1 00:00:10,760 --> 00:00:14,920 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,000 --> 00:00:21,919 Speaker 1: I'm Joe Wisenthal and I'm Tracy Halliway, Tracy. Uh will 3 00:00:21,920 --> 00:00:26,440 Speaker 1: obviously be remembered for a lot of things, no doubt, 4 00:00:27,240 --> 00:00:33,080 Speaker 1: you know, after the pandemic, the all of the political 5 00:00:33,120 --> 00:00:36,400 Speaker 1: stuff that we saw, the extraordinary sort of year in 6 00:00:37,120 --> 00:00:40,640 Speaker 1: economics and the stock market and everything Somewhere down the 7 00:00:40,680 --> 00:00:43,600 Speaker 1: list maybe like down like fifty or seventy or ninety 8 00:00:43,840 --> 00:00:47,440 Speaker 1: in terms of like the things that people look back on, 9 00:00:47,920 --> 00:00:49,680 Speaker 1: I would say it's kind of a the Year of 10 00:00:49,680 --> 00:00:56,440 Speaker 1: the Spack. Yeah, certainly, definitely if you're in capital markets, 11 00:00:56,640 --> 00:00:59,760 Speaker 1: it's the year of the Spack. And I think I'm 12 00:00:59,760 --> 00:01:02,040 Speaker 1: trying to remember the latest numbers, but I think it 13 00:01:02,120 --> 00:01:07,039 Speaker 1: was something like sixty billion dollars raised in which was 14 00:01:07,120 --> 00:01:12,759 Speaker 1: more than the previous ten years combined, something like that. Right, 15 00:01:12,760 --> 00:01:15,640 Speaker 1: So we've just seen this extraordinary surge for people who 16 00:01:15,680 --> 00:01:20,319 Speaker 1: don't know, it's like, uh, these vehicles where people buy 17 00:01:20,360 --> 00:01:23,520 Speaker 1: into an I p O and then the company has 18 00:01:23,600 --> 00:01:26,520 Speaker 1: some certain amount of time to then go out and 19 00:01:26,880 --> 00:01:30,280 Speaker 1: actually acquire a company bring it public, subject to the 20 00:01:30,280 --> 00:01:32,880 Speaker 1: approval of the people who bought into the I p O. 21 00:01:33,319 --> 00:01:36,360 Speaker 1: We've seen a lot in the electric vehicle space, We've 22 00:01:36,400 --> 00:01:40,000 Speaker 1: seen a lot of other technology other areas, but just 23 00:01:40,120 --> 00:01:44,280 Speaker 1: generally a it exploded and be you know once, like 24 00:01:44,400 --> 00:01:48,440 Speaker 1: many things, not the type of thing we expected to 25 00:01:48,480 --> 00:01:50,720 Speaker 1: see in the first half of the year. I think, 26 00:01:50,760 --> 00:01:53,360 Speaker 1: like thinking back to March April May, we would not 27 00:01:53,480 --> 00:01:57,880 Speaker 1: expect it to be such an extraordinary year in capital markets, right. 28 00:01:58,040 --> 00:02:00,640 Speaker 1: And I think one of the reasons that facts tend 29 00:02:00,680 --> 00:02:04,240 Speaker 1: to draw a lot of attention is that most people 30 00:02:04,320 --> 00:02:07,680 Speaker 1: are a lot of people associate them with these sort 31 00:02:07,680 --> 00:02:13,280 Speaker 1: of like pre two financial crisis excesses. So there's this 32 00:02:13,320 --> 00:02:16,440 Speaker 1: idea that there's so much money slashing around in the system, 33 00:02:16,480 --> 00:02:19,000 Speaker 1: people are sort of desperate to put it to work, 34 00:02:19,080 --> 00:02:21,880 Speaker 1: so they'll just stick it into a blank check company, 35 00:02:22,360 --> 00:02:25,920 Speaker 1: not knowing what that company is eventually going to be, 36 00:02:26,000 --> 00:02:28,520 Speaker 1: and just sort of hoping um that their money will 37 00:02:28,560 --> 00:02:31,320 Speaker 1: get deployed in one way or another. So I think 38 00:02:31,360 --> 00:02:33,920 Speaker 1: a lot of people look at it as another example 39 00:02:34,320 --> 00:02:37,399 Speaker 1: a froth in the market. But again, as we discussed 40 00:02:37,440 --> 00:02:40,680 Speaker 1: on a previous episode with someone who is actually running 41 00:02:41,280 --> 00:02:44,840 Speaker 1: us back, there's also an argument that this makes sense. 42 00:02:45,000 --> 00:02:48,280 Speaker 1: The structure makes sense for a lot of companies in 43 00:02:48,320 --> 00:02:51,079 Speaker 1: the market. Yes, I think that's right for a lot 44 00:02:51,080 --> 00:02:53,320 Speaker 1: of companies that make sense. And I think that's also 45 00:02:53,760 --> 00:02:56,360 Speaker 1: UM a part of the change, which is that not 46 00:02:56,480 --> 00:02:59,160 Speaker 1: only were I I would say respects maybe associated with 47 00:02:59,160 --> 00:03:01,560 Speaker 1: spect of XI, I think they were associated to with 48 00:03:01,639 --> 00:03:04,440 Speaker 1: like shady companies that it's like, Okay, if you had 49 00:03:04,480 --> 00:03:07,320 Speaker 1: a asset, if you had a company that couldn't do 50 00:03:07,440 --> 00:03:11,640 Speaker 1: the typical I P O route, couldn't really withstand scrutiny, 51 00:03:11,800 --> 00:03:13,799 Speaker 1: maybe you try to take it public via s back. 52 00:03:13,880 --> 00:03:16,760 Speaker 1: And I think it's sort of like, you know, the 53 00:03:16,760 --> 00:03:20,720 Speaker 1: they didn't leave a good uh flavor taste in people's mouth. 54 00:03:21,200 --> 00:03:23,560 Speaker 1: And I think that's changed. And I think that one 55 00:03:23,560 --> 00:03:24,919 Speaker 1: of the things that we saw this year is like 56 00:03:25,080 --> 00:03:30,200 Speaker 1: more seeming higher quality assets came public. That way, more 57 00:03:30,560 --> 00:03:35,240 Speaker 1: UM investors and banks with sort of a reputable or 58 00:03:35,320 --> 00:03:39,960 Speaker 1: strong reputations willing to or eager to use these type 59 00:03:39,960 --> 00:03:44,680 Speaker 1: of financing capital markets vehicle for this, and so maybe 60 00:03:44,800 --> 00:03:49,080 Speaker 1: they're they're shedding some of their previous reputation, which was 61 00:03:49,880 --> 00:03:54,000 Speaker 1: sort of not that shedding the spack stigma, shedding the 62 00:03:54,040 --> 00:03:56,480 Speaker 1: spec that's well put, shedding the spack stigma. I mean, 63 00:03:56,600 --> 00:03:59,920 Speaker 1: we'll see. I mean, who knows, maybe we'll look back 64 00:04:00,120 --> 00:04:02,560 Speaker 1: the class of twenties SPACs and they all have flopped. 65 00:04:02,680 --> 00:04:04,920 Speaker 1: There have been some flops, I mean, like you know, 66 00:04:04,920 --> 00:04:09,880 Speaker 1: obviously not flops, but you know, controversies. Nicola was a 67 00:04:10,040 --> 00:04:12,640 Speaker 1: very popular spect that surged to the moon for a 68 00:04:12,680 --> 00:04:15,440 Speaker 1: while and then all kinds of questions rose about it's 69 00:04:15,480 --> 00:04:19,120 Speaker 1: business and it's CEO left. So there's still like lots 70 00:04:19,120 --> 00:04:23,040 Speaker 1: of questions about the types of companies coming public this way, 71 00:04:23,080 --> 00:04:26,320 Speaker 1: but it's certainly am It does not seem to be 72 00:04:26,360 --> 00:04:30,200 Speaker 1: going away anytime soon, which means we need to learn 73 00:04:30,200 --> 00:04:33,680 Speaker 1: more about learn more about them. Yeah, I agree, let's 74 00:04:33,680 --> 00:04:36,520 Speaker 1: do it. So we're gonna talk about spacks. We're also 75 00:04:36,640 --> 00:04:39,600 Speaker 1: just gonna be talking about the extraordinary moment for capital 76 00:04:39,760 --> 00:04:43,680 Speaker 1: markets in general. I'm very excited about today's guest. We're 77 00:04:43,680 --> 00:04:46,880 Speaker 1: gonna be speaking with Larry weasonek key is uh for 78 00:04:46,920 --> 00:04:49,280 Speaker 1: the last three years, he's been the co president at 79 00:04:49,360 --> 00:04:53,359 Speaker 1: Cowen and Company and has a long career doing global 80 00:04:53,440 --> 00:04:57,720 Speaker 1: capital markets at Lehman, Barclays and so forth. And so 81 00:04:57,880 --> 00:05:01,560 Speaker 1: I'm going to get the lay of the land. M Larry. So, Larry, 82 00:05:01,600 --> 00:05:05,120 Speaker 1: thank you very much for joining us. Well, Joe Chacey, 83 00:05:05,200 --> 00:05:07,560 Speaker 1: thanks for allowing me to join. You really appreciate it. 84 00:05:09,080 --> 00:05:10,880 Speaker 1: I'm trying to think where to start, But what do 85 00:05:10,960 --> 00:05:13,640 Speaker 1: you sort of what do you do at counting company? 86 00:05:13,720 --> 00:05:18,120 Speaker 1: Describe counting companies sort of role and your role within 87 00:05:18,160 --> 00:05:22,160 Speaker 1: the bank. Sure, well, look I'll start with COUN is 88 00:05:22,200 --> 00:05:26,279 Speaker 1: a you know, hundred plus a year old institution, UH 89 00:05:26,320 --> 00:05:30,680 Speaker 1: that really was in some respects reborn about ten years 90 00:05:30,680 --> 00:05:35,520 Speaker 1: ago when the old Cowen, which had been bought about 91 00:05:35,560 --> 00:05:39,120 Speaker 1: two decades ago by sak Chen, had been spun out 92 00:05:39,640 --> 00:05:41,760 Speaker 1: and went into the financial crisis, probably a little bit 93 00:05:41,839 --> 00:05:46,159 Speaker 1: too small and too narrow to navigate the period of 94 00:05:46,160 --> 00:05:48,840 Speaker 1: O eight and O nine, and it ended up merging 95 00:05:49,040 --> 00:05:53,599 Speaker 1: with a alternative asset manager, Ramius. And so the current 96 00:05:53,640 --> 00:05:56,120 Speaker 1: coun is really about ten years old, and the combination 97 00:05:56,160 --> 00:05:58,920 Speaker 1: of the legacy of what was Ramius and what was 98 00:05:59,000 --> 00:06:02,360 Speaker 1: count at that point and really over the last decade 99 00:06:02,760 --> 00:06:05,920 Speaker 1: the firm's grown enormously and we're but but nonetheless we're 100 00:06:05,920 --> 00:06:11,919 Speaker 1: a pretty targeted institution. We're about people, UH, and we 101 00:06:12,040 --> 00:06:16,400 Speaker 1: focus uh disproportionately, although not exclusively, uh in on the 102 00:06:16,480 --> 00:06:22,040 Speaker 1: US markets and in particular on the arenas of equities, credit, 103 00:06:22,680 --> 00:06:27,400 Speaker 1: and banking delivered to UH not only but again predominantly 104 00:06:28,040 --> 00:06:31,479 Speaker 1: growth sectors of the economy. UH. And in addition, we 105 00:06:31,520 --> 00:06:34,800 Speaker 1: have an asset management business, which is the remnants of 106 00:06:34,800 --> 00:06:37,840 Speaker 1: what was ramious UH, where we also try in as 107 00:06:37,880 --> 00:06:40,880 Speaker 1: much as we can, focus on areas where where we 108 00:06:41,000 --> 00:06:44,520 Speaker 1: have a core strength and knowledge base UM, and again 109 00:06:44,520 --> 00:06:49,800 Speaker 1: it tilts more towards disruptive areas. So with your advisory 110 00:06:49,839 --> 00:06:54,039 Speaker 1: hat on, I'd be really curious to hear um what 111 00:06:54,120 --> 00:06:58,159 Speaker 1: you've heard from clients in so you have a really 112 00:06:58,160 --> 00:07:03,560 Speaker 1: good perspective on what corporates are basically looking for, what 113 00:07:03,600 --> 00:07:08,560 Speaker 1: they've experienced in a really strange year that I think 114 00:07:08,760 --> 00:07:12,040 Speaker 1: was probably marked by a real sense of urgency when 115 00:07:12,040 --> 00:07:15,480 Speaker 1: it came to raising funding around springtime during the worst 116 00:07:15,480 --> 00:07:17,560 Speaker 1: of the market sell off, and then we've sort of 117 00:07:18,000 --> 00:07:22,560 Speaker 1: segued into a moment where people are talking about bubbly markets, 118 00:07:22,640 --> 00:07:26,160 Speaker 1: excess liquidity slashing in the system, and this idea that 119 00:07:26,280 --> 00:07:30,440 Speaker 1: capital is sort of free and available to everyone. I'd 120 00:07:30,440 --> 00:07:32,560 Speaker 1: be curious if you could give us some some color 121 00:07:32,920 --> 00:07:36,120 Speaker 1: on what you've seen. Well, Chacy, it's a It's a 122 00:07:36,120 --> 00:07:38,000 Speaker 1: great question and one that would take a lot longer 123 00:07:38,040 --> 00:07:41,520 Speaker 1: than the podcast to answer, but I'll try and maybe 124 00:07:42,040 --> 00:07:44,760 Speaker 1: pick a few core elements and then we can delve 125 00:07:44,840 --> 00:07:47,800 Speaker 1: into it deeper. I think the first is that, having 126 00:07:47,840 --> 00:07:50,840 Speaker 1: been around the capital markets now for longer than i'd 127 00:07:50,840 --> 00:07:54,840 Speaker 1: like to remember, it's always been the case that we're 128 00:07:54,880 --> 00:08:00,520 Speaker 1: reminded in periods of dislocations of how strategic financing decisions 129 00:08:00,520 --> 00:08:06,160 Speaker 1: of the past actually are um when challenges come about 130 00:08:06,320 --> 00:08:09,680 Speaker 1: in the broad economy and the capital markets and specific 131 00:08:10,320 --> 00:08:13,360 Speaker 1: many a time in good times, folks believe that the 132 00:08:13,520 --> 00:08:16,480 Speaker 1: financing decisions are a choice for the treasurer or the 133 00:08:16,480 --> 00:08:20,520 Speaker 1: assistant treasurer. It's not a boardroom kind of conversation. And 134 00:08:20,560 --> 00:08:24,200 Speaker 1: that always comes to roost when we hit difficult times. 135 00:08:24,200 --> 00:08:27,160 Speaker 1: And that's true whether you look back in the seventies, 136 00:08:27,560 --> 00:08:30,640 Speaker 1: the late eighties around the SNL crisis, whether we look 137 00:08:30,640 --> 00:08:33,599 Speaker 1: at the Internet bubble, whether we look at o A. 138 00:08:34,280 --> 00:08:38,360 Speaker 1: Those who didn't set up their foundation with a strong 139 00:08:38,880 --> 00:08:40,120 Speaker 1: you know, think of it as you have to build 140 00:08:40,120 --> 00:08:42,200 Speaker 1: the basement first, then build the first floor, then the 141 00:08:42,240 --> 00:08:45,560 Speaker 1: second floor. The capital structure of a company is that 142 00:08:45,840 --> 00:08:49,200 Speaker 1: is that that basement, that first floor, the foundation. And 143 00:08:49,240 --> 00:08:52,440 Speaker 1: so what we saw when we hit March, and we 144 00:08:52,520 --> 00:08:56,560 Speaker 1: saw the beginnings of the acknowledgement of what the pandemic 145 00:08:56,640 --> 00:09:01,240 Speaker 1: might be. Is many companies found themselves is where either 146 00:09:01,600 --> 00:09:05,360 Speaker 1: their plan on the business side was being blown up 147 00:09:06,200 --> 00:09:08,439 Speaker 1: or maybe their business was actually gonna be able to 148 00:09:08,480 --> 00:09:11,680 Speaker 1: be somewhat resilient, but they were worried that the financing 149 00:09:11,720 --> 00:09:15,319 Speaker 1: plan that they had set in place to help them 150 00:09:15,360 --> 00:09:18,000 Speaker 1: with the business side wasn't as robust as they thought. 151 00:09:18,440 --> 00:09:20,160 Speaker 1: And what am I gonna do if I want to 152 00:09:20,160 --> 00:09:22,640 Speaker 1: grow any more capital and I don't have it on hand? 153 00:09:23,120 --> 00:09:25,839 Speaker 1: That was a big question that was you know, in 154 00:09:25,960 --> 00:09:28,280 Speaker 1: every board room in in in March or April. So 155 00:09:28,679 --> 00:09:32,640 Speaker 1: I like to say financing is always strategic, but we're 156 00:09:32,640 --> 00:09:37,760 Speaker 1: remind of that when we hit difficult times. So we 157 00:09:37,920 --> 00:09:42,600 Speaker 1: mentioned that, you know, especially the second half of sort 158 00:09:42,640 --> 00:09:46,000 Speaker 1: of turned into the year of the Spack unexpectedly just 159 00:09:46,080 --> 00:09:49,640 Speaker 1: an absolute boom trade. You mentioned it bigger, more money 160 00:09:50,080 --> 00:09:52,800 Speaker 1: through these vehicles than than I think the last ten 161 00:09:52,880 --> 00:09:57,160 Speaker 1: years combined. When from that perspective that you described that 162 00:09:57,280 --> 00:10:01,880 Speaker 1: financing decisions must be sort of strategic to the company, 163 00:10:02,480 --> 00:10:06,080 Speaker 1: what was it about this moment in particular that's like 164 00:10:06,320 --> 00:10:08,880 Speaker 1: this is the vehicle for right now. What is it 165 00:10:08,920 --> 00:10:10,960 Speaker 1: on sort of the investor side of the people you 166 00:10:11,000 --> 00:10:13,000 Speaker 1: saw want to put money to work in this way, 167 00:10:13,000 --> 00:10:15,080 Speaker 1: that they're willing to buy into these And what was 168 00:10:15,120 --> 00:10:18,439 Speaker 1: it on the sort of the cell side, Uh, that 169 00:10:18,480 --> 00:10:22,080 Speaker 1: there were um companies that were ready to and eager 170 00:10:22,120 --> 00:10:26,400 Speaker 1: to go public through this route. Yeah, well, you know, 171 00:10:26,880 --> 00:10:29,559 Speaker 1: I like the way you actually even coined the question, 172 00:10:29,559 --> 00:10:32,120 Speaker 1: which is the two sides of it, which is what 173 00:10:32,160 --> 00:10:36,160 Speaker 1: were the issues why people would finance the SPACs? And 174 00:10:36,200 --> 00:10:40,280 Speaker 1: then why why do companies sell into spac And I 175 00:10:40,320 --> 00:10:43,400 Speaker 1: think that the first thing to recognize is for many 176 00:10:43,440 --> 00:10:46,800 Speaker 1: folks who have not been around the capital markets, they 177 00:10:46,840 --> 00:10:49,680 Speaker 1: see all of a sudden on Bloomberg, you know, all 178 00:10:49,679 --> 00:10:52,240 Speaker 1: these SPACs being done, and they think that this is 179 00:10:52,520 --> 00:10:55,520 Speaker 1: some kind of new creation. The reality is SPACs have 180 00:10:55,600 --> 00:10:58,880 Speaker 1: been around in one form of another for more than 181 00:10:58,920 --> 00:11:02,640 Speaker 1: twenty years. And everything about blank check corporations they go back, 182 00:11:02,679 --> 00:11:04,640 Speaker 1: you know, you can go back to the twenties and 183 00:11:04,679 --> 00:11:08,520 Speaker 1: thirties of the last century and they were blank check companies. 184 00:11:08,800 --> 00:11:10,760 Speaker 1: So like a lot of financial engineering or a lot 185 00:11:10,760 --> 00:11:15,400 Speaker 1: of financial structures, the market and the technology have to 186 00:11:15,440 --> 00:11:20,160 Speaker 1: align for them to become broadly utilized. And I think 187 00:11:20,240 --> 00:11:23,760 Speaker 1: that's something that when we look back at two twenty, well, 188 00:11:23,960 --> 00:11:27,040 Speaker 1: the question really is why in two twenty did they 189 00:11:27,040 --> 00:11:31,560 Speaker 1: line up so well that it became commonplace? And I 190 00:11:31,600 --> 00:11:35,480 Speaker 1: think that goes to this issue of the financing is 191 00:11:35,480 --> 00:11:41,559 Speaker 1: strategic question, which is that up until February of this year, 192 00:11:41,600 --> 00:11:44,200 Speaker 1: i'd say most of your listeners had never heard of 193 00:11:44,240 --> 00:11:47,320 Speaker 1: us back and then something changed. And what changed was 194 00:11:47,880 --> 00:11:54,920 Speaker 1: that for particularly very very um growth oriented companies, companies 195 00:11:54,920 --> 00:11:57,440 Speaker 1: that maybe in the past would have gotten their next 196 00:11:57,480 --> 00:12:00,520 Speaker 1: round of funding in the private market and did another 197 00:12:00,600 --> 00:12:04,600 Speaker 1: year or two before going public, what happened was the 198 00:12:04,640 --> 00:12:09,200 Speaker 1: private market ostensibly dried up UM. And what I'm about 199 00:12:09,240 --> 00:12:12,600 Speaker 1: to say here is true both about venture backed opportunities, 200 00:12:12,840 --> 00:12:15,240 Speaker 1: but also it was true in the p world. So 201 00:12:15,280 --> 00:12:18,880 Speaker 1: if you look at general private equity investment, when when 202 00:12:18,920 --> 00:12:22,840 Speaker 1: sitting around with you know, financial sponsors in March and April, 203 00:12:23,120 --> 00:12:24,720 Speaker 1: I can tell you the one thing they weren't talking 204 00:12:24,760 --> 00:12:27,400 Speaker 1: about was how they were deploying a new capital. They 205 00:12:27,400 --> 00:12:31,000 Speaker 1: were focused on their existing portfolio. So with that going on, 206 00:12:31,480 --> 00:12:33,800 Speaker 1: if you're the CEO and the board of a company, 207 00:12:33,840 --> 00:12:38,559 Speaker 1: that your growth plans are potentially even taking off because 208 00:12:38,920 --> 00:12:42,040 Speaker 1: maybe you have a product offering that is actually going 209 00:12:42,120 --> 00:12:45,240 Speaker 1: to benefit from the pandemic. It could be disruptive