WEBVTT - Startup Shares Trading at 61% Discount Lure VC 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business. Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:21.360 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:21.520 --> 0:00:30.000 What else you want to go? That way? 0:00:33.080 --> 0:00:36.120 All right? So check it out. Everybody check you calendar. 0:00:36.159 --> 0:00:38.680 It's been ten years since Google now Alphabet bought Ways 0:00:38.680 --> 0:00:42.000 for one point fifteen billion. That was back in twenty thirteen. 0:00:42.440 --> 0:00:45.640 Oil Levine, of course, co founded a Ways. He's also 0:00:45.680 --> 0:00:48.120 an investor and move it. Intel bought that one for 0:00:48.200 --> 0:00:51.000 a billion back in twenty twenty. And last time around 0:00:51.000 --> 0:00:53.160 he joined us. We talked about his new book, fall 0:00:53.200 --> 0:00:55.320 in Love with the Problem, Not the Solution, a handbook 0:00:55.360 --> 0:00:58.040 for entrepreneurs. So delighted to have ARII back with us 0:00:58.080 --> 0:01:01.040 here in our Blueberry Interactive Brokers studio. Hello, Hello, we 0:01:01.040 --> 0:01:04.160 weren't dissing you as you walked in, and so forgive us. 0:01:04.160 --> 0:01:06.840 How are you do it? 0:01:06.880 --> 0:01:07.240 Okay? 0:01:07.280 --> 0:01:09.640 Do it okay? Trying to make sense of all the 0:01:10.120 --> 0:01:13.280 creeze when it comes to AI, Can I just jump 0:01:13.319 --> 0:01:14.480 in with you? Because I feel like when you were 0:01:14.480 --> 0:01:15.160 in February. 0:01:15.360 --> 0:01:17.000 I just wanted can I just say thank you? Because 0:01:17.000 --> 0:01:19.200 I was using Ways yesterday all on my way to 0:01:19.280 --> 0:01:22.520 City Field, and it got me there in a timely manner. 0:01:22.800 --> 0:01:25.520 I drove a cab driver crazy earlier this week because 0:01:25.560 --> 0:01:27.720 he was following something else. I'm like, I'm on Ways 0:01:27.760 --> 0:01:30.960 and here's what you're gonna do talk to us about. 0:01:31.600 --> 0:01:33.479 First of all, do you ever regret selling it? 0:01:34.640 --> 0:01:38.279 No? I you know, people have regrets of the stuff 0:01:38.280 --> 0:01:39.160 that they haven't done. 0:01:39.280 --> 0:01:41.039 I think we might have talked about this, but you don't. 0:01:41.160 --> 0:01:44.959 You just you know, I moved on. I left after 0:01:45.040 --> 0:01:48.440 the acquisition so I can build more startups and and 0:01:48.680 --> 0:01:51.240 I am very happy with the decision back then. And 0:01:51.280 --> 0:01:52.920 at the end of the day, look, when you're making 0:01:52.920 --> 0:01:56.640 a decision, it's the right decision, the right decisions, or 0:01:56.720 --> 0:01:58.400 no decisions. And this is it. 0:01:58.680 --> 0:02:00.480 So you got a T shirt on is fall in 0:02:00.520 --> 0:02:02.320 Love with the problem not the solution? So those on 0:02:03.000 --> 0:02:05.040 our streaming service and YouTube can see this. You've also 0:02:05.080 --> 0:02:07.320 got a book out with that title. AI. Is it 0:02:07.360 --> 0:02:09.680 a problem? Is it a solution? Is it both? 0:02:10.600 --> 0:02:13.720 Is it yet to be determined? But it's definitely a solution. 0:02:14.080 --> 0:02:16.480 We just not clear what is the problem. 0:02:16.200 --> 0:02:19.799 Yet, Well, as a startup guy, you've got to look 0:02:19.840 --> 0:02:24.680 at the technology like that and automatically start thinking of applications, 0:02:24.800 --> 0:02:30.240 right of ways to use it for progress or profits. 0:02:30.320 --> 0:02:33.120 What do you think about the potential of AI? 0:02:33.480 --> 0:02:36.680 So, in general, my approach would we start with the problem, right, 0:02:36.800 --> 0:02:40.280 start with the use case, and only then build a solution. 