WEBVTT - Kevin Landis on Technology Investments (Podcast) 0:00:02.200 --> 0:00:06.800 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:07.240 --> 0:00:10.400 This week on the podcast, I have an extra special guest, 0:00:10.560 --> 0:00:13.080 and what can I tell you? Kevin Landis has been 0:00:13.119 --> 0:00:19.840 investing in technology companies I don't know, thirty years, thirty years, 0:00:19.880 --> 0:00:23.840 both public and private. He runs Firsthand Funds. They have 0:00:24.120 --> 0:00:29.640 a number of different mutual funds that specialize in technology companies, 0:00:30.080 --> 0:00:34.120 including one that is one of the rare publicly traded 0:00:35.520 --> 0:00:40.600 venture capital funds. Imagine an individual VC that itself is 0:00:40.920 --> 0:00:45.480 publicly traded. Kevin not only survived the dot com implosion 0:00:45.560 --> 0:00:50.000 but thrived. The funds have put up really outstanding numbers 0:00:50.720 --> 0:00:55.800 over the past fill in the blank, five, ten, fifteen years. Uh. 0:00:55.800 --> 0:01:01.480 He really is super knowledgeable about startups and technology companies, 0:01:01.960 --> 0:01:04.960 both both new and old. And one of the things 0:01:05.040 --> 0:01:09.480 that makes them so interesting is they're located right out 0:01:09.480 --> 0:01:11.600 there in the heart of Silicon Valley. It's it's hard 0:01:11.600 --> 0:01:14.960 to imagine that before first Hand Funds opened up in 0:01:15.080 --> 0:01:19.440 ninety four, there were no mutual funds located right there 0:01:19.959 --> 0:01:23.600 in the midst of tech Land. Really quite interesting. He 0:01:23.640 --> 0:01:27.520 grew up out there, he went to Berkeley, that's his backyard. 0:01:28.120 --> 0:01:31.800 Really a fascinating guy in a fascinating conversation about all 0:01:31.840 --> 0:01:35.200 things technology related. I think you'll find this to be 0:01:35.240 --> 0:01:37.680 an interesting conversation. I really enjoyed it. So with no 0:01:37.760 --> 0:01:42.760 further ado, my interview of first Hand Funds Kevin Landis 0:01:44.000 --> 0:01:48.600 vias is Masters in Business with Barry Ridholtz on Boomberg Radio. 0:01:49.040 --> 0:01:52.440 My special guest this week is Kevin Landis. He is 0:01:52.560 --> 0:01:55.800 the c i O of first Hand Capital Management and 0:01:55.920 --> 0:02:00.400 president and chairman of first Hand Funds. Founded in four 0:02:00.520 --> 0:02:04.840 with five hundred million dollars in assets under management, Kevin 0:02:04.880 --> 0:02:10.880 has specialized in technology. The first Hand Technology Opportunities Funds 0:02:11.280 --> 0:02:13.680 has been up a hundred and two percent over the 0:02:13.720 --> 0:02:19.320 past twelve months. Kevin Landis, Welcome to Bloomberg. Thank you 0:02:19.400 --> 0:02:22.720 very much for having me. So you spent your life 0:02:22.760 --> 0:02:25.560 in Silicon Valley and are known as one of the 0:02:25.720 --> 0:02:30.600 longest tenured technology investors. How did you find your way 0:02:30.880 --> 0:02:34.960 into tech investing? Well, there's a there's a long, boring 0:02:35.600 --> 0:02:38.520 story of how I, you know, touched every stone along 0:02:38.560 --> 0:02:42.480 the path, or there's more of the moment in time 0:02:42.600 --> 0:02:44.880 terable answer, And I'll give you the moment in time answer, 0:02:45.480 --> 0:02:48.200 and that is when I was in the fifth grade, 0:02:48.840 --> 0:02:51.480 I told my parents that I wanted to be a 0:02:51.560 --> 0:02:54.920 historian when I grew up. Now, my parents were both 0:02:55.040 --> 0:02:58.160 children of the Great Suppression, and so they were immediately 0:02:58.160 --> 0:03:02.520 horrified that I was um unwittingly, I was pointing to 0:03:02.560 --> 0:03:06.040 a profession that wouldn't make me very financially successful or secure. 