlation. No compute equals no revenue. But compute and a shitty model also equals no revenue. See Grok for details.”

“It’s entirely plausible in a world of super big exits that 10 super big exits cover the entire nut from the LP perspective such that it’s still a good business and literally nobody cares about the fact that the other 96 companies wither off on the vine.”

“It’s entirely plausible in a world of super big exits that 10 super big exits cover the entire nut from the LP perspective such that it’s still a good business and literally nobody cares about the fact that the other 96 companies wither off on the vine.”

“It is worth noting that Europe, the alleged socialist capital of the world, has a far more performance-oriented sports culture than America where it’s a nasty little oligopoly.”

“It is worth noting that Europe, the alleged socialist capital of the world, has a far more performance-oriented sports culture than America where it’s a nasty little oligopoly.”

This post is part of the ongoing 20VC x Saa Str collaboration with Harry Stebbings and Rory O’Driscoll.

PE Loves Saa S Again: Thoma Bravo Buys Olo for $2 Billion

Thoma Bravo's Record $34.4B Fundraise: Great News for B2B and Saa S Founders

Thoma Bravo: Software Spend Will Grow 19% a Year Through 2028. AI is The Accelerant.

PE Loves Saa S Again: Thoma Bravo Buys Olo for $2 Billion

Thoma Bravo's Record $34.4B Fundraise: Great News for B2B and Saa S Founders

Thoma Bravo: Software Spend Will Grow 19% a Year Through 2028. AI is The Accelerant.

Get from

Key Takeaways

• AI VC AI Mentor: Digital Jason + Amelia AI Startup Benchmarking

• AI Agent Playbook Free e Books

    e Book: Hiring a Great VP of Sales
    e Book: Raising Capital
    e Book:  The First $1m ARR
  

• University All Posts Podcasts The Top CROs VC Fundraising Top Videos Q&A Best of Saa Str #1 Bestselling Book Search Everything Join the Community

• Free e Books

    e Book: Hiring a Great VP of Sales
    e Book: Raising Capital
    e Book:  The First $1m ARR
  

• AI Annual 2026 Events Overview Sponsors

    Event Sponsorship
    Media Sponsorship