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Speaker 1: You're listening to taking Stock with pim Box and Kathleen
Speaker 1: Hayes on Bloomberg Radio. Eat or Be Eaten, Acquire or
Speaker 1: Be Acquired? M and A madness in the startup universe,
Speaker 1: and our next guest says, if you want to survive
Speaker 1: and thrive, you better pay attention to a very major trend,
Speaker 1: the move from the information age into the intelligence age.
Speaker 1: Joining us the studio day is gust Tie. He's general
Speaker 1: partner at Trinity Ventures in Menlo Park, California, the heart
Speaker 1: of the valley, and he's here today to join us
Speaker 1: to talk about this. Gus, welcome, Thank you. So, uh,
Speaker 1: there is certainly a lot of M and A activity
Speaker 1: what is driving in and we're talking about trends, but
Speaker 1: is there anything about people uh getting more confident, financing
Speaker 1: being cheap? What's behind it? Yes, Kathleen, I think we're
Speaker 1: in a super fascinating time right now where you have
Speaker 1: Microsoft buying LinkedIn for six billion, you have Walmart buying
Speaker 1: Jet for three point three billion, and even GM bought
Speaker 1: Crews for billion dollars. I think that the trend is driving.
Speaker 1: All of these are large corporations seeking to bring in
Speaker 1: DNA and capability to move from the information age to
Speaker 1: the intelligence age. Hey, Gus, you know, just to give
Speaker 1: some context here, at Trinity Ventures, Zu Lily initial public offering,
Speaker 1: that would be you, Blue Nile initial public offering, that
Speaker 1: would be you. If I always keep asking myself, if
Speaker 1: these are all such great companies, whether it's publical private,
Speaker 1: why sell them? Sure? Well, from a venture capital standpoint,
Speaker 1: when we make investments in companies, we do make agreement
Speaker 1: with the management team and the other shareholders to have
Speaker 1: some form of liquidity. And so if the liquidity comes
Speaker 1: in other forms such as dividends, that would be possible.
Speaker 1: But in general, when a company is acquired or goes public,
Speaker 1: it makes their capital liquid and then we could we
Speaker 1: buy in and we liquid eight and we distribute those
Speaker 1: profits back to our LPs. That makes sense to me.
Speaker 1: You want to put some money in your pocket when
Speaker 1: you put all that work into starting up a company.
Speaker 1: What about this? What are you talking about? Information age
Speaker 1: to intelligence age? What does that mean? It's it's very
Speaker 1: it's very compelling. What does it mean? Yeah, we view
Speaker 1: this as as transformative from moving from the industrial revolution
Speaker 1: to the information revolution. And so now over the last
Speaker 1: twenty years, we've been aggregating all of this information about things.
Speaker 1: So if you look at Amazon when they pulled together
Speaker 1: all the things you could buy, that's pulling together information
Speaker 1: on one particular place. However, the information overwhelms all of us,
Speaker 1: whether we're individuals or businesses, and so you need to
Speaker 1: add intelligence to be able to sort through that information.
Speaker 1: So you've seen this intelligence revolution where you makes sense
Speaker 1: of the data in in information technology companies, but you
Speaker 1: haven't seen that shift yet in all the other industries.
Speaker 1: And that's what we're arguing is taking place right now
Speaker 1: that if these large companies don't add intelligence to all
Speaker 1: the information they have already, they may become dinosaurs. Does
Speaker 1: that same strategy apply to the venture capital world? Well,
Speaker 1: because I understand that what is it you know? You
Speaker 1: do ten investments, seven dive, three maybe live on, and
Speaker 1: one is the thing that you know puts the roof
Speaker 1: over everybody's head, it sure does apply to venture capital
Speaker 1: in all other industries. And you are seeing innovation at
Speaker 1: various different types of venture firms, particularly the newer ones
Speaker 1: that have this fresh look A dear friend of mine
Speaker 1: who who inspires me in the valley is Dave McClure.
Speaker 1: He has five startups, and he would argue that firms
Speaker 1: that are traditional, perhaps even a firm like ours, as
Speaker 1: a dinosaur, and and we have to pay attention to
Speaker 1: that because you need to sort data better. I mean, seriously,
Speaker 1: what does that mean for you? If you're a dinosaur?
Speaker 1: How could you be a dinosaur? Well? You know, I
Speaker 1: would argue that venture firms are more resilient to this
Speaker 1: trend because we actually are competing to understand and makes
Speaker 1: sense of data we already have and put it in
Speaker 1: the forms of or what it's it's the model of
Speaker 1: so so a thesis for a disruption for venture capital
Speaker 1: what pim the way, what I inferred from what Pim
Speaker 1: was saying is that the traditional model is you make
Speaker 1: two investments per partner per year. And if you have
Speaker 1: a firm of ten ten partners at investments per year,
Speaker 1: from a portfolio theory basis, it may make sense to
Speaker 1: make a hundred investments per year. If you have a
Speaker 1: strategy for feeding the winners and calling the losers, that's
Speaker 1: a legitimate strategy. And if you have information that that
Speaker 1: you can transform it intelligence to understand that trend better.
Speaker 1: You could have a leg up. I just want to
Speaker 1: go through some recent deals to get your thoughts on this. Gillette,
Speaker 1: Dollar Shave Club. Yeah, I mean Dollar Shave Club, as
Speaker 1: I understand, doesn't make money necessarily, at least not yet.
Speaker 1: Is there a strategy or a theme that we need
Speaker 1: to understand here? Yes? And and so? Uh the theme
Speaker 1: and Uni Leaver purchased Dollar Shave Club for a billion
Speaker 1: in Gillette, which is owned by PNG, had a lawsuit
Speaker 1: against Dollar Shave Club. If I understand the public information properly,
Speaker 1: the theme would be that Uni Lever, being a hundred
Speaker 1: and thirty billion dollar, hundred forty billion dollar company, would
Speaker 1: be interested in developing a deeper relationship with end consumers
Speaker 1: and collecting information from them and serving them. Dollar Shave
Speaker 1: Club innovated in moving from a product to a service
Speaker 1: and using analytics of understanding the customers and how to
Speaker 1: tune products for those customers. So it's very savvy. So
Speaker 1: what what do you make of I just have to
Speaker 1: ask you. Just Walmart just seems like a match made
Speaker 1: in heaven potentially, sure, yes, Uh, it's I think it's
Speaker 1: a very savvy strategic move and strategic moves have to
Speaker 1: play out operationally. You have to execute. But why so
Speaker 1: savvy strategically is that Walmart is a four billion is
Speaker 1: revenue company. Last year it actually shrank from the previous year.
Speaker 1: It's online business last year was fourteen billion dollars. And
Speaker 1: if you think online revenue retail is important, that fourteen
Speaker 1: billion dollars barely matched the growth of of Amazon, so
Speaker 1: they have to do something to catch up. You remember
Speaker 1: a dollar Shape Club? I am not no would you
Speaker 1: invest in that? Would you have invested in Dollar Shape Club?
Speaker 1: I made the mistake in passing, and I regretted, but
Speaker 1: you were offered Yes both, Thanks very much, Gus, general
Speaker 1: partner at Trinity Ventures. They're based in Menlo Park, California.
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