0:03:06.840 --> 0:03:09.000 And they really tried hard to talk me out of it, 0:03:10.320 --> 0:03:13.480 and finally one of them said, you know, Kevin, if 0:03:13.520 --> 0:03:16.400 you can figure out the history that hasn't happened yet, 0:03:17.400 --> 0:03:20.160 then you're gonna be all right son, and the other 0:03:20.240 --> 0:03:23.839 quickly agreed. And I thought about that on and off 0:03:23.919 --> 0:03:26.840 ever since, that if you configure out the history that 0:03:26.919 --> 0:03:30.239 hasn't happened, that's a really good thing. And I think 0:03:30.280 --> 0:03:34.800 that's that's a pretty good encapsulation of what I do. 0:03:35.240 --> 0:03:38.720 That's the definition of investing history that has yet to happen. 0:03:39.400 --> 0:03:42.000 So I'm kind of intrigued by your background. You have 0:03:42.080 --> 0:03:44.840 a BS degree. It looks like this is a double 0:03:44.880 --> 0:03:49.440 degree in electrical engineering and computer science from UC Berkeley 0:03:49.480 --> 0:03:52.080 before you got your m b A. The first question 0:03:52.160 --> 0:03:55.680 is why not go directly to a tech startup? Was 0:03:55.720 --> 0:03:59.800 there any ever any lure to that? There was, and 0:04:00.880 --> 0:04:03.680 I considered that, but this was one of those moments 0:04:03.680 --> 0:04:08.320 where fate sort of intervened. And my dad's business was 0:04:08.400 --> 0:04:12.120 as a manufacturer's rep in Silicon Valley, meaning he was 0:04:12.160 --> 0:04:15.240 the customer facing office. He and his partner with the 0:04:15.320 --> 0:04:19.040 customer facing office for tech companies based outside of Silicon 0:04:19.120 --> 0:04:22.800 Valley dealing with Silicon Valley customers. And his partner had 0:04:22.800 --> 0:04:24.720 a heart attack and had to go in for cornery 0:04:24.720 --> 0:04:28.240 bypass surgery during my senior year in college, and my 0:04:28.320 --> 0:04:30.760 dad needed needed me to come and join the business 0:04:30.839 --> 0:04:33.880 because he would have looked like a one man band otherwise. 0:04:34.400 --> 0:04:38.480 So I spent the first four years of my professional career, 0:04:38.600 --> 0:04:41.960 instead of learning more things about engineering, learning a lot 0:04:42.040 --> 0:04:46.360 about business and human nature and how to deal with people. So, Kevin, 0:04:46.400 --> 0:04:50.120 your first experience in the field was not anything that 0:04:50.560 --> 0:04:55.520 encouraged you to want to become a an insider at 0:04:55.520 --> 0:04:59.000 some tech startup. Well, that's right, but it I mean 0:04:59.480 --> 0:05:02.120 it taught me a great deal about human nature and 0:05:02.160 --> 0:05:05.560 about business and business strategy, and like you know that, 0:05:05.720 --> 0:05:08.520 it led to the second job that I got out 0:05:08.680 --> 0:05:13.039 after business school as an analyst at a high technology 0:05:13.040 --> 0:05:16.520 market research firm which also began teaching me a lot 0:05:16.560 --> 0:05:18.880 of the things that that I had thought that I 0:05:18.880 --> 0:05:22.360 had learned in school that actually weren't true. Give us 0:05:22.400 --> 0:05:25.360 an example of things you learned in school that turned 0:05:25.400 --> 0:05:28.200 out to be not true. Well. One of the one 0:05:28.240 --> 0:05:32.520 of the explanations for um efficient markets is that there's 0:05:32.520 --> 0:05:36.960 a lot of just incredibly brilliant, gifted people doing perfect research, 0:05:37.040 --> 0:05:39.480 and that everything that can be known about a company 0:05:39.520 --> 0:05:42.920 is already in the stock price. But when you're an 0:05:42.960 --> 0:05:46.680 analyst at again, at a high tech market research firm, 0:05:46.720 --> 0:05:49.640 and somebody from a big name financial firm calls and 0:05:49.720 --> 0:05:53.039 starts asking you a bunch of very naive questions, it 0:05:53.120 --> 0:05:56.719 doesn't take you long to realize that the emperor has 0:05:56.760 --> 0:06:01.800 no clothes, and that maybe you need to modify your 0:06:01.839 --> 0:06:05.400 thought to realize that the world is not this perfectly 0:06:05.480 --> 0:06:08.719 ordered place where everything's all worked out. There's actually a 0:06:08.720 --> 0:06:12.120 lot of confusion out there, uh, and that information is 0:06:12.160 --> 0:06:16.839 