WEBVTT - Why Ram Parameswaran Says the World's Biggest Tech Stocks Are Ridiculously Cheap Right Now 0:00:10.560 --> 0:00:14.480 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.520 --> 0:00:19.200 I'm Joe Wisenthal and I'm Tracy Hallaway, so tricy. You know, 0:00:19.520 --> 0:00:22.360 we talk a lot about some of the big trends 0:00:22.440 --> 0:00:27.200 of the last year, talk about housing, talk about various 0:00:27.280 --> 0:00:30.479 commodities there that are a short supply. We've talked a 0:00:30.480 --> 0:00:33.839 lot lately about cryptocurrencies. But the other big theme of 0:00:33.880 --> 0:00:37.560 the last year was just like the incredible power performance 0:00:37.680 --> 0:00:41.400 of big tech and defined broadly, I mean, it's just 0:00:41.400 --> 0:00:45.880 an incredible year for huge tech companies in e commerce. Absolutely. 0:00:45.960 --> 0:00:48.600 It's kind of weird because I'm thinking back to and 0:00:48.680 --> 0:00:51.199 this was the big story in markets. It was the 0:00:51.240 --> 0:00:55.240 sort of outperformance of the thing stocks and how everything 0:00:55.360 --> 0:00:58.560 had just rotated back into these big tech companies. You know, 0:00:58.640 --> 0:01:02.160 Netflix was doing incredibly well because everyone was sat at 0:01:02.200 --> 0:01:06.160 home watching movies. There's all this talk about how the 0:01:06.200 --> 0:01:10.080 COVID crisis had basically re oriented our lives even more 0:01:10.720 --> 0:01:14.119 towards tech, and now we've come out the other side 0:01:14.160 --> 0:01:17.200 of it, and there was some talk about the rotation 0:01:17.280 --> 0:01:20.480 and too value things like that, but I think in general, 0:01:21.280 --> 0:01:25.680 the big tech stocks have held up remarkably well. Right, Yeah, 0:01:25.720 --> 0:01:28.560 they're doing really well. I mean the stocks, you know, 0:01:28.640 --> 0:01:31.160 they maybe they weren't as hot as they were a 0:01:31.280 --> 0:01:33.479 year ago at the time, but the companies are still 0:01:33.520 --> 0:01:36.440 doing very well. So, you know, I think even with 0:01:36.520 --> 0:01:41.039 the quote normalization unquote of the economy, it does not 0:01:41.280 --> 0:01:44.080 seem like there's some sort of like shift away from tech. 0:01:44.120 --> 0:01:45.880 And I think there's kind of like two things going on. 0:01:45.920 --> 0:01:49.960 I mean, one is covid Um, you know, obviously forced 0:01:50.200 --> 0:01:53.360 certain economic behaviors to go more online, and so you think, okay, 0:01:53.440 --> 0:01:56.240 Zoom Video a company like that that obviously placed a 0:01:56.240 --> 0:01:59.360 lot of in person activity. We're talking over Zoom right now. 0:01:59.480 --> 0:02:02.520 And then the other of thing is, of course this 0:02:02.800 --> 0:02:06.560 other theme, which is like the sort of great acceleration thesis, 0:02:07.080 --> 0:02:09.760 which is that all the trends going into the crisis 0:02:09.800 --> 0:02:12.720 seemed to have just gotten like magnified in five years, 0:02:12.720 --> 0:02:17.440 got condensed until one year. Yeah, and I think that's 0:02:17.639 --> 0:02:21.120 probably what we're seeing right now with tech. I mean, 0:02:21.160 --> 0:02:23.800 this idea that we're all going to go into remote working. Okay, 0:02:23.919 --> 0:02:25.960 maybe we're not all going to work from home forever, 0:02:26.080 --> 0:02:28.400 but there might be some sort of hybrid model. We've 0:02:28.440 --> 0:02:31.200 all gotten very used to ordering stuff off of Amazon. 0:02:31.880 --> 0:02:34.880 But that said, even though we talk a lot about 0:02:34.919 --> 0:02:39.000 the acceleration of trends that may be beneficial to tech, 0:02:39.080 --> 0:02:44.320 there are some things coming up that could potentially be challenging. 