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

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Business, Investing, Tech News, News

4.4 • 693 Ratings

🗓️ 1 June 2026

⏱️ 75 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Brendan Foody is the Founder and CEO @ Mercor, one of the leading data providers to the largest labs on the planet including OpenAI. In the last two years, Brendan has scaled the company to $1.5BN in ARR and a valuation of $10BN.

AGENDA:

True or False:

Mercor lost Meta and OpenAI as a customer with the hack?
Mercor has been poaching competitor talent, paying them millions?
Mercor revenue is not real revenue and is only GMV?

12:56 Would Brendan sell Mercor for $30 billion?

14:23 Why everyone is wrong that AI will lead to labor displacement?

15:59 We will create many new jobs that do not exist with AI.

16:59 Why training agents will be a massive labor category that does not exist today

19:51 Will we see the data provider market unbundle and specialize into verticals?

22:24 Is the stated revenue really revenue or is it really GMV?

27:55 How a 1 million ARR company secured one of the best investors in the world with a helicopter ride

29:41 How Felicis secured the deal of the decade with a race track and a set of Ferraris

32:59 Which investment round felt like the highest price to grow into?

34:49 Why will value accrue to the infrastructure layer, not the application layer, in the next 12 months?

35:46 Why the model is the product and why application layer companies should be scared as a result

37:22 Why network effects will be the determinant of value creation

38:46 Why the forward-deployed motion, not the GTM motion, will determine true value creation.

41:59 Why token spend within organizations is going to continue to increase

43:54 Why agent evaluation to commoditize the model layer will be a massive business for enterprises?

51:13 Why we should have increased capital gains tax

01:01:31 How to compete with $20 million a year from Meta?

01:08:49 Will Mercor go public and when?

Transcript

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0:00.0	Building defensibility in the software layer on top of the models is going to be incredibly
0:06.3	difficult.
0:07.3	I think over the last two years, everyone has increasingly realized that the model is the
0:12.0	product.
0:13.0	We have the demand to double overnight.
0:15.4	We just don't have the capacity.
0:16.9	Like right now, we're spending more on tokens for our internal agents than we are on employee
0:22.4	headcount. I think we're seeing in a real time that services are getting automated.
0:28.2	I could definitely see one of them being a $10 trillion company, maybe even significantly higher.
0:34.4	How much does it cost to hire a high-quality AI researcher?
0:37.9	Oftentimes it would be in the tens of millions of stock per year.
0:41.3	This is 20VC with me, Harry Stebbings. Now, joining me in the hot seat today, we have
0:44.7	Brandon Foodie, co-founder and co-CEO of McCaw, one of the fastest-growing AI companies
0:49.7	valued at over $10 billion today, doing over a billion dollars in revenue.
0:55.0	Now, Brandon's done quite a few shows before, and so my question was, how do I get answers that
0:59.8	he's never given before? How do I push and ask questions that no one's ever pushed him to
1:03.8	ask before? This is the most revealing interview that Brandon has ever done, discussing core
1:09.6	elements like, is revenue really revenue in this business?
1:13.4	What does that look like moving forward?
1:15.3	Would he rather invest in open AI or anthropic?
1:18.2	We do not shy away from the spicy question in this show, and Brandon was incredible and more than delivered.
1:23.9	But before we dive into the show today, did you know the industry average for booking a business trip is 45 minutes?
	...

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