0:02:40.440 --> 0:02:43.799 I mean this key is because the generative language is 0:02:43.919 --> 0:02:47.320 very powerful. Right then if we ask one hundred people 0:02:47.320 --> 0:02:49.880 on the street have you tried that? Then probly all 0:02:49.880 --> 0:02:52.240 of them are going to say yes. The challenge is 0:02:52.280 --> 0:02:53.880 that if you're going to ask them are you still 0:02:54.000 --> 0:02:57.680 using it? And very few are going to tell you yes, 0:02:57.880 --> 0:03:00.840 which basically means that we are not a product market yet, 0:03:01.040 --> 0:03:04.160 or it's not applicable for the for the consumer market, 0:03:04.200 --> 0:03:06.880 for the mass market. Yet there are some cases that 0:03:06.919 --> 0:03:08.800 I would say this is awesome, right, So if you 0:03:08.880 --> 0:03:12.160 are if you are in the business of generating content, 0:03:12.720 --> 0:03:14.680 this is going to be very helpful to you can 0:03:14.760 --> 0:03:17.200 generate way more content based on that. 0:03:17.440 --> 0:03:18.639 Or are you investing in it? 0:03:19.440 --> 0:03:22.600 Nope, not yet. Many of my companies are actually using AI, 0:03:22.760 --> 0:03:24.520 but not that generating language yet. 0:03:24.680 --> 0:03:25.079 Why not? 0:03:26.720 --> 0:03:30.880 Because you know it was not available until recently. And 0:03:30.960 --> 0:03:34.040 now I have one company in the medical space that 0:03:34.160 --> 0:03:38.640 is actually having the knowledge and requires the language generation 0:03:38.800 --> 0:03:40.920 for that, and this is going to be a leapfrog 0:03:41.000 --> 0:03:41.280 for them. 0:03:41.480 --> 0:03:44.000 Do you still think about I know Ways was ten 0:03:44.080 --> 0:03:47.680 years ago, but do you still think about navigation and 0:03:48.360 --> 0:03:51.920 the possible the possibilities that AI could help in in 0:03:52.000 --> 0:03:54.720 that space. I mean, my first thought when I heard 0:03:54.720 --> 0:03:57.840 your name and AI was I wonder if this could 0:03:57.880 --> 0:04:01.480 help me avoid speeding tickets more often? Because that's one 0:04:01.520 --> 0:04:04.920 of the benefits of Ways is that I can see 0:04:04.960 --> 0:04:07.360 where others have pointed out that the costs. 0:04:07.280 --> 0:04:08.400 Because at least are waiting. 0:04:09.240 --> 0:04:12.080 So do you think AI could help at all in 0:04:12.200 --> 0:04:14.720 making you know, Google Maps a better product for example? 0:04:14.920 --> 0:04:18.040 So so Ways is based in a lot of cases 0:04:18.080 --> 0:04:21.360 on crowdsource on one hand, than AI on the other hand. Right, 0:04:21.400 --> 0:04:24.840 and so we can understand right contry, we can use 0:04:24.960 --> 0:04:28.120 the they you know, we can look at different users 0:04:28.160 --> 0:04:32.680 and from their behavior understand what is going on. And 0:04:32.760 --> 0:04:35.560 so we have built the AI system before we even 0:04:35.640 --> 0:04:38.839 knew how to say that, right, And I think that 0:04:39.000 --> 0:04:43.400 many companies have built an AI capabilities into their product 0:04:44.080 --> 0:04:47.720 before we actually had the region or the generation of 0:04:47.720 --> 0:04:48.520 the language. 0:04:49.680 --> 0:04:52.040 Do you think of generative AI as akin to some 0:04:52.120 --> 0:04:54.400 other tech development? I mean, I don't know. I think 0:04:54.440 --> 0:04:57.039 folks are been talking about the creation of the Internet. 0:04:57.080 --> 0:04:58.600 I don't know, how do you think about it? 0:04:58.600 --> 0:05:02.120 People are saying that this is, uh, the biggest revolution ever, right, 0:05:02.120 --> 0:05:03.920 and I would say, no, no, no, wait a minute, 0:05:04.000 --> 0:05:07.240 It's not there yet. It's definitely not as big as 0:05:07.279 --> 0:05:09.839 the Internet itself. It's definitely not as big as the 0:05:09.839 --> 0:05:14.800 mobile phone itself. It's definitely not as big as the smartphone. Right, yeah, 0:05:15.040 --> 0:05:15.880 the PC yet? 0:05:16.279 --> 0:05:17.000 Is it a yet? 0:05:17.120 --> 0:05:19.919 Or is it might be yet? But because at the 0:05:20.000 --> 0:05:21.880 end of the day, what all the other tools that 0:05:21.920 --> 0:05:27.599 I've mentioned did is that they interconnect people and they 0:05:27.839 --> 0:05:32.120 enable people to become better, better, to communicate, better, to 0:05:32.160 --> 0:05:38.600 access the information better for anywhere, anytime, anywhere, And this 0:05:38.760 --> 0:05:42.119 increased the abilities of the people. Now we are looking 0:05:42.160 --> 0:05:46.400 into a system that may be able to generate content 0:05:46.440 --> 0:05:49.920 by itself, but less likely to be creative. 0:05:50.440 --> 0:05:54.039 Well, you know, if you're talking about falling over the problem. 0:05:54.240 --> 0:05:56.560 All of the things that we just talked about, the Internet, 0:05:56.600 --> 0:05:59.719 the mobile phone, the PC, right, they were solving the 0:05:59.760 --> 0:06:04.200 problem of I guess connectivity in some ways, but now 0:06:04.279 --> 0:06:07.760 those things are the problem, or connectivity is the problem. 0:06:07.800 --> 0:06:11.520 I have how many email accounts? I have three cell phones, 0:06:11.600 --> 0:06:16.480 I have you know, ib and Facebook, and I want 0:06:16.480 --> 0:06:19.600 to be less connected. So for me, the problem that 0:06:19.640 --> 0:06:21.919 AI could solve is helping me deal with all of 0:06:21.960 --> 0:06:23.120 this connectivity that I have. 0:06:23.320 --> 0:06:26.680 Absolutely, I agree. Right, So what you're basically saying is 0:06:26.680 --> 0:06:29.960 that I'm overwhelmed with information and I would like something 0:06:30.040 --> 0:06:34.839 to you know, scan out from this information and figure 0:06:34.880 --> 0:06:37.120 out what is really important and bring that to me 0:06:37.640 --> 0:06:38.400 in a better way. 0:06:38.600 --> 0:06:40.240 Just the signal no more noise please? 0:06:40.680 --> 0:06:44.839 Yes? Definitely yes. And is that something that the current 0:06:44.880 --> 0:06:49.520 engine can do, probably with enough training, definitely yes. Is 0:06:49.560 --> 0:06:51.640 that the use case that we will end up with? 0:06:52.360 --> 0:06:52.960 Maybe yes? 0:06:53.480 --> 0:06:56.240 So would you say, and I'm thinking about our audience 0:06:56.279 --> 0:06:59.880 and investing audience, you know, who have just watched this 0:07:00.080 --> 0:07:03.279 AI euphoria and we've seen something like an Nvidia, but 0:07:03.360 --> 0:07:06.159 some other names just go kind of off the charts. 0:07:06.320 --> 0:07:08.839 Would you say it's too early to make that investment play? 0:07:10.440 --> 0:07:10.480 No. 0:07:10.680 --> 0:07:13.080 I think that if you don't play in this game, 0:07:13.160 --> 0:07:14.560 then definitely you are going to. 0:07:14.480 --> 0:07:16.720 Lose, right, So it's not too early to go into. 0:07:16.560 --> 0:07:18.400 Some of these, it's not too early. And to a 0:07:18.400 --> 0:07:21.080 certain extent, what I would like to also mention is, look, 0:07:21.120 --> 0:07:22.960 we look at it and we say, okay, wait a minute, 0:07:22.960 --> 0:07:25.960 that chat GPT just appear in our life about six 0:07:26.000 --> 0:07:27.720 months ago. Right, So you look at it and you say, 0:07:28.080 --> 0:07:32.000 in six months it's done so much. Right, Wait a minute. 0:07:32.560 --> 0:07:36.720 Open AI is seven years old. It takes a lot 0:07:36.720 --> 0:07:40.720 of time to create value. And the first part of 0:07:40.760 --> 0:07:44.640 this value or the value generation journey was about creating 0:07:44.680 --> 0:07:47.120 the technology, and now we are looking for the use 0:07:47.200 --> 0:07:51.080 case that will make it valuable. In some cases it's 0:07:51.120 --> 0:07:53.640 already there, but in some cases it's not there yet. 0:07:54.320 --> 0:07:57.840 Do you have an overarching investment strategy? 