0:02:44.440 --> 0:02:47.320 So you know, for instance, we talk about the bottlenecks, 0:02:47.360 --> 0:02:50.880 the shortages, what others actually mean for I don't know 0:02:50.919 --> 0:02:53.040 a company like Uber, right, is it going to be 0:02:53.040 --> 0:02:56.120 able to get enough drivers? Are we going to see 0:02:56.120 --> 0:03:00.200 that backlash against big tech from d C. There are 0:03:00.480 --> 0:03:05.639 certain things coming up that could be problematic exactly right, Well, anyway, 0:03:05.639 --> 0:03:08.200 I'm very excited about speaking with our guests. We're gonna 0:03:08.200 --> 0:03:12.560 be speaking with an investor in techs uh, very sort 0:03:12.560 --> 0:03:17.480 of big picture focused, big ideas, concentrated bets in the space, 0:03:17.560 --> 0:03:20.400 someone who really sort of like thinks deeply about where 0:03:20.440 --> 0:03:24.200 it's all going, had some major winners. I'm excited to 0:03:24.240 --> 0:03:28.560 welcome to odd Lots Ramparts and he is the founder 0:03:28.600 --> 0:03:32.880 and c i O of Octahedron Capital. Rom thank you 0:03:32.960 --> 0:03:35.640 so much for joining us. Well, Joe and Tracy, thank 0:03:35.640 --> 0:03:38.040 you for having me. It's a real pleasure. Yeah, this 0:03:38.080 --> 0:03:40.640 is super exciting, very excited to talk to you. What 0:03:40.720 --> 0:03:43.480 do you describe Octahedron because I don't think it's not 0:03:43.600 --> 0:03:46.160 like the typical fund. I know you have like very 0:03:46.320 --> 0:03:50.440 big handful of concentrated bets, but what do you describe 0:03:50.440 --> 0:03:52.960 exactly what is the structure of the fund and your 0:03:53.000 --> 0:03:55.800 general approach to investing. Thank you Joe for having me. 0:03:55.880 --> 0:03:57.800 So let me start with a very big picture of 0:03:57.800 --> 0:04:01.000 the top down, which is, you know what our shitness. So, 0:04:01.040 --> 0:04:04.000 our our mission is very simple and we simply want 0:04:04.000 --> 0:04:07.560 to be the absolute best partner for the world's Internet 0:04:07.600 --> 0:04:11.600 scale businesses. So so what does that mean? So I've 0:04:11.600 --> 0:04:14.160 been obsessed with this idea of inner scale for almost 0:04:14.160 --> 0:04:17.640 a decade since I started working after business school at 0:04:17.640 --> 0:04:21.440 Sanford Bernstein, where my boss and I co founded the 0:04:21.480 --> 0:04:24.279 Internet team there, and we were quite well known on 0:04:24.320 --> 0:04:27.440 Wall Street for a couple of years because of very 0:04:27.480 --> 0:04:30.279 distinctive work on Amazon where we where. We kind of 0:04:30.320 --> 0:04:33.560 discovered through math in a bunch of our other analysis 0:04:33.600 --> 0:04:36.679 that hiding inside a five or six percent retail margin 0:04:36.760 --> 0:04:40.760 business was a thirty percent margin cloud business. We helped 0:04:40.760 --> 0:04:44.359 defend Google to the transition from desktop to mobile, And 0:04:44.400 --> 0:04:48.400 what I started realizing was, you know, when when investors 0:04:48.520 --> 0:04:53.960 started thinking about the traditional offline market, we just have 0:04:54.080 --> 0:04:58.000 a very narrow definition of TAM, which I have made 0:04:58.120 --> 0:05:00.839 so many mistakes off in the past, and in fact, 0:05:00.880 --> 0:05:03.280 one of my biggest mistakes in life is to having 0:05:03.400 --> 0:05:07.480 narrow definitions. That's number one. Number two is I've started 0:05:07.520 --> 0:05:11.200 realizing and learning over the last decade that these companies 0:05:11.240 --> 0:05:15.000 not only get bigger and better over scale, but then 0:05:15.040 --> 0:05:18.240 they become these humongous they put these humongous revenue scale 0:05:18.320 --> 0:05:22.520 numbers that an early investor cannot comprehend. And number three, 0:05:23.040 --> 0:05:26.359 there are niches that are richest in niches that I 0:05:26.400 --> 0:05:29.400 did not expect. If you think about the Internet being 0:05:29.440 --> 0:05:33.719 thirty years old, if you think about what is what 0:05:33.839 --> 0:05:37.080 actually flows through the Internet, even think about net income 0:05:37.279 --> 0:05:40.360 on Internet companies as a percentage of total global net income, 0:05:41.120 --> 0:05:43.559 or even you think about what's the total market cap 0:05:43.600 --> 0:05:49.000 excluding Apple across total global market cap by almost always, 0:05:49.360 --> 0:05:51.760 you know, we size it to be less than ten percent. 