not really evenly distributed. And all of the forces that 0:06:17.279 --> 0:06:22.200 finance professors will teach you about why markets tend towards efficiency, 0:06:22.320 --> 0:06:26.640 they're all valid arguments, but things are usually changing fast 0:06:26.760 --> 0:06:31.279 enough and people are imperfect enough that markets don't really 0:06:31.279 --> 0:06:34.320 always have it, have it just right. I couldn't agree 0:06:34.360 --> 0:06:37.400 with you more. I find markets are kind of sort 0:06:37.440 --> 0:06:42.280 of eventually efficient, but that's the still leaves a lot 0:06:42.320 --> 0:06:46.640 of riddle room and and hence the opportunity for some 0:06:46.720 --> 0:06:50.880 investors to outperform right. Right, So you're an analyst for 0:06:50.920 --> 0:06:54.080 a number of years. What else did you do before 0:06:54.240 --> 0:06:59.159 launching firsthand funds? In so after being you know, starting 0:06:59.200 --> 0:07:03.000 out as an applications engineer customer facing with my dad's firm, 0:07:03.120 --> 0:07:06.240 and then being a junior analyst in a market research firm, 0:07:06.400 --> 0:07:08.400 then I spent a couple of years as a product 0:07:08.440 --> 0:07:12.200 manager at a little chip company in Silicon Valley, And 0:07:12.240 --> 0:07:14.760 again it was it was a great just an example 0:07:14.760 --> 0:07:18.680 for myself, uh, to realize some of the nitty gritty 0:07:18.680 --> 0:07:23.240 stuff that I thought I understood as an analyst, but 0:07:23.320 --> 0:07:25.040 even though I was close to the industry, it wasn't 0:07:25.160 --> 0:07:29.640 in the industry. And that again, I just kept learning 0:07:29.640 --> 0:07:31.720 more stuff that I thought I knew that I hadn't known, 0:07:32.360 --> 0:07:37.920 and uh and that was where uh frankly though, I 0:07:37.920 --> 0:07:39.800 I kind of realized one day that I was making 0:07:39.800 --> 0:07:42.560 more money trading stocks than I was on my day job. 0:07:43.120 --> 0:07:44.880 And maybe that was the wrong day job to have 0:07:45.760 --> 0:07:48.440 h Maybe my crew calling was just to be a 0:07:48.480 --> 0:07:52.440 detect investor. So you launched first Hand Funds in ninety four. 0:07:52.520 --> 0:07:56.320 What was the process like of getting that off the ground. Well, 0:07:56.400 --> 0:07:58.800 that was really daunting because you know a lot of 0:07:58.800 --> 0:08:01.960 times when your pick, when you're you're young, starting out, 0:08:03.040 --> 0:08:06.280 you have this feeling like you know the existing businesses, 0:08:06.280 --> 0:08:07.600 there's some sort of a club and you need to 0:08:07.600 --> 0:08:10.040 get an invite uh to get in, or somebody needs 0:08:10.040 --> 0:08:12.000 to give you a chance, and you have to make 0:08:12.040 --> 0:08:14.240 that leap that says you kind of have to make 0:08:14.280 --> 0:08:16.160 your own looks and no one's going to hand it 0:08:16.160 --> 0:08:20.400 to you. And so my partner and I UH basically 0:08:20.480 --> 0:08:24.120 figured out how to form a mutual funds. At that time, 0:08:24.200 --> 0:08:27.600 I couldn't believe there was no high tech neutral fund 0:08:27.640 --> 0:08:31.440 based in Silicon Valley, and I couldn't believe that that 0:08:31.560 --> 0:08:33.679 I couldn't find any examples of tech funds that were 0:08:33.720 --> 0:08:37.040 run by engineers, and it seemed like, oh my gosh, 0:08:37.080 --> 0:08:39.199 this is If I don't do this, I'm going to 0:08:39.280 --> 0:08:40.679 regret it for a really long time. So we need 0:08:40.720 --> 0:08:43.280 to figure out how to do this, and then we 0:08:43.440 --> 0:08:47.199 basically just if we pulled a couple of million dollars 0:08:47.240 --> 0:08:50.400 out of our address books, UH and and got in 0:08:50.400 --> 0:08:52.800 touch with people that we had gotten to know who 0:08:53.120 --> 0:08:56.480 believed in us, and said, here's this vehicle we're investing in, 0:08:56.559 --> 0:08:59.280 and let's let's see if we can make you some money. 0:08:59.480 --> 0:09:03.880 And that was That was basically our little startup states there. 