0:07:57.920 --> 0:07:58.760 I mean, you've. 0:08:00.240 --> 0:08:06.120 Created and sold two billion dollar businesses. Probably people come 0:08:06.160 --> 0:08:08.440 to you with pitches left and right. 0:08:08.320 --> 0:08:09.000 All the time. 0:08:09.600 --> 0:08:13.600 Is there one kind of overarching strategy that you use 0:08:13.760 --> 0:08:15.240 to drive your investments? 0:08:15.640 --> 0:08:17.880 I do, right, because at the end of the day, 0:08:18.800 --> 0:08:22.000 my mission in life is to create value, and I 0:08:22.080 --> 0:08:25.400 can create value through different ways. One of them is 0:08:25.440 --> 0:08:29.240 you building solutions to a problem that will help you 0:08:29.360 --> 0:08:32.480 to become better. And so this is ways or movie 0:08:32.720 --> 0:08:37.280 or pont Era or Zumka or C three or Fairfly 0:08:37.400 --> 0:08:39.600 or many of my startups, and that other one is 0:08:39.640 --> 0:08:43.080 through guiding and mentoring and teaching others, right. And the 0:08:43.080 --> 0:08:46.920 book is about fulfilling my destiny of creating value as 0:08:47.000 --> 0:08:50.840 sharing the know how. And to a certain extent, when 0:08:50.880 --> 0:08:52.920 you share the know how, when I go into a 0:08:52.960 --> 0:08:55.959 company and I help them, at the end of the day, 0:08:56.000 --> 0:08:58.920 what happens is that they sign up to my know 0:08:59.040 --> 0:09:03.800 how and that increased their likelihood of being successful. So 0:09:03.880 --> 0:09:07.680 my methodology is not about guessing what's right, is creating 0:09:07.880 --> 0:09:08.400 what's right. 0:09:09.160 --> 0:09:11.959 So for entrepreneurs, you might grab your book and kind 0:09:12.000 --> 0:09:16.040 of get, you know, fall into your philosophy and benefit 0:09:16.120 --> 0:09:18.560 from it. I do wonder or what you think is 0:09:18.640 --> 0:09:21.760 one of our biggest problems today that needs solving. 0:09:22.720 --> 0:09:24.880 You know, we can look at many problems, right. So 0:09:24.960 --> 0:09:26.959 a lot of us are speaking about, wait a minute, 0:09:27.000 --> 0:09:28.439 we are way too much connected. 0:09:28.520 --> 0:09:28.679 Right. 0:09:28.720 --> 0:09:31.880 You look at the younger generation and they are connected 0:09:31.960 --> 0:09:35.600 into social media in the levels that are beyond imagination, right, 0:09:35.640 --> 0:09:37.800 and in some cases they're not happy. Right, And so 0:09:38.240 --> 0:09:41.480 happiness of younger generation is a challenge. You look at 0:09:41.520 --> 0:09:45.240 medical services, right. Medical services in the US are five 0:09:45.360 --> 0:09:47.640 times more expensive than they are in Germany. 0:09:48.160 --> 0:09:50.160 Now, it's not to live in Germany, he talks about 0:09:50.160 --> 0:09:50.520 all the time. 0:09:50.760 --> 0:09:53.520 And it's not that they're better in Germany. In here 0:09:53.559 --> 0:09:56.400 that in Germany. Right, it's simply five times more expensive. 0:09:56.440 --> 0:09:58.080 So you look at it and say, okay, wait a minute, 0:09:58.080 --> 0:09:59.960 this is waste of free sources. 0:10:00.240 --> 0:10:00.400 Right. 0:10:00.720 --> 0:10:03.040 We started weighs in two thousand and seven in order 0:10:03.040 --> 0:10:05.360 to help people to avoid traffic jams. There are more 0:10:05.400 --> 0:10:08.200 traffic jams today than the work in two thousand and seven, right, 0:10:08.240 --> 0:10:11.760 So obviously this problem is not done yet and we 0:10:11.800 --> 0:10:13.760 will need to address that as well. And so there 0:10:13.760 --> 0:10:16.040 are a lot of big problems that needs to be addressed. 0:10:16.080 --> 0:10:17.720 And I think that at the end of the day, 0:10:18.559 --> 0:10:21.319 it's the entrepreneurs that are going to change the world. 0:10:21.640 --> 0:10:24.160 And yeah, our role is to encourage it. 0:10:24.520 --> 0:10:28.120 Well, love it and love when you come in so great. Uri, 0:10:28.200 --> 0:10:30.400 Thank you so much, Olivine, co founder of Ways. 0:10:30.400 --> 0:10:30.680 Of Course. 