0:05:51.839 --> 0:05:54.279 And let that sink in for a second. The Internet 0:05:54.360 --> 0:05:57.640 is ubiquitous, but in almost every way you think about 0:05:57.640 --> 0:06:01.480 the Internet, less than ten percent of total global value 0:06:01.839 --> 0:06:04.919 gets accrued to the Internet. So over the next twenty 0:06:05.000 --> 0:06:08.520 or thirty years, our bet is that whether it's Internet 0:06:08.600 --> 0:06:14.320 companies so traditional content marketplaces, on demand businesses, or whether 0:06:14.400 --> 0:06:16.880 it's the stuff that lubricates Internet, which happens to be 0:06:16.920 --> 0:06:20.599 payments companies and and certain software companies. You know, we 0:06:20.720 --> 0:06:25.680 think that this convergence of obviously ubiquitous computing, ubiquitous connectivity, 0:06:26.160 --> 0:06:31.520 now ubiquitous democratization of knowledge, and now post COVID ubiquitous location, 0:06:32.240 --> 0:06:34.600 we'll get us from that ten to twelve percent range 0:06:34.640 --> 0:06:37.640 to fifty to sixty in our lifetimes. So the mission is, 0:06:37.839 --> 0:06:40.400 let's be the best part note of these Internet scale companies, 0:06:40.520 --> 0:06:43.800 and that's what we do. So I have a lot 0:06:43.800 --> 0:06:46.440 of questions already, but just on this idea of being 0:06:46.440 --> 0:06:51.440 the best partner to Internet scale company is possible. My impression, 0:06:51.480 --> 0:06:53.320 I think a lot of people's impressions of the space 0:06:53.400 --> 0:06:57.560 is that there is a lot of competition to give 0:06:57.640 --> 0:07:01.279 capital to the next big thing. So, you know, obviously 0:07:01.320 --> 0:07:03.360 on the West Coast there's a bunch of people in 0:07:03.440 --> 0:07:08.040 venture capital who are fighting to find companies to up 0:07:08.040 --> 0:07:12.120 and coming companies to invest in. How competitive is the 0:07:12.200 --> 0:07:14.720 space in your mind, and how do you go about 0:07:14.800 --> 0:07:20.720 differentiating yourself from everyone else? Right, It's it's indeed competitive, 0:07:20.920 --> 0:07:25.480 and it's just gotten more competitive historically. But this is 0:07:25.480 --> 0:07:29.360 the way we distinguish ourselves. So number one, you know, 0:07:29.480 --> 0:07:31.720 Joe mentioned a very important point in the beginning, which 0:07:31.760 --> 0:07:34.920 is concentration. So as a fund, you know, we believe 0:07:34.960 --> 0:07:38.560 in essentialism. We try to constantly rank order the best 0:07:38.640 --> 0:07:42.640 ideas on our risk reward basis publicly and privately, so 0:07:43.000 --> 0:07:46.800 that forcing function does not allow us to spray and pray. 0:07:47.120 --> 0:07:50.240 The impact on the private markets is that on average 0:07:50.320 --> 0:07:54.200 per year, Octahedron makes between i'd say it in two 0:07:54.200 --> 0:07:59.320 and four investments totally in the private markets. Right. Number two, 0:07:59.600 --> 0:08:02.840 we are not vcs. We don't take boat seats. We 0:08:02.960 --> 0:08:05.520 actually co opt with some of the best vcs in 0:08:05.560 --> 0:08:07.760 the world, who are all many of them whom are 0:08:07.800 --> 0:08:11.480 investors in Octahedred. And the value that both companies see 0:08:11.560 --> 0:08:14.720 from a firm like us, which is true native crossover, 0:08:15.320 --> 0:08:17.880 is that one we don't have twenty different companies to 0:08:17.920 --> 0:08:21.280 look after. We today we have six private companies. We 0:08:21.400 --> 0:08:25.000 recently just today invested in a company called Fair whose 0:08:25.040 --> 0:08:28.040 announcement went out today. What that does for us is 0:08:28.080 --> 0:08:30.720 we can for every company is very important to us. 0:08:31.040 --> 0:08:34.000 So what we can do is our emission is to 0:08:34.040 --> 0:08:37.840 not only help those companies scale into the public markets 0:08:37.920 --> 0:08:39.560 over the next two to three years, which is kind 0:08:39.559 --> 0:08:41.920 of our sweet spot. We don't do early state stuff. 