consumer, 210 00:12:45,800 --> 00:12:48,760 Speaker 1: it could be in things like sustainable energy, where it 211 00:12:48,800 --> 00:12:52,920 Speaker 1: could be in areas like uh, you know, energy transition, 212 00:12:53,360 --> 00:12:58,080 Speaker 1: where those opportunities are really unaffected, where they're accelerated potentially 213 00:12:58,120 --> 00:13:01,640 Speaker 1: by the events of what's happened in the pandemic. But 214 00:13:01,720 --> 00:13:04,400 Speaker 1: you don't have the funding you need in that scenario, 215 00:13:04,920 --> 00:13:09,160 Speaker 1: all of a sudden, privately negotiated transaction with an entity 216 00:13:09,200 --> 00:13:13,920 Speaker 1: that brings capital to bear becomes very interesting. And because 217 00:13:13,920 --> 00:13:16,040 Speaker 1: of a number of other developments in the eighteen months 218 00:13:16,080 --> 00:13:18,200 Speaker 1: prior as to how deals were getting done in this 219 00:13:18,240 --> 00:13:22,480 Speaker 1: back market, it allowed for a path to real capital 220 00:13:22,520 --> 00:13:25,280 Speaker 1: for the companies UM, so long as they were public 221 00:13:25,559 --> 00:13:28,959 Speaker 1: public market ready, And that's where the period of kind 222 00:13:29,000 --> 00:13:33,400 Speaker 1: of the second quarter really changed things. What does public 223 00:13:33,440 --> 00:13:37,760 Speaker 1: market ready actually mean in this context, because again I 224 00:13:37,840 --> 00:13:40,600 Speaker 1: think Joe mentioned this in the intro, but when a 225 00:13:40,600 --> 00:13:43,040 Speaker 1: lot of people hear the words facts, they think that 226 00:13:43,120 --> 00:13:47,280 Speaker 1: this is basically a way of UM sort of listing light. 227 00:13:47,559 --> 00:13:51,760 Speaker 1: You don't have as strict disclosure requirements and maybe you 228 00:13:51,760 --> 00:13:54,520 Speaker 1: can get away with a few things like using forward 229 00:13:54,559 --> 00:13:57,200 Speaker 1: earnings projections and things like that that you wouldn't be 230 00:13:57,200 --> 00:14:00,040 Speaker 1: able to do if you went down the traditional A 231 00:14:00,080 --> 00:14:03,880 Speaker 1: PEO process listening. I think it's a really interesting point 232 00:14:03,920 --> 00:14:07,240 Speaker 1: that as we sit here today looking back on twenty 233 00:14:07,559 --> 00:14:10,760 Speaker 1: we can say that the events of I wouldn't just 234 00:14:10,840 --> 00:14:13,800 Speaker 1: say two, I'd say nineteen as well as we started 235 00:14:13,840 --> 00:14:17,160 Speaker 1: seeing some real significant increase in direct listings. What we 236 00:14:17,160 --> 00:14:20,480 Speaker 1: would say is companies that want to go public in 237 00:14:20,520 --> 00:14:23,920 Speaker 1: the US now have three paths available to them. They 238 00:14:23,960 --> 00:14:26,040 Speaker 1: have standard I p O s with all of the 239 00:14:26,080 --> 00:14:30,440 Speaker 1: regular structures around that, they have direct listings, and they 240 00:14:30,480 --> 00:14:34,040 Speaker 1: have sale to US back. And so I'll address particularly 241 00:14:34,040 --> 00:14:36,680 Speaker 1: your question about sale to US back, but broadly speaking, 242 00:14:36,680 --> 00:14:40,080 Speaker 1: I'd say a market where there's more choices and companies 243 00:14:40,120 --> 00:14:43,560 Speaker 1: can match what they feel is appropriate for them to 244 00:14:43,880 --> 00:14:48,280 Speaker 1: the best path um is probably a better market overall. 245 00:14:48,440 --> 00:14:51,280 Speaker 1: It's a more complete market. And again we're not here 246 00:14:51,280 --> 00:14:52,600 Speaker 1: to talk about direct listings, but there are a lot 247 00:14:52,600 --> 00:14:54,640 Speaker 1: of folks who are big advocates for that as well 248 00:14:54,680 --> 00:14:59,160 Speaker 1: as an alternative on this back front. I think probably 249 00:14:59,200 --> 00:15:03,440 Speaker 1: the two elm monts that were the biggest beneficiaries for 250 00:15:03,520 --> 00:15:08,240 Speaker 1: companies thinking about going to the market that broadened. It 251 00:15:08,360 --> 00:15:11,920 Speaker 1: was one the fact that they can use forward projections. 252 00:15:12,440 --> 00:15:15,120 Speaker 1: And so we have to think about the world of 253 00:15:15,440 --> 00:15:19,120 Speaker 1: a company that is investing for the future, that is 254 00:15:19,200 --> 00:15:25,480 Speaker 1: has limited cash flows today and historically would be challenged 255 00:15:25,520 --> 00:15:27,960 Speaker 1: to get that story across to the public market. And 256 00:15:27,960 --> 00:15:30,120 Speaker 1: the reason it will be a challenge is they have 257 00:15:30,240 --> 00:15:34,320 Speaker 1: to rely on historical numbers, which might be just investing 258 00:15:34,640 --> 00:15:36,280 Speaker 1: cement in the ground or whatever it might be to 259 00:15:36,320 --> 00:15:39,120 Speaker 1: build that business, and they might be a number of 260 00:15:39,200 --> 00:15:43,200 Speaker 1: years away from having real cash flows or significant revenues 261 00:15:44,080 --> 00:15:48,560 Speaker 1: when you have the ability to use forward projections. And 262 00:15:48,600 --> 00:15:51,360 Speaker 1: then an important part of the second piece. Many of 263 00:15:51,360 --> 00:15:54,240 Speaker 1: these deals, the way that they get done is in 264 00:15:54,360 --> 00:15:57,360 Speaker 1: front of the um deal being announced, the m and 265 00:15:57,400 --> 00:15:59,920 Speaker 1: A deal being announced, they line up a pipe and 266 00:16:00,000 --> 00:16:05,400 Speaker 1: investment from a series of institutional investors, and those investors 267 00:16:05,640 --> 00:16:09,160 Speaker 1: have the opportunity to look at those forward projections, to 268 00:16:09,280 --> 00:16:12,640 Speaker 1: meet with management and have in depth conversations, much more 269 00:16:12,640 --> 00:16:15,480 Speaker 1: in depth conversations then they could have in an I 270 00:16:15,560 --> 00:16:18,800 Speaker 1: p O process. So if you think of it, think 271 00:16:18,800 --> 00:16:21,280 Speaker 1: of the lead investors in an I p O is 272 00:16:21,320 --> 00:16:24,960 Speaker 1: being similar to the lead investors in a pipe tied 273 00:16:25,000 --> 00:16:27,880 Speaker 1: to a SPACK deal. The difference is there's a lot 274 00:16:27,920 --> 00:16:31,240 Speaker 1: more education that goes on for that pipe investor in 275 00:16:31,280 --> 00:16:34,640 Speaker 1: a SPACK than they get in an I p O process. 276 00:16:34,680 --> 00:16:38,720 Speaker 1: So for a company who's forward or their future is 277 00:16:38,880 --> 00:16:41,760 Speaker 1: fairly different than maybe what their history was because of 278 00:16:41,760 --> 00:16:46,600 Speaker 1: where they are in their evolution, that process allows them 279 00:16:46,640 --> 00:16:51,680 Speaker 1: to raise capital from these pipe investors, which then when 280 00:16:51,720 --> 00:16:57,680 Speaker 1: that's lined up, that's when they have completed the necessary 281 00:16:57,720 --> 00:17:01,000 Speaker 1: requirements to sign a merger agree and that's when the 282 00:17:01,000 --> 00:17:03,560 Speaker 1: deal gets announced, and then months later the deal closes 283 00:17:03,960 --> 00:17:06,560 Speaker 1: and ultimately it starts to trade in the public market. 284 00:17:07,080 --> 00:17:11,200 Speaker 1: That process that moves forward, that discussion with investors comes 285 00:17:11,240 --> 00:17:14,080 Speaker 1: up with what price is a clearing price and allows 286 00:17:14,119 --> 00:17:17,720 Speaker 1: them to have certainty before they announce. It is extraordinarily 287 00:17:17,800 --> 00:17:21,439 Speaker 1: interesting too many companies. And it's not just because they 288 00:17:21,440 --> 00:17:25,240 Speaker 1: can use forward projections. It's that they minimize the many 289 00:17:25,280 --> 00:17:29,480 Speaker 1: many months of risk that's involved in a standard IPO process, 290 00:17:29,640 --> 00:17:32,520 Speaker 1: where when they finally go to the market, if the 291 00:17:32,600 --> 00:17:36,040 Speaker 1: market's not there for them they had timing, etcetera, they 292 00:17:36,040 --> 00:17:39,320 Speaker 1: have a failed i PO. When you have this negotiated 293 00:17:39,400 --> 00:17:42,639 Speaker 1: process with the spack and with the pipe investors, that 294 00:17:42,720 --> 00:17:46,280 Speaker 1: predates the merger agreement being announced. If the deal doesn't 295 00:17:46,280 --> 00:17:49,119 Speaker 1: come together, the market doesn't know about it. It was 296 00:17:49,160 --> 00:17:52,240 Speaker 1: never out there. You don't have all the embarrassment of 297 00:17:52,280 --> 00:17:54,600 Speaker 1: a I p O getting priced at the you know, 298 00:17:54,680 --> 00:17:56,840 Speaker 1: below the range whatever it is, and that has an 299 00:17:56,840 --> 00:18:00,640 Speaker 1: appeal to a certain percent of the core puts out there. 300 00:18:00,800 --> 00:18:04,240 Speaker 1: Certainly not everyone's still a very robust I PO uh 301 00:18:04,280 --> 00:18:24,280 Speaker 1: you know uh market, but for some companies a better path. So, 302 00:18:24,680 --> 00:18:29,360 Speaker 1: you know, it's interesting you talking about transformative technologies, new technologies. 303 00:18:29,720 --> 00:18:33,639 Speaker 1: There have been a lot in UM the electric vehicle, 304 00:18:33,880 --> 00:18:39,040 Speaker 1: autonomous vehicle, space vehicle tech, clean energy, many of the companies. 305 00:18:39,240 --> 00:18:41,879 Speaker 1: It's not just that the future is not going to 306 00:18:41,960 --> 00:18:44,720 Speaker 1: resemble the past, it's that there's almost no present. Maybe 307 00:18:44,720 --> 00:18:48,040 Speaker 1: it's just a technology still in commercialization or with revenue 308 00:18:48,040 --> 00:18:50,120 Speaker 1: expected to be a few years off. You know. I'm 309 00:18:50,160 --> 00:18:51,760 Speaker 1: thinking about like one of the big I p o s, 310 00:18:51,800 --> 00:18:56,160 Speaker 1: for example of this year, the software company Snowflake, which 311 00:18:56,160 --> 00:18:59,320 Speaker 1: has a real business UM but still being valued at 312 00:18:59,400 --> 00:19:02,879 Speaker 1: sort of multiples and expectations way into the future. And 313 00:19:02,920 --> 00:19:05,680 Speaker 1: maybe someone just drew ruler and sort of projected where 314 00:19:05,680 --> 00:19:08,199 Speaker 1: their earnings are going to be and are coming up 315 00:19:08,200 --> 00:19:12,680 Speaker 1: with a multiple on that. Is there something fundamentally different? 