0:10:30.760 --> 0:10:32.400 Check out the book fall in Love with the Problem, 0:10:32.520 --> 0:10:33.160 Not the Solution. 0:10:33.920 --> 0:10:37.400 If you're listening to the Bloomberg Business Week podcast, catch 0:10:37.480 --> 0:10:40.800 us live weekday afternoons from three to six Eastern Listen 0:10:40.920 --> 0:10:44.400 on Bloomberg dot com, the iHeartRadio app, and the Bloomberg 0:10:44.400 --> 0:10:47.680 Business app or wants us live on YouTube. 0:10:48.120 --> 0:10:50.480 A Bloomberg News team of Pema Parmer, Lin, Ley Lynn 0:10:50.480 --> 0:10:53.760 and Sarah McBride reporting today that secondary market, you know 0:10:54.120 --> 0:10:56.440 where backers of postal health startups can sell their stakes 0:10:56.480 --> 0:10:59.840 to other investors, are drawing increasing interest from venture capital 0:11:00.280 --> 0:11:02.800 and other money managers that are really looking to snap 0:11:02.840 --> 0:11:05.760 up chunks of private companies on the cheap. It's a 0:11:05.800 --> 0:11:06.840 sign of the times, Matt. 0:11:07.240 --> 0:11:10.640 Yeah, Well, I mean I've seen this sign of the 0:11:10.679 --> 0:11:13.520 times before, so it's a sign of the times again. 0:11:13.640 --> 0:11:18.280 The warning warning. Well, no, I mean, for example, before Facebook, 0:11:18.520 --> 0:11:21.920 iPod you know, secondary markets were all the rage at 0:11:21.920 --> 0:11:25.480 the time, and if you've gotten this dock then you'd 0:11:25.480 --> 0:11:27.880 have had a lull, but you would be very wealthy 0:11:27.960 --> 0:11:28.280 right now. 0:11:28.360 --> 0:11:30.520 No, it's a really good point, so let's get into it. 0:11:30.640 --> 0:11:33.720 Bloomberg News hedge fund reporter Hemla Palmers here and Javier 0:11:33.720 --> 0:11:36.360 Avolosi is co founder and CEO of Caplit joining us 0:11:36.440 --> 0:11:39.120 and they are a provider of pre IPO class market data. 0:11:39.800 --> 0:11:42.720 And he is with us on zoom from San Francisco. Heima, 0:11:43.040 --> 0:11:45.319 set up your story, give us the background. 0:11:44.960 --> 0:11:46.480 Right, So there's a few things that are going on 0:11:46.559 --> 0:11:50.840 right now in the market. We're seeing founders, employees, investors 0:11:51.400 --> 0:11:54.240 of startup companies really under pressure right now, a lot 0:11:54.280 --> 0:11:57.320 of them seeking liquidity, and so they're looking to get cash, 0:11:57.360 --> 0:12:00.400 you know, maybe because the job market is difficult, maybe 0:12:00.440 --> 0:12:03.640 because interest rates are arising. There's fewer exits for employees 0:12:03.679 --> 0:12:06.040 now if there's not as many IPOs, and so they 0:12:06.080 --> 0:12:08.560 need cash, and so they're looking to increasingly in this 0:12:08.679 --> 0:12:13.160 environment sell their shares on the secondary market, or firms, 0:12:13.600 --> 0:12:16.360 hedge funds or venture firms maybe looking for liquidity as 0:12:16.360 --> 0:12:20.120 well for the similar reasons, also looking for liquidity selling 0:12:20.120 --> 0:12:22.560 those shares on the secondary The other side of that 0:12:22.760 --> 0:12:25.760 is that there's great opportunity to buy stuff because the 0:12:25.800 --> 0:12:29.800 prices are incredibly attractive in this environment as valuations have fallen. 0:12:30.400 --> 0:12:34.160 So, Javier, is your company then kind of like a 0:12:34.200 --> 0:12:35.800 Bloomberg for private companies. 