0:08:41.920 --> 0:08:44.840 That's for other vcs and and other board members. But 0:08:44.920 --> 0:08:48.160 then how do you also stay public or stay successful 0:08:48.160 --> 0:08:51.120 in the public market. And the average other fund that's 0:08:51.120 --> 0:08:54.319 competing for capital in the late stage, they are typically 0:08:54.320 --> 0:08:57.559 trying to build an index of everything going public. So 0:08:57.640 --> 0:09:00.280 it's what I would categorize a spray and pray approach. 0:09:00.559 --> 0:09:02.800 And so I would say that just the craft we 0:09:02.920 --> 0:09:05.760 create around do a few things, do it really well, 0:09:05.920 --> 0:09:09.160 go really deep, take care of every management team because 0:09:09.280 --> 0:09:12.079 it is a really important part of a portfolio. Is 0:09:12.160 --> 0:09:16.000 I think what distinguishes us from from other capital out there, 0:09:16.200 --> 0:09:18.320 and there are some fantastic companies that are involved in 0:09:18.320 --> 0:09:21.800 the private markets. But again, you know what I've learned 0:09:21.800 --> 0:09:23.840 over time is this is not a zero sum game. 0:09:24.360 --> 0:09:27.800 It's so infinitely large, and it's so infinitely big. There's 0:09:27.880 --> 0:09:31.200 so many opportunities for everybody. So we're in the business 0:09:31.200 --> 0:09:33.920 of effectively playing non zero sum games. It's not us 0:09:33.920 --> 0:09:37.880 worth somebody else, it's us and everybody else. From we 0:09:38.000 --> 0:09:42.440 talked about this idea of like obviously the last year 0:09:42.480 --> 0:09:46.600 has been particularly extraordinary, and you put out these presentations 0:09:46.720 --> 0:09:50.240 of like things you've learned, and you know, I'm curious 0:09:50.240 --> 0:09:53.720 of what your takeaway for tech is from the last year, 0:09:53.760 --> 0:09:56.960 Like was last year a period of which our lives 0:09:57.000 --> 0:10:01.520 temporarily changed? Are their permanent ranges? Like what is what 0:10:01.640 --> 0:10:04.080 did you think about tech going into the last year, 0:10:04.120 --> 0:10:06.160 and sort of like what's you what have you learned? Yeah? 0:10:06.160 --> 0:10:08.439 What have you learned? Yeah? You know, I think this 0:10:08.480 --> 0:10:11.840 is probably the most tumultus event we've all faced in 0:10:11.840 --> 0:10:15.680 our lifetimes. And I don't think anybody you know, I 0:10:15.760 --> 0:10:20.479 launched this fund in April and it was so confusing 0:10:20.600 --> 0:10:23.240 and dark and that we don't know we were flying blind. Now, 0:10:23.440 --> 0:10:25.199 I'll be honest that we did not know what was 0:10:25.240 --> 0:10:27.640 going to happen. In fact, the deck you were referencing 0:10:27.679 --> 0:10:31.199 called a few things we learned came out of that confusion, 0:10:31.360 --> 0:10:33.640 because when I started this fund with one analyst in 0:10:33.720 --> 0:10:35.760 ten million in a u M and we're obviously much 0:10:35.800 --> 0:10:39.480 bigger now, we were completely confused, like what just happened? 0:10:39.520 --> 0:10:41.640 And what do we make of this? And you know, 0:10:41.679 --> 0:10:43.840 all the credit card panel data we buy and the 0:10:44.040 --> 0:10:48.160 tracking we do of absence downloads and scale. It all went, 0:10:48.400 --> 0:10:50.800 you know, haywire, right, the numbers are all over the place. 0:10:50.840 --> 0:10:53.280 We weren't quite sure, and that's how you put it. 0:10:53.360 --> 0:10:55.079 Put the deck we read, we said, listen, we read 0:10:55.120 --> 0:10:57.240 a hundred transcripts, so let's put it all together in 0:10:57.280 --> 0:10:59.480 a format. And the format we just gave it to 0:10:59.520 --> 0:11:01.880 the world because we figured that if we're facing, if 0:11:01.920 --> 0:11:04.280 we're so confused, a lot of other people are confused 0:11:04.280 --> 0:11:07.080 as well. So that's a interesting side note on this. 0:11:07.200 --> 0:11:10.080 This debt did not happen. It happened completely by by 0:11:10.240 --> 0:11:14.080 by mistake. So what do we learned? Number one is 0:11:14.679 --> 0:11:18.000 fully convinced that the world has changed forever in almost 0:11:18.000 --> 0:11:21.280 every single way. But within that there are nuances, and 0:11:21.480 --> 0:11:23.440 it will be interesting to see what happens in the 0:11:23.480 --> 0:11:27.080 next three months when we normalize very difficult calms from 0:11:27.160 --> 0:11:30.400 last year. Let's talk about the top, which is digital advertising. 