316 00:19:12,720 --> 00:19:15,680 Speaker 1: I mean, all companies are, all growth tech companies are 317 00:19:15,720 --> 00:19:19,480 Speaker 1: fundamentally you know about the future. Is there something fundamentally 318 00:19:19,520 --> 00:19:24,200 Speaker 1: different about say a company that has some projectable business 319 00:19:24,359 --> 00:19:29,960 Speaker 1: like an enterprise software company versus a transformative or new 320 00:19:30,040 --> 00:19:33,760 Speaker 1: tech in which there's nothing really even to extrapolate yet 321 00:19:34,160 --> 00:19:37,480 Speaker 1: in terms of why the spack route may make sense 322 00:19:37,520 --> 00:19:40,919 Speaker 1: for them, whereas something is slightly more predictable and established 323 00:19:41,119 --> 00:19:43,040 Speaker 1: the I p O route makes sense for the for 324 00:19:43,080 --> 00:19:46,199 Speaker 1: them like like a snowflake. Yeah, I do. I do 325 00:19:46,320 --> 00:19:49,199 Speaker 1: think that you highlight an interesting point, which is and 326 00:19:49,240 --> 00:19:51,879 Speaker 1: it maybe gets a bit more to the value of 327 00:19:51,880 --> 00:19:57,680 Speaker 1: the spack team and why when companies look to sell 328 00:19:57,800 --> 00:20:01,119 Speaker 1: these days, they're often doing what has become known as, 329 00:20:01,160 --> 00:20:03,920 Speaker 1: in quotes, a spack off. I want to talk about 330 00:20:03,920 --> 00:20:06,440 Speaker 1: spa off. Yeah, they're not necessarily responding to the first 331 00:20:06,480 --> 00:20:09,320 Speaker 1: spact that that calls them up. And the reason for 332 00:20:09,400 --> 00:20:13,960 Speaker 1: that is that you're exactly right. If you're a company 333 00:20:14,000 --> 00:20:17,119 Speaker 1: that is now getting to choose how you're going to 334 00:20:17,320 --> 00:20:20,679 Speaker 1: enter the marketplace, let's just compare that that's sack the 335 00:20:20,760 --> 00:20:24,080 Speaker 1: company and their board looking at selling to a SPACK 336 00:20:24,640 --> 00:20:27,359 Speaker 1: to going the I p O path. One of the 337 00:20:27,359 --> 00:20:28,880 Speaker 1: things they would do in an I p O path 338 00:20:29,040 --> 00:20:32,280 Speaker 1: is they would think through, I probably need to bring 339 00:20:32,359 --> 00:20:36,040 Speaker 1: different people onto my board as a public company than 340 00:20:36,080 --> 00:20:38,640 Speaker 1: I would have when I was a private company. Maybe 341 00:20:38,720 --> 00:20:40,720 Speaker 1: some of the vcs are going to come off the 342 00:20:40,760 --> 00:20:43,479 Speaker 1: board and we're gonna put some, you know, folks who 343 00:20:43,560 --> 00:20:47,399 Speaker 1: have more public market experience onto the board. When selling 344 00:20:47,440 --> 00:20:49,720 Speaker 1: to a SPACK, I can do that, and I can 345 00:20:49,720 --> 00:20:54,080 Speaker 1: do that by selecting a SPACK that has expertise in 346 00:20:54,080 --> 00:20:57,080 Speaker 1: my area. So let's just say, for example, I'm in 347 00:20:57,119 --> 00:21:01,800 Speaker 1: one of those hyper change arenas. I'd rather sell if 348 00:21:01,800 --> 00:21:05,720 Speaker 1: I'm a financial tech company to a SPACT that has 349 00:21:06,040 --> 00:21:10,959 Speaker 1: some significant fintech executives involved with it, because I'm basically 350 00:21:11,000 --> 00:21:14,080 Speaker 1: picking at a minimum to new board members, but one 351 00:21:14,160 --> 00:21:16,760 Speaker 1: or two depending on the structure, but two new board 352 00:21:16,800 --> 00:21:19,640 Speaker 1: members for now when I'm a public company, who's gonna 353 00:21:19,640 --> 00:21:22,399 Speaker 1: have oversight of the company. And so one of the 354 00:21:22,440 --> 00:21:24,720 Speaker 1: things that is really important is what does the SPAC 355 00:21:24,800 --> 00:21:27,399 Speaker 1: bring to the table. What are the backgrounds of the 356 00:21:27,480 --> 00:21:30,280 Speaker 1: folks from the spack who will ultimately go on my board. 357 00:21:31,320 --> 00:21:34,280 Speaker 1: Maybe it's they have real good connections in the industry 358 00:21:34,320 --> 00:21:37,440 Speaker 1: I'm selling to and they will help accelerate my business. 359 00:21:37,480 --> 00:21:40,280 Speaker 1: So the decision of what SPAC will I sell to 360 00:21:40,880 --> 00:21:45,320 Speaker 1: becomes very similar to what private equity fund would I 361 00:21:45,320 --> 00:21:48,200 Speaker 1: sell to if as going private or if I have 362 00:21:48,240 --> 00:21:50,560 Speaker 1: a choice of growth equity funds. So I'm now doing 363 00:21:50,600 --> 00:21:53,920 Speaker 1: growth equity round in the private market. Um, who would 364 00:21:53,920 --> 00:21:56,000 Speaker 1: I want to come in to be my partner for 365 00:21:56,000 --> 00:21:59,399 Speaker 1: the next five years. So think of that process of 366 00:21:59,400 --> 00:22:03,639 Speaker 1: selecting a spack that company sells to as who is 367 00:22:03,680 --> 00:22:08,000 Speaker 1: going to be part of my oversight and part of 368 00:22:08,000 --> 00:22:12,159 Speaker 1: my ecosystem to help me complete my plans. Because all 369 00:22:12,200 --> 00:22:13,480 Speaker 1: these companies, what they really want to do in the 370 00:22:13,480 --> 00:22:17,400 Speaker 1: public market is basically execute on their plan. And that's 371 00:22:17,440 --> 00:22:21,360 Speaker 1: why SPACs that have a lot of expertise are emerging 372 00:22:21,400 --> 00:22:25,080 Speaker 1: as being, you know, honestly better bidders than those who 373 00:22:25,160 --> 00:22:28,359 Speaker 1: are just you know, a few folks have come together 374 00:22:28,400 --> 00:22:32,479 Speaker 1: to try and put some capital to work. So just 375 00:22:32,600 --> 00:22:34,600 Speaker 1: on the spack off point, I mean, one of the 376 00:22:34,640 --> 00:22:37,520 Speaker 1: things you you're an analogy to private equity. Just then, 377 00:22:37,560 --> 00:22:39,960 Speaker 1: one of the things we heard about private equity in 378 00:22:40,240 --> 00:22:44,640 Speaker 1: the latest cycle is that targets became fewer and fewer 379 00:22:45,119 --> 00:22:48,440 Speaker 1: as as there was more money poured into alternative assets. 380 00:22:49,160 --> 00:22:53,240 Speaker 1: As the spack space heats up, and you know, lots 381 00:22:53,240 --> 00:22:55,359 Speaker 1: of people are setting these up and lots of people 382 00:22:55,359 --> 00:22:59,320 Speaker 1: are looking for targets to to merge with. Um how 383 00:22:59,359 --> 00:23:02,080 Speaker 1: competitive of is it at the moment? And you know, 384 00:23:02,200 --> 00:23:05,080 Speaker 1: like what is a spack off actually look like in 385 00:23:05,440 --> 00:23:09,800 Speaker 1: your experience? Like everything else, It's almost like if you say, 386 00:23:10,400 --> 00:23:13,560 Speaker 1: if you've met one family office, you've met one family office. 387 00:23:13,680 --> 00:23:15,879 Speaker 1: Or SAM could be said about private equity, SAM can 388 00:23:15,920 --> 00:23:19,520 Speaker 1: be said about how how a company decides to run 389 00:23:19,560 --> 00:23:22,879 Speaker 1: there what's really an M and A process which is 390 00:23:22,880 --> 00:23:25,159 Speaker 1: a back off the differences, and this is important for 391 00:23:25,160 --> 00:23:28,760 Speaker 1: your listeners to understand. Unlike a normal M and A 392 00:23:28,880 --> 00:23:32,639 Speaker 1: process where the deal ends when the other side says 393 00:23:33,000 --> 00:23:35,240 Speaker 1: I'm willing to buy you at a price and he 394 00:23:35,400 --> 00:23:38,800 Speaker 1: and I have a money good in a spack, the 395 00:23:38,880 --> 00:23:41,879 Speaker 1: capital markets decide whether that's a proper deal or not 396 00:23:42,359 --> 00:23:45,359 Speaker 1: because it has to be funded. And and that's where 397 00:23:45,680 --> 00:23:48,080 Speaker 1: the combination of what's known as the d spack the 398 00:23:48,119 --> 00:23:50,720 Speaker 1: process where the original investors in the spacks, or at 399 00:23:50,760 --> 00:23:52,880 Speaker 1: least those who are still holding it at the time 400 00:23:52,880 --> 00:23:55,320 Speaker 1: a deal is announced, they get to decide whether or 401 00:23:55,320 --> 00:23:58,280 Speaker 1: not they want their money back or whether they're going 402 00:23:58,320 --> 00:24:01,800 Speaker 1: to roll into the new company. And that's also where 403 00:24:01,840 --> 00:24:04,880 Speaker 1: in the moments prior to that, the pipe investors, which 404 00:24:04,880 --> 00:24:09,359 Speaker 1: are generally not only but generally very large institutions that 405 00:24:10,080 --> 00:24:14,040 Speaker 1: are public market investors, um they make that decision. So 406 00:24:14,119 --> 00:24:16,199 Speaker 1: you have to first think about a spack off is 407 00:24:16,680 --> 00:24:21,240 Speaker 1: finding the right partner who can deliver two things. One, 408 00:24:21,680 --> 00:24:24,160 Speaker 1: they can really help my business grow I'm now saying 409 00:24:24,160 --> 00:24:27,679 Speaker 1: my meaning on the company. And secondly, they have the 410 00:24:27,720 --> 00:24:30,520 Speaker 1: credibility in the marketplace that they're going to help me 411 00:24:31,320 --> 00:24:33,520 Speaker 1: get the capital that's at the end of the rainbow. 412 00:24:33,680 --> 00:24:36,040 Speaker 1: The end of the rainbow is that these companies get 413 00:24:36,200 --> 00:24:39,800 Speaker 1: capital via bout the pipe and what's known as the 414 00:24:39,840 --> 00:24:44,680 Speaker 1: d SPAC process. So when when we're advising, let's say 415 00:24:44,800 --> 00:24:49,440 Speaker 1: a company on a spack off, we're much more focused 416 00:24:49,480 --> 00:24:54,040 Speaker 1: on the quantity the qualitative elements as opposed to quantitative 417 00:24:54,440 --> 00:24:58,760 Speaker 1: It's almost never about the highest price because whatever the 418 00:24:59,200 --> 00:25:03,560 Speaker 1: SPAC might indicate they think the value is, it is 419 00:25:03,680 --> 00:25:08,000 Speaker 1: only real if it's validated by the capital markets investors 420 00:25:08,480 --> 00:25:11,200 Speaker 1: via the back end. And so what's most important is 421 00:25:11,200 --> 00:25:13,879 Speaker 1: the quality of issues. What do they bring to the table. 