0:12:37.320 --> 0:12:39.880 I think that's the exact right way to characterize it. Matt, So, 0:12:40.120 --> 0:12:41.920 first of all, thank you for having me on, Carolyn 0:12:41.920 --> 0:12:45.360 Matt and Himma for including us in the article. What 0:12:45.400 --> 0:12:48.120 we do is we really work to aggregate a lot 0:12:48.160 --> 0:12:50.640 of the market activity that's happening in the secondary market 0:12:50.920 --> 0:12:53.960 and bring transparency to the market by centralizing this pricing 0:12:54.000 --> 0:12:57.280 activity into one place. So when him or others want 0:12:57.280 --> 0:12:59.800 to shine a light through the form of media, cap 0:12:59.880 --> 0:13:01.760 like can be a resource in terms of saying what 0:13:01.760 --> 0:13:04.280 the pricing of these private companies is based on what 0:13:04.320 --> 0:13:05.560 we see in secondary trading. 0:13:06.480 --> 0:13:10.280 So do secondary markets then use your data in order 0:13:10.360 --> 0:13:12.640 to make the transactions more transparent. 0:13:13.520 --> 0:13:16.240 That's exactly right. So the biggest users of the Caplite 0:13:16.280 --> 0:13:20.560 platform are actually brokers who have a responsibility to their clients, 0:13:20.920 --> 0:13:25.000 as Hima described. In some cases that's employees or founders. 0:13:25.040 --> 0:13:28.240 In other cases that's institutional investors who are looking to 0:13:28.280 --> 0:13:31.720 sell their stock pre ipo for whatever reason. We would 0:13:31.800 --> 0:13:34.839 serve the broker who is then building that client relationship 0:13:34.880 --> 0:13:38.000 and effectively helping them to buy or sell something. 0:13:38.160 --> 0:13:41.080 So what your data is actually what Emma said, is 0:13:41.080 --> 0:13:44.280 that valuations have gone down a lot, correct, And this 0:13:44.400 --> 0:13:47.319 is why you know, whether it's a hedge fund or 0:13:47.360 --> 0:13:50.200 other private investors, they're saying, wait, here's an opportunity for 0:13:50.240 --> 0:13:54.360 me because these are really distressed it seems like assets. 0:13:54.160 --> 0:13:58.319 That's exactly right, Carol. So and to quantify that a bit. 0:13:58.400 --> 0:14:03.040 On average, we see pre IPO Unicorn type companies trading 0:14:03.080 --> 0:14:06.600 at about a fifty percent discount from where the VC 0:14:06.800 --> 0:14:10.240 that invested in them last valued them, and that discount 0:14:10.320 --> 0:14:13.040 has been increasing for the past twelve months and is 0:14:13.080 --> 0:14:16.480 finally starting to stabilize. So there's an old adage in 0:14:16.520 --> 0:14:19.600 the private markets that private markets tend to lag what's 0:14:19.600 --> 0:14:22.600 going on in the public markets, and that has played 0:14:22.640 --> 0:14:27.960 out almost exactly in this latest cycle, where private company 0:14:28.040 --> 0:14:30.440 data is about a quarter maybe a little bit more 0:14:30.680 --> 0:14:33.520 lagging behind publics. And so when we saw the public 0:14:33.600 --> 0:14:37.120 market turn in October and start to rally, private markets 0:14:37.120 --> 0:14:40.840 are following that trend very closely, just in a quarter 0:14:40.920 --> 0:14:41.560 or two delay. 0:14:42.840 --> 0:14:46.400 So as we see the buying that's increasingly prominent in 0:14:46.400 --> 0:14:50.160 the space, how do we tell whether someone is buying 0:14:50.240 --> 0:14:53.640 because they believe in the company and they think that 0:14:53.680 --> 0:14:55.920 they can get it at a very attractive price, or 0:14:56.160 --> 0:14:59.040 are we if we're seeing some buying of companies where 0:14:59.280 --> 0:15:01.520 the firm is I invested in over so long that 0:15:01.560 --> 0:15:04.840 they just really can't afford to have that company struggle. 0:15:05.160 --> 0:15:07.720 Therefore we'll want to buy more shares and provide them 0:15:07.720 --> 0:15:08.680 with liquidity or something. 