0:11:31.000 --> 0:11:35.520 Digital advertising is now the only way by which retailers 0:11:35.640 --> 0:11:38.920 and businesses can get ahold of consumers, which is why 0:11:39.040 --> 0:11:42.679 if you think about twenty one, the numbers have been 0:11:42.720 --> 0:11:45.560 off the charts, whether it's Google or Amazon, or Facebook 0:11:45.640 --> 0:11:48.760 or Snapchat or Twitter, or by dance in China. The 0:11:48.840 --> 0:11:51.800 numbers are just off the charts because how else now 0:11:51.840 --> 0:11:54.600 people have been quarantined and quiet and staying you know, 0:11:54.840 --> 0:11:57.640 basically stayed low for an ear, how are you going 0:11:57.720 --> 0:12:00.199 to acquire and re engage all these buil and some 0:12:00.320 --> 0:12:03.200 consumers who are not going to be out traveling and 0:12:03.440 --> 0:12:06.280 partying and eating out and just going about their normal 0:12:06.320 --> 0:12:09.760 lives and probably having revenged spending over the next you know, 0:12:09.840 --> 0:12:14.360 twelve months. Well, an obvious winner is digital advertising, and 0:12:14.440 --> 0:12:18.240 the scale and engagement and tools and the importance to 0:12:18.320 --> 0:12:23.280 the economy cannot be should not be underestimated. That's number one. 0:12:24.120 --> 0:12:27.760 Number two the world of SMBs. You know, for the 0:12:27.840 --> 0:12:30.120 longest time, we've had a thesis. In fact, when we 0:12:30.160 --> 0:12:33.880 think about investing in Internet scale software, SMB software is 0:12:34.000 --> 0:12:35.920 right in the bank, in the middle of our wheelhouse. 0:12:36.440 --> 0:12:38.880 And for the longest time, it was just difficult to 0:12:38.960 --> 0:12:42.720 invest in SMB in the SMB space, mostly because the mortality, 0:12:43.400 --> 0:12:46.960 you know, over the last year, it's taken a life 0:12:46.960 --> 0:12:50.439 of its own. And if you basically break up SMBs 0:12:50.480 --> 0:12:54.120 by services and non services or retailer or people that 0:12:54.160 --> 0:12:58.720 sell stuff, we've just seen this explosion of one big 0:12:58.760 --> 0:13:03.000 picture laws of entrepreneurs and lots of companies being built. Right, 0:13:03.120 --> 0:13:07.400 the pace of new business formations has been unprecedented, and 0:13:07.800 --> 0:13:12.160 therefore the use of software, whether it's payment systems like Brecks, 0:13:12.280 --> 0:13:15.360 or whether it's um you know, supply chain solutions like 0:13:15.440 --> 0:13:20.880 fair Are, the use of payroll systems like Gusto and Rippling, 0:13:21.640 --> 0:13:27.120 or you look at software that digitizes retailers like Shopify, 0:13:27.200 --> 0:13:30.440 has been unprecedented, right because you've got all these companies 0:13:30.480 --> 0:13:33.360 turning on and they've all been given the same tools 0:13:33.400 --> 0:13:36.520 that allows them to compete on the same with the 0:13:36.600 --> 0:13:40.000 same tools and services and products that the largest retailers 0:13:40.000 --> 0:13:44.239 in the world have. And even better, because digital advertising 0:13:44.640 --> 0:13:47.400 gets you out of billions of consumers, they have a 0:13:47.520 --> 0:13:50.640 shot at advertising and getting the consumers with the same 0:13:50.800 --> 0:13:54.280 level playing field the largest companies in the world have had, 0:13:54.559 --> 0:13:58.200 which means that this COVID crisis has created this sort 0:13:58.240 --> 0:14:03.240 of weird equalization mechan some for smb s. Now, it 0:14:03.280 --> 0:14:06.040 doesn't mean the big companies have been left behind in retail. 