422 00:25:14,480 --> 00:25:17,159 Speaker 1: Do they have real insights that can add to you 423 00:25:18,040 --> 00:25:20,359 Speaker 1: as a public company, Do they have credibility in the 424 00:25:20,400 --> 00:25:24,119 Speaker 1: capital markets to help raise the capital um And you know, 425 00:25:24,400 --> 00:25:27,000 Speaker 1: will they when the when you move forward, will they 426 00:25:27,000 --> 00:25:30,000 Speaker 1: be valuable on your board, because you're gonna be living 427 00:25:30,000 --> 00:25:32,639 Speaker 1: with these folks on your board for a while. So 428 00:25:32,800 --> 00:25:36,200 Speaker 1: just to sort of like put it all together, there's 429 00:25:36,200 --> 00:25:40,679 Speaker 1: a natural reason. It sounds like why the spack boom 430 00:25:40,920 --> 00:25:44,240 Speaker 1: is also very heavily concentrated in a lot of these 431 00:25:44,680 --> 00:25:49,960 Speaker 1: sort of new energy, alternative tech type things in which 432 00:25:50,280 --> 00:25:53,320 Speaker 1: money is important for them to continue their development, but 433 00:25:53,440 --> 00:25:56,600 Speaker 1: also they really have sort of key strategic goals. So 434 00:25:56,720 --> 00:26:00,000 Speaker 1: maybe for an enterprise software company in which the business 435 00:26:00,160 --> 00:26:01,680 Speaker 1: is set and then it's just a matter of growing 436 00:26:01,680 --> 00:26:05,200 Speaker 1: it through the sales force, the spack in addition to money, 437 00:26:05,640 --> 00:26:11,760 Speaker 1: really brings in some strategic uh alliances that are more 438 00:26:11,840 --> 00:26:13,720 Speaker 1: needed to like get from point A to point B. 439 00:26:14,880 --> 00:26:18,439 Speaker 1: I think you're right for why two thousand twenty was 440 00:26:18,800 --> 00:26:20,280 Speaker 1: when we say it with the Year of the Spack 441 00:26:20,840 --> 00:26:23,600 Speaker 1: where you said it actually not me why why that's 442 00:26:23,600 --> 00:26:26,200 Speaker 1: where we saw the real breakthroughs. It was those kind 443 00:26:26,200 --> 00:26:28,840 Speaker 1: of businesses, you know, where there's a huge amount of 444 00:26:28,880 --> 00:26:31,920 Speaker 1: investment for the payoff in the future. By the way, 445 00:26:31,960 --> 00:26:34,320 Speaker 1: the deepest capital market in the world is not the 446 00:26:34,320 --> 00:26:37,000 Speaker 1: private market. It's still the U S public market, and 447 00:26:37,080 --> 00:26:41,400 Speaker 1: so getting access to that capital is helpful. And you're 448 00:26:41,480 --> 00:26:43,480 Speaker 1: and so I would agree with your thesis. I do 449 00:26:43,600 --> 00:26:46,640 Speaker 1: think that's going to broaden out though, because I think 450 00:26:46,640 --> 00:26:48,560 Speaker 1: that you know, we're starting to see and the price 451 00:26:48,560 --> 00:26:51,359 Speaker 1: software companies that are coming down this path. I think, 452 00:26:51,359 --> 00:26:54,600 Speaker 1: what will you know? It really depends on the nature 453 00:26:54,680 --> 00:26:58,320 Speaker 1: that anytime you see this much activity, um it forces 454 00:26:58,400 --> 00:27:00,639 Speaker 1: everyone to look at it. It's a little bit I 455 00:27:01,000 --> 00:27:03,560 Speaker 1: use example, and maybe it's because I'm a old convertible 456 00:27:03,560 --> 00:27:07,479 Speaker 1: bond originator of the convertible bond market, which is you know, 457 00:27:07,560 --> 00:27:09,879 Speaker 1: over the last thirty years, there's been periods where it 458 00:27:09,920 --> 00:27:12,280 Speaker 1: seemed like every company in the world was doing converble bond, 459 00:27:12,760 --> 00:27:15,000 Speaker 1: and then they've been periods where literally there's almost no 460 00:27:15,080 --> 00:27:17,760 Speaker 1: issuance for eighteen months or twenty four months, and the 461 00:27:17,760 --> 00:27:20,520 Speaker 1: only companies that come are growth companies looking for another 462 00:27:20,520 --> 00:27:23,520 Speaker 1: way to raise capital. And so I think that we 463 00:27:23,520 --> 00:27:26,000 Speaker 1: should look at what's happened with Spack says, when this 464 00:27:26,080 --> 00:27:28,840 Speaker 1: settles down to a natural equilibrium, and we will, we 465 00:27:28,880 --> 00:27:31,480 Speaker 1: will find an equilibrium. It will be one of the 466 00:27:31,560 --> 00:27:35,879 Speaker 1: choices facing companies that think about going public and for 467 00:27:36,040 --> 00:27:40,240 Speaker 1: certain situations where they either like the certainty of the 468 00:27:40,280 --> 00:27:42,879 Speaker 1: capital at a price that comes from it, they like 469 00:27:43,000 --> 00:27:46,920 Speaker 1: the corporate governance benefits of picking the board members that 470 00:27:46,960 --> 00:27:49,639 Speaker 1: bring real quality, but they might not be able to 471 00:27:49,680 --> 00:27:52,320 Speaker 1: get as good at a set of board members if 472 00:27:52,359 --> 00:27:55,440 Speaker 1: they win a natural path plaiting for smaller companies, your 473 00:27:55,440 --> 00:27:58,920 Speaker 1: typical billion dollar company coming to the market is still 474 00:27:58,960 --> 00:28:02,440 Speaker 1: a relatively small comp the in the US market today, 475 00:28:02,480 --> 00:28:04,679 Speaker 1: so they might end up with a much better board 476 00:28:05,000 --> 00:28:07,080 Speaker 1: by selling to a SPACK than they would if they 477 00:28:07,080 --> 00:28:11,560 Speaker 1: went to normal I p O path, raising fifty million dollars, etcetera. 478 00:28:11,800 --> 00:28:13,879 Speaker 1: So there's a lot of things in there, but we 479 00:28:13,920 --> 00:28:15,800 Speaker 1: are seeing it broaden out. I would say if we 480 00:28:15,840 --> 00:28:18,440 Speaker 1: think about twenty one, I think it will be interesting 481 00:28:18,480 --> 00:28:22,320 Speaker 1: is you're going to see more companies in areas where 482 00:28:23,080 --> 00:28:25,160 Speaker 1: they were willing to go the IPO path. They would 483 00:28:25,160 --> 00:28:28,160 Speaker 1: normally go and spend six months nine months with all 484 00:28:28,200 --> 00:28:31,280 Speaker 1: the process, but if they can move quicker, they can 485 00:28:31,320 --> 00:28:33,600 Speaker 1: get a deal done in three months via a deal 486 00:28:33,640 --> 00:28:36,399 Speaker 1: with a spack. They can get raise more capital that 487 00:28:36,440 --> 00:28:39,440 Speaker 1: way than they might by doing another private round and 488 00:28:39,440 --> 00:28:41,440 Speaker 1: then coming back with the I p O in the 489 00:28:41,480 --> 00:28:43,920 Speaker 1: second half. I think you're going to see that they're 490 00:28:43,920 --> 00:28:47,440 Speaker 1: gonna say, you know what, SPACs are more acceptable now. 491 00:28:48,080 --> 00:28:51,960 Speaker 1: It's no longer a four letter word um in the 492 00:28:52,000 --> 00:28:55,520 Speaker 1: negative way. And what you'll see is companies that otherwise 493 00:28:55,520 --> 00:28:57,200 Speaker 1: would have done an IPO that might come to the 494 00:28:57,240 --> 00:29:01,440 Speaker 1: SPACK market again. Not because it's not going to diminish 495 00:29:01,920 --> 00:29:04,440 Speaker 1: the benefit of the I p O process. It's just 496 00:29:04,520 --> 00:29:08,120 Speaker 1: gonna be another choice UM. But we'll see it broaden. Now. 497 00:29:23,640 --> 00:29:26,640 Speaker 1: It's interesting that you're talking about these trends sort of 498 00:29:26,720 --> 00:29:30,400 Speaker 1: coming and going in capital markets. One of the big 499 00:29:30,480 --> 00:29:33,920 Speaker 1: trends just a year or two ago was this idea 500 00:29:34,040 --> 00:29:37,600 Speaker 1: that public markets were dead and that these big tech 501 00:29:37,680 --> 00:29:41,440 Speaker 1: companies or these growing tech companies were going to stay 502 00:29:41,520 --> 00:29:44,400 Speaker 1: in the private market forever, because why would they ever 503 00:29:44,640 --> 00:29:46,680 Speaker 1: bother to I p O when they can get as 504 00:29:46,760 --> 00:29:51,040 Speaker 1: much money as they want through private fundraising. So I'm 505 00:29:51,040 --> 00:29:56,040 Speaker 1: curious when it comes to SPACs, why bother going public 506 00:29:56,520 --> 00:30:00,680 Speaker 1: at all? If capital is plun too full in the 507 00:30:00,720 --> 00:30:04,800 Speaker 1: private market. That is a great question, and I think 508 00:30:05,280 --> 00:30:08,440 Speaker 1: it comes back to the reflections of when you look 509 00:30:08,440 --> 00:30:12,160 Speaker 1: at the abyss of March we had, my example being 510 00:30:12,400 --> 00:30:15,760 Speaker 1: comparing it back to other periods of time when the 511 00:30:15,800 --> 00:30:18,880 Speaker 1: markets dried up. When you're in the public capital markets, 512 00:30:19,320 --> 00:30:21,800 Speaker 1: you have at the deepest market available to you for 513 00:30:21,920 --> 00:30:25,280 Speaker 1: raising capital. You might have doing a difficult market except 514 00:30:25,320 --> 00:30:27,840 Speaker 1: a deeper discount to raise equity than you would in 515 00:30:27,880 --> 00:30:32,000 Speaker 1: a more brilliant market, but you have a marketplace where 516 00:30:32,000 --> 00:30:37,000 Speaker 1: people meet every day, uh and agree on price and size. Um. 517 00:30:37,040 --> 00:30:39,560 Speaker 1: That's just not true in the private market. The private 518 00:30:39,600 --> 00:30:41,800 Speaker 1: market get you know. If i'd like to say, when 519 00:30:41,800 --> 00:30:43,920 Speaker 1: the public market gets a cold, the private market gets 520 00:30:43,960 --> 00:30:47,360 Speaker 1: the flu. You know. Unfortunately, when you're dependent on the 521 00:30:47,360 --> 00:30:51,560 Speaker 1: private market, it works great so long as each successive 522 00:30:51,640 --> 00:30:54,600 Speaker 1: round can be done in a higher value. Uh. And 523 00:30:54,880 --> 00:30:58,920 Speaker 1: the market is fairly fairly good. If you looked at 524 00:30:59,120 --> 00:31:00,960 Speaker 1: the amount of of a capital that was put to 525 00:31:01,000 --> 00:31:05,040 Speaker 1: work from March one to say, the end of June, 526 00:31:05,800 --> 00:31:08,640 Speaker 1: it wasn't a lot. And if you were a company 527 00:31:08,680 --> 00:31:12,200 Speaker 1: that was living saying I can wait another two years 528 00:31:12,200 --> 00:31:14,560 Speaker 1: to go public because I can always keep raising money 529 00:31:14,600 --> 00:31:17,000 Speaker 1: in the private market at higher levels, when all of 530 00:31:17,040 --> 00:31:20,240 Speaker 1: a sudden, that doesn't work anymore, because since the public 531 00:31:20,240 --> 00:31:25,040 Speaker 1: markets down, the private markets shut unless you're willing to 532 00:31:25,040 --> 00:31:28,280 Speaker 1: do it down round at a very very big discount. 