0:15:09.640 --> 0:15:12.040 Yeah, you are right to point out it's absolutely a 0:15:12.040 --> 0:15:14.600 function of both. So we have seen quite a bit 0:15:14.640 --> 0:15:19.320 of existing investors snapping up shares, especially back in Q 0:15:19.360 --> 0:15:23.400 three and Q four, mostly Q four and leading into 0:15:23.560 --> 0:15:26.320 Q one of this year, where investors who are already 0:15:26.320 --> 0:15:29.520 on these companies cap tables who have full information into 0:15:29.720 --> 0:15:33.240 how these companies are performing, saw the fifty percent drop 0:15:33.320 --> 0:15:36.480 that had been happening over the past couple of quarters 0:15:36.720 --> 0:15:38.760 and saw that as a perfect entry point to kind 0:15:38.800 --> 0:15:41.760 of start building on exposure that they already owned. But 0:15:41.840 --> 0:15:44.960 our market is pretty thematic, and so when I think 0:15:45.000 --> 0:15:47.720 about answering this question of what are investors looking for, 0:15:47.760 --> 0:15:50.680 how are they picking the right ones? Oftentimes they're playing 0:15:50.720 --> 0:15:53.600 certain themes. This is not dissimilar than the public markets. 0:15:53.880 --> 0:15:56.200 A massive theme that is being played on right now 0:15:56.360 --> 0:16:00.760 is regenerative AI, right, and so a lot of what's 0:16:00.800 --> 0:16:03.840 pushing the public markets up is also pushing private markets up. 0:16:03.840 --> 0:16:08.200 So you have companies like Open AI or Anthropic or 0:16:08.280 --> 0:16:10.960 data bricks or salonists who are sort of benefiting from 0:16:10.960 --> 0:16:12.800 these tailwinds that are pushing the markets up. 0:16:12.800 --> 0:16:16.120 More broadly, we've seen a couple of times xavier where 0:16:16.880 --> 0:16:21.360 private markets have gotten secondary markets have gotten really big 0:16:21.400 --> 0:16:24.160 As I mentioned before the Facebook IPO, when there were 0:16:24.160 --> 0:16:28.000 so many unicorns out there, we saw that as well, 0:16:28.000 --> 0:16:30.720 employees just looking at cash in buy a big house 0:16:30.800 --> 0:16:34.200 or whatever before they went public. What do you think 0:16:34.240 --> 0:16:36.600 is driving it right now? Is it just the valuation 0:16:36.800 --> 0:16:39.440 drop and the fact that there's a lack of exits. 0:16:40.360 --> 0:16:43.400 So I think that lack of exits piece is a 0:16:43.440 --> 0:16:47.600 point that probably deserves more attention. This might sound like 0:16:47.640 --> 0:16:52.040 crazy to say than it's already received, and a sort 0:16:52.080 --> 0:16:55.760 of a loser in that situation that is not often 0:16:55.800 --> 0:16:58.360 talked about is the employee or even some of the 0:16:58.480 --> 0:17:02.960 very earliest investors like investors, These are folks who expected 0:17:03.360 --> 0:17:06.360 an exit event to happen in late twenty twenty one 0:17:06.880 --> 0:17:11.159 or early twenty twenty two, and for really market driven 0:17:11.200 --> 0:17:14.879 in macro reasons, their company, their private company, shelved that 0:17:15.040 --> 0:17:19.520 offering and have sort of like basically put it on 0:17:19.600 --> 0:17:22.720 hold indefinitely. And so what's been driving a lot of 0:17:22.760 --> 0:17:25.720 liquidity seekers to the market is you have in your 0:17:25.720 --> 0:17:28.080 head that you're about to receive a very large payout 0:17:28.160 --> 0:17:31.160 for work that has been happening for years, and suddenly 0:17:31.200 --> 0:17:34.920 that's delayed indefinitely. Now you're turning to the private markets 0:17:34.920 --> 0:17:36.800 to help get you some of that cash that you 0:17:36.880 --> 0:17:40.399 had already sort of mentally been budgeting for the reason 0:17:40.600 --> 0:17:42.480 so that's kind of where the cell side comes from. 0:17:42.520 --> 0:17:45.280 The reason the buyside is coming back very strongly is 0:17:45.560 --> 0:17:48.840 that IPO window is starting to crack open. So every 0:17:48.840 --> 0:17:52.239 time you have an article talking about Klavio filing or 0:17:52.320 --> 0:17:58.439 Rubric hiring bankers to row, refreshing a registration statement for 0:17:58.480 --> 0:18:01.480 a public offering, these are bits of news that get 0:18:01.600 --> 0:18:04.960 pre IPO investors really rushing back into the space to 0:18:05.000 --> 0:18:07.400 help clean out some of the supply that's being that's 0:18:07.440 --> 0:18:10.440 being added to the market by employees, founders, and early investors. 