0:14:06.559 --> 0:14:09.560 What we've seen is whether it's Walmart or Target, and 0:14:09.559 --> 0:14:12.960 there's a really interesting have and have not scenario here. 0:14:13.640 --> 0:14:16.800 The Walmart's the targets in the world. The Williams Sonomas, 0:14:16.880 --> 0:14:20.320 the Nikes in the world have taken this crisis and 0:14:20.360 --> 0:14:24.400 they now have significant material portions of their revenues being 0:14:24.440 --> 0:14:29.240 implemented via e commerce and all the investments they made 0:14:29.360 --> 0:14:33.960 historically nique commerce, including innovations and buy online, pickup at shop, 0:14:34.040 --> 0:14:37.920 curbside pickup, you know, directly integrating with API s like 0:14:38.040 --> 0:14:41.720 door Dash, bringing on Instacot for local delivery. They just 0:14:41.840 --> 0:14:44.760 turned everything on a scale and it's just worked wonderfully 0:14:44.800 --> 0:14:46.600 for them. So you see this have and have not 0:14:46.880 --> 0:14:50.400 behavior and moving down the stack a little bit with 0:14:50.560 --> 0:14:54.040 an e commerce again because everyone has focused at time online, 0:14:54.360 --> 0:14:58.880 we've seen this explosion of alternative shopping mechanisms because I 0:14:58.880 --> 0:15:01.520 know you mentioned Amazon and the beginning. Amazon is now 0:15:01.560 --> 0:15:04.320 not the only game in town, and everybody in some 0:15:04.480 --> 0:15:08.160 ways are gunning for Amazon's market sad now, Amazon itself 0:15:08.200 --> 0:15:11.080 is doing really well, as you've seen from the numbers, 0:15:11.120 --> 0:15:14.760 but everyone is gunning for some version of Amazon. So 0:15:14.800 --> 0:15:18.280 what have we seen. You know, niche vertical marketplaces just 0:15:18.320 --> 0:15:20.880 scale and do really well and come to a point 0:15:20.880 --> 0:15:24.200 that Amazon can't really touch them anymore. These are examples 0:15:24.240 --> 0:15:27.800 are wayfair for example. EXE is a second example, but 0:15:27.880 --> 0:15:30.400 if you look at the private companies, two companies have 0:15:30.520 --> 0:15:32.800 been really I've been really intrigued by and I met 0:15:32.800 --> 0:15:36.040 the management teams last week. It's a company called Curated, 0:15:36.600 --> 0:15:40.960 and Curated allows you to go and buy higher value 0:15:40.960 --> 0:15:45.080 items like skis and camping gear and cycles, the stuff 0:15:45.080 --> 0:15:47.480 you would go to an r I you spend an 0:15:47.480 --> 0:15:49.760 hother there you have pressure to go buy a bike 0:15:49.840 --> 0:15:52.440 for yourself. You've probably got twenty bikes on on the 0:15:52.520 --> 0:15:54.840 rack to choose from, and you've got to go pick 0:15:54.880 --> 0:15:56.680 it up, pack it and go home, which is kind 0:15:56.720 --> 0:15:59.920 of a difficult experience. Curated brings that online and I 0:16:00.000 --> 0:16:01.840 actually used in My wife and I used it last 0:16:01.880 --> 0:16:05.200 week and it was just a wonderful experience. The other 0:16:05.280 --> 0:16:07.920 product we the other kind of like niche we see 0:16:08.480 --> 0:16:11.360 is all sorts of video based shopping, And of course 0:16:11.360 --> 0:16:13.880 this is a trend that started in China and it's 0:16:13.960 --> 0:16:17.040 very popular then. But I suspect that lots of video 0:16:17.120 --> 0:16:20.440 improvements and more more like experiences within apps are going 0:16:20.520 --> 0:16:22.800 to come to the four and take us away from 0:16:22.840 --> 0:16:26.239 the boring Amazon experience to a more kind of interactive, 0:16:26.240 --> 0:16:30.000 fun experience. So a lot of changes happening. And then 0:16:30.040 --> 0:16:31.720 one last area I want to I want to touch 0:16:31.800 --> 0:16:35.000 upon is is just on demand and and this is 0:16:35.080 --> 0:16:38.160 you know, Tracy, you alluded to Uber earlier in the conversation. 