0:09:03.920 --> 0:09:07.040 I think the joke was that um our management see 0:09:07.040 --> 0:09:09.880 was enough that uh we could each buy a sandwich 0:09:09.920 --> 0:09:13.160 each day, and that was it. So what are the 0:09:13.160 --> 0:09:17.600 advantages of running a tech mutual funds from right in 0:09:17.640 --> 0:09:22.920 the heart of Silicon Valley? You know, you can't bump 0:09:22.960 --> 0:09:27.560 into people and chit chat without picking up UH industry 0:09:27.559 --> 0:09:31.520 scuttle butt. I mean, I did the best. I had 0:09:31.559 --> 0:09:33.679 an example just the other day. We my wife and 0:09:33.720 --> 0:09:37.200 I were working with this uh a dog rescue organization, 0:09:37.280 --> 0:09:40.920 and and we took a rescue dog for a weekend 0:09:40.960 --> 0:09:45.480 while the fosters were out of town. And you know, 0:09:45.559 --> 0:09:47.080 the guy came back to pick up the dog and 0:09:47.120 --> 0:09:48.960 we were chit chatting, and all of a sudden, before 0:09:48.960 --> 0:09:51.760 you know, we're talking about what's going on at vm 0:09:51.800 --> 0:09:54.400 ware and what's the matter with this company? In that company? 0:09:54.440 --> 0:09:56.280 Where do you think about the CEO leaving there to 0:09:56.320 --> 0:09:58.319 go to Intel, and all of a sudden, I'm in 0:09:58.320 --> 0:10:01.800 the middle of a research meeting and I'm just handed. 0:10:01.920 --> 0:10:05.120 This guy is dog so uh and you know the 0:10:05.200 --> 0:10:07.440 same thing, you bump into somebody you know they haven't 0:10:07.440 --> 0:10:09.439 seen in a few months at the grocery store. You 0:10:09.440 --> 0:10:14.320 you're always swimming in it, and uh so people aspect 0:10:14.320 --> 0:10:16.320 what's your you know, what's your process for going out 0:10:16.320 --> 0:10:20.200 and and uh, you know, getting ideas and getting skulled button. 0:10:22.000 --> 0:10:24.959 That's like saying, what's your process for getting wet when 0:10:25.000 --> 0:10:29.600 it's raining? Just go out sitting and shopping, right, yeah, right, 0:10:29.720 --> 0:10:32.920 that's pretty funny. You're also the CEO of the first 0:10:32.960 --> 0:10:37.040 Hand Technology Value Funds, which is really interesting. It's a 0:10:37.200 --> 0:10:43.480 publicly traded venture capital funds, obviously focusing on emerging technologies. 0:10:43.960 --> 0:10:46.880 You were pre i p O investors in Facebook, Twitter, 0:10:47.000 --> 0:10:51.800 Solar City, Yelp, Roku, leading to the obvious question, why 0:10:52.240 --> 0:10:56.280 a publicly traded venture capital firm? Well, that's so that 0:10:56.360 --> 0:11:00.000 was a great That was a great moment in uh 0:11:00.280 --> 0:11:02.959 in time here. I mean, you're probably well acquainted with 0:11:03.840 --> 0:11:06.120 how easy it was for companies to go public in 0:11:06.120 --> 0:11:09.920 the late ninety nineties, and then the and then the 0:11:10.120 --> 0:11:14.280 just the dramatic backlash against that. The pendulum swung really 0:11:14.320 --> 0:11:16.880 hard the other direction. And it wasn't just people being 0:11:16.920 --> 0:11:21.199 skeptical of of startups uh and and of IPOs, but 0:11:21.280 --> 0:11:23.520 it was also Starbanes Oxley and a bunch of other 0:11:24.679 --> 0:11:30.640 really draconian regulations that just made it really, really difficult. 0:11:31.000 --> 0:11:34.600 That the I p O went from being uh, sort 0:11:34.640 --> 0:11:37.920 of this rite of passage that people were striving for 0:11:38.160 --> 0:11:42.520 to being just awful ordeal that people were avoiding at 0:11:42.520 --> 0:11:45.559 all costs. And that's we just realized as we got 0:11:45.640 --> 0:11:49.719 into you know, uh, you know, oh seven oh eight 0:11:49.840 --> 0:11:54.280 or nine, that companies, by the time they went public, uh, 0:11:54.400 --> 0:11:57.439 they were so well known and so expensive that a 0:11:57.520 --> 0:12:00.599 lot of those early returns had already been and you 0:12:00.679 --> 0:12:03.920 just couldn't get them in the public market. So, you know, 0:12:04.040 --> 0:12:06.719 I had by this time already made a career out 0:12:06.800 --> 0:12:11.719 of mocking and ridiculing companies that failed to adapt um. 0:12:12.120 --> 0:12:14.360 And you know, when we started out in the nineties, 0:12:14.400 --> 0:12:16.439 I made fun of Deck in data general, you know, 0:12:16.559 --> 0:12:18.880 and then uh, you know, by two thousands ten, we 0:12:18.960 --> 0:12:22.079 were all making fun of Yahoo and UH and and 0:12:22.240 --> 0:12:25.199 plenty of others believe me. Uh. And I kind of 0:12:25.240 --> 0:12:27.160 looked at that, and I said, well, I'm running a 0:12:27.800 --> 0:12:31.079 what's a mutual fund, but in the industry is referred 0:12:31.080 --> 0:12:34.679 to as a forty Act fund because that's the the 0:12:34.720 --> 0:12:37.480 Investment Company Act of nineteen forty. And so one day 0:12:37.480 --> 0:12:39.439 I just sort of looked in the mirrors, said, right, 0:12:40.320 --> 0:12:42.520 I'm here in Silicon Valley making fun of people who 0:12:42.640 --> 0:12:45.920 failed to revolve, and I'm running a nineteen forty Acts fund. 0:12:46.760 --> 0:12:49.040 Uh And and I thought about that a little bit, said, 0:12:49.040 --> 0:12:52.240 you know, I think we need to adapt. So um, 0:12:52.640 --> 0:12:55.800 we realized that there was an obscure branch of the 0:12:55.880 --> 0:12:59.400 forty Act that talked about business development companies b dcs, 0:13:00.280 --> 0:13:05.040 and that had kind of evolved into this odd kind 0:13:05.040 --> 0:13:08.679 of a credit granting model. But we went back to 0:13:08.760 --> 0:13:10.439 the original version of that, which is, no always a 0:13:10.520 --> 0:13:14.359 business development company. We can make this adventure capital portfolio. 0:13:15.480 --> 0:13:18.959 And that was right around the time that companies like 0:13:19.280 --> 0:13:22.839 SHA's Posts and Second Market, We're making it easier to 0:13:22.880 --> 0:13:27.360 get shares in startup companies. So that was, uh, that 0:13:27.559 --> 0:13:29.839 just sort of fell into place, and and we looked 0:13:29.880 --> 0:13:32.520 around and said, Okay, we're just gonna buy Uh, we're 0:13:32.559 --> 0:13:35.319 gonna look at We're not changing how we look at companies. 0:13:35.800 --> 0:13:38.320 We're still looking for the same things right place, right 0:13:38.400 --> 0:13:40.480 time markets that we like, this looks like the winner. 0:13:41.040 --> 0:13:44.480 And uh, that allowed us to really kind of go 0:13:44.559 --> 0:13:46.640 back to doing what we've always done. I always pull people. 0:13:46.679 --> 0:13:47.800 You know, you don't need to pay me to go 0:13:47.880 --> 0:13:50.560 buy Microsoft for you. You know you kind of already 0:13:50.559 --> 0:13:54.559 discovered that one. Uh just today, you know, nobody needs 0:13:54.600 --> 0:13:57.040 to pay me to go buy Apple. Uh, you can 0:13:57.080 --> 0:14:00.880 buy it on your own. So but what you're looking 0:14:00.920 --> 0:14:03.599 for those companies you haven't heard of yet. And so 0:14:04.800 --> 0:14:07.319 that's why we made that shift. So why do that 0:14:07.440 --> 0:14:11.400 in a vehicle that's publicly traded instead of just setting 0:14:11.520 --> 0:14:16.120 up a separate venture capital fund that doesn't have to 0:14:16.200 --> 0:14:20.440 go through all of the usual public listening things. Well, 0:14:20.640 --> 0:14:23.160 I think that we've always had a bit of a 0:14:23.520 --> 0:14:27.560 egalitarian dance here where it should be available for everybody, 0:14:28.120 --> 0:14:31.440 and it shouldn't just see this, uh you know kind 0:14:31.440 --> 0:14:33.880 of I don't want to say elitist, but you shouldn't 0:14:33.880 --> 0:14:36.480 just be an investment vehicle that's only available for the few. 0:14:36.600 --> 0:14:40.760 Should be available for everybody. And so I like the 0:14:40.840 --> 0:14:43.480 idea of publicly listed vehicles. I mean, that's kind of 0:14:43.520 --> 0:14:45.160 the reason that we didn't start out with a hedge 0:14:45.200 --> 0:14:48.200 fund to begin with. We wanted the doors open to everybody. 