533 00:31:28,760 --> 00:31:31,360 Speaker 1: It all of a sudden opened up eyes again to 534 00:31:31,480 --> 00:31:34,720 Speaker 1: really a generation of entrepreneurs and their venture backers. Again, 535 00:31:34,760 --> 00:31:36,360 Speaker 1: I say it that way because you know a lot 536 00:31:36,400 --> 00:31:39,640 Speaker 1: of folks who are running venture capital funds and entrepreneurs 537 00:31:39,640 --> 00:31:42,920 Speaker 1: that you know they were in high school in two 538 00:31:42,960 --> 00:31:46,000 Speaker 1: thous eight. They don't remember the challenges of a very 539 00:31:46,040 --> 00:31:49,600 Speaker 1: difficult market. So I think it made reminded them of 540 00:31:49,720 --> 00:31:52,320 Speaker 1: while the public market really does have a value, it's 541 00:31:52,360 --> 00:31:55,360 Speaker 1: there to be the place where folks who want to 542 00:31:55,360 --> 00:31:57,920 Speaker 1: transact in the deepest pool of capital in the world 543 00:31:58,360 --> 00:32:00,760 Speaker 1: get to transact on a daily basis us and so 544 00:32:01,720 --> 00:32:04,280 Speaker 1: I do think that you can't separate that from what 545 00:32:04,320 --> 00:32:08,000 Speaker 1: happened in two twenty and that's why SPACs have taken 546 00:32:08,040 --> 00:32:10,480 Speaker 1: off again. It's also we're seeing more companies go public. Look, 547 00:32:10,680 --> 00:32:12,840 Speaker 1: you mentioned Snowflake before and again, I I don't want 548 00:32:12,840 --> 00:32:15,520 Speaker 1: to speak about particular companies. I think there's something to 549 00:32:15,520 --> 00:32:18,560 Speaker 1: be said about why are all these very large tech 550 00:32:18,600 --> 00:32:22,120 Speaker 1: companies coming up going public now because at some point 551 00:32:22,680 --> 00:32:27,040 Speaker 1: your investors need liquidity. You know, the average venture capital company, 552 00:32:27,280 --> 00:32:30,000 Speaker 1: if you look back a decade ago, m tended to 553 00:32:30,040 --> 00:32:33,560 Speaker 1: have a monetization event, usually around seven to ten years. 554 00:32:34,480 --> 00:32:39,160 Speaker 1: What's happened post the financial crisis is it's stressed out. 555 00:32:39,160 --> 00:32:42,760 Speaker 1: The ten or twelve years. That's a long time for 556 00:32:43,080 --> 00:32:45,960 Speaker 1: venture capitalists have their money locked up. It's a long 557 00:32:46,040 --> 00:32:51,320 Speaker 1: time for the founders, the employees they've hired to not 558 00:32:51,400 --> 00:32:55,640 Speaker 1: have monetization. And so what we're seeing is it's not 559 00:32:55,680 --> 00:32:58,640 Speaker 1: that they don't go public. They just waited three or 560 00:32:58,680 --> 00:33:02,800 Speaker 1: four more years because they could. But they ultimately are 561 00:33:02,920 --> 00:33:04,800 Speaker 1: either going to be sold or come to the public 562 00:33:04,840 --> 00:33:08,240 Speaker 1: market because at some point the folks who risk capital 563 00:33:08,280 --> 00:33:11,640 Speaker 1: a decade ago need to get that capital redeployed. And 564 00:33:11,720 --> 00:33:14,640 Speaker 1: so I think we're in a period of growth of 565 00:33:14,680 --> 00:33:17,880 Speaker 1: public companies for the first time since you know, maybe 566 00:33:17,880 --> 00:33:19,720 Speaker 1: you go back to Sarvane's Oxley, you know, for the 567 00:33:19,760 --> 00:33:23,040 Speaker 1: first time since that. I also think it's why you're 568 00:33:23,040 --> 00:33:27,480 Speaker 1: seeing the advent of the private exchange market, where we're seeing, 569 00:33:27,840 --> 00:33:31,000 Speaker 1: you know, a lot more activity where companies are allowing 570 00:33:32,000 --> 00:33:35,160 Speaker 1: their historical investors to trade in the secondary market privately 571 00:33:35,560 --> 00:33:38,600 Speaker 1: pre I p O, because they recognize that ten years 572 00:33:38,600 --> 00:33:40,640 Speaker 1: a long time for people to keep their capital tied up. 573 00:33:40,760 --> 00:33:44,920 Speaker 1: So all that leads to this symbiotic relationship between private 574 00:33:44,960 --> 00:33:47,400 Speaker 1: capital for the early stage and then ultimately going to 575 00:33:47,400 --> 00:33:50,640 Speaker 1: the public market when it's a more established company. I mean, 576 00:33:51,000 --> 00:33:55,240 Speaker 1: you make a compelling case that a public markets are 577 00:33:55,360 --> 00:33:59,080 Speaker 1: the sort of deepest pool of liquidity and companies needed 578 00:33:59,160 --> 00:34:01,160 Speaker 1: that there are a lot of company needs who ten 579 00:34:01,240 --> 00:34:04,239 Speaker 1: years ago got their first private funding and it's now 580 00:34:04,320 --> 00:34:08,719 Speaker 1: time for them to realize some of that. Just cynically, though, 581 00:34:08,840 --> 00:34:11,759 Speaker 1: it certainly seems like and I hate um, I won't 582 00:34:11,800 --> 00:34:14,960 Speaker 1: use the word bubble, but it certainly seems like valuations 583 00:34:14,960 --> 00:34:19,440 Speaker 1: on public markets not only are high by historical measures 584 00:34:19,480 --> 00:34:22,120 Speaker 1: of other public markets, but that the company is going 585 00:34:22,200 --> 00:34:26,239 Speaker 1: public are enjoying a pretty nice premium of from their 586 00:34:26,320 --> 00:34:30,600 Speaker 1: last private market valuations in many of these cases. And 587 00:34:30,640 --> 00:34:34,560 Speaker 1: so I'm curious if there is to what extent is 588 00:34:34,600 --> 00:34:37,160 Speaker 1: some of this re equalization, the re expansion of public 589 00:34:37,200 --> 00:34:39,880 Speaker 1: market just sort of a recognition that if you have 590 00:34:39,960 --> 00:34:42,720 Speaker 1: a good asset, if you have a company that's private 591 00:34:42,840 --> 00:34:45,799 Speaker 1: or something like that, there's a decent chance that you 592 00:34:45,840 --> 00:34:50,040 Speaker 1: can get a higher valuation right now on public markets. Yeah, 593 00:34:50,160 --> 00:34:53,759 Speaker 1: there's no question that all else constant, right if you 594 00:34:53,800 --> 00:34:57,200 Speaker 1: if you again, if we had an academic UH finance 595 00:34:57,239 --> 00:35:00,840 Speaker 1: professor on, they'd say, the same company of its public 596 00:35:01,320 --> 00:35:03,840 Speaker 1: UH should always trade a higher value in the public 597 00:35:03,880 --> 00:35:06,960 Speaker 1: market because because the private market, I have to have 598 00:35:07,040 --> 00:35:10,600 Speaker 1: a discount for the fact that I can't get liquidity 599 00:35:10,640 --> 00:35:12,279 Speaker 1: when I wanted on a regular basis. So there's no 600 00:35:12,400 --> 00:35:15,360 Speaker 1: question that you know, this is true, and many times 601 00:35:15,560 --> 00:35:18,040 Speaker 1: today I think it's even more true. But I'm not 602 00:35:18,120 --> 00:35:22,160 Speaker 1: so sure it's as much about where the institutions live 603 00:35:22,680 --> 00:35:24,520 Speaker 1: as I think one of the things that we're seeing 604 00:35:24,640 --> 00:35:28,920 Speaker 1: is particularly for hyper growth companies or the opportunity for 605 00:35:28,960 --> 00:35:33,279 Speaker 1: real growth in areas that are transformative. I do think 606 00:35:33,280 --> 00:35:37,799 Speaker 1: that we're seeing a generational shift. We're seeing many of 607 00:35:37,800 --> 00:35:40,960 Speaker 1: these businesses. And this is true where the existing public companies, 608 00:35:41,320 --> 00:35:43,480 Speaker 1: whether it be companies that go to the public market 609 00:35:43,560 --> 00:35:47,839 Speaker 1: via I p O, direct listing or spacts that in 610 00:35:47,880 --> 00:35:51,880 Speaker 1: some respect the you know, the quote unquote Robin Hood 611 00:35:52,280 --> 00:35:57,000 Speaker 1: investors often are taking over the stocks for some period 612 00:35:57,560 --> 00:36:02,359 Speaker 1: and that dynamic where UM investors who are looking for 613 00:36:02,440 --> 00:36:06,680 Speaker 1: that next great investment theme are coming in, uh in 614 00:36:06,920 --> 00:36:10,200 Speaker 1: buying these stocks, they are often bidding them too levels 615 00:36:10,239 --> 00:36:13,840 Speaker 1: that broadly speaking, neither the research analysts or the institutional 616 00:36:13,840 --> 00:36:18,080 Speaker 1: investors seem to be fully agreeing with those valuations. And 617 00:36:18,440 --> 00:36:22,880 Speaker 1: you know that happens in a market when there's a 618 00:36:22,920 --> 00:36:26,320 Speaker 1: lot of growth. We've seen it before, and those stories 619 00:36:26,360 --> 00:36:30,600 Speaker 1: tend to retreat after that buying is exhausted. And we've 620 00:36:30,600 --> 00:36:32,080 Speaker 1: seen some of that in twenty I think we'll see 621 00:36:32,120 --> 00:36:36,319 Speaker 1: more than twenty one as uh. You know, newer investors 622 00:36:36,640 --> 00:36:40,399 Speaker 1: decided to come in in the aftermarket without necessarily having 623 00:36:40,440 --> 00:36:42,680 Speaker 1: all the research and knowledge of what the right valuation 624 00:36:42,760 --> 00:36:45,520 Speaker 1: should be. Those folks are not they're not involved in 625 00:36:45,560 --> 00:36:47,640 Speaker 1: the I p O is not involved in the initial 626 00:36:47,680 --> 00:36:50,200 Speaker 1: settat of values. They come into the aftermarket, and again, 627 00:36:50,440 --> 00:36:55,919 Speaker 1: you know that's that's part of uh, you know, the marketplace. So, Larry, 628 00:36:55,960 --> 00:36:58,920 Speaker 1: I mean, one of the things that you mentioned early 629 00:36:58,960 --> 00:37:02,920 Speaker 1: on is that now investors kind of have three distinct 630 00:37:03,880 --> 00:37:06,560 Speaker 1: routes to go in public. There's the traditional I p O. 631 00:37:06,640 --> 00:37:09,080 Speaker 1: I'm sorry, companies have three distinct routs to go in public. 