0:16:38.600 --> 0:16:41.200 Will come to that in a bit between Uber and 0:16:41.320 --> 0:16:44.040 door Dash and possibly to a lower exit instacrat in 0:16:44.040 --> 0:16:46.400 the US and almost every single company in other parts 0:16:46.400 --> 0:16:48.840 of the world. I mean, we've these have now become 0:16:48.880 --> 0:16:52.360 indispensable for many for many people's lives, right. So if 0:16:52.360 --> 0:16:55.320 you take door Dash for example, theyme just had an 0:16:55.400 --> 0:17:00.480 unprecedented kind of explosion in their overall bise this over 0:17:00.480 --> 0:17:03.040 the last twelve months. And what's funny is we tracked 0:17:03.080 --> 0:17:06.840 the data every week and shockingly it sees there's no 0:17:07.200 --> 0:17:10.480 evidence of slowdown. Now we do see some slowdown in 0:17:10.600 --> 0:17:13.360 Uber Eats for example, in a bunch of deeper slowdown 0:17:13.359 --> 0:17:16.960 and Postmates and a pretty drastic slowdown in in instacast 0:17:17.000 --> 0:17:19.679 for example. And I can explain that away by a 0:17:19.720 --> 0:17:23.000 few mechanics. But you know, door Dash by layering on 0:17:23.080 --> 0:17:27.200 products first, delivering you know, food to you, now, delivering 0:17:27.440 --> 0:17:30.199 convenience products to you, now, bring on a marketplace with 0:17:30.280 --> 0:17:33.320 groceries and safely coming on board, they've done a really 0:17:33.359 --> 0:17:36.679 good job layering on products in the overall ecosystem. But 0:17:36.760 --> 0:17:39.680 this is a worldwide phenomenon, right whether you see Rappi 0:17:39.760 --> 0:17:43.199 in Latin America, or Grab in Indonesia and and and 0:17:43.320 --> 0:17:47.760 Southeast Asia, or Kupang in Korea, on demand systems are 0:17:47.800 --> 0:17:49.960 here to stay. And and and the reason I bring up 0:17:49.960 --> 0:17:53.960 on demand is Amazon built this humongous business still growing 0:17:54.000 --> 0:17:59.160 at unprecedented rates by price selection and convenience, and all 0:17:59.200 --> 0:18:02.280 these on demand companies are gunning for that convenience part, 0:18:02.400 --> 0:18:04.840 and Amazon, I think, over the next two to four years, 0:18:05.200 --> 0:18:08.399 needs to really figure out how they bring that convenience 0:18:08.440 --> 0:18:26.720 factor down from one day to a few hours. I 0:18:26.720 --> 0:18:28.960 want to dig into a lot of these different business models. 0:18:28.960 --> 0:18:31.400 But there's one thing that you said it caught my attention, 0:18:31.440 --> 0:18:33.920 which is that you launched the new fund in April 0:18:34.080 --> 0:18:39.399 of last year. Given how you're making concentrated bets, I 0:18:39.440 --> 0:18:43.080 guess I'm just curious what it was like actually launching 0:18:43.080 --> 0:18:47.040 the fund at that time period and whether or not 0:18:48.560 --> 0:18:50.240 I'm not sure how to phrase this, but you know, 0:18:50.280 --> 0:18:54.240 if you're only investing in six companies, it feels like 0:18:54.280 --> 0:18:57.679 a lot of pressure, particularly at a time when people 0:18:57.680 --> 0:19:01.040 were talking about how this was an un precedented crisis. 0:19:01.080 --> 0:19:03.200 No one really knew what was going to happen. There 0:19:03.240 --> 0:19:06.080 was a lot of uncertainty about the future. How did 0:19:06.080 --> 0:19:10.080 you actually go about doing that and deciding on where 0:19:10.080 --> 0:19:13.479 to place the new money? Yeah, so there were so 0:19:13.680 --> 0:19:17.400 just to be clear, remember we made six private investments 0:19:17.440 --> 0:19:19.840 over the last year, So the sixth number was the 0:19:19.960 --> 0:19:23.000 number of private investments over the last fourteen months. We 0:19:23.200 --> 0:19:26.040 you know, on the public side, we typically invest between 0:19:26.119 --> 0:19:29.080 eight and twelve companies at a point in time, and 0:19:29.160 --> 0:19:31.919 everything is all it's all about risker moorday, point in 0:19:31.960 --> 0:19:34.639 time and the specific companies. Our business model, Tracy, is 0:19:34.960 --> 0:19:38.040 very different compared to the average fund where in the 0:19:38.080 --> 0:19:41.240 average one I worked in, so the average one I 0:19:41.280 --> 0:19:43.280 know of, you tend to become what I got an 0:19:43.280 --> 0:19:45.359 analyst of the week. So you've got to pitch ideas 0:19:45.400 --> 0:19:47.200 every couple of weeks and then you pitch it to 0:19:47.240 --> 0:19:49.679 your PM and hopefully goes to your book. We have 0:19:49.760 --> 0:19:51.840 a we have taken the opposite business model is something 0:19:51.880 --> 0:19:54.760 I've learned that ultimate where I lost prior to this. 0:19:55.240 --> 0:19:58.120 As a firm, we only cover between forty and sixties 0:19:58.160 --> 0:20:00.119 stocks and I have an analyst team of four or 0:20:00.160 --> 0:20:03.760 people now and every analyst covers between twelve, let's saving 0:20:03.840 --> 0:20:06.000 ten and twelve stocks. How do we pick these stocks? 