0:18:10.640 --> 0:18:14.640 Heavier in terms of what you're seeing and these depressed valuations, 0:18:14.680 --> 0:18:17.520 but obviously investors finding some opportunities. What it does it 0:18:17.560 --> 0:18:20.200 give you any kind of clues about the broader market 0:18:20.359 --> 0:18:22.640 environment as we are kind of in this funny place 0:18:22.640 --> 0:18:24.560 where I feel like every day we're debating what, you know, 0:18:24.600 --> 0:18:27.000 a FED speaker says, or Jay Powell says, or what's 0:18:27.000 --> 0:18:30.040 going on with the economic environment. So I'm just curious 0:18:30.080 --> 0:18:33.359 if it gives you any clues about kind of the 0:18:33.359 --> 0:18:35.720 health of this overall financial market. 0:18:36.200 --> 0:18:38.560 It does. I mean, I really think about the pre 0:18:38.680 --> 0:18:43.640 IPO and private markets generally as a proxy for risk appetite. 0:18:43.720 --> 0:18:46.199 And so, you know, when we start to see the 0:18:46.280 --> 0:18:50.280 bid to ask volume ratio at Caplight starting to flip 0:18:50.320 --> 0:18:53.919 towards more of equilibrium between the amount of buy interests 0:18:53.960 --> 0:18:55.840 that's in the market and the amount of sell interest 0:18:56.359 --> 0:18:58.720 and that that's the closest it now is the closest 0:18:58.720 --> 0:19:01.680 time we've been to that equal really since twenty twenty one. 0:19:02.200 --> 0:19:05.080 That starts to give me confidence in the broader rally 0:19:05.119 --> 0:19:09.400 that's happening across capital markets. You know, I think we've 0:19:09.400 --> 0:19:12.840 worked with private company CEOs CFOs to help them kind 0:19:12.840 --> 0:19:15.400 of understand when they should even be thinking about raising 0:19:15.440 --> 0:19:19.120 additional primary capital and or if they should be thinking 0:19:19.119 --> 0:19:21.480 about a public exit for the first time in twelve 0:19:21.560 --> 0:19:24.000 or twelve or so months. And so, in a way, 0:19:24.119 --> 0:19:27.080 the adage that I referenced earlier that said private markets 0:19:27.160 --> 0:19:31.280 lags public markets. While that is true from a pricing standpoint, 0:19:31.600 --> 0:19:34.480 the risk taking sentiment that happens in our market can 0:19:34.520 --> 0:19:37.080 sometimes be predictive of when companies are going to come 0:19:37.080 --> 0:19:39.800 out and raise primary rounds or even potentially listed on 0:19:39.840 --> 0:19:40.640 the public markets. 0:19:41.480 --> 0:19:43.960 On that point about the bit ask spread, you know, 0:19:44.000 --> 0:19:47.479 we're seeing not as many deals actually done compared to 0:19:47.760 --> 0:19:50.720 the opportunity. I'm curious what you think it'll take for 0:19:50.800 --> 0:19:52.320 the transactions to actually increase. 0:19:52.359 --> 0:19:54.200 And just got about thirty seconds half of here. 0:19:54.640 --> 0:19:59.080 Of course. Yeah, So keeping it brief, the biggest necessity 0:19:59.200 --> 0:20:02.800 was a reduction in valuations, and now that that has happened, 0:20:03.000 --> 0:20:05.919 we're seeing more bids come into the market, larger bids 0:20:05.920 --> 0:20:08.240 come into the market. And whenever we see these three 0:20:08.280 --> 0:20:12.120 factors reducing prices, more bids and larger bids, we tend 0:20:12.160 --> 0:20:15.840 to see closed transactions. So I actually and we ourselves 0:20:15.880 --> 0:20:17.439 are seeing a lot of these through our platform. So 0:20:17.440 --> 0:20:20.000 I actually think this next quarter Q three of twenty 0:20:20.000 --> 0:20:22.359 twenty three is going to be a pretty active quarter 0:20:22.440 --> 0:20:25.080 in terms of reporting out closed secondary transactions. 0:20:25.160 --> 0:20:27.120 Really cool perspective, Very cool. 0:20:27.440 --> 0:20:29.119