632 00:37:09,120 --> 00:37:12,480 Speaker 1: There's the traditional I p O, there's this back and 633 00:37:12,520 --> 00:37:15,879 Speaker 1: then there's the direct listing and um we we talked 634 00:37:15,920 --> 00:37:18,920 Speaker 1: about this on an earlier episode, but it looks like 635 00:37:19,400 --> 00:37:24,480 Speaker 1: regulations will allow such that companies could actually raise money 636 00:37:24,480 --> 00:37:27,480 Speaker 1: through direct listing, so that they cannot only come public 637 00:37:27,480 --> 00:37:31,080 Speaker 1: and get liquidity, but actually get cash for the new cash, 638 00:37:31,200 --> 00:37:34,319 Speaker 1: which they couldn't previously do. And then you have like 639 00:37:34,360 --> 00:37:37,480 Speaker 1: a lot of like long time uh sort of Silicon 640 00:37:37,600 --> 00:37:41,000 Speaker 1: Valley types super critical of the traditional I p O 641 00:37:41,239 --> 00:37:45,280 Speaker 1: the cut that banks get the premium, the so called 642 00:37:45,360 --> 00:37:48,759 Speaker 1: money left on the table. What do you see is 643 00:37:48,840 --> 00:37:52,440 Speaker 1: the future of the traditional I p O isn't necessarily 644 00:37:52,440 --> 00:37:55,960 Speaker 1: going to survive and for what kinds of companies doesn't 645 00:37:55,960 --> 00:37:59,640 Speaker 1: make the most sense if there are these other either 646 00:38:00,000 --> 00:38:04,360 Speaker 1: master or cheaper route it's going public. Well again, I 647 00:38:04,400 --> 00:38:06,719 Speaker 1: do think that you should actually do a separate podcast 648 00:38:06,760 --> 00:38:12,080 Speaker 1: just in that question. We can have you back if 649 00:38:12,080 --> 00:38:14,680 Speaker 1: you want. We could just even the concept of cheaper 650 00:38:14,800 --> 00:38:16,840 Speaker 1: is something you have to think about because you know, 651 00:38:16,840 --> 00:38:19,120 Speaker 1: on a direct listing is an advisory fee that would 652 00:38:19,120 --> 00:38:22,640 Speaker 1: be paid on the entire value of the company, whereas 653 00:38:22,680 --> 00:38:24,720 Speaker 1: the I p O fee is only paid on the 654 00:38:24,760 --> 00:38:27,040 Speaker 1: amount of shares that are sold in the marketplace. And 655 00:38:27,120 --> 00:38:29,920 Speaker 1: so again I leave that to the academics, because I 656 00:38:29,920 --> 00:38:33,200 Speaker 1: think there's an argument that at times the expenses are 657 00:38:33,239 --> 00:38:37,239 Speaker 1: actually very similar. I think that the biggest issue I 658 00:38:37,280 --> 00:38:39,840 Speaker 1: would just raise. I'll even add a fourth path that 659 00:38:39,920 --> 00:38:43,000 Speaker 1: some companies will take, which is there's also reverse mergers. 660 00:38:43,000 --> 00:38:45,759 Speaker 1: I've been around forever where a company ends are you know, 661 00:38:45,800 --> 00:38:49,000 Speaker 1: bringing with them capital and buys an existing entity and 662 00:38:49,040 --> 00:38:51,600 Speaker 1: now they go public that way, So listen, I think 663 00:38:51,640 --> 00:38:54,680 Speaker 1: that the most important thing, and this is where I do. 664 00:38:54,880 --> 00:38:58,600 Speaker 1: I may not agree with all the perspectives every loud 665 00:38:58,640 --> 00:39:02,120 Speaker 1: investor might raise ab out direct listing versus this versus that, 666 00:39:02,520 --> 00:39:05,480 Speaker 1: but I think that by having choices that a company 667 00:39:05,520 --> 00:39:09,120 Speaker 1: can determine what they want with their boards, they make 668 00:39:09,120 --> 00:39:11,760 Speaker 1: the most informed decisions for where they are. So companies, 669 00:39:11,800 --> 00:39:14,440 Speaker 1: for example, that that are not necessarily going to be 670 00:39:14,520 --> 00:39:17,680 Speaker 1: twenty billion dollar companies on day one, they know that 671 00:39:17,719 --> 00:39:21,160 Speaker 1: they need to have a real following um As as 672 00:39:21,440 --> 00:39:23,279 Speaker 1: I would have said back in my converbal bond days, 673 00:39:23,600 --> 00:39:26,000 Speaker 1: you know where the bond needs to be sold. It's 674 00:39:26,000 --> 00:39:29,799 Speaker 1: not just bought UM in those situations, lining up, you know, 675 00:39:30,000 --> 00:39:33,400 Speaker 1: researching to really understand the story, having you know, a 676 00:39:33,600 --> 00:39:36,760 Speaker 1: road a road show to meet with you know, dozens 677 00:39:36,800 --> 00:39:40,160 Speaker 1: and dozens investors to build up that interest for that 678 00:39:40,239 --> 00:39:43,399 Speaker 1: to have a successful launch as a public company. That's 679 00:39:43,400 --> 00:39:47,440 Speaker 1: still true for most companies. Um. You know, the majority 680 00:39:47,480 --> 00:39:49,840 Speaker 1: of companies that come public are not at ten billion 681 00:39:49,840 --> 00:39:52,399 Speaker 1: dollar valuations. They are companies that maybe there are seven 682 00:39:52,520 --> 00:39:54,319 Speaker 1: fifty or a billion or a billion and a half. 683 00:39:54,719 --> 00:39:58,520 Speaker 1: And those companies require having significant interest in order for 684 00:39:58,560 --> 00:40:01,440 Speaker 1: them to be able to be stable public companies. And 685 00:40:01,480 --> 00:40:05,120 Speaker 1: so the I P O path or a variant of that, 686 00:40:05,440 --> 00:40:07,800 Speaker 1: maybe with a spack where they have a pipe attached 687 00:40:07,800 --> 00:40:10,480 Speaker 1: and they can do a deep road show with investors. 688 00:40:10,760 --> 00:40:12,400 Speaker 1: I think that's still going to be with the majority 689 00:40:12,400 --> 00:40:14,840 Speaker 1: of companies that want to go public come through. But 690 00:40:14,880 --> 00:40:17,440 Speaker 1: the direct listings work for certain entities and and you know, 691 00:40:17,600 --> 00:40:20,319 Speaker 1: again that's why there's chocolate and vanilla. The last thing 692 00:40:20,360 --> 00:40:22,680 Speaker 1: I think that I'd want to share as part of 693 00:40:22,680 --> 00:40:24,920 Speaker 1: a twenty look back in the capital markets is just 694 00:40:25,400 --> 00:40:27,759 Speaker 1: I do think that and we you know, we talked 695 00:40:27,800 --> 00:40:29,080 Speaker 1: about a little bit, We talked about some of the 696 00:40:29,080 --> 00:40:32,279 Speaker 1: sustainable stories that came to market. I don't think we 697 00:40:32,320 --> 00:40:36,040 Speaker 1: should overlook that. I think will be viewed for the 698 00:40:36,120 --> 00:40:40,520 Speaker 1: capital markets as the year that sustainability or sustainable investments 699 00:40:41,200 --> 00:40:44,560 Speaker 1: came to UH came to the market in a real way. 700 00:40:44,880 --> 00:40:46,480 Speaker 1: And I think when we look back ten years now 701 00:40:46,560 --> 00:40:49,359 Speaker 1: and say all the awful things about the pandemic and 702 00:40:49,760 --> 00:40:53,640 Speaker 1: you know, the enormous challenges society faced on a lot 703 00:40:53,680 --> 00:40:57,440 Speaker 1: of fronts, UM, one of the real positives will be 704 00:40:58,000 --> 00:41:01,040 Speaker 1: that stories that were focused on solid thing, some of 705 00:41:01,280 --> 00:41:05,560 Speaker 1: you know, the the the globe's biggest problems were abably 706 00:41:05,560 --> 00:41:09,319 Speaker 1: get funded UM and that more and more investors end 707 00:41:09,360 --> 00:41:12,640 Speaker 1: investors are looking to put capital to work in funds 708 00:41:12,680 --> 00:41:16,600 Speaker 1: that invest in sustainable opportunities. And so it's not lost 709 00:41:16,640 --> 00:41:18,839 Speaker 1: on me at least that two twenty was a year 710 00:41:18,880 --> 00:41:21,040 Speaker 1: for that. And maybe it's because we got reminded of 711 00:41:21,200 --> 00:41:24,680 Speaker 1: how interconnected we all are, but I think it's a 712 00:41:24,760 --> 00:41:29,720 Speaker 1: great thing that stories that do everything from sustainable farming, 713 00:41:30,200 --> 00:41:34,440 Speaker 1: too energy transition to solving lots of other problems around 714 00:41:34,719 --> 00:41:38,200 Speaker 1: you know, the limited resources we have are getting funded 715 00:41:38,200 --> 00:41:40,319 Speaker 1: in the private and the public market in a way 716 00:41:40,320 --> 00:41:43,399 Speaker 1: that just wasn't happening in eighteen nineteen, in a deep way. 717 00:41:43,480 --> 00:41:45,400 Speaker 1: And so I hope that, you know, we'll find that 718 00:41:45,480 --> 00:41:49,840 Speaker 1: the twenties is a decade of these great ideas that 719 00:41:49,920 --> 00:41:54,040 Speaker 1: hopefully will become key parts of becoming energy independent and 720 00:41:54,040 --> 00:41:57,200 Speaker 1: all those things. Um, you know, uh that we'll look 721 00:41:57,239 --> 00:42:02,600 Speaker 1: back at two twenty as the turning point for that. Larry, 722 00:42:02,760 --> 00:42:06,200 Speaker 1: this is really appreciate you joining us. Maybe we'll do 723 00:42:06,280 --> 00:42:08,240 Speaker 1: maybe we'll just have you back in a few weeks 724 00:42:08,239 --> 00:42:10,040 Speaker 1: to talk about I P S. Or maybe maybe in 725 00:42:10,080 --> 00:42:13,000 Speaker 1: a year or something. But you're you're you're sort of 726 00:42:13,040 --> 00:42:15,600 Speaker 1: a breadth of knowledge on this and your insight super 727 00:42:15,640 --> 00:42:18,960 Speaker 1: helpful and clearing up a lot of questions that I 728 00:42:19,000 --> 00:42:21,040 Speaker 1: think both Tracy and I had. Well, it was my 729 00:42:21,120 --> 00:42:26,520 Speaker 1: pleasure and hopefully we have a healthier two twenty one. 730 00:42:26,560 --> 00:42:29,480 Speaker 1: Let's just say that since yeah, nothing, nothing's more in 731 00:42:29,480 --> 00:42:32,240 Speaker 1: our mind than that and there so anyway, without question, 732 00:42:33,000 --> 00:42:53,120 Speaker 1: all right, thanks Larry, Thanks thanks so much, Larry, Cheers Tracy. 