0:14:48.760 --> 0:14:53.240 And of course, you know, we're unconventional enough that, um, 0:14:53.960 --> 0:14:55.800 I don't think we do very well on the on 0:14:55.880 --> 0:14:57.920 the standard public road show that you'd have to go 0:14:58.040 --> 0:15:04.000 through to do institution fundraising, So we're not really adapted 0:15:04.120 --> 0:15:07.840 at at that game. So last question on the public 0:15:07.960 --> 0:15:11.200 private issue, what do you think of the line being 0:15:11.360 --> 0:15:16.680 blurred between these pre public companies and publicly traded companies 0:15:16.960 --> 0:15:20.320 and all of the SPACs that have come out as 0:15:20.400 --> 0:15:24.440 a sort of back doorway two I p O companies 0:15:24.560 --> 0:15:28.120 that don't go through that road show you were describing. Yeah, 0:15:28.480 --> 0:15:30.320 I think it's first of all, I think it's a 0:15:30.360 --> 0:15:33.360 good thing that people get in the habit of looking 0:15:33.400 --> 0:15:37.560 at companies through the same lens. You know, a late 0:15:37.600 --> 0:15:39.320 stage public company, you ought to look at it the 0:15:39.320 --> 0:15:42.000 same way you look at a public company. Uh. And 0:15:42.480 --> 0:15:47.160 and I think that would uh that that level of scrutiny. 0:15:47.920 --> 0:15:50.880 That's a good thing. But I'm also I'm a really 0:15:50.960 --> 0:15:53.640 big fan of competition. I think it really brings out 0:15:53.680 --> 0:15:57.520 the best in US, so I view direct listings and 0:15:58.080 --> 0:16:03.040 fact as basic the other ideas coming in uh and 0:16:03.200 --> 0:16:07.800 competing with the UH sort of this historical model of 0:16:07.840 --> 0:16:12.600 I pos the standard S one and you know, I 0:16:13.240 --> 0:16:15.120 would I don't know if I would say the the 0:16:15.200 --> 0:16:19.080 old style S one process is broken, but it's certainly 0:16:19.760 --> 0:16:23.440 bend out of shape and and doesn't work that well 0:16:23.800 --> 0:16:28.280 because it is it is just it is really onerous, uh, 0:16:28.360 --> 0:16:31.160 and it is really tough on the company. Uh. So 0:16:32.080 --> 0:16:35.160 you really need to be um big with a lot 0:16:35.240 --> 0:16:38.520 of resources before you do it. And um, that's unfair 0:16:38.600 --> 0:16:41.320 to a lot of people. Uh. You should be able 0:16:41.360 --> 0:16:43.760 to go public a little bit earlier, a little bit sooner, 0:16:44.480 --> 0:16:49.280 and frankly, you know today there's that spack process allows 0:16:49.320 --> 0:16:52.040 you to talk a lot more about where you're going 0:16:52.400 --> 0:16:55.760 instead of just being uh restricted and only being able 0:16:55.800 --> 0:16:58.600 to stay where you've been and where you're going is 0:16:58.640 --> 0:17:01.680 kind of what matters for stuff. Huh. That's interesting. I 0:17:01.760 --> 0:17:05.200 know quite a few other people out in your part 0:17:05.240 --> 0:17:08.440 of the woods. Venture capitalists like Bill Gurley have been 0:17:09.119 --> 0:17:13.399 big champions of the direct listening exactly because the I 0:17:13.560 --> 0:17:18.040 P O process has become increasingly difficult over the past 0:17:18.640 --> 0:17:21.200 I don't know twenty thirty years is that is most 0:17:21.280 --> 0:17:26.000 of this a post dot com implosion effect. Was it 0:17:26.160 --> 0:17:30.440 easier in the nineties, Yes, absolutely absolutely going public Going 0:17:30.520 --> 0:17:33.920 public in two thousand's was still really really easy. But 0:17:34.240 --> 0:17:36.840 you know, if you look at the scandals, if you 0:17:36.920 --> 0:17:39.320 look at all all of the busted I pos, the 0:17:39.359 --> 0:17:43.000 whole pet dot com generation. Uh, and then you combine 0:17:43.080 --> 0:17:47.360 that with some of the corporate scandals i e. World Calm, Tycho, 0:17:47.520 --> 0:17:49.639 and Ron, those are kind of my big three. Um, 0:17:49.800 --> 0:17:52.280 you could say frauds. We're not afraid of the word 0:17:52.359 --> 0:17:55.720 fraud here, right, those the reaction to those kind of 0:17:55.800 --> 0:18:00.040 got conslated. Uh So corporate fraud and busted I. He 0:18:00.240 --> 0:18:03.560 has kind of got conflated. And and everyone said, despite 0:18:03.600 --> 0:18:05.879 the fact that those management teams thought went to jail 0:18:06.520 --> 0:18:10.160 under existing law, uh and Justice Serve people still said 0:18:10.200 --> 0:18:11.960 there ought to be a law, and so they made 0:18:12.000 --> 0:18:15.240 Sarbanes Oxley. Um. And I think that's the equivalent of 0:18:16.000 --> 0:18:18.400 you know, going home and kicking the dog because you're 0:18:18.720 --> 0:18:21.200 because your boss is mean to you. Um. So the 0:18:21.280 --> 0:18:23.600 dog they kicked there was you know, the next twenty 0:18:23.680 --> 0:18:27.040 years of tech companies wanted to go public. Um. But 0:18:27.160 --> 0:18:29.240 The other thing I'll say there is that you know, 0:18:29.880 --> 0:18:33.719 the direct listing and and the Spack merger are actually 0:18:33.880 --> 0:18:39.560 kind of converging on a on a similar UH path. Today. 0:18:39.920 --> 0:18:43.280 UH there's usually a big pipe of public investment and 0:18:43.359 --> 0:18:47.320 a private or private investment in public equity, and that 0:18:47.600 --> 0:18:52.520 pipe investment UH is highly supportive as back transactions, and 0:18:52.720 --> 0:18:55.159 it's almost becoming a standard part of it, like a 0:18:55.240 --> 0:18:58.040 required part of it. That's kind of like building your 0:18:58.040 --> 0:19:00.040 book on the I P O figuring out who is 0:19:00.080 --> 0:19:02.560 going to own that stock afterwards. And it has a 0:19:02.640 --> 0:19:06.600 lot of the lower costs associated with a direct listing. 0:19:06.720 --> 0:19:09.600 So people are talking about the blended cost with your 0:19:09.880 --> 0:19:13.359 pipe plus back transaction. So the market is trying to 0:19:13.480 --> 0:19:17.639 find the right the right mix of that makes a 0:19:17.720 --> 0:19:21.520 lot of sense in tech stocks. Right through the nineties 0:19:22.000 --> 0:19:25.920 really a unique period in history. I always kind of 0:19:26.200 --> 0:19:29.440 chuckle when I see some of the young guns compare 0:19:29.600 --> 0:19:35.240 the current market to the era or the dot com implosion, 0:19:35.840 --> 0:19:38.240 although I'm chuckling a little less these days than I 0:19:38.440 --> 0:19:41.159 was a year or two ago. What's your taken on 0:19:41.240 --> 0:19:45.639 this comparison? How did the twenties match up against the 0:19:45.800 --> 0:19:49.600 late nineties. Well, first, let's talk about how they're the same. 0:19:50.240 --> 0:19:53.280 You know. I think the feeling that one gets here 0:19:53.960 --> 0:19:58.399 uh is we're reminded that a little optimism is a 0:19:58.480 --> 0:20:02.520 great thing u uh and and too much optimism can 0:20:03.240 --> 0:20:04.760 you can drive right off the road, and that can 0:20:04.800 --> 0:20:08.560 be a really bad thing. So uh, it's good to 0:20:08.680 --> 0:20:13.479 have people looking for looking towards the future, looking to see, well, 0:20:13.520 --> 0:20:16.280 what could we do? What could this company do? Um? 0:20:17.040 --> 0:20:20.199 What how do we change things for the better? Uh? 0:20:20.560 --> 0:20:24.520 And it should be about that. I think somewhere along 0:20:24.560 --> 0:20:28.000 the line, though, there's a segment that simply is saying, uh, 0:20:28.280 --> 0:20:31.920 how do we just get rich? And uh? There's nothing 0:20:32.000 --> 0:20:35.600 wrong with the profit motives. It's great, I'm a capitalist, 0:20:36.119 --> 0:20:39.280 but um, you know it should be what how are you? 0:20:39.400 --> 0:20:41.000 How are you making the world better? And what are you? 0:20:41.160 --> 0:20:44.080 What are you really uh driving towards I'm actually kind 0:20:44.119 --> 0:20:46.600 of encouraged that a lot of the sort of the 0:20:46.840 --> 0:20:50.399 the striving and and the looking forward what can we do? 0:20:50.560 --> 0:20:53.760 Has to do with solving really big problems. How do 0:20:53.840 --> 0:20:56.720 we go to space again? How