0:20:06.040 --> 0:20:08.879 Because that's a collective knowledge of you know, four or 0:20:08.880 --> 0:20:10.760 five of us who between us have you know, fourty 0:20:10.800 --> 0:20:13.080 years of thirty years of experience, right, so we kind 0:20:13.119 --> 0:20:15.919 of know where the world is going to and the 0:20:15.960 --> 0:20:19.080 expectation per analysts is to become amongst the world's best 0:20:19.080 --> 0:20:21.840 analysts in those ten or twelve stocks. And we have 0:20:21.880 --> 0:20:24.040 a very kind of like common format and the way 0:20:24.080 --> 0:20:26.920 we we we we think about our driver trees, the 0:20:26.960 --> 0:20:28.800 way we build our models that we we think about 0:20:28.880 --> 0:20:31.960 valuation and so as the PM my analyst team makes 0:20:31.960 --> 0:20:34.800 it really easy for me to pick and choose between 0:20:34.880 --> 0:20:37.800 companies based on the risk reward at a point in time. 0:20:38.600 --> 0:20:41.720 But I'll tell you last year in April was a 0:20:41.760 --> 0:20:44.080 difficult time, and it was very difficult, mostly because that 0:20:44.200 --> 0:20:47.439 markets have I remember trufed on March twenty three, and 0:20:47.480 --> 0:20:49.640 by the time we got dollars in our TB account 0:20:49.640 --> 0:20:53.360 on April fifteen, the markets had rallied almost thty one 0:20:53.760 --> 0:20:56.760 if I'm not mistaken. It was just tough, guys, because 0:20:57.119 --> 0:21:01.119 you know, that my favorite companies were ten by the 0:21:01.119 --> 0:21:04.400 time I even got my first dollar. So luckily for us, 0:21:04.520 --> 0:21:07.600 there was no pressure from our LPs who to go 0:21:07.760 --> 0:21:11.679 deploy capital immediately, so we could take almost a month 0:21:11.760 --> 0:21:14.640 to slowly deploy dollars one, you know, one by one 0:21:14.680 --> 0:21:16.760 by one. There was no reason to go put all 0:21:16.800 --> 0:21:19.760 our money, you know, at one goal into the market, 0:21:20.119 --> 0:21:22.640 so we took our time and I think we kind 0:21:22.680 --> 0:21:26.080 of like led our way in over almost two months, 0:21:26.440 --> 0:21:28.720 and then by June, when we got so much more 0:21:28.760 --> 0:21:32.000 clarity about the world, we were able to kind of, um, 0:21:32.480 --> 0:21:35.280 you know, be fully invested. Of course, this is not 0:21:35.359 --> 0:21:37.640 a static game because you know, we we we raised 0:21:37.680 --> 0:21:41.040 money pretty rapidly through the crisis, and today we're you know, 0:21:41.040 --> 0:21:44.040 we're getting close to two million dollars in a u M. 0:21:44.080 --> 0:21:45.760 So the hard part is, you know, how do you 0:21:45.840 --> 0:21:48.240 keep up? Right? So there were the challenges were Number one, 0:21:49.080 --> 0:21:51.639 there were three or four moving parts. One is the 0:21:51.680 --> 0:21:54.760 markets were moving and there was no way any of 0:21:54.880 --> 0:21:58.879 us could have even anticipated the multiple expression that happened 0:21:58.960 --> 0:22:02.640 last year. Right, these companies were just beating numbers by 0:22:02.720 --> 0:22:05.840 epic proportions, like the world changed so rapidly. Even they 0:22:05.880 --> 0:22:07.879 were not able to keep up. And you mentioned a 0:22:07.920 --> 0:22:10.640 little about you know, the you know, the the challenges 0:22:10.720 --> 0:22:13.240 with acquiring supply for Uber, but all that was true. 0:22:13.240 --> 0:22:15.199 So Uber had a demand problem first. Now we have 0:22:15.200 --> 0:22:17.639 a supply problem, but it will all eventually, you know, 0:22:17.720 --> 0:22:19.560 be good for them. And once once the demand and 0:22:19.560 --> 0:22:22.119 supply work, Uber is gonna be an explosive stock in 0:22:22.119 --> 0:22:25.719 my opinion. But number three, you know, we were raising capital, 0:22:25.920 --> 0:22:27.960 so each time money came maybe we were like, man, 0:22:28.040 --> 0:22:29.639