733 00:42:53,200 --> 00:42:56,600 Speaker 1: I found that super helpful. You know, I I do 734 00:42:56,719 --> 00:43:00,840 Speaker 1: think that for a long time throughout last year. Still 735 00:43:00,840 --> 00:43:03,799 Speaker 1: and I guess maybe still um a little bit like 736 00:43:04,239 --> 00:43:06,840 Speaker 1: what's really the deal of like spacks, Like is it 737 00:43:06,960 --> 00:43:10,000 Speaker 1: really a good vehicle? How much of it is just 738 00:43:10,040 --> 00:43:13,880 Speaker 1: about getting that pop or finding some sexy story that 739 00:43:13,920 --> 00:43:16,400 Speaker 1: you can flip to Robin Hood investors or whatever. But 740 00:43:16,440 --> 00:43:22,080 Speaker 1: I'm starting to buy the idea that it is a 741 00:43:22,160 --> 00:43:26,560 Speaker 1: reasonable um, a reasonable vehicle for a lot of companies. 742 00:43:26,640 --> 00:43:28,640 Speaker 1: That's probably gonna be with us UH to stay for 743 00:43:28,640 --> 00:43:32,520 Speaker 1: a while. I'm going to reserve judgment for at least 744 00:43:32,680 --> 00:43:36,239 Speaker 1: one economic cycle and see what happens. I will say. 745 00:43:37,120 --> 00:43:39,759 Speaker 1: I will say when bark box announced that it was 746 00:43:39,840 --> 00:43:43,799 Speaker 1: going public through a spack, most of the commentary I 747 00:43:43,840 --> 00:43:46,919 Speaker 1: saw about that just was talking about pets dot com 748 00:43:47,200 --> 00:43:50,880 Speaker 1: and the sort of two thousand's Internet bubble. That was 749 00:43:50,960 --> 00:43:53,720 Speaker 1: the first thing that people were talking about. But Larry 750 00:43:53,760 --> 00:43:57,120 Speaker 1: did make this interesting point about how certain capital market 751 00:43:57,160 --> 00:44:02,279 Speaker 1: structures tend to become trendy at certain times. And yeah, 752 00:44:02,680 --> 00:44:06,080 Speaker 1: and I do you do see that in this idea 753 00:44:06,120 --> 00:44:09,920 Speaker 1: of trying to escape market volatility or the uncertainty of 754 00:44:09,960 --> 00:44:13,040 Speaker 1: an I P O process by going the spack rout. 755 00:44:13,080 --> 00:44:15,399 Speaker 1: That's certainly the case. But I guess my question is 756 00:44:16,000 --> 00:44:21,600 Speaker 1: as things start to normalize in our SPACs going to 757 00:44:21,960 --> 00:44:27,040 Speaker 1: um not be as popular as they were last year, right? 758 00:44:27,120 --> 00:44:29,960 Speaker 1: I mean, I think that was actually probably what helped 759 00:44:29,960 --> 00:44:32,640 Speaker 1: me the most, because I still I was not satisfied 760 00:44:32,719 --> 00:44:35,000 Speaker 1: or I still like it was like the why now 761 00:44:35,160 --> 00:44:38,239 Speaker 1: question because it's like, Okay, you can lay out a 762 00:44:38,360 --> 00:44:42,279 Speaker 1: list of arguments for why for a lot of companies 763 00:44:42,520 --> 00:44:45,759 Speaker 1: the spack route makes sense. But I was still hung 764 00:44:45,840 --> 00:44:47,320 Speaker 1: up for a long time. I was like, yeah, but 765 00:44:47,440 --> 00:44:51,880 Speaker 1: why not? What was it about in particular that caused 766 00:44:51,880 --> 00:44:54,600 Speaker 1: this to catch fire? And I think Larry did a 767 00:44:54,719 --> 00:44:57,200 Speaker 1: good job and help me, at least to some extent, 768 00:44:58,239 --> 00:45:02,239 Speaker 1: understand what it was about this moment. I mean, there 769 00:45:02,320 --> 00:45:05,560 Speaker 1: was obviously a lot of appetite for sort of new technology, 770 00:45:06,080 --> 00:45:11,080 Speaker 1: transformational tech. There was the market volatility of the moment 771 00:45:11,280 --> 00:45:14,759 Speaker 1: that maybe made traditional I PR roads, I p O 772 00:45:15,040 --> 00:45:18,320 Speaker 1: routes too risky or too long, too much of a 773 00:45:18,480 --> 00:45:23,239 Speaker 1: long cycle. The need for public market liquidity, Uh, you 774 00:45:23,239 --> 00:45:26,120 Speaker 1: know his analogy about you know, it's like when the 775 00:45:26,120 --> 00:45:28,760 Speaker 1: public market gets a cold, the private market gets a fluid. 776 00:45:28,800 --> 00:45:32,400 Speaker 1: So he just wanting to have that public market currency. 777 00:45:32,840 --> 00:45:37,720 Speaker 1: So I can start to see from that conversation why 778 00:45:37,760 --> 00:45:40,840 Speaker 1: a number of things sort of did come together in 779 00:45:40,920 --> 00:45:43,279 Speaker 1: that moment to produce what turned out to be a 780 00:45:43,320 --> 00:45:45,760 Speaker 1: pretty extraordinary year. Like I wouldn't have guessed it obviously 781 00:45:45,800 --> 00:45:48,520 Speaker 1: going back in the spring, but there's enough sort of 782 00:45:48,560 --> 00:45:50,439 Speaker 1: moving parts that I can say, Okay, I could sort 783 00:45:50,480 --> 00:45:55,319 Speaker 1: of this makes sense. Why why it happened? Yeah, I 784 00:45:55,360 --> 00:45:59,640 Speaker 1: guess the question is whether or not that experience of 785 00:45:59,680 --> 00:46:05,880 Speaker 1: early is so ingrained that companies will always considers facts 786 00:46:05,920 --> 00:46:08,480 Speaker 1: as a as a financing option, like one of the 787 00:46:08,520 --> 00:46:10,640 Speaker 1: many things they can pull off the shelf, one of 788 00:46:10,680 --> 00:46:15,080 Speaker 1: the many options forever, or or whether it's sort of 789 00:46:15,120 --> 00:46:16,920 Speaker 1: like this one time thing. I guess it gets back 790 00:46:16,960 --> 00:46:21,480 Speaker 1: to Larry's point about how capital decisions are. They should 791 00:46:21,520 --> 00:46:27,000 Speaker 1: be strategic, right, but I think often, like people don't 792 00:46:27,000 --> 00:46:31,680 Speaker 1: really sorry, I can't talk today, they should be strategic, 793 00:46:32,400 --> 00:46:35,600 Speaker 1: but I think often people tend to make a shorter 794 00:46:35,760 --> 00:46:38,120 Speaker 1: term decisions, so they might just be jumping on the 795 00:46:38,280 --> 00:46:41,640 Speaker 1: back bandwagon rather than actually thinking it through. Basically, I'm 796 00:46:41,680 --> 00:46:46,160 Speaker 1: saying I'm unsure whether or not um never mind cut. 797 00:46:46,239 --> 00:46:49,879 Speaker 1: But basically I'm saying thing, but I get what you're saying. 798 00:46:49,920 --> 00:46:51,560 Speaker 1: It makes a lot of sense, you know, I do 799 00:46:51,719 --> 00:46:53,799 Speaker 1: think broadly, And this is a topic that we have 800 00:46:53,840 --> 00:46:55,720 Speaker 1: to come back to, Like we have to talk about 801 00:46:56,160 --> 00:46:59,400 Speaker 1: what is the future of the traditional I p O. 802 00:46:59,480 --> 00:47:02,680 Speaker 1: Because there have been assailed by critics for a long time. 803 00:47:02,920 --> 00:47:06,560 Speaker 1: Lots of critics of the pop and the implication that 804 00:47:06,640 --> 00:47:08,640 Speaker 1: the company is leaving a lot of money on the 805 00:47:08,680 --> 00:47:13,840 Speaker 1: table with this big gap, critics of the pricing, paying underwriters, 806 00:47:14,200 --> 00:47:18,640 Speaker 1: paying underwriters. You know. I'm also curious um whether whether 807 00:47:18,880 --> 00:47:22,400 Speaker 1: things like road show or educating analysts is as important 808 00:47:22,480 --> 00:47:24,000 Speaker 1: in the world at which we have the Internet and 809 00:47:24,040 --> 00:47:27,040 Speaker 1: can learn about companies through all different kinds of ways, 810 00:47:27,160 --> 00:47:30,759 Speaker 1: and we have sort of amateur analysts on Twitter and 811 00:47:30,760 --> 00:47:34,440 Speaker 1: then their newsletter who don't learn about a company through 812 00:47:34,480 --> 00:47:38,239 Speaker 1: the traditional route. How much that could is intermediating the 813 00:47:38,280 --> 00:47:41,759 Speaker 1: need for the traditional road road show. So I think 814 00:47:42,560 --> 00:47:45,080 Speaker 1: there should be a big topic for us this year. Yeah, 815 00:47:45,239 --> 00:47:48,160 Speaker 1: for sure. I I since the I P O series 816 00:47:48,440 --> 00:47:51,239 Speaker 1: coming on. Oh yeah, I love that, and oh you know, 817 00:47:51,280 --> 00:47:54,160 Speaker 1: also just uh the you know, we did that episode 818 00:47:54,160 --> 00:47:57,200 Speaker 1: in the past about direct listings. They have since gotten approval, 819 00:47:57,239 --> 00:47:59,080 Speaker 1: I think. So I think there's the total green light 820 00:47:59,160 --> 00:48:02,400 Speaker 1: for direct listing with a capital raise. It'll be super 821 00:48:02,440 --> 00:48:06,760 Speaker 1: interesting to see what companies when presented with that option, 822 00:48:07,160 --> 00:48:08,880 Speaker 1: how many of them are go down that route and 823 00:48:09,000 --> 00:48:12,440 Speaker 1: lots lots of talk about Yeah, I think there's definitely 824 00:48:12,880 --> 00:48:16,480 Speaker 1: enough going on to have a series. All right, shall 825 00:48:16,520 --> 00:48:19,480 Speaker 1: we leave it there. Let's see it there. This has 826 00:48:19,520 --> 00:48:23,040 Speaker 1: been another episode of the All Thoughts podcast. I'm Tracy Alloway. 827 00:48:23,120 --> 00:48:26,440 Speaker 1: You can follow me on Twitter at Tracy Alloway and 828 00:48:26,520 --> 00:48:28,839 Speaker 1: I'm Joe Why Isn't Thal? You can follow me on 829 00:48:28,880 --> 00:48:33,120 Speaker 1: Twitter at The Stalwart. Follow our producer Laura Carlson. She's 830 00:48:33,200 --> 00:48:36,520 Speaker 1: at Laura M. Carlson. Follow the Bloomberg head of podcast, 831 00:48:36,520 --> 00:48:40,239 Speaker 1: Francesco Levi at Francesca Today, and check out all of 832 00:48:40,280 --> 00:49:13,880 Speaker 1: our podcasts under the handle at podcasts. Thanks for listening 833 00:49:01,040 --> 00:49:01,080 Speaker 1: to