do we? Uh? You 0:20:56.840 --> 0:20:59.560 know Elon Musk wants to go to Mars. That's good 0:20:59.600 --> 0:21:01.080 for him, you know, how do we send lots of 0:21:01.160 --> 0:21:04.240 other people there, how do we bring people back and uh, 0:21:04.920 --> 0:21:07.879 and how do we sell climate change? There's there's some 0:21:08.000 --> 0:21:10.720 really big things there were there's are no quote a 0:21:10.760 --> 0:21:13.119 few years ago somebody said we were promised flying cars 0:21:13.160 --> 0:21:15.959 and instead we got a hundred and forty characters. Uh. 0:21:16.359 --> 0:21:18.800 To me, that was that was that was this great 0:21:18.920 --> 0:21:22.280 encapsulation again of just how you can kind of get 0:21:22.320 --> 0:21:23.879 off track if you're when you've got a bunch of 0:21:23.920 --> 0:21:27.120 smart people working on something. You know. Uh, it's sort 0:21:27.119 --> 0:21:31.159 of if you're working on on making crops grow on 0:21:31.600 --> 0:21:36.560 some stupid online game, Uh, that has limited value. On 0:21:36.560 --> 0:21:38.840 the other hand, if you're actually working on making crops grow, 0:21:39.160 --> 0:21:42.480 maybe that's better. So I like that, uh. And I 0:21:42.600 --> 0:21:45.320 like that people are are looking at companies and not saying, well, 0:21:45.359 --> 0:21:46.800 what did you do over the last five years, but 0:21:46.840 --> 0:21:48.240 what are you gonna do in the next five years. 0:21:48.520 --> 0:21:49.920 That's the right way to look at It's the better 0:21:49.920 --> 0:21:53.400 way to look at it. Um. I just I guess 0:21:53.440 --> 0:21:57.520 I would cautume folks. A lot of these companies aren't 0:21:57.560 --> 0:21:59.480 gonna make it. A lot of these companies are gonna 0:21:59.520 --> 0:22:03.600 fall short their lofty goals. That's probably okay. I mean, 0:22:03.680 --> 0:22:08.120 it's it's okay that pets dot Com blew up because 0:22:08.160 --> 0:22:10.200 now you've got Amazon. So for better or for worse, 0:22:10.240 --> 0:22:13.359 you've got Amazon. Somebody made it. Somebody made it work. Uh, 0:22:13.480 --> 0:22:15.480 and somebody was actually right in all all the hype 0:22:15.520 --> 0:22:19.119 that they were generating. And I think it'll be this 0:22:19.240 --> 0:22:22.520 way again. Uh. And in the meantime, markets will do 0:22:22.600 --> 0:22:25.960 their damned this to give us lots of opportunities to 0:22:26.040 --> 0:22:29.440 hurt ourselves financially. So two thoughts about that. One is 0:22:30.080 --> 0:22:33.000 pets dot Com might have been a disaster, but today 0:22:33.040 --> 0:22:36.920 we have Chewy, which is doing really well. I'm intrigued 0:22:36.960 --> 0:22:41.440 by the concept of genomic agriculture as the better bet 0:22:41.800 --> 0:22:46.200 than Farmville. Discuss some of the things you see that 0:22:46.359 --> 0:22:51.960 are really more along the flying cars progression than the 0:22:52.080 --> 0:22:57.480 hundred forty character progression right right, In other words, the 0:22:57.840 --> 0:23:01.880 sort of the John F. Kennedy called action momentum. It's 0:23:02.040 --> 0:23:05.880 focused on duty instead of call of duty. So yeah, 0:23:06.600 --> 0:23:14.119 I guess, uh, you know, UM, electrification of transport is 0:23:14.160 --> 0:23:16.680 a big deal. Yes, you're still using power, but I 0:23:16.760 --> 0:23:19.800 think that the part that UM people are kind of 0:23:19.880 --> 0:23:22.880 learning from direct experience on their on their personal vehicles 0:23:23.000 --> 0:23:25.520 is that the great thing about having an electric drive 0:23:25.560 --> 0:23:29.239 train is that you can harvest all the energy uh 0:23:29.320 --> 0:23:33.240 that's built up in your vehicle speed. And I always 0:23:33.520 --> 0:23:35.960 you know, tell people, go stand out in front of 0:23:36.000 --> 0:23:40.080 your house on trash day and watch this big heavy 0:23:40.160 --> 0:23:43.040 truck going from zero to ten miles and back down 0:23:43.080 --> 0:23:45.600 to zero, all the way up